SHRI ASHOKE DAS,KOLKATA vs. I.T.O WD - 53(3),KOLKATA, KOLKATA

The grounds raised therein can be read together and the only ground in this appeal remains for our consideration is as to whether CIT-A justified in confirming the penalty levied by the AO u/s 271(1)(c) in the circumstances of the case.

Brief facts of the case are that the assessee is an individual. The assessee filed his return of income on 31-10-2005 declaring total income of Rs.7,69,390/-. Under Shri Ashoke Das scrutinyproceedings, the AO found that the assessee earned income under the head commission from net working business, capital gain in shares, income other sources and loss from house property and determined income of at Rs.80,96,110/- and an assessment order dt:26-12-07 was passed u/sec 143(3) adding such amount to the total income of the assessee.. The Assessing officer has initiated the penalty proceedings u/s. 271(1) (c) for not disclosing the income of the assesse and levied penalty of Rs.25,08,485/- U/Sec 271(1)(c) of the Act. Aggrieved, the assessee preferred an appeal before the CIT(A). The CIT(A) confirmed the order of the Assessing Officer in imposing penalty u/s. 271(1)( c) of the Act. Aggrieved, the assessee is in appeal before us.

During the course of arguments the Ld. AR for the assessee submitted that no satisfaction was recorded by the AO in assessment order dt. 24-12-2007 framed u/s. 143(3) of the Act is as to whether the assessee found guilty in concealment of income or for furnishing of inaccurate particulars of income in respect of long term capital gain or short term capital gain. Futher, ld.A/R argued that whisper or whatsoever made by the AO that about the initiation of penalty proceedings in the said assessment order. The ld.A/R argued that the assessee preferred an appeal before the Hon’ble High Court of Calcutta against the order dated 1-5-2009 passed by ‘B ‘Bench of Kolkata Tribunal, wherein the Tribunal confirmed the quantum of additions made by the AO and further submitted that the Hon’ble High Court was pleased to admit the said appeal being in ITAT No.9 of 2012 and placed a copy of such order before us. The ld. A/R argued that the additions made by the AO is debatable in view of the admission of assessee’s own appeal by the Hon’ble Calcutta High Court.

Coming to the decision placed on reliance by the ld.A/R in support of his contentions, we find that a similar issue has come before ITAT Mumbai Bench, wherein the Tribunal observed that the penalty cannot be levied u/s. 271(1) ( c) for the reasons admission of appeal of assessee by the Hon’ble High Court of Bombay. The relevant portion of Hon’ble High Court supra which is reproduced as under:-

We find that from the aforementioned case when High Court admits substantial question of law on an addition, it becomes apparent that the addition is certainly debatable and in such circumstances the Hon’ble High Court supra held penalty cannot be levied u/s 271(1)(c) of the Act. We find that in the present case as rightly pointed out by the Ld.AR that the appeal preferred by the assessee has been admitted by the Hon’ble High Court of Calcutta, which is evident from the copy of such order placed before us. Therefore, the imposition of penalty has become debatable and arguable. In our view, in the light of the decision of Hon’ble Bombay High Court supra relied on by the Ld.AR the ratio laid down therein is clearly applicable to the facts of the present case. Respectfully following the same, the grounds raised by the assessee are allowed. Shri Ashoke Das

In the result, the appeal of assessee is allowed.