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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER आदेश आदेश आदेश
PER D. KARUNAKARA RAO, AM:
This is the appeal filed by assessee against the order of CIT (Appeals)-3, Pune, dated 16.02.2016 for the A.Y. 2008-09.
Assessee raised the following core grounds on merit and the same are extracted here as under : “1. The Appellant was under a bonafide belief that investing the capital gain into the new house property is exempt from capital gain tax. As such, the said income was not offered to tax. There was no any malafide intention to furnish any inaccurate particulars of income or hide something. 2. However, the Ld. AO, without appreciating the facts of the case, passed the penalty order u/s.271(1)(c) of the ITA, 1961 on 27-06-2011, levying a penalty of Rs.7,02,313/- for furnishing inaccurate particulars of income and concealment of income.”
2 ITA No.1292/PUN/2016 Shri Ambadas K. Lavhale
2.1 Assessee also raised the following additional grounds on legal issue
and the same read as under :
“1. The order of penalty passed by the Ld. AO u/s.271(1)(c) of the Act is without jurisdiction as the mandatory conditions for invoking the provisions of section 271(1)(c) of the Act has not been complied with and the notice issued u/s.274 of the Act is an invalid notice on the facts and circumstances of the case.
The order of penalty passed by the Ld. AO is bad in law as the penalty was initiated under one limb (i.e.) furnishing inaccurate particulars of income and penalty was levied under another limb (i.e.) under the facts and circumstances of the case.”
Briefly stated relevant facts include that the assessee is an
individual and filed the return of income on 31-07-2008 declaring total
income of Rs.11,92,695/-. As per Form 16, assessee declared the
income from salary at Rs.13,42,695/- after allowing exemption u/s.10 of
the I.T. Act. During the year under consideration, AO noticed that
assessee sold an immovable property situated at Goregaon (W), Mumbai
and failed to show capital gains from the said property. Eventually, the
AO made addition of Rs.23,47,700/- on the same under the head short
term capital gain. Penalty proceedings were initiated for furnishing
inaccurate particulars of income u/s.271(1)(c) of the Act and a penalty of
Rs.7,02,313/- was imposed on the assessee. In the First Appellate
proceedings, the CIT(A) upheld the penalty levied by the AO. Aggrieved
with the same, the assessee is in appeal before the Tribunal.
Before us, Ld. Counsel submitted that there is delay of 28 days in
filing the appeal before the Tribunal and referred to the affidavit filed by
the assessee. On perusal of the same, it is noticed that the assessee as
well as his brother, who was looking after the tax matters of the assessee
were out of station. Further, the order of CIT(A) was misplaced and
hence the delay in filing the appeal.
3 ITA No.1292/PUN/2016 Shri Ambadas K. Lavhale
Considering the contents of the above affidavit, we are of the
opinion that the delay in filing of the appeal late by 28 days needs to be
condoned as there was reasonable cause for not filing the appeal within
the stipulated time. Therefore, the delay is condoned and the appeal is
taken up for adjudication in the following paragraphs.
Further also, at the outset, Ld. Counsel for the assessee referring
to the additional grounds raised (legal in nature) submitted that this is a
case where the AO failed to record valid satisfaction at the time of
initiation as well as at the time of levying the penalty. 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. Ld. Counsel prayed for admitting the legal grounds as
no fresh facts are required to be investigated.
Per Contra, Ld. DR for the Revenue relied on the orders of
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, we admit the additional grounds raised by the assessee on the
specific legal issue, i.e. recording of proper satisfaction by the AO. We
4 ITA No.1292/PUN/2016 Shri Ambadas K. Lavhale
perused the order of the AO and find that the AO initiated the penalty
proceedings u/s.271(1)(c) of the Act for “furnishing inaccurate
particulars” whereas in the penalty order it was mentioned as “for
concealment and for furnishing inaccurate particulars of income”.
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. Thus, we set aside the order of
CIT(A) and direct the AO to delete the penalty. Accordingly, the
additional grounds of appeal raised by the assessee are allowed on
technical ground 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 14th day of August, 2018.
Sd/- Sd/- (िवकास अव�थी िवकास अव�थी /VIKAS AWASTHY) (डी डी. क�णाकरा राव क�णाकरा राव/D. KARUNAKARA RAO) िवकास अव�थी िवकास अव�थी डी डी क�णाकरा राव क�णाकरा राव �याियक सद�य �याियक सद�य/JUDICIAL MEMBER लेखा सद�य �याियक सद�य �याियक सद�य लेखा सद�य लेखा सद�य/ACCOUNTANT MEMBER लेखा सद�य
पुणे / Pune; �दनांक / Dated : 14th August, 2018. Satish
5 ITA No.1292/PUN/2016 Shri Ambadas K. Lavhale
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)-3, Pune. 4. The Pr. CIT-4, 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.