MRS. PUSHPA D. PATIL,SATARA vs. INCOME-TAX OFFICER,

आदेश / ORDER आदेश आदेश आदेश

PER D. KARUNAKARA RAO, AM :

There are six appeals filed by the assessee involving A.Yrs. 1999- 2000 to 2004-05. These appeals are filed against separate orders of CIT(A)- 2, Pune, commonly dated 15-03-2016. Penalty levied u/s.271(1)(c) of the Act is the only issue in all these appeals. Grounds raised by the assessee are also identical.

2 ITA Nos.1587 to 1592/PUN/2016 Mrs. Pushpa D. Patil

ITA No.1587/PUN/2016 A.Y. 1999-2000

individual. In this case, initially, the assessee has not filed the return of

income. In response to notice u/s.148 of the Act , the assessee filed the

return of income declaring total income of Rs.1,33,833/- and agricultural

income at Rs.23,000/-. During the year under consideration, the assessee

was running a STD booth and earning income from therein besides rental

income from house property, salary from Ayodhya Leasing and Finance Co.

Ltd. and income from other sources. Based on the information gathered by

the ADIT (Investigation), Kolhapur, it was noticed that assessee made

investments during the period A.Y. 1998-99 to 2003-04 totalling to

Rs.68,34,747/-. An amount of Rs.17,67,470/- was stated to have been

invested out of loans taken from various banks including LIC. Balance

amount of Rs.50,67,177/- was treated by him as assessee’s unexplained

investment/unaccounted income. The said income was admitted by the

3 ITA Nos.1587 to 1592/PUN/2016 Mrs. Pushpa D. Patil

husband of the assessee Shri Daulat B. Patil. Assessee submitted Balance

sheet and Capital accounts for the block period mentioned above. At the

end of the assessment u/s.143(3) r.w.s. 147 of the Act, AO made various

additions totaling to Rs.4,28,182/- and determined the total income of the

assessee at Rs.5,65,015/-. AO also initiated penalty proceedings

u/s.271(1)(c) of the Act for filing inaccurate particulars of income and

levied penalty of Rs.1,35,586/-. In the First Appellate proceedings, the

CIT(A) confirmed the penalty u/s.271(1)(c) of the Act to the extent of 100%

of tax sought to be evaded instead of 200% penalty levied by the AO.

In the rest of the assessment years too, AO adopted the same

manner in matters of levying the penalties u/s.271(1)(c) of the Act.

appeals before the Tribunal with the similar grounds extracted above.

assessee submitted orally that this is a case where the AO failed to record

valid satisfaction in the assessment orders 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 orders as well as the penalty

orders highlighting the above legal deficiencies. Further, he submitted that

4 ITA Nos.1587 to 1592/PUN/2016 Mrs. Pushpa D. Patil

if relief is granted on the legal issue, there is no need for adjudicating the

grounds raised on the merits of the penalty.

AO.

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. On perusal of the assessment order dated

29-12-2006, we find the AO made various additions invoking the

provisions of section 68, 69 and 69B etc. While making each of these

additions, AO initiated the penalty proceedings stating that this is a case of

“furnishing of inaccurate particulars of income”. Further, we have

perused the penalty order dated 19-06-2007 and find the AO levied the

penalty for default of furnishing of inaccurate particulars as well as

concealment of income. For the sake of completeness, we proceed the

extract the contents of Para No.5 and the same reads as under :

“5……………….. ……………………..I am therefore, satisfied that this is a fit case for imposing penalty under sec.271(1)(c) of the I.T. Act, 1961. In this case, since the assessee has been reluctant to make any proper reply as to why penalty under sec.271(1)(c) in her case should not be imposed due to concealment of income and assets but also non cooperated with the Department by furnishing proper explanation. Rather, the assessee made false allegations against the Assessing Officer and though tried to dilute and dilate the main issues relating to evasion of tax, thereby making baseless allegation and resorting to illegal action, not in accordance with the provisions of the Income Tax Act. I, accordingly consider it to be a fit case for imposing penalty under sec.271(1)(c) of the Income Tax Act, 1961, of Rs.2,49,360/- being 200% of the tax sought to be evaded on the concealed income, calculated as under ……….”

Although the AO initiated the penalty proceedings for default of

furnishing of inaccurate particulars, eventually in para No.5, the AO levied

5 ITA Nos.1587 to 1592/PUN/2016 Mrs. Pushpa D. Patil

the penalty for concealment of income. It is also evident that AO levied the penalty for each of the addition for “furnishing of inaccurate particulars of income”.

Therefore, it is evident that at the time of initiation of penalty proceedings in the assessment, AO mentioned one limb of clause (c) of section 271(1) of the Act and did not mention any limb while levying the penalty. 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 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.

Order pronounced on 24th 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 : 24th August, 2018. Satish

6 ITA Nos.1587 to 1592/PUN/2016 Mrs. Pushpa D. Patil

आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत अपीलाथ� / The Appellant. 1. 2. ��यथ� / The Respondent. 3. The CIT (Appeals)-2, Pune. 4. The Pr. CIT, Central-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.