TaxTMI 
TaxTMI 
2019 (3) TMI 80
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....the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate the fact that the order of penalty passed by the Ld. AO under section 271 (l)(c) of the Act is bad in law as from the notice issued u/s 274 read with Section 271 of the Act, it is not discernible as to whether the penalty proceedings were initiated for furnishing of inaccurate particulars of income or concealment of income under the facts and circumstances of the Appellant's case, both of which are mutually exclusive and apply to different set of facts, is bad in law and is liable to be quashed; Without prejudice to the above: 3. Ground No. 3 That on the facts and circumstances of the case, the Ld. CIT(A) / Ld. AO has failed to appreciate that the Appellant has disclosed fully and truly all the details in the return of income, during the course of appellate and assessment proceedings and in the absence of failure to furnish accurate particulars, which is sine qua non for initiating penalty, the Ld. CIT(A) / Ld. AO erred in initiating penalty proceedings and levy thereof. 4. Ground No. 4 That on the facts and circumstances of the case and in law, the Ld. CIT(A)/ Ld. AO erred in misinterpreting t....
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....f liability in case of static creditors 7,61,884/- No 4 Disallowance U/s 40A(i)(a) 13,97,08,721/- No 5 Incorrect claim U/s 40A(i)(a) 2,43,72,131/- No 6 Excess shortage/breakage 20,89,501/- No A notice dated 30.12.2008 U/s 271(1)(c) was issued by the Assessing Officer('AO' for short) accordingly, thereby initiating penalty proceedings U/s 271(1)(c) of IT Act. 2.1. Vide order dated 23.03.2016, the Assessing Officer ('AO' for short) passed penalty order U/s 271(1)(c) of Income Tax Act ('IT Act' for short) levying penalty amounting of Rs. 5,74,603/- U/s 271(1)(c) of IT Act. The penalty has been levied in respect of disallowances of Rs. 13,97,08,721/- and Rs. 15,07,658/- U/s 40A(i)(a) of IT Act, totaling Rs. 14,12,16,379/-. 3. Aggrieved, the Assessee filed appeal against the aforesaid order dated 23.03.2016, before the Ld. CIT(A). Vide order dated 24.09.2018, the Ld. CIT(A) is dismissed the Assessee's appeal. The relevant part of the order of the Ld. CIT(A) is reproduced as under: "4.2.3.1. The appellant filed return for AY 2006-07 at loss of Rs. 25,80,27,830/- and loss was reduced to Rs. 7,02,54,091/- in the order u/s 143(3). Wit....
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....8,721/- before CIT(A).In the audit report u/s 44AB, the auditor had quantified the report stating that the appellant company has not furnished the required information in respect of deduction of TDS. As per the said report the Auditors have duly certified that an amount of Rs. 13,97,08,721/- was required to be disallowed on account of non deduction of TDS. In spite of the above findings of the auditor, the appellant did not add back this amount in its computation of income. Further appellant company has not disputed this issue before the CIT(A). Thus the appellant company has knowingly not disallowed the expenditure of Rs. 13,97,08,721/- which tantamount to the filling of inaccurate particulars of income. 4.3.2.3. The above claims would have gone unnoticed but for scrutiny and this is a primary issue with no disputes and reflects ip the appellant's admission to the same the case is squarely covered for levy of penalty as per the decision of the Hon'ble Delhi High Court in the case of CIT vs Zoom Communication Pvt. Ltd. (327 TTR 510 Del), wherein the Hon'ble jurisdictional High Court has very clearly brought out that the same is liable for penalty. The AO has specifically....
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....s U/s 271(1)(c) have been initiated separately", and submitted that this sentence in the assessment order should be construed as sufficient for initiation of penalty proceedings U/s 271(1)(c) of IT Act in respect of all the additions made in the assessment order dated 30.12.2008. 5. We have heard both sides. We have perused materials on record. Also, we have considered judicial precedents brought to our notice at the time of hearing, and which have been referred in the orders of the lower Authorities [namely the AO and the Ld. CIT(A)]. On perusal of the assessment order dated 30.12.2008 we find that the AO specifically recorded initiation of penalty proceedings U/s 271(1)(c) of IT Act in respect of certain additions. These are addition of Rs. 1,38,64,065/- towards capitalization of service charges (in paragraph 3 of the assessment order); and addition of Rs. 69,77,437/- on account of capitalization of advertisement expenses (in paragraph 4 of the assessment order). However, on perusal of the assessment order dated 30.12.2008, there is no initiation of penalty proceedings in respect of additions on account of cessation of liability in case of static creditors amounting to Rs. 7,6....
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....in respect of certain additions during the assessment proceedings; and not recorded in respect of certain other additions; it acts as a bar against levy of penalty U/s 271(1)(c) of IT Act in respect of those additions in respect of which such satisfaction was not recorded in the assessment order or during the assessment proceedings. 5.1. Useful reference may be made to judicial precedents in the cases of CIT vs. Rajan and Co. (No. 1) [2007] 291 ITR 340 (Delhi), CIT vs. Vikas Promoters P. Ltd. [2005] 277 ITR 337 (Delhi), CIT vs. Auto Lamps Ltd. [2005] 278 ITR 32 (Delhi), CIT vs. Ram Commercial Enterprises Ltd. 246 ITR 568 (Delhi), CIT vs. Super Metal Re-rollers 265 ITR 82 (Delhi), Everplus Securities and Finance Ltd. vs. DCIT [2006] 285 ITR (AT) 112 (Delhi) in support of the view taken by us in the foregoing paragraph no. 5 of this order. In the case of CIT vs. Rajan and Co. (No. 1)(supra), the Hon'ble Delhi High Court, upheld the deletion of penalty by ITAT when the AO had recorded satisfaction with regard to one sum while with regard to the other he made no such indication. In the case of CIT vs. Vikas Promoters P. Ltd. (supra), the AO had mentioned simply that penalty proceedi....
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....rt, dismissing Revenue's appeal, held in this case that it was not sufficient that the satisfaction of the AO as contemplated in section 271(1)(c) of the Act was inherent in the queries raised by him during the course of the assessment proceedings and that the AO had directed the issue of notice for levy of penalty under the section after being satisfied that the assessee had concealed the particulars of its income. Similar view was taken in Everplus Securities and Finance Ltd. vs. DCIT (supra). 5.2. In view of the foregoing paragraphs 5 and 5.1 of this order, we are of the view that there was no valid initiation of penalty proceedings U/s 271(1)(c) of IT Act in respect of the additions on which penalty U/s 271(1)(c) of IT Act was levied by the AO in aforesaid order dated 23.03.2016 U/s 271(1)(c) of IT Act. Therefore, the penalty levied by AO under Section 271(1)(c) of IT Act, and upheld by the Ld. CIT(A) in his impugned appellate order dated 24.09.2018; is hereby cancelled. As regards the submission of the Ld. Counsel for Assessee that the AO did not make specific charge against the Assessee in the notice U/s 271(1)(c) of IT Act whether the penalty proceeding were for concealme....