TMI Blog2021 (8) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... he Learned Commissioner of Income Tax (Appeals)- 7, Ahmedabad, dated 18/07/2018 (in short Ld. CIT(A) ) arising in the matter of penalty order passed under s. 271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as the Act ). The assessee has filed the Cross Objection in the Revenue s appeals bearing ITA no. 2072/AHD/2018 for the Assessment Year 2014-2015. 2. The Revenue has raised the following grounds of appeal: 1. That under the facts and circumstances of the case, the Ld. C1T(A) has erred in law and on facts in deleting the penalty levied u/s 271(1)( c) of the I.T. Act amounting to ₹ 77,24,050/- . 2. The Ld. CIT(A) has erred in law and on facts by not appreciating that as per Section 5 of the I.T. Aet, 1961 Capital Gain is to be taxed on accrual basis 2.1 The Ld.CIT(A] has erred in law and on facts by not appreciating that ignorance of law is no excuse especially when such law has been there in the statute right from its inception and that he being a big businessman had ail professional advice. 3. The Ld. CIT(A) has erred in law and on facts by accepting the bonafides of the assessee without the assessee having brought any cogent relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration. However, it is seen that during the assessment proceedings, the appellant offered to rectify this mistake and offered the same as income for the year under consideration. The appellant also paid the necessary tax on the said transaction before the passing of the penalty order. 3.2.1 Looking at the facts of the case, I am of the view that the appellant had not offered the capital gain for taxation during year under consideration since he was under the bonafide belief that the income was to be offered in the year that the consideration would be received. However, since he has rectified the error and offered the capital gains for tax and even paid the tax due, I am of the view that there was no intention to conceal income, and penalty provisions of Section 271(l)(c) were not attracted. The appellant's case is al squarely covered by various case-laws Dial have been relied on by him. Following the discussion above, the penalty of ₹ 77,24,050/- levied by the AO u/s.271(1)(c)of the Act is deleted. 3. In the result, the appeal is allowed. 6. Being aggrieved by the order of the LD. CIT(A) the Revenue is in appeal before us 7. Both the Ld. D.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visualizes situations to levy penalty in the manner as detailed below: i. The assessee has concealed income or ii. The assessee has furnished inaccurate particulars of income. iii. In addition to these two situations, penalty can also be imposed, inter alia, when assessee is deemed to have concealed particulars of income under Explanation 1 to section 271(1)(c) of the Act. This explanation provides that the assessee will be deemed to have concealed particulars of income wherein respect of any facts material to the computation of the total income of any person under this Act. 8.4 From the above, there remains no ambiguity to the fact that the penalty can only be levied by the AO for any of the charge as discussed above. The penalty provisions have to be construed strictly in accordance with and in terms of the language employed therein. Thus the penalty provisions cast responsibilities upon the AO so as to levy the penalty under the specific charges. 8.5 The Hon ble Gujarat High Court in the case of CIT vs. Manu Engineering Works reported in 122 ITR 306 has held as under: Now, the language of and/or may be proper in issuing a notice as to penalty order or frami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear cut finding was reached by the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down. 8.7 A conjoint reading of the above judgments cast responsibility upon the AO to reach the clear finding with respect to levy of penalty under the specific charge and if the AO fails to do so then the penalty cannot be levied as such penalty order shall not be maintainable in the eyes of law. 8.8 In the light of the above stated discussion, we see the case on hand. It is noticed that the AO in the penalty order has levied the penalty under both the charges i.e. concealment of particulars of income and furnishing inaccurate particulars of income. The relevant finding of the AO is extracted as under: In the instant case assessee has concealed particulars of his income to reduce the income. In view of the above, the undersigned is left with no other option but to levy the penalty u/s 271(1)(c) of the Act, 1961. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX In view of the discussion made in above paras, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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