2021 (4) TMI 167 - AT - Income Tax

Penalty levied u/s 271(1)(c) - undisclosed LTCG - Notice under Section 148 issued and in response to the notice assessee submitted a return declaring long term capital gain and other interest income - penalty imposed as assessee has not filed his return of income voluntarily, but after re-opening of the assessment under Section 147 - In the penalty order the AO levied penalty for furnishing inaccurate particulars of income and the CIT (Appeals) confirmed the penalty for concealment of income - HELD THAT - The issue is squarely covered by the decision of Hon'ble Delhi High Court in Pr. CIT Vs. Sahara India Life Insurance Corporation of India Ltd. 2019 (8) TMI 409 - DELHI HIGH COURT wherein it has been held that notice issued for imposing the penalty would be bad in law if it does not satisfy the specific charge under which the penalty proceedings had been initiated i.e. for concealment of income or for furnishing inaccurate particulars of income. Same is also the decision in CIT Vs. Manjunatha Cotton Ginning Factory 2013 (7) TMI 620 - KARNATAKA HIGH COURT wherein it has been held that the notice issued by the AO would be bad in law if it did not specify for which limb of section 271(1)(c) of the Act, penalty proceedings are initiated. Also see M/S SSA S EMERALD MEADOWS 2015 (11) TMI 1620 - KARNATAKA HIGH COURT As AO levied penalty for furnishing inaccurate particulars of income and the CIT (Appeals) confirmed penalty for concealment of income. In view of the above inconsistency and binding judicial decisions cited above, we reverse the orders of the lower authorities and direct the AO to delete the penalty under Section 271(1)(c) - Decided in favour of assessee.

Summary

Issues involved:
1. Penalty levied under Section 271(1)(c) of the Income Tax Act, 1961.
2. Jurisdiction of the penalty.
3. Concealment of income or furnishing inaccurate particulars of income.

Detailed Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) confirming the penalty under Section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer initiated penalty proceedings after re-opening the assessment under Section 147 of the Act. The penalty was imposed for furnishing inaccurate particulars of income, leading to a penalty of ?30,21,973. The appellant challenged this before the CIT (Appeals), who upheld the penalty, stating that the appellant concealed income of ?1,49,09,770.

2. The main contention revolved around the satisfaction recorded by the Assessing Officer and the specific charge for the penalty. The assessment order and the penalty notice did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars. The CIT (Appeals) relied on Explanation (3) to Section 271(1)(c) to confirm the penalty for concealment of income. However, the lack of clarity in the charge was against judicial precedents, including decisions by the Delhi High Court, Karnataka High Court, and the Supreme Court, which emphasized the necessity of specifying the charge for penalty proceedings.

3. Considering the inconsistency in the charge for penalty between furnishing inaccurate particulars of income and concealment of income, the Tribunal reversed the orders of the lower authorities. Citing the binding judicial decisions in favor of the assessee, the Tribunal directed the Assessing Officer to delete the penalty of ?30,21,973 under Section 271(1)(c) of the Act. Consequently, the appeal of the assessee was allowed, and all other grounds of appeal were deemed academic and not requiring adjudication.

In conclusion, the Tribunal's decision highlighted the importance of specifying the charge for penalty proceedings under Section 271(1)(c) of the Income Tax Act, ensuring clarity and adherence to judicial precedents for a fair assessment of penalties related to income concealment or inaccurate particulars.