GANESH SOPAN DABHADE,,PUNE vs. INCOME-TAX OFFICER,,

PER D. KARUNAKARA RAO, AM:

This is the appeal filed by assessee against the order of CIT (Appeals) - 6, Pune, dated 30.03.2016 for the A.Y. 2009-10.

2 ITA No.1538/PUN/2016 Mr.Ganesh Sopan Dabhade

the said land as on 01-04-1981 was arrived at Rs.32,70,000/-.

Assessee’s share being ¼ of the said valuation worked out to

Rs.8,17,500/-. The said valuation resulted in Capital gains at

Rs.12,19,680/-. Assessee re-invested the amount and claimed deduction

of Rs.20,83,660/- u/s.54B of the Act. As per the AO, the assessee’s

share comes to Rs.1,66,306/- only. The assessee accepted the same and

paid the taxes. Further, the AO levied the penalty of Rs.4,79,689/-.

levied by the AO vide the discussion given in Para Nos. 5.1 and 5.2 of his

order.

the Tribunal with the following grounds :

“1. The Learned Appellate authority has not justified the case while disposing the appeal. 2. The Learned Appellate authority has not considered the facts of the case while imposing the penalty u/s.271(1)(c) of the Income Tax Act which is unnatural and unjustified. 3. The Learned Appellate Authority has confirmed the penalty which is levied by the Assessing Authority without applying his views and expressions, which is unnatural and not justified to the Appellant. 4. The Appellant prays to add, alter, amend, explain, clarify, modify and / or withdraw the ground/s as the occasion may demand at the time of presentation of the case.”

despite the issue of notice and service of the name. The

acknowledgement is placed on record. However, after going through the

facts of the case and the orders of the Revenue, we find the appeal can be

adjudicated with the assistance of Ld. DR for the Revenue considering

3 ITA No.1538/PUN/2016 Mr.Ganesh Sopan Dabhade

the issue of ambiguity with reference to the application of mind by the

AO qua the proper reference to satisfaction at the time of initiating the

penalty proceedings as well as levying the penalty.

AO/CIT(A). Further, he brought our attention to the assessment order

and the penalty orders and fairly admitted that the AO has not recorded

his satisfaction properly.

Revenue, we find there is requirement of looking into the defect in

recording of proper satisfaction by the AO while initiating the penalty

proceedings u/s.271(1)(c) of the Act and also levying the penalty in the

penalty proceedings. In this regard, 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 :

“6. ………………………… Penalty proceedings u/s.271 (1)(c) is initiated for furnishing inaccurate particulars of income and concealment of income.”

7.1 We also perused the penalty order dated 28.05.2012 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 therefore, satisfied that the assessee has furnished inaccurate particulars of income and thereby concealed and income of Rs.21,16,738/- and the penal provisions under section 271(1)(c) is clearly attracted in this case on the undisclosed capital gain of Rs.21,16,738/-. I, therefore, levy minimum penalty of Rs.4,79,689/- as calculated below….”

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From the above, it is evident that at the time of initiation of penalty

proceedings as well as at the time of levy of penalty, AO mentioned both

limbs of clause (c) of section 271(1) of the Act. 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 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, 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 appeal of the assessee is allowed on technical

grounds.

assessee on merits becomes an academic exercise. Therefore, the

relevant grounds on merits are dismissed as academic.

Order pronounced on 03rd day of August, 2018.

Sd/- Sd/-

(िवकास अव�थी िवकास अव�थी िवकास अव�थी /VIKAS AWASTHY) (डी िवकास अव�थी डी डी. क�णाकरा राव डी क�णाकरा राव क�णाकरा राव/D. KARUNAKARA RAO) 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 : 03rd August, 2018. Satish

5 ITA No.1538/PUN/2016 Mr.Ganesh Sopan Dabhade

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

आदेशानुसार / BY ORDER, // True Copy //

Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.