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TMI Blog2023 (12) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal of the Assessee against the Penalty Order, dated 16/03/2022, passed under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). 2. The Appellant has raised following grounds of appeal: "1) That the Ld. CIT(A) wrongly confirmed penalty u/s 271(1)(C) by ignoring that the Ld. A.O. initiated penalty u/s 271(1)(c) in quantum order dtd. 05-03-15 for furnishing inaccurate particulars of income but issued notice u/s 271(1)(c) dtd. 05/03/15 on both limbs i.e; not striking of any limb or not indicating limb on which he is relying and kept both limbs alive, levy of penalty u/s 271(1)(c) is bad-in-law and void-ab-initio. 2) That the Ld. CIT(A) wrongly confirmed penalty u/s 271(1)(c) by ignoring that Ld. A.O. h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also initiated penalty proceedings under Section 271(1)(c) of the Act, and vide order dated 16/03/2022 penalty of INR 38,716/- was levied on the Appellant under Section 271(1)(c) of the Act being tax on 12.5% of alleged bogus purchases. 6. Being aggrieved, the Appellant preferred appeal before CIT(A) challenging the levy of the aforesaid penalty. Before the CIT(A), it was contended on behalf of the Appellant that (a) the penalty notice, dated 05/03/2015 issued under Section 271(1)(c) read with Section 274 of the Act was bad in law as the same had been issued without deleting or striking off inapplicable part, and (b) no penalty could be levied in the present case as the addition was based upon estimation on income. However, the CIT(A) wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other, or both grounds mentioned in Section 271(1)(c), does a mere defect in the notice-not striking off the irrelevant matter-vitiate the penalty proceedings? 181. It does. The primary burden lies on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(1)(c), read with section 274 of IT Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evied in the present case as the additions in the quantum proceedings were made/sustained on estimate basis. 11. Our view draws strength from the decision of the Mumbai Bench of the Tribunal has, in the case of Orient Fabritech Pvt. Ltd. vs. ITO, Range- 1(2)(4): ITA No. 1425/Mum/2021, wherein in identical facts and circumstances, penalty levied under Section 271(1)(c) of the Act was deleted by the Tribunal holding as under: "4. Both sides heard, orders of the authorities below examined. The assessee is in appeal against levy of penalty in respect of assessee's involvement in obtaining bogus purchase bills. In quantum proceedings, the AO made addition of the entire alleged bogus purchases. The matter travelled to the Tribunal, the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge under section 271(1)(c) of the Act, that is to be invoked. The Hon'ble Apex Court in the case of T. Ashok Pai Vs. CIT 292 ITR 11 has held the concealment of income and furnishing inaccurate particulars of income carry different connotations. Thus, the AO is duty bound to clearly convey to the assessee the limb for which penalty is to be levied. Where the position is unclear, penalty is unsustainable. 7. Thus, the penalty levied under section 271(1)(c) of the Act is unsustainable on account of defect in statutory notice issued under section 274 of the Act, as well for the reason that penalty is levied on addition made on mere estimations. The impugned order is set-aside and the appeal of assessee is allowed." 12. In view of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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