Rajesh Kumar Sharma [BXFPS1920J]

AY : 2016-17
Statement of facts & grounds of appeal:

The return of income of the assessee , a salary holder for AY : 2016-17 was
also filed on 04.08.2016 declaring a total income at Rs. 5,18, 790/- . Later on
after it was detected that the assessee has fraudulently claimed excess of
refund by claiming wrong deductions u/s 80D, 80G of the Income tax Act,
1961 (herein after referred to as the Act ) , a notice u/s 148 of the Act was
issued to the assessee and in response to the notice, the assessee filed his
return of income modifying his total income to Rs. 5,68,530/-on 06.01.2022 .
The total income of the assessee was assessed u/s 147 read with section 144B
of the IT Act at Rs. 6,88,600/- on 30.03.2022 involving addition by way of
salary amounting to Rs.38,527/- not offered for taxation in the returns of
income filed in response to notice u/s 148 of the Act and disallowance of claim
of deduction u/s 80C of the Act to the extent of Rs. 81, 547/-being unverifiable
in nature . A penalty u/s 271(1)© of the Act was separately initiated for
furnishing in accurate particulars of income in the original returns filed u/s
139(1) of the IT Act .
Later on , an order was passed on 26.09.2022 levying a penalty of Rs.
34,981/- u/s 271(1)© of the Act against the assesee on account of
understatement of income by claiming excess deduction under Chapter VI A to
the tune of Rs. 81,547/- and not showing income from other sources to the
tune of Rs. 57,993/- and levying penalty @100% of the tax sought to be
evaded at Rs. 34,981/-.
The assesee preferred appeal against both the orders passed by the Assessing
Officer. Later on, the CIT(A)(NFAC) confirmed the penalty u/s 271(1)(c) of the
Act levied at Rs. 34,981/-vide order dated 10/02/2023 communicated vide DIN
& order No. ITBA/NFAC/S/250/2022-23/1049620105(1) dated 10.02.2023 .
While conforming the order of levy of penalty , the learned CIT(A) (NFAC)
deemed it fit not to interfere with the order of Assessing Officer levying the
penalty u/s 271(1) (c) of the Income tax Act, 1961 for furnishing inaccurate
particulars of income and concealment of income by holding that there was a
clearcut case of concealment of income or filing of income..
The assesee has preferred appeal against the order of the CIT(A)(NFAC) dated
10/02/2023 communicated to the assesee vide vide DIN & order No.
ITBA/NFAC/S/250/2022-23/1049620105(1) dated 10.02.2023 raising the
following grounds of appeal :
1) Whether the ld. CIT(A)(NFAC) was justified on the facts and in circumstances of the
case and in law to confirm the penalty imposed by the Assessing Officer u/s 271(1)(c)
of the Income tax Act, 1961 for filing inaccurate particulars of income ?

2) Whether the ld. CIT(A)(NFAC) was justified on the facts and in circumstances of the
case and in law to confirm the levy of penalty at Rs.34,981/- u/s 271(1)(c) of the
Income tax Act, 1961 made by the Assessing Officer while passing the order on
26.09.2022?

3) Whether the ld. CIT(A)(NFAC) was justified on the facts and in circumstances of the
case and in law to hold that there was concealment of income resulting in levy of
penalty when the Assessing Officer in the order of assessment dated 30.03.2022
made u/s 147 read with section 144B of the Act clearly mentioned that penalty
proceedings u/s 271(1)(c) of the I.T. Act was initiated for filing inaccurate
particulars of income to the extent of Rs.1,55,811 in the form of addition of short
salary offered for taxation amounting to Rs.38,527/-, fraudulent claim of deduction
claimed u/s 80D of the Act at Rs.11,737/ & u/s 80GG of the Act at Rs. 24,000/- and
unverifiable claim of deduction u/s 80Cof the Act for Rs 81,547/- in the returns filed
u/s 139(1) of the Act ?

4) Whether the ld. CIT(A)(NFAC) was justified on the facts and in circumstances of the
case and in law to hold that there was concealment of income resulting in levy of
penalty when the notice issued u/s 274 read with section 271(1)(c) of the Act dated
30.03.2022 mentioned that the assessee had furnished in accurate particulars of
income and the order of levying penalty u/s 271(1)(c) of the Act was passed for
understatement of income and concealment of income by way of not showing income
from other sources amounting to Rs. 57, 993/- which is in contrast to the satisfaction
note in the original assessment order dated 30.03.20022 where there was no mention
of concealment of income by way of not showing income from other sources ?

5) Whether the ld. CIT(A)(NFAC) was justified on the facts and in circumstances of the
case and in law to confirm the levy of penalty at Rs.34,981/- u/s 271(1)(c) of the
Income tax Act, 1961 made by the Assessing Officer on understatement of income &
 concealment of income to the tune of Rs.1,69, 810/- when the satisfaction note
initiating the penalty spoke of furnishing inaccurate particulars of income to the tune
of Rs. 1,55,811/- exclusive of income the additional income shown by the as income
from other sources to the tune of Rs. 52,528/- on his own volition in the returns of
income filed in response to notice u/s 148 of the Act without being detected by the
Department?

6) The appellant craves leave to add to alter, amend , modify and /or delete any or all of
the above said grounds of appeal . The appellant reserves its right to file further
submissions in the appeal.

In furtherance of the grounds of appeal raised, the assesee craves to pray & contend:

i) That the ld. CIT(A)(NFAC) was not justified in holding correct the erroneous
decision of the Assessing Officer to levy the penalty u/s 271(1)(c) of the Income
tax Act, 1961 by holding that there was understatement of income and
concealment of income by way of not showing income from other sources when
the Assessing Officer in the order of assessment dated 30.03.2022 made u/s 147
read with section 144B of the Act clearly mentioned in the form of satisfaction
note that penalty proceedings u/s 271(1)(c) of the I.T. Act was being initiated for
filing inaccurate particulars of income in respect of understatement of salary
amounting to Rs.38,527/-, fraudulent claim of deduction claimed u/s 80D at
Rs.11,737/ and u/s 80GG at Rs. 24,000/- and unverifiable claim of deduction u/s
80C for Rs 81,547/- in the returns of income filed u/s 139(1) of the Act although
the fraudulent claim of deduction u/s 80D and 80G was withdrawn , but the gross
salary declared in the original return was reduced by a sum of Rs.38,527/-and
further income from other sources to the tune of Rs.52,528/- was shown in the
returns of income was filed in response to notice u/s 148 of the IT Act declaring a
total income of Rs. 5,68,530/- .

ii) That the ld. CIT(A)(NFAC) was not justified on the facts and in circumstances of
the case as well as in law, in holding correct the erroneous decision of the
Assessing Officer to levy penalty of Rs.34,981/- u/s 271(1)(c) of the Act made by
the Assessing Officer while passing the order of penalty on 26.09.2022 for
 concealment of income when the Assessing Officer , while completing the
assessment u/s 147 read with section 144B of the Act and initiating penalty
proceedings u/s 271(1)(c) of the Act , had held that there was filing of inaccurate
particulars of income resulting in understatement of income to the tune of
Rs.1,55,811/-- which called for levy of penalty u/s 271(1)(c) of the Act @100%
or 300% of the tax sought to be evaded on Rs. 1,55,811/- .

iii) That the ld. CIT(A)(NFAC) was not justified on the facts and in circumstances of
the case as well as in law, in holding correct the erroneous decision of the
Assessing Officer to levy penalty of Rs.34,981/- u/s 271(1)(c) of the Act made by
the Assessing Officer while passing the order of penalty on 26.09.2022 for
concealment of income to the tune of Rs. 1,69,810/- .
iv) That ld. CIT(A)(NFAC) was not justified on the facts and in circumstances of the
case as well as in law, in not interfering with the order of Assessing Officer
levying the penalty u/s 271(1)(c) of the Income tax Act, 1961 by holding that
there was concealment of income by way of understatement of income and
concealment of income in terms of not showing income from other sources in the
returns filed u/s 139(1) of the Income tax Act,1961 for AY: 2016-17 when it was
only understatement of income which the Assessing Officer assessed while
passing the assessment order u/s 147 read with section 144B of the Act which was
followed by issuance of notices u/s 274 read with section 271(1)(c) of the Act to
the assessee on 30.03.2022 ( photocopy of the notice annexed as Annexure-1 for
reference) which mentioned that it appeared that the assessee had furnished in
accurate particulars of income.
v) That ld. CIT(A)(NFAC) , on the facts and in circumstances of the case as well as
in law failed to appreciate that penalty levied by the learned Assessing Officer for
concealment of income to the tune to the tune of Rs.1,69,810/- was beyond the
scope of the satisfaction note of the Assessing Officer mentioned in the
assessment order while initiating the proceedings for levy of penalty u/s 271(1)(c)
of the Act to the effect that there was inaccurate furnishing of income to the tune
of Rs.1,55, 811/- only .
vi) That ld. CIT(A)(NFAC), on the facts and in circumstances of the case as well as
in law failed to appreciate that the learned Assessing Officer while passing the
assessment order made u/s 147 read with section 144B of the Act had judiciously
 not included the additional sum of Rs.52,528/- under income from other sources
apart from the sum of Rs.5,465/- already declared in the returns of income u/s
139(1) of the Act which the assessee had suo moto declared in the returns of
income filed u/s 148 of the Act without being pointed out by the Department.
However, while passing the order levying the penalty, he changed track
erroneously and treated the whole declared sum of income from other sources to
the tune of Rs. 57, 993/- as concealed income and levied penalty u/s 271(1)(c) of
the Act for concealment of income which included the sum of Rs. 57, 993/- as
well. Even, his action of issuance of notices u/s 274 read with section 271(1)(c)
of the Act to the assessee on 05.08.2022 & 13.09.2022 ( photocopies of notices
annexed as Annexure-2 & Annexure -3 for reference), both mentioning that it
appeared that the assessee had concealed the particulars of income & furnished
inaccurate particulars of such income.

vii) That ld. CIT(A)(NFAC) was not justified on the facts and in circumstances of the
case and in law in brushing aside the reliance on the decision of Karnataka High
Court in the case of CIT Vs Manjunatha Cotton & Ginning Factory reported in
359 ITR 565(Kar) which followed the decision of Karnataka High Court in the
case of CIT Vs SSA’s Emerald Meadows (2016) 73 taxmann.com 241(Kar) , the
SLP against which had been dismissed by the Hon’ble Supreme Court when the
order of penalty was passed citing a one of the limbs of section 271(1)(c) of the
Act-concealment of income by understatement of income and not showing income
from other sources contrary to the satisfaction initiating the penalty under section
271(1)(c) of the Act which talked of furnishing of inaccurate particulars of income
by short salary offered for taxation amounting to Rs.38,527/-, fraudulent claim of
deduction claimed u/s 80D at Rs.11,737/and u/s 80GG at Rs.24,000/- , and
unverifiable claim of deduction u/s 80C for Rs 81,547/- and the issuance of notice
u/s 274 read with section 271(1)(c) of the Act was made for furnishing of
inaccurate of particulars of income .
viii) That the order passed by the Ld. CIT(A)(NFAC), under the facts and
circumstances of the case confirming the levy of penalty , is bad in the eyes of
law and the assessee fervently prays for its reversal.
ix) The assessee begs to submit that the case of the assessee may kindly be decided
on the basis of the arguments which had been put forward in preceding paras.
Adv. Sharwan Kumar Jha

A/R of Rajesh Kumar Sharma, the assessee