Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI D.T. GARASIA & SHRI MANOJ KUMAR AGGARWAL
Per D.T. Garasia, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 29.03.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2006-07.
The short facts of the case are that assessee filed return of income for assessment year 2006-07 declaring the income of Rs.1,62,419/- whereas the Income Tax Officer (ITO) has assessed the income of the assessee at Rs.15,82,220/- since cash deposits of Rs.15,82,220/- appeared in assessee’s bank account and added the same to the income of the assessee treating it as unexplained cash credits. Further, penalty proceedings under section 271(1)(c) were also invoked in respect of this addition and notice under section 274 r.w.s. 271(1)(c) was sent to the assessee. During the assessment proceedings,
2 Shri Suresh Jaganath Chavan assessee explained the source of deposits made in the bank account which was not accepted by the ITO since the same was not supported with documentary evidence.
The matter carried to the Ld. CIT(A) and the Ld. CIT(A) restricted the addition to the extent of Rs.4,00,000/-, however, upheld the penalty. Hence, the assessee is in appeal before us.
Before us, the Ld. A.R. submitted that the penalty should be imposed on one limb for furnishing of inaccurate particulars of income or concealment of income. The AO should specify the charge before levying the penalty under section 271(1)(c) of the Act. The Ld. A.R., relying upon the judgment of Hon’ble Bombay High Court in the case of CIT vs. Shri Samson Perinchery in of 2014 & others, has submitted that when the AO has not specified with the charge, the penalty cannot be levied. He further submitted that in the case of Shri Samson Perinchery (supra), in an identical case, departmental appeal against the Tribunal’s order has been dismissed by the Hon’ble Bombay High Court. He further relied upon the judgment of Hon’ble Karnataka High Court in the case of CIT vs. SSA’s Emerald Meadows in ITA No.380 of 2015 and has submitted that the Hon’ble Karnataka High Court dismissed the departmental appeal in identical case hence, the present appeal of the assessee may be allowed.
Ld. D.R. has relied upon the Revenue Authorities.
We have heard the rival contentions of both the parties. We find that the Hon’ble Bombay High Court in the case of CIT vs. Shri Samson Perinchery (supra) has held that the impugned order of the Tribunal deleted the penalty imposed upon the assessee by holding that the initiation of penalty under section 271(1)(c) of the Act by AO was for furnishing of inaccurate particulars
3 Shri Suresh Jaganath Chavan of income while the order imposing penalty is for concealment of income. The impugned order holds that the concealment of income and furnishing of inaccurate particulars of income carry different connotations. Therefore, the AO should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be held that the initiation would be only on one limb i.e. for furnishing of inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. The relevant para of the Hon’ble Bombay High Court is reproduced as under: “4. The impugned order relied upon the following extract of Karnataka High Court’s decision in CIT v/s. Manjunath Cotton and Ginning Factory 359 ITR 565 to delete the penalty.
“The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus, the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The apex court in the case of Ashok Pai reported in [2007] 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing of inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of Manu Engineering reported in 122 ITR 306 and Delhi High Court in the case of Virgo Marketing P. Ltd., reported in 171 Taxman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind.”
In view of the above, we are of the considered opinion that the issue in the present appeal is covered in favour of the assessee. Hence, respectfully following the decision of Hon’ble Bombay High Court in the case of CIT vs. Shri Samson Perinchery (supra), we delete the penalty.
Order pronounced in the open court on 09.05.2017.