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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश आदेश / ORDER आदेश आदेश
PER D. KARUNAKARA RAO, AM :
This is the appeal filed by Revenue against the order of CIT (Appeals)-12,
Pune, dated 12.08.2016 for the A.Y.2012-13.
Grounds raised by the Revenue are extracted here as under:
“1. On the facts and the circumstances of the case, the Ld. CIT(A) was justified in allowing the appeal of the assessee on the basis of Hon'ble Gujarat High Court’s decision in the case of LMP Precision Engg. Co. Ltd. which in fact is in favour of the Revenue and not in assessee’s favour, without going through the entire facts of the case? 2. On the facts and the circumstances of the case, the Ld. CIT(A) was justified in deleting the penalty levied u/s.271(1)(c) of the Act without appreciating the fact that the revised return was filed by the assessee after receipt of notice u/s.143(3) of the Act, i.e. after the case was selected for scrutiny? 3. The order of the Ld. CIT(A) may be vacated and the Assessing Officer be restored.
2 ITA No.2526/PUN/2016 M/s. Ashray Premises Pvt. Ltd.
The appellant craves leave to add, alter, amend and modify any of the above ground of appeal.”
Briefly stated relevant facts include that the assessee is a company
engaged in the business of construction of residential and commercial projects
including development of Tech Parks and real estate in and around Pune.
Assessee filed the original return of income on 20.09.2012 for the assessment
year declaring total income at Rs.2,66,84,675/-. During the assessment, AO
assessed the total income of the assessee at Rs.3,50,84,675/-. The Assessing
Officer initiated penalty u/s. 271(1)(c) of the Act in respect of interest income
of Rs.84,00,000/- which was disclosed in the revised return. Thereafter,
Assessing Officer levied penalty of Rs.27,72,000/- treating the amount of
Rs.84,00,000/- as concealed income. In the First Appellate proceedings, the
CIT(A) deleted the penalty so levied by the AO u/s. 271(1)(c) of the Act.
Aggrieved with the order of CIT(A), the Revenue filed the present appeal
before the Tribunal with the grounds extracted above.
Before us, at the outset, Ld. Counsel for the assessee submitted orally
that this is a case where the AO failed to record valid satisfaction in the
assessment order during which the penalty proceedings were initiated.
Highlighting the legal requirement of making a specific reference to the specific
limb of clause (c) of section 271(1) of the Act and relying on various binding
judgments in the case CIT Vs. Shri Samson Perinchery (2017) 392 ITR 4
(Bom.) as well as the judgment of Hon’ble Karnataka High Court in the case of
CIT Vs. Manjunatha Cotton and Ginning Factory 359 ITR 565 Ld. Counsel
demonstrated that the penalty levied by the AO is unsustainable in law. In
this regard, he brought our attention to the assessment order as well as the
penalty order highlighting the above legal deficiencies. Further, he submitted
3 ITA No.2526/PUN/2016 M/s. Ashray Premises Pvt. Ltd.
that if relief is granted on the legal issue, there is no need for adjudicating the
grounds raised on the merits of the penalty.
Per Contra, Ld. DR for the Revenue relied heavily on the order of the AO.
We heard both the parties and perused the orders of the Revenue on the
legal issue raised orally. Firstly, as argued by the Ld. Counsel, we would like
to adjudicate the issue on the legal issue, i.e. recording of proper satisfaction
by the AO. We perused the order of the AO and find the satisfaction recorded
by the AO for initiating the penalty proceedings u/s.271(1)(c) of the Act is
relevant for extraction. Therefore, the same is reproduced as under:
“05. The proceedings u/s.271(1)(c) are separately initiated against the assessee for concealment of income and furnishing inaccurate particulars of income to the extent of Rs.84,00,000/- in the return filed u/s.139(1).”
7.1 We also perused the penalty order dated 21.08.2015 and find the
satisfaction recorded by the AO for levying the penalty u/s.271(1)(c) of the Act
is relevant for extraction. The said satisfaction reads as under:
“8. I am satisfied that the assessee has furnished inaccurate particulars of income and made itself liable for levy of penalty u/s.271(1)(c) of the Act, 1961. Accordingly, order u/s.271(1)(c) of the I.T.Act, 1961, levying penalty of Rs.27,72,000/- is passed.”
From the above, it is evident that at the time of initiation of penalty
proceedings in the assessment, AO mentioned both limbs of clause (c) of
section 271(1) of the Act whereas at the time of levying penalty AO mentioned
only one limb. This manner of recording of satisfaction suggests the existence
of ambiguity with reference to applicability of specific limb. Therefore, we are
of the opinion that considering the above referred binding judgments such
penalty order is unsustainable in law legally. AO is under obligation to specify
4 ITA No.2526/PUN/2016 M/s. Ashray Premises Pvt. Ltd.
the correct limb at the time of initiation as well as at the time of levy of penalty. Therefore, we are of the view, that the assessee is entitled to relief on the legal issue. Accordingly, we hold that the grounds of appeal on the merits are dismissed as academic.
In the result, appeal of the Revenue is dismissed on technicalities.
Order pronounced 21st day of August, 2018.
Sd/- Sd/- िवकास अव�थी /VIKAS AWASTHY) (डी डी डी. क�णाकरा राव डी (िवकास अव�थी िवकास अव�थी िवकास अव�थी क�णाकरा राव क�णाकरा राव/D. KARUNAKARA RAO) क�णाकरा राव �याियक सद�य/JUDICIAL MEMBER लेखा लेखा सद�य �याियक सद�य लेखा लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य �याियक सद�य सद�य सद�य
पुणे / Pune; �दनांक / Dated : 21st August, 2018. Satish
आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-12, Pune. 4. The Pr. CIT, Central, Pune. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “बी बी बी” ब�च, बी 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
आदेशानुसार / BY ORDER,
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.