TMI Blog2017 (11) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has offered explanation before the tax authorities and the same was not found to be false. Under these set of facts, we are of the view that the impugned penalty is not sustainable. Accordingly, we set aside the order passed by the learned CIT(A) and direct the Assessing Officer to delete the penalty. - Decided in favour of assessee. - ITA No.4829/M/2016 - - - Dated:- 23-6-2017 - SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Assessee : ShriJ. P. Bairagra, A.R. For The Revenue : Ms. PoojaSwaroop ORDER Per D.T. Garasia, Judicial Member: The present appeal has been preferred by the assessee against the order dated 19.05.2016 of the Commissioner of Income Tax (Appeals) 28 [hereinafter referred to as the CIT(A)] relevant to assessment year 2007-08. 2. The only ground effect to ground. The CIT(A) erred in confirming the levy of penalty of ₹ 42,07,500/- u/s.271(1)(c) of the Income Tax Act, 1961( in short the Act ). 3. The brief facts of the case are that assessment was completed u/s.143(3) of the Act dated 30.09.2009 determining total income of ₹ 4,66,963/- after allowing deduction u/s.VIA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad income from other sources. 5. Aggrieved by this order u/s.263 assessee preferred appeal before ITAT in respect to exercise of power by CIT(A) u/s.263 of the Act which was dismissed by the Tribunal. The assessment proceeding u/s.143(3) r.w.s 263 of the Act was completed and ₹ 1,25,00,000/- has been assessed under the head income from other sources. Since the assessee filed inaccurate of particulars with a view of avoid the tax on the income of ₹ 1,25,00,000/- AO initiated the penalty u/s.271(1)(c) of the Act and after hearing the assessee the AO has levied the penalty of ₹ 42,07,500/-@ 100% of the tax to be avoided was levied. The matter carried to CIT(A) and CIT(A) has dismissed the appeal. 6. The learned AR submitted that assessee was living with his father from childhood, marriage and birth of his children and till the year 2003 in the flat at Mumbai. After the family dispute assessee along with his wife and children shifted to Bangalore and kept one bed room occupied by him was locked. The father of the assessee Shri.VinodVaid had entered into agreement dated 03.04.2006 for sale of Mumbai flat with Mr. Dharmesh Shah wherein the assessee was confirming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nishing inaccurate particular so income which is at page no. 101 to 102 of the paper book. The Punjab Haryana High Court has held that satisfaction of the ITO in the course of assessment proceeding regarding concealment of income which constitute the basis and foundation of the proceeding for levy of the penalty. The Manu Engg.Works 122 ITR 306, New SorathiaEngg. Co 282 ITR 642 is directly on the issues. The learned AR further submitted that the notice u/s.274 should specify whether the penalty is for concealment of particulars of income or furnishing inaccurate particulars of income. Manjunatha Cotton Ginning Factory 359 ITR 565, Karnataka High Court is directly on the issue. The assessee has not concealed income or furnished any inaccurate particulars of income. As per section 271(1) (c) of the Act penalty is leviable if the AO satisfy that assessee has concealed the particulars of income or furnished inaccurate particulars of income if the assessee fails to offers any explanation and if the explanation is given by the assessee found to be false or if the assessee is not about to substantiate the explanation and fails to prove such expenditure if bonafide. In the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars of income for concealing particulars of such income. He has merely inserted the words wrong claim u/s.54. Thus the penalty notice received u/s.274 is ambiguous to the extent for which the penalty is initiated. The said noticedoes not specified whether the penalty is levied for concealment of income or for furnishing in accurate particulars of income. TheHon ble Karnataka High Court in case of CIT Vs. Manjunatha Cotton and Ginning Factory and others 359 ITR 565 held that notice u/s.274 r.w.s 271(1)(c) of the Act should specifically state the grounds mentioned in the section 271(1)(c) i.e. whether it is for concealment of income or furnishing of inaccurate particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy the requirement of law. The assessee should know the ground which he has to specifically otherwise principal of natural justice is offended. On the basis of such proceeding no penalty could be imposed to the assessee. The taking of penalty proceeding on one limb and finding guilty on other limb is bad in law.The Karnataka High Court has held that the AO is empowered to initiate the penalty proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king of the relevant clauses will lead to an inference as to non-application of mind. 10. We therefore, respectfully following the decision of Jurisdictional High Court we are of the view when the AO proposed to invoked the penalty for. Therefore when the AO proposed to invoked the penalty for concealment of the income the notice should be appropriately marked. Similarly is for the furnishing inaccurate particulars of income in the standard proforma without striking the relevant clause will lead to an inference as non-application of mind of AO, therefore we delete the penalty. 11. The Hon bleGujarat High Court in the case of Mannu Engineering 122 ITR 306 has held that it is incumbent upon 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 has been furnished by him. In absence of clear cut finding the order of penalty is liable to be struck on. This view was also considered by Bombay Tribunal in case of ShriChandru K. MirchandaniVs. ITO 5368/Mum/2014 dated 05.04.2017. The same view is discussed by the Tribunal in the case of MeherjeeCassinath Holdings Private Limited Vs. ACIT 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from capital gain and he has filed all the details before AO and AO did not allow the claim and all the particulars of the income was furnished in its return of income, therefore, assessee has claimed the capital gain which was not accepted or was not acceptable with the revenue that could not attract the penalty u/s.271(1)(c) of the Act. We relying upon the decision of the Hon'ble Supreme Court in case of Reliance Petroproducts Ltd. 322 ITR 158 wherein Hon bleSupreme Court has held thatas per section 271(1)(c) there should have been concealment of particulars of income of the assessee secondly must have furnished inaccurate particulars of his income. In this case, it is not the case of the concealment of particulars of income. In this case, all the information given in the return was not found to be incorrect or inaccurate. In this case, any statement made or any detail supplied by the assessee is factually not incorrect hence, prima-facie assessee could not be held guilty or furnishing inaccurate particulars of income. In order to expose the assessee to the penalty unless the case is strictly covered by the provision the penalty provision cannot be invoked. In this case asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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