The Income Tax Appellate Tribunal (ITAT) Pune bench held that notice for penalty under Section 274 of the Income Tax Act, 1961 proceedings is initiated against inaccurate particulars of income not for the concealment of the income .Therefore the bench deleted the penalty imposed under section 271(1)(c) Income Tax Act, 1961.
Shivaji Dattatray Sonawane, the taxpayer filed the appeal before the tribunal by challenging the penalty proceedings initiated under Section 271(1)(c) Income Tax Act, 1961 when the department initiated proceedings on the charge of concealment of income, but impose penalty on the charge of furnishing of inaccurate particulars of income.
During the proceedings the tribunal observed that penalty notice under Section 274 r.w.s. 271(1)(c), for assessment year 2016-17 notice has been issued for concealment of income. Whereas, penalty under 271(1)(c) order, the penalty has been levied for furnishing inaccurate particulars of income .
Section 271(1)(c) lays down that the penalty proceedings can be initiated on the basis of either of the two charges i.e. concealment of particulars of income or furnishing of inaccurate particulars of income. Both these charges are entirely different.
Thus if the proceedings are initiated on the charge of concealment of income, then penalty cannot be levied on the charge of furnishing of inaccurate particulars of income.
The present case, the initiation of penalty through notice under Section 274 of the Income Tax Act has been initiated for concealment of income whereas the actual penalty under section 271(1)(c) has been levied for furnishing of inaccurate particulars of income.
Further the tribunal opinion that the AO has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of income. This satisfaction of the AO about the concealment of particulars of income or furnishing inaccurate particulars of such income is essential before levying any penalty under Section 271(1)(c) of the Income Tax Act.
After analyzing the assessment order and fact of the case the two member bench of Inturi Rama Rao (Accountant Member) and Partha Sarathi Chaudhury, (Judicial Member) held observed that notice under Section 274 r.w.s. 271(1)(c) of the Income Tax Act has been issued for concealment of particulars of income, whereas the actual penalty had been levied for furnishing of inaccurate particulars of income.
Therefore the bench allowed the appeal of the assessee. Naimish Sanjay Dixit, counsel appeared for the assessee and M.G. Jasnani, appeared for the revenue.
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