RACHNA SHIV,MEERUT vs. DCIT, CIRCLE- 2, MEERUT

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ITA 53/DEL/2018Status: DisposedITAT Delhi26 July 2018AY 2009-105 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice was invalid because it did not strike off inappropriate words and failed to specify whether the penalty was for concealment or furnishing inaccurate particulars of income. Therefore, the penalty was deleted.

What were the facts?

The assessee surrendered an amount as undisclosed income during assessment proceedings due to a difference in Form 26AS and declared income. The Assessing Officer levied penalty under Section 271(1)(c), which was upheld by the CIT(A).

What were the issues?

The primary issue was the validity of the penalty notice issued under Section 271(1)(c) for not striking off inappropriate words and for not specifying the exact charge against the assessee.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, NEW DELHI

Before: SHRI R. K. PANDA

For Appellant: Shri Vinod Kumar Goel, Adv
For Respondent: Shri S. L. Anuragi, Sr. DR

Assessee by : Shri Vinod Kumar Goel, Adv. Department by : Shri S. L. Anuragi, Sr. DR Date of hearing : 17-07-2018 Date of pronouncement : 26-07-2018 O R D E R

PER R. K. PANDA, AM :

1.

This appeal filed by the assessee is directed against the order dated 22.12.2017 of CIT(A), Meerut relating to assessment year 2009-10.

2.

Levy of penalty of Rs.84,090/- by the Assessing Officer u/s 271(1)(c) of the I.T. Act, 1961 which has been upheld by the ld. CIT(A) is the only issue raised by the assessee in the grounds of appeal

3. Facts of the case, in brief, are that the assessee is an individual and filed her return of income on 12.09.2009 declaring total income of Rs.40,27,956/-. The Assessing Officer reopened the assessment u/s 147 on the ground that there was difference of receipts as per Form No.26AS and Income-tax Return. In response to notice u/s 148, the assessee filed the return of income on 15.04.2016. During the course of assessment proceedings, it was submitted that since the assessee could not obtain the copy of bank statement, therefore, the assessee surrendered an amount of Rs.2,47,395/- as income of the assessee on account of undisclosed income. The Assessing Officer accordingly completed the assessment u/s 147/143(3) on a total income of Rs.42,75,350/-. Since the assessee in response to notice u/s 148 filed her return of income declaring the same income which was originally returned and during the course of assessment proceedings had surrendered the income of Rs.2,47,395/-, the Assessing Officer in the penalty order passed u/s 271(1)(c) levied penalty of Rs.84,090/- being 100% of tax sought to be evaded.

4. In appeal, the ld. CIT(A) upheld the action of the Assessing Officer on the ground that voluntary disclosure does not release the assessee from the mischief of penal proceedings. According to him, law does not provide that when an assessee makes a disclosure and claims it to be voluntary regarding his unexplained income, he has to be absolved from penal provisions especially when the case was taken up for scrutiny on that very issue of suspicious transactions.

5. Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before the Tribunal.

6. Ld. counsel for the assessee referred to the notice issued u/s 274 r.w.s.

271(1)(c) dated 17.11.2016 and submitted that the inappropriate words in the said notice has not been struck off and the notice does not specify as to whether the penalty is being levied for his concealing the particulars or furnishing inaccurate particulars of income. Referring to various decisions, he submitted that when inappropriate words in the notice are not deleted and the notice does not specify as to whether penalty is being levied for furnishing inaccurate particulars of income or for concealing the particulars, penalty u/s 271(1)(c) cannot be levied. He accordingly submitted that the order of the ld. CIT(A) be set-aside and the penalty levied by the Assessing Officer by cancelled.

7.

Ld. DR on the other hand strongly supported the order of the ld. CIT(A).

He submitted that by not declaring the correct short term capital gain, the assessee has concealed its particulars and furnished inaccurate particulars.

Therefore, ld. CIT(A) was fully justified in sustaining the penalty levied by the Assessing Officer u/s 271(1)(c) of the I.T. Act.

8.

I have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the ld. CIT(A) and the Paper Book filed on behalf of the assessee. I have also considered the various decisions cited before me. It is an admitted fact that the assessee in her return of income has not disclosed the correct receipts since there was difference in Form 26AS and income declared. I find on being questioned by the Assessing Officer during the course of assessment proceedings, the assessee surrendered the amount and the Assessing Officer thereafter levied penalty u/s 271(1)(c) which has been sustained by the ld. CIT(A). It is the submission of the ld. counsel for the assessee this was an inadvertent error on the part of the assessee since the bank account was not obtained and, therefore, penalty should not be levied since it was a bona-fide mistake. It is also the alternate contention of the ld. counsel for the assessee that inappropriate words in the notice has not been struck off and the notice does not specify as to whether the assessee has furnished inaccurate particulars of income or concealed its particulars of income.

9.

I find some force in the alternate argument of the ld. counsel for the assessee. A perusal of the notice issued for levied of penalty, a copy of which has been filed during the course of hearing shows that the inappropriate words in the said notice have not been struck off and the notice does not specify as to whether penalty is being levied for concealing the particulars of income or for furnishing inaccurate particulars of such income. I find the Hon’ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton and Ginning Factory reported in 359 ITR 656 has held that where the inappropriate words in the notice issued for levy of penalty are not struck off and the notice does not specify as to whether the assessee has concealed its particulars of income or furnished inaccurate particulars of income, penalty u/s 271(1)(c) is liable to be deleted. I find the SLP filed by the Revenue was dismissed by the Hon'ble Supreme Court vide C.C. No.11485/2016 order dated 05.08.2016. Since in the instance case also, the Assessing Officer has not struck off the inappropriate words and the notice does not specify as to whether the penalty is levied for furnishing inaccurate particulars of income or for concealing particulars of income, therefore, in view of the ratio laid down by the Hon’ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra), the penalty levied by the Assessing Officer and sustained by the ld. CIT(A) is liable to be deleted. In view of the above discussion, the order of the ld. CIT(A) is set-aside and the grounds raised by the assessee are allowed.

10.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on this 26th July, 2018.

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