DEEP GUPTA,MUMBAI vs. DCIT CENT. CIR. 13, MUMBAI

This appeal by assessee under section 253 of the Income-Tax Act (“The Act”) is directed against the order ld. CIT(A)-48, Mumbai dated 30.06.2016 for Assessment Year (AY) 2011-12, which in turn arises from the order of penalty levied under section 271(1)(c) by the Assessing Officer. The assessee has raised the following grounds of appeal:

We have heard the ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. The ld. AR of the assessee argued that the Shri Deep Gupta assessee has neither furnished the inaccurate particular of income nor concealed any income. The assessee during the assessment proceeding inadvertently claimed the interest of Rs. 2,75,823/- as a deduction under section 57. The assessee suo moto offered the same for income when it was came to the notice of assessee. It was argued that while passing the assessment order, the AO initiated the penalty for furnishing inaccurate particular of income. However, while levying the penalty, the AO levied the penalty for concealing the particulars of income. In support of his submission, the ld. AR of the assessee relied upon the decision of Hon’ble Karnataka high Court in case of CIT vs. Manjunath Cotton and Ginning Factory [359 ITR 565 (SC)] and the decision of jurisdictional High Court in case of CIT vs. Shri Samson Perinchery (ITA No. 1154, 953, 1097 & 1226 of 2014 dated 05.01.2017. On the other hand, the ld. DR for the Revenue supported the order of authorities below. It was argued that the penalty was initiated for furnishing inaccurate particular of income. The penalty was levied for furnishing inaccurate particular of income the word “concealment” is a typographical mistake in the order. The entire order passed by AO deals with furnishing inaccurate particulars of income. In support of his submission, the ld. DR for the Revenue relied upon the decision of Nagpur Bench of Hon’ble Bombay High Court in case of M/s Maharaj Garage & Company vs. CIT in I.T.R No. 21 of 2008 dated 22.08.2017. 3 ITA No. 5066/M/2016- Shri Deep Gupta

We have considered the submission of both the parties and perused the orders of authorities below. We have noted that assessee claimed the interest expenses of Rs. 22,80,000/- against interest income of Rs. 22,80,000/-. The assessee was asked to justify the deduction under section 57 of the Act. The assessee furnished his explanation/ reply. In his submission, the assessee contended that the interest paid on other loan for Rs. 2,75,823/- claimed as deduction under section 57 of the Act to Deep Gupta HUF was inadvertently claimed. The assessee further contended that he has suo-moto offered the same and prayed not to initiate penalty proceeding. Thus, the AO out of total interest expenses of Rs. 22,80,000/- allowed Rs. 20,04,177/- as deduction under section 57 and disallowed Rs. 2,75,823/-. The AO initiated the penalty for furnishing “inaccurate particular of income”. Further, the AO served notice under section 274 dated 09.01.2014 on the assessee. The assessee furnished his reply on 21.07.2014, in the reply the assessee contended that assessee has not concealed his income nor furnished any inaccurate particular of his income. During the course of assessment, the assessee was asked to prove the deduction against interest income earned. The assessee submitted that interest of Rs. 2,75,823/- was claimed inadvertently and suo-moto offered to tax. The assessee further contended that he has declared income of Rs. 77,21,600/- and paid a tax of Rs. 19,84,643/- by way of TDS and advance tax and as such there is no ill motive attached to not offering the amount of disallowance under 4 Shri Deep Gupta consideration which is miniscule. The assessee prayed to drop the penalty proceeding. The reply of the assessee was not found suitable by the AO. The AO levied the penalty for “concealing the particular of income”. The Hon’ble Apex Court in case of T. Ashok Pai vs. CIT [292 ITR 11 (SC)] held that ‘concealing of income’ and ‘furnishing of inaccurate particulars’ of income in section 271(1)(c), carry different meanings/connotations. The AO while passing the assessment order initiated the penalty for ‘furnishing inaccurate’ particulars of income, however while levying the penalty it was levied for ‘concealing the income’. The Hon’ble jurisdictional High Court in case of CIT vs. Samson Perinchery (supra) held that penalty order can be made only on the ground on which it has been initiated and cannot be on fresh ground on which assessee has no notice. The case law in M/s Maharaj Garage & Company vs. CIT (supra) relied by ld. DR for the Revenue is not applicable on the facts of his case. The said deals with the ratio as to whether the assessee was having sufficient notice before imposing the penalty or not. However, the facts of the present case is different, here the penalty was initiated for furnishing inaccurate particulars and was levied for concealing the income. Thus, the ratio in case of Samson Perinchary (supra)