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2021 (7) TMI 870 - AT - Income TaxLevy of penalty u/s 271(1)(c) - Defective notice - non specification of charge - Notice as barred by limitation u/s 275 - whether AO has erred in imposing penalty under section 271(1)(c) without specifically pointing out in the show cause notice, whether the penalty was proposed on concealment of particulars of income or for furnishing inaccurate particulars of income - HELD THAT - In the instant case, the ld CIT(A) has passed the order on 19.09.2011 and the penalty order has thereafter been passed by the AO on 22.03.2013 which is well within the limitation period of one year from the end of financial year in which the order of the ld CIT(A) has been received by the Commissioner. In the result, the contention so advanced by the ld AR in so far as the impugned order is barred by limitation cannot be accepted. Defect in the show-cause notice issued u/s 271(1)(C) - Uncertain charge at the time of initiation of penalty proceedings is followed by a certain charge and definite finding at the time of passing the penalty proceedings as to the concealment of particulars of income and the penalty order so passed cannot be vitiated on the ground of uncertain charge and non-application of mind as so contended by the ld AR. Unsecured loan receipts - Assessee has submitted before the Tribunal that the payment have been received through cheque, all creditors have confirmed the amount and filed their confirmations, all the transactions have been entered in the books of accounts and bank balance show sufficient funds and basis such contentions, the Tribunal had remanded the matter to the file of the AO with the direction that where the assessee has filed the confirmations before the AO, then the AO in case of any doubt will issue summons to these creditors to verify the correctness thereof. We find that there is no further enquiry or summons issued by the AO to the specified creditors and the findings as given in the original order were reiterated by the AO in the order passed pursuant to directions of the Tribunal. In the above background, we therefore agree with the contention of the ld AR that once the explanation has been submitted by the assessee along with necessary confirmation and other evidences, the onus shifts on the AO to disprove the same by bringing contrary evidence on record and which in the instant case, has not been disproved by the AO and therefore, mere non-acceptance of the explanation so submitted by the assessee can be made a basis for addition in the quantum proceedings, however, the same cannot result in levy of penalty u/s 271(1)(c) No other contention has been advanced on merits of levy of penalty an addition of unexplained/bogus credits and unexplained advances against flat bookings. Hence, the levy of penalty on such addition are hereby confirmed. - Decided partly in favour of assessee.
Issues Involved:
1. Legality of the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. 2. Limitation period for passing the penalty order. 3. Specificity of the show-cause notice issued under section 271(1)(c). 4. Merits of the penalty imposed on different additions. Detailed Analysis: 1. Legality of the Penalty Imposed Under Section 271(1)(c): The assessee challenged the penalty of ?7,73,859 imposed under section 271(1)(c) on the grounds that the Assessing Officer (AO) did not specifically point out whether the penalty was for concealment of income or furnishing inaccurate particulars of income. The Tribunal noted that penalty proceedings are separate from assessment proceedings and require independent consideration of evidence. The Tribunal found that the AO did not properly consider the explanation submitted by the assessee and relied solely on the fact that the additions were confirmed by the CIT(A) and ITAT. The Tribunal held that the penalty order was passed without proper application of mind and hence deserved to be set aside. 2. Limitation Period for Passing the Penalty Order: The assessee argued that the penalty order was barred by limitation as it was passed on 22.03.2013, whereas the relevant additions were confirmed by the CIT(A) on 12.09.2008 and by the ITAT on 24.04.2009. The Tribunal referred to Section 275 of the Income Tax Act, which prescribes the time limit for passing penalty orders. The Tribunal concluded that the penalty order should have been passed by 31.03.2011 for the additions confirmed by the CIT(A) and ITAT, and since it was passed on 22.03.2013, it was barred by limitation. Therefore, the penalty related to the additions of ?2,79,000 and ?10,05,301 was deleted. 3. Specificity of the Show-Cause Notice Issued Under Section 271(1)(c): The Tribunal examined the show-cause notice issued under section 271(1)(c) and found that it did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars of income. The Tribunal referred to various judicial precedents, including the decision of the Hon'ble Rajasthan High Court in Sheveta Construction Co. (P.) Ltd. v. ITO, which held that a penalty notice must specify the exact charge against the assessee. The Tribunal concluded that the penalty notice was invalid due to non-application of mind by the AO, and the penalty proceedings were thus quashed. 4. Merits of the Penalty Imposed on Different Additions: - Addition of ?2,79,000 (Unsecured Loans Below ?20,000 Taken in Cash): The Tribunal noted that the assessee did not file an appeal against this addition, and it attained finality with the passing of the assessment order. However, due to the invalidity of the penalty notice and the barred limitation period, the penalty on this addition was deleted. - Addition of ?10,05,301 (Advances Against Flat Bookings): This addition was confirmed by the ITAT, and no further appeal was filed by the assessee. However, similar to the addition of ?2,79,000, the penalty on this addition was also deleted due to the invalidity of the penalty notice and the barred limitation period. - Addition of ?8,30,000 (Unsecured Loans Taken Through Cheque): The Tribunal found that the AO did not make any further inquiry or issue summons to the creditors as directed by the ITAT. The Tribunal held that once the assessee submitted explanations and confirmations, the onus shifted to the AO to disprove the same, which was not done. Therefore, the penalty on this addition was directed to be deleted. Conclusion: The Tribunal concluded that the penalty order was barred by limitation and the show-cause notice was invalid due to non-application of mind by the AO. Consequently, the penalties related to the additions of ?2,79,000, ?10,05,301, and ?8,30,000 were deleted. The appeal of the assessee was partly allowed.
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