Case Number: ITA 1845/DEL/2022
Appellant: Inderjit Mehta Construction Private Limited, Delhi
Respondent: DCIT, Circle-12(1), Delhi
Assessment Year: 2015-16
Result: 2015-16
Case Filed On: 2022-08-17
Order Type: Final Tribunal Order
Date of Order: 2023-02-28
Pronounced On: 2023-02-28
The instant appeal has been preferred by the Assessee against the order dated 22.06.2022 impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals)-30, New Delhi, (in short “Ld. Commissioner”) u/s 250 of the Income Tax Act, 1961 (in short “the Act”), pertaining to the assessment year 2015-16.
In the instant case, the Assessee, a construction company, declared an income of Rs. 5,18,48,810/- by filing its return of income on 25.09.2015, which was selected for scrutiny being a survey case as certain documents were impounded during the course of the survey. By considering the information submitted by the Assessee, it was found by the Assessing Officer that the Assessee’s accounts have been audited, as per the provisions of section 44AB of the Income Tax Act and the audit report in form 3CA and 3CD was furnished by the Assessee during the course of assessment proceedings. The Assessee also furnished written submissions/information as called for.
The Assessing Officer further observed that during the course of survey proceedings u/s 133A of the Act, on the business premises of the Assessee company on 12.11.2014, certain documents were impounded. The Assessee was asked to submit page-wise analysis of the impounded material. On perusal of these documents and reply of the Assessee, it was seen that the amounts of Rs. 50,000/- (Pooja Industries – Cash paid for Sandeep Gupta at page No. 154), Rs. 25,000/- (Cash paid to Shirdi tour at page No. 151), and Rs. 100000/- (Pooja Industries – Cash paid Sandeep Gupta at page No. 151(Back) etc. of the Annexure IM-8, were not tallying with the books of the accounts of the Assessee. The same were confronted to the Assessee. In response, the Assessee made a disclosure of additional income of Rs. 60,00,000/- over and above the returned income.
Therefore, the AO made an addition of Rs. 60,00,000/- to the returned income of the Assessee by holding that it is very much clear that this disclosure has been made by the Assessee on the basis of discrepancies detected by the department.
The AO in the Assessment order also recorded satisfaction for initiation of penalty proceedings u/s 271(1)(c) of the Act for concealing the particulars of income and consequently issued the notice dated 18.12.2017 for concealment of particulars of income u/s 271(1)(c) of the Act and ultimately vide penalty order 28.6.2018 passed u/s 271(1)(c) of the Act, imposed the penalty of Rs. 19,46,700/- for furnishing of inaccurate particulars of income of Rs. 60,00,000/- sought to be evaded.
The Assessee challenged the said penalty before the learned Commissioner, not only on the merit, but also on the legal aspect that satisfaction for initiating the penalty proceedings u/s 271(1)(c) of the Act was for concealment of particulars of income, whereas the penalty was levied for furnishing of inaccurate particulars of income, which is not permissible. The Ld. Commissioner, somehow affirmed the penalty by observing as under:
In the case of M/s Gangotri Textiles Ltd. Vs. DCIT 121 Taxmann.com 171 (Madras)/[2021] 276 Taxman 356 (Madras), it was held by Madras High Court that the Assessing Officer has issued show cause notice to the Assessee before levying the penalty and all the submissions of the Assessee have been duly considered, therefore, any technical defect in notice does not prejudice the Assessee. In view of the judicial position and facts of this case, I do not find any substance in the argument of the Assessee on this issue. Therefore, I hold that the Assessing Officer has rightly levied penalty u/s 271(1)(c) of the Act of Rs. 19,46,700/- on account of default of the Assessee in concealing income of Rs. 60,00,000/- of tax sought to be evaded.
The Assessee being aggrieved is in appeal before us and in support of its case reiterated the same contentions as made before the authorities below that in the instant case in the assessment order, the satisfaction for initiation of the penalty proceedings u/s 271(1)(c) of the Act was made/recorded for concealment of the particulars of income and the notice dated 18.12.2017 u/s 274 read with Section 271(1)(c) of the Act was issued for concealment of the particulars of income, whereas the penalty under consideration was levied for furnishing of inaccurate particulars of income. Therefore, the levy of penalty by the AO is not as per law and against the judicial principles settled by the Hon’ble Courts, specifically by the judgments of Hon’ble Supreme Court in the case of Ashok Pai Vs. CIT 292 ITR 11 and the Hon’ble Bombay High Court in the case of CIT-11 Vs. Samson Perinchery (ITA no. 1154 of 2014, ITA no. 953 of 2014, ITA no. 1097 of 2014 & 1226 of 2014).
On the contrary, learned DR submitted that by initiating the penalty proceedings, issuing notice u/s 274 and imposing penalty for furnishing inaccurate particulars of income, the rights of the Assessee did not get prejudiced, as the Assessee got the proper opportunities to defend its case and therefore the impugned order does not require any interference, as the same is neither perverse nor suffered from impropriety.
Having heard the parties and perusing the material available on record and giving thoughtful consideration to the peculiar facts and circumstances of the case, we observe that provisions of Section 271(1)(c) of the Act have two limbs – first, concealing particulars of income; and second, furnishing inaccurate particulars of income. The question arises what would be the fate of the levy of penalty, where the penalty proceedings have been initiated for one limb and the penalty has been levied for another limb.
We observe that Hon’ble High Court of Bombay in the case of CIT-11 Vs. Samson Perinchery (supra) has held that the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned u/s 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground, on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground, of which the penalty proceedings have been initiated and it cannot be on a fresh ground of which the Assessee has no notice.
We observe that the Hon’ble Apex Court in the case of Ashok Pai Versus CIT 292ITR 11 also reminded that ‘Concealment of income’ and ‘furnishing of inaccurate particulars’ are different. Both concealment and furnishing inaccurate particulars refer to deliberate acts on the part of the Assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. Since the AO has not given any finding that any details supplied by the Assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act.
Therefore, we find merit in the submissions of the Assessee that the penalty proceedings were initiated on one limb of Section 271(1)(c) and penalty was levied on the other limb of Section 271(1)(c), therefore, the same is not justified, hence the penalty levied is deleted. Grounds raised by the Assessee are thus, allowed.
In the result, the appeal filed by the Assessee is allowed.
Inderjit Mehta Construction Private Limited, Delhi vs. DCIT, Circle-12(1), Delhi – ITA 1845/DEL/2022
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