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Facts
The Assessing Officer (AO) added Rs. 6,34,400/- as commission income to the assessee's total income and initiated penalty proceedings for concealment of income. Subsequently, the AO levied a penalty of Rs. 1,71,600/- for furnishing inaccurate particulars of income, which was affirmed by the Commissioner. The assessee appealed against this penalty.
Held
The Tribunal noted that while penalty proceedings were initiated for concealment of income, the AO ultimately levied the penalty for furnishing inaccurate particulars of income. The Tribunal held that the AO did not record any satisfaction for initiating penalty proceedings for furnishing inaccurate particulars, and the penalty cannot be levied on a limb for which no satisfaction was recorded.
Key Issues
Whether penalty for furnishing inaccurate particulars of income can be levied when penalty proceedings were initiated for concealment of income and no specific satisfaction was recorded for the former.
Sections Cited
250, 143(3), 274, 271(1)(c)
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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI OMKARESHWAR CHIDARA
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the assessee against the order dated 25.01.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2011-12.
In this case, the Assessing Officer (AO) vide order dated 09.12.2013 under section 143(3) of the Act, assessed the total income of the assessee at Rs.11,74,780/- and also made the addition of Rs.6,34,400/-as commission income @ 8% of the cash deposit of Rs.79,30,000/- in his bank account. The AO in the Assessment Order also recorded the satisfaction for initiation of penalty proceedings on the limb of concealment of income and subsequently issued the notice under section 274 read with section 271(1)(c) of the Act.
The assessee challenged the said addition of Rs.6,34,400/- before the Ld. Commissioner by filing first appeal. However, as per the assessee, in order to be in peace, he withdrew the appeal filed against the assessment order.
Thereafter, the AO vide order dated 01.04.2022 levied the penalty to the tune of Rs.1,71,600/- for furnishing inaccurate particulars of income.
On appeal the penalty levied was affirmed by the Ld. Commissioner.
The Assessee being aggrieved against the levy and affirmation of penalty has preferred this appeal. Ms. Dinkle Hariya, Ld. Advocate/A.R. of the Assessee has raised 02
3 Shri Anil Assudomal Manghnani issues which appear to be legal in nature, first that on the basis of addition made on the estimate basis, no penalty is leviable. Secondly even otherwise the satisfaction was recorded for initiating the penalty on the limb i.e. concealment of income, however, ultimately the AO levied the penalty for filing of inaccurate particulars of income and therefore penalty is un-sustainable.
On the contrary Mr. Manoj Sinha, Addl. CIT/ Ld. D.R. refuted the claim of the assessee.
Heard the parties and perused the material available on record. Admittedly in the assessment order, the satisfaction for initiation of penalty proceedings was initiated for concealment of income as submitted by Ld. Counsel of the Assessee, however, ultimately the AO levied the penalty for filing of inaccurate particulars of income. Admittedly the AO has not recorded any satisfaction for initiation of penalty proceedings qua furnishing of inaccurate particulars of income, on which the penalty has ultimately been levied. Hence, question emerges “whether the penalty can be levied on a limb on which no satisfaction was recorded/no penalty proceedings were initiated”. The dictum laid down by the Hon’ble Apex Court in the case of T. Ashok Pai vs. CIT (292 ITR 11) is clear on this aspect, which reads as under:
4 Shri Anil Assudomal Manghnani 'Concealment of income' and 'furnishing of inaccurate particulars' carry different connotations. Concealment refers to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi.
In simple meaning, expression “concealment of income” and furnishing of inaccurate particulars of income connote different meanings and cannot be used as substitute to each other. Hence, we are of the considered view that where the penalty has not been initiated for a particular limb/charge, then no penalty can be levied on that particular charge. Hence, on this aspect itself, the penalty is un-sustainable.
8.1 Even otherwise there is also force in the contention of the Ld. Counsel that the penalty on the basis of addition which itself based on the estimation, is hardly sustainable.
8.2 On the aforesaid analysis, the penalty levied by the AO and affirmed by the Ld. Commissioner is un-sustainable, therefore the same is deleted.
8.3 As we have deleted the penalty, hence not delving into the merits of the case as the same would become futile exercise.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 28.06.2024.