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2020 (7) TMI 432 - AT - Income TaxPenalty u/s. 271(1)(c) - non specific charge - concealment of income or furnishing inaccurate particulars of income - HELD THAT - AO has not levied the penalty on the specific charge as mandated u/s 271(1)(c) of the Act. In such facts and circumstance the Hon'ble Jurisdictional High Court in the case of Snita Transport Pvt. Ltd. Vs. Assistant Commissioner of Income Tax 2012 (12) TMI 981 - HIGH COURT OF GUJARAT has held that penalty cannot be imposed without mentioning the specific charge. AO has not mentioned the specific charge in its penalty order whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Penalty levied by the AO and confirmed by the learned CIT (A) is not sustainable. As we have deleted the penalty imposed by the AO confirmed by the ld. CIT-A on the technical ground, i.e. no specific charge has been invoked as discussed above. Therefore, we are inclined to refrain ourselves from adjudicating the grounds of appeal of assessee raised on merits. Penalty u/s 271(1)(c) - addition was made on estimated basis - HELD THAT - There cannot be any penalty qua to the addition made on estimated basis. In holding so we draw support and guidance from the judgment of Hon ble Gujarat High Court in the case of ITO Vs. Bombay wala readymade stores 2014 (11) TMI 1099 - GUJARAT HIGH COURT . We set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT - Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited 2020 (5) TMI 359 - ITAT MUMBAI
Issues Involved:
1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act. 2. Specificity of the charge in the penalty order. 3. Penalty on estimated income additions. Analysis of the Judgment: Issue 1: Imposition of penalty under Section 271(1)(c) of the Income Tax Act The primary issue in all three appeals was the imposition of penalties under Section 271(1)(c) of the Income Tax Act. The penalties were imposed for the concealment of income or furnishing inaccurate particulars of income. The assessee challenged these penalties on various grounds, including the argument that the additions were made on an estimated basis. Issue 2: Specificity of the charge in the penalty order In ITA No. 214/Rjt/2015 for AY 2001-02, the Tribunal observed that the Assessing Officer (AO) imposed the penalty without specifying whether it was for concealment of income or furnishing inaccurate particulars of income. The relevant extract from the penalty order indicated ambiguity: "it is established that the assessee has concealed but gross of income/ furnished inaccurate particulars of income and this is, therefore, a fit case for levy of penalty u/s. 271(1)(c) of the Act." The Tribunal referenced the Hon'ble Jurisdictional High Court's decision in Snita Transport Pvt. Ltd. Vs. Assistant Commissioner of Income Tax, which held that a penalty cannot be imposed without mentioning the specific charge. Consequently, the Tribunal found the penalty order unsustainable and deleted the penalty imposed by the AO and confirmed by the CIT(A). Issue 3: Penalty on estimated income additions In ITA No. 254/AHD/2014 for AY 1999-00, the Tribunal noted that the issue was identical to the one decided in ITA No. 214/Rjt/2015. Following the same reasoning, the Tribunal set aside the CIT(A)'s findings and directed the AO to delete the penalty. In ITA No. 255/AHD/2014 for AY 2005-06, the Tribunal addressed the penalty imposed on an addition made on an estimated basis. The AO had disallowed interest expenses and determined the gross profit rate, which was later adjusted by the ITAT. The Tribunal, referencing the Hon'ble Gujarat High Court's decision in ITO Vs. Bombaywala Readymade Stores, held that penalties cannot be levied on estimated additions. Therefore, the Tribunal set aside the CIT(A)'s findings and directed the AO to delete the penalty. Conclusion: The Tribunal concluded that penalties under Section 271(1)(c) cannot be imposed without specifying the charge and cannot be levied on estimated income additions. Consequently, the appeals were partly allowed or fully allowed, as applicable. Pronouncement Delay Due to COVID-19: The Tribunal acknowledged the delay in pronouncing the order due to the COVID-19 pandemic and referenced the Hon'ble Mumbai Tribunal's decision in JSW Limited Vs. Deputy Commissioner of Income Tax, which extended the time for pronouncing orders due to the lockdown. Final Result: - ITA No. 214/Rjt/2015 & 254/Rjt/14: Partly allowed. - ITA No. 255/Rjt/2014: Allowed.
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