At, Income Tax Appellate Tribunal Pune
By, THE HONOURABLE MS. SUSHMA CHOWLA
By, JUDICIAL MEMBER & THE HONOURABLE MR. ANIL CHATURVEDI
By, ACCOUNTANT MEMBER
For the Appellant: Rajesh Gawli, Advocate. For the Respondent: None.
Sushma Chowla, JM:
1. The appeal filed by Revenue is against order of CIT(A)-1, Pune, dated 17.03.2016 relating to assessment year 2012-13 against penalty levied under section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act').
2. Despite service of notice, none appeared on behalf of assessee nor any application was moved for adjournment. However, since the issue involved, we proceed to decide the present appeal after hearing the learned Departmental Representative for the Revenue.
3. The Revenue has raised the following grounds of appeal:-
1. The order of the Ld. Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case.
2. The Ld. Commissioner of Income-tax(Appeals) has erred on the facts and circumstances of the case, in deleting the penalty levied u/s 271(1)(c) of the Act of Rs.37,96,070/- as against the additional income offered during the survey and admitted by filing revised return of income.
3. The Ld. Commissioner of Income-tax(Appeal) has erred on the facts and circumstances of the case in holding that the claim as revenue expenditure was on oversight and not a conscious decision.
4. The only issue raised in the present appeal is against deletion of penalty levied under section 271(1)(c) of the Act.
5. Briefly, in the facts of the case, the assessee was domestic company and engaged in the business of manufacturing and installation of engineering goods. The assessee had filed its original return of income on 28.09.2012 declaring total income at 28,53,37,379/-. Information was received from the Maharashtra Sales Tax Department regarding hawala purchases made by several persons including the assessee. Thereafter, survey under section 133A of the Act was conducted in the business premises of assessee. The Assessing Officer during the course of assessment proceedings after noting the details of purchases made from Aquatech Solutions Pvt. Ltd., expenditure for construction of laboratory held as capital expenditure and after allowing 10% depreciation at 13 lakhs, balance amount of 1,17,00,000/- was capitalized and disallowed as revenue expenditure under section 37 of the Act. The Assessing Officer further held that the assessee has concealed particulars of its income and furnished inaccurate particulars of income, penalty proceedings under section 271(1)(c) of the Act are being initiated separately. In the penalty order passed under section 271(1)(c) of the Act, dated 30.07.2014, the Assessing Officer first held the assessee to have concealed its income in the form of bogus purchases. Further, the Assessing Officer held the assessee to have furnished inaccurate particulars of income within meaning of section 271(1)(c) of the Act and has committed default in view of provisions of section 271(1)(c) of the Act and explanation thereof.
6. The CIT(A) has deleted the penalty levied by Assessing Officer observing that Explanation-1 of section cannot be invoked in respect of deciding the issue of furnishing inaccurate particulars of income, against which the Revenue is in appeal.
7. On perusal of record and after hearing the learned Departmental Representative for the Revenue, it transpires that penalty proceedings are to be initiated for non satisfaction of one of the two limbs of section 271(1)(c) of the Act. The requirement of law is that the assessee is to be show caused as to which limb of section 271(1)(c) of the Act has not been fulfilled. Thereafter, while levying penalty it is incumbent upon the Assessing Officer to levy penalty for concealment on the limb for which it was initiated. The Assessing Officer has to give a finding in this regard.
8. The Hon'ble Bombay High Court in CIT Vs. Shri Samson Perinchery in Income Tax Appeal No.1154 of 2014 with other Income Tax Appeals Nos.953 of 2014, 1097 of 2014 and 1226 of 2014, judgment dated 05.01.2017 have laid down the proposition with regard to initiation of penalty proceedings on one limb of section 271(1)(c) of the Act and levy on another limb and observed that show cause notice needs to be given to the assessee as to which limb of section has not been fulfilled by it and which makes the assessee liable for penalty for concealment and then can levy penalty on the said limb.
9. Now, coming to the facts of the present case, the Assessing Officer while making addition in assessment order had initiated penalty for furnishing inaccurate particulars of income and the said satisfaction so recorded is thus within framework of law. Now, coming to penalty order passed by the Assessing Officer. The perusal of para 8.3 of penalty order, the Assessing Officer holds the assessee to have concealed particulars of its income in the form of bogus purchases and further holds that the assessee has furnished inaccurate particulars of income within meaning of section 271(1)(c) read with Explanation-1 of the Act. As pointed out, Explanation-1 of section 271(1)(c) of the Act deals with concea
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lment of income and the Assessing Officer thus, in the present case has held the assessee to have furnished inaccurate particulars of income and also concealed its income. Such an order levying penalty under section 271(1)(c) of the Act on both the limbs of section 271(1)(c) of the Act do not stand and the same is held to be invalid and accordingly, penalty levied under section 271(1)(c) of the Act is deleted. Upholding the order of CIT(A), we dismiss the grounds of appeal raised by Revenue. 10. In the result, the appeal of Revenue is dismissed.