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Judgment
PER NAVEEN CHANDRA [A. M]:
The above captioned appeal is preferred by the Revenue against the order dated 27.11.2017, passed by Learned Commissioner of Income Tax (Appeals)-7, New Delhi (hereinafter referred to as ‘ld. CIT(A)), under section 250(6) of the Income Tax Act, 1961 [hereinafter referred to as, “Act”] for Assessment Year 2010-11. The assessment order in this appeal is passed by the Assessing Officer [for short, AO] under section 271(1)(c) of the Act.
The short issue in the instant case is penalty levied under section 271(1)(c) of the Act. The assessee has challenged the penalty on the two issues, one that there is the absence of indication of specific limb in the notice issued which has not specified whether the penalty is being levied for concealment of income or furnishing of inaccurate particulars of income. Secondly, the assessee has challenged the penalty on account of fact that the addition has been made on debatable issues wherein the penalty is not leviable if addition is made on those issues.
Per Contra, the ld. DR submitted that the assessee had withdrawn the quantum appeal before the ld. CIT(A) and therefore the penalty was levied in the case of the assessee.
We have heard the rival submissions and perused the material available on record. We find that the penalty notice under section 271(1)(c) dated 22.03.2013 for AY 2010-11 enclosed at page-57 of the paper book shows that the AO has not specified the limb under which the penalty is proposed to be levied whether for concealment of income or furnishing of inaccurate particulars of income.
The issue of whether non-specification of exact limb being fatal to the penalty proceedings is no longer res integra. On identical circumstances, the Hon'ble High Court of Delhi in the case of Sahara India Life Insurance Company Ltd ITA No. 475 of 2019 order dated 02.08.2019 has in the context of penalty provisions u/s 271(1)(c), held as under:
“21.The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of inc me or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar), the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016.”
It would not be out of place to refer to the decision of the Hon'ble High Court of Delhi in the case of Virgo Marketing Pvt Ltd [2008] 171 Taxmann 156 [Delhi] wherein the Hon'ble High Court held as under:
“We are unable to discern from a reading of the assessment order why the Assessing Officer chose to initiate penalty proceedings against the assessed and under which part of Section 271(1)(c) of the Act. In other words, we are unable to discern from the assessment order the reason for initiating penalty proceedings. Therefore, the concurrent view held by both the authorities below must be accepted.”
Further, the Hon'ble Supreme Court in the case of SSA’s Emerald Meadows Pvt Ltd [2016] 8 TMI 1145, while confirming the Karnataka High Court order in [2015] (11) TMI 1620, has held that notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act to be bad in law as it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. he Hon’ble Delhi High Court and Hon’ble Supreme Court in the case of SSA Emerald has held that failure to specify the limb of notice u/s 271(1)(c) vitiates notice under section 271(1)(c) of the Act. In view of the same, we are of the considered view that the penalty levied u/s 271(1)(c) cannot be sustained and the same is therefore deleted.
In the result, the appeal of the Revenue is dismissed.