Income Tax Appellate Tribunal - Panji
Dilip Motilal Chordiya,, Pune vs Income-Tax Officer,, Pune on 29 November, 2017
आयकर अपील
य अ धकरण] पण
ु े यायपीठ "ए" पण
ु े म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "A", PUNE
BEFORE MS. SUSHMA CHOWLA, JM AND
SHRI ANIL CHATURVEDI, AM
आयकर अपील सं
. / ITA No.762/PUN/2017
नधा रण वष / Assessment Year : 2008-09
Shri Dilip Motilal Chordiya, .......... अपीलाथ /
Flat No.10, Sajjan Plaza,
Appellant
3rd Floor,Opp. Hindustan Bakery,
Chinchwad, Pune - 411033.
PAN : AAMPC1174F.
बनाम v/s
Dy.Commissioner of Income Tax, .......... यथ /
Circle - 9, Pune.
Respondent
Assessee by : Shri M.K. Kulkarni
Revenue by : Shri Alok Singh
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 07.09.2017 Date of Pronouncement: 29.11.2017
आदे श / ORDER
PER ANIL CHATURVEDI, AM :
1. This appeal of the assessee is emanating out of the order of Commissioner of Income Tax (A) -6, Nashik dated 20.12.2016 for the assessment year 2008-09.
2. The relevant facts as culled out from the material on record are as under :-
Assessee is an individual and is a builder and developer. Assessee filed his return of income for A.Y. 2008-09 on 29.09.2008 declaring total income at Rs.16,67,420/-. Revised return was filed by the assessee on 30.09.2008 declaring total income of Rs.16,66,390/-. 2 Therefore assessee again revised return of income on 30.03.2009 declaring total income of Rs.1,37,89,116/- including additional income of Rs.1,20,50,000/-. Thereafter, assessment was framed u/s 143(3) of the Act vide order dt.23.12.2010 and the total income of the assessee was determined at Rs.1,56,88,941/- inter-alia by making addition of Rs.18,99,825/- u/s 41(1) of the Act by treating the outstanding liability as being cessation of liability. On the unaccounted expenditure of Rs.1,20,50,000/- that was offered by the assessee in the return of income and was accepted by Department, the AO vide order dt.23.12.2010 levied penalty of Rs.40,95,795/- u/s 271(1)(c) of the Act on account of furnishing of inaccurate particulars of income and concealing the income. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dt.20.12.2016 (in appeal No.PN/CIT(A)-V/DCIT Cir.9/214/2013-14) dismissed the appeal of the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds :
"1. On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in conforming the levy of penalty u/s. 271(1)(c) of Rs. 40,95,795/- that too without considering properly the submissions made before. The sustaining of the penalty is not according to law. The same be quashed.
2. On the facts and in the circumstances of the case and in law the Ld. CIT(A) failed to appreciate the submission of the assessee before him that no such penalty is leviable when quantum appeal was pending for adjudication before Tribunal Pune. The levy of penalty was thus premature. The penalty be quashed.
3. On the facts and in the circumstances of the case and in law the income of Rs. 1,20,50,000/- was not taxable in the year under appeal. The same was disclosed in the Revised Return filed for A. Y. 2008-09 so filed on 30-03-2009 assessable in A. Y. 2009-10. The appropriate taxes have been paid in that year. The assessee concealed nothing nor furnished any inaccurate particulars of income. The explanation submitted in response to show-cause notice u/s. 274 was also not held 3 to be false. The penalty sustained is not justifiable. It be quashed
4. On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in sustaining the penalty levied under section 271(1)(c) of the Act as it was barred by limitation. The penalty levied and sustained by cancelled.
5. On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in sustaining the penalty levied u/s, 271(1)(c) of the Act in view of the fact that the same was levied without any specific charge of either concealment or furnishing of inaccurate particulars of income. The issue is covered infavour of the assessee considering the judgments of the various Benches of the Hon'ble Tribunal including the Hon'ble Pune Bench and also of the jurisdictional Bombay High Court. In view of this the penalty is not leviable and also thereafter, not sustainable. It be quashed."
3. Before us, Ld.A.R. submitted that though the assessee has raised several grounds but all the grounds are inter-connected and the sole controversy is with respect to levy of penalty u/s 271(1)(c) of the Act.
4. Before us, Ld.A.R. submitted that while framing the assessment u/s 143(3) of the Act, AO had made addition u/s 41(1) of the Act amounting to Rs.18,99,825/- and determined the total income at Rs.1,56,88,941/- as against the income of Rs.1,37,89,116/- declared by the assessee. On the additional income of Rs.1,20,50,000/- that was offered by assessee in the return of income and accepted by Revenue, AO levied penalty of Rs.40,95,795/- u/s 271(1)(c) of the Act. Ld.A.R. pointing to the orders passed by the AO submitted that while passing the assessment order, AO has not recorded any satisfaction for levy of penalty but while passing the penalty order u/s 271(1)(c) of the Act, the AO levied penalty for concealment of income as well as for furnishing inaccurate particulars of income. Ld.A.R. relying on the decision of Hon'ble Bombay High Court in the case of CIT Vs. Samson Perinchery (ITA No.1154 of 2014 order dt.05.01.2017), submitted that 4 when initiation of penalty is for furnishing of inaccurate particulars of income and penalty was levied on concealment of income, then in the absence of proper show cause notice to assessee, penalty u/s 271(1)(c) cannot be levied. Ld.A.R. therefore submitted that penalty levied by AO be deleted. Ld.D.R. on the other hand, supported the order of lower authorities.
5. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to levy of penalty u/s 271(1)(c) of the Act. In the present case, penalty has been levied on the income of Rs.1,20,50,000/- that was offered by the assessee in the return of income and accepted by the Revenue. The perusal of assessment order passed u/s 143(3) of the Act reveals that AO had initiated penalty proceeding but no satisfaction was recorded while passing the assessment order. Thereafter in the penalty order passed u/s 271(1)(c) of the Act, AO held that assessee had furnished inaccurate particulars of income and had concealed the income u/s 271(1)(c) of the Act. It is a settled law that while levying penalty for concealment, the AO has to record satisfaction and thereafter come to a finding in respect of one of the limbs, which is specified under section 271(1)(c) of the Act. The first step is to record satisfaction while completing the assessment as to whether the assessee had concealed its income or furnished inaccurate particulars of income. Thereafter, notice u/s 274 read with Section 271(1)(c) of the Act is to be issued to the assessee. The Assessing Officer thereafter has to levy penalty under Section 271(1)(c) of the Act for non-satisfaction of either of the limbs. While completing the assessment, the Assessing Officer has to come to a finding as to whether the assessee has concealed its 5 income or furnished inaccurate particulars of income. The Hon'ble Bombay High Court in CIT Vs. Shri Samson Perinchery in ITA No.1154 of 2014 with other ITA Nos.953 of 2014, 1097 of 2014 and 1226 of 2014, vide judgment dated 05.01.2017 held that where initiation of penalty is one limb and the levy of penalty is on other limb, then in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty.
6. In the present case, as noted hereinabove, it is seen that the AO has not recorded any satisfaction for levy of penalty in the assessment order but had levied penalty on both the limbs i.e., for concealment of income and for furnishing of inaccurate particulars of income while passing the penalty order. Considering the aforesaid facts in the light of the decision of Hon'ble Bombay High Court in the case of Samson Perinchery (supra), we are of the view that in the present case the basic condition for levy of penalty has not been fulfilled and that the penalty order suffers from non-exercising of jurisdiction power of AO and therefore penalty order cannot be upheld. We accordingly set aside the penalty order passed by AO. Thus, the ground of assessee is allowed.
7. In the result, the appeal of assessee is allowed.
Order pronounced on the 29th day of November, 2017.
Sd/- Sd/-
(SUSHMA CHOWLA) (ANIL CHATURVEDI)
या यक सद!य / JUDICIAL MEMBER लेखा सद!य / ACCOUNTANT MEMBER
पण
ु े Pune; दनांक Dated : 29th November, 2017.
Yamini
6
आदे श क# $ त&ल'प अ(े'षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. CIT(A)-2, Nashik.
4. CIT-2, Nashik.
5 "वभागीय %त%न&ध, आयकर अपील य अ&धकरण, "ए" / DR, ITAT, "A" Pune;
6. गाड, फाईल / Guard file.
आदे शानस ु ार/ BY ORDER // True Copy // व.र/ठ %नजी स&चव / Sr. Private Secretary आयकर अपील य अ&धकरण ,पुणे / ITAT, Pune.