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TMI Blog2021 (4) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, in three different financial years, that is, F.Y. 2009-10, 2010-11 and 2011-12. Therefore, we noticed that no fault has been found by the ld. CIT(A) with the particulars submitted by the assessee in its Return of income. Besides, as we noted above that the charge against which the penalty is to be levied is not specific and when the charge itself is not specific and is vague, the penalty should not be levied. Hence, we are not inclined to accept the contention of the ld. CIT(A) in confirming the penalty imposed by assessing officer under section 271(1) (c ) of the Act, therefore we delete the penalty - Decided in favour of assessee. - ITA No.281/AHD/2016 - - - Dated:- 9-10-2020 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Rasesh Shah - CA For the Respondent : Shri O P Meena Sr. DR ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: 1. By way of this appeal, the assessee has challenged correctness of the order dated 06.01.2016 passed by the learned CIT(A), in the matter of Penalty order under section 271(1)(c ) of the Income Tax Act 1961 ( the Act ), for the assessment year 2011-12. Grievances raised by the assessee are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34,00,000 +16,00,000), the deduction u/s. 54EC of the Act was denied. While making the addition by way of disallowance of deduction u/s.54EC of the Act, the Assessing Officer had initiated penalty proceedings u/s.271(1)(c) of the Income Tax Act observing as follows: 5.5. In light of the discussions made hereinabove, the arguments of the assessee in respect of allowance of deduction of ₹ 1,50,00,000/- u/s. 54EC of the Act are not accepted. It is clear that the assessee does not fulfill the conditions laid down in section 54EC for claiming benefit of that section. However, deduction u/s. 54EC, to the extent of ₹ 50,00,000 /-, which was invested by the assessee on 31.03.2010, i.e. before the date of sale deed is allowed. Accordingly, the said deduction of ₹ 1,00,00,000/- claimed by the assessee u/s. 54EC, to the Act is disallowed and added to the total income of the assessee. By claiming incorrect deduction, the assessee has furnished inaccurate particulars of his income, for which, penalty proceedings u/s. 271(l)(c) r.w.s 274 of the Act is initiated separately on this point. 5. The assessee also claimed deduction under section 54F of the Act, at ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2014, the Assessing Officer noted that deduction u/s.54EC of the Act was to be allowed to the assessee on the amount of ₹ 50,00,000/- invested within the specified period and not on the amount of ₹ 50,00,000/-, 34,00,000/- and 16,00,000/- invested after the specified period. Therefore, Assessing Officer was of the view that the assessee had not brought the income to the tune of ₹ 52,40,028/- (1,00,00,000/- + 52,04,028/-) within the ambit of taxation which was brought on record as a result of the assessment proceedings. Therefore, Assessing Officer vide his penalty order, imposed the penalty u/s.271(1)(c) at ₹ 31,35,750/- observing as follows: 7. In view of the above facts and circumstances, this is a fit case for levy of penalty u/s.271(1)(c) of the Act for concealment and furnishing inaccurate particulars of income. The amount of penalty leviable is worked out as under:- Concealed income/inaccurate particulars of income ₹ 1,52,40,028/- Tax sought to be evaded on above income ₹ 31,35,750/- Minimum penalty @10% of the tax sought to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that ld. Counsel relied on the Judgment of the Hon`ble Supreme Court in the case of CIT Vs. Reliance Petroproducts, 322 ITR 158 (SC). The Ld. Counsel of the assessee in his written submissions explained the facts in respect of deduction under section 54EC of the Act, in the following manner: Sr. No. Date of receipt Amount received Investment Rs. Date of investment Remarks 1 26th March 2010 50,00,000/- 50,00,000/- 31.03.2010 A.O. allowed but CIT(A) enhanced , however ITAT deleted Penalty levied 2 08th Feb.2010 84,00,000/- 50,00,000/- 28.02.2010 Allowed by CIT(A) Penalty was not levied 3 34,00,000/- 30.04.2011 A.O. made addition, confirmed by CIT(A) and upheld by ITAT. (Penalty levied) 08.08.2011 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lars of income. The ld. Counsel finally submits that the penalty order is liable to be quashed on legal issue as well as on merit. 14. On the other hand, the ld. DR for the Revenue submitted that the assessee has claimed false deductions under section 54EC and under section 54F of the Act and therefore it is tantamount to furnish inaccurate particulars of income . The ld.. DR also contends that to mention the different accusation/charge in the assessment order under section 143(3) and penalty order under section 271(1) (c ) of the Act does not vitiate the penalty levied by the assessing officer as it is only a typographical error in quoting the charge in assessment order as assessee has furnished inaccurate particulars of his income and in penalty order as concealment and furnishing inaccurate particulars of income . Since the assessee has claimed false deductions under section 54EC and under section 54F of the Act therefore penalty under section 271(1)(c) of the Act, may be levied on both limbs, that is, concealment and furnishing inaccurate particulars of income . Apart from this, the ld. DR relied on the stand taken by the assessing officer in his penalty order u/s.271( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined unchanged. Further, the ld. AO observed that the amount of ₹ 52,04,000/- was made in the specified Capital Gain Account beyond the stipulated time. The AO has levied penalty against both these wrong claims of deductions made u/s.54EC at ₹ 1,00,00,000/-and u/s.54F at ₹ 52,04,000/-. On appeal ld. CIT(A) has confirmed the penalty imposed by the assessing officer. 17. We note that the first grievance of the ld. Counsel is that there is no any definite charge/ accusation on the assessee, whether initiation of penalty proceeding is on account of concealment of income or on account of furnishing inaccurate particulars of income . Let us first examine the charge in the assessment order and penalty order: (a) We note that during the assessment proceedings u/s 143(3) of the Act, while making the addition by way of disallowance of deduction u/s.54EC of the Act, the Assessing Officer had initiated penalty proceedings u/s.271(1)(c) of the Income Tax Act observing as follows:- By claiming incorrect deduction, the assessee has furnished inaccurate particulars of his income, for which, penalty proceedings u/s. 271(l)(c) r.w.s 274 of the Act is initiated separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... `ble Gujarat High Court in case of Nayan C. Shah vs. ITO [Tax Appeal No. 543 of 2012 (Guj- HC)] held. as follows: 11. Another notable aspect of the matter is that while the Assessing Officer has imposed penalty on the ground that the assessee has furnished inaccurate particulars of income, the Tribunal has set aside the order of the Commissioner (Appeals) by holding that the assessee has suppressed the actual particulars of income by not making disallowance under section 40(a)(ia) of the Act. Thus, the Assessing Officer has imposed penalty on the ground of furnishing inaccurate particulars, whereas the Tribunal has upheld. the order of the Assessing Officer on the ground of concealment of particulars. It is by now well settled that while issuing a notice under section 271(1)(c) of the Act, the Assessing Officer is required to specify as to what is the default on the part of the assessee, as to whether the case is one of furnishing inaccurate particulars, or whether it is a case of concealment of income, or both. In the facts of the present case, the Assessing Officer has proceeded on the footing that inaccurate particulars were filed by the assessee, whereas the Tribunal has h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to defraud the revenue and hence no adverse inference could be drawn that the assessee had concealed any income or had furnished inaccurate particulars of income. 22. We note that the assessee has made a bona fide claim of deductions under section 54EC and under section 54F of the Act and it is not a false claim made by the assessee to deceive the revenue, therefore, the assessee`s case falls in the category of bona fide claim of deductions hence the penalty should not be levied. At this juncture it is appropriate to quote the judgment of the Hon`ble Supreme Court in the case of CIT vs. Reliance Petroproducts, 322 ITR 158 (SC), wherein it was held as follows: 10. It was tried to be suggested that Section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as, the Commissioner of Income Tax (Appeals) and the High Court have correctly reached this conclusion and, therefore, the appeal filed by the Revenue has no merits and is dismissed. 23. The judgment of the hon`ble Supreme Court in the case of Reliance Petroproducts(supra) is squarely applicable to the facts of the assessee`s case under consideration. As the assessee has furnished all the particulars regarding claim of deduction u/s.54EC and 54F of the Act in the Return of Income, and during the course of assessment proceedings, all the material facts relating to investment in Bonds u/s.54EC and specified account 54F of the Act were disclosed to the assessing officer. The assessee also explained that he had received the amount of sale consideration in piecemeal manner and invested the said amount of ₹ 1,50,00,000/- u/s.54EC of the Act, in three different financial years, that is, F.Y. 2009-10, 2010-11 and 2011-12. Therefore, we noticed that no fault has been found by the ld. CIT(A) with the particulars submitted by the assessee in its Return of income. Besides, as we noted above that the charge against which the penalty is to be levied is not specific and when the char ..... X X X X Extracts X X X X X X X X Extracts X X X X
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