Bharat Laxmilal Somani, Ahmedabad V. ITO, Ward-6(1)(2), Ahmedabad

ITA 1420/AHD/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7127 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 29-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Section: 271(1)(c); 143(3); 274

Judgement Text

ITA No.1420/Ahd/2018 A.Y. 2014-15 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND Ms. SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER (Conducted through Virtual Court) ITA No.1420/Ahd/2018 Assessment Year: 2014-15 Bharat Laxmilal Somani vs. Income Tax Officer, Prop. M/s. Dinesh Appliances, Ward 6(1)(2), Ahmedabad. C/o. M.S. Chhajed & Co., “Kamal Shanti”, Besides Bank of Baroda, Near Sardar Patel under Bridge, Naranpura, Ahmedabad - 380 014. [PAN – AFGPS 3773 P] (Appellant) (Respondent) Appellant by : Shri Hem Chhajed, A.R. Respondent by : Shri R R Makwana, Sr. D.R. Date of hearing : 29.11.2021 Date of pronouncement : 02.12.2021 O R D E R PER SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER : This appeal is filed by the assessee against the order dated 25.04.2018 passed by the CIT(A)-6, Ahmedabad for the Assessment Year 2014-15. 2. The grounds of appeal raised by the assessee are as under : “(1) The Ld. CIT has erred in law and on facts in upholding order of Ld. A.O. of levy of penalty when there was no specific charge at the time of initiation of penalty. (2) The Ld CIT(A) has erred in law and on facts in upholding the order of penalty u/s 271(1)(c) of Act of Rs.2,48,312/-. ITA No.1420/Ahd/2018 A.Y. 2014-15 Page 2 of 4 (3) The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal.” 3. The assessee is an individual and filed return of income for the A.Y. 2014-15 on 29.11.2014 declaring total income of Rs.5,92,662/-. The Assessing Officer observed that during the course of assessment, on verification of purchase and sales registers furnished by the assessee for the year under assessment, the assessee made purchases of Tiles from M/s Navkar Sales Corporation in the month of May & June 2013 and sold the same to M/s. Crystal Ceramic Pvt. Ltd. during the month of May & June 2016. The quantum of above purchases and sales found to be at Rs.6,48,78,689/- and Rs.6,47,72,648/- respectively. The Assessing Officer made addition on account of bogus purchases and sales amounting to Rs.9,39,380/-. The Assessing Officer initiated penalty under Section 271(1)(c) of the Income Tax Act, 1961 without giving any specific charge for imposing penalty. The Assessing Officer issued notice under Section 271(1)(c) read with Section 274 of the Act dated 26.12.2016. The assessee furnished his reply. The Assessing Officer vide penalty order dated 27.06.2017 levied penalty of Rs.2,48,312/- thereby observing that the assessee has furnished inaccurate particulars of income or has concealed the income within the meaning of provisions of Section 271(1)(c) of the Act. The Assessing Officer further observed that the assessee has committed default and the amount of income sought to be evaded by reason of concealing particulars of his income or furnishing inaccurate particulars of such income works out to be Rs.9,39,380/-. 4. Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee thereby observing that the assessee has filed inaccurate particulars of income thereby concealing the income and since the assessee already offered profit at 1.1% in his return of income the difference of 0.65% was treated as income of the assessee. Thus, the CIT(A) held that there is no addition on estimate basis and the addition was made treating the particular sales and purchases as bogus. Thus, the CIT(A) confirmed the penalty. 5. The Ld. AR submitted that there is no specific charge mentioned in the assessment order as well as in the notice under Section 271(1)(c) read with 274 of the Act. The Ld. AR further submitted that without giving specific charge, imposition of ITA No.1420/Ahd/2018 A.Y. 2014-15 Page 3 of 4 penalty is not valid. On merit, the Ld. AR submitted that the addition was made purely on estimate basis and the objection of the CIT(A) that the assessee has offered profit at 1.1% in his return of income and the difference of 0.65% was treated as income by the Assessing Officer does not amount to either furnishing of inaccurate particulars of income or that of concealing of income. Thus, the provisions of Section 271(1)(c) does not apply in the present case. 6. The Ld. DR relied upon the assessment order, penalty order and the order of the CIT(A) and submitted that the CIT(A) has given a specific observation that the assessee has filed inaccurate particulars of income thereby concealing the income. In fact, the assessee has offered profit at 1.1% in his return of income and thus should have offered the difference of 0.65% at that stage which amount to filing of inaccurate particulars of income and concealing the income. Thus, there is no addition on estimate basis. The penalty order should be confirmed. 7. We have heard both the parties and perused all the relevant materials available on record. The Assessing Officer in assessment proceedings under Section 143(3) of the Act has though initiated penalty has not given any specific satisfaction as to how the penalty should be imposed as well as no specific charge was mentioned in the original assessment order. The notice under Section 271(1)(c) read with Section 274 of the Act dated 26.12.2016 also does not mention exactly as to which charge of the levy of penalty should be taken into account in assessee’s case. The penalty order is also not revealing under which charge the Assessing Officer has levied penalty. In fact, the Assessing Officer has simply made observation in para 7 of the penalty order that the assessee evaded the income details and thereby concealed the particulars of income or furnished inaccurate particulars. But the intention of the provision of Section 271(1)(c) has given a mechanism as to on which specific limb penalty has to be levied. If the assessee furnished inaccurate particulars then the penalty proceedings will be separate and the reasoning will be separate to that extent. If the assessee has concealed the particulars of income, the reasoning has to be given by the Assessing Officer to that extent. If both the limbs has been observed or identified in any particular assessee’s case then for both the limbs the Assessing Officer has to give the reason either in assessment order or in penalty order itself, but that is a ITA No.1420/Ahd/2018 A.Y. 2014-15 Page 4 of 4 lacuna in the present penalty order under challenge. Therefore, on this ground the penalty does not sustain. 8. Now coming to the merits, the Assessing Officer admittedly, in assessment order, in the penalty order and before the CIT(A), the CIT(A) also undisputedly quoted that the assessee offered profit at 1.1% in his return of income. Thus, the assessee has given full disclosure in his return of income itself and that cannot be held as inaccurate particulars of income or concealing of the income. Thus, Section 271(1)(c) of the Act does not apply in the present case. Appeal of the assessee is thus allowed. 9. In the result, appeal of the assessee is allowed. Pronounced in the open Court on this 2 nd day of December, 2021. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA RAGHUNATH KAMBLE) Accountant Member Judicial Member Ahmedabad, the 2 nd day of December, 2021 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad