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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
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.
Before us, at the outset, Ld.A.R. submitted that though the three appeals of the assessee are for different assessment years but the issue involved in three appeals are common namely, the levy of penalty u/s 271(1)(c) of the I.T. Act. He therefore submitted that the submissions
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.
The relevant facts as culled out from the material on record are
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 :
The learned Commissioner of Income-tax (Appeals) [CIT (A)] erred in upholding the levy of penalty under section 271(1)(c) of the Income Tax act 1961 (the 'Act’). The CIT (A) ought to have held that no penalty was leviable, on the facts and in law.
The CIT (A) erred in holding that the appellant has concealed the income/furnished inaccurate particulars of income.
That on the facts and in the circumstances of the case, the CIT(A) failed to appreciate the fact that :
The income declared by the appellant was purely on estimated basis and there is no tangible material found during the course of survey u/s 133A of the act to justify the levy of penalty for concealment.
The assessed income was same as the returned income.
The taxes were paid and revised return was filed before issue of notices u/s 148, u/s 143(2) and u/s 142(1).
Alleging that the return was revised during the course of assessment proceedings.
Holding that the original return was filed after the sales tax survey.
Concluding that denial of VAT set off was known to the appellant before filing the original return of income and therefore, he ought to have declared his true income in original return.
Alleging that the additional income was not voluntarily disclosed by the appellant.
Confirming the levy of penalty as it rested upon invalid reassessment which was void ab-initio.”
Subsequently, the assessee has raised the following additional
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
The assessee further submits that the penalty order passed is invalid in law since there is no proper satisfaction recorded by the A.O. and even the notice issued by the ld. A.O. u/s. 274 r.w.s. 271(1)(c) is bad in law.”
Similar grounds have been raised by assessee in A.Ys. 2010-11
and 2011-12.
Before us, Ld.A.R. submitted that though the assessee has
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.
Before us, Ld.A.R submitted that in the revised return of income
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.
We have heard the rival submissions and perused the material
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.
In the present case, as noted hereinabove, it is seen that for A.Y.
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.
In the result, all the three appeals of the assessee are
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.