GANESH HARI GADGIL,,SANGLI vs. INCOME-TAX OFFICER,,

All these six appeals relating to same assessee on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience. However, in order to adjudicate the issue, reference is being made to the facts and issues in ITA No.1759/PUN/2016, relating to assessment year 2000-01.

The assessee during the course of hearing has raised additional ground of appeal, which reads as under:- 1] The assessee submits that no proper satisfaction was recorded by the learned A.O. in the asst. order and even the notice issued u/s 274 r.w.s. 271(1)(c) was without proper application of mind and hence, the penalty order passed u/s 271(1)(c) is bad in law and the penalty levied may kindly be deleted.

The learned Authorized Representative for the assessee pointed out that the issue raised in the additional ground of appeal goes to the root of the jurisdiction and hence, needs to be adjudicated first. He further pointed out that the Assessing Officer while recording satisfaction for levying penalty under section 271(1)(c) of the Act and while passing the order levying penalty has failed to record as to which limb of section 271(1)(c) of the Act has not been fulfilled by the assessee.

The learned Departmental Representative for the Revenue on the other hand, placed reliance on the orders of authorities below.

We have heard the rival contentions and perused the record. The assessee by way of additional ground of appeal has raised the issue against non-recording of proper satisfaction by the Assessing Officer while issuing notice under section 274 of the Act and also passing the order under section 271(1)(c) of the Act. In the facts of the present case, the assessee had filed

Penalty under section 271(1)(c) of the Act is attracted where the assessee has concealed its income or furnished inaccurate particulars of income. It is the requirement of law that the Assessing Officer while initiating penalty proceedings, has to record satisfaction as to which limb of said section has not been fulfilled in order to initiate penalty proceedings for concealment against the assessee and hence show cause the assessee. Further, while levying penalty under section 271(1)(c) of the Act, the Assessing Officer has to come to a finding as to the same limb of said section for which satisfaction was recorded while initiating penalty proceedings. In the absence of the Assessing Officer to come to a finding while recording satisfaction and while passing penalty order, such order passed by the Assessing Officer is both null and void.

We find that jurisdictional High Court in CIT Vs. Shri Samson Perinchery in Income Tax Appeal No.1154 of 2014 with other Income Tax Appeals Nos.953 of 2014, 1097 of 2014 and 1226 of 2014, judgment dated 05.01.2017 held that where there is no proper satisfaction for levy of penalty and in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty.

Applying the said proposition to the facts of present case, where the Assessing Officer has failed to record satisfaction as to which limb of section 271(1)(c) of the Act had not been fulfilled while initiating penalty proceedings and also while levying penalty, we hold that the order passed by Assessing Officer in this regard is null and void. The additional ground of appeal raised by the assessee is thus, allowed.

The facts and issues in ITA Nos.1760/PUN/2016 to 1764/PUN/2016 are identical to the facts and issues in ITA No.1759/PUN/2016 and our decision in ITA No.1759/PUN/2016 shall apply mutatis mutandis to ITA Nos.1760/PUN/2016 to 1764/PUN/2016

In the result, all appeals of assessee are allowed.