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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
आदेश / ORDER PER SUSHMA CHOWLA, JM:
The appeal filed by the assessee is against order of CIT(A)-2, Thane, dated 29.02.2016 relating to assessment year 2008-09 against levy of penalty under section 271(1)(c) of the Income-tax Act, 1961 (in short ‘the Act’).
The assessee has raised the following ground of appeal:- 1. In the facts and circumstances of the case and in law the CIT(A) erred in confirming penalty levied by the A.O. of Rs.10,34,569/- under section 271(1)(c) of the Income Tax Act, 1961.
The issue raised in the present appeal is against levy of penalty for concealment under section 271(1)(c) of the Act.
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The assessee has filed an adjournment application. However, since the issue raised in the present appeal is covered, adjournment application moved by the assessee is refused and we proceed to decide the appeal after hearing the learned Departmental Representative for the Revenue.
On perusal of record and after hearing the learned Departmental Representative for the Revenue, the issue arising in the present appeal is against levy of penalty under section 271(1)(c) of the Act. In the facts of the case, the assessee had furnished return of income declaring total income of ₹ 73,53,920/-. During the course of assessment proceedings, the Assessing Officer noted that the assessee had shown unsecured loans ₹ 3,17,75,912/-. Out of total unsecured loan shown of ₹ 3.17 crores, the assessee had claimed to have obtained unsecured loan of ₹ 30 lakhs from his mother. On perusal of bank pass book of said loan creditor, she had deposited ₹ 15 lakhs each on two different dates in her bank account and immediately issued a cheque in favour of assessee. In confirmation submitted by his mother, it was observed that she was an agriculturist and had advanced loan to the assessee out of her past savings / earnings. The Assessing Officer observed that these facts clearly showed that the credit worthiness of assessee’s mother could not be proved and the loan received by the assessee from her was given out of her income. Thus, the assessee could not satisfactorily prove the nature and source of the sum credited in his books of account at ₹ 30 lakhs. After giving opportunity to the assessee to explain the same, the said amount of ₹ 30 lakhs was treated as deemed income of assessee for the relevant assessment year as per section 68 of the Act and the same was brought to tax as Income from other sources.
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Since the said income had not offered by the assessee in his return of income, penalty proceedings under section 271(1)(c) of the Act for concealing the income or furnishing inaccurate particulars of income were initiated by issuing notice under section 274 r.w.s. 271(1)(c) of the Act.
Thereafter, penalty under section 271(1)(c) of the Act was levied vide order dated 25.09.2014 holding the assessee to have concealed his income or furnished inaccurate particulars of income of ₹ 30 lakhs being unexplained income and therefore, liable for levy of penalty under section 271(1)(c) of the Act. Penalty of ₹ 10,34,569/- was levied against the assessee.
The assessee is aggrieved by the levy of penalty under section 271(1)(c) of the Act, which was upheld by the CIT(A).
The case of Revenue on the other hand is that where the penalty proceedings have been initiated on both the counts and even show cause notice has been issued on both the counts, the Assessing Officer had given proper show cause notice to the assessee and levied penalty, then the said penalty order passed under section 271(1)(c) of the Act merits to be upheld.
We find that the Hon’ble Bombay High Court in CIT Vs. Shri Samson Perinchery in Income Tax Appeal No.1154 of 2014 with other Income Tax Appeals Nos.953 of 2014, 1097 of 2014 and 1226 of 2014, judgment dated 05.01.2017 after referring to the decision of the Hon'ble Supreme Court in Ashok Pai Vs. CIT (2007) 292 ITR 11 (SC) and the decision of the Hon’ble High
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Court of Karnataka in CIT & Anr. Vs. M/s. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar) has held that satisfaction of the Assessing Officer has to be with regard to one of two breaches mentioned under section 271(1)(c) of the Act, for initiation of penalty proceedings, would not warrant / permit penalty being imposed for other breaches. The Revenue in this regard has strongly emphasized that where the Assessing Officer has recorded satisfaction in respect of both the limbs and also has given notice in respect of both the limbs and where penalty has been levied though on both the limbs, then the same merits to be upheld as it does not violate the provisions of the Act. However, we find no merit in the said stand of learned Departmental Representative for the Revenue. Penalty under section 271(1)(c) of the Act can be levied only in respect of either of two limbs i.e. either for concealment of income or furnishing inaccurate particulars of income. The Assessing Officer after making additions in the hands of assessee has to record satisfaction in this regard as to which limb of section 271(1)(c) of the Act has not been satisfied by the assessee and accordingly, give him show cause notice by recording satisfaction of violating both the limbs and also issuing similar notice is outside the purview of provisions of said section and hence, is not sustainable. The Assessing Officer having failed to record satisfaction with regard to non-fulfillment of one of the limbs and similarly, non-striking of in- appropriate portion of notice issued under section 274 of the Act and even penalty has been levied for non-satisfaction of both the limbs, such an order levying penalty for concealment cannot be upheld. Accordingly, we hold so. We find support from the ratio laid down by the Pune Bench of Tribunal in Kanhaiyalal D. Jain Vs. ACIT in ITA Nos.1201 to 1205/PN/2014, relating to
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assessment years 2003-04 to 2007-08, dated 30.11.2016. Consequently, we allow the issue in favour of assessee. The ground of appeal raised by the assessee is thus, allowed.
In the result, the appeal of assessee is allowed.
Order pronounced on this 24th day of May, 2018.
Sd/- Sd/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 24th May, 2018. GCVSR आदेश की प्रयतलऱपप अग्रेपषत/Copy of the Order is forwarded to : अऩीऱाथी / The Appellant; 1. 2. प्रत्यथी / The Respondent; 3. आयकर आयुक्त(अऩीऱ) / The CIT(A)-2, Thane; The Pr.CIT-2, Thane; 4. ववबागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे “फी” / DR 5. ‘B’, ITAT, Pune; गार्ड पाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune