Case Law Details

Case Name : Zaheer Abdulhamid Mulani Vs ITO (ITAT Pune)
Appeal Number : ITA No.1185/PUN/2017
Date of Judgement/Order : 26/03/2019
Related Assessment Year : 2011-12
Courts : All ITAT (6092) ITAT Pune (193)

Zaheer Abdulhamid Mulani Vs ITO (ITAT Pune)

The sanctity in terms of natural justice with regard to this proposition is that the assessee under the scheme of welfare legislation which is embedded in the Income Tax Act, 1961 should get an opportunity to prepare himself for the defense as regards to the exact charge on which penalty is imposed upon him u/s. 271(1)(c) of the Act. In the instant case, the charge is vague and therefore, levy of penalty is not warranted. Furthermore, the revised return filed by the assessee is in conformity with section 139(5) of the Act wherein all the particulars of income have been disclosed.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals), Pune dated 23.12.2016 for the assessment year 2011-12 as per grounds of appeal on record.

2. The crux of the grievance of the assessee is with regard to confirmation of penalty levied u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

3. The brief facts in this case are that the assessee is a salaried individual who derives salary from (i) Eaton Technologies Pvt. Ltd (ii) Hutchison 3 Global Services Pvt. Ltd (iii) Axa Technologies Shares Services Pvt. Ltd. The Assessment u/s. 143(3) was completed on 29.03.2014 assessing total taxable income of Rs.39,89,650/-. The case was selected for scrutiny as per the Scrutiny Selection Norms under CASS and the required notices duly issued and served on the Assessee. Penalty was initiated in the assessment Order for furnishing inaccurate particulars and concealment of income for the failure of the Assessee to offer Rs.4,54,653/- and Rs.1,71,721/- salary received from two concerns, failure to disclose interest amount of Rs.8,121/- and to explain the source of cash deposits amounting to Rs.32,50,000/-.

4. At the time of hearing the Ld. AR of the assessee at the very outset submitted that the notice issued u/s.274 r.w.s.271(1)(c) of the Act along with penalty order is vague as to the limb on which penalty u/s. 271(1)(c) of the Act is initiated. The Ld. AR contended that it is settled principle of law if the charge is not specific then the penalty u/s.271(1)(c) of the Act cannot be levied. That in support of his contentions, the Ld. AR of the assessee relied on the decision of Hon’ble Jurisdictional High Court in the case of CIT Vs. Samson Perinchery in ITA No.1154 of 2014 and the decision of Hon’ble Karnataka High Court in the case of CIT Vs. Manjunath Cotton and Ginning Factory reported as 359 ITR 565. The Ld. AR further submitted that the assessee has filed revised return on 18.12.2013 in compliance to section 139(5) of the Act. Since revised return was filed before assessment was completed i.e. on 29.03.2014 and in that revised return, the assessee has reflected the salary and the interest component which was not included in the original return and thereby in compliance to section 139(5) of the Act, there is neither ‘concealment of income’ nor ‘furnishing of inaccurate particulars of income’ so far as the assessee is concerned.

5. Per contra, the Ld. DR has relied on the orders of Sub-ordinate Authorities.

6. We have perused the case records and considered the judicial pronouncement placed before us. The facts reveal that in the notice issued u/s.274 r.w.s. 271(1)(c) of the Act as well as penalty order, the charge for which penalty u/s.271(1) (c) of the Act has been levied, is not specific and both the limbs of charge are mentioned there i.e. ‘concealment of income’ and ‘furnishing of inaccurate particulars of income’.

That taking guidance from the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Samson Perinchery (supra.) wherein the Hon’ble Bombay High Court has considered the decision of Hon’ble Karnataka High Court in the case of CIT Vs. Manjunath Cotton and Ginning Factory (supra.), the legal proposition that comes out and which is binding in nature is that the Assessing Officer should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income.

7. The sanctity in terms of natural justice with regard to this proposition is that the assessee under the scheme of welfare legislation which is embedded in the Income Tax Act, 1961 should get an opportunity to prepare himself for the defense as regards to the exact charge on which penalty is imposed upon him u/s. 271(1)(c) of the Act. In the instant case, the charge is vague and therefore, levy of penalty is not warranted. Furthermore, the revised return filed by the assessee is in conformity with section 139(5) of the Act wherein all the particulars of income have been disclosed.

Taking totality of facts and legal scenario into consideration, we set aside the order of the Ld. CIT(Appeals) and direct the Assessing Officer to delete the penalty from the hands of the assessee.

8. In the result, appeal of the assessee is allowed.

Order pronounced on 26th day of March, 2019.

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