TMI Blog2022 (10) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... The Revenue has filed an appeal against the order of Commissioner of Income Tax Appeals(CIT(A))-50 Mumbai, passed under Section 271(1)C and 250 of the Income Tax Act 1961 (hereinafter in short the Act ) and the assessee has filed cross objections(C.O.). The Revenue has raised following grounds of appeal. 1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty of Rs.4,85,51,154/- levied by the Assessing Officer ignoring the fact that the quantum additions have stood the test of appeal before the Ld.CJT(A) and has been duly confirmed by the Ld.CJT(A) 2) On the facts and in the circumstances of the case and in law ,the Ld. CIT(A) erred in deleting the penalty of Rs.4,85,51,154/~ under section 271(l)(c) of the Act without appreciating that the proviso to section 275(1 )(a),inserted w.e.f.1.6.2003,mandates that the assessing officer shall pass the order imposing the penalty within one year from the end of the financial year in which such order of Ld.CIT(A) is received in the office of Pr.CIT. 3) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in quashing the order passed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 271(1)C of the Act. Whereas, the A.O. has made additions and the assessee has filed an appeal with the CIT(A) and was granted partial relief. whereas, in respect of certain expenditure and the claims, the CIT(A) has confirmed the addition. The assessee has filed reply to show cause notice on 12.02.2015 in respect to applicability of provisions of Section 271(1)C and there is no concealment of income nor furnishing of inaccurate particulars of income. The AO was not satisfied with the compliance and finally, the AO has relied on the facts, judicial decisions and appliedthe provision of Section 271(1)(c) and levied the penalty of Rs.4,85,51,154/- and passed the order under Section 271(1)C of the Act dated 31.03.2018. 4. Aggrieved by the penalty order, the assessee has filed an appeal with the CIT(A), whereas, the Ld. CIT(A) considered the grounds of appeal, findings of the AO in scrutiny assessment, submissions of the assessee and dealt on the provisions under Section 271(1)C of the Act and judicial decisions and has deleted the penalty and observed at page 3 Para 4 to 7.1 of the order read as under: 4. Brief facts of the case: 4.1. The appellant filed its ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its directors and share-holders in August and September 1 963 and they had seized a larger number of books of accounts and documents. The seized documents revealed that the assessee had under-assessed its income or it had escaped assessment. For example, it was noticed that the assessee had adopted, at the stage of export of manganese ore, the practice commonly described as under- invoicing and had thereby entered in the books of accounts a smaller amount of profits than the real profits. Because of this, a concealed income was discovered and for assessment years 1953-54 to 1958-59, a notice was issued under Section 148 read with Section 147 (a) of the Income Tax Act, 1951. He points out that this notice dated 25.1.1965 was served upon assessee September 1965 and, therefore, the period of limitation of four years asstipulated under Section 153 (2) fa) of the Income Tax Act, 1961 then in force, expired on 31.3.1970. The assessment order came to be passed on 18.3.1970. 4. Insofar as second question is concerned, he points out that the Reference was necessitated in the light of argument advanced before the ITAT by the respective counsel or assessee's representatives. He invi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 34 of the repealed Act i.e. 1922 Act, in respect of any such income are pending at the commencement of this Act, a notice under section 148 of new Act may, subject to the provisions contained in section 149 or section 150, be issued with respect to that assessment year and all the provisions of the 1961 Act shall apply accordingly. Issuance of such notice has been made subject to the provisions of Section 149 or Section 150 of 1961 Act. 8. Provisions of Section 149 of the Income Tax Act, 1961 prescribe a limitation of six years at the relevant time. Accordingly, it is not in dispute that the issuance of notice dated 12.1.1965 is within six years of assessment year 1959-60. But the question referred to is about the order of re-assessment dated 18.3.1970. We find that the provisions of Section 153 (2) at the relevant time prescribed limitation of four years from the end of assessment year in which notice under Section 148 of the Income Tax Act, 1961 is served upon assessee. Here, though notice is dated 25.1.1965, admittedly, it is served on assessee in September 1965 i.e. in financial year 1965-66 which expired on 31.3.1966. The assessment year for the purposes of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1972 are premature. 11.With reference to various precedents placed on record, learned Chartered Accountant invited our attention to the order imposing penalty to show that in paragraph 6, it has been observed that the I.T.O. has in its order for the assessment year 1954-55 given specific instances of suppression of receipts. Absence of such finding in addition to assessment year 1959-60, was brushed aside by pointing out the specific instances which were relevant for the assessment year 1954-55. The grievance about addition of Rs.10 lacs has also been similarly overlooked in paragraph 9 of the penalty order. 12.We have perused paragraphs 6, 9 and 10 of the penalty order. In the light of question referred to us, we have to appreciate the argument as advanced. However, we note that learned counsel for the Department has attempted to show that as penalty order was passed for several years, concealment in one of the assessment years has been referred to by way of illustration. He submitted that as finding of concealment was maintained by 1st Appellate Authority on 2.3.1971 and was only partly set aside by ITAT on 26.3.1974, contention that penalty order does not specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue has filed an appeal before the Hon ble Tribunal. 5. At the time of hearing, the learned DR submitted that the CIT(A) has erred in deleting penalty. Per Contra, the Ld. AR submitted that against the quantum addition. The assessee has filed an appeal before the Honble Tribunal. Whereas the Hon ble Tribunal in ITA No. 867/M/2014 A.Y. 2008-09 dated 24-06-2022 has granted relief and placed the copy of the order. Further, the Ld.AR in the C.O. has raised additional ground of appeal on the validity of notice issued u/sec271(1)(c) of the Act as the show cause notice did not specify the relevant limb of sec271(1)(c) of the Act in levy of penalty and supported the submissions with the full bench decision of Honble Bombay High Court. 6. We heard the rival submissions and perused the materials on record. Prima facie, the Ld.AR contentions are that the Notice u/sec 274 r.w.s.271 of the Act issued by the Assessing officer is defective, as it does not mention whether the penalty is levied for concealment of particulars of income or furnishing inaccurate particulars of income. The Ld. AR has filed the submissions and demonstrated the copy of Notice. Whereas, the Ld.DR contentions are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec. 271(1)(c) r.w.s. 274 of the Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a deferent statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 182. More particularly, a penal provision, even with civil consequences, must be construed strictly. And ambiguity, if any, must be resolved in the affected assessee's favour. 8. We have considered the facts, circumstances and ratio of the decision of Hon ble High Court and are of the view that in the A.O has not strike off the charge for levy of penalty for concealment of income or for furnishing of inaccurate particulars of income. The Ld.DR could not controvert the decision of High Court with any new cogent material evidence or information to take a different view. Accordingly, we quas ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
