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ITAT quashed penalty as it was not based on specific charge
ITAT quashed penalty as it was not based on specific charge
AO came to know that assessee had deposited cash of Rs.25,15,000 in his bank account. Assessee filed a revised computation and offered income of Rs.27,57,812. AO made addition under "income from other sources", and levied penalty u/s 271(1)(c) (of Income Tax Act, 1961). CIT(A) confirmed the penalty. ITAT held that the initiation and levy of the penalty should be on a specific charge, and held the penalty to be bad in law.-501477
1. An AIR Information was received that assessee had deposited cash amount of Rs.25,15,000 into his bank account during the previous year and in the case of Ms. Rashmi M Panjwani it was Rs.25,39,500. Assessee submitted that, he, inadvertently could not offer the cash as well as cheque deposit in this particular bank account for taxation and accordingly, he filed a revised computation offering the income of Rs.27,57,812. Thus, the addition was made on the basis of offer made by the assessee and the same was taxed by the AO under the head "income from other sources". In the assessment order, the AO initiated the penalty proceedings under section 271(1)(c) (of Income Tax Act, 1961). Thereafter, a notice under section 274 (of Income Tax Act, 1961) r.w.s. 271 (of Income Tax Act, 1961) was issued. AO levied penalty at Rs.15 lakhs for concealing the particulars of income, which was far more than the minimum penalty which was sought to be evaded by the assessee.
2. CIT(A) confirmed the penalty for Rs. 8,79,597/- in the case of Dipesh M Panjwani and Rs. 8,93,937/- in the case of Ms. Rashmi M Panjwani.
3. On appeal, the ITAT held as under:
"In the aforesaid decision their Lordships have taken into consideration, similar ratio laid down by Hon'ble Delhi High Court and Hon'ble Gujarat High Court. Again in case of CIT vs. Steel Centre (supra), the Hon'ble Karnataka High court has reiterated the same proposition. Thus, from the aforesaid decisions, it is abundantly clear that the initiation and levy of the penalty should be on a specific charge otherwise the whole proceedings is bad in law and gets vitiated. This principle has been followed by the Tribunal in several cases as referred to above by the Counsel. Before us, no contrary decisions of any other High Court have been brought to our notice, accordingly, we are of the view that the entire proceedings of initiation and levy of penalty under section 271(1)(c) (of Income Tax Act, 1961) is bad in law and hence, the penalty levied by the AO and as confirmed by the CIT(A) is quashed. Accordingly, the additional ground raised by the assessee is allowed.”
Case Reference - ACIT-19(2) Vs Dipesh M Panjwani.
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "D", MUMBAI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND
SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER
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