2020 (5) TMI 107 - AT - Income Tax

Penalty levied u/s 271(1)(c) - non-satisfaction of the AO while initiated the penalty proceedings u/s 271(1)(c) of the Act and also not specifying the charge in the notice issued u/s 274 r.w.s. 271 - HELD THAT - Penalty proceedings in the case has been initiated with the remark penalty proceedings u/s 271(1)(c) of I.T.Act read with explanation 5A for concealment of particulars of income are being initiated separately. However, from the copy of the notice issued u/s 274 r.w.s. 271 we find that the AO has failed to strike off irrelevant portion of the notice not applicable. We find that the said issue stands covered in favour of the assessee by the decision in Pr.CIT vs Sahara India Life Insurance Company Ltd. 2019 (8) TMI 409 - DELHI HIGH COURT . Applying the ratio laid down by the Hon ble Delhi High Court to the present case, we hold that where the AO has failed to strike off the irrelevant portion not applicable to the assessee, there is no merit in the penalty order passed u/s 271(1)(c) of the Act. The same is held to be bad and invalid in law. Penalty levied u/s 271AAA - In the case of other members of the Dawat group relying on the decision in the case of Shri Ashwani Kumar Arora vs ACIT 2017 (11) TMI 456 - ITAT DELHI , similar penalty has been deleted u/s 271AAA of the Act. In the case of Ashok Kumar Arora vs ACIT 2017 (11) TMI 513 - ITAT DELHI and in the case of Vijay Kumar Arora vs ACIT 2018 (7) TMI 2109 - ITAT DELHI wherein similar penalty has also been deleted u/s 271AAA of the Act. Following the same parity of reasoning, we delete the penalty levied u/s 271AAA - Decided in favour of assessee.

Summary

Issues:
1. Appeal against penalty under section 271(1)(c) & 271AAA for assessment years 2008-09 & 2009-10 respectively.

Analysis:
1. For the appeal related to assessment year 2008-09, the additional grounds challenged the legality of the penalty order under section 271(1)(c) due to non-satisfaction of the Assessing Officer and lack of specific charges in the notice. The Tribunal admitted these grounds for adjudication.
2. The Tribunal found that the penalty proceedings were initiated without striking off irrelevant portions in the notice, leading to a legal flaw. Citing a Delhi High Court decision, the Tribunal ruled in favor of the assessee, holding the penalty order under section 271(1)(c) invalid and deleted the penalty.
3. Concerning the appeal for assessment year 2009-10, the issue was the levy of penalty under section 271AAA. The assessee had offered additional income during the search proceedings, but the Assessing Officer imposed a penalty under section 271AAA.
4. Despite the CIT(A) upholding the penalty, the Tribunal referred to a similar case involving the Dawat group where penalties under section 271AAA were deleted. Relying on precedent, the Tribunal deleted the penalty in this case as well.
5. The Tribunal emphasized that the penalty could not be upheld as the income declared by the assessee was assessed by the AO, and the manner of earning the undisclosed income was disclosed. Following consistent reasoning in similar cases, the Tribunal allowed the appeals, deleting the penalties under section 271AAA.

This detailed analysis covers the legal issues and the Tribunal's decisions on the appeals against penalties imposed under sections 271(1)(c) and 271AAA for the respective assessment years.