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Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI AMIT SHUKLA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] – 30, New Delhi dated 13.02.2018 pertaining to assessment year 2007-08.
The sum and substance of the grievance of the assessee is that the CITA erred in confirming the penalty levied by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'].
Briefly stated, the facts of the case are that a search and seizure operation under section 132 of the Act was carried out at various premises of HBN Group on 20.11.2009 including the assessee company.
In response to the notice under section 153A of the Act, the assessee filed return of income declaring total income at Rs. NIL.
Assessment was completed vide order dated 30.12.2011 wherein the addition of Rs.2.30 crores was made to the returned income of the assessee. Simultaneously, penalty proceedings under section 271(1)(c) of the Act were also initiated alleging that the assessee has concealed the particulars of income. Statutory notices were, accordingly, issued and served upon the assessee. The said notice is as under:
“Whereas in the course of proceedings before me for the Assessment Year 2007-08 it appears to me that you :-
Have without reasonable cause failed to comply with a notice u/s 143(1)(1/143(2) of the Act dated……
Have concealed the particulars of income or furnished inaccurate particulars of income in terms of explanation 1,2,3,4 and 5/undisclosed income in the case of search.
You are hereby requested to appear before me at 11.30 A.M. on 27/01/2012 and show cause why an order imposing a penalty on you should not be made u/s 271 of the Act. If you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made u/s 271.
Assessing Officer
Asstt. Commissioner of Income tax, Central Circle 4, New Delhi.”
Subsequently, penalty was levied under section 271(1)(c) of the Act for concealment of particulars of income.
A perusal of the aforementioned notice clearly shows that the Assessing Officer has not specified under which limb of the section he is proposing to levy penalty under section 271(1)(c) of the Act.
This issue has been elaborately considered by the Hon’ble High Court of Delhi in the case of Sahara India Life Insurance 426 of 2019. The relevant findings of the Hon’ble High Court read as under:
“21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of inc me or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016.”
Similar view was taken by the Hon’ble High Court of Karnataka in the case of SSA Emerald Meadows of 2015. The relevant findings of the judgement read as under:
“Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act to be bad in law as it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The issue was decided in favour of the assessee.”
A SLP of the revenue against this judgement of the Hon’ble High Court of Karnataka was dismissed by the Hon’ble Supreme Court in 73 taxmann.com 248. Respectfully following the binding decision of the Hon’ble Jurisdictional High Court of Delhi, we direct the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act.
In the result the appeal of the assessee in is allowed.
The order is pronounced in the open court on 23.11.2021.