INCOME TAX APPELLATE TRIBUNAL - DELHI

AVINASH KUMAR SETIA, NEW DELHI VS DCIT, DELHI

17-09-2019

Summarised Judgement (Scroll for Complete Judgement)

The assessee has raised the following grounds of appeal:-

The learned CIT(A) erred in facts and in law confirming the penalty of Rs. 41,41,114/- which is not only bad in law but also against the facts and circumstances of the case."

The assessee is an individual who was assessed u/s 143(3) read with section 147 of the Act of Rs. 12942910/- wherein, an addition of Rs. 1.25 crores was made on account of undisclosed income. 

While making the addition the ld AO initiated the penalty proceedings in the assessment order stating that since the assessee has concealed the particulars of income and also submitted inaccurate particulars of income penalty u/s 271(1)(c) of the Act was initiated. The above order was challenged before the ld CIT (A) who confirmed the levy of the penalty vide order dated 02.01.2015 which is challenged before us.

Decision - We are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable.

Even the AO has failed to apply his mind at the time of recording satisfaction at the time of framing assessment to initiate the penalty proceedings u/s 271(1)(c) of the Act as to under which limb of section 271(1)(c) i.e. for concealing particulars of income or furnishing inaccurate particulars of such income, penalty proceedings have been initiated rather written vague and ambiguous satisfaction recorded throughout the assessment order as well as penalty orders.

In view of this, following the decision of the various high Courts, we reverse the order of the lower authorities and direct the learned assessing officer to delete the penalty levied u/s 271 (1) (c) of the act.

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

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Complete Judgement

INCOME TAX APPELLATE TRIBUNAL - DELHI

AVINASH KUMAR SETIA, NEW DELHI VS DCIT, DELHI

17-09-2019

INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH "F": NEW DELHI

BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER

AND

SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER

ITA No. 1814/Del/2015

(Assessment Year: 2009-10)

Avinash Kumar Setia,           Vs.             DCIT,

B-33, Shivalik, Malvia Nagar,               Central Circle-17,

New Delhi                             New Delhi

PAN: ABBPS9057K

(Appellant)                          (Respondent)

 Assessee by :                  Shri Kapil Goel, Adv

      Revenue by:                  Shri Surender Pal, Sr. DR

Date of Hearing                      22/07/2019

Date of pronouncement                   17/09/2019

ORDER

PER PRASHANT MAHARISHI, A. M.

1. This appeal is filed by the assessee against the order of the ld CIT(A)-XXVI, New Delhi [ The ld CIT (A)] dated 02.01.2015 for the Assessment Year 2009- 10, wherein, the penalty levied of Rs. 41,41,114/- u/s 271(1)(c) of The Income tax Act [ the Act] by the ld ACIT, New Delhi [ the ld AO] as per order dated 29.03.2014 was confirmation of the penalty.

2. The assessee has raised the following grounds of appeal:-

"1. The learned CIT(A) erred in facts and in law confirming the penalty of Rs. 41,41,114/- which is not only bad in law but also against the facts and circumstances of the case."

3. The brief facts of the case shows that the assessee is an individual who was assessed u/s 143(3) read with section 147 of the Act of Rs. 12942910/- wherein, an addition of Rs. 1.25 crores was made on account of undisclosed income. Consequently, the assessment was passed at Rs. 12943910/-. While making the addition the ld AO initiated the penalty proceedings in the assessment order stating that since the assessee has concealed the particulars of income and also submitted inaccurate particulars of income penalty u/s 271(1)(c) of the Act was initiated. Consequently, the addition of the above sum challenged by the assessee before the various forums was Page | 1 ultimately confirmed by the Hon'ble Delhi High Court in 395 ITR 235. Thus, the penalty order u/s 271(1)(c) of the Act was passed by the ld AO on 29.03.2014 levying penalty of Rs. 4141114/-. The above order was challenged before the ld CIT (A) who confirmed the levy of the penalty vide order dated 02.01.2015 which is challenged before us.

4. The ld Authorized Representative coming to the ground of the appeal submitted that at the time of making the assessment the ld AO has noted the satisfaction that, assessee has concealed the particulars of income and also submitted inaccurate particulars of income‟. At the time of levy of the penalty the order u/s 271(1)(c) clearly show that the „assessee has furnished inaccurate particulars of income in the first para of the penalty order and in the 3rd para of penalty order it is stated that the, assessee has concealed the particulars of income‟. He further referred to the 4th para of the order stating that penalty was levied for „furnishing inaccurate particulars of income. He further referred to the notice of the penalty issued u/s 274 of the act dated 17/2/2014 where in none of the tow charges are struck off. He, therefore, submitted that there are inconsistent charges raised by the ld AO and no proper satisfaction with respect to the charges twin limbs of the default has been noted. He referred to several judicial precedents in this regard. For the sake of brevity all these judicial precedents are not mentioned.

5. Learned departmental representative vehemently supported the orders of the lower authorities and submitted that the addition has been confirmed by the honourable Delhi High Court in the present case and therefore the assessee has concealed the income. He further referred to the decision of the honourable Delhi High Court in case of Raj Hans Towers private limited vs Commissioner of income tax in 373 ITR 9 (Delhi) to support the case of the revenue.

6. Assessee has also raised an additional ground of appeal precisely challenging the initiation of the penalty proceedings with respect to the specific charge. However, looking to the facts of the case, we do not adjudicate on admission of the additional ground but proceed to decide the issue on the merits of the case as per the facts available before us.

7. We have carefully considered the rival contention and perused the orders of the lower authorities. In the show cause notice issued by the learned assessing officer on 17/2/2014 u/s 274 read with section 271 (1) © of the income tax act 1961, none of the twin charges for initiating the penalty proceedings were struck off. Further, in the assessment order the penalty is initiated in the last para of the assessment order stating that the assessee has concealed the particulars of income and also submitted inaccurate particulars of its income. In the penalty order also at various paragraphs there is inconsistency with respect to the nature of default committed by the assessee. In paragraph number 1 the AO stated that assessee has furnished inaccurate particulars of his income. In paragraph number 3 AO states that assessee has concealed the particulars of income. In paragraph number 4 the AO states that the penalty is initiated for furnishing inaccurate particulars of income. Further at the time of calculating the penalty the AO states that assessee has concealed the income of INR 4 292000/-

8. Now at the time of passing this order we have the benefit of the order of the Honourable Jurisdictional high court which binds us. Hon‟ble Delhi High Court in case of Pr. CIT vs. Sahara India Life Insurance Company Ltd. in ITA 475/2019 order dated 02.08.2019. while deciding the identical issue 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 income 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 of 2016 by order dated 5th August, 2016."

9. Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory, CIT vs. SSA‟s Emerald Meadows and Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra), we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. Even the AO has failed to apply his mind at the time of recording satisfaction at the time of framing assessment to initiate the penalty proceedings u/s 271(1)(c) of the Act as to under which limb of section 271(1)(c) i.e. for concealing particulars of income or furnishing inaccurate particulars of such income, penalty proceedings have been initiated rather written vague and ambiguous satisfaction recorded throughout the assessment order as well as penalty orders. In view of this, following the decision of the various high Courts, we reverse the order of the lower authorities and direct the learned assessing officer to delete the penalty levied u/s 271 (1) (c) of the act.

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

11. Order pronounced in the open court on 17/09/2019.

                -Sd/-                                                                    -Sd/-

           (AMIT SHUKLA)                                    (PRASHANT MAHARISHI)

          JUDICIAL MEMBER                                   ACCOUNTANT MEMBER

Dated: 17/09/2019