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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
आयकर अपीलीय अधिकरण “G” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI श्री महावीर स िंह, न्याययक दस्य एविं श्री राजेश कुमार लेखा दस्य के मक्ष । BEFORE SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM
Aayakr ApIla saM./ ITA No. 7336/Mum/2017 (inaQa-arNa baYa- / Assessment Year 2011-12) The Dy. Commissioner of Stone Shippers Ltd. Income Tax, Central Circle 117, Jolly Maker 3(3)(2), Room No. 609, 6 th Vs. Chambeers II, Vinay. K. Floor, Aayakar Bhavan, M.K. Shah Marg, Nariman Point, Road, Mumbai-400 020 Mumbai-400 021 .. (p`%yaqaaI- / Respondent) (ApIlaaqaI- / Appellant) स्थायी लेखा िं./PAN No. AALCS6774R अपीलाथी की ओर े / Appellant by : Shri Chaudhary Arun Kumar Singh, DR प्रत्यथी की ओर े / Respondent by : Ms. Moksha Mehta, AR ुनवाई की तारीख / Date of hearing: 18-04-2019 घोषणा की तारीख / Date of pronouncement : 18-04-2019
AadoSa / O R D E R
महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
This appeal filed by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-8, Mumbai [in short CIT(A)], Appeal No. CIT(A)-8/IT-95/16-17 vide order dated 04.09.2017. The Assessment was framed by the Dy. Commissioner of Income Tax, Circle 3(3), Mumbai (in short ‘DCIT/ ITO / AO’) for the A.Y. 2011-12 vide order
2 dated 06.01.2014 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’). The penalty was levied by DCIT, Circle 3(3), Mumbai under section 271(1)(c) of the Act vide order dated 29.03.2016. 2. The only issue in this appeal of Revenue is against the order of CIT(A) holding that the notice issued under section 274 read with Section 271(1)(c) of the Act without striking of the inappropriate charge and imposition of penalty under section 271(1)(c) of the Act by the AO is bad in law as the penalty initiated and levied both, on different charges and not on specific charge. For this Revenue has raised the following grounds: -
“1. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was right in holding that the Notice u/s 274 r.w.s 271 and imposition of penalty u/s 271(1)(c) of the Act was bad in law when the AO in the assessment order has stated that penalty proceedings are initiated as the assessee has submitted inaccurate particulars of income and concealing the taxable income and the assessee was aware about the reason for initiating penalty proceedings as it was mentioned categorically in the assessment order?
Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in applying the ratio of Samson Perinchery [2007] ITA No. 1154 of 2014 by the Hon'ble Bombay High Court against the 3 Assessing Officer's order levying penalty when in fact the AO initiated penalty proceedings in the assessment order and notice of penalty on both furnishing inaccurate particulars of income and concealing particulars of income making the facts different?”
Briefly stated facts are that the AO during the course of assessment proceedings noted that the assessee while computing book profit had reduced the net profit to the extent of ₹ 5,52,28,144/- being exempt income under section 10B of the Act and not followed the amended provisions of section 115JB of the Act. Therefore, the AO made addition and initiated the penalty proceedings under section 271(1)(c) of the Act. The AO levied the penalty under section 271(1)(c) of the Act. The CIT(A) deleted the penalty on the jurisdictional issue by observing in Para 5.1.1 and 5.1.2 as under: -
“5.1.1 These grounds agitates the point that order of penalty passed u/s 271(1)(c) is bad in law as notice u/s 274 r.w.s. 271 of the Act does not specify whether penalty is initiated for furnishing of inaccurate particulars or concealment of income. Without prejudice, the appellant has contended that there was no concealment of income or furnishing of inaccurate particulars. A perusal of the impugned notice dated 06/01/2013 and 15/02/2016 show that the Assessing Officer has issued the notice on the ground "that you have 4 concealed the particulars of your income or furnished inaccurate particulars of such income.
5.1.2 The ratio of decisions of Hon'ble Bombay High Court in the case of CIT vs. Samson Perinchery [2017] ITA No. 1154 of 2014 and of Hon'ble Mumbai Tribunal in case of Ms. Sandhya Gadkari Sharma v. DCIT [2017] 181 TTJ 462 cited by the appellant apply squarely to the instant case and on this ground alone the issue of notice of 274 read with section 271(1)(c) and imposition of penalty under section 271(1)(c) has to be treated as bad in law respectful following of jurisdictional courts.”
Aggrieved, against the deletion, the Revenue came in appeal before Tribunal.
We have heard rival contentions and gone through the facts and circumstances of the case. We find from the assessment order that the AO has initiated the penalty proceedings vide Para 5.4 as under: -
“5.4 Penalty proceedings under section 271(1)(c) of the I.T. Act, are initiated for furnishing inaccurate particulars and concealing the taxable income.”
The learned Counsel for the assessee drew our attention to the show case notice issued under section 274 of the Act dated 06.01.2013, which is enclosed at page 63 of the assessee’s paper book and also 5 another notice under section 271(1)(c) of the Act dated 15.02.2016. The notice under section 274 read with section 271(1)(c) of the Act, the AO has not deleted the inappropriate words and it is clear that the AO has not applied his mind while issuing notice under section 274 read with section 271(1)(c) of the Act. Subsequently, also vide notice dated 15.02.2016 which is enclosed at assessee’s paper book at page 64, that the AO has initiated the penalty proceedings for both the charges and the relevant para reads as under: -
“Whereas, in the course of assessment proceedings for AY 2011-12, it appears that you have concealed the particulars of your income or furnished inaccurate particulars of such income. The notice under section 274 r.w.s 271(1)(c), of the I.T. Act 1961 has already been served on you.”
Even the AO while levying the penalty under section 271(1)(c) of the Act vide his penalty order dated 29.03.2016 had levied the penalty vide para 14 as under: -
“In view of the above discussions, I hold that the assessee has furnished the inaccurate particulars of income and concealed particulars of income as envisaged by section 271 of the Income-tax Act, 1961, to the extent of ₹ 6,09,02,504/- [₹ 50,00,000+5,52,28,144 + 6,74,360].”
We noted that the AO has levied penalty on the following items: -
6 Sr. Particulars Amount (₹) No. 1. Rejecting the deduction of profits of section 5,52,28,144 10B unit to arrive at the book profits under section 115JB of the Act 2. Addition of provision for gratuity to arrive at 6,74,360 the book profits under section 115JB of the Act. 3. Adoption of incorrect profit as per books 50,00,000 while computing book profit under section 115JB of the Act. 7. From the above, it is clear that the AO on all occasions was not sure about which charge, which is initiating or levying the penalty i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. In such circumstances, we are of the view that the assessee’s issue is squarely covered by the decision of Hon’ble Bombay High Court decision in the case of Samson Perinchery (2013) 392 ITR 4 (Bom). We also noted that at the time of hearing the learned Sr. DR has not doubted the facts of the case but pointed out that there is due application of mind by the AO which can be demonstrated from the discussion in the assessment order and the order of CIT(A), wherein the AO had discussed the reasons for the disallowance of depreciation, he has recorded the satisfaction that the penalty proceedings are initiated under section 271(1)(c) of the Act for concealing particulars of income as well as for furnishing of inaccurate particulars of income.
In view of the above, we are of the view that the Sr. DR has admitted to application of mind by the AO but stated that there is no difference in as much as that the AO in assessment order had initiated the penalty proceedings for both the charges i.e. for furnishing of inaccurate particulars of income as well as concealment of particulars of 7 income. We find that this issue is squarely covered by the decision of Hon’ble Bombay High Court in the case of Samson Perinchery (supra) wherein it is held as under: -
“The impugned order of the Tribunal deleted the penalty imposed upon the Respondent Assessee. This by holding that the initiation of penalty under Section 271(1)(c) of the Act by Assessing Officer was for furnishing inaccurate particulars of income while the order imposing penalty is for concealment of income. The impugned order holds that the concealment of income and furnishing inaccurate particulars of income carry different connotations. Therefore, the Assessing Officer should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. Further, the Tribunal also noted that notice issued under Section 274 of the Act is in a standard proforma, without having striked out irrelevant clauses therein. This indicates non application of mind on the part of the Assessing Officer while issuing the penalty notice.”
8 9. Respectfully, following the Hon’ble High Court, we affirm the order of CIT(A) deleting the penalty on this jurisdictional issue. Hence, we need not to go into the merits of the case. 10. In the result, the appeal of Revenue is dismissed. Order pronounced in the open court on 18-04-2019. (राजेश कुमार / RAJESH KUMAR) (महावीर स िंह /MAHAVIR SINGH) (लेखा दस्य / ACCOUNTANT MEMBER) (न्याययक दस्य/ JUDICIAL MEMBER) मुिंबई, ददनािंक/ Mumbai, Dated: 18-04-2019 स दीप सरकार, व.निजी सधिव / Sudip Sarkar, Sr.PS आदेश की प्रनिललपप अग्रेपिि/Copy of the Order forwarded to : अपीलाथी / The Appellant 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त(अपील) / The CIT(A) 3. आयकर आयुक्त / CIT 4. ववभागीय प्रयतयनधि, आयकर अपीलीय अधिकरण, मुिंबई / DR, ITAT, 5. Mumbai गार्ड फाईल / Guard file. 6. आदेशाि सार/ BY ORDER, त्यावपत प्रयत //// उप/सहायक पुंजीकार (Asstt.