Section 271(1)(c) – AO initiated penalty proceedings on being satisfied that inaccurate particulars of income were furnished but levied penalty on the grounds of furnishing ‘inaccurate particulars’ as well as ‘concealment’ – Order passed by AO held void

7.  Fairdeal Tradelink Company vs. ITO Members:
Vikas Awasthy (J.M.) and G. Manjunatha (A.M.) ITA No.:
3445/Mum/2016 A.Y.:
2011-12 Date of
order: 5^th November, 2019 Counsel
for Assessee / Revenue:  R.C. Jain and
Ajay D. Baga / Samatha Mullamudi

Section
271(1)(c) – AO initiated penalty proceedings on being satisfied that inaccurate
particulars of income were furnished but levied penalty on the grounds of
furnishing ‘inaccurate particulars’ as well as ‘concealment’ – Order passed by
AO held void

FACTS

In the assessment proceedings, STT on
speculative transactions was disallowed by the AO. Penalty proceedings u/s
271(1)(c) were initiated for filing inaccurate particulars of income.

However, while levying the penalty, the AO
mentioned both the charges of section 271(1)(c), i.e., furnishing of
‘inaccurate particulars of income’ as well as ‘concealment’. The assessee
challenged the penalty on the ground that a penalty can only be levied on the
grounds for which the proceedings were initiated.

HELD

On a perusal of
the records of the proceedings, the Tribunal noted that the AO, at the time of
recording satisfaction, had mentioned only about furnishing ‘inaccurate
particulars’ as the reason for initiation of penalty proceedings. However, at
the time of levy of penalty, he mentioned both the charges of section 271(1)(c)
of the Act, i.e., furnishing ‘inaccurate particulars’ and ‘concealment’.

According to the Tribunal, this reflected
the ambiguity in the mind of the AO with regard to levying penalty. Relying on
the decision of the Bombay High Court in the case of CIT vs. Samson
Perinchery (392 ITR 04), the Tribunal held that the order passed u/s
271(1)(c) suffered legal infirmity and hence was void.