SEZ INDORE LTD,INDORE vs. THE ACIT 3(1), INDORE

We have heard the respective parties and perused the relevant materials available on record.

The short point involved in this case as to whether penalty can be imposed without specifying guilt as to whether there was concealment of income by the assessee or furnishing of inaccurate particulars of such income by the assessee. It appears that the penalty proceeding was initiated by the DCIT, Central Circle-3(1), Indore for furnishing of inaccurate particulars of income by the assessee while making addition for land premium receipts to the tune of Rs. 5,85,03,365/- and Rs. 50,34,633/- under Section 40(ii) of the Act. It further appears that while imposing penalty the DCIT, Circle3(1), Indore in its order dated 31.03.2017 clearly came to a conclusion that concealment and furnishing of inaccurate particulars of income by the assessee which was, in turn, confirmed by the First Appellate Authority.

It is incumbent upon the assessing authority to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished. Otherwise the penalty order passed by the authorities below is liable to be quashed. &273/Ind/2021 SEZ Indore Ltd. vs. ACIT Asst.Year –2009-10 & 2010-11 - 3 –

On this aspect we have considered several judgments passed by the Hon’ble Jurisdictional High Court including in the case of Snita Transport Pvt. Ltd. vs. ACIT, reported in 42 taxmann.com 54 wherein it has been held that penalty cannot be imposed by the authorities below without mentioning the specific charge leveled against the assessee. The relevant portion of the said order is reproduced hereinbelow: “9. Regarding the contention that the Assessing Officer was ambivalent regarding under which head the penalty was being imposed namely for concealing the particulars of income or furnishing inaccurate particulars, we may record that though in the assessment order the Assessing Officer did order initiation of penalty on both counts, in the ultimate order of penalty that he passed, he clearly held that levy of penalty is sustained in view of the fact that the assessee had concealed the particulars of income. Thus insofar as final order of penalty was concerned, the Assessing Officer was clear and penalty was imposed for concealing particulars of income. In light of this, we may peruse the decision of this Court in case of Manu Engineering Works (supra). In the said decision, the Division Bench came to the conclusion that language of "and/or" may be proper in issuing a notice for penalty, but it was incumbent upon the Assessing Authority to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by them. If no such clear cut finding is reached by the authority, penalty cannot be levied. It was a case in which in final conclusion the authority had recorded that "I am of the opinion that it will have to be said that the assessee had concealed its income and/or that it had furnished inaccurate particulars of such income." It was in this respect the Bench observed that "Now the language of "and/or" may be proper in issuing a notice as to penalty order or framing of charge in a criminal case or a quasi-criminal case, but it was incumbent upon the IAC to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear cut finding was reached by the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down."

The principles laid down by the Hon’ble Jurisdictional High Court in the above case are squarely applicable to the facts of the case in hand. At the cost of repetition we observe that the AO has not mentioned the specific charge in its penalty orders whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Therefore, in our considered view, the penalty levied by the AO and confirmed by the First Appellate Authority is &273/Ind/2021 SEZ Indore Ltd. vs. ACIT Asst.Year –2009-10 & 2010-11 - 4 – not sustainable in the eye of law. The penalty, therefore, is deleted. Hence, the appeal filed by the assessee is allowed.

The identical issue involved in the case has already been dealt with by us in A.Y. 2009-10 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, the appeal preferred by the assessee is allowed.

In the combined result, both the appeals filed by the assessee are allowed.