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TMI Blog2018 (5) TMI 1577X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Appeals) XXV, New Delhi dated 13/12/2017, wherein penalty levied by the Assistant Commissioner of Income Tax, Central Circle-08, New Delhi under section 271(1)(c) of the Income Tax Act ( the Act ) vide order dated 20/3/2014 for both the assessment years of ₹ 21909613/ and ₹ 31289013/ respectively are confirmed. 2. Though in both the appeals the assessee has raised effectively 5 grounds of appeal, however the challenge to the order of the Commissioner of Income Tax (A) was that assessee has neither furnished any inaccurate particulars of income and nor there was any concealment of income, on the facts of the instant case as there was no specific charge in the show cause notice issued by the Ld. assessing officer to the said effect, the impugned addition on which the penalty has been levied by the Ld. assessing officer, the Hon‟ble high court has admitted the appeal of the assessee against that addition and independently the additions are based on mere suspicion, surmises and conjectures on which penalty cannot be levied. 3. The brief facts of the adjustment/addition made to the total income of the assessee on which penalty has been levied are culled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above additions were challenged by the assessee before the appellant authorities and ultimately reached at the doorstep of the Hon‟ble high Court wherein, vide ITA No. 948/2016 dated 18/07/2017 the appeal of the assessee was admitted for assessment year 2004-05 on the issue that whether the addition made by the Ld. Assessing Officer was based on any incriminating material and whether the addition of ₹ 6.27 crores on estimation of profit and ₹ 2.02 crores on account of investment is correct or not. 4. For assessment year 2005-06, total turnover of the assessee was estimated at ₹ 20.59 crores and the gross profit was estimated at 53.31%. Therefore the gross profit was computed at ₹ 10.97 crores and consequently the assessment under section 143 (3) of the act was passed on that sum. Assessee challenged the matter before the higher forum which reached the doorstep of Hon‟ble Delhi High Court wherein Hon‟ble high court was pleased to admit the appeal of the assessee Vide ITA No. 1/2017 dated 18/07/2017 wherein Hon‟ble high court is seized of the matter whether the ITAT was correct in law in upholding the addition of ₹ 10.97 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 223;ble Delhi High Court in case of CIT Vs Liquid Investment Limited, CIT Vs. Thomson Press India Ltd, CIT Vs. H B Leasing and Finance Company Limited. ii. He further submitted that the notice is issued by the Ld. assessing officer under section 274 does not have any specific charge either of the furnishing of the inaccurate particulars of income or concealment of income. He referred to page No. 248 and 249 of paper book wherein such notices under section 274 are placed. He showed that the Ld. assessing officer has failed to strike off one of the two charges specified therein. He therefore submitted that it is held by the Hon‟ble Karnataka High Court in case of CIT versus SSA Emerald Meadows 73 Taxmann.com 241 and 242 taxman 180 that in such case penalty cannot be levied. He further referred the decision of the Hon‟ble Bombay High Court in the case of CIT versus Samson Perichery 392 ITR 4, where similar view was taken. iii. He further submitted that the penalty is an independent proceedings and Ld. assessing officer has not reached at the conclusion that how the assessee has concealed or furnished inaccurate particulars of the income. iv. He further submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 145 (3) as well as on the merits of the addition. Therefore, it is apparent that for both the assessment years the Hon‟ble High Court has admitted the appeal of the assessee on merits as well as on legal grounds. The Hon‟ble Bombay High Court in case of CIT Vs. Advaita Estate Development Private Limited in ITA No. 1498 of 2014 dated 17/2/2017 has dealt with the issue that when the Hon‟ble high court admits the appeal of the assessee whether on such additions/disallowance, penalty under section 271(1)(c) of the act can be levied or not as under:- 4. In the above view, the impugned order followed its decision in Nayan Builders and Developers Pvt.Ltd. vs. The Income Tax Officer in Income Tax Appeal No. 2379/Mum/2009 rendered on 18th March, 2011 and the decision of the Delhi High Court in CIT vs Liquid Investment and Trading Co (ITA No.240/2009) rendered on 5th October, 2010 to hold that when an appeal has been admitted in quantum proceedings by the High Court, then that itself is an evidence of the issue being debatable, not warranting any penalty. 5. The Revenue had filed an appeal from the order of the Tribunal in Nayan Build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of law. Thus not entertained. 11. The Hon‟ble Delhi High Court in CIT versus liquid investments limited in ITA No. 240/2009 is also held that when the assessee has preferred an appeal under Section 260A of the act which has also been admitted as substantial question of law, this itself shows that the issue is debatable and for this reason the penalty under section 271(1)(c) is not leviable. The same view was reiterated by the Hon‟ble Delhi High Court in case of CIT Vs. Thomson Press India Ltd wherein, it has been held that where the question of law raised by the assessee has been framed and admitted in the circumstances of the case, imposition of penalty cannot justify. Similar view has further been taken by the Hon‟ble Delhi High Court in the 334 ITR 367 wherein it has been held in para No. 3 that once the appeal preferred by the assessee has been admitted that would show that substantial question of law on the income addition is involved and thus the issue is clearly debatable. We are also aware that Hon‟ble Gujarat High Court has taken a contrary view in [2015] 58 taxmann.com 334 (Gujarat)/[2015] 232 Taxman 352 (Gujarat)/[2014] 272 CTR 353 (G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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