2019 (6) TMI 699 - AT - Income Tax

Penalty U/s 271(1)(c) - quantum addition regarding unaccounted sale was made physical stock was found short in survey carried out - HELD THAT - Nature of specification of charge by the A.O. at the stage of initiation of penalty proceedings at the time of issue of notice us 274 r.w.s 271(1)(c) and at the time of passing the penalty order u/s 271(1)(c) should not be at variance. If there is any variance between the charge levied at the time of initiation of penalty proceedings and the charge levied at the time of imposition of penalty, the penalty order will be vitiated and penalty cannot be sustained. However, if the charge are same then no fault can be found with regard to defect in notice so as to hold that the penalty is not leviable. It is clear that both at the time of initiation of penalty as well as at the time of imposing the penalty, the charge of the A.O. was same i.e. concealment of income and also for furnishing inaccurate particulars of income . This situation is covered by the proposition laid down by the Coordinate Bench in the case of HPCL Mittal Energy Ltd. Vs ACIT 2018 (6) TMI 1554 - ITAT AMRITSAR . Accordingly, we hold that the penalty has been correctly levied in so far as the charge for initiation of penalty as well as charge while levying the penalty was same. Thus, we do not find any merit in the contention of the ld AR. With regard to merit of penalty so imposed U/s 271(1)(c) we found that there was survey at the business premises of the assessee wherein it was found that the assessee has made unaccounted sales, therefore, stock was found short on physical verification. To the extent of profit on such short stock, addition was made. This addition was confirmed by the ld. CIT(A) and thereafter by the ITAT. Thus, there is no dispute with regard to the concealment of income and furnishing of inaccurate particulars of income, in so far as the addition has been upheld up to the last extent. Accordingly, we do not find any infirmity in the penalty so imposed. - Decided against assessee.

Summary

Issues:
- Imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961.
- Allegations of concealment of income and furnishing inaccurate particulars of income.
- Discrepancy in charge specified during initiation of penalty proceedings and at the time of passing the penalty order.
- Validity of penalty imposed for unaccounted sales leading to short stock.

Analysis:
1. The appeal was filed against the order of the ld.CIT(A) confirming the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The assessee contended that the penalty was levied for both concealment of income and furnishing inaccurate particulars of income, which was not in accordance with law. The grounds of appeal highlighted discrepancies in the penalty imposition process.

2. A survey conducted at the assessee's business premises revealed a short stock amounting to ?7,77,010, leading to an addition of ?2,61,930 in the assessment. The CIT(A) and ITAT confirmed this addition, following which the penalty under section 271(1)(c) was imposed by the Assessing Officer (AO). The appeal challenged this penalty imposition.

3. The assessee argued that the penalty proceedings were initiated for furnishing inaccurate particulars of income, but the AO concluded that there was both concealment of income and inaccurate particulars. The distinction between concealment and inaccurate particulars of income was emphasized, citing case law to support the argument.

4. The dispute revolved around the satisfaction recorded by the AO during penalty initiation and the subsequent penalty imposition. The assessee contended that the charge specified during penalty initiation should align with the charge levied in the penalty order to ensure the penalty's legality.

5. The Tribunal analyzed the legal requirements for specifying charges during penalty proceedings and at the time of passing the penalty order. The judgment emphasized that any variance in the specified charges could vitiate the penalty order. However, if the charges remained consistent, the penalty would be deemed valid.

6. Upon reviewing the facts and legal precedents, the Tribunal found that the charge of concealment of income and furnishing inaccurate particulars of income remained consistent from initiation to imposition of the penalty. As the charge alignment was maintained, the penalty imposition was deemed correct.

7. The Tribunal upheld the penalty considering the unaccounted sales leading to short stock, which resulted in the addition upheld by the CIT(A) and ITAT. The decision was based on the totality of facts, legal principles, and the justification provided by the AO for imposing the penalty.

8. Ultimately, the Tribunal dismissed the appeal, affirming the validity of the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961, in light of the consistent charge specifications and the findings related to unaccounted sales causing the stock discrepancy.