2018 (11) TMI 1605 - AT - Income Tax

Penalty u/s 271(1)(c) - AO nowhere recoded under which limb as prescribed 271(1)(c) the satisfaction has been made. unexplained credits in his bank account - HELD THAT - Satisfaction must be there either directly or indirectly and while levying the penalty A.O. must be sure under which limb, he is levying the penalty and it is trite that penalty cannot be levied for twin charges until and unless the satisfaction recorded under both the limbs separately and followed with correct notice u/s 274 of the Act, specifying exact limbs, because the penalty for furnishing of inaccurate particulars and concealment of particulars of income are all altogether mutually different connotation which is settled by the various Courts, hence, we do not have any hesitation to delete the penalty being illegal and unjustified. - Decided in favour of assessee.

Summary

Issues:

1. Appeal against penalty order under the Income Tax Act, 1961.
2. Proper opportunities in penalty proceedings.
3. Addition of unexplained credits in bank account.
4. Imposition of penalty under different limbs of section 271(1)(c).
5. Legal grounds for penalty deletion.

Issue 1: Appeal against penalty order under the Income Tax Act, 1961

The appellant filed an appeal feeling aggrieved against the order passed by the Ld. CIT(A)-Amritsar under section 250(6) of the Income Tax Act, 1961, where the penalty was partly sustained and directed to be restricted on the amount of addition of ?5,21,323. The appellant's counsel argued that the legal aspects of the case were covered by various judgments of different High Courts and specifically referred to a recent order passed by the Amritsar Bench. The Departmental Representative relied on the orders passed by the authorities below.

Issue 2: Proper opportunities in penalty proceedings

The appellant's counsel contended that no proper opportunities were afforded to the Assessee in the penalty proceedings, amounting to a denial of justice. However, the Departmental Representative supported the orders passed by the authorities below.

Issue 3: Addition of unexplained credits in bank account

The Assessing Officer made an addition of ?23,28,500 on account of unexplained credits in the appellant's bank account maintained in IDBI Bank, Amritsar. The CIT(A) allowed relief of ?13,84,841 out of the total addition and confirmed the balance addition of ?933,659. The ITAT, Amritsar, restricted the addition to ?521,323 in the appeal of the Assessee and dismissed the Department's appeal due to a low monetary limit as per CBDT Circular applicable at that time.

Issue 4: Imposition of penalty under different limbs of section 271(1)(c)

The Assessing Officer imposed the penalty order on both limbs of section 271(1)(c) - furnishing inaccurate particulars of income and concealment of income. However, it was noted that the penalty must be levied under a specific limb, and penalty for both charges cannot be imposed unless satisfaction is recorded under both limbs separately. As the satisfaction was not recorded under specific limbs and the notice under section 274 did not specify the exact limbs, the penalty was deemed illegal and unjustified. Therefore, the penalty order was set aside due to perversity, impropriety, and illegality.

Issue 5: Legal grounds for penalty deletion

The Tribunal held that the penalty was deleted on legal grounds, and there was no need to delve into the merit of the case. It was emphasized that penalty cannot be levied for both furnishing inaccurate particulars and concealment of income unless satisfaction is recorded under both limbs separately. The order passed by the Ld. CIT(A) was set aside as it was deemed to be suffered from perversity, impropriety, and illegality.

In conclusion, the appeal filed by the assessee was allowed, and the penalty was deleted on legal grounds.