Mohammed Nasrudeen, Pudhukottai V. ITO, Ward 3, Cuddalore

ITA 645/CHNY/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5964 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-05-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 10-03-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N.V.KRISHNAN
• Section: 274

Judgement Text

आयकर अपीलीय अिधकरण, ’सी’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI ी एबी टी. वक , ाियक सद एवं एवंएवं एवं ी अिमताभ शु ा, लेखा सद के सम BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.645/Chny/2024 िनधा रण वष /Assessment Year: 2011-12 Shri Mohammed Nasrudeen, 871-B, South Street, Ammapatinam, Manamelgudi, Pudhukotai District-614 617. v. The Income Tax Officer, Ward-3, Cuddalore. [PAN: AZWPM 6686 K] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Appellant by : Shri N.V.Krishnan, Advocate यथ क ओर से /Respondent by : Shri P. Sajit Kumar, JCIT सुनवाईक तारीख/Date of Hearing : 22.05.2024 घोषणाक तारीख /Date of Pronouncement : 05.07.2024 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short "the Ld.CIT(A)”), Delhi, dated 10.01.2024 for the Assessment Year (hereinafter in short "AY”) 2011-12. 2. The main grievance of the assessee is against action of the Ld.CIT(A) confirming the penalty levied by the AO u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter in short "the Act”). The brief facts as ITA No.645/Chny/2024 (AYs 2011-12) Mohammed Nasrudeen :: 2 :: noted in the Assessment Order dated 26.12.2018 is that assessee had deposited cash of Rs.43,47,755/- in Axis Bank, Chidambaram and did not file return of income for AY 2011-12. Therefore, AO recorded reason to believe escapement of income and issued notice on 22.03.2018 and re- opened the assessment; and noted that assessee pursuant to the notice u/s.148 of the Act had filed return of income admitting total income of Rs.1,78,669/-. When the AO asked the assessee to furnish the nature and source of cash deposit in bank, the assessee submitted that the deposits were in the course of his business; and certain amounts were earlier withdrawn and all unused cash were re-deposited; and stated that sales receipts were credited into bank account. The AO noted from perusal of the bank statement of bank account of the assessee that it could not been ascertained from the entries as to whether deposits/withdrawals related to the Maligai business or not? According to the AO, assessee could not substantiate his running of business with any supporting evidences like place of business, purchases, sales bills, agencies with whom he dealt with, etc. According to the AO, assessee failed to give any evidences. Therefore, the entire cash deposits of Rs.43,81,277/- and non-cash deposits of Rs.9,49,898/- amounting to Rs.53,31,175/- was assessed u/s.69 of the Act; and the AO endorsed in the assessment order “penalty proceedings u/s.271(1)(c) of the Act, initiated” and thereafter, the AO issued penalty notice dated 26.12.2018 ITA No.645/Chny/2024 (AYs 2011-12) Mohammed Nasrudeen :: 3 :: for having concealed the particulars of income and levied impugned penalty of Rs.15,50,240/- on 26.02.2020. On appeal, the Ld.CIT(A) confirmed the penalty. 3. Aggrieved, the assessee is in appeal before this Tribunal. 4. After hearing both the parties, we are not repeating the aforesaid facts discussed (supra) for the sake of brevity. The only legal issue that has been raised before us is that the AO while framing the assessment order dated 26.12.2018 u/s.143(3)/147 of the Act has not recorded his satisfaction that the assessee has concealed the particulars of his income as envisaged u/s.271(1)(c) of the Act, failure of which, according to the Ld.AR is fatal for imposing penalty u/s.271(1)(c) of the Act. 5. The Ld.AR submitted that it is well settled that the penalty proceedings are distinct from assessment proceedings and that both are independent proceedings and that mere confirmation of additions in quantum proceedings cannot per-se, lead to confirmation of penalty; and that the assessee is at liberty to lead fresh evidence during penalty proceedings to prove that there was neither concealment of particulars of income nor furnished any inaccurate particulars of income. Further, according to the Ld.AR, the first condition before initiating penalty by AO under sub-clause (c) of sub-section (1) of section 271 of the Act is to record his satisfaction in the course of assessment proceedings that any ITA No.645/Chny/2024 (AYs 2011-12) Mohammed Nasrudeen :: 4 :: person has concealed the particulars of his income or furnished inaccurate particulars of such income, then the AO has to issue proper notice making it clear the specific fault committed by assessee and give proper opportunity u/s 274 of the Act and then levy penalty. Thus, according to him, the penalty proceedings have their foundation in the assessment order. However, in this case, according to the Ld.AR, the AO has not made any mention about his satisfaction of initiating penalty proceedings against the assessee [in the assessment order dated 26.12.2018] for the faults as stated in sec.271(1)(c) of the Act (supra); and has merely made an endorsement in the last line of assessment order that penalty proceedings are initiated separately, which action of AO will not suffice to initiate validly penalty u/s.271(1)(c) of the Act against the assessee. We find force in the submission of Ld AR and find that the AO in the course of assessment proceedings did not made any endorsement of his satisfaction that the assessee has concealed particulars of his income or furnished inaccurate particulars of such income, failure to do so i.e, satisfaction of the AO in the assessment order that assessee had concealed the particulars of income or furnished inaccurate particulars of income was sine qua non for initiation of penalty u/s.271(1)(c)/274 of the Act, which is absent in this case, therefore the consequent levy of penalty is bad in law as confirmed by the Hon’ble Supreme Court in the case of ITA No.645/Chny/2024 (AYs 2011-12) Mohammed Nasrudeen :: 5 :: PCIT v. Golden Peace Hotel & Resorts reported in [2021] 124 taxmann.com 249 (SC). 6. Therefore assessee succeeds and the penalty levied by AO of Rs.15,50,240/-, is directed to be deleted. Therefore, penalty deserves to be deleted and we order accordingly. 7. In the result, appeal filed by the assessee is allowed. Order pronounced on the 05 th day of July, 2024, in Chennai. Sd/- (अिमताभ शु ा) (AMITABH SHUKLA) लेखा सद य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) याियक सद य/JUDICIAL MEMBER चे ई/Chennai, दनांक/Dated: 05 th July, 2024. TLN, Sr.PS आदेश क ितिलिप अ"ेिषत/Copy to: 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकरआयु /CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय ितिनिध/DR 5. गाड फाईल/GF