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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
आदेश / ORDER PER ANIL CHATURVEDI, AM :
These two appeals filed by the assessee are emanating out of the consolidated order of Commissioner of Income Tax (A)-4, Pune dt.
15.01.2015 for the assessment years 2007-08 and 2008-09 and
Revenue has filed cross-appeal against the order of Commissioner of
Income Tax (A)-4, Pune for A.Y. 2007-08.
Before us, at the outset, both the parties submitted that though
the appeals are for two different assessment years but the facts and
issues involved in both the appeals are identical except for the
assessment year and the amounts involved and therefore the
submissions made by them while arguing one appeal would be equally
applicable to the other appeal also and thus, both the appeals can be
heard together. In view of the aforesaid submissions of both the
parties, we, for the sake of convenience, proceed to dispose of both the
appeals by a consolidated order but however, proceed with narrating
the facts for assessment year 2007-08.
The relevant facts as culled out from the material on record are
as under :-
3.1 Assessee is a company stated to be engaged in the business of
Printing and Publishing of newspapers and periodicals. Assessee
electronically filed its return of income for A.Y. 2007-08 on
12.11.2007 declaring total income of Rs.10,20,49,650/-. The case
was selected for scrutiny and thereafter assessment was framed u/s
143(3) of the Act vide order dt.15.12.2009 and the total income was
determined at Rs.13,70,91,085/- inter-alia by making additions /
disallowances of Rs.2,67,00,519/- on account of long term capital
gains, Rs.61,15,826/- on account of deduction u/s 80IA of the Act,
Rs.23,05,985/- on account of capital expenditure and Rs.1,24,000/-
on account of deduction u/s 14A of the Act. AO vide order
dt.22.03.2013 levied penalty u/s 271(1)(c) of the Act of
Rs.98,44.900/- only on additions on account of long term capital
gains and withdrawal of deduction claimed u/s 80IA(4) of the Act. For
A.Y. 2008-09 the details of income offered by the assessee, additions
made and penalty levied are as under :
A.Y. Returned Additions Total income Penalty levied income assessed u/s 143(3) in Rs. in Rs. 2008-09 60,60,21,360/- 1,41,60,820/- 62,02,28,533/- Rs.42,48,246/- (Long term capital gains) on long term Rs.1,71,353/- capital gains . (Disallowance u/s 14A)
Aggrieved with the penalty order, assessee carried the matter before
Ld.CIT(A), who vide consolidated order dt.15.01.2015 (in appeal
No.PN/CIT(A)-4/Cir.6/103/13-14) 430/09-10) granted partial relief to
the assessee for A.Y. 2007-08 and dismissed the appeal of the
assessee for A.Y. 2008-09. Aggrieved by the order of Ld.CIT(A),
assessee and Revenue are now in appeal before us. The grounds
raised by the assessee in A.Y. 2007-08 are as under :
“On the facts and under the circumstances of the case the learned Assessing Officer and CIT Appeals erred in :
holding that the assessee concealed the income and /or concealed the particulars of income and/or furnished inaccurate particulars of income attracting provisions of Sec. 271(1)(c) of the Income Tax Act, 1961 and levying the penalty of Rs.80,10,156/-. This action being bad in law it is prayed that the penalty of Rs.80,10,156/- be deleted.
invoking the provisions of Sec. 271(1) (c) and levying penalty of Rs. 80,10,156/-. The action being bad in law it is submitted that that the penalty be deleted.”
3.2. The ground raised by the Revenue in appeal No.397/PUN/2015
reads as under :
“1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the penalty levied u/s 271(1)(c) of the I.T. Act, 1961 by the Assessing Officer. Assessee has claimed deduction u/s 80IA(4) without setting off the unabsorbed depreciation and losses of earlier years which is not intended by section 80IA(5). If unabsorbed depreciation / losses of earlier years of 80IA unit are set off there would be no profit for A.Y. 2007-08 to be claimed u/s 80IA(4). Since assessee has claimed ineligible deduction u/s 80IA(4), penalty proceedings u/s 271(1)(c) are clearly attracted for furnishing inaccurate particulars of income.”
3.3. Similar grounds have been raised by assessee in ITA
No.348/PUN/2015 for A.Y. 2008-09.
Before us, Ld.A.R. submitted that he would like to raise
additional ground to the effect that the satisfaction recorded by the
AO while initiating penalty proceedings u/s 271(1)(c) of the Act was
not correct as the penalty proceedings was initiated for concealment of
income and for furnishing of inaccurate particulars of income. He
submitted that though no specific ground with respect to non-
recording of satisfaction has been taken by the assessee but Rule 11
of the Income Tax (Appellate Tribunal) Rules, 1963 permits the
assessee to raise any ground which was not set forth in the
Memorandum of Appeal for the first time before the Tribunal. He
therefore prayed that the same be admitted for adjudication as it was
a legal issue. The Ld.D.R. objected to it and submitted that no such
ground was urged by the assessee before Ld.CIT(A).
On the issue of additional grounds raised before us by assessee,
we have heard the rival submissions. It is an undisputed fact that in
the memo of appeal, assessee has not raised any ground with respect
to non-recording of satisfaction by AO but before us, Ld.A.R. has
relied on Rule 11 of Income Tax (Appellate Tribunal) Rules 1963 in
support of raising the oral ground on this issue. A perusal of Rule 11
reveals that there is no blanket bar on the appellant raising additional
ground not set forth in the memorandum of appeal provided that the
leave of the Tribunal is required to be obtained and further the
affected party must be given a sufficient opportunity of being heard in
that issue. In the present case, we find that though the assessee has
not raised the additional ground (which is urged before us orally) in
the memorandum of appeal whereby he is challenging the validity of
penalty order, we have no objection in its admissions as it is a legal
ground. We therefore admit the additional ground on validity of
penalty order.
Before us, Ld.A.R. submitted that the penalty order passed by
AO is bad in law and therefore be set aside. He submitted that while
passing the assessment order AO with respect to additions of
Rs.2,67,00,519/- on account of long term capital gains and on
account of deduction u/s 80IA of the Act of Rs.61,15,826/- has
recorded that assessee had furnished inaccurate particulars of income
/ concealed the income. But while passing the penalty order u/s
271(1)(c) of the Act on 22.03.2013 AO had levied penalty for
furnishing inaccurate particulars of income. In support of his
aforesaid contention, he pointed to the findings of AO in the both the
orders. He therefore submitted that while recording satisfaction for
levy of penalty in the assessment order the AO has recorded
satisfaction for levying penalty be invoking both the limbs of
Sec.271(1)(c) of the Act viz. concealment of income as well as
furnishing inaccurate particulars of income, shows that there was
ambiguity in the mind of AO with respect to charge for which the
penalty is to be levied. He therefore relying on the decision of Hon’ble
Bombay High Court in the case of CIT Vs. Samson Perinchery
reported in (2017) 392 ITR 4 (Bom) submitted that in the absence of
proper show cause notice to assessee, penalty u/s 271(1)(c) cannot be
levied and therefore urged that penalty levied by AO be deleted.
Ld.D.R. on the other hand, supported the order of lower authorities.
We have heard the rival submissions and perused the material
on record. The issue in the present case is with respect to levy of
penalty u/s 271(1)(c) of the Act. In the present case in A.Y. 2007-08
penalty of Rs.98,44,900/- has been levied u/s 271(1)(c) of the Act on
addition on account of long term capital gains and for withdrawal of
deduction claimed u/s 80IA(4) of the Act. For A.Y. 2008-09 penalty
of Rs.61,15,826/- was levied on addition made on account of
withdrawal of deduction claimed u/s 80IA(4) of the Act. The perusal
of assessment order passed u/s 143(3) of the Act reveals that in the
assessment order AO had recorded satisfaction for concealment of
income / filing inaccurate particulars of income. Thereafter, in the
penalty order passed u/s 271(1)(c) of the Act, AO had levied penalty
for furnishing of inaccurate particulars of income. It is a settled law
that while levying penalty for concealment of income / furnishing of
inaccurate particulars of income, the AO has to record satisfaction
and thereafter come to a finding in respect of one of the limbs, which
is specified under section 271(1)(c) of the Act. The first step is to
record satisfaction while completing the assessment as to whether the
assessee had concealed its income or furnished inaccurate particulars
of income. Thereafter, notice u/s 274 read with Section 271(1)(c) of
the Act is to be issued to the assessee. The Assessing Officer
thereafter has to levy penalty under Section 271(1)(c) of the Act for
non-satisfaction of either of the limbs. While completing the
assessment, the Assessing Officer has to come to a finding as to
whether the assessee has concealed its income or furnished
inaccurate particulars of income. The Hon’ble Bombay High Court in
CIT Vs. Shri Samson Perinchery (supra) has held that where initiation
of penalty is one limb and the levy of penalty is on other limb, then in
the absence of proper show cause notice to the assessee, there is no
merit in levy of penalty.
Considering the facts of the present case in the light of the
decision of Hon’ble Bombay High Court in the case of Samson
Perinchery (supra), we are of the view that in the present case, the
basic condition for levy of penalty has not been fulfilled and that the
penalty order suffers from non-exercising of jurisdiction power and
therefore penalty order cannot be upheld. We accordingly set aside
the penalty order passed by AO. Thus, the ground of assessee is
allowed for A.Ys. 2007-08 and 2008-09.
In the result, both the appeals of assessee are allowed.
Now we take up Revenue’s appeal in A.Y. 2007-08.
10.1. Since the penalty levied in A.Y. 2007-08 on account of deduction u/s 80IA of the Act has been quashed by us while deciding the appeal of assessee hereinabove, the adjudication of grounds raised by the Revenue become academic and therefore requires no adjudication and therefore the grounds of Revenue are dismissed.
In the result, the appeal of the Revenue is dismissed.
To sum up, both the appeals of the assessee are allowed and the appeal of the Revenue is dismissed.
Order pronounced on 18th day of July, 2018.
Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER
पुणे Pune; �दनांक Dated : 18th July, 2018. Yamini
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-4, Pune. 4. CIT-III, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” / DR, ITAT, “A” Pune; गाड� फाईल / Guard file. 6.
आदेशानुसार/ BY ORDER
// True Copy //
व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.