JITENDRA PRATAPRAO SONAR,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX,

आदेश / ORDER PER ANIL CHATURVEDI, AM :

These three appeals filed by the assessee are emanating out of a 1. consolidated order of Commissioner of Income Tax (A)-4, Pune dt.30.10.2015 for the assessment years 2009-10, 2010-11 and 2011- 12 wherein Ld.CIT(A) has confirmed the levy of penalty u/s 271(1)(c) of the Act.

made by him while arguing appeal for one year would be equally

applicable to other years and therefore all the three appeals can be

heard together. Ld.D.R. did not object to the aforesaid submission of

Ld.A.R. We therefore for the sake of convenience proceed to dispose of

all the three appeals by a consolidated order.

as under :-

3.1 Assessee is an individual and stated to be engaged in the

business of undertaking Publishing and Printing contracts. Assessee

filed his original return of income for A.Y. 2009-10 on 30.09.2009

declaring total income at Rs.41,80,600/-. A survey action u/s 133A of

the Act was carried out on 22.10.2012 at the business premises of the

assessee. During the course of survey action, it was noticed that

assessee had made bogus purchases from various parties who were

declared hawala dealers by the Sales Tax Department. The aggregate

purchases made by the assessee from such parties was to the tune of

Rs.82,23,904/-. AO noted that on being confronted, assessee could

not provide all the supporting documents to ascertain the veracity of

purchases but however assessee offered additional income of

Rs.36,85,775/- after applying an estimated gross profit of 24% on the

total turnover. Assessee thereafter revised his return of income on

28.03.2013 declaring the total income of Rs.78,66,380/- Thereafter,

the case was re-opened and subsequently assessment was framed u/s

143(3) r.w.s. 147 of the Act vide order dt.28.03.2014 and the total

income was determined at Rs.78,66,380/- being the same as offered by

the assessee in the revised return of income. For the other assessment

years the details of income offered by the assessee are as under :

A.Y. Income Addl. income Total income Total income offered in differed in offered in assessed u/s original response to return in 143(3) r.w.s. return notice u/s 148 response to 147. notice u/s 148 in Rs. in Rs. in Rs. in Rs.

2010-11 99,42,430/- 1,60,34,335/- 2,59,76,780/- 2,59,76,780/-

2011-12 1,33,93,884/- 1,66,42,104/- 3,00,35,988/- 3,00,35,988/-

On the additional income offered by the assessee in the revised return

of income for the three assessment years, AO vide order dt.26.09.2014

levied penalty of Rs.12,16,305/- (for A.Y. 2009-10), Rs.48,78,801/- (for

A.Y. 2010-11) and Rs.50,28,183/- (for A.Y. 2011-12) u/s 271(1)(c) of

the Act on account of concealing the particulars of income and for

furnishing inaccurate particulars of income. Aggrieved by the orders

of AO, assessee carried the matter before Ld.CIT(A), who vide order

dt.30.10.2015 dismissed the appeals of the assessee. Aggrieved by the

order of Ld.CIT(A), assessee is now in appeal before us and has raised

the following grounds in A.Y. 2009-10 :

“That on the facts and in the circumstances of the case :

That on the facts and in the circumstances of the case, the CIT(A) failed to appreciate the fact that :

grounds :

“1. The assessee submits that the penalty order passed u/s. 271 (1) (c) be declared null and void since the said order has been passed without proper application of mind

Similar grounds have been raised by assessee in A.Ys. 2010-11

and 2011-12.

raised several grounds but all the grounds are inter-connected and the

sole controversy is with respect to levy of penalty u/s 271(1)(c) of the

Act.

filed by the assessee, the revised income offered by the assessee were

accepted in toto by the AO without any change. He submitted that on

the additional income offered by the assessee, AO levied penalty u/s

271(1)(c) of the Act. Ld.A.R. submitted that while passing the

assessment orders for A.Y. 2009-10 and 2010-11, AO initiated penalty

for concealing the particulars of income but while passing the

assessment order for A.Y. 2011-12, no satisfaction was recorded by

AO. He submitted that thereafter the AO while passing the order for

penalty for all the three assessment years, AO levied penalty for

concealing the particulars of income as well as for furnishing

inaccurate particulars of income. He pointed to the relevant

assessment and penalty orders. He therefore, relying on the decision

of Hon’ble Bombay High Court in the case of CIT Vs. Samson

Perinchery (ITA No.1154 of 2014 order dt.05.01.2017), submitted that

when initiation of penalty is for furnishing of inaccurate particulars of

income or when no satisfaction for penalty is recorded but when

penalty was levied for concealment of income, then in the absence of

proper show cause notice to assessee, penalty u/s 271(1)(c) cannot be

levied. He therefore submitted that penalty levied by AO be deleted.

Ld.D.R. on the other hand, supported the orders of lower authorities.

on record. The issue in the present case is with respect to levy of

penalty u/s 271(1)(c) of the Act. In the present case, it is an

undisputed fact that the amount of additional income offered by the

assessee pursuant to survey action for all three assessment years has

been accepted by Revenue in toto. On the additional income offered

and accepted by Revenue, the penalty u/s 271(1)(c) has been levied by

AO. The perusal of assessment order passed u/s 143(3) r.w.s 147 of

the Act for A.Y. 2009-10 and 2010-11 reveals that AO initiated penalty

for concealing the particulars of income. As far as A.Y. 2011-12 is

concerned the perusal of assessment order reveals that AO had not

recorded any satisfaction for levy of penalty. Thereafter in the penalty

orders passed u/s 271(1)(c) of the Act, AO held that assessee had

concealed particulars of income by furnishing inaccurate particulars of

income. It is a settled law that while levying penalty for concealment,

the AO has to record satisfaction and thereafter come to a finding in

respect of one of the limbs, which is specified under section 271(1)(c) of

the Act. The first step is to record satisfaction while completing the

assessment as to whether the assessee had concealed its income or

furnished inaccurate particulars of income. Thereafter, notice u/s 274

read with Section 271(1)(c) of the Act is to be issued to the assessee.

The Assessing Officer thereafter has to levy penalty under Section

271(1)(c) of the Act for non-satisfaction of either of the limbs. While

completing the assessment, the Assessing Officer has to come to a

finding as to whether the assessee has concealed its income or

furnished inaccurate particulars of income. The Hon’ble Bombay High

Court in CIT Vs. Shri Samson Perinchery in ITA No.1154 of 2014 with

other ITA Nos.953 of 2014, 1097 of 2014 and 1226 of 2014, vide

judgment dated 05.01.2017 held that where initiation of penalty is one

limb and the levy of penalty is on other limb, then in the absence of

proper show cause notice to the assessee, there is no merit in levy of

penalty.

2011-12 the AO has not recorded any satisfaction and further levied

penalty on both the limbs i.e., for concealment of income and for

furnishing of inaccurate particulars of income. For A.Y. 2009-10 and

2010-11, AO recorded that penalty is initiated for concealing the

particulars of income but in the penalty order passed levied penalty on

both the limbs i.e., for furnishing of inaccurate particulars of income

and concealing the income. Considering the aforesaid facts in the

light of the decision of Hon’ble Bombay High Court in the case of

Samson Perinchery (supra), we are of the view that in the present

cases, the basic condition for levy of penalty has not been fulfilled and

that the penalty order suffers from non-exercising of jurisdiction

power of AO and therefore penalty orders cannot be upheld. We

accordingly set aside the penalty orders for all the three years passed

by AO. Thus, the grounds of assessee are allowed.

allowed.

Order pronounced on 5th day of January, 2018.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 5th January, 2018. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-4, Pune. 4. Pr.CCIT, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, ITAT, “B” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy //

व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.