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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R
Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeal by assessee for Assessment Year [AY] 2010-11 contest the order of the Ld. Commissioner of Income-Tax (Appeals)-3 [CIT(A)], Thane, Appeal No.977-THN/13-14 dated 01/03/2016 qua Saidutta Transport & Developers Pvt.Ltd Assessment Year 2010-11 confirmation of penalty u/s 271(1)(c) for Rs.36,52,032/-. The assessment for impugned AY was framed by Ld. Assistant Commissioner of Income Tax Circle-4,Thane u/s 143(3) of the Income Tax Act,1961 on 28/03/2013 whereas the impugned penalty has been levied vide order dated 27/09/2013. The penalty has been levied against aggregate quantum additions of Rs.1,07,44,431/- on account of Sundry creditors and unexplained purchases. The assessee has raised the following effective grounds of appeal:
1. The Hon.CIT(A) erred in confirming the penalty of Rs.36,52,032/- levied u/s 271(1)(c) of the I.T. Act 1961, not appreciating that the additions made in assessment were on account of inability to furnish written confirmations within short span of time and that the said additions did not represent the concealed income of the appellant.
2. The Hon. CIT(A) erred in not appreciating that penalty of Rs.36,52,032/- levied u/s 271(1)(c) of the I.T. Act 1961, for “concealment of income” was not justified, when the penalty was initiated in the asst. order for furnishing “inaccurate particulars of income”. 2.1 Facts leading to the imposition of penalty are that the assessee being resident corporate assessee engaged as transporter and developers was assessed at Rs.276.72 Lacs after certain additions as against returned income of Rs.110.65 Lacs filed by the assessee on 06/10/2010. The quantum additions against which the penalty has been imposed has attained finality since the assessee did not contest the same any further. 2.2 Consequently, the assessee has been saddled with impugned penalty u/s 271(1)(c) which, upon confirmation by Ld. CIT(A), is being contested before us.
3. The Ld. Authorized Representative for the assessee [AR], at the outset, while drawing our attention to the legal grounds contended that Saidutta Transport & Developers Pvt.Ltd Assessment Year 2010-11 penalty proceedings stood vitiated since the penalty was initiated on one limb whereas the same has been levied on another limb. Our attention is drawn to the orders of the lower authorities and show cause notice issued u/s 274 read with section 271(1)(c) to submit that the impugned notice fail to specify the exact charge / limb for which the penalty was being levied on the assessee. Reliance has been placed on the judgment of Hon’ble Bombay High Court rendered in CIT Vs. Shri Samson Perinchery [392 ITR 4] and several other judicial pronouncements. Per contra, Ld. Departmental Representative [DR] supported the stand of lower authorities and submitted that the factual matrix justifies the imposition of penalty.
4. We have carefully heard the rival contentions and perused relevant material including cited case laws. We find that penalty has been initiated by Ld. AO in the quantum assessment order by making following observations:- 4.3 The undersigned is satisfied that the assessee has furnished inaccurate particulars of income to the tune of Rs.52,04,857/- and hence liable for penal proceedings u/s.271(1)(c) r.w.s. 274 of the Act. Penal proceedings u/s 271(1)(c) r.w.s. 274 of the Act are initiated separately on this point. ………. 6.1 The undersigned is satisfied that the assessee has furnished inaccurate particulars of income to the tune of Rs.55,39,574/- and hence liable for penal proceedings u/s.271(1)(c) r.w.s. 274 of the Act. Penal proceedings u/s 271(1)(c) r.w.s. 274 of the Act are initiated separately on this point. Further, a perusal of the show-cause notice dated 28/03/2013 as placed in the paper book reveals that Ld. AO has not specified the exact charge / limb viz. concealment of income or furnishing of inaccurate particulars of income for which the penalty was being initiated. The revenue could not Saidutta Transport & Developers Pvt.Ltd Assessment Year 2010-11 controvert the said fact by showing any other penalty notice u/s 274 read with Section 271(1)(c). Finally, a perusal of the penalty order reveals that the penalty has been levied by Ld. AO making following observations: 4. The undersigned is satisfied that the assessee has concealed its income to the tune of Rs.1,07,44,431/- and is liable to pay penalty u/s. 271(1)(c) of the Act. A perusal of the above facts shows that the penalty has been initiated on one limb viz. furnishing of inaccurate particulars of income whereas the same has finally been levied for concealment of income. The aforesaid two limbs, as per settled legal pronouncements, carry different meaning and connotations. The three events, as stated above, put together, reveal that Ld. AO has failed to adhere to the settled legal propositions while imposing penalty on the assessee which is quite evident from certain legal judicial pronouncements as enumerated by us in the succeeding paragraphs.
5. The Hon’ble Supreme Court in the judgment titled as Dilip N.Shroff Vs. JCIT (291 ITR 519) has observed that the concealment of income and furnishing of inaccurate particulars of income are different and carry different connotations. The Hon’ble Court further held that non-striking off of the relevant portions of standard show-cause notice reflects non-application of mind by AO and hence vitiates the penalty. We also note that the ratio of this judgment was very much relevant and valid despite the judgment of Apex Court in the case of CIT Vs. Dharmendra Textile Processor (306 ITR 277) in view of another judgment of Supreme Court in CIT Vs. Reliance Petro products Pvt. Ltd. [322 ITR 158] wherein it was observed that reasoning given in the case of Dilip N.Shroff could not be faulted except to Saidutta Transport & Developers Pvt.Ltd Assessment Year 2010-11 the extent of observations regarding necessity of mens-rea for the purpose of Section 271(1)(C). Similar view has been expressed in the judgment of Hon’ble Karnataka High Court rendered in CIT Vs. Manjunatha Cotton & Ginning Factory [2013 359 ITR 565] which was later followed by the same court in CIT Vs. SSA’s Emerald Meadows [ITA NO. 380 OF 2015 23/11/2015] against which special leave petition [SLP] filed by the revenue before Apex Court in CC No.11485/2016 order dated 05/08/2016 was dismissed by the Hon’ble court, finding no merits in the case. Further, Hon’ble Bombay High Court has followed the ratio of same judgment in CIT Vs. Shri Samson Perinchery [ITA No. 1154 of 2014 order dated 05/01/2017] and further Tribunal, in catena of judgment and more particularly in Wadhwa Estate & Developers Vs. ACIT [ITA N0. 2158/Mum/2016 dated 24/02/2017] has taken the same view following the aforesaid judgments.
6. Upon consideration of factual matrix as noted by us in paragraph 4, we find that the three events, put together, reflects non-application of mind on the part of AO and the AO himself was not sure about the limb / exact charge for which the assessee was being penalized which is evident from the fact that the penalty has been initiated for one limb whereas the same has finally been levied on another limb. Therefore, the penalty order stood vitiated on legal grounds and hence, liable to be quashed. Respectfully following the catena of judgments on the issue favoring the assessee, we delete the impugned penalty and allow this ground of assessee’s appeal.