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Income Tax Appellate Tribunal, BENCHES “E”, MUMBAI
Before: Shri G S Pannu & Shri Pawan Singh
O R D E R Per Pawan Singh, Judicial Member:
This appeal by the assessee under section (u/s) 253 of the Income-tax Act (‘Act’), is directed against the order of the Commissioner of Income-tax (Appeals)-38 {CIT(A)}, Mumbai, dated 29.11.2016 for Assessment Year(AY)
2006-07. The assessee has raised the following grounds of appeal:
1. “That on facts and circumstances of the case, penalty imposed u/s 271(1)(c) at Rs. 53,280/- by the ld. Assessing Officer and confirmed by the ld. C.I.T. (Appeals) is bad in law and void ab initio for the following stated reasons:-
i. Notice dated 31-01-2014 issued u/s 274 r.w.s. 271 in standard format is without striking out inapplicable portion therefore it is not discernible whether penalty proceeding was initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income, ii. And against the penalty' proceeding stated to be initiated u/s 271(1)(c) in the relevant assessment order on the alleged charge of furnishing of inaccurate particulars of income, in the order passed u/s 271(1)(c) on 22-07-2014 penalty has been imposed for the alleged charge of concealment of particulars of income.
In view of the above, alleged penalty imposed u/s 271(l)(c) being unlawful and legally untenable therefore same may kindly be quashed.
That without prejudice to appeal ground no. 1, even on merit of the case, alleged penalty imposed u/s 271(1)(c) and confirmed by the lower authorities is without properly appreciating the entirety of the facts of the case, legal position and relevant judicial rulings therefore same may kindly be deleted.
3. That appellant craves the leave to amend, alter, substitute and or to raise new or additional grounds of appeal
at the time of hearing.”
2. Brief facts of the case are that the assessment for the relevant assessment year was completed u/s. 143(3) r.w.s. 147 on 31.01.2014. The Assessing Officer while passing the assessment order denied the claim of Long term capital gain to the assessee holding that the assessee availed accommodation entries from Mukesh Chokshi entities and treated the amount as unaccounted money. The Assessing Officer levied penalty u/s. 271(1)(c)
@100% on the tax sought to be evaded and worked out the penalty at ` 53,280/- vide its order dated 22.07.2014. On appeal, the CIT(A) sustained the penalty. Aggrieved, the assessee is in appeal before us.
The learned AR for the assessee argued that notice u/s. 148 dated 26.03.2013, was served and subsequently reminders were sent. In response, the assessee filed return of income on 28.11.2013 declaring taxable income at ` 4,18,210/-, which included exempt Long term capital gain of ` 3,52,445/- The income was offered for taxation before the issuance of notice u/s. 143(2). The assessee has not concealed any income rather offered the Long term capital gain as income in the revised income, which was accepted by the Assessing Officer. The assessee has not filed any appeal due to smallness of the amount. It was argued that the assessee neither concealed particulars of income nor filed inaccurate particulars. The learned AR further argued that the notice u/s. 274 r.w.s.271 (1)(c) was issued on a printed proforma and the Assessing Officer has not stroked out inappropriate portion in the notice. In support of his submission, the learned AR relied on the decision of Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory 263 ITR 153 (Kar); decision of Hon’ble Supreme Court in the case of CIT vs. Suresh Chandra Mittal 251 ITR 0009 (SC) and the order dated 19.08.2016 of the Mumbai Benches of the Tribunal in the case Universal Music India Pvt. Ltd. in ITA No.6752/Mum/2017.
On the other hand, the learned DR argued that the assessee was aware of the problem in her return of income that she has availed accommodation entries and the transactions were not genuine and it was only to escape liability, offered the income as ‘other income’ in the revised return. In the context of the ground raised by the assessee pertaining to non-striking of inappropriate portion of notice u/s. 274, the learned DR relied on the decision of Hon’ble Bombay High Court in the case of CIT vs. Kaushalya & Ors 216 ITR 660 (Bom).
We have heard both the sides and gone through the material available on record along with the orders of the authorities below. The assessment was reopened u/s. 147 by issuing notice u/s. 148 on 22.03.2015. The assessee filed here return of income on 28.11.2013. The notice u/s. 143(2) r.w.s. 147 was issued on 06.12.2013. The assessee in her revised return of income offered an amount of `3,52,445/- for tax. Further the assessee in the note attached with the statement of income has specified that to avoid litigation and buy peace and to remain cordial with the department, the assessee had opted to offer the exempt Long term capital tax as taxable income. The assessee in reply to notice u/s. 274 r.w.s. 271(1)(c) has specified that disputed Long term capital gain has voluntarily been offered by the assessee to avoid litigation and buy peace. We have further noticed that the assessee has offered impugned income before issuance of notice u/s. 143(2) r.w.s. 147 dated 06.12.2013. The Assessing Officer while passing penalty order has not properly considered the reply of the assessee filed in response to notice u/s. 274 r.w.s. 271(1)(c).
The Hon’ble Apex Court in case of Suresh Chandra Mittal (supra), held that when the assessee has declared additional income to buy peace and to come out of vexed litigation, the plea of the assessee could be treated as bona fide and the penalty was not leviable. We have seen that the assessee has voluntarily offered Long term capital gains for tax. The assessee has furnished necessary information in the notes of account while filing the return of income. In our considered view, the assessee has neither concealed nor filed any inaccurate particulars of income while filing the revised return of income. Thus, the order passed by the Assessing Officer u/s. 271(1)(c) dated 22.07.2014 is not sustainable. In the result the ground No.2 of the appeal is allowed. As we have allowed the appeal of the assessee on ground No.2, hence, the discussion on ground No.1 of the appeal has become academic.