Income Tax Appellate Tribunal - Pune
Smt. Surekha Nayyar,, Pune vs Assistant Commissioner Of ... on 16 March, 2018
आयकर अपीलीय अिधकरण पुणे यायपीठ "एक
एक सद य"
सद य पुणे म
IN THE INCOME TAX APPELLATE TRIBUNAL
SMC BENCH, PUNE
सु ी सुषमा चावला,
चावला याियक सद य एवं ी डी.
डी क णाकरा राव,
राव लेखा सद य के सम
BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM
आयकर
आयकर अपील सं. / ITA No.615/PUN/2016
िनधा रण वष / Assessment Year : 2007-08
Smt. Surekha Nayyar,
Belvedere, H-2/601,
ITI Road, Aundh,
Pune - 411 007
PAN : AAIPN0957B .... अपीलाथ /Appellant
Vs.
ACIT, Circle-4,
Pune .... यथ / Respondent
अपीलाथ क ओर से / Appellant by : Smt. Apoorva Chandakkar
थ की ओर से / Respondent by : Shri Ajay Modi, JCIT
सुनवाई क तारीख / घोषणा क तारीख /
Date of Hearing : 12.03.2018 Date of Pronouncement: 16.03.2018
आदेश / ORDER
PER D. KARUNAKARA RAO, AM :
This appeal is filed by the assessee against the order of CIT(A)-3, Pune, dated 20-01-2016 for the Assessment Year 2007-08.
2. Grounds raised by the assessee read as under :
"On facts and in law, 1] The learned CIT(A) erred in holding that the penalty order passed u/s.271(1)(c) was correct without appreciating that the notice issued was invalid and accordingly, the penalty order ought to have been declared null and void.
2] The learned CIT(A) erred in confirming the levy of penalty u/s. 271(1)(c) of Rs.2,34,560/-.
3] The learned CIT(A) erred in holding that the assessee had furnished inaccurate particulars of income in respect of the computation of capital gain on sale of land and hence, the A.O. was justified in levying penalty u/s.271(1)(c).
4] The learned CIT(A) erred in not appreciating that the assessee had committed a bona fide mistake in not disclosing the correct amount of sale consideration received on sale of land and hence, there was no reason to levy penalty on account of bona fide mistake committed by the assessee.2
5] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal."
3. Briefly stated relevant facts are that assessee is an individual and filed the return of income declaring total income of Rs.48,49,271/-. In the scrutiny assessment u/s.143(3) of the Act, AO quantified the assessed income at Rs.1,33,44,300/- after granting eligible deductions. In the appeal of the assessee, making an addition of Rs.10,04,089/- on account of cost of construction is the subject matter of penalty u/s.271(1)(c) of the Act. During the assessment proceedings, as per the discussion given in Para No.5.2 of the assessment order, the assessee accepted for making the said addition. This addition relates to the residential premises admeasuring 2500 sq.ft. + 2 car parkings owned by the assessee. Applying the rate of cost of construction of the said premises as per the PMC rates, the undisclosed component of investment by the assessee in the residential premises was worked out by the AO at Rs.10,04,089/-. Assessee admitted the same in the assessment and the contents on para 7 of the assessment order are relevant. The penalty proceedings are initiated separately for "furnishing of inaccurate particulars of income". The said penalty was confirmed by the CIT(A) vide his penalty order dated 20-01-2016 for the A.Y. 2007-08.
4. Aggrieved with the same, the assessee is in appeal before us with the grounds extracted above.
5. Bringing our attention to the ground No.1 of the appeal, Ld. Counsel for the assessee submitted that the penalty order constitutes an invalid one in view of the improper satisfaction with reference to the limbs of clause (c) of section 271(1) of the Act. On this issue, Ld. Counsel brought our attention to Para 7 of the assessment order which contains the AO's satisfaction for the initiation of the penalty proceedings and it refers to 3 "furnishing of inaccurate particulars of income". Further, Ld. Counsel brought our attention to the penalty order of the AO dated 29-03-2012, in general, and the contents of Para No.5 of the penalty order, in particular, and submitted that the penalty is actually levied for both the limbs of clause (c) of section 271(1) of the Act.
6. In reply to this legal issue, Ld. DR for the Revenue submitted that the AO is justified in levying the penalty as the offence attracts both the limbs of clause (c) of section 271(1) of the Act.
7. We heard both the parties on this legal issue and perused the orders of the Revenue. For the sake of completeness of this order, we proceed to extract the relevant lines from Para 7 of the assessment order and Para No.5 of the penalty order and the same reads as under :
"Para 7 of the assessment order :
7. ...... Penalty proceedings are initiated separately for furnishing inaccurate particulars of income."
Para 5 of the penalty order :
5. Thus, it is held that assessee has concealed the particulars of income and also furnished inaccurate particulars of income only with a view to pay lesser tax and made itself liable for penalty u/s.271(1)(c) of the Act............."
From the above, it is clear that the AO initiated the penalty proceedings for the offence of furnishing of inaccurate particulars of income and levied the same for both "furnishing inaccurate particulars of income" and concealed the particulars of income". Therefore, it is a case where the AO did not have clarity of thought and he suffered from ambiguity in his mind with regard to the applicable limb of clause (c) of section 271(1) of the Act to the facts of the case. Therefore, we find the penalty order of the AO falls short of legal requirement on the issue. Initiation of penalty proceedings in this case was done in a casual manner and the penalty was levied for both the limbs. Such penalty order is 4 unsustainable in law legally. Such view was already taken in a number of cases. Said manner of initiating and levying of penalty without making reference to the specific limb of clause (c) is unsustained. AO is under obligation to specifying the same and correct limb at the time of initiation as well as at the time of levy of penalty. Therefore, the penalty levied by the AO is unsustainable on technical grounds. Further, this view of ours get strength by the judgment of Hon'ble jurisdictional High Court in the case of CIT Vs. Shri Samson Perinchery dated 05-01-2017 as well as the judgment of Hon'ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory 359 ITR 565.
8. Considering the legal ground in favour of the assessee, we are of the opinion that adjudication of other grounds becomes an academic exercise. Therefore, the same are dismissed as academic. Accordingly, the grounds raised by the assessee are partly allowed.
9. In the result, appeal of the assessee is partly allowed.
Order pronounced on this 16th day of March, 2018.
Sd/- Sd/-
(SUSHMA CHOWLA) (D.KARUNAKARA RAO)
ाियक सद / JUDICIAL MEMBER लेखा सद / ACCOUNTANT MEMBER
पुणे / Pune; दनांक Dated : 16th March, 2018.
Satish
आदेश क ितिलिप अ ेिषत/Copy of the Order is forwarded to :
1. अपीलाथ / The Appellant;
2.
यथ / The Respondent;
3. आयकर आयु (अपील) / The CIT(A)-3, Pune
4. आयकर आयु / The CIT-3, Pune
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, पुणे "एक सद य" / DR 'SMC', ITAT, Pune;
6. फाईल / Guard file.
गाड आदेशानुसार सार/ BY ORDER,स स यािपत ित //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune