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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI SANDEEP GOSAIN
सुनवाई की तायीख / Date of Hearing : 01.03.2017 घोषणा की तायीख /Date of Pronouncement : 17.03.2017 आदेश / O R D E R
PER D. KARUNAKARA RAO, AM:
This appeal filed by the assessee on 18.11.2011 is against the order of the CIT (A)-16, Mumbai dated 2.9.2011 for the assessment year 2008-2009. In this appeal, assessee raised the following ground which reads as under:- “The Ld CIT (A) has erred in confirming the penalty charged u/s 271(1)(c) of the Act for Rs. 2,82,98,339/-.”
2. Briefly stated relevant facts of the case are that the assessee is engaged in the business of „manufacturing, trading and export of readymade garments‟. Assessee filed the return of income declaring the total loss of Rs. 8,31,53,070/-. Assessment was completed u/s 143(iii) of the Act and the assessed income was determined at Rs. 1,01,826/-. In the assessment, AO made certain disallowances viz (i) disallowance of Rs. 8,22,49,900/- on the ground that no evidence of stock reducing to NIL has been furnished and (ii) disallowance of expenses claimed as bad debts amounting Rs. 6,53,074/-. During the assessment proceedings, AO noticed that the opening stock was shown at Rs. 8,22,49,900/- and closing stock at Rs. NIL. Assessee was asked to justify the stock along with the claim of expenses made in the P & L Account. Considering the assessee‟s failure to substantiate its claim, AO held that the assessee concealed particulars of income, furnished inaccurate particulars of income and proceeded to initiate the penalty proceedings u/s 271(1)(c) of the Act. Accordingly, penalty order was passed on 3.3.2011. Matter travelled to the CIT (A).
During the proceedings before the first appellate authority, after considering the submissions of the assessee, CIT (A) dismissed the appeal and confirmed the penalty levied by the AO. Aggrieved, assessee is in appeal before the Tribunal.
Before us, at the outset, Ld Counsel for the assessee briefly narrated the background facts of the case and brought our attention the copy of the notice issued u/s 274 of the Act and mentioned that the AO did not ticked any of the columns provided on page of the said notice. Ld AR for the assessee reasoned that the AO has ambiguity on the applicable limb ie „concealment of income‟ or „furnishing of inaccurate particular of income‟.
Further, bringing our attention to the penalty order dated 03.03.2011, Ld Counsel for the assessee read out the para 2 which reads as under:- “................As the assessee has “concealed particulars of income”, “furnished inaccurate particulars of income”, the penalty proceeding u/s 271(1)(c) of the Act are initiated.”
After hearing both the parties and on perusal of the orders of the Revenue Authorities, we find, there is no clarity in the minds of the Revenue Authorities, whether the amount involved is a case of “concealment of income” or “furnishing of inaccurate particulars of income”. In such circumstances, the assessee is entitled to relief as per the ratio laid down in the binding judgment of Hon’ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton and Ginning Factory [2013] 359 ITR 565 (Karn.). For all the above reasons, we find, the penalty levied by the AO and confirmed by the CIT (A) is not legally sustainable. Accordingly, grounds raised
by the assessee are allowed.
7. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 17th March, 2017.