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TMI Blog2020 (10) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... issue had come up before in the case of PCIT vs M/s Sahara India Life Insurance Company Limited. [ 2019 (8) TMI 409 - DELHI HIGH COURT] - We hold that the penalty proceedings initiated by the AO is not in accordance with law and, therefore, the same has to be quashed. - Decided in favour of assessee. - ITA No.5960/Del/2019 - - - Dated:- 29-9-2020 - Shri R.K. Panda, Accountant Member And Shri Sudhanshu Srivastava, Judicial Member For the Assessee : Shri Raj Kumar Gupta, CA For the Revenue : Shri R.K. Gupta, Sr. DR ORDER PER R.K. PANDA, AM: This appeal filed by the assessee is directed against the order dated 29th April 2019 of the CIT(A)-15, New Delhi, relating to assessment year 2014-15. The grounds raised by the assessee are as under:- 1. That under the facts and circumstances, the initiation of penalty proceedings are illegal and unsustainable in law, more so, as the notice issued for initiating impugned proceedings is fatally defective for not specifying the specific charge i.e. either for concealment of particulars of income or for furnishing inaccurate particulars of income. 2. That without prejudice, the impugned penalty order is vitia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, according to the ld. CIT(A), where satisfaction of the AO while completing the assessment has been correctly recorded, then, merely because of inappropriate portion has not been struck off in the notice, the penalty proceedings would not become invalid. 4. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 5. The ld. counsel for the assessee drew the attention of the Bench to page 2 of the synopsis which contains the first show-cause notice under section 271(1)(c) of the Act dated 26th December, 2016. He submitted that a perusal of the same would show that the inappropriate words in the said notice has not been struck off and the AO has, in the notice issued under section 274 read with section 271 of the IT Act . dated 26th December 2016 has mentioned as under:- To Kallash Chander Malhotra (HUF) J-3/127-128, Rajouri Garden Delhi-110027. Whereas in the course of proceeding before me for the assessment year 2014- 15 it appears to me that you:- _ *Have concealed the particulars of your income or furnished inaccurate particulars of such Income in items of explanation 1,2,3,4,and 5. You are hereby requested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which does not invite the rigours of penalty proceedings under section 271(1)(c) of the Act. He submitted that the assessee in the instant case has declared an income of ₹ 24 lacs as agricultural income and the amount was received through cheque from M/s Nature Forms Real Estate Pvt. Ltd., as rent of agricultural land to be used for agricultural purposes for cultivation of allavera by the said company. Referring to the provisions of section 2(1A)(a), he submitted that rent derived from land situated in India used for agricultural purposes is agricultural income. He submitted that there was no dispute to the fact that the assessee owns agricultural land and prior to assessment year 2014-15 the assessee had been carrying out agricultural activity himself and was declaring agricultural income of ₹ 5,23,500/- in assessment year 2012-13 and ₹ 5,24,500/- in assessment year 2013-14 which was accepted by the Department. He submitted that although the assessee had a strong case in his favour, however, to buy peace of mind he had accepted the addition made by the AO and paid taxes thereon. Relying on various decisions, he submitted that penalty under section 271(1)(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with section 271(1)(c) of the Act. A perusal of the penalty notice issued under section 274 read with 271 of the Act dated 26th December 2016 which has already been reproduced in the preceding paragraphs shows that the inappropriate words have not been struck off and it is not clear as to under which limb of provisions of section 271(1)(c) the AO has initiated penalty proceedings, i.e., for concealment or furnishing of inaccurate particulars of income. 12. Similarly, the subsequent notice issued by the AO on 2nd June 2017 does not show anything and the AO simply asked the assessee to show cause as to why penalty under section 271(1)(c) should not be imposed in your case. We find Para 8 of the penalty order reads as under:- Since the assessee had furnished inaccurate particulars of income, penalty proceedings u/s 271(l)(c) of the Act were initiated. Moreover, the assessee's disclosure for additional income has come only after it was detected by AO. Hence, I am satisfied that this is a fit case for imposition of penalty for concealment of particulars of income and furnishing inaccurate particulars in respect of his income amounting to ₹ 24,00,000/- as per the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Sahiwal Investment Trading co. vs. ITO vide ITA No.4913/Del/2015 for assessment year 2006-07 order dated 18.07.2018 to which both of us parties. We find the Tribunal in the said decision while allowing the additional ground filed by the assessee has decided the issue in favour of the assessee by observing as under :- 12. Additional Ground No. (ii) is relating to absence of specific charge pointing out in the notice. It is pertinent to note here that the penalty order is based on furnishing of inaccurate particulars but the notice is not specifying exactly on which limb the penalty u/s 271(1)(c) has been initiated. From the notice dated 30.06.2013 produced by the Ld. 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 ITA No.5206/Del/2016 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Vegetable Products Limited (supra). We, therefore, set-aside the order of the ld. CIT(A) and direct the Assessing Officer to cancel the penalty so levied. 15. The decision in the case of MAK Data Private Limited relied on by the ld. DR is not applicable to the facts of the present case since the issue in that case was scope of Explanation-1 to Section 271(1)(c) of the Act and voluntary surrender of income to buy peace of mind. There was no occasion on the part of the Hon ble Supreme Court to decide on the issue of non-striking off of inappropriate words in the notice issued while initiating penalty proceedings. Therefore, the decision relied on by the ld. DR is not applicable to the facts of the present case. 16. In this view of the matter, we hold that the penalty proceedings initiated by the AO is not in accordance with law and, therefore, the same has to be quashed. Since the assessee succeeds on this legal ground, the grounds on merit become academic in nature and, therefore, the same is not being adjudicated. 17. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 29.09.2020. - - TaxTMI - TMITax - Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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