M/S. ANUKUL CONSTRUCTION CO.,,RAJKOT-GUJARAT vs. THE ITO, WARD-1(2)(5),, RAJKOT-GUJARAT

The assessee has raised the following grounds of appeal:

The Ld. CIT (A) has erred in law and facts in confirming penalty u/s. 271(1)(c) in respect of addition of Rs.1,30,928/-. The penalty needs deletion.

The Ld. CIT (A) has erred in law and facts in confirming penalty u/s. 271(1)(c) of Rs.40,460/- in respect of addition made on without proper verification and settled law. The penalty needs deletion.

The Ld. CIT (A) has erred in law and facts in confirming penalty u/s. 271(1)(c) of Rs.40,460/-. Without accepting that the Ld. A.O. has passed order without giving adequate time and opportunity although the assessee specifically requested for the same. The penalty needs deletion.

The Ld. CIT(A) has erred in not bringing any cogent material justifying levy of penalty. The penalty needs deletion.

The penalty order being bad in la needs cancellation

Without prejudice the penalty order having been passed beyond limitation prescribed needs cancellation.

Taking into considering the legal position, statutory aspects and facts of the case no penalty ought to have been levied. The same deserves cancellation.”

The assessee firm is engaged in civil construction work and filed return of income on 30.09.2009 declaring total income of Rs.4,12,105/-. The assessment order was passed on 22.12.2011 thereby making various additions/disallowances by the Assessing Officer and assessed the total income at Rs.54,14,990/-. The assessee has preferred appeal before the CIT(A) and the CIT(A) partly allowed the said appeal of the assessee and sustained the addition on account of unexplained contract receipt of Rs.5,25,184/- and restricted the same to the extent of profit impeded thereon i.e. Rs.1,30,928/-. The CIT(A) also sustained the disallowance to the extent of Rs.1,08,880/- in respect of no charge interest on loan and advances given to its partners. The Assessing Officer subsequently initiated penalty proceedings under section 271(1)(c) of the Act and the Assessing Officer has passed penalty order in respect of concealment of particulars of income to the extent of Rs.3,65,399/- and imposed penalty of Rs.94,317/- under Section 271(1)(c)

Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

Total addition of Rs.525184 made has been reduced Rs.130000 thus an uninquried addition had been reduced on estimation basis and that to without rejecting books of a/c duly audited at least does not approve levy of penalty.

Moreover it is humbly submitted that the assessee has filed return declaring income of Rs.412105. Addition of Rs.5002882 has been deleted in appeal and deleting penalty in all amount of addition is also either not levied or canceled thus the only part survive for the levy of penalty of Rs.130928 on which tax leviable accounts to Rs.40460 only. The overall position of the assessee declaring huge income of Rs.412205 paying full tax thereon and deletion, cancelation and reduction of entire amount of addition by the first appellate authority itself shows that an assessee would not prefer not to disclose of Rs.130928 on which penalty levied is only Rs.40460. Thus the conduct of the assessee is accepted by the department but totally failure to consider the case as a levy of penalty is bad in law needs deletion.

The appeal therefore may kindly be allowed.”

We have heard the Ld. DR and perused all the relevant material available on record as well as the written submission filed by the Ld. AR. In the assessment order the addition of Rs.5,25,184/- was made which was thereafter reduced to Rs.1,30,000/- There was no mention in assessment order that the books were rejected at any point of time and thus adequate material was present before the Assessing Officer during the assessment proceedings. Penalty under section 271(1)(c) of the Act is attracted only when there is concealment of particulars of income inaccurate particulars of income has been filed by the assessee. But in the present case the Assessing Officer at no point of time pointed out that these two elements were not complied by the assessee. In fact, the penalty notice has also not given any specific charge under Section 271(1)(c) of the Act and on this issue the Hon’ble Supreme Court in the case of CIT vs. SSA’s Emerald Meadows (2016) 73 taxmann.com 248 (SC) has held that the notice under Section 271(1)(c) should satisfy the charge, otherwise order is bad in law. Thus, on merit as well as on sustainability of the penalty order the Revenue fails and hence appeal of the assessee is allowed.

In the result, appeal filed by the assessee is allowed.