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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
PER D. KARUNAKARA RAO, AM:
This is the appeal filed by assessee against the order of CIT(A)-2, Pune, dated 10.09.2015 for the A.Y. 2009-10.
Grounds raised by the assessee are extracted here as under:
“1. Commissioner of Income Tax (Appeals) has erred in confirming the Penalty levied by Assessing Officer u/s.271(1)(c). Appellant prays to cancel the same.
Commissioner of Income Tax (Appeals) has erred in bona-fide belief of the Assessee company that certificate of SSI issued by Industries Department is Final Authority even u/s.80IB(14)g, makes the issue clear. Even CIT(A) has accepted & granted relief for Other Years u/s.80IB(14)g-Even for AY 2010- 11.
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Commissioner of Income Tax (Appeals) has erred in not appreciating that the issue at the most is debatable as there are divergent views. Appellant urges to cancel the penalty levied. 4. Penalty order is Bad in Law. 5. Appellant prays for just & Equitable Relief. 6. Appellant prays to add, alter, amend and or withdraw the Ground/s during the proceedings.”
Assessee also raised the additional grounds/modified additional
grounds and the same read as under:
“1. On facts and circumstances of the case and in law, The penalty order confirmed by CIT(A) is bad in law. 2. On facts and circumstances of the case and in law, proceedings initiated vide notice u/s.274 r.w.s 271(1) is invalid and bad in law. 3. Appellant prays to add, alter, amend, modify, clarify the ground and /or withdraw the ground/s, during appeal proceedings.” Modified/Additional Ground for Ground No.4 in Form 36.
On facts and circumstance of the case and in law, the penalty order confirmed by CIT(A) is bad in law. 2. On facts and circumstances of the case and in law, proceeding initiated vide notice u/s.274 r.w.s.271(1) is invalid and bad in law. 3. Appellant prays to add, alter, amend, modify, clarify the ground and/or withdraw the ground/s, during Appeal proceedings.”
Briefly stated relevant facts include that the assessee is company
and stated to have been engaged in the business of milk, milk products,
trading in cattle feed, lab equipments and diesel. Assessee filed return of
income declaring total income of Rs.69,02,082/- after claiming deduction
u/s.80IB(3) at Rs.68,61,518/-. In the assessment, the AO denied the
claim of the assessee assessing the total income of the assessee at
Rs.1,37,63,600/- exemption u/s.80IB(3). The Assessing Officer initiated
penalty proceedings u/s.271(1)(c) of the Act as the assessee has furnished
inaccurate particulars of income by way of claiming an unallowable,
incorrect and unwarranted deduction u/s.80IB(3) and levied penalty of
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Rs.26,07,622/-. In the First Appellate proceedings, the CIT(A) confirmed
the levied by the AO. Aggrieved with the order of CIT(A), the assessee is in
appeal before the Tribunal with the grounds/additional grounds referred
above.
Before us, at the outset, Ld. Counsel for the assessee, referring to
Additional grounds (legal in nature) and grounds submitted 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.
Per Contra, Ld. DR for the Revenue relied on the orders of the
AO/CIT(A).
We heard both the parties and perused the orders of the Revenue.
On going through the facts of the case and the arguments of the Ld.
Counsel on the legal issues, we are of the opinion that the additional
grounds raised by the assessee should be admitted for adjudication
considering the binding judgments on the admission of additional
grounds. Firstly, we would like to adjudicate the additional grounds (a)
and (b) relevant to recording of satisfaction by the AO. In this connection,
we perused the order of AO and found that the AO while initiating the
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penalty proceedings u/s.271(1)(c) of the Act mentioned that “the assessee
has furnished inaccurate particulars of income” whereas while levying
the penalty it was mentioned that “ I am satisfied that it is a fit case for
imposition of penalty u/s.271(1)(c) read with section 274 of the I.T.
Act, 1961 to the extent of Rs.68,61,518/-”. Even in the notice issued
u/s.274 r.w.s. 271(1)(c) of the Act, the AO did not struck off the relevant
limb. This manner of recording of satisfaction suggests the existence of
ambiguity in the mind of the AO with reference to the applicable limb of
clause (c). 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 the correct limb at the time of
initiation as well as at the time of levy of penalty. In view of the above
deliberation on this issue, we are of the opinion that the penalty order is
liable to be quashed on this legal issue itself. Thus, we set aside the
order of CIT(A) and direct the AO to delete the penalty. Accordingly, the
additional grounds of appeal relating to the legal issue are allowed on
technical grounds without going into the merits of the issue.
Consequently, the adjudication of the grounds raised by the
assessee on merits becomes an academic exercise. Therefore, the relevant
grounds on merits are dismissed as academic.
In the result, appeal of the assessee is partly allowed.
Order pronounced on 21st day of August, 2018.
Sd/- Sd/- (िवकास िवकास िवकास अव�थी िवकास अव�थी अव�थी /VIKAS AWASTHY) (डी अव�थी डी डी. क�णाकरा राव डी क�णाकरा राव क�णाकरा राव/D. KARUNAKARA RAO) क�णाकरा राव �याियक सद�य/JUDICIAL MEMBER लेखा सद�य �याियक सद�य लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य �याियक सद�य लेखा सद�य लेखा सद�य
पुणे / Pune; �दनांक / Dated : 21st August, 2018. Satish
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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)-2, Pune. 4. The Pr. CIT-1, Pune. 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब�च, पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
आदेशानुसार / BY ORDER,
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.