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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-I’ : NEW DELHI
Before: SHRI P.K. BANSAL
O R D E R The only issue involved in this appeal against the order of the CIT (Appeals) dated 01.09.2015 is levy of the penalty amounting to Rs.94,607/- u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
I heard the rival submissions and carefully considered the same. I noted that in this case, the AO levied the penalty on the assessee on the sum of Rs.2,47,468/- which he added in the income of the assessee in passing an order u/s 144 as, according to him, the assessee did not offer any explanation about the source of such expenditure even though these expenses have been incurred through the credit card. I noted that the AO levied the penalty u/s 271(1)(c) in the following manner :-
“7. In the light of above discussion, the undersigned is satisfied that the assessee has concealed the income and furnished inaccurate particulars of income and it is a fit case for levy of penalty u/s 271(1)© of the Income Tax Act, 1961 read with Explanation 1 to section 271(1).
The computation of penalty is as follows :- Income concealed/income in respect of which : Rs.2,47,468/- Inaccurate particulars furnished Tax on above income : Rs. 94,607/- i.e. Tax sought to be evaded Minimum penalty leviable @ 100% : Rs. 94,607/- Maximum penalty leviable @ 300% : Rs.2,83,821/- From the said paragraph of the AO levying the penalty, it is apparent that the penalty has been levied by the AO without specifying a particular charge against the assessee. The CIT (A) confirmed the order of the AO.
From the provisions of section 271(1)(c), it is apparent that the penalty u/s 271(1)(c) can be levied if the AO in the course of any proceedings under the Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. Thus, there must be a specific charge and the charge levied must be either concealment of the particulars of income or furnishing of inaccurate particulars of income. Explanation 1 is applicable in the case of concealment of the particulars of income. It cannot be applied in case of filing of the inaccurate particulars of income. In the case of concealment of particulars of income, there is a deemed concealment of the particulars of the income in view of the Explanation 1 and the onus is on the assessee to prove that he has not concealed the particulars of the income while in the case of furnishing of inaccurate particulars of income, the onus is on the revenue to prove that the assessee has furnished the inaccurate particulars of income. Merely making a claim which may not be allowable by AO cannot be regarded that the assessee has furnished the inaccurate particulars of income. I am of the view that until and unless, a specific charge is levied, the penalty levied by the AO cannot be survived in the eyes of law. In this case, the AO simply observed that the assessee made himself liable for the levy of the penalty u/s 271(1)(c) but in the subsequent paragraph, he imposed the penalty for the default of concealment of the particulars of income and furnishing of inaccurate particulars of such income. This itself proves that the AO is not sure what fault has been committed by the assessee. Hon’ble Gujarat High Court in the case of New Sorathia Engineering Co. v. CIT [2006] 282 ITR 642 (Guj) has clearly laid down that it is incumbent upon the AO to state whether penalty is being levied for concealment of particulars of income or whether any inaccurate particulars of income had been furnished by the assessee. In the absence of clear-cut finding being given by the AO, Hon’ble High Court declared the order passed for levying the penalty to be invalid. Similar view has been taken by the Hon’ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton and Ginning Factory – 359 ITR 565. No contrary decision was brought to my knowledge by the ld. DR. On this basis itself, the penalty is liable to be deleted. I, therefore set aside the order of the CIT (A) and deleted the penalty levied u/s 271(1)(c) of the Act.
In the result, the appeal filed by the assessee stands allowed. Order pronounced in open court on this 19th day of February, 2016.