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TMI Blog2018 (3) TMI 1797X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered view that the penalty proceedings suffer from element of vagueness at the time of satisfaction, and also at the time of passing of the order levying penalty u/s. 271(1)(c). Hence, the penalty proceedings are liable to be set aside. Since, the assessee has succeeded on the legal issue and the penalty has been set aside, deliberating on the merits of appeal by Department would be merely an academic exercise. Accordingly, the appeal of Revenue is dismissed. - ITA No. 1243/PUN/2014 - - - Dated:- 28-3-2018 - SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM For the Appellant: Shri Hari Krishan For the Respondent: Shri Achal Sharma ORDER PER VIKAS AWASTHY, JM: This appeal has been filed by the Revenue assailing the order of Commissioner of Income Tax (Appeals)-2, Nashik dated 19-03-2014, whereby the First Appellate Authority has deleted levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for assessment year 2006-07. 2. The brief facts of the case as emanating from records are: The assessee filed its return of income for the impugned assessment year on 31- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. The assessee its return of income had deliberately furnished inaccurate particulars of income to reduce tax liability. It is a fit case for levy of penalty and the Assessing Officer has rightly levied penalty u/s. 271(1)(c) of the Act. The ld. DR pointed that the Commissioner of Income Tax (Appeals) has deleted penalty without appreciating the facts of the case. The assessee has failed to show any bonafide in making wrong claim in the original return of income. The ld. DR prayed for setting aside the order of Commissioner of Income Tax (Appeals). 4. On the other hand Shri Hari Krishan appearing on behalf of the assessee vehemently defended the order of Commissioner of Income Tax (Appeals) and prayed for dismissing the appeal of Revenue. 5. Notwithstanding his submissions on merits, the ld. AR pointed that there is defect in recording of satisfaction for levy of penalty and order levying penalty u/s. 271(1)(c) of the Act. The ld. AR filed an application under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 to raise this legal ground. The ld. AR pointed that a perusal of assessment order would show that while recording satisfaction the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax authority and having a bearing on the tax liability of the assessee. However, the assessee has to raise such legal ground in the grounds of appeal or by raising additional grounds of appeal. Thus, it is a well settled proposition that legal grounds can be raised before the Tribunal for the first time, even if it has not been raised before the authorities below. In the present case, it is in appeal by the Revenue that the assessee has raised a legal ground which goes to the root of validity of penalty proceedings initiated by the Assessing Officer. The Hon ble Madras High Court in the case of Commissioner of Income Tax Vs. Smt. S. Vijayalakshmi reported as 242 ITR 46 has held that in order to consider a claim for relief during hearing before Tribunal, it is not necessary that there should be specific appeal or even a cross appeal by the assessee. In an appeal filed by Department the relevant facts are already on record, the Tribunal is not precluded from giving a finding on issue emanating from facts already on record and decide the issue in favour of the assessee even without an appeal or cross objections. For the sake of completeness it would be relevant to refer to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, the assessee has furnished inaccurate particulars of his income and thereby concealed the income to the extent of ₹ 54,70,743/- ₹ 26,24,802/- on account of offering exempted Long Term Capital Gain as regular income and profit on the sale of shares treated as business income as against claimed as Short Term Capital Gain respectively. 13. From the foregoing discussion, it is clear that the assessee has concealed his income and therefore, this is a fit case for levy of penalty u/s. 271(1)(c) of the I.T. Act, 1961. Therefore, in the light of the above discussion, a penalty of ₹ 27,24,960/- is levied as against maximum penalty leviable at ₹ 81,74,880/-. The manner in which satisfaction has been recorded without specifying the charge and the perusal of order levying penalty clearly reveal that there was ambiguity in the mind of Assessing Officer at the time of recording satisfaction, as well as, at the time of passing of the order levying penalty. No limb of section 271(1)(c) i.e. whether the penalty is being initiated for concealment of particulars of income or furnishing inaccurate particulars of income has been mentioned while r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Commissioner of Income Tax Vs. Samson Perinchery reported as 392 ITR 4. 11. The Pune Bench of the Tribunal have been consistently deleting levy of penalty u/s. 271(1)(c) where there has been ambiguity in recording of satisfaction and levy of penalty. The charge for levy of penalty u/s. 271(1)(c) has to be specifically conveyed to the assessee at the time of recording satisfaction otherwise, the principles of natural justice are offended. The assessee should know the charge which he has to meet while defending his case for levy of penalty. 12. Thus, in view of facts of the instant case and the various case laws discussed above, we are of considered view that the penalty proceedings suffer from element of vagueness at the time of satisfaction, and also at the time of passing of the order levying penalty u/s. 271(1)(c) of the Act. Hence, the penalty proceedings are liable to be set aside. 13. Since, the assessee has succeeded on the legal issue and the penalty has been set aside, deliberating on the merits of appeal by Department would be merely an academic exercise. Accordingly, the appeal of Revenue is dismissed. 14. In the res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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