TMI Blog2019 (3) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... need not be adjudicated as we have already cancelled the penalty and this ground/contention is purely academic in view of our decision to cancel the penalty. When there is no valid initiation of penalty proceedings U/s 271(1)(c) of IT Act in respect of certain additions made in the assessment order; it is immaterial if the AO made specific charge against the Assessee: whether the penalty proceedings were for concealment of the particulars of income or for furnishing of inaccurate particulars of income. - ITA No.- 7900/Del/2018, SA No.- 62/Del/2019 - - - Dated:- 27-2-2019 - Shri Kuldip Singh, Judicial Member And Shri Anadee Nath Misshra, Accountant Member For the Assessee : Sh. Sachit Jolly, Adv., Sh. Rohit Garg, Adv., Sh. Aarujh Bhatia, Adv. For the Revenue : Smt. Aparna Karan, CIT(DR) ORDER PER: ANADEE NATH MISSHRA, AM This is an appeal filed by Assessee against impugned appellate order dated 24.09.2018 of the Commissioner of Income Tax (Appeals)[ CIT(A) for short]-35, Delhi. 1.1. The grounds of appeal are as under: GROUNDS OF APPEAL 1. Ground no. 1 That on the facts and circumstances of the case and in the law, the order passed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, the Ld. CIT(A) / Ld. AO failed to appreciate that the claim for allowance of the impugned expenditure was made in the proceedings for the subsequent year, and accordingly, the Appellant did not challenged the assessment order and merely because the Appellant has not challenged the order of assessment would not itself be sufficient to initiate / levy penalty. 7. Ground No. 7 That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that the Ld. AO proceeded to pass the a nonspeaking penalty order without application of mind, in undue haste and without affording adequate opportunity of being heard to the appellant, in gross violation of principles of natural justice and liable to be quashed. 2. Assessment order dated 30.12.2008 was passed under Section( U/s for short) 271(1)(c) of Income Tax Act( IT Act for short) wherein certain additions were made and penalty proceedings U/s 271(1)(c) of IT Act were initiated in respect of some of these additions; whereas penalty proceedings U/s 271(1)(c) of IT Act were not initiated in respect of the rest of the additions. A summary of the additions made, and whether penalty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 40(a)(ia) of the Act for failure to comply with the withholding tax provisions. Subsequently, out of the aforesaid provisions of ₹ 12,38,99,557/- the provisions worth ₹ 2,28,64,473/- were reversed and in respect of provisions amounting to ₹ 15,07,658/- it was found out that the expenses in respect of which the provisions were created were not liable to TDS in accordance with the provisions of Chapter XVII B of the Act and were erroneously included in the other provisions liable for TDS and not allowable as deduction (in AY 2005-06) in accordance with the provisions of section 40(a)(ia) of the Act. In view of the above facts the aforesaid provisions of ₹ 2,43,72,131/- (i.e. ₹ 2,28,64,473 + ₹ 15,07,658) were claimed as a deduction while computing the taxable income for A.Y. 2006-07. Rejecting the aforesaid submission, the Ld. AO proceeded to make a disallowance of ₹ 2,43,72,131 to the Appellant's income. The CIT(A) upheld the addition of ₹ 15,07,658/- on account of incorrect claim u/s 40 A(i)(a), out of the total addition of ₹ 2,43,72,131/- made on this issue. The relevant extracts of the OT(A) order, dated 29.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smissed. 4.3. Additional Ground of appeal: is with regard to Ground no. VI The order of penalty passed u/s 271(l)(c) of the Act is bad in law as from the notice issued u/s 274 read with Section 271 of the Act it is not discernible as to whether the penalty proceedings were initiated for furnishing of inaccurate particulars of income or concealment of income under the facts and circumstances of the Appellant's case and therefore, the impugned penalty order deserves to be cancelled. 4.3.1. The Ground has been considered and found to be devoid of merits. In the penalty order dated 23.03.2016, the AO has specifically mentioned that the penalty u/s 271(1) (c) has been levied on the amount of ₹ 13,97,08,721/- and ₹ 15,07,658/- for filing inaccurate particulars of income, Appeal on additional ground is dismissed. 4. Aggrieved, again, the Assessee has filed this appeal in Income Tax Appellate Tribunal ( ITAT for short). 4.1. At the time of hearing before us, the Ld. Counsel for Assessee drew our attention to the fact that penalty proceedings U/s 271(1)(c) of IT Act were not initiated by the AO in respect of the aforesaid additions of ₹ 13,97,08, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of excess shortage/breakage amounting to ₹ 20,89,501/- (in paragraph 8 of the assessment order). Thus it is obvious that as far as additions on account of disallowances U/s 40A(i)(a) of IT Act, amounting to aforesaid ₹ 13,97,08,721/- and 15,07,658/-, totaling to ₹ 14,12,16,379/- is concerned, AO has not recorded satisfaction for initiation of penalty proceedings U/s 271(1)(c) of IT Act. When the AO specifically initiates penalty proceedings in respect of certain additions in the assessment order, but does not record initiation of penalty proceeding in respect of the other additions; it has to be inferred that the additions in respect of which penalty proceedings were not initiated were not intended to be considered for subsequent order imposing penalty U/s 271(1)(c) of IT Act. When certain things are specifically included and remaining things are not included therein, it has to be inferred that what was not specifically included was not intended to be included at all. Scope of penalty proceedings U/s 271(1)(c) of IT Act cannot be widened later to include within its scope such additions which were not sought to be covered within the scope of penalty U/s 271(1)(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce for the purpose of levying penalty while completing the assessment. In the case of CIT vs. Auto Lamps Ltd.(supra), the AO had recorded in his order that penalty proceedings U/s 271(1)(c) of IT Act for furnishing inaccurate particulars of the income had been initiated separately. Hon ble Delhi High Court held that before initiating penalty proceedings U/s 271(1)(c) of IT Act, 1961, it is the AO who has to form his own opinion and record his satisfaction; and further that merely because the penalty proceedings have been initiated, it cannot be assumed that such a satisfaction was arrived at. In the case of CIT vs. Ram Commercial Enterprises Ltd.(supra), the Hon ble Delhi High Court held that the satisfaction as to the assessee having concealed the particulars of his income or furnished inaccurate particulars of such income is to be arrived at by the AO during the course of any proceedings under the Act, which would mean the assessment proceedings, without which, the very jurisdiction to initiate the penalty proceedings is not conferred on the assessing authority by reference to Section 271(1)(c) of IT Act. Relying on CIT vs. Angidi Chettiar (S.V.) [1962] 44 ITR 739 (SC) and Manas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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