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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Ekta Gautam Lalwani Income Tax Officer, Formmerly Ekta Manohar Ward 21(1)(1) Talreja Mumbai-400 051 Plot NO. 20 Gurukripa-5th Floor, Vs. RD No. 11, JVPD Ville Parele, Mumbai-400 049 PAN No. AFCPT0048N .. Appellant Respondent Assessee by .. Mr. Paras Jain .. Shri Naveen Gupta, DR Revenue by Date of hearing .. 04-05-2017 .. Date of pronouncement 17-05-2017 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the orders of CIT(A)-32, Mumbai, in appeal No. CIT(A)-32/ITO 21(1)(1)/IT-76/2013-14 dated 12-05- 2014. The Assessment was framed by ITO Ward 21(1)(1) Mumbai for the A.Y. 2008-09 vide order dated 10-12-2010 u/s 143(3) Income Tax Act, 1961 (hereinafter ‘the Act’). The penalty u/s 271(1)(c) was levied by ITO Ward 21(1)(1) Mumbai vide order dated 25-03-2013.
The only issue in this appeal of assessee is against the order of CIT(A) confirming the levy of penalty under section 271(1)(c) of the Act. For this assessee has raised following ground: -
“Considering the facts and circumstances of the case, the Commissioner of income Tax (Appeals)-32, Mumbai, erred in facts and in law in confirming the levy of penalty of Rs 3.64,873 u/s 271(1)(c) of thee Income Tax Act, 1961, and the same ought to be deleted..
Ekta Gautam Lalwani AY:08-09 3. Brief facts relating to the above issues are that the AO during the course of assessment proceedings noticed from the capital account of the assessee that she has introduced jewellery worth Rs. 10,65,880/- during the relevant FY 2007- 08 relevant to this AY 2008-09. The AO required the assessee to explain the source of acquisition of said jewellery. The assessee vide letter dated 20-07-2010 stated that the jewellery was received as gift from one of her relative Shri Pradeep Sadaragani. AO required the assessee to file the documents like confirmation of gift, source of jewellery etc. Assessee filed the details of gift before the AO, who pointed out certain defects like passport of the donor is expired one, defective valuation report, no declaration before customs authorities at Mumbai regarding transportation of jewellery gifted, and valuation report filed is defective one as it does not indicate the valuation date and address as per valuation report does not match with the address of the assessee. The assessee filed copy of passport of the donor but could not file other documents. Accordingly, equivalent value of jewellery was added as undisclosed income of the assessee. The matter travelled to CIT(A) in quantum appeal but the same was confirmed. The AO initiated the penalty proceedings for concealment of income under section 271(1)(c) of the Act. The assessee produced notice under section 274 read with section 271 of the Act dated 10-12-2010 which clearly reveals that the notice is for concealment of particulars of income. But the AO has levied the penalty for furnishing of particulars of income by observing in Para 7 as under: -
“7 Therefore, I am satisfied that the provisions u/s. 271(1)(c) of the I.T. Act, are attracted as the assessee has furnished inaccurate particulars of income thereby concealment of the income Minimum penalty of Rs. Rs 3,64,873/- being 100% of the tax sought to be evaded maximum penalty is Rs. 10,94,617/- being 300% of the tax sought to be evaded by the assessee. ”
However, the CIT(A) was of the view that it does not matter whether the charges is for concealment of income or for furnishing of inaccurate particulars of income and this can be gathered only after due verification of facts in the penalty proceedings and AO has rightly levied the penalty for furnishing of Page 2 of 5
Ekta Gautam Lalwani AY:08-09 inaccurate particulars of income whereas actually the penalty was initiated for concealment of particulars of income. The relevant fining of CIT(A) in Para 3.3. (XI) reads as under: -
“The appellant has contended that in the assessment order the AO has only mentioned that penalty proceedings under section 271(1)(c) are initiated and has not mentioned as to for what charge such proceedings have been initiated. In this regard it is stated that when an addition is made in the assessment order and when the AO prima facie comes to the satisfaction that such item of addition may result into either concealment or furnishing of inaccurate particulars of income, penalty proceedings are initiated. It is only in the penalty proceedings that after due verification and appreciation of the facts, the penalty is levied for concealment of income or for further furnishing of inaccurate particulars of income. In the case the assessee it is clear case of furnishing of inaccurate particulars of income whereby an item of income which should have been offered to tax, the appellant has shown as gift, bona fide of which have not been proved.”
Aggrieved, now assessee is in appeal before us.
At the outset, the learned Counsel for the assessee stated that assessee case is clearly covered by the decision of Hon’ble Bombay High Court in the case of CIT vs. Shri Samson Perinchery in of 2014 and others dated 5th January 2017.
“5. 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. Page 3 of 5
Ekta Gautam Lalwani AY:08-09 6. 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.”
In the present case also it is a fact that the penalty initiated as per notice under section 274 read with section 271 of the Act is for concealment of particulars of income and not for furnishing of inaccurate particulars of income. But finally while levying the penalty, he levied on the premises of furnishing of inaccurate particulars of income. This was challenged by assessee before CIT(A) but he has sideline the issue. As the issue is covered by the decision of Hon’ble Bombay High Court following the decision of Hon’ble Karnataka High Court in Ekta Gautam Lalwani AY:08-09 the case of CIT v/s. Manjunath Cotton and Ginning Factory 359 ITR 565, respectfully following the same we allow the appeal of assessee.
In the result, appeal of assessee is allowed. Order pronounced in the open court on 17-05-2017.