Vishnu Tambi Vs DCIT (ITAT Jaipur)
Under Section 271(1)(c) of the Act, the authority has been given discretion to levy the penalty in case there is a concealment of particulars of income and also with regard to quantum of penalty. However, it is a basic need of the provisions of law that definite finding is required to be recorded by the Revenue Officer for reaching to a conclusion with regard to concealment of income or furnishing of inaccurate particulars of income and without any such findings, there cannot be any question of imposition of any penalty. The mere revision of income to a higher figure on estimate basis by the AO does not automatically warrant an inference of concealment of income by the assessee. The addition to the income of the assessee in this case is based on estimate basis whereas the concealment in our views implies some deliberate act on the part of the assessee in withholding the true facts from the authorities. On this proposition, we draw strength from the decision of Hon’ble Madras High Court in the case of CIT vs K.R. Chinni Krishna Chetty (2000) 246 ITR 121 (Mad). Therefore, keeping in view the totality of the facts and circumstances of the case, we are of the considered view that in this case the additions were made on the basis of estimation and as discussed in the cases referred above, the penalty cannot be levied on the basis of estimated additions.
FULL TEXT OF THE ITAT JUDGEMENT
These five appeals have been filed by the assessee against common order of ld.CIT (A)-4, Jaipur dated 02.07.2018 for the Assessment Years 2005-06, 2006-07, 2007-08, 2009-10 & 2010-11 passed under 271(1)(c) of the Income Tax Act, 1961 on the grounds mentioned hereinbelow.
ITA No. 965/JP/2018 – A.Y. 2005-06
‘’1. Under the facts and circumstances of the case and in law the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 without striking off the irrelevant portion of the printed show cause notice dated 26-12-2011 viz. ‘’furnished inaccurate particulars of income” or ‘’concealed particulars of such income” is bad in law.
2. Under the facts and circumstances of the case and in law the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 is against the principles of judicial consistency and therefore, bad in law.
3. That the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 is void ab initio deserves to be quashed as no satisfaction was recorded with reference to concealment of income or furnishing inaccurate particulars of income.
4. In the facts and circumstances of the case the AO has erred in imposing the penalty of Rs. 13,000/- u/s 271(1)(c) of the I.T. Act, 1961
ITA No. 966/JP/2018 – A.Y. 2006-07
‘’1. Under the facts and circumstances of the case and in law the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 without striking off the irrelevant portion of the printed show cause notice dated 26-12-2011 viz. ‘’furnished inaccurate particulars of income” or ‘’concealed particulars of such income” is bad in law.
2. Under the facts and circumstances of the case and in law the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 is against the principles of judicial consistency and therefore, bad in law.
3. That the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 is void ab initio deserves to be quashed as no satisfaction was recorded with reference to concealment of income or furnishing inaccurate particulars of income.
4. In the facts and circumstances of the case the AO has erred in imposing the penalty of Rs. 12,000/- u/s 271(1)(c) of the I.T. Act, 1961
ITA No. 967/JP/2018 – A.Y. 2007-08
‘’1. Under the facts and circumstances of the case and in law the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 without striking off the irrelevant portion of the printed show cause notice dated 26-12-2011 viz. ‘’furnished inaccurate particulars of income” or ‘’concealed particulars of such income” is bade in law.
2. Under the facts and circumstances of the case and in law the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 is against the principles of judicial consistency and therefore, bad in law.
3. That the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 is void ab initio deserves to be quashed as no satisfaction was recorded with reference to concealment of income or furnishing inaccurate particulars of income.
4. In the facts and circumstances of the case the AO has erred in imposing the penalty of Rs. 12,000/- u/s 271(1)(c) of the I.T. Act, 1961
ITA No. 968/JP/2018 – A.Y. 2009-10
‘’1. Under the facts and circumstances of the case and in law the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 without striking off the irrelevant portion of the printed show cause notice dated 26-12-2011 viz. ‘’furnished in accurate particulars of income” or ‘’concealed particulars of such income” is bade in law.
2. Under the facts and circumstances of the case and in law the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 is against the principles of judicial consistency and therefore, bad in law.
3. That the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 is void ab initio deserves to be quashed as no satisfaction was recorded with reference to concealment of income or furnishing inaccurate particulars of income.
4. In the facts and circumstances of the case the AO has erred in imposing the penalty of Rs. 10,000/- u/s 271(1)(c) of the I.T. Act, 1961
ITA No. 969/JP/2018 – A.Y. 2010-11
‘’1. Under the facts and circumstances of the case and in law the order passed by the AO u/s 271(1)( c) of the I.T. Act, 1961 without striking off the irrelevant portion of the printed show cause notice dated 26-12-2011 viz. ‘’furnished inaccurate particulars of income” or ‘’concealed particulars of such income” is bade in law.
2. Under the facts and circumstances of the case and in law the order passed by the AO u/s 271(1)( c) of the I.T. Act, 1961 is against the principles of judicial consistency and therefore, bad in law.
3. That the order passed by the AO u/s 271(1)(c) of the I.T. Act, 1961 is void ab initio deserves to be quashed as no satisfaction was recorded with reference to concealment of income or furnishing inaccurate particulars of income.
4. In the facts and circumstances of the case the AO has erred in imposing the penalty of Rs. 7,000/- u/s 271(1)(c) of the I.T. Act, 1961
2.1 Due to prevailing COVID-19 pandemic condition, the hearing of the appeal is concluded through video conference. First of all, we take up the appeal of the assessee for the Assessment Year 2005-06 for adjudication as per the grounds of appeal raised hereinabove.
3.1 During the course of hearing, the ld.AR of the assessee has not pressed the Ground No. 1 to 3. Hence, the same are dismissed being not pressed.
4.1 The Ground No. 4 raised by the assessee relates to challenging the order of the ld. CIT(A) in confirming the penalty levied by the AO u/s 271(1) (c ) of the Act.
4.2 Brief facts of the case are that the assessee is engaged in the wholesale business of sarees and salwar suits under the name and style of M/s Manish Enterprises. A search and seizure operation was carried out on 23.07.2009 at the residential and business premises of the assessee. Notice u/s 153A of the Income Tax Act, 1961 was issued on 07.12.2009. In response to notice u/s 153A, the assessee has filed returns in the above assessment years. The AO has completed the assessment u/s 143(3)/153A of the Income Tax Act, 1961 inter-alia making trading additions by applying the GP rate of 10% as against GP rate declared by the assessee in all the assessment years.
4.3 Aggrieved by the order of the AO, the assessee preferred appeal before the ld. CIT(A) who restricted the G.P. Rate at 8.5% on estimate basis.
4.4 Subsequently, the AO levied the penalty in the above case u/s 271(1)( c) of the Act with respect to addition confirmed by the ld. CIT(A). On appeal, before the ld. CIT(A), he confirmed the penalty levied by the AO.
4.5 Now aggrieved by the order of the ld. CIT(A) regarding confirming the penalty u/s 271(1)(c) of the Act, the assessee has preferred an appeal before us on the ground mentioned hereinabove.
4.6 During the course of hearing, the ld.AR of the reiterated the same arguments as raised by him before the ld. CIT(A) and he also relied on the following written submission submitted before us.
‘’Ground no. 4 : –
ASSESSMENT YEAR — 2005-06
In the facts and circumstances of the case the Learned Assessing Officer has erred in imposing the penalty of Rs. 13,000/- u/s 271(1)(c) of the Income Tax Act, 1961.
ASSESSMENT YEAR — 2006-07
In the facts and circumstances of the case the Learned Assessing Officer has erred in imposing the penalty of Rs. 12,000/- u/s 271(1)(c) of the Income Tax Act, 1961.
ASSESSMENT YEAR — 2007-08
In the facts and circumstances of the case the Learned Assessing Officer has erred in imposing the penalty of Rs. 12,000/- u/s 271(1)(c) of the Income Tax Act, 1961.
ASSESSMENT YEAR — 2009-10
In the facts and circumstances of the case the Learned Assessing Officer has erred in imposing the penalty of Rs. 10,000/- u/s 271(1)(c) of the Income Tax Act, 1961.
ASSESSMENT YEAR — 2010-11
In the facts and circumstances of the case the Learned Assessing Officer has erred in imposing the penalty of Rs. 7,000/- u/s 271(1)(c) of the Income Tax Act, 1961.
1. Facts of the case-:-The Learned Assessing Officer has completed the assessment u/s 143(3)/153A of the Income Tax Act, 1961 for all the assessment years pertaining to block period. The below table shows the addition made and confirmed year wise-
