Levy of penalty u/s 271(1)(c) of the Income-tax Act for furnishing of inaccurate particulars of income

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: ‘B’ NEW DELHI
BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEMBER
AND
DR. B. R. R. KUMAR, ACCOUNTANT MEMBER
ITA No. 3239/DEL/2018 ( A.Y 2014-15)
(THROUGH VIDEO CONFERENCING)
Samal Infra Projects P. Ltd.
F-47, Sector-Deleta-1, Greater
Noida, Greater Noida,
Uttar Pradesh
AANCS2375J
(APPELLANT)

vs

ITO
Ward-3(3)
Noida
Uttar Pradesh
(RESPONDENT)
Appellant by Ms. Shipra Walia, CA
Respondent by Sh. Umesh Takyar, Sr. DR

Date of Hearing 14.10.2021
Date of Pronouncement 1.11.2021

ORDER

This appeals is filed by the assessee against the order dated 21/03/2018 passed by the CIT(A)-1, Noida for Assessment Year 2014-15.

2. The assessee company is engaged in the business of construction. For assessment year 2014-15, the Assessee filed its return of income showing taxable income of Rs. 11,95,010/- on November 19 2014. The Assessing Officer observed that the assessee has not paid statutory dues of service tax Rs 41,73,159/- till the due date of filing the return thereby attracting disallowance under Section 43B of the Act. However non-payment of statutory dues was pointed out at Sr. no. 26 of Form 3CD of Tax audit report as pointed out by the Assessee. Further an ad-hoc disallowance of Rs 10,000/- was also made to cover up the possible leakage in the books of accounts. Pursuant to proceedings under sub section 3 of section 143 of the Act for AY 2014-15, the Assessing Officer passed an assessment order dated 22nd December 2016 wherein a sum of Rs.42,73,159/- was added to fee computation of income. The Assessing Officer initiated penalty proceedings under the Act on the grounds of concealment of income or furnishing of inaccurate particulars of income. The penalty order was passed by the Assessing Officer on 06 June 06 2017 thereby imposing penalty of Rs 13,20,406 on the ground of concealment of income .

3. We have heard both the parties and perused all the relevant materials available on record. First of all, in the notice issued u/s 274 r.w.s 271(1)(c) of the Income Tax Act, 1961, there was no specific charges as relates to concealment of income or furnishing of inaccurate particulars of income. From the notice dated 22/12/2016 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.

4. Thus, notice under Section 271(1)(c) r.w.s. 274 of the Act itself is bad in law. Besides, this it can be seen from the order of the CIT(A) in last para no. 8 that the CIT(A) has modified the limb of the penalty u/s 271(1)(c) of the Act which shows that the Assessing Officer was not specific in the imposition of the penalty under Section 271(1)(c) of the Act. Thus, by following the legal ratio set out in the decision of the Hon’ble Supreme Court in case of SSA’S Emerald Meadows (supra), we, therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to cancel the penalty so levied. In result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on this 01st Day of November, 2021

Please find attached the enclosed file for the full judgement