2021 (9) TMI 639 - AT - Income Tax

Penalty u/s 271(1)(c) - Defective notice u/s 274 - assessee has filed inaccurate particulars of income on account of Hawala purchases - assessee filed return of income for the year under i.e. A.Y. 2009-10 again u/s. 139(5) wherein the assessee offered additional income - AO did not process the said return as it was time barred but however reopened the assessment already completed u/s. 143(3) - contention of the ld. AR is that when the AO satisfied on one charge and issuance of notice for both the charges is patently wrong - HELD THAT - In the case of Samson Pernchery 2017 (1) TMI 1292 - BOMBAY HIGH COURT held the AO should be clear as to which the two limbs under which penalty is imposed and the penalty cannot be initiated on one limb for furnishing of inaccurate particulars of income and imposition of penalty on the other limb i.e. concealment of income. In the present case, the AO recorded satisfaction that the assessee filed inaccurate particulars of income and initiated penalty by issuing a notice u/s. 148 of the Act on both the charges and imposed the penalty on both the charges. As in the case of HPCL Mittal Energy Ltd. 2018 (8) TMI 507 - ITAT AMRITSAR the Third Member Bench held the penalty initiated by the AO for concealment of income and imposition of penalty is for concealment/furnishing inaccurate particulars of income is not sustainable. In the present case assessment order clearly recorded that the assessee filed inaccurate particulars of income passed u/s. 143(3) r.w.s. 147 of the Act. In consequence of which the AO issued notice u/s. 274 r.w.s. 271(1)(c) of the Act dated 31-03-2013 for both the charges that are concealment of income and furnishing of inaccurate particulars of income. In penalty order dated 27-09-2013 imposed penalty by recording his satisfaction that the assessee has furnished inaccurate particulars/concealed particulars of income. Thus, the penalty imposed by the AO fails and is quashed - Decided in favour of assessee.

Summary

Issues:
Appeal and cross objection against common order by CIT(A) for assessment year 2009-10.

Analysis:
The judgment pertains to an appeal and cross objection filed against a common order by the Commissioner of Income Tax (Appeals) for the assessment year 2009-10. The main issue raised was regarding the penalty imposed by the Assessing Officer (AO) on the assessee. The AO had found that the assessee had filed inaccurate particulars of income related to certain purchases, leading to penalty proceedings under section 271(1)(c) of the Income Tax Act. The AO had issued a notice for both concealment of income and furnishing inaccurate particulars of income. The assessee contended that the penalty was illegal and without jurisdiction. The arguments put forth by both parties revolved around whether the penalty was justified based on the facts and circumstances of the case.

The AO had determined the total income of the assessee for the relevant year and initiated penalty proceedings after finding discrepancies in the purchases claimed by the assessee. The AO treated a portion of the claimed purchases as unexplained and added it to the total income of the assessee. Subsequently, penalty proceedings were initiated under section 271(1)(c) of the Act. The AO issued a notice for both concealment of income and furnishing inaccurate particulars of income, which was contested by the assessee. The assessee argued that the penalty was not justified as the AO had not clearly distinguished between the two charges and imposed penalty on both grounds.

The judgment referred to previous decisions, including the case of Samson Pernchery and HPCL Mittal Energy Ltd., to analyze the legal principles regarding the imposition of penalties for concealment of income and furnishing inaccurate particulars of income. It was noted that the AO's failure to differentiate between the two charges and imposing penalty on both grounds was not sustainable. The judgment concluded that the penalty imposed by the AO was not justified based on the facts and circumstances of the case. Consequently, the penalty order was quashed, and the grounds raised by the assessee in the cross objection were allowed. As a result, the appeal of the Revenue was deemed infructuous and dismissed. In the final outcome, the cross objection of the assessee was allowed, and the appeal of the Revenue was dismissed.