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TMI Blog2019 (1) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... ed dated 26.12.2016 same is delightfully vague as to requisite satisfaction of AO to validly initiate penalty proceedings u/s. 271(1B) of the Act and said assessment order also does not disclose under which specific limb penalty charge is made by the AO, accordingly penalty order passed by AO and order of Ld. CIT(A) may please be quashed; 2. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the penalty order passed by AO u/s. 271(1)(c) as AO has levied penalty without any application of mind in routine and casual manner which is confirmed in arbitrary manner by Ld. CIT(A), accordingly penalty order passed by AO and order of Ld. CIT(A) may please be quashed; Merits of penalty order u/s 271(l)(c) Rs. 433,132 3. That on the facts and in the circumstances of the case and in law, Ld CIT-A erred in sustaining the penalty order passed by Ld AO u/s 27l(l)(c) without appreciating assessee 's contention that: i) Firstly addition made by Ld AO in quantum proceedings u/s 68 of the Act is itself incorrect and made in grave violation to principle of natural justice as no case specific incriminating material is brought on records at any stag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so. 4. The brief facts of the case are that return of income declaring total income at Rs. 4,51,430/- was filed by the assessee on 15.07.2014. The case of the assessee was processed u/s 143(1) of the I.T. Act, 1961. The assessee during the year was deriving income under the garb of Income from other sources. As per the AIR information during the year under review, it was observed by the AO that assessee has made investment in the shares and earned long term capita! gain exempted u/s 10(38) of Rs. 14,01,720/- accordingly. In order to bring in light the modus operand! of the assessee to earn the long term capital gain, the assessee was show caused vide this office letter bearing No. 727 dated 28.11.2016. In reply, the asseseee submitted vide its letter dated 05.12.2016 that its purchased the shares of M/s Kappac Pharma Ltd. and sold these shares on BSE platform but in order to avoid the litigation with the Income. Tax Department; it offered/surrendered the amount of Rs. 14,01,720/-. Keeping in view above facts, the AO disallowed the amount of 14,01,720/- claimed as capital gain exempted u/s 10(38) and treated it as income of the assessee for the A.Y. 2014-15 u/s 68 of the I.T. Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under which specific limb penalty charge is made by the AO, accordingly penalty order passed by AO and order of Ld. CIT(A) may please be quashed. He draw my attention towards the assessment order dated 26.12.2016 passed u/s. 143(3) of the I.T. Act, 1961 especially the last page of the assessment order and stated that the AO has initiated the penalty proceedings u/s. 271(1)(c) read with section 274 of the I.T. Act on being satisfied that assessee has concealed the particulars of her income or furnished inaccurate particulars of income, which is a fatal error and not sustainable in the eyes of law. Therefore, he requested that the penalty imposed is liable to be quashed on legal ground as the issue is squarely covered by the following decisions.: - Hon'ble Karnataka High Court decision in the case of CIT & Ors. Vs. M/s Manjunatha Cotton and Ginnig Factory & Ors. (2013) 359 ITR 565 - Apex Court decision in the case of CIT & Anr. Vs. M/s SSA's Emerald Meadows in CC No. 11485/2016 dated 05.8.2016. 5.1 On the contrary, Ld. DR relied upon the orders of the authorities below. He submitted that the question is whether the assessee has offered any explanation for concealment of particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of Commissioner of Income Tax vs. Manjunatha Cotton and Ginning Factory (2013) (7) TMI 620- Karanataka High Court. Thus since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion no substantial question of law arises - decided in favour of assessee." ii) CIT & Anr. Vs. M/s SSA's Emerald Meadows - Hon'ble Supreme Court of India - reported in 2016 (8) TMI 1145 - Supreme Court. The Apex Court held that High Court order confirmed (2015) (11) TMI 1620 (Supra) - Karnataka High Court. Notice issued by AO under section 274 read with section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income - Decided in favour of assessee." iii) ITAT, 'A' Bench, New Delhi decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income - Decided in favour of assessee." 8. In the background of the aforesaid discussions and respectfully following the precedents, we delete the penalty in dispute and decide the issue in favor of the assessee and against the Revenue." iv) ITAT, 'D' Bench, New Delhi decision dated 26.5.2017 in the case of Rajender Jain vs. ACIT passed in ITA No. 6804/Del/2013 wherein the Tribunal has observed as under:- "7. We have heard both the parties and perused the orders passed by the Revenue Authorities alongwith the relevant records available with us. Firstly, we have perused the assessment order wherein the AO has recorded his satisfaction on the page 2, 2nd para viz. "I am satisfied that it is a fit case for initiation of penalty proceedings u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income/concealment of income." We have also perused the notice dated 31.12.2007 issued by the AO for initiating the penalty and directing the assessee to appear before him at ----- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied that the assessee has furnished the inaccurate particulars of income. In our view the penalty in dispute is not sustainable in the eyes of law, because the AO has not recorded any clear finding whether the assessee was guilty of concealment of income or furnishing of inaccurate particulars of income. Secondly, the notice u/s. 271(1)(c) has been issued to the assessee levying the penalty for furnishing of inaccurate particulars of income/concealment of income, whereas the penalty in dispute has been levied by the AO on account of furnishing of inaccurate particulars. In our view the penalty is not sustainable in the eyes of law. Our aforesaid view is fortified by the following decisions:- i) "CIT & Anr. Vs. M/s Emerald Meadows - 2015 (11) TMI 1620 - Karnataka High Court has held that Tribunal has correctly allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under section 274 read with Section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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