Case Law Details
Soniya Ashokkumar Sachdev Vs ITO (ITAT Mumbai)
ITAT Mumbai deleted penalty under section 271(1)(c) of the Income Tax Act as penalty order was issued without striking off the irrelevant limb/ inapplicable words.
Facts- The assessee had filed original return of income declaring total income at Rs.1,88,180/-. The case was selected for scrutiny under CASS and a notice u/s. 143(2) was served on the assessee on 22.09.2016. The AO passed assessment order u/s.143(3) of the Income Tax Act, 1961.
AO has levied penalty u/s.271(1)(c) of the Act. Aggrieved by the penalty order the Assessee had filed appeal before the CIT(A). Despite issuance of five notices to the appellant during the appellate proceedings, there was no compliance to any of them, accordingly, the CIT(A) upheld the order of the AO. Aggrieved by the order of the Ld.CIT(A) the assessee filed appeal before this Tribunal.
Conclusion- It is an admitted fact by the AO in the penalty order that notice u/s.271(1)(c) was issued for Concealment of Income / filling inaccurate particulars, without striking off the inapplicable words. This goes to the root of initiation of penalty.
In the case under consideration inappropriate words have not been struck out in the penalty notice, by the AO. Therefore, respectfully following Hon’ble jurisdictional High Court, it is held that the penalty u/s.271(1)(c) is not maintainable. Hence, the Assessing Officer is directed to delete the penalty u/s.271(1)(c).
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)[NFAC], Delhi dated 15.11.2022 emanating from penalty order of Assessing officer dated 26.03.2019 under section 271(1)(c) of the I.T.Act, 1961 for the A.Y.2014-15. The Assessee has raised the following grounds of appeal:
“1. The Ld. CIT (A) has erred in confirming penalty levied by the Ld. Assessing Officer without considering the submissions made before him in course of appellate proceedings which fact is evident not only from his observations as given in para 7 of the appellate order but even from the record (Income Tax Portal) (A).
2. The Ld. CIT (A) has erred in completing appellate proceedings without having adjudicated upon the legal ground (ground no 3) raised before him.
3. The Ld. CIT (A) has erred in confirming the penalty levied by the Ld. Assessing Officer, without appreciating the fact that the penalty order passed by the Ld. Assessing Officer was bad in law as the same was passed in pursuance to an invalid notice issued for initiation of penalty proceedings since the Ld. Assessing Officer had failed to specify as to whether the penalty was initiated for furnishing of inaccurate particulars or for concealment of income (any specific limb).
4. The Ld. CIT (A) has erred in confirming the penalty levied in pursuance to the assessment order passed u/s 143 (3) of the I.T. Act, without appreciating the fact that the assessment order passed was substantially modified by Hon’ble ITAT vide its order dated 14/01/2020, whereafter the penalty could not have been levied in pursuance to the original assessment order passed u/s 143 (3) of the I.T Act and the show cause notice issued alongwith the said assessment order.
5. The Ld. Assessing Officer has erred in confirming the penalty without appreciating/considering the facts placed before him vide submissions made in the course of appellate proceedings.
6. The appellant craves leave to add, amend, alter and/or vary any of the grounds at the time or before the hearing of this appeal.
7. The appellant therefore prays that the order passed u/s. 271(l)(c) r.w.s 274 of the I.T. Act, 1961 not being in accordance with law may please be quashed and/or penalty levied without appreciating the facts of the case and provisions of law deserves to be and may please be deleted.”
2. The brief facts of the case are that the assessee had filed original return of income on 22/03/2016 declaring total income at Rs.1,88,180/-. The case was selected for scrutiny under CASS and a notice under section 143(2) was served on the assessee on 22.09.2016. The Assessing Officer(AO) passed assessment order u/s.143(3) of the Income Tax Act, 1961.
2.1 The AO has levied penalty u/s.271(1)(c) of the Act. Aggrieved by the penalty order the Assessee had filed appeal before the CIT(A). Despite issuance of five notices to the appellant during the appellate proceedings, there was no compliance to any of them, accordingly, the Ld.CIT(A) upheld the order of the AO. Aggrieved by the order of the Ld.CIT(A) the assessee filed appeal before this Tribunal.
3. AR, Shri M.P.Makhija argued that the notice for penalty was defective. The AO has not specified the charge towards either concealment or filling inaccurate particulars of income. He relied on the Hon’ble Bombay High Court’s decision in the case of Mohd. Farhan A. Shaikh.
4. The Ld.DR relied on the orders of the lower authorities.
Discussion and Findings:
5. We have heard both parties, perused the records. Now we take up the legal ground raised by the appellant assessee regarding validity of notice u/s.274 r.w.s 271(1)(c) of the Act .
5.1 The Ld.AR submitted that the Penalty was not initiated properly as the AO had not struck off the irrelevant limb of the Penalty Notice. Ld.AR relied on the various case laws. It is observed that in the Penalty Notice the AO has mentioned as under:
Quote, “* * have concealed the particulars of your income or – ——————————– furnished inaccurate particulars of such income.” Unquote.
5.2 Thus, it is an admitted fact by the AO in the penalty order that notice u/s.271(1)(c) was issued for Concealment of Income / filling inaccurate particulars, without striking off the inapplicable words. This goes to the root of initiation of penalty.
6. The Hon’ble Bombay High Court has held in the case of Ganga Iron & Steel Trading Co. v/s Commissioner of Income Tax. [2022] 135 com 244 (Bombay) order dated December 22, 2021 as under
Quote, “10. We find that the law as laid down by the Full Bench applies on all fours to the facts of the present case as in the show cause notice dated 12-2-2008, the Assistant Commissioner of Income-tax is not clear as to whether there was concealment of particulars of income or that the Assessee had furnished inaccurate particulars of income. We therefore find that issuance of such show cause notice without specifying as to whether the Assessee had concealed particulars of his income or had furnished inaccurate particulars of the same has resulted in vitiating the show cause notice.
Heavy reliance was placed by the learned counsel for the Revenue on the decision in Mak Data (P.) Ltd. (supra) to urge that the penalty contemplated by section 271 (1) (c) of the said Act was in the nature of civil liability and mens rea was not essential therein. The decision in Dilip N. Shroff (supra) having been held as not laying down good law in Dharmendra Textile Processors Ltd. (supra), it was submitted that the show cause notice issued in the present proceedings was liable to be upheld. It may be noted that all the decisions relied upon by the learned counsel for the Revenue were considered by the Full Bench while answering the issues referred to it on reference. The Full Bench having considered these decisions and having answered the question as regards defect in the notice under section 271(1)(c) of the said Act resulting in vitiating the penalty proceedings, we find ourselves bound by the answers given by the Full Bench. It would not be permissible for us to disregard this aspect and take a different view of the matter.
Accordingly substantial question of law no. III is answered by holding that since the show cause notice dated 12-2-2008 does not indicate whether there was concealment of particulars of income or furnishing of incorrect particulars of such income, the same would vitiate the penalty proceedings.” Unquote.
7. In the case under consideration inappropriate words have not been struck out in the penalty notice, by the AO. Therefore, respectfully following Hon’ble jurisdictional High Court, it is held that the penalty u/s.271(1)(c) is not maintainable. Hence, the Assessing Officer is directed to delete the penalty u/s.271(1)(c). Accordingly, grounds of appeal raised by the Assessee are allowed.
8. In the result, appeal of the Assessee is allowed.
Order pronounced in the open Court on 9th March, 2023.
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