Case Law Details
Pradeep Sugamchand Kawadiya Vs ITO (ITAT Ahmedabad)
The short point involved in this case as to whether the penalty is sustainable when the same has been initiated and levied without specifying the alleged guilt committed by the assessee either for concealment of income or furnishing of inaccurate particulars of income.
Brief facts leading to this case is this that the Assessment Order was finalized u/s.143(3) r.w.s 147 of the Act on 31.12.2015 by the Ld.AO whereupon penalty proceeding u/s.271(1)(c) of the Act was also initiated for “concealment of income and for furnishing of inaccurate particulars of income”. Finally, the same was imposed for both the counts which was in turn confirmed by the ”Ld.CIT (A)”.
Further this particular aspect of the matter is neither been considered even at the appellate stage by the Ld. CIT(A). Thus, this is an admitted position that the authorities below has failed to come to a definite finding regarding the charge/guilt committed by the assessee as mandated under section 271(1)(c) of the Act while either issuing of show-cause under section 271(1)(c) r.w.s. 274 of the Act or at the final stage of issuing penalty both of which suffer from ambiguity in the light of the judgment passed in the matter of Snita Transport Pvt. Ltd.-vs-ACIT reported in 42 com 54 whereby and whereunder the principle of specifying the guilt committed by the assessee in the show-cause under section 271(1)(c) as well as in the penalty order by the AO has been directed to be applied.
The principle laid down by the Hon’ble Jurisdictional High Court in the above case is squarely applicable to the facts of the case in hand. At the cost of repetition we observe that the AO has not mentioned the specific charge in its penalty orders as to whether it was levied for concealment of income or for furnishing inaccurate particulars of income. No such definite finding is reflecting from the orders impugned before us. Therefore, in our considered view, the penalty levied by the AO and confirmed by the Learned CIT (A) is not sustainable in the eye of law. The penalty is, thus, deleted. Hence, the ground of appeal of the assessee is allowed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The instant appeal filed at the instance of the Assessee is directed against the order dated 15.11.2017, passed by the Learned Commissioner of Income Tax (Appeals)-9, Ahmedabad, ( in short “ Ld.CIT(A)”) arising out of the order dated 29.06.2016 passed by the AOunder section 271(1)(c) of the Income Tax Act, 1961(herein after referred to as “the act”)for the Assessment Year 2011-2012, whereby and whereunder the penalty to the tune of Rs.3,24,613/- levied by the AO has been confirmed.
2. The short point involved in this case as to whether the penalty is sustainable when the same has been initiated and levied without specifying the alleged guilt committed by the assessee either for“ concealment of income” or furnishing of “inaccurate particulars of income”.
3. Brief facts leading to this case is this that the Assessment Order was finalized u/s.143(3) r.w.s 147 of the Act on 31.12.2015 by the Ld.AO whereupon penalty proceeding u/s.271(1)(c) of the Act was also initiated for “concealment of income and for furnishing of inaccurate particulars of income”. Finally, the same was imposed for both the counts which was in turn confirmed by the ”Ld.CIT (A)”.
4. Heard the parties, perused the relevant materials records available on records. As it appears that 4 and 5 of the AO order penalty proceeding was initiated for “concealment of income and inaccurate particulars of income”.
Further that the show-cause notice dated 21.12.2015 u/s.274 r.w.s 271(1)(c) of the Act has not specified the exact charge whether the proceeding is sought to be initiated for “concealment of income or furnishing inaccurate particulars of income”. The same was brought to our notice by the Ld. Counsel appearing for the assessee which is available at page 10 of the paper book submitted before us. It is a settled principal of law that concealment and furnishing of inaccurate particular of income carry different connotations. In this regard the Ld. Counsel appearing for the assessee relied upon the judgment passed by the Hon’ble Apex Court in the matter of CIT vs. SSA’S Emerald Meadows [2016] 73 taxmann.com 248(SC) where the order passed by the Hon’ble High Court quashing the notice issued by the Assessing Officer u/s.274 r.w.s 271(1)(c) of the Act, holding it bad in law since the same does not specify under which limb of section 271(1)(c) of the Act, penalty proceeding has been initiated; copy whereof has also been submitted before us. Even the penalty order u/s. 271(1)(c) of the Act dated 29.06.2016 levied penalty both for consciously and deliberately concealment of income and furnishing of inaccurate particulars of capital gain to the tune of Rs.16,23,063/- thus without specifying the guilt committed by the assessee u/s.271(1)(c) of the Act though mandated under section 271(1)(c) of the Act. The same is appearing at page 3 of the penalty order impugned before us.
5. Further that in the order imposing penalty the Ld. ITO in its penaltimate paragraph while dealing with the guilt committed by the assessee clubbed both the limbs being furnishing of inaccurate particulars of income and concealment of income too, the relevant portion whereof is as follows:-
“It is undisputed fact that the default was detected during the course of scrutiny Assessment. If the case was ot selected for scrutiny than the offence/default would have not been detected. The assessee has committed default within the meaning of penalty u/s. 271(1)(c) of the Income-tax Act, has concealed the particulars of his income or furnished inaccurate particulars of such income. Hence, I am satisfied that the assessee has committed default within the meaning of section 271(1)(c) of the Income-tax Act and accordingly, penalty is levied on the part of the income.
I levy penalty of Rs. 1,34,987/- being 100% of tax sought to be evaded as against the maximum 300% leviable of Rs. 4,04,961/-.”
6. Further this particular aspect of the matter is neither been considered even at the appellate stage by the Ld. CIT(A). Thus, this is an admitted position that the authorities below has failed to come to a definite finding regarding the charge/guilt committed by the assessee as mandated under section 271(1)(c) of the Act while either issuing of show-cause under section 271(1)(c) r.w.s. 274 of the Act or at the final stage of issuing penalty both of which suffer from ambiguity in the light of the judgment passed in the matter of Snita Transport Pvt. Ltd.-vs-ACIT reported in 42 com 54 whereby and whereunder the principle of specifying the guilt committed by the assessee in the show-cause under section 271(1)(c) as well as in the penalty order by the AO has been directed to be applied. The relevant extract of the order is reproduced below:
“9. Regarding the contention that the Assessing Officer was ambivalent regarding under which head the penalty was being imposed namely for concealing the particulars of income or furnishing inaccurate particulars, we may record that though in the assessment order the Assessing Officer did order initiation of penalty on both counts, in the ultimate order of penalty that he passed, he clearly held that levy of penalty is sustained in view of the fact that the assessee had concealed the particulars of income. Thus insofar as final order of penalty was concerned, the Assessing Officer was clear and penalty was imposed for concealing particulars of income. In light of this, we may peruse the decision of this Court in case of Manu Engineering Works (supra). In the said decision, the Division Bench came to the conclusion that language of “and/or” may be proper in issuing a notice for penalty, but it was incumbent upon the Assessing Authority to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by them. If no such clear cut finding is reached by the authority, penalty cannot be levied. It was a case in which in final conclusion the authority had recorded that “I am of the opinion that it will have to be said that the assessee had concealed its income and/or that it had furnished inaccurate particulars of such income.” It was in this respect the Bench observed that “Now the language of “and/or” may be proper in issuing a notice as to penalty order or framing of charge in a criminal case or a quasi-criminal case, but it was incumbent upon the IAC to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear cut finding was reached by the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down.”
The principle laid down by the Hon’ble Jurisdictional High Court in the above case is squarely applicable to the facts of the case in hand. At the cost of repetition we observe that the AO has not mentioned the specific charge in its penalty orders as to whether it was levied for concealment of income or for furnishing inaccurate particulars of income. No such definite finding is reflecting from the orders impugned before us. Therefore, in our considered view, the penalty levied by the AO and confirmed by the Learned CIT (A) is not sustainable in the eye of law. The penalty is, thus, deleted. Hence, the ground of appeal of the assessee is allowed.
As we have deleted the penalty imposed by the Learned AO & confirmed by the Learned CIT(A) on the technical ground, i.e. no specific charge has been assigned as discussed above, we are inclined to refrain ourselves from adjudicating the grounds of appeal of assessee raised on merits.
7. In the result, assessee’s appeal is allowed.
Order pronounced in the Court on 06/12/2019 at Ahmedabad.
