Mamtaben N. Patel, Ahmedabad V. The ITO, Ward-4(2)(3), Ahmedabad

ITA 1306/AHD/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6421 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 06-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Reasonable cause
• Section: 147; 148; 271(1)(c); 139; 251; 139(1)

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ B’’ BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT And SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 1306/AHD/2019 िनधाᭅरण वषᭅ/Asstt. Year: 2010-11 Mamtaben N. Patel, 104, Suryadev Complex, Bopal Road, Nr. Nandeshwar Mahadev, Bopal, Ahmedabad-380058. PAN: AHWPP6614J Vs. I.T.O., Ward-4(2)(3), Ahmedabad. (Applicant) (Respondent) Assessee by : Shri Tushar Hemani, Sr. Advocate with Shri Parimalsinh B. Parmar Revenue by : Shri R.R. Makwana, Sr.D.R सुनवाई कᳱ तारीख/Date of Hearing : 09/11/2021 घोषणा कᳱ तारीख /Date of Pronouncement: 15/12/2021 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-4, Ahmedabad, dated 10/06/2019 arising in the matter of penalty order passed under s. 271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2010-11. ITA no.1306/AHD/2019 A.Y. 2010-11 2 2. The assessee has raised the following grounds of appeal: 1. The learned CIT(A) has erred in law and on facts in confirming the action of AO in initiating and levying penalty under section 271(l)(c) of the Act without recording mandatory satisfaction as contemplated under the Act at the time of framing the assessment order. 2. The learned CIT(A) has erred both in law and on the facts of the case in confirming the penalty when show cause notice u/s.274 r.w.s.271(l)(c) of the Act did not specify the exact charge as to whether the penalty is levied for concealment or furnishing of inaccurate particulars of income. Such a defect renders the penalty void ab initio and is also a violation of the principles of natural justice. 3. The learned CIT(A) has erred both in law and on the facts of the case in confirming the penalty of Rs.1,00,345/- levied u/s 271(l)(c) of the Act. 4. In any case, the impugned penalty order is barred by limitation and thus without jurisdiction and illegal. 5. In any case, quantification of the penalty is erroneous and excessive 6. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 7. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 3. The only issue raised by the assessee is that the learned CIT (A) erred in confirming the penalty levied by the AO for Rs. 1,00,345/- under the provisions of section 271(1)(c) of the Act. 4. The facts in brief are that the assessee in the present case is an individual. The assessee has not filed income tax return under the provisions of section 139(1) of the Act. There was the information available with the AO about the escapement of income with respect to sale of land and share trading activities carried on by the assessee. Accordingly, the AO issued show cause notice under section 148 of the Act on account of income escaping assessment. The assessee in response to such ITA no.1306/AHD/2019 A.Y. 2010-11 3 show cause notice declared an income of Rs. 6,84,617/- which was accepted by the AO in the assessment framed under section 147 of the Act vide order dated 29 th September 2017. 4.1 The AO, in the assessment proceedings initiated the penalty proceedings under section 271(1)(c) of the Act on the reasoning that above income was declared by the assessee only upon initiation of the proceedings under section 147 of the Act on account of escapement of income. Had the proceedings not been initiated upon the assessee, income of the assessee would have gone without tax. The AO also referred explanation 3 of section 271(1) of the Act which provides that if the assessee does not furnish the income tax return under section 139 of the Act without reasonable cause despite the fact that the assessee had taxable income, then such person shall be deemed to have concealed particular of income as provided under section 271(1)(c) of the Act. Accordingly, the AO held that the assessee has concealed the particulars of income being the amount of Rs. 6,84,617/- and levied the penalty of Rs. 1,00,345/-representing 100% of the amount of tax sought to be evaded. 5. Aggrieved, assessee preferred an appeal to learned CIT (A) who confirmed the order of the AO by observing as under: The appellant claims that particulars were in the return of income but the return was filed only after a notice u/s.148 was issued. The appellant has relied on a few cases but ratio in those cases is not applicable. This is not inadvertent mistake or a silly mistake. The appellant in this case has not come out clearly with important facts till the filing return of income as per provisions u/s. 139(1) so as to show the lack of mens rea. I feel the mistake claimed by appellant is intentional and undertaken with purpose by not disclosing true income in the return of income. Even the return was not filed in this case. It may be mentioned that more than 90% of the returns are not scrutinized and enclosures which are voluntary to be filed, are not necessarily checked. As per various pronouncements by the different courts, penalty of concealment cannot be imposed because the assesses has taken a particular stand or had preferred an interpretation which was plausible and reasonable, but has not been accepted, unless the assessee had not disclosed facts before the authorities. Such cases have to be distinguished from cases where the claim of the assessee is farcical or farfetched. Dubious and fanciful claims under the garb of interpretation, are a mere pretence and not bonafide. Similarly, the appellant can't get benefit of land mark Supreme Court judgment in the case of Reliance Petro Products Ltd., 322 ITR 158 (SC) ., . wherein in the last para of judgment it has been stated, ........... wherein there is no findings by the assessing officer for the inaccurate particulars or concealment of income. In fact, same ratio ITA no.1306/AHD/2019 A.Y. 2010-11 4 is reiterated by Hon'ble Gujarat High Court in the case of CIT Ahd-IV Vs. Whiteford India Ltd.- 38 Taxmann.com 15 (Guj.) wherein the relief to the assessee was granted with following comments, "..... where no clear finding was recorded by Assessing Officer whether assessee was guilty of concealing income and/or furnishing inaccurate particulars of income, .....". Therefore, courts have consistently held that there need to be findings of A.O. if the penalty order is to be confirmed. In instant case, there is specific finding by the A.O. In a recent judgment dated 31.10.2013 in the case of Mak Data Pvt. Ltd. Vs. CIT, 38 Taxmann Com 448 (SC), the Hon'ble Supreme Court has ruled, "voluntary disclosure does not absolve assessee, bonafide explanation of income required". The facts of the case also make it amenable to the judgment against it in the case of K.P. Madhusudhanan Vs. CIT 251 ITR 99 (SC). Further, as per judgments, additional income in response to notice u/s.148, penalty on additional income confirmed in the case laws: PC Joseph & Bros. Vs. CIT 243 ITR 818 (Ker.) Narain Das Suraj Bhan Vs. CST21 STC 104 (SC) The dictionary meaning of the word concealment is to hide, to keep secret. The Explanation to section 271(1)(c) does not alter or extend this meaning. It only assumes the concealment to exist if the assessee fails to prove that the non disclosure was not due to fraud or willful conduct, held by Allahabad High Court in the case of Mohammad Ibrahim Azimulla 131 ITR 680 (All.). Concealment means en attempt to hide an item of income or a portion thereof from the knowledge of the income tax authorities, held in case of CIT Vs. Mahabit Prasad Bajaj 298 ITR 109 (Jhar). The A.O. has initiated penalty perfectly as per provisions of the IT. Act, 1961 and has only imposed penalty of 100% of amount payable on concealed income for which inaccurate particulars have been furnished. It is not the case where appeiiani made certain ciaims in the return of income which were found to be not allowable subsequently during assessment proceedings, rather it is a case where additions have been made on certain facts which came to surface only during the examination of record by the assessing officer and notice u/s.148 of the IT. Act was issued to the non filer. In view of facts of this case and the case laws quoted above, I conclude that penalty order u/s.271(1)(c) of IT Act, 1961 is very fair and need not to be interfered. The only ground of appeal is dismissed. 6. Being aggrieved by order of Ld. CIT (A) assessee is in the appeal before us. 7. Learned AR before us submitted that the AO has levied the penalty u/s 271(1)(c) of the Act without mentioning any specific charge. As such the AO in Para No.4 of the penalty order while calculating the penalty has drawn its conclusion by levying both the charges i.e. furnished inaccurate particulars of income and thereby concealed particulars of income. Accordingly, the learned AR prayed that penalty without mentioning the specific charge cannot be levied upon the assessee. ITA no.1306/AHD/2019 A.Y. 2010-11 5 8. On the other hand, learned DR before us submitted that the assessee cannot be absolved from the penalty even the AO has specified both the charges in his penalty order. The learned DR vehemently supported the order of Authorities below. 9. We have heard the rival contentions and perused the material available on record. From the preceding discussion, we note that the penalty has been imposed by the AO u/s 271 (1)(c) without mentioning the specific charge in penalty order dated 21/03/2018, whether, it was levied on account of concealment of income or furnishing inaccurate particulars of income. The relevant extract of the penalty order is reproduced as under: “furnished inaccurate particulars of his income and thereby concealed income of Rs. 5,04,620.00” 9.1 On perusal of above, it is clear that the AO has not levied the penalty on the specific charge as mandated u/s 271(1)(c) of the Act. In such facts and circumstance the Hon'ble Jurisdictional High Court in the case of Snita Transport Pvt. Ltd. Vs. Assistant Commissioner of Income Tax reported in 42 taxmann.com 54 has held that penalty cannot be imposed without mentioning the specific charge. 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 ITA no.1306/AHD/2019 A.Y. 2010-11 6 the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down." 9.2 The principles laid down by the Hon’ble Jurisdictional High Court in the above case are squarely applicable to the facts of the case on hand. The AO has not mentioned the specific charge in his penalty orders whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Therefore, in our considered view, the penalty levied by the AO and confirmed by the learned CIT (A) is not sustainable. Hence, the ground of appeal of the assessee is allowed. 9.3 As we have deleted the penalty imposed by the AO & confirmed by the ld. CIT-A on the technical ground i.e. no specific charge has been invoked as discussed above, therefore, we are inclined to refrain ourselves from adjudicating the grounds of appeal of assessee raised on merits. 10. In the result, the appeal of the assessee is partly allowed. Order pronounced in the Court on 15/12/2021 at Ahmedabad. Sd/- Sd/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 15/12/2021 Manish