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Trans Conduct (India) Versus The Asst. Commissioner of Income Tax, Circle 21 (1) , Mumbai

2017 (11) TMI 676 - ITAT MUMBAI

Levy of penalty u/s 271(1)(c) - addition on bogus purchases - Held that:- AO is not sure about the charge on which penalty is to be levied. The AO has also invoked issue of concealment of particulars of income. He is also levied penalty for furnishing of inaccurate particulars of income as is clear from the order of the AO. In view of this facts and circumstances, we are of the view that the AO himself is not sure about the levy of this charge. Since, the issue is covered by the decision of Honí .....

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appeal No. CIT(A)-37/IT-142/ACIT-25(3)/2013-14 dated 18-03-2016. The Assessment was framed by the Assistant Commissioner of Income Tax, Circle-21(2), Mumbai (in short ACIT) for the assessment year 2010-11 vide order dated 31-12-2012 under section 143(3) of the Income Tax Act, 1961(hereinafter the Act ). The penalty was levied under section 271(1)(c) of the Act vide order dated 27-06-2013. 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the levy of penalty .....

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the following judgements of the High Court and ITAT wherein penalty has been dropped in cases where addition was accepted by the assessee to avoid litigation and buy peace: 1. Manjunath Cotton and Ginning Factory (359 ITR 565) (Kar) 2. Vinay Sharma vs ITO (ITA No 871IDeI/2013) (Del) 3. Heranba Industries Ltd (ITA No 22921M/2013) 3. At the outset, the learned Counsel for the assessee has raised the issue of jurisdiction for levy of penalty that the assessee has initiated the penalty proceedings f .....

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for furnishing inaccurate particulars of income and concealment of income. He further, took us through the order at para 5 which reads as under: - 5. I am therefore satisfied that the assessee has committed a default within the meaning of section 271(1)(c) of the I.T. Act by filing inaccurate particulars of income and concealment of income by taking accommodation entries from hawala traders and enhanced its purchases to the tune of ₹ 17,52,735/-. Minimum and Maximum penalty under section .....

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of lower authorities and stated that the issue is covered in favour of Revenue by the decision of the Hon ble Bombay High Court in the case of CIT vs. Smt. Kaushalya (1994) 75 taxman 549 (Bom.), wherein it is held that merely mistake in language used or merely non-striking of inaccurate portion account by itself not invalidate notice under section 274 of the Act. In view of the above, the learned CIT Departmental Representative argued that the penalty on this issue cannot be deleted. 5. We have .....

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on ble Bombay High Court in the case of CIT v. Samson Perinchery [2017] 392 ITR 4 (Bom.), wherein it is held as under : - 3 The impugned order of the Tribunal deleted the penalty imposed upon the Respondent Assessee. This by holding that the initiation of penalty under Section 271 (1)(c) of the Act by Assessing Officer was for furnishing inaccurate particulars of income while the order imposing penalty is for concealment of income. The impugned order holds that the concealment of income and furn .....

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ted that notice issued under Section 274 of the Act is in a standard proforma, without having striked out irrelevant clauses therein. This indicates non-application of mind on the part of the Assessing Officer while issuing the penalty notice. 4 The impugned order relied upon the following extract of Karnataka High Court's decision in CIT v/s. Manjunath Cotton and Ginning Factory 359 ITR 565 to delete the penalty: The Assessing Officer is empowered under the Act to initiate penalty proceedin .....

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) at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of Manu Engineering reported in 122 ITR 306 and the Delhi High Court in the case of Virgo Marketing P. Ltd., reported in 171 Taxmn 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke th .....

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ledee. In the above view, the deletion of the penalty, is unjustified. 6. The above submission on the part of the Revenue is in the face of the decision of the Supreme Court in Ashok Pai v/s. CIT 292 ITR 11 [relied upon in Manjunath Cotton & Ginning Factory (supra)] - wherein it is observed that concealment of income and furnishing of inaccurate particulars of income in Section 271(1)(c) of the Act, carry different meanings/ connotations. Therefore, the satisfaction of the Assessing Officer .....

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