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TMI Blog2025 (5) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2020 [impugned order] passed by the learned Income Tax Appellate Tribunal [ITAT] in ITA No.2191/Del/2017 in respect of Assessment Year [AY] 2010-11 whereby the said appeal was allowed. 4. The impugned order is a common order passed in two connected appeals [being ITA No. 2191/Del/2017 and ITA No.2006/Del/2017] preferred by the respondent [Assessee]. Whilst, the Assessee's appeal [being ITA No.2191/Del/2017] assailed the order dated 25.01.2017 passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)]-7, New Delhi dismissing the Assessee's appeal against the disallowance and additions made by the Assessing Officer [AO]; ITA No. 2191/Del/2017 assailed the order dated 25.01.2017 passed by CIT(A) confirming the penalty of Rs. 1,25, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. 10. The Assessee responded to the notice initiating penalty proceedings by filing a reply dated 15.04.2013. The Assessee contended that it had incurred the expenditure as disclosed and the question whether the same were allowable was a debatable issue. 11. The AO found that no business activity was carried out by the Assessee and therefore disallowed the expenditure booked by the Assessee. The additions made by the AO were founded on the failure on the part of the Assessee to establish that it had incurred expenses in carrying on its business activities. 12. The AO determined that the tax evaded was to the extent of Rs. 76,65,87,116/- and determined the penalty amount within the band of 100% to 300% of the said amount. 13. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant extract of the impugned order is set out below: 24. We have carefully considered the rival contention and perused the orders of the lower authorities. One of the issues involved in this appeal is whether the AO without striking out- one of the limb i.e. furnishing of inaccurate particulars of income or concealment of income can levy penalty under section 271 (1) (c) of the act. The honourable Delhi High Court in ITA number 475/2019 along with other appeals in case, of Sahara India life insurance Co Ltd in order dated 2 August 2019 has considered the identical issue as under: "21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1) (c) of the Act, which was accepted by the ITAT. It followed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares holding that it is much below the market price and transaction is not executed at 'arm's length. Therefore, it is apparent that that the claim of the assessee though ultimately not accepted by the concurrent authorities but it cannot be denied that issue raised is not debatable. Further, when the issue itself is debatable, it cannot result into penalty. Based on our discussion also in the quantum appellate proceedings before us covered in this order, it cannot be denied that claim of the assessee is not debatable. 27. Further, the assessee has furnished all the particulars related to its claim. None of the evidences filed by the assessee was incorrect. It may be an altogether different thing that in spite of those evidences, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 274 read with Section 271 (1) (c) of the Act did not specify, as to the limb under which penalty was sought to be imposed. In other words, the notice which was served on the respondent/assessee did not indicate, as to whether penalty was being levied on account of concealment of income, or for the reason that it had furnished inaccurate particulars. The Tribunal, based on the order of the Supreme Court in CIT vs. SSA's Emerald Meadows (2016) 73 taxmann.com 248 (SC) observed that the penalty proceedings would have to be quashed. 16. For the sake of convenience, the relevant part of the impugned order passed by the Tribunal is extracted as under: "7.2 The Hon'ble Apex Court in case of M/s. SSA's Emerald Meadows, (2016) 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has concealed particulars of income? 3. The Tribunal has allowed the appeal filed by the Assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271 (1) (c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271 (1) (c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the Assessee, has relied upon the decision of the Division Bench of this Court rendered In the case of COMMISSIONER or INCOME TAX -vs- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. In our v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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