TMI Blog2023 (4) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) of the Act as to under which limb of section 271(1)(c) penalty proceedings are being initiated, rather vague and ambiguous satisfaction has been recorded as discussed in the preceding paras. This is a mechanical satisfaction recorded by the AO which shows that the AO was himself not aware as to whether the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. Not only this, when we examine penalty levied on account of salary disallowance AO has merely made adhoc addition by way of guess work and the AO has not arrived at a definite decision that the assessee has made wrong claim qua the expenditure on account of salary and wages. It is also settled principle of law that on the basis of any adhoc addition penalty proceedings under section 271(1)(c) of the Act cannot be levied. Disallowance of excess salary this addition has been deleted by the Ld. CIT(A) subject to the verification of the figures by the AO but the AO proceeded to levy the penalty on this amount also which shows that the entire process of initiating penalty proceedings were mechanical, without any application of mind. Appeal of assessee allowed. - IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non deliberate delay. Consequently delay in filing both the aforesaid appeals of 357 days is hereby condoned and appeals are ordered to be registered and is being heard on merits. 4. The assessee by filing the present appeals sought to set aside the impugned orders both dated 31.10.2019 passed by the Commissioner of Income Tax (Appeals) (hereinafter referred to as the Ld. CIT(A)] confirming the penalty levied by the Assessing Officer (AO) to the tune of Rs.18,92,513/- and Rs.13,20,370/- for A.Y. 2008-09 2011-12 respectively under section 271(1)(c) of the Income Tax Act, 1961 (for short the Act ) by raising identically worded grounds except the difference in the penalty amount (grounds of A.Y. 2008-09 are taken for the sake of brevity) inter-alia that: 1) The Id. A.O as well as Ld CIT(A) is erred in confirming Penalty of Rs.18,92,513/-. 2) The appellant Prays to delete the Penalty levied on this account. 3) The appellant craves to add, alter or omit any or all of the above grounds of appeal with prior permission of your honor. 5. Briefly stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply his mind by recording valid satisfaction as to which of the limb of section 271(1)(c) of the Act i.e. for concealing particulars of income or furnishing inaccurate particulars of such income penalty proceedings are being initiated rather vague and ambiguous satisfaction which is invalid under the law has been recorded. In A.Y. 2008-09 the AO has also wrongly levied the penalty on the amount of Rs.12,50,000/- on account of excess salary claimed by the assessee as the same has been allowed by the Ld. CIT(A) by directing the AO to allow the same after due verification of the payment. 12. However, on the other hand, the Ld. D.R. for the Revenue by relying upon the penalty order passed by the AO and confirmed by the Ld. CIT(A) contended that during the assessment proceedings it is duly proved that the assessee has furnished inaccurate particulars of income and as such penalty has been rightly levied and confirmed and relied upon the decision rendered by the Hon ble Supreme Court in case of Sundaram Finance Ltd. vs. Dy.CIT (2018) 99 taxmann.com 152(SC) and the decision rendered by the Hon ble Madras High Court in case of Gangotri Textiles Ltd. vs. Dy.CIT (2020) 121 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voke the provisions contained under section 271(1)(c) of the Act i.e. as to whether the assessee has furnished inaccurate particulars of income or concealed particulars of income need to be invoked specifically but in the instant case the AO has failed to apply his mind at the time of recording his satisfaction at the time of framing assessment to initiate the penalty proceedings under section 271(1)(c) of the Act as to under which limb of section 271(1)(c) of the Act, the penalty proceedings are being initiated, rather vague and ambiguous satisfaction has been recorded as discussed in the preceding paras. This is a mechanical satisfaction recorded by the AO which shows that the AO was himself not aware as to whether the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. 18. Not only this, when we examine penalty levied on account of salary disallowance in A.Y. 2011-12 to the tune of Rs.3,99,535/- the AO has merely made adhoc addition by way of guess work and the AO has not arrived at a definite decision that the assessee has made wrong claim qua the expenditure on account of salary and wages. It is also settled principle of law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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