Grounds of Appeal related to the penalty imposed u/s 271(1)(c) of the Act , 1961
AY 2015-16
1. In the facts and circumstances of the case the Ld. Jurisdictional AO is not justified in imposing penalty of 6,54,050.00 on the assessee which is illegal and imposed in a most arbitrary manner and assessee denies her liability to pay penalty of Rs.6,54,050.00.
The assessment order was passed in the case of the assesse on 29.03.2022 and correspondingly computation chart reflects the tax payable as zero. Penalty was imposed on 08.09.2022 for a sum of Rs. 654050.00 which is without assigning any reason but it has been imposed on estimated basis by writing a sentence as “tax sought to be evaded on the income of Rs. 27,00,000.00 equal to Rs. 6,54,050.00” Notice of demand under section 156 reflects tax payable as zero. By way of rectification Dt. 25.02.2024 the demand determined is 21,02,436.00 which includes tax of Rs. 8,34,300.00. But as on 08.09.2022 the demand payable on the assesse is zero as per notice of demand u/s 156 of the Act Dt. 29.03.2022. Hence the imposition of penalty only on the estimation of tax liability for a sum of Rs. 6,54,050.00 is illegal and is prayed to be made null and void when the demand as per notice of demand is zero as on 8.09.2022. The calculation of penalty of Rs. 654050.00 has no base of its own. Hence the imposition of penalty is in a most illegal manner and is prayed to be deleted and assesse denies her liability to pay penalty of Rs. 654050.00
2. In the facts and circumstances of the case the case of the assessee was decided u/s 147/144 in a most arbitrary and illegal manner for which the assessee has filed separate appeal and hopes to win the appeal and correspondingly the AO has imposed penalty equivalent to tax amount without going into the facts of the case.
The complete written submission has already been submitted dt. 9.04.2024 on e-filing portal for the appeal against the assessment order passed u/s 147/144 Dt. 29.3.2022. These written submissions were submitted against the order of assessment Dt. 29.03.2022 passed u/s 147 r.w.s 144B of the Act along with paper book. The penalty has been imposed by the Ld. Assessing Officer in a most illegal manner and it has been imposed before rectification of the order and after rectification Dt. 25.02.2024 the tax liability determined is 8,34,300.00 though the same is also illegal. Hence prayer is made to delete the entire amount of penalty.
3. That having regard to the facts and circumstances of the case, Ld. AO has erred in law and on facts in imposing penalty of Rs.6,54,050.00 passing the impugned penalty order dated 08.09.2022 and penalty imposed therein is bad in law and nullity in the eyes of law inter-alia for the following reasons: –
(a) The assessee has not concealed the particulars of her true income during the course of assessment Nor she has furnished inaccurate particulars of its income. In the penalty order No. ______ Dt. 08.09.2022 the AO has stated at para No. 3 that assessee has concealed true particulars of her income and in paragraph 5 of the order says that assessee is in default of concealing her income by furnishing inaccurate particulars of her income. In para 6 of the penalty order the AO has alleged that the assessee has committed default of both the limbs of section 271(1)(c) of the Act which is not possible by any stretch of imagination.
(b) In the assessment order No. ______ dt. 29.03.2022 at page No. 3 it has been written that penalty u/s 271(1)(c) is initiated. He has not mentioned under which limb of the section 271(1)(c) of the act penalty is initiated. No satisfaction note has been given in the assessment order regarding imposition of penalty.
(c) The notice No. ______ Dt. 01.09.2022 contains the first paragraph general in nature alleging that the assessee has committed both the defaults i.e. concealed the particulars of income and furnished inaccurate particulars. Not specifically mentioned under which default assessee shall be penalized.
From the above mentioned ground of appeal it is clear that the Ld. AO has imposed penalty randomly without assigning under which limb he is imposing the penalty. As per section 271(1)(c) of the Act the penalty is imposed “if any person concealed the particulars of his income
Or
furnished inaccurate particulars of such income.
The provision does not say penalty is imposable under both the limbs. Specification of particular limb is mandatory in the case of imposition of penalty. As per the above details with this ground of appeal at the time of passing of the order Dt. 08.09.2022 vide DIN: _____ the Ld. AO has failed to specify particular limb of the provision in order to impose the penalty. The imposition of penalty is illegal and it is prayed to delete the penalty. the assesse relies on the following judgement:
ITO Vs. Shri Uday Kumar D.Bhatt. (ITAT Ahmedabad) Dt. 06.08.2021 wherein held
“The findings of the AO clearly show that the AO was not conscious about the charge under which the penalty was to be levied under the provisions of section 271(1) (C) of the Act. Accordingly, we hold that the penalty order is not sustainable and therefore the penalty cannot be levied on this technical ground “
The assesse relies on one more judgement.
Imposition of penalty u/s 271(1) (C) without specifying the limb is bad.
Unitech Reality Pvt. Ltd. Vs DCIT (ITAT Delhi) Dt. 19.07.2023
Thus to conclude, following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory (359 ITR 565), CIT vs. SSA’s Emerald Meadows (2016) 73 Taxmann.Com. 241 (Karnataka). The appeal against which was dismissed by the Hon’ble SC in SLP No. 11485 of 2016 by order Dt. (5-8-2016) and Pr. CIT vs. Sahara India Life Insurance Company Ltd. (ITA No. 475/219 order Dt. 20-8-2019) of the Hon’ble Delhi High Court , the Co-ordinate Benches of the Tribunal are taking the consistent 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 notice has been issued, the penalty proceedings initiated u/s 271(1)(c) are not sustainable.
On the basis of above written submissions it is prayed to delete the penalty amount of Rs. 654050.00
4. In the facts and circumstances of the case the penalty 271(1)(c) of the Act the assessee observes that the notice issued was stereotyped and the Assessing officer has not specified any limb or charge for which the notice was issued i.e., either for concealment of particulars of income or furnishing of inaccurate particulars of such income. It can be seen from the notice issued u/s 274 read with section 271(1)(c) of the Act,
The full explanation has already been given with the ground of appeal at point No. 3. Same written submissions are relied on for this ground of appeal.
5. In the facts and circumstances of the case the assessee has replied to the penalty notice issued on 01.09.2022 fully on 02.09.2022 and requesting not to impose penalty on the assessee thereby that no concealment of income has been made and neither inaccurate particulars were filed but AO while imposing penalty has not acknowledged the reply of the assessee and imposed heavy penalty of Rs. 6,54,050.00 on the assessee in a most illegal and arbitrary manner.
It has been fully explained that Rs. 27,00,000.00 is not income of the assesse by way of submissions of written submissions and Paper Book in response to the appeal proceedings going on against the order passed u/s 147/144 of the Act. It is loan taken from HDFC Bank Ltd. in the name of the assesse and her husband Shri Rakesh Sehgal. The total investment in the property is Rs. 27,00,000 .00 and the major portion of Rs. 22,80,000.00 is loan from the bank jointly in the name of assesse and her husband and Rs. 4,20,000.00 was paid by the assesse out of her Stridhan. During the course of assessment Rs. 27,00,000.00 has been added to the income of the assesse as well as same Rs. 27,00,000.00 has been added to the income of the husband shri Rakesh Sehgal and both are in appeal and are facing the consequences of this act of the Assessing officers. Complete written submissions along with the paper book in the case of the assesse already submitted on 9.04.2024 and the Hon,ble CIT (A) is requested to check the same just for clarification of the issue. The assesse has never concealed the particulars of her income or furnished inaccurate particulars of such income. She filed her ITR for a sum of Rs. 240000.00 which she has earned from tuitions. On the basis of written submission submitted in the case of the assesse for the appeal filed for the order u/s 147/144B of the Act you are requested to delete penalty of Rs. 654050.00 on the assesse.
6. In the facts and circumstances of the case the assessee relies on the various judgements of the courts and tribunals wherein stated that no penalty is imposable when specific limb of the penalty is not mentioned.
There are numerous court judgements on the issue that the penalty u/s 271(1) (c) of the Act is not imposable when no specific limb has been mentioned in the notice for imposition of penalty and also no specific limb has been mentioned in the order and this makes the order itself illegal. Judgments in this regard has been mentioned at ground No. 3 here. Ongoing through these judgements, it is clear that the AO has to impose penalty under a particular limb and not under both the limbs or where imposition of penalty is not specific under which limb notice is issued and which limb penalty is imposed.
7. The Ld. AO, Ward No. 2(1), is not justified in imposing penalty of Rs. 6,54,050.00 on the assessee who has fully complied to the notices u/s 274 r.w.s. 271(1)(c) of the Act Dt. 01.09.2022 and compliance date was 09.2022. Full reply was filed on 02.09.2022 but penalty was imposed without acknowledging the reply Dt.02.09.2022 which is against the principle of natural justice.
Looking at para 2 of the penalty order Dt. 8.09.2022 the Ld. assessing officer has not considered the reply filed by the assesse Dt. 02.09.2022. The due date for submitting the reply was 7.9.2022 as per DIN and Notice No. ITBA/PNL/F/271(1) (C) /2022-23/1045107929(1) Dt. 01.09.2022 issued by Ward No. 2(1), . This action of the assessing officer is bad in law and against the principle of natural justice. The Delhi High Court of Delhi in the case of Mayur Batra Vs. Asstt. Commissioner of Income Tax Dt. 16.03.2022 has clearly stated that the penalty imposed is not in accordance with law when reply of the assesse has not been considered by the Ld. Assessing Officer.
In the case of the assesse as the reply of the assesse uploaded on 2.09.2022 on the e filing portal of the assesse could not be noted by the Ld. Assessing Officer, ward No. 2(1), therefore, imposition of penalty is bad in law and the action of the Ld. AO is violative of principle of natural justice. Accordingly, it is prayed to delete the penalty.
8. The Ld. AO, ward No. 2(1), is not justified in imposing penalty of Rs.6,54,050.00 on the assessee as assessee has not concealed the particulars of income as Rs. 27,00,000.00 was not income of the assessee but it was loan taken from bank jointly with her husband and partly invested out of her income and savings as stridhan of the assessee. No income was concealed and no inaccurate particulars were furnished by the assessee during the course of assessment proceedings.
Separate appeal proceedings are going on this issue whether Rs. 27,00,000 is income of the assesse or not. Detailed written submissions had already been submitted in this regard. There in it is clearly explained that Rs. 27,00,000 is not income of the assesse.
All other grounds of appeal are on the same issue.
9. Prayer is made to the Ld. CIT(A) Faceless to add or delete any of the ground of appeal on or before the date of hearing.
The assesse and counsel of the assesse prayes to delete the penalty of Rs. 654050.00 imposed on the assesse u/s 271(1) (C) of the act in a most illegal and arbitrary manner.
10. Further prayer is made for a virtual hearing before the Hon’ble CIT(A) faceless.
The assesse seeks an opportunity for personal hearing in the matter.
Prayer is made to delete the entire penalty of Rs.6,54,050.00 imposed on the assessee as she herself is in appeal against the order u/s 144 r.w.s. 147 of the Act passed by AO, Faceless in a most illegal & arbitrary manner.
Thanking you
Sd/-
Assessee
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