2020 (2) TMI 1178 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Defective notice - AO has not struck the relevant portion of the from to indicate as to whether the penalty is for concealment of income or for furnishing inaccurate particulars of income - no clear cut satisfaction has been recorded by AO as to whether the assessee has concealed the particulars of income or furnished inaccurate particulars of income - HELD THAT - We find similar issue arose before the Hon ble Bombay High Court in the case of Goa Coastal Resorts Recreation 2020 (1) TMI 93 - BOMBAY HIGH COURT wherein the Hon ble High Court held that penalty is not leviable. AO was not justified in levying penalty u/s 271(1)(c) of the Act and therefore direct its deletion. Appeal of the assessee is allowed.

Summary

Issues:
Levy of penalty u/s 271(1)(c) for furnishing inaccurate particulars and concealment of income.

Analysis:
The appeal arises from the order of Commissioner of Income Tax (A) for the assessment year 2013-14. The assessee, engaged in the business of Builders and Developers, filed the return of income declaring total income at ?1,25,03,000. The assessment was completed by making additions of ?49,98,490 on account of routing entries of receipts to the capital account instead of the Profit and Loss account, and ?846 on account of interest on TDS. Subsequently, a penalty of ?15,44,530 u/s 271(1)(c) was imposed by the Assessing Officer, which was upheld by the Ld.CIT(A). The assessee appealed against this order, challenging the levy of penalty.

The grounds raised by the assessee included contentions that the penalty notice did not specify the exact charge under section 271(1)(c), and the AO did not clearly indicate whether the penalty was for concealment of income or furnishing inaccurate particulars of income. The Ld.A.R. argued that due to this ambiguity, the penalty was not justified. The AO had initiated penalty proceedings for both furnishing of inaccurate particulars and concealment of income, without clear satisfaction recorded.

The Tribunal observed that the AO had failed to specify whether the penalty was for concealment of income or for furnishing inaccurate particulars of income, both in the assessment order and the penalty order. Citing a similar case before the Hon’ble Bombay High Court, the Tribunal held that in the absence of clear satisfaction by the AO regarding concealment or inaccurate particulars, the penalty was not leviable. Referring to the decision in the case of Goa Coastal Resorts & Recreation Pvt. Ltd., the Tribunal found that the penalty was not justified and directed its deletion, allowing the appeal of the assessee.

In conclusion, the Tribunal held that the AO was not justified in levying the penalty u/s 271(1)(c) due to the lack of clear satisfaction regarding the nature of the charge. The Tribunal followed the decision of the Hon’ble Bombay High Court and directed the deletion of the penalty. The appeal of the assessee was allowed, and the penalty was set aside.

This detailed analysis of the judgment highlights the issues involved, the arguments presented, and the Tribunal's decision based on legal precedents and interpretations of the relevant provisions.