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Income Tax Appellate Tribunal, BENCH “D” MUMBAI
Before: SHRI D.T.GARASIA, JM & SHRI RAJESH KUMAR, AM
सुनवाई की तारीख /Date of Hearing : 27.2.2017 घोषणा की तारीख /Date of Pronouncement : 24.4.2017 आदेश / O R D E R PER RAJESH KUMAR, A. M: This is an appeal filed by the assessee against the order dated 2.2.2016 passed by the ld.CIT(A)-57, Mumbai for the assessment year 2010-11.
The sole issue in all the grounds of appeal
filed by the assessee is against the confirmation of penalty of Rs.8,60,500/- by the ldCIT(A) as levied by the AO under section 271(1)( c ) of the Income Tax Act, 1961 in respect of addition of Rs.25,31,556/- on account of non-inclusion of income drawn from Lord 2 Incorporation, USA. The assessment u/s 143(3) was completed on 19.3.2013 by assessing the total income of assessee at Rs.21,75,39,350/- as against the returned income of Rs.21,49,63,680/- by making two additions of Rs.25,31,556/- being the income from Lord Incorporation, USA for providing services by the assessee and mismatch amount of Rs.44,113/- to hotels and restaurant. The AO initiated penalty proceedings u/s 271(1)( c ) r.w.s.274 of the Act for furnishing inaccurate particulars of income and concealment of income and accordingly issued notice dated 19.3.2013 and ultimately penalty was imposed vide order dated 27.9.2013 passed under section 271(1)( c ) of the Act which was confirmed by the ld.CIT(A). Aggrieved by the order of the ld.CIT(A), the assessee preferred an appeal before this Tribunal.
3. Before us, the ld.AR, at the outset, submitted before us that the order passed by the AO u/s 271(1)(c) of the Act was invalid and liable to be quashed for the reasons that the AO initiated penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income/ concealment of the income and issued notice under section 271(1)(c) without mentioning the limbs on which the penalty was proposed to be levied. Ultimately the penalty was imposed for furnishing inaccurate particulars of income. The ld. AR vehemently submitted before us that the issue involved in this appeal has now been settled by the decisions of various High Courts and also decisions of the Tribunal by holding that if the penalty is levied without specifically stating the charge, the 3 penalty order is invalid and has to be quashed. The ld. AR strongly relied on the decision of Tribunal in the case of Shri Samson Perinchery V/s ACIT in ITA No.4625/Mum/2013 (AY-2003-04) and others, order dated 11.10.2013. Besides, the ld.AR also relied on number of other decisions viz: i) CIT V/s SSA’s Emerald Meadows –ITA No.380 of 2015) dated 23.11.2015 (Karnataka High Court); ii) CIT V/s SSA’s Emerald Meadows –CC No.11485/2016 dated 5.8.2016 (SC); iii) Lalitkumar M Sakhala V/s DCIT-ITA No.938/Mum/2013 dated 10.8.2016 (AY-2009-10) Mumbai ITAT; iv) Price Waterhouse Coopers Pvt.Ltd V/s ACIT -348 ITR 306 (SC); v) Wadhwa Estate and Developers India Pvt.Ltd V/s ACIT –ITA No.2158/Mum/2016, dated 24.2.2017 (AY-2011-12) (Mum.Trib); vi) Shri Raj Dutta V/s JCIT-ITA No.930/Del/2012-dated 12.8.2016 (AY- 2006-07) (Del.Trib) 4. On the other hand, the ld. DR while controverting the arguments of the ld.AR defended the initiation of penalty proceedings and penalty imposed by the AO u/s 271(1)(c) read with section 274 of the Act and also the confirmation thereof by the ld.CIT(A). The ld. DR submitted that u/s 274 of the Act the mandatory conditions are that the assessee should be given an opportunity to reply the show cause which has been given and duly availed by the assessee by attending the proceedings and filing written as well as oral submissions which were duly considered while passing the penalty order.
5. We have carefully considered the rival contentions, perused the material placed before us including the orders of authorities below and case law relied upon by the parties. The perusal of the assessment order reveals that the AO 4 ITA No.3858/M/2016 has not specified under which charge the penalty was proposed to be levied i.e whether it is for concealment of income or furnishing inaccurate particulars of income. The AO, without specifying the charges initiated penalty proceedings under section 271(1)(c ) of the Act i.e. whether the assessee has concealed a particulars of income or furnished inaccurate particulars of income. We also find from the order under section 271(1) (c) r.w.s.274 of the Act as extracted hereinafter that the notice has been issued without striking off one of the two limbs i.e. for concealing the particulars of income or furnishing inaccurate particulars of income of such income under which the penalty was initiated against the assessee.
In the case of CIT vs. SSA's Emerald Meadows ITA 380 of 2015, the Hon’ble Karnataka High Court has also decided the identical issue in favour of the assessee by holding that no substantial question of law arose for determination in this appeal which was filed against the order of the tribunal wherein the tribunal allowed the appeal of the assessee by quashing the penalty proceedings and consequent order where the AO did not specify under which limb the penalty had been initiated by following and relying on the decision in the case of CIT Vs Manjunatha Cotton and Ginning Factory (2013)359ITR 565. The revenue filed SLP against the decision of Karnataka High Court in the above decision which has also been dismissed by the Honble Supreme Court 05.08.2016.
5 In the case of CIT V/s Samson Perinchery in INCOME TAX APPEAL NO. 1154 OF 2014(Bom) order dated 5.1.2017 the Hon’ble Bombay High Court has been held as under: “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 respondentAssessee 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 (supra).”
We are, therefore, respectfully following the ratio laid down by the Hon’ble High Courts including the jurisdictional High Court and Supreme Court hold that the order of the CIT(A) upholding the imposition of penalty u/s 271(1)(c) of the Act where the AO had not specified or mentioned the charge on which the penalty has been imposed is not correct and cannot be sustained. In view of the foregoing discussion, we set aside the order of CIT(A) and direct the AO to delete the penalty levied u/s 271(1)( c ) of the Act.