Advocate Akhilesh Kumar Sah
Deutsche Bank AG, Mumbai vs. ADIT (International Taxation) (ITAT Mumbai)
Assessing Officer has to strike off and specify the charge/limb for which he is proposing to initiate penalty proceedings under section 271(1)(c): Deutsche Bank case
Recently, in Deutsche Bank Ag, Mumbai vs. ADIT (International Taxation) [ITA.No. 4723 & 4724/MUM/2015 (A.Y: 2000-01 & 2001-02), decided on 05.01.2018], the issue was that the Assessing Officer did not specify the charge for which the penalty proceedings were initiated under section 271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’). Counsel for the assessee submitted that the notice had been issued without specifying the charge for which the penalty is initiated as there was no striking off of the limb in the notice and therefore the initiation itself is improper and not valid. He placed reliance on the decision of the Coordinate Bench in the case of Meherjee Cassinath Holdings vs. ACIT in ITA. No. 2555/Mum/2012 dated 28.04.2017.
The learned Members of the Mumbai ITAT observed that section 271(1)(c) of the Act empowers the Assessing Officer to impose penalty to the extent specified if, in the course of any proceedings under the Act, he is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. In other words, what section 271(1)(c) of the Act postulates is that the penalty can be levied on the existence of any of the two situations, namely, for concealing the particulars of income or for furnishing inaccurate particulars of income. Therefore, it is obvious from the phraseology of section 271(1)(c) of the Act that the imposition of penalty is invited only when the conditions prescribed under section 271(1)(c) of the Act exist. It is also a well-accepted proposition that ‘concealment of the particulars of income’ and ‘furnishing of inaccurate particulars of income’ referred to in section 271(1)(c) of the Act denote different connotations.
The learned Members of the Mumbai ITAT after hearing the rival submissions held that the notice issued by the Assessing Officer under section 274 read with section 271(1)(c) of the Act was on account of non-application of mind and therefore on this account itself the penalty imposed under section 271(1)(c) is liable to be deleted and directed the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act.
