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Income Tax Appellate Tribunal, MUMBAI BENCHES “H”, MUMBAI
Before: Shri P K Bansal & Shri Amarjit Singh
O R D E R Per P K Bansal, Vice-President:
This appeal has been filed by the assessee against the order of the CIT(A)-45, Mumbai, dated 25.01.2016, for A.Y. 2006-07, confirming the penalty amounting to ` 1,87,340/- levied by the Assessing Officer u/s. 271(1)(c) of the Income tax Act, 1961.
None appeared on behalf of the assessee even though notice was duly sent. We, therefore, proceed to dispose of the appeal after hearing the learned DR and on the basis of the material available on record.
After hearing the learned DR and going through the orders of the tax authorities below, we noted that in this case the only addition made by the Assessing Officer was in respect of Long term capital gains of ` 6,23,418/- shown by the assessee on account of purchase and sale of Minolta Finance Ltd., which was treated as bogus as the scrip was recognized as a penny scrip. Thereafter, penalty proceedings were initiated on the said addition and notice was issued u/s. 274 r.w.s. 271(1)(c) of the I.T.Act, 1961. Ultimately, the Assessing Officer levied penalty by observing as under:
“6.1 In view of all the above facts and circumstances involved in the case of the assessee, I am satisfied that assessee had committed default and has thus become liable to be penalized as per the provisions of section 271(1)(c) of the I.T.Act. The income concealed by the assessee on which tax sought to be evaded is determined at `.6,42,873/-. 6.2 Minimum penalty leviable in this case works out to `1,87,335/- being 100% of tax sought to be evaded and maximum penalty works out to ` 5,62,005/- being 300% of tax sought to be evaded.”
From the assessment order, we noted that the Assessing Officer has not initiated penalty for any specific default i.e. whether for concealment of income or for filing inaccurate particulars of income. Penalty was also levied on the reasoning the assessee has committed default and thus becomes liable to penalize u/s. 271(1)(c) of the I.T. Act. The issue, in our opinion, is squarely covered in favour of the assessee and against the Revenue by the decision of the Bombay High Court in the case of CIT vs. Samson Perinchery 392 ITR 4 (Bom), wherein Hon’ble High Court has held as under:--
“3 The impugned order of the Tribunal deleted the penalty imposed upon the Respondent Assessee. This by holding that the initiation of penalty under Section 271 (1)(c) of the Act by Assessing Officer was for furnishing inaccurate particulars of income while the order imposing penalty is for concealment of income. The impugned order holds that the concealment of income and furnishing inaccurate particulars of income carry different connotations. Therefore, the Assessing Officer should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. Further, the Tribunal also noted that notice issued under Section 274 of the Act is in a standard proforma, without having striked out irrelevant clauses therein. This indicates non-application of mind on the part of the Assessing Officer while issuing the penalty notice. 4 The impugned order relied upon the following extract of Karnataka High Court's decision in CIT v/s. Manjunath Cotton and Ginning Factory 359 ITR 565 to delete the penalty: “The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus, the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it as case of furnishing of inaccurate particulars. The apex court in the case of Ashok Pai reported in [2007] 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of Manu Engineering reported in 122 ITR 306 and the Delhi High Court in the case of Virgo Marketing P. Ltd., reported in 171 Taxmn 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non application of mind.”
The grievance of the Revenue before us is that there is no difference between furnishing of inaccurate particulars of income and concealment of income. Thus, distinction drawn by the impugned order is between Tweedledum and Tweedledee. In the above view, the deletion of the penalty, is unjustified.
The above submission on the part of the Revenue is in the face of the decision of the Supreme Court in Ashok Pai v/s. CIT 292 ITR 11 [relied upon in Manjunath Cotton & Ginning Factory (supra)] – wherein it is observed that concealment of income and furnishing of inaccurate particulars of income in Section 271(1)(c) of the Act, carry different meanings/ connotations. Therefore, the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned under Section 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/ permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the Assessee has no notice. 7 Therefore, the issue herein stands concluded in favour of the Respondent Assessee by the decision of the Karnataka High Court in the case of Manjunath Cotton and Ginning Factory (supra). Nothing has been shown to us in the present facts which would warrant our taking a view different from the Karnataka High Court in the case of Manjunath Cotton and Ginning Factory (supra).
Following the said decision of the Bombay High Court, we delete the penalty allow the appeal of the assessee.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 17th day of November, 2017.