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2018 (3) TMI 217 - AT - Income TaxPenalty u/s 271(1)(c) - non recording of satisfaction - addition income filed in response to notice issued under section 153A - Held that - The assessee was not entitled to get the benefit of immunity under clause (b). Where voluntary disclosure was made by the assessee and where the statement was not extorted from him then meaning of expression voluntary was elaborated to hold the said expression voluntary was in the context that the statement made by him was not extorted from him by applying force. Where penalty proceedings have been initiated on both the limbs of section 271(1)(c) of the Act and the Assessing Officer having failed to record satisfaction in respect of one of the limbs of section 271(1)(c) of the Act and the penalty having been levied for concealment or furnishing of inaccurate particulars of income i.e. without coming to a finding as to which limb has not been fulfilled by the assessee then penalty order passed in the case suffers from infirmity. Accordingly the same is cancelled. The Assessing Officer is directed to delete the penalty levied under section 271(1)(c) of the Act. - Decided in favour of assessee partly.
Issues Involved:
1. Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961. 2. Jurisdictional issue regarding the recording of satisfaction by the Assessing Officer for initiating penalty proceedings. Issue-wise Detailed Analysis: 1. Levy of Penalty under Section 271(1)(c): The primary issue in these appeals is the levy of penalty under section 271(1)(c) of the Act for concealment of income and furnishing inaccurate particulars of income. The assessee had filed returns declaring additional income in response to notices under section 153A following search actions. The Assessing Officer initiated penalty proceedings on the grounds that the additional income was disclosed only after the search, implying concealment and furnishing of inaccurate particulars. The assessee argued that no penalty should be levied as there was no seizure of assets or documents during the search, and the additional income was voluntarily disclosed to correct inadvertent omissions in the original returns. The assessee relied on various judicial precedents to support this claim, including the Delhi High Court's decision in Pr.CIT Vs. Neeraj Jindal and Supreme Court rulings in T Ashok Pai Vs. CIT, CIT Vs. Reliance Petroproducts Pvt. Ltd., and Price Waterhouse Coopers Pvt. Ltd. Vs. CIT & Anr. However, the Revenue countered that the issue was covered against the assessee by the Supreme Court's decision in Prasanna Dugar Vs. CIT, which upheld the Calcutta High Court's ruling that penalty under section 271(1)(c) was applicable even when additional income was voluntarily disclosed post-search. The Tribunal observed that the assessee's case was similar to that in Prasanna Dugar Vs. CIT, where the Supreme Court upheld the penalty despite voluntary disclosure. Consequently, the Tribunal held that the issue was settled against the assessee, and the penalty under section 271(1)(c) was upheld. 2. Jurisdictional Issue Regarding Recording of Satisfaction: The second issue pertains to whether the Assessing Officer recorded the necessary satisfaction for initiating penalty proceedings under section 271(1)(c). The assessee contended that the Assessing Officer failed to specify which limb of section 271(1)(c) (concealment of income or furnishing inaccurate particulars) was breached, thus invalidating the penalty proceedings. The Tribunal noted that the Bombay High Court in CIT Vs. Shri Samson Perinchery had ruled that penalty proceedings must clearly specify the limb under which the penalty is initiated. If the initiation and levy of penalty are based on different limbs, the penalty cannot be sustained. In this case, the Assessing Officer initiated penalty proceedings on both limbs but did not specify which one was applicable. Consequently, the Tribunal found that the penalty order suffered from infirmity and was invalid. The Tribunal directed the Assessing Officer to delete the penalty levied under section 271(1)(c). Conclusion: The Tribunal upheld the penalty under section 271(1)(c) based on the Supreme Court's decision in Prasanna Dugar Vs. CIT, which settled the issue against the assessee. However, the Tribunal also found that the penalty order was invalid due to the failure of the Assessing Officer to specify the limb under which the penalty was initiated, as required by the Bombay High Court's ruling in CIT Vs. Shri Samson Perinchery. Consequently, the Tribunal directed the deletion of the penalty, and the appeals were partly allowed.
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