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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI G.S.PANNU & SHRI RAM LAL NEGI
ORDER PER G.S.PANNU,A.M:
The captioned appeal filed by the assessee pertaining to assessment year 2008-09 is directed against an order passed by CIT(A)-7, Mumbai dated 28/11/2013, which in turn arises out of an order passed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’) dated 18/05/2011.
In this appeal, the solitary grievance of the assessee is against the order of the CIT(A) in sustaining penalty imposed by the Assessing Officer under section 271(1)(c) of the Act amounting to Rs.7,50,400/-.
Briefly put, the relevant facts are that the appellant is an individual who filed a return of income for assessment year 2008-09 declaring an income of Rs.1,44,145/-, which was picked up for scrutiny assessment, which was finalized on 12/11/2010 under section 143(3) of the Act whereby the total income was assessed at Rs.23,89,150/-. The difference between the assessed and the returned income comprised of an element of Rs.22,45,000/-, which represented an addition made by the Assessing Officer by treating various loans received by the assessee totalling to Rs.22,45,000/- as being unexplained within the meaning of section 68 of the Act . Notably, assessee was found to have invested Rs.30,10,000/- in the immovable property, Rs.2,50,000/- in mutual funds, and Rs.2,00,000/- in bank account. On being asked to explain the source of such investment assessee, inter-alia stated that loans amounting to Rs.22,45,000/- were raised from friends and relatives. The Assessing Officer records that having regard to the details furnished, assessee could not produce the creditors and, therefore, he treated the loan amount of Rs.22,45,000/- as unexplained under section 68 of the Act. Subsequently, the Assessing Officer levied penalty under section 271(1)(c) of the Act being 100% of the tax sought to be evaded qua the aforesaid addition. Thus, a penalty of Rs.7,50,400/- was levied, which has been affirmed by the CIT(A) also. Against such a levy, assessee is in appeal before us.
Before us, the assessee the assessee has raised multiple Grounds of appeal, but at the time of hearing a short point was adverted to, which was based on the ratio laid down by the Hon'ble Bombay High Court in the case of CIT vs. Samson Perinchery in Income Tax Appeal Nos. 1154 of 2014,953 of 2014,1097 of 2014 and 1226 of 2014 dated 5th January, 2017. Firstly, the Ld.Representative for the assessee referred to the following discussion in the assessment order to point out that the penalty proceedings were initiated by the Assessing Officer under section 271(1)(c) of the Act on account of assessee having “furnished inaccurate particulars of income”
“By claiming loans which could not be proved, the assessee has furnished inaccurate particulars of income making the assessee liable to penalty under the provisions of section 271(1)(c) of the I.T.Act 1961. Therefore, penalty proceedings are initiated for default u/s.271(1)(c) of the Act.”
4.1 Secondly, our attention has been invited to the show cause notice issued under section 274 r.w.s. 271 of the Act dated 12/11/2010, where the inapplicable limb of section 271(1)(c) of the Act has not been stuck off. It is not clear that the notice is issued for concealment of the particulars of income or furnishing of inaccurate particulars of income under section 271(1)(c) of the Act. Thirdly, our attention has been drawn to the impugned penalty order passed by the Assessing Officer whereby the penalty has been levied for concealment of the particulars of income. In this context, following conclusion of the Assessing Officer in the penalty order has been referred to:
“ I am satisfied that the assessee has concealed the particulars of income of his income in the return of income filed. I, therefore, hold that the assessee has committed a default within the meaning of section 271(1)(c) of the Income-tax Act,1961 making him liable to prescribed penalty.” 4.2 On the basis of the aforesaid factual matrix, it is pointed out that the show cause notice issued is ambiguous and, therefore, it is not sustainable and for that matter reliance has been placed on the decision of the Mumbai Tribunal in the case of M/s.Orbit Enterprises vs. ITO, in & 1597/Mum/2014 dated 01/09/2017. Further, it is pointed out that whereas penalty proceedings have been initiated on the ground of furnishing of inaccurate particulars of income , whereas it has been levied in the penalty order on the ground of concealment of particulars of income. Judgment of the Hon'ble Bombay High Court in the case of Samson Perinchery (supra) has been relied upon to say that the penalty could have been levied only on the ground on which it has been initiated.
On the other hand, the Ld. Departmental Representative has not contested the factual matrix, but pointed out that the proceedings under section 271(1)(c) of the Act were duly initiated in the assessment order and the mistake sought to be pointed out by the Assessing Officer is not fatal for the levy of penalty.
We have carefully considered the rival submissions. In the present case, it is quite clear that while on one hand, in the assessment order, the initiation of penalty is only one limb i.e. for furnishing of inaccurate particulars of income, whereas while imposing penalty, the same has been imposed on the other limb i.e. for concealment of income. The said infirmity clearly renders the penalty order as untenable, having regard to the ratio of the decision of Hon'ble Bombay High Court in the case of Samson Perinchery(supra). In fact, Hon'ble Bombay High Court has taken note of the arguments of the Revenue that there is no difference between inaccurate particulars of income and concealment of income. The said argument has been repelled by the Hon'ble Bombay High Court by referring to the judgment of the Hon'ble Supreme Court in the case of Ashok Pai vs. CIT 292 ITR 11(SC), wherein it is observed that concealment of income and furnishing of inaccurate particulars of income under section 271(1)(c) of the Act, carry different connotations. Thus, in the face of such legal position, the penalty order passed by the Assessing Officer is clearly untenable since it could have been made only on the ground on which the penalty proceedings were initiated in the assessment order and not on the other limb of section 271(1)(c) of the Act . Thus, by adverting to the aforesaid short point , we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the penalty of Rs. 7,50,400/-imposed under section 271(1)(c) of the Act.
In the result, appeal of the assessee is allowed, as above.