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08-03-2019, Kapishek Films, Section 271(l)(c), 271, Tribunal Mumbai

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2 months 1 week ago #8773 by amit
Section - 271(l)(c), 271, 274
Order Date - 08-03-2019
Favouring - Assessee
Court - Tribunal Mumbai
Appellant - Kapishek Films Pvt. Ltd.
Respondent - ITO
Citation - 319Taxpundit222
Appeal No. - I.T.A. No.3979/Mum/2013
Asstt. Year - 2003-04


PER : Manoj Kumar Aggarwal

1. Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2003-04 is a recalled matter since the appeal was dismissed ex parte qua the assessee vide order dated 24/11/2017. However, the order has subsequently been recalled vide MA No. 496/Mum/2018 upon assessee’s miscellaneous application.

2. By way of aforesaid appeal, the assessee contest levy of penalty u/s 271(1)(c) for Rs.11.85 Lacs as imposed by Ld. Assessing Officer vide order dated 29/03/2010 and as confirmed by Ld. Commissioner of Income-Tax (Appeals)-3, Mumbai, [CIT(A)] vide impugned order dated 06/02/2012.

3. Upon perusal of quantum assessment order u/s 143(3) dated 27/03/2006, it transpires that the assessee has been saddled with quantum disallowance of Rs.32.26 Lacs u/s 69C, being difference in cost of production as reflected in the Profit & Loss Account and as reflected in Schedule-8 of the accounts. Resultantly, penalty proceedings were initiated u/s 271(1)(c) in the quantum assessment order against this disallowance. The penalty was finally levied by Ld. AO on 29/03/2010 which was confirmed by Ld. first appellate authority and the same is under challenge before us. It has been submitted that the quantum disallowance has already attained finality.

4. Although the assessee, in the original grounds of appeal, has agitated the penalty on merits, however, vide letter dated 29/01/2019, an additional ground of appeal has been raised which contest the validity of penalty proceedings on the strength of certain judicial pronouncements. Since, additional ground goes to the root of the matter and contest the jurisdiction of Ld. AO in imposing the penalty, we take up the same first. This additional ground of appeal does not require appreciation of new facts and hence taken on record in terms of judgment of Hon’ble Apex Court rendered in National Thermal Power Co. Vs. CIT [1998] 229 ITR 383. The additional ground reads as under: -

1. The penalty notice dated 27.03.2006 issued u/s 271(1)(C) r.w.s 274 of the Act is bad in law since no proper satisfaction was ever recorded by the learned
assessing officer in the assessment proceedings with regard to the initiation of the penalty proceeding whether the same was initiated for furnishing inaccurate particulars or concealment of income.

2. The penalty notice dated 27.03.2006 issued u/s 274 r.w.s 271 of the Act is void ab initio as the said notice does not specify whether the penalty proceedings were initiated for concealment of income or furnishing inaccurate particulars of income.

3. The penalty order dated 29.03.2010 passed u/s 271(l)(c) of the Act is bad in law as the penalty was levied by the learned assessing officer on both the limbs (i.e. furnishing inaccurate particulars as well as concealment of income) which is not permissible in the law as per the provisions of section 271(l)(c) of the Act.

5. The Ld. Authorized Representative for Assessee [AR], Shri Tanmay Phadke, drawing our attention to the quantum assessment order, showcasue notice issued by Ld. AO during penalty proceedings and penalty order submitted that the proceedings stood vitiated for want of proper satisfaction as envisaged by law and therefore, the impugned penalty could not be sustained. The same has been controverted by Ld. DR who submitted the wrong claim made by assessee has rightly entailed imposition of penalty.

6. We have carefully considered the same. The perusal of quantum order reveal that penalty has been initiated by Ld. AO by making following observations: -

“Penalty proceedings u/s 271(1)(c) is being initiated separately.” Pursuant to the same, the assessee was issued notice u/s 274 read with Section 271 of the Income Tax Act on 27/03/2006, the perusal of which reveal that Ld. AO has failed to mark the appropriate limb i.e. concealed the particulars of your income or furnished inaccurate particulars of income for which the penalty was being initiated against the assessee. Finally, the penalty has been levied by Ld. AO in the penalty order by making following observation: -

“In view of the above facts its clearly established that assessee company furnished inaccurate particulars of income and concealed the income, therefore, penalty u/s 271(1)(c) is leviable in this case under consideration.”

Upon combined reading of three events, it transpires that Ld. AO has failed to frame a specific charge against the assessee. The terms furnishing of inaccurate particulars of ncome and concealment of income, as per settled legal proposition, carry different connotations and therefore, failure to specify the same violate the right of the assessee to defend the same. Our conclusion is duly supported by the cited decision of this Tribunal rendered in Mrs. Indrani Sunil Pillai Vs ACIT [ITA No.1339/Mum/2016] dated 19/01/2018, wherein in identical situation, the matter, after due deliberations, was decided in assessee’s favor by making following observations: -

5. We have heard rival contentions and perused material on record in the light of the decisions relied upon. A reading of the impugned assessment order makes it clear that the Assessing Officer has initiated penalty proceedings under section 271(1)(c) without

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