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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SHRI WASEEM AHMED & SHRI T. R. SENTHIL KUMAR
आदेश/O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-2 (in short the Ld. CIT(A)), Rajkot dated 31/01/2020arising in the matter of penalty order passed under Section 271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2004-05.
The only effective issue raised by the assessee is that the learned CIT(A) erred in confirming the levy of penalty under section 271(1)(c) of the Act for Rs. 1,52,809/- only.
The facts in brief are that the assessee is anindividual and engaged in the business of job work of gold ornaments. The Assessee for the year under consideration declared income at Rs. 1,10,860/- only. However, the AO in the assessment order under section 143(3) of the Act made addition of Rs. 3,51,000/-, Rs. 1,05,000/- and Rs. 50,000/- being bogus gift, unexplained credit and unexplained credit from Shri Yatin Kadam respectively. The AO also initiated penalty proceeding under section 271(1)(c) of the Act on account of furnishing inaccurate particular of income but kept in abeyance till order of CIT(A) in quantum proceeding was passed. Thereafter, a final notice under section 274 r.w.s. 271(1)(c) was issued dated 10-02-2012. But the assessee failed to make response to the said notice.
The AO in absence of any reply/submission from the assessee held that the assessee has concealed income and furnished inaccurate particular of income and the assessee has nothing to say about the same. Hence, the AO levied the penalty of Rs. 1,52,809/- being 100% of the amount of tax sought to be evaded on account of concealment of income and furnishing inaccurate particular of income.
The learned CIT(A) on appeal by the assessee, also confirmed the levy of penalty by observing as under: “Thus, CIT(A) has confirmed the addition made by the Assessing Officer. The Assessing Officer has clearly establishes the fact in the Assessment Order stating that the assessee has conceal income to the extent of Rs.3,51,000/- by claiming it as gift which are true to be bogus by the Assessing Officer. The assessee could not explain the source of unexplained credit for Rs. 1,05,000/- and therefore assessee has conceal income for Rs.50,000/- and Rs.1,05,000/- by way of unexplained cash credit in all assessee has conceal income for Rs.5,06,000/-. The AO has also made observation that it is a willful attempt on the part of assessee to conceal the income. The assessee once again fails before the Appellate Authorities in sustaining his claim. I therefore confirm the action of the Assessing Officer based on the above facts that assessee has concealed income of Rs.5,06,000/- and rightly therefore the AO has levied penalty u/s 271(1)(c) of the Act at 100% tax to be evaded for Rs.1,52,809/-. The appellant accordingly do not succeed in the appeal and therefore ground of appeal on this account is accordingly dismissed.”
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.
The assessee through written submission has submitted that the AO has not imposed any specific charge i.e. concealment of income or furnishing inaccurate loss of income in the penalty order. Thus, in the absence of specific charge, the penalty under the provisions of section 271(1)(c) of the Act cannot be levied.
On the other hand, the learned DR before us vehemently supported the order of the authorities below.
We have heard the learned DR and perused the materials available on record. Admittedly, the assessee has shown receipt of gift and unsecured loan which was treated as unexplained cash credit under section 68 of the Act and same was also confirmed by the learned CIT (A). The AO also initiated penalty proceedings under section 271(1)(c) of the Act and levied penalty for concealment of income and furnishing inaccurate particulars of income.
The provisions of section 271(1)(c) of the Act empower the AO to impose penalty on the assessee in case the AO in proceedings found that the assessee has concealed income or furnished inaccurate particular of income. Thus, there are two different limbs of imposing penalty, the first concealment income and another is furnishing inaccurate particular of income. The Hon’ble High Courts time and again held that any addition made under assessment proceedings will not automatically lead to concealment of income or furnishing inaccurate particular of income. As such, the AO has to reach on independent finding that the assessee has concealed income or furnished inaccurate particular of income. The AO should reach to specific charge whether it a case of concealment of income or the case of furnishing inaccurate particular of income. In holding so, we draw support and guidance from the judgment of Hon’ble Jurisdictional High court in case of Snita Transport Pvt. Ltd vs. ACIT reported in 42 taxmann.com 54, where it was held as under: “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."
Coming to the case on hand, we perused the penalty order and found that no specific charge was made by the AO. Thus the case on hand squarely covered by the above judgment of Hon’ble Gujarat High Court. Therefore, we hereby set aside the order of the learned CIT(A) and direct the AO to delete the penalty imposed under section 271(1)(c) of the Act. Hence, the ground of appeal of the assessee is hereby allowed.
In the result,the appeal of the assessee is hereby allowed.
Order pronounced in the Court on 04/01/2023 at Ahmedabad.