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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] - Ghaziabad dated 14.12.2017 pertaining to assessment year 2013-14.
The assessee has raised the following grounds of appeal:
“Ground No. 1
That on the facts and circumstance of the case, the penalty order passed by the Ld. C1T(A) under section 250 of the Income-tax Act is bad in law.
Ground No. 2
That the Ld. CIT (A) has erred in confirming the penalty amounting to Rs. 14,38,083/- levied by the Dy. Commissioner of Income-tax under section 271 (1 )(c) of the Income-tax Act, 1961 ignoring the fact that the penalty proceedings had already been dropped by the Ld. AO.
Ground No. 3
That the Ld. CIT (A) has erred in confirming the penalty amounting to Rs. 14,38.083/- levied without appreciating the fact that assessee has neither concealed the income nor furnished inaccurate particulars of income
Ground No. 4
That the CIT (A) has erred in confirming the penalty without considering the fact that notice issued by Ld. AO under section 274 read with section 271 (1 )(c) is bad in law as it did not specify under which limb of Section 271(1 )(c) of the Act the penalty proceedings had been initiated i.e.. whether tor concealment of particulars of income or furnishing of inaccurate particulars of income.”
At the very outset, the ld. counsel for the assessee addressed Ground No.
4. It is the say of the ld. counsel that the ld. CIT(A) erred in confirming the penalty levied under section 271(1)(c) of the Act wherein the notice issued by the Assessing Officer did not specify under which limb of section 271(1)(c) of the Act the penalty proceedings have been initiated. A perusal of the assessment order shows that on addition of Rs. 66,17,984/-, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act separately for concealment of income and furnishing of inaccurate particulars of income.
A perusal of the penalty order shows that the assessing officer levied the penalty of Rs.14,38,083/- by holding that the assessee was found to have concealed particulars of its income and furnished inaccurate particulars of income. The above narrated facts clearly show that the Assessing Officer was not sure under which limb of this section the penalty is leviable. This issue has been duly considered and decided 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.
In light of the above decisions, penalty levied 271(1)(c) of the Act is directed to be deleted.
Before parting, vide Ground No. 2, the assessee has raised the issue that the Assessing Officer had dropped the penalty proceedings and therefore, could not have levied penalty subsequently.
We have carefully considered the order sheet entry dated 30.03.2016 wherein the Assessing Officer has made the noting “considering the reply of the assessee and facts of the case, penalty proceedings are hereby dropped”. This being the fact of the matter, we do not find any reason why penalty proceedings were revived as there is no order under section 263 of the Act wherein the PCIT has taken action.
In any case, since we have directed for deletion of the penalty, we are of the considered view that the other issues are only of academic interest.
In the result, the appeal filed by the assessee in is allowed.
The order is pronounced in the open court on 23.11.2021.