N.K. Choudhry ORDER
Shamim Yahya, Member (A)
1. This appeal by the assessee is directed against the order of the Ld. CIT(A)-23, New Delhi, dated 10.01.2019 pertaining to Assessment Year 2015-16.
2. Grounds of appeal reads as under:-
1. That the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the levy of penalty u/s. 271(1)(c) amounting to Rs. 15,24,915/- and which is against the facts and circumstances of the case.
2. That the Ld. CIT(A) has failed to appreciate the fact that no specific charge either for concealment of income or furnishing of inaccurate particulars of income have been framed before levying the penalty u/s. 271(1)(c).
3. That no proper satisfaction has been recorded by the Assessing in the Assessment order for the purposes of initiating penalty u/s. 271(1)(c).
4. Notwithstanding the above said fact while the penalty has been initiated for furnishing of inaccurate particulars of income and whereas, the show cause notice have been issued for concealment of income and, as such, the levy of penalty is totally uncalled for and void ab initio.
5. That even otherwise on merits of the case, no penalty u/s. 271(1)(c) was leviable and the written submission and explanation as submitted during the course of hearing have not been considered properly".
3. Brief facts of the case leading to levy of penalty u/s. 271(1)(c) of the Act and the sequence of the events as culled out in the Ld. CIT(A)'s order in this case read as under:-
Original return of income was filed by the assessee on 27.08.2015. A search was conducted on 16.03.2016. The assessee revised the return on 30.09.2016. On the basis of said revised return, the assessment was framed pursuant to 153A notice issued on 14.06.2016.
The appellant filed his return of income for the assessment year under consideration (AY 2015-16) on 27.08.2015 declaring income at Rs. 10,95,740/-. In this return of income, the appellant had disclosed long-term capital gain of Rs. 47 lakhs purportedly from the sale of shares of M/s. Delta leasing Ltd. and claimed the same amount as exempt under section 10(38). This return of income was processed under section 143(1). On 16.03.2016, a Search & Seizure (S & S) action was carried out in Shri Prem Arora group of cases. The case of appellant was also covered under said S & S action. During the course of search/survey an Annexure A-6 (being a computer hard disk) was impounded on 16.03.2016, from the office of Shri Prem Arora. The said computer hard disk contained a file (at path D:/M ISC/DELTA LEASING.jpg). Content of this file have been reproduced on page 2 of the assessment order. For the sake of ready reference, it is (again) reproduced hereunder.
Thereafter, on 30.09.2016 the appellant revised his return of income declaring his income at Rs. 5,795,740/-. In the revised return of income, appellant had surrendered the amount of Rs. 47 lakhs (which was earlier claimed as exempt being from the purported sale of shares of M/s. Delta leasing Ltd.) as 'income from other sources'. Later on, the appellant filed his return of income on 14.06.2017, in response to the notice issued under section 153A, declaring the same income (Rs. 5,795,740/-) as was declared in the revised return of income i.e. the amount of Rs. 47 lakhs (which was earlier claimed as exempt being from the purported sale of shares of M/s. Delta leasing Ltd.) was shown as 'income from other sources' Assessment proceedings under section 143(3) rws 153A culminated into passing of the assessment order dated 18.12.2017. In this assessment order, the AO has noted that during the course of search/survey an Annexure A-6 (being a computer hard disk) was impounded on 16.03.2016, from the office of Shri Prem Arora. The said computer hard disk contained a file (at path D:/M ISC/DELTA LEASING.jpg). Content of this file have been reproduced on page 2 of the assessment order. For the sake of ready reference, it has already been reproduced above.
From the above reproduced content is of the file in the impounded hard disk, the AO concluded that the appellant was getting accommodation entries in form of long-term capital gain purportedly earned through purchase and sale of sales of Delta leasing Finance Ltd. by paying a commission of 5% to Shri Prem Arora. Upon asking the explanation of the appellant regarding payment of commission for obtaining accommodation entries in form of above stated long-term capital gain, purportedly earned through purchase and sale of sales of Delta leasing Finance Ltd., the appellant denied payment of any such commission. However, the AO rejected explanation of the appellant and made an addition of Rs. - being amount of commission, paid @ 5% to obtain accommodation entry in form of a posted long-term capital gain, (purportedly earned through purchase and sale of sales of Delta leasing Finance Ltd.).
4. The Assessing Officer initiated penalty u/s. 271(1)(c) on both aspects, first Rs. 47 Lakhs on returned income as per section 153A of the Act as well as addition of 5% of obtaining accommodation entries on Rs. 47 lakhs i.e. amounting to Rs. 2,35,000/-. Before final computation of income, the Assessing Officer has initiated penalty proceedings in respect of the same for concealment of income. Thereafter, after computing the income, he held that penalty proceedings are initiated separately for furnishing of inaccurate particulars of income.
5. Before the Ld. CIT(A), the assessee relied upon the decision of the Hon'ble Delhi High Court in the case of Pr. CIT vs. Neeraj Jindal reported in MANU/DE/0416/2017 : 79 taxmann.com 96. Relying upon the judgment to the proposition that the extent of income declared in the return of income, in response to notice issued u/s. 153A, penalty u/s. 271(1)(c) cannot be imposed. However, the Ld. CIT(A) distinguished the said decision on the ground that in the case of Neeraj Jindal (Supra), the returned income was accepted, however, in the present case, there is further addition on account of commission paid.
6. Upon hearing of both the parties and perusing the records, we find this distinction made by the Ld. CIT(A) is wholly inapplicable and not in accordance with the canons of judicial discipline in the above said case law. The ratio emanating that to the extent of income returned u/s. 153A, the penalty u/s. 271(1)(c) cannot imposed. Hence, we are of the considered opinion that the Ld. CIT(A) has erred in distinguishing the aforesaid decision of the Hon'ble jurisdictional High Court. Furthermore, it is noted that while initiating penalty proceeding, the Assessing Officer himself is not sure as to what is the charge. In one place, he is mentioning that penalty has been levied for furnishing of inaccurate particular of income and at another place; he is mentioning that penalty has been levied for concealment of particulars of income. It has been held by higher courts that unless the charge upon the assessee is specific, penalty u/s. 271(1)(c) is not leviable on this account also. In this view of the matter also, in our considered opinion and on the facts and circumstances of the case, the assessee's case does not deserves to be visited the rigors of penalty u/s. 271(1)(c) of the Act. Hence, we set-aside the order of the Ld. CIT(A) and deleted the penalty.
7. In the result, this appeal filed by the assessee stands allowed.
Order pronounced in the open court on 18th October, 2022.
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