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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-2, Thane, [in short CIT(A)] in appeal No. dated 23.12.2015. The assessment was framed by the Income Tax Officer, Ward-2, Panvel (in short ITO) for the assessment year 2008-09 order dated 21-12-2010 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’). The penalty was levied by ITO, ward-2, Panvel under section 271(1)(c) of the Act vide order dated 28-06-2011.
The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO levying the penalty under section 271(1)(c) of the Act amounting to ₹ 3,97,180/-. For this assessee has raised the following ground No. 1: -
“1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in upholding action of the assessing officer in levying the penalty of ₹ 3,97,180/-."
At the outset, it is noticed that this appeal was fixed for hearing on earlier occasions but none turned up. Even now, during the course of hearing neither any application for adjournment was filed nor anybody represented assessee. In such circumstances, we are proceeding to decide the appeal ex-parte qua assessee.
Briefly stated facts are that the assessee is engaged in the business of supply of labours in the civil construction business. The AO during the assessment proceedings, made addition on the basis of details submitted by the assessee for an amount of ₹ 12,85,111/-, being on account of difference in the accounts of Vascon Engineering Pvt. Ltd. of ₹ 3,74,436/- and difference in contract receipts in the case of Payal enterprises and Ruby Mills limited amounting to ₹ 9,10,675/-. The assessee has not challenged this addition in appeal and accepted the quantum addition. Thereafter the AO started the penalty proceedings under section 271(1)(c) as in the assessment order the AO has initiated the penalty proceedings under section 271(1)(c) for furnishing of inaccurate particulars of income. The AO while levying the penalty under section 271(1)(c) vide order dated 28-06-2011 levied the penalty on both the charges i.e. furnishing of inaccurate particulars of income as well as concealing the particulars of income. The AO has levied the penalty vide Para 5,6 and 7 of the penalty order which reads as under:-
“5: Due consideration was given to the explanation offered by the assessee. The provision of the 271(1) (c) and its explanation, has clearly laid out the situations for leviability of penalty and there is no ambiguity as such. The Explanations appended to sec. 271(1)(c) entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return.
(a) Explanation 1 makes it clear that the assessment proceedings and penalty proceedings are wholly distinct and independent of each other.
(b) Explanation 1 is a rule of evidence. It raises an initial presumption that the additions represent concealed income of the assessee. The initial burden of discharging the onus to rebut the above presumption is on the assessee. In other words, the assessee has to explain that the explanation offered by him about a particular income/expenditure is bonafide and all material to the computation of his income has been disclosed.
(c) The burden placed upon the assessee is not discharged by any vague explanation. Explanation of the assessee for the purpose of avoidance of penalty must be an acceptable explanation.
(d) Mere failure to substantiate the explanation is not enough to warrant penalty. Revenue has to establish that the explanation offered was not substantiated.
Reliance is placed on the Apex Court's, observation in the case of Union of India Vs. Dharmendra Textile Processors (2008 - 306 ITR 277) wherein the larger bench of the Apex Court (after the decision in the case of Dilip N. Shroft -291 ITR 519) had disapproved the statement that willful concealment is essential for attracting concealment penalty. It is held that Object behind enactment of Penalty u/s 271(1)(c) r/w Explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue. Penalty under that provision is a civil liability and willful concealment is not an essential ingredient for attracting civil liability.
6. In this case, since the assesses was unable to reconcile the difference in accounts of the assesses which amounts to Rs. 3,74,436/- with documentary evidence, the some was brought to tax by the AO. Similarly, in respect of two contract receipts totaling to Rs. 12,28,246/- which was not reflected in its sale7 by the assessee, it was contented by the assessee that the contract work of the said parties were not carried out due to some dispute and the payment was returned to some third parties at the instruction of the parties. However, the assessee could not prove his claim of repayment with bank extract nor this amount was shown as unpaid in its Balance Sheet. Moreover, it was observed by the AO that TDS was deducted by these parties on these two receipts. Since the argument of the assessee was not accepted by the AO nor the assesses put forth any concrete proof in support of his claim, the said receipts were added by the AO to the income of the assessee. I am
A.O.
In view of the above. I am of the considered view that it is a lit case for levy of penalty u/s 271(1)(c) of the I.T. Act, for furnishing inaccurate particulars of income and for concealing particulars of income to the extent of Rs. 12,85,111/- thereby attracting penal action u/s 277(1)(c) of the IT Act 1961. I therefore, levy penalty of Rs. 3,97,180/- being 100% of tax evaded."
The CIT(A) also confirmed the action of the Assessing Officer. Aggrieved, now assessee is in second appeal before Tribunal. Before us. The learned Sr. Departmental Representative relied on the orders of the lower authorities but it was pointed out to him that how the AO can levy the penalty on both the charges i.e. for furnishing of inaccurate particulars of income as well as for concealing of particulars of income. The AO is not sure about specific charge for which the assessee is in default, which is clear from above reproduced order of the AO regarding levy of penalty. In view of these facts, we are of the view that the issue is covered by the decision of Hon’ble Bombay High Court in the case of CIT vs Samson Perinchery (2013) 392 ITR 4 (Bom). Respectfully following the decision of Hon’ble Bombay High Court, we allow this appeal of the assessee.
In the Result, the appeal of the assessee is allowed.
Order pronounced in the open court on 28-02-2018.