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Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI CHALLA NAGENDRA PRASAD
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the CIT[A]- 27, New Delhi dated 31.01.2018 pertaining to Assessment Year 2008-09.
The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the penalty levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 [the Act, for short] when the Assessing Officer has not specified the charge in the show cause notice issued u/s 274 r.w.s 271 of the Act.
The roots for levy of penalty lie in the assessment order dated 03.08.2011 framed u/s 153A r.w.s 143(3) of the Act by which the returned loss of Rs. 32.41 lakhs was assessed at Rs. 49.68 crores. Penalty proceedings were separately initiated.
The entire quarrel revolves around the penalty notice, which according to the assessee, does not specify the limb under which the penalty is levied.
The representatives of both the sides were heard at length, the case records carefully perused.
First penalty dated 03.08.2011 read s under:
Second penalty notice dated 10.02.2016 reads as under:
In the first penalty notice, it is not discernible whether the penalty was leviable for concealment of income or for furnishing of inaccurate particulars of income.
At para 7 of the order by which the Assessing Officer has levied penalty, the Assessing Officer has concluded as under:
“As the assessee has clearly concealed the particulars/filed inaccurate particulars of income……..”
Even while levying the penalty, the Assessing Officer is not certain under which limb the penalty is to be levied.
This has not been accepted by the Hon'ble Bombay High Court in the case of Mohd. Farhan A. Shaikh 434 ITR 1, Goa Dourado Promotions Pvt Ltd 433 ITR 268 and the decision of the Hon'ble Jurisdictional High Court in the case of Sahara India Life Insurance Co. Ltd 432 ITR 84 wherein the Hon'ble High Court has held as under:
““21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of inc me or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016.”
Similar view was taken by the Hon’ble High Court of Karnataka in the case of SSA Emerald Meadows of 2015. The relevant findings of the judgement read as under:
“Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act to be bad in law as it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The issue was decided in favour of the assessee.”
A SLP of the revenue against this judgement of the Hon’ble High Court of Karnataka was dismissed by the Hon’ble Supreme Court in 73 taxmann.com 248.
Respectfully following decisions of the Hon'ble High Courts [supra] and the binding decision of the Hon’ble Jurisdictional High Court of Delhi [supra], we direct the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act.
In the result, the appeal of the assessee in is allowed.
The order is pronounced in the open court on 25.10.2023 in the presence of both the representatives.