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M/s ABR Auto Pvt. Ltd. Versus ACIT, Circle 1 (1) , New Delhi

2017 (12) TMI 257 - ITAT DELHI

Penalty u/s 271(1)(c) - Held that:- AO did not record his satisfaction for initiation of penalty proceedings, because while passing the assessment order dated 30.12.2011 passed u/s. 143(3)(ii) of the Act, the AO has stated that “….. Penalty proceedings u/s. 271(1)(c)is being initiated separately for furnishing inaccurate particulars of income / concealment income……………….”, which is not sufficient and therefore, the penalty proceedings cannot be said to be validly initiated under such circumstance .....

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RDER PER H.S. SIDHU, JM Assessee has filed the appeal against the Order dated 04.9.2015 passed by the Ld. Commissioner of Income Tax (Appeals-I), New Delhi pertaining to assessment year 2009-10. The solitary issue raised in the appeal is relating to upholding the penalty of ₹ 36,58,000/- u/s. 271(1)(c) of the I.T. Act, 1961. 2. The facts in brief are that assessee is an investment company and has made investment in the shares of closely held unquoted companies. The total amount of investme .....

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e I.T. Act, 1971 for levy of penalty. The penalty u/s. 271(1)(c) was levied on 31.3.2014 of ₹ 36,58,000/-. 3. Aggrieved with the said penalty order, the assessee filed the appeal before the Ld. CIT(A), who vide his impugned order dated 04.09.2015 has upheld the penalty in dispute and accordingly, dismissed the appeal of the assessee. 4. At the time of hearing, Ld. Authorised Representative of the Assessee has stated that assessee had appealed before the Ld. CIT(A) against the above said ad .....

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he ITAT vide its order dated 5.8.2016 in ITA No. 2375/Del/2013 had allowed the appeal of the assesse and deleted the quantum additions of ₹ 4,07,158/- and ₹ 91,39,000/-. However, during the penalty proceedings, the AO vide his order dated 31.3.2014 imposed penalty of ₹ 36,58,000/- u/s. 271(1)(c) of the Act, in respect of total additions of ₹ 1,07,62,163/- on the alleged ground that the assessee had furnished inaccurate particulars of income. In view of the above, ld. Coun .....

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at AO did not record his satisfaction for initiation of penalty proceedings and further that quantum and penalty proceedings are independent of each other and penalty cannot be imposed simply on the basis of finding recorded in the assessment order. Ld. Counsel of the Assessee has draw our attention towards the assessment order dated 30.12.2011 passed u/s. 143(3)(ii) of the Act and stated that while completing the assessment the AO has observed ….. Penalty proceedings u/s. 271(1)© is .....

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e assessment order nor the printed show cause notice nowhere states the specific charge of alleged concealment and / or furnishing of inaccurate particulars of income vis-à-vis addition made. In view of the above, he stated that entire penalty proceedings stand vitiated, because it is not in accordance with law and in order to support his contention, he placed the reliance on the following decisions:- Hon ble Karnataka High Court decision in the case of CIT & Ors. Vs. M/s Manjunatha C .....

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ve case, it is humbly submitted that the following decisions may kindly be considered: 1. Union of India v. pharamendra Textile Processors [(2007) 295 ITR 244] (Copy Enclosed) where Hon'ble Supreme Court held that Penalty under section 271 (1)(c) is a civil liability for which willful concealment is not an essential ingredient for attracting the civil liability as is the case in the matter of proceedings under section 276C 2. CIT Vs Zoom Communication (P.) Ltd. [191 Taxman 179 (Delhi)/[2010] .....

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, voluntary disclosure of concealed income does not absolve assessee of section 271(1)© penalty if the assessee fails to offer an explanation which is bonafide and proves that all the material facts have been disclosed. 5. CIT vs. Gates Foam & Rubber Co [91 ITR 467] CIT vs India Seafood [105 ITR 708] where Hon'ble Kerala High Court held that Claiming excessive deduction also amounts to concealment of income 6. Steel Ingots Ltd vs. CIT [296 ITR 228] where Hon'ble Madhya Pradesh H .....

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fied. 6. We have carefully considered the rival submissions and perused the relevant records. We find that assessee had appealed before the Ld. CIT(A) against the quantum additions i.e. disallowance u/s. 14A amounting to ₹ 4,07,158/- and disallowance on account of long term capital loss treated as business income amounting to ₹ 91,39,000/-. However, the assessee did not press for other disallowances made on account of Bad Debts of ₹ 1,32,000/- and Disallowance of Expenses on ac .....

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. CIT(A) on the issue u/s. 14A and restore the matter to the file of the AO for fresh adjudication after due verification of the claim of the assessee regarding no expenditure having been incurred and allowed the issue relating to Long Term Capital Loss treated as Business income of ₹ 91,39,000/- by deleted this addition. We further note that during the penalty proceedings, the AO vide his order dated 31.3.2014 imposed penalty of ₹ 36,58,000/- u/s. 271(1)(c) of the Act, in respect of .....

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iated separately for furnishing inaccurate particulars of income / concealment income………………. , which is not sufficient and therefore, the penalty proceedings cannot be said to be validly initiated under such circumstances. However, nowhere in the assessment order states the specific charge of alleged concealment and / or furnishing of inaccurate particulars of income. Therefore, the entire penalty proceedings stand vitiated, because it is not in accordan .....

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