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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Goodbuild (India) P. Ltd Commissioner of Income Tax (A) 9-B, 302 God Gift Tower, M.R Circle 51 Vs. Chowk Hill Road, Bandra (W) R. No. 619, Aayakar Bhavna, M.K. Rd, Mumbai-20 PAN No.AACCG1455G Appellant .. Respondent .. Shri Vijay Mehta, AR Assessee by Revenue by .. Shri Pradeep Kumar Singh, DR Date of hearing .. 16-05-2017 Date of pronouncement .. 24-05-2017 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of CIT(A)-51, Mumbai, in appeal No. CIT(A)-51/IT-186/2013-14 dated 21-01-2015. The Assessment was framed by DC CC-21, Mumbai for the A.Y. 2010-11 vide order dated 20-03-2013 u/s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’). The penalty was levied u/s 271(1) (c) of the Act by ACIT Centre Circle-21, Mumbai vide order dated 27-09-2013.
The only issue in this appeal of assessee is against the order of CIT(A) confirming the levy of penalty by the AO under section 271(1)(c) of the Act for not disclosing MAT tax liability.
Briefly stated facts are that the assessment was completed under section 143(3) by the AO vide his order dated 20-03-2013 to determining the total income at Rs 5,98,99,067/- under the MAT provisions under section 115 JB of the Act. The AO during the course of scrutiny assessment noticed that the assessee’s case falls under section 115JB of the Act but the assessee failed to disclose the same. The assessee computed his tax liability by claiming the exemption under section 80IB(10) and therefore, declared nil return of income. The AO computed its tax liability under section 115JB of the Act and initiated penalty proceedings. At the outset, the learned Counsel for the assessee first of Goodbuild (India) P. Ltd A.Y:10-11 all drew our attention to page 18 of the assessee’s paper book, whereby notice for initiation of penalty under section 271(1)(c) read with section 274 of the Act dated 23-03-2013 is enclosed at assessee’s paper book, as issued by the DCIT Centre Circle-21, Mumbai. In term of the notice, the learned Counsel for the assessee stated that the AO failed to apply his mind for initiating penalty proceedings as he has not initiated penalty for any specific charge. He stated that he has left blank and not tick mark the particular charge whether the assessee has concealed the particulars of income or it has furnished inaccurate particulars of income. Further, the learned Counsel for the assessee took us through the penalty order whereby he has levied the penalty for both the charges i.e. concealment of particulars of income as well as for furnishing of inaccurate particulars of income vide Para 4 of his penalty order which reads as under: -
“In view of the fact and circumstances mention here- in-above, it is being concluded that assessee has concealed / furnished inaccurate particulars of income in original return and hence it is a fit case where penalty under section 271(1)(c) is required to be imposed. Accordingly, the undersigned is proposed to levy penalty under section 271(1)(c) in this case. Accordingly, penalty under section 271(1)(c) of the IT Act is worked out on the Book Profit u/s.115JB Rs. 5,98,65,324/- as under.”
The learned Counsel for the assessee also drew our attention to a particular line mentioned in Para 3 that according to AO the assessee’s case is covered in explanation to section 271(1)(c) which is for concealment of income and not for furnishing of inaccurate particulars of income. He drew our attention to the following line. -
“Hence, the assessee is squarely covered by provisions of sec. 271(1)(c) r.w explanation since it filed inaccurate particulars thereby concealing its income for the current year.”
Goodbuild (India) P. Ltd A.Y:10-11 4. According to the learned Counsel, the AO failed to apply his mind for framing of charge against assessee for levying penalty under section 271(1)(c) of the Act. The learned Counsel for the assessee relied on the decision of Hon’ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton & Ginning factory (2013) 359 ITR 565 (Karn) and also on the decision of the Hon’ble Bombay High Court in the case of CIT Vs Samson Perinchery in of 2014 dated 05.01.2017, wherein it is held that failure by the AO to specify in the notice issued u/s 274 of the Act, whether the penalty is being initiated for ‘furnishing of inaccurate particulars of income’ or for ‘concealment of income’ is fatal. It reflects non-application of mind and renders the levy of penalty invalid.
We find that the above 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. We find that this issue is squarely covered in favour of assessee and against the Revenue by the decision of Hon’ble Bombay High Court in the case of Samson Perinchery (supra), respectfully following the same, we allow the appeal of the assessee.
In the result, the appeal of assessee is allowed. Order pronounced in the open court on 24-05-2017.