ASST CIT CEN CIR 38, MUMBAI vs. R.C.C. (SALES ) P.LTD, MUMBAI

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ITA 5409/MUM/2013Status: DisposedITAT Mumbai03 November 2015AY 2005-063 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer did not record any satisfaction regarding the concealment of income during the assessment proceedings. Therefore, the penalty order was passed without proper satisfaction and was not in accordance with the law.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting the penalty levied on the assessee. The penalty was imposed for alleged concealment of income and inaccurate particulars furnished in the return of income.

What were the issues?

Whether the penalty levied under Section 271(1)(c) is valid when the Assessing Officer has not recorded satisfaction regarding concealment of income during assessment proceedings.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SHRI D. KARUNAKARA RAO & SHRI RAM LAL NEGI

For Appellant: Shri Prakash L. Pathak
Hearing: 03.11.2015Pronounced: 03.11.2015

अऩीराथी की ओय से / Appellant by : Shri Prakash L. Pathak प्रत्मथी की ओय से/ Respondent by : Shri Prateek Jha & Dr. Prayag Jha सुनवाई की तायीख / Date of Hearing : 03.11.2015 घोषणा की तायीख /Date of Pronouncement : 03.11.2015 आदेश / O R D E R

PER D. KARUNAKARA RAO, AM:

1.

This appeal filed by the revenue on 7.8.2013 is against the order of the CIT (A)-41, Mumbai dated 31.5.2013 for the assessment year 2005-2006. In this appeal, Revenue raised the following grounds which read as under: “1. Whether on the facts and in the circumstancers of the case and in law, the Ld CIT (A) is justified in deleting the penalty levied while the assessee did not furnish the true picture of his income in his return of income and neither he himself disclosed the income on which additions were made during the assessment proceedings before the enquiring of the Assessing Officer was started.

2. Whether on the facts and in the circumstances of the case and in law, the Ld CIT (A) is justified in deleting the penalty levied on the disallowance u/s 35AB of Rs. 57,50,000/-, while the assessee was eligible for such claim till AY 2002-2003 only and he benefited himself by making such claim in AY 2005-2006 also, which shows that the intention of the assessee is not bonafide.

3. Whether on the facts and in the circumstances of the case and in law, the Ld CIT (A) is justified in deleting the penalty levied on account of excess claim of depreciation of Rs. 82,144/- on plant and machinery (ie accessories attached to computers viz printers etc) while the assessee has given inaccurate particulars of income ie claimed assets to be a part of block of assets to which it actually does not belong.”

2. Before us, at the outset, Ld Counsel for the assessee submitted that the Assessing Officer passed the penalty order u/s 271(1)(c) of the Act when there is no satisfaction recorded by the AO while making additions in assessment made on 31.12.2010. In this regard, bringing our attention to all the paragraphs of the assessment order in general and para 9 in particular, Ld Counsel for the assessee submitted that there is no reference to the necessity of initiating the penalty u/s 271(1)(c) of the Act. On perusal of the said para 9, we find it relevant to extract the same which reads as under: “9. Assessed accordingly. Given credit for taxes paid after due verification. Issued Demand Notice (DN) and challan / RO.”

3.

From the above, it is self-explanatory. There is no reference to the AO‟s satisfaction for issue of notice u/s 271(1)(c) of the Act for levy of penalty under the said section. In effect, the penalty order passed on 30.3.2012 is without any satisfaction on the „concealment of income‟. In the absence of the same, it is not known as to why the penalty is levied ie whether it is for „concealment of income‟ or furnishing of „inaccurate particulars of income‟. Thus, there is an ambiguity in the mind of the officers on the allegation of concealment made out by the AO in the penalty order. Such allegation should not be made when there is no satisfaction about the same recorded during the assessment proceedings. Further, we have perused the judgment of the Bombay High Court in the case of CIT vs. Dajibhai Kanjibhai [1991] 189 ITR 41 (Bom.) which is in support of the assessee. The said judgment of the jurisdiction High Court (supra) is relevant for the legal proposition that penal provisions u/s 271(1)(c) are not attracted when there is no evidence to show that ITO / AO was satisfied about the concealment of income in the course of assessment proceedings. In such circumstances, imposing penalty is not in accordance with law and deserves to be quashed. Without going to the other aspects of the arguments and the counter arguments, we are of the opinion that the order of the CIT (A) is fair and reasonable and it does not call for any interference on these technical grounds. Accordingly, grounds raised

by the Revenue are dismissed.

4. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 3rd November, 2015.

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