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2021 (9) TMI 120 - AT - Income TaxLevy of penalty u/s. 271(1)(c) - AO has issued notice for both limbs and levied penalty for one limb - as per AO assessee has concealed particulars of income in respect of income declared in return of income filed in response to notice issued u/s. 148 - Assessee argued as no specific charge on the assessee made whether he is levying penalty for concealment of particulars of income or furnishing inaccurate particulars of income - whether the case of the assessee falls under Explanation-(1) or Explanation-(3) to Section 271(1)(c) ? - HELD THAT - Although the AO has issued notice on the ground of concealment of particulars of income or furnishing inaccurate particulars of income, but finally he has levied penalty for concealment of particulars of income. It is not the case of the assessee that the AO has initiated penalty proceedings for concealment of particulars of income, but has levied penalty for furnishing inaccurate particulars of incom - case law cited by the ld. AR for the assessee has no application, because the AO has given opportunity to the assessee to show-cause for which, the assessee has filed his explanation and thereafter the AO has clearly recorded that it is a case of concealment of particulars of income - under similar circumstances in the case of Grass Field Farms Resorts (P) Ltd. 2015 (9) TMI 1585 - ITAT JAIPUR held that notice cannot be held as invalid merely for the reason that the AO has issued notice for both limbs and levied penalty for one limb. There is no error in the reasons given by the ld. CIT(A) to confirm penalty levied by the AO u/s. 271(1)(c) - Decided in favour of Revenue.
Issues Involved:
1. Legitimacy of penalty levied under Section 271(1)(c) of the Income Tax Act, 1961. 2. Jurisdiction and procedural correctness of the Assessing Officer (AO) in levying the penalty. 3. Applicability of Explanation (3) to Section 271(1)(c) of the Income Tax Act. 4. Requirement of specific charge and satisfaction by the AO for initiating penalty proceedings. Detailed Analysis: 1. Legitimacy of Penalty under Section 271(1)(c): The primary issue revolves around whether the penalty levied under Section 271(1)(c) for concealment of income is justified. The assessee did not file regular returns despite having substantial income from real estate and other investments. The Investigation Wing discovered undisclosed investments, leading to the reopening of assessments under Section 147. The assessee then filed returns admitting income, which the AO accepted without further additions. However, the AO initiated penalty proceedings, arguing that the returns filed in response to Section 148 notices were not voluntary but coerced by the investigation. The CIT(A) upheld this view, stating that the assessee's actions constituted concealment of income. 2. Jurisdiction and Procedural Correctness: The assessee argued that the AO did not have jurisdiction to levy the penalty, as the specific charge was not made clear, and the required satisfaction was not recorded. The CIT(A) and the Tribunal rejected this argument, citing the Supreme Court's decision in MAK Data (P) Ltd. v. CIT, which held that the AO need not record satisfaction in a particular manner. The initiation of penalty proceedings during the assessment itself was deemed sufficient for satisfaction. 3. Applicability of Explanation (3) to Section 271(1)(c): The assessee contended that their case fell under Explanation (3) to Section 271(1)(c), which pertains to situations where no return is filed before the due date, and no notice under Section 142(1) or 148 is issued before the due date for assessment completion under Section 153(1). However, the Tribunal found that the case did not meet these conditions, as the returns were filed only after the investigation revealed substantial undisclosed income. Therefore, the Tribunal concluded that the case fell under the main provisions of Section 271(1)(c) and not Explanation (3). 4. Requirement of Specific Charge and Satisfaction: The assessee relied on the Karnataka High Court's decision in CIT v. Manjunatha Cotton and Ginning Factory, arguing that the penalty notice must specify whether the penalty is for concealment of income or furnishing inaccurate particulars. The Tribunal acknowledged this requirement but noted that the AO had issued the notice covering both grounds and ultimately levied the penalty for concealment. The Tribunal found this approach acceptable, citing similar views from other judicial precedents, including the Jaipur ITAT's decision in Grass Field Farms & Resorts (P) Ltd. Conclusion: The Tribunal upheld the penalty levied under Section 271(1)(c), finding that the assessee's failure to file returns voluntarily and the subsequent admission of income only after investigation constituted concealment. The procedural objections raised by the assessee regarding jurisdiction, specific charge, and satisfaction were dismissed based on judicial precedents. The appeals for both assessment years were dismissed, affirming the penalties imposed by the AO.
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