REVIEW VENTURES LLP (FORMERLY-REVIEW FINANCE PRIVATE LIMITED),MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(3)(1), MUMBAI

The only issue in this appeal of assessee is against the levy of penalty under section 271(1)(c) of the Act by the AO and confirmed by CIT(A). For this assessee has raised the first jurisdictional issue vide following ground No. 1: - “On the facts and circumstances of the case, the ld. CIT(A) erred in holding that the penalty order passed under section 271(1)(c) of the Income Tax Act, 1061 is void-ab-initio, invalid and bad in law."

At the outset, the learned Counsel for the assessee took us through the assessment order vide Para 4.5 which reads as under: - “4.5 Penalty proceedings under section 271(1)(c) are initiated separately for concealing/ furnishing inaccurate particulars of income.”

The learned Counsel for the assessee stated that the AO initiated the penalty proceedings while framing the assessment order on both the counts i.e. for concealing the particulars of income as well as for furnishing of inaccurate particulars of income in view of the above Para 4.5. Further, the learned Counsel for the assessee took us through the assessee’s paper book at page 53 and 54 wherein, notice under section 274 read with section 271(1)(c) of the Act is enclosed. The learned Counsel for the assessee drew our attention to the notice and stated that 3 the AO has not strike off the inappropriate words or paragraph and accordingly, AO is not clear about the specific charge for levy of penalty under section 271(1)(c) of the Act. According to the learned Counsel, the penalty is initiated for disallowance of depreciation. He narrated that the depreciation on residential property was claimed by Assessee Company at the rate of 10%, which is the depreciation rate for building used for business purposes. The learned Counsel admitted that in quantum the assessee has accepted the addition and not filed any appeal. On the other hand, the learned Sr. DR relied on the assessment order and the order of CIT(A) for confirmation of penalty.

We have heard the rival contentions and gone through the facts and circumstances of the case. We noted from the assessment order that the AO has initiated the penalty proceedings for concealment of particulars of income as well as for furnishing of inaccurate particulars of income under section 271(1)(c) of the Act. We find that this issue is squarely covered by the decision of Hon’ble Bombay High Court in the case of CIT vs Samson Perinchery (2013) 392 ITR 4 (Bom), we 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 if 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 of particulars of income as well as for furnishing of inaccurate particulars of income. We are of the view, that the Sr. DR has admitted to demonstrate the application of mind by the AO but it is no difference in as much as that the AO in assessment order as initiated the penalty proceedings for both the charges i.e. for furnishing of inaccurate 4 particulars of income as well as concealment of particulars of 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: -