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TMI Blog2020 (6) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in the case of Sahiwal Investment Trading Co. vs. ITO [ 2018 (7) TMI 1472 - ITAT DELHI] has cancelled the penalty levied by the AO. Even on merits also we find, the Hon ble Delhi High Court in the case of Noble Hewitt (I) (P) Ltd. [ 2007 (9) TMI 238 - DELHI HIGH COURT] has held that where the assessee did not debit the amount to the P L Account as an expenditure nor did the assessee claim any deduction in respect of the amount where the assessee was following mercantile system of accounting, the question of disallowing the deduction not claimed would not arise. We further find the CIT(A) in assessee s own case for A.Y. 2012-13, deleted the addition of unpaid service tax which was added back by the assessee in its revised computation of income. Issue as to addition u/s 43B on account of non-payment of service tax liability when the same has not been debited in the Profit Loss Account nor claimed as an expenditure has become a debatable issue. It has been held in various decisions that penalty u/s 271(1)(c) is not leviable on account of additions which are debatable issues. We, therefore, are of the opinion that penalty u/s 271(1)(c) of the IT Act, 1961 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) of the IT Act, 1961. In appeal, the ld.CIT(A) upheld the penalty so levied by the AO. 5. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 6. The ld. Counsel for the assessee, at the outset, referred to a copy of notice issued u/s 274 r.w. section 271 of the IT Act dated 24th March, 2014, which is placed at page 6 of the paper book. Referring to the said notice, he submitted that the inappropriate words in the said notice have not been struck off by the AO. Therefore, it is not understood as to under which limb of the provisions of section 271(1)(c) of the IT Act the AO has levied the penalty. Since the said show cause notice issued u/s 274 of the Act did not specify the charge against the assessee as to whether it is for concealing the particulars of income or for furnishing inaccurate particulars of income, therefore, the penalty order passed u/s 271(1)(c) of the IT Act in pursuance of the said notice deserves to be set aside. For the above proposition, the ld. Counsel referred to the following decisions:- i) CIT v. Manjunatha Cotton Ginning Factory 359 ITR 565; ii) CIT v. SSA S Emerald Meadows [2016] 73 taxmann.co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that there is no satisfaction recorded in the assessment order, therefore, the penalty could not have been levied by the AO u/s 271(1)(c) of the IT Act. Referring to the decision of the Delhi Bench of the Tribunal in the case of Tristar Intech (P) Ltd. vs. ACIT, ITA No.1457/Del/2010, order dated 7th September, 2015 he submitted that the Tribunal in the said decision has held that Explanation-1 cannot be applied in a case where the assessee furnishes inaccurate particulars of income. Since the AO, in the instant case has invoked clause (a) and (b) of Explanation-1 to section 271(1)(c) of the IT Act while levying the penalty u/s 271(1)(c) of the IT Act, therefore, the same is also not sustainable. He accordingly submitted that on all counts penalty levied by the AO and sustained by the CIT(A) is not in accordance with the law and, hence, should be deleted. 10. The ld. DR, on the other hand, heavily relied on the order of the CIT(A). He submitted that the assessee is a habitual defaulter in submitting its e-returns since the returns were always filed beyond the due date. The assessee never bothered even to respond to the show cause notices/questionnaires issued by the AO. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequently in the decision in the case CIT vs. Samson Perinchery (supra) has followed the decision of the Hon ble Karnataka High Court and, therefore, the decisions relied on by the ld. DR cannot be accepted. Referring to the decision of the Delhi Bench of the Tribunal in the case of Sanjay Mittra vs. DCIT, ITA No.5206/Del/2016, he submitted that the Tribunal has considered all the decisions relied on by the ld. DR in that case and held that all those decisions are of non-jurisdictional High Courts whereas the Delhi Bench of the Tribunal is bound by the decision of the Hon ble Delhi High Court. Distinguishing the various decisions relied on by the ld. DR, he submitted that none of the decisions are applicable to the present case and are distinguishable and, therefore, the penalty levied by the AO and sustained by the CIT(A) should be cancelled. 12. We have considered the rival arguments made by both the sides and perused the material available on record. We have also considered the various decisions cited before us. We find, the AO, on the basis of the details furnished by the assessee during the course of assessment proceedings, made an addition of ₹ 1,45,61,540/- u/s 43B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AR during the hearing, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. The issue is squarely covered by the decision of the Hon'ble Supreme Court in case of M/s SSA' Emerald Meadows. The extract of the decision of the Hon'ble Karnataka High Court in M/s. SSA' Emerald Meadows are as under which was confirmed by the Hon'ble Apex Court: 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') 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 Tribunal, while allowing the appeal of the assessee, has relied on the ITA No. 4913/Del/2015 decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX - VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. In our vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA s Emerald Meadows (2016) 73 Taxman.com 241 (Kar), the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of 2016 by order dated 5th August, 2016. 22. On this issue again this Court is unable to find any error having been committed by the ITAT. No substantial question of law arises. 14. We, therefore, are of the opinion that the levy of penalty u/s 271(1)(c) is not valid in law in view of non-striking of the inappropriate words in the penalty notice. 15. Even on merits also we find, the Hon ble Delhi High Court in the case of Noble Hewitt (I) (P) Ltd. (supra) has held that where the assessee did not debit the amount to the P L Account as an expenditure nor did the assessee claim any deduction in respect of the amount where the assessee was following mercantile system of accounting, the question of disallowing the deduction not claimed would not arise. We further find th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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