2024 (10) TMI 524 - AT - Income Tax

Penalty u/s 271(1)(c) - allegation of defective notice u/s 274 - difference between sale consideration stamp value u/s 56(vii)(b) of the Act and unexplained cash credits - HELD THAT - Ratio of this full bench decision of in the case of Mr. Mohd. Farhan A. Shaikh vs. ACIT 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB) squarely applies to the facts of the present Assessee s case as a joint satisfaction for concealment of income and for furnishing inaccurate particulars has been recorded in the Assessment Order and the penalty proceedings has been initiated and order of penalty imposed on concealment of income . Thus, by following the above ratio, we hold that, the penalty order passed u/s 271(1)(c) of the Act by the AO and the order of the CIT(A) in confirming the penalty order are erroneous. Appeal filed by the assessee is allowed.

Summary

Issues:
Appeal against order of Learned Commissioner of Income Tax (Appeals) for Assessment Year 2015-16, Denial of condonation of delay in filing appeal, Confirmation of penalty u/s 271(1)(c) of Rs. 3,61,467/-.

Analysis:
The appeal was filed against the order of the Learned Commissioner of Income Tax (Appeals) for Assessment Year 2015-16. The assessee raised grounds of appeal including the denial of condonation of delay in filing the appeal and the confirmation of penalty u/s 271(1)(c) of Rs. 3,61,467/-. The assessment was framed under section 143(3) of the Income Tax Act, 1961, with additions made on account of difference between sale consideration & stamp value u/s 56(vii)(b) of the Act and unexplained cash credits. Penalty proceedings were initiated under section 271(1)(c) of the Act, and the penalty order was passed against the assessee for concealing income. The appeal was dismissed by the Learned Commissioner of Income Tax (Appeals) due to a delay of four days without an application for condonation of delay by the assessee.

The assessee contended that an application for condonation of delay was filed before the Learned Commissioner of Income Tax (Appeals) and that the penalty imposition was erroneous as the satisfaction recorded by the Assessing Officer did not match the grounds for penalty in the order. The assessee sought to set aside the lower authorities' orders by deleting the penalty. The Department, however, sought dismissal of the appeal based on the lower authorities' orders.

The Tribunal analyzed the satisfaction recorded by the Assessing Officer in the assessment order for initiating penalty proceedings under section 271(1)(c) of the Act. The Tribunal referred to a full bench decision of the Hon'ble Bombay High Court (Goa) in a similar case, where it was held that a defect in the notice regarding penalty proceedings could vitiate the penalty proceedings. The Tribunal concluded that the penalty order and the confirmation of the penalty order by the Learned Commissioner of Income Tax (Appeals) were erroneous based on the joint satisfaction for "concealment of income" and "furnishing inaccurate particulars" recorded in the assessment order. Therefore, the penalty order was quashed, and the assessee's grounds of appeal were allowed.

In conclusion, the Tribunal allowed the appeal filed by the assessee against the penalty order dated 07/02/2020 for Assessment Year 2015-16.