Inderjit Mehta Construction Private Limtied, Delhi V. DCIT, Circle-12(1), Delhi

ITA 1845/DEL/2022

AI Insights

The case involves M/s Inderjit Mehta Construction Private Limited, which appealed against a penalty imposed by the Assessing Officer (AO) for furnishing inaccurate particulars of income amounting to Rs. 60,00,000. This penalty was based on discrepancies found during a survey and subsequent scrutiny of the company's financial records. The AO had initially recorded satisfaction for initiating penalty proceedings under section 271(1)(c) for concealment of income but later imposed the penalty for furnishing inaccurate particulars. The Tribunal, referencing decisions from the Supreme Court and various High Courts, concluded that the penalty could not be imposed for a different breach than that for which the proceedings were initiated, leading to the allowance of the appeal and deletion of the penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 112767 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-02-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 16-08-2022
• Other Referred Cases: M/s Gangotri Textiles Ltd. Vs. DCIT, Ashok Pai Vs. CIT, CIT-11 Vs. Samson Perinchery, Padma Ram Bharali Vs. CIT, Commissioner of Income-tax v. Lakhdhir Lalji
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c); 133A; 250; 274; 44AB

Judgement Text

1 ITA no. 1845/Del/2022 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C ”: NEW DELHI BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No. 1845/DEL/2022 [Assessment Year: 2015-16 M/s Inderjit Mehta Construction Private Limited, 9, Atta-ur-rehman Lane, Civil Lines, Delhi-110054. PAN- AAACI3235L Vs DCIT, Circle-12(1), New Delhi. APPELLANT RESPONDENT Assessee represented by Shri S.B. Gupta, CA Department represented by Mohd. Gayasuddin Ansari, CIT(DR) Date of hearing 28.02.2023 Date of pronouncement 28.02.2023 O R D E R PER N.K. CHOUDHRY, JM: The instant appeal has been preferred by the Assessee against the order dated 22.06.2022 impugned herein, passed by the Ld. Commissioner of Income tax (Appeals)-30, New Delhi, (in short “Ld. Commissioner”) u/s 250 of the Income Tax Act, 1961 (in short “the Act”), pertaining to the assessment year 2015-16. 2 ITA no. 1845/Del/2022 2. In the instant case, the Assessee a construction company, declared an income of Rs.5,18,48,810/- by filing its return of income on 25.09.2015, which was selected for scrutiny being a survey case as certain documents were impounded during the course of survey. By considering the information submitted by the Assessee it was found by the Assessing Officer that the Assessee’s accounts have been audited, as per the provisions of section 44AB of the Income tax Act and the audit report in form 3CA and 3CD was furnished by the Assessee during the course of assessment proceedings. The Assessee also furnished written submissions/information as called for. 2.1 The Assessing Officer further observed that during the course of survey proceedings u/s 133A of the Act, on the business premises of the Assessee company on 12.11.2014, certain documents were impounded. The Assessee was asked to submit page-wise analysis of the impounded material. On perusal of these documents and reply of the Assessee, it was seen that the amount of Rs. 50,000/- ( Pooja industries- Cash paid for Sandeep Gupta at page No. 154), Rs.25,000/- (Cash paid to shirdi tour at page No. 151 ) and Rs. 100000/- ( Pooja Industries - Cash paid Sandeep Gupta at page No.l51(Back) etc. of the Annexure IM-8, were not tallying with the books of the accounts of the Assessee. The same were confronted to the Assessee. In response, the Assessee made a disclosure of additional income of Rs.60,00,000/- over and above the returned income. Therefore, the AO made addition of Rs.60,00,000/- to the returned income of the Assessee by holding that it is very much clear 3 ITA no. 1845/Del/2022 that this disclosure has been made by the Assessee on the basis of discrepancies detected by the department. 3. The AO in the Assessment order also recorded satisfaction for initiation of penalty proceedings u/s 271(1)(c) of the Act for concealing the particulars of income and consequently issued the notice dated 18.12.2017 for concealment of particulars of income u/s 271(1)(c) of the Act and ultimately vide penalty order 28.6.2018 passed u/s 271(1)(c) of the Act, imposed the penalty of Rs. 19,46,700/- for furnishing of inaccurate particulars of income of Rs. 60,00,000/- sought to be evaded. 4. The Assessee challenged the said penalty before the learned Commissioner, not only on the merit, but also on the legal aspect that satisfaction for initiating the penalty proceedings u/s 271(1)(c) of the Act was for concealment of particulars of income, whereas the penalty was levied for furnishing of inaccurate particulars of income, which is not permissible. The Ld. Commissioner, somehow affirmed the penalty by observing as under: In the case of M/s Gangotri Textiles Ltd. Vs. DCIT 121 Taxmann.com 171 (Madras)/[2021] 276 Taxman 356 (Madras), it was held by Madras High Court that the Assessing Officer has issued show cause notice to the Assessee before levying the penalty and all the submissions of the Assessee have been duly considered, therefore, any technical defect in notice does not prejudice to the Assessee. In view of the judicial position and facts of this case, I do not find any substance in the argument of the Assessee on this issue. Therefore, I hold that Assessing Officer has rightly levied penalty u/s 271(1)(c) of the Act of Rs. 4 ITA no. 1845/Del/2022 19,46,700/- on account of default of the Assessee in concealing income of Rs. 60,00,000/- of tax sought to be evaded. 5. The Assessee being aggrieved is in appeal before us and in support of its case reiterated the same contentions as made before the authorities below that in the instant case in the assessment order, the satisfaction for initiation of the penalty proceedings u/s 271(1)(c) of the Act was made/recorded for concealment of the particulars of income and the notice dated 18.12.2017 u/s 274 read with Section 271(1)(c) of the Act was issued for concealment of the particulars of income, whereas the penalty under consideration was levied for furnishing of inaccurate particulars of income. Therefore, the levy of penalty by the AO is not as per law and against the judicial principles settled by the Hon’ble Courts, specifically by the judgments of Hon’ble Supreme Court in the case of Ashok Pai Vs. CIT 292 ITR 11 and the Hon’ble Bombay High Court in the case of CIT-11 Vs. Samson Perinchery (ITA no. 1154 of 2014, ITA no. 953 of 2014, ITA no. 1097 of 2014 & 1226 of 2014). 6. On the contrary, learned DR submitted that by initiating the penalty proceedings, issuing notice u/s 274 and imposing penalty for furnishing inaccurate particulars of income, the rights of the Assessee did not get prejudiced, as the Assessee got the proper opportunities to defend its case and therefore the impugned order does not require any interference, as the same is neither perverse nor suffered from impropriety. 5 ITA no. 1845/Del/2022 7. Having heard the parties and perusing the material available on record and giving thoughtful consideration to the peculiar facts and circumstances of the case, we observe that provisions of Section 271(1)(c) of the Act have two limbs – first, concealing particulars of income; and second, furnishing inaccurate particulars of income. The question arises what would be the fate of the levy of penalty, where the penalty proceedings have been initiated for one limb and the penalty has been levied for another limb. 7.1 We observe that Hon’ble High Court of Bombay in the case of CIT-11 Vs. Samson Perinchery (supra) has held that the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned u/s 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground, on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground, of which the penalty proceedings have been initiated and it cannot be on a fresh ground of which the Assessee has no notice. 7.2 We observe that the Hon’ble Apex Court in the case of Ashok Pai Versus CIT 292ITR 11 also reminded that 'Concealment of income' and 'furnishing of inaccurate particulars' carry different connotations. Concealment refers to deliberate act on the part of the Assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. Hence the contention of the learned DR that Assessee got proper opportunity and no prejudice has 6 ITA no. 1845/Del/2022 been caused to the Assessee by initiating the penalty proceedings, on one limb and imposing the penalty on second limb, as both the limbs are correlated, in view of this judgments referred to above, is untenable. 7.3 The Hon’ble Gauhati High Court in the case of Padma Ram Bharali Vs. CIT (1977) 110 ITR 54 (Gau) also came across with the identical situation/issue and deleted the penalty by holding as under: “It also has to be remembered that clause (c) of sub-section (1) of section 271 deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences, but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up a penalty proceeding for one offence and finding guilty for another offence or finding guilty for either the one or the other offence, as has been done by the Tribunal in the instant case, cannot be sustained in law. This view is supported by the decision of the Gujarat High Court in commissioner of Income-tax v. Lakhdhir Lalji [1972] 85 ITR 77 (Guj). In the result we find that, on the facts and in the circumstances of the case, the Tribunal was not justified in law in upholding the penalty imposed by the Inspecting Assistant Commissioner relating to the amount of Rs. 28,742.” 7.4 On the aforesaid deliberations and analyzations, we are of the considered view that the penalty cannot be imposed on a particular limb, on which neither satisfaction has been recorded nor notice u/s 274 of the Act has been issued, hence the penalty under consideration is liable to be deleted. 7 ITA no. 1845/Del/2022 8. In the result, appeal filed by the Assessee stands allowed. Order pronounced in open court on 28.02.2023. Sd/- Sd/- (ANIL CHATURVEDI ) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI