A.Thirumagal, Tirunelveli V. DCIT Circle 1, Tirunelveli

CO 182/CHNY/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3537 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 19-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS S VIJAYAPRABHA IRS
• Assessee Lawyers: N DEVANATHAN
• Keywords: Opportunity of being heard; Principle of natural justice; Retrospective amendment; Question of law
• Section: 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , !' . #$#% , & '' ( [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO.1958/CHNY/2017 & C.O.NO. 182/CHNY/2017 ( IN ITA NO.1958/CHNY/2017 ) / ASSESSMENT YEAR : 2013-2014. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, TIRUNELVELI. VS. A. THIRUMAGAL, OLD NO.84, NEW NO.48B, MAIN ROAD, GANDHI NAGAR, TIRUNEKVEKU 627 008. [PAN ADEPT 0523C] ( )* / APPELLANT) ( +,)* /RESPONDENT/CROSS OBJECTOR) DEPARTMENT BY : MRS. S. VIJAYAPRABHA, IRS, JCIT. ASSESSEE BY : SHRI. N. DEVANATHAN, ADVOCATE /DATE OF HEARING : 08-03-2018 /DATE OF PRONOUNCEMENT : 15-03-2018 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THESE ARE APPEAL AND CROSS OBJECTION OF THE REVEN UE AND ASSESSEE RESPECTIVELY DIRECTED AGAINST AN ORDER DA TED 18.05.2017 OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3, MADURAI . ITA NO.1958/2017 & CO NO.182/2017. :- 2 -: 2. APPEAL OF THE REVENUE IS TAKEN UP FIRST FOR DISPOS AL. REVENUE IS AGGRIEVED ON DELETION OF A PENALTY OF C 12,04,000/- LEVIED ON THE ASSESSEE U/S.271(1) (C) OF THE INCOME TAX A CT, 1961 (IN SHORT THE ACT). LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAD DELETED THE PENALTY FOR A REASON THAT LD. ASSESSING OFFICER DID NOT MENTION WHETHER THE PENALTY WAS INITIATED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS. ASSESSEE HAD PLEADED BE FORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT LD. ASSES SING OFFICER WAS OBLIGED TO MENTION THE REASON FOR INITIATING PENA LTY. 3. NOW BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT PENALTY WAS LEVIED BOTH FOR CONCEALM ENT OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS. ACCO RDING TO HER, WHEN ASSESSEE WAS GUILTY OF BOTH IT WAS NOT NECESSARY FO R THE LD. ASSESSING OFFICER TO SPECIFY WHICH LIMB WAS APPLICABLE TO IT . THUS, ACCORDING TO HER, LD. COMMISSIONER OF INCOME TAX (APPEALS) FELL IN ERROR IN DELETING THE PENALTY. 4. PER CONTRA, LD. AUTHORISED REPRESENTATIVE DREW OUR ATTENTION TO THE NOTICE ISSUED BY THE LD. ASSESSING OFFICER U /S.271(1)(C) R.W.S.274 OF THE ACT WHICH DID NOT SPECIFY FOR WHAT REASON P ENALTY PROCEEDINGS ITA NO.1958/2017 & CO NO.182/2017. :- 3 -: WERE BEING INITIATED ON IT. THUS, ACCORDING TO HE R, PENALTY NOTICE WAS VAGUE AND LEVY OF PENALTY WAS RIGHTLY DELETED BY TH E LD. COMMISSIONER OF INCOME TAX (APPEALS). 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. NOTICE ISSUED UNDE R SECTION 274 R.W.S. 271 OF THE ACT INITIATES THE PROCEEDING FOR LEVY O F A PENALTY UNDER SECTION 271 (1) (C) OF THE ACT. NOTICE ISSUED TO TH E ASSESSEE UNDER THESE SECTIONS, FOR THE IMPUGNED ASSESSMENT YEAR IS REPRODUCED HEREUNDER:- NOTICE U/S 274 READ WITH SECTION 271(1) C OF THE IN COME-TAX ACT, 1961. PAN:ADEPT0523C OFFICE OF THE ACIT CIRCLE-I, TIRUNELVELI. DATE: 15.09.2015 TO DR. A. THIRUMAGAL 48B, MAIN ROAD, GANDHI NAGAR TIRUNELVELI -627008. WHEREAS IN THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2013-2014 IT APPE ARS TO ME THAT YOU:- HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FU RNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11.30 A.M ON 28110/2015 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON Y OU SHOULD NOT BE MADE U/S 271(C) OF THE INCOME-TAX ACT, 1961.IF YOU DO NOT WI SH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERS ON OR THROUGH AUTHORISED ITA NO.1958/2017 & CO NO.182/2017. :- 4 -: REPRESENTATIVE, YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS M ADE U/S 271 (1) (C). [NANDINI.R.NAIR] I.R.S ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1 TIRUNELVELI CONTENTION OF THE LD. DR IS THAT ASSESSEE WAS GUI LTY OF BOTH CONCEALMENT OF INCOME AS WELL AS FURNISHING OF INA CCURATE PARTICULARS OF INCOME. HOWEVER, A READING OF THE ABOVE NOTICE CLEARLY SHOW THAT THE WORD USED FOR LINKING THE TWO PORTIONS IS OR AND NOT AND. AN ASSESSEE IN OUR OPINION HAS EVERY RIGHT TO KNOW WHI CH ALLEGED DEFAULT HE HAS TO EXPLAIN. IF IT IS BOTH IT IS NECESSARY T O MENTION SO, IN THE NOTICE. WITHOUT KNOWING WHAT IS DEFAULT FOR WHICH HE IS BEING CHARGED, AN ASSESSEE CANNOT GIVE EXPLANATION. IN A SIMILAR SITUATION HONBLE KARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA), RELYING ON ITS OWN JUDGMENT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HELD AS UNDER AT PARA 2 TO 4 OF ITS JUDGMENT. 2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWI NG SUBSTANTIAL QUESTIONS OF LAW : (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? ITA NO.1958/2017 & CO NO.182/2017. :- 5 -: (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) IS BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 271(1B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX A CT, 1961 (FOR SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPE CIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDIN GS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CA SE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 IT R 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION , NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINA TION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. IN THE EARLIER CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) THEIR LORDSHIP HAD OBSERVED AS UNDER:- NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFIC ALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) , I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FO R FURNISHING OF INCORRECT PARTICULARS OF INCOME. SEN DING PRINTED FORM WHERE ALL THE GROUNDS MENTIONED IN ITA NO.1958/2017 & CO NO.182/2017. :- 6 -: SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW ; THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE ARE OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE ; ) TAKING UP OF PENALTY PROCEEDINGS ON ON E LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIM B IS BAD IN LAW ; PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS : THOUGH PROCEEDINGS FOR IMPOSITION OF PENALTY EMANATE FROM PROCEEDINGS OF ASSESSMENT, THEY ARE INDEPENDENT AND A SEPARATE ASPECT OF THE PROCEEDINGS ; THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS CONCEALMENT OF INCOME AND FURNISHIN G OF INCORRECT PARTICULARS WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE PROCEEDINGS ON THE MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIE D, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS . THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED INVALID IN THE PENALTY PROCEEDINGS. VIEW TAKEN BY THE HONBLE KARNATAKA HIGH COURT IN T HE ABOVE JUDGMENT STOOD INDIRECTLY AFFIRMED BY THE HONBLE APEX COURT, WHEN IT DISMISSED AN SLP FILED BY THE REVENUE AGAINST THE JUDGMENT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA), SPECIFICALLY OBSERVING THAT THERE WAS NO MERIT IN THE PETITION FILED BY THE REV ENUE. CONSIDERING THE ABOVE CITED JUDGMENTS, WE HOLD THAT NOTICE ISSU ED U/S.274 R.W.S. 271 OF THE ACT, REPRODUCED BY US AT PARA 5 WAS NOT VALID. THE LD. ITA NO.1958/2017 & CO NO.182/2017. :- 7 -: COMMISSIONER OF INCOME TAX (APPEALS) WAS IN OUR OPI NION JUSTIFIED IN SETTING ASIDE THE LEVY OF PENALTY. 6. SINCE WE HAVE UPHELD THE ORDER OF THE LD. COMMISSIO NER OF INCOME TAX (APPEALS) DELETING THE LEVY OF PENALTY, CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL A S CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 15 TH DAY OF MARCH, 2018, AT CHENNAI. SD/- SD/- ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( !' . #$#% ) (ABRAHAM P. GEORGE) & / ACCOUNTANT MEMBER / CHENNAI ! / DATED: 15 TH MARCH, 2017 KV !' # $% &% / COPY TO: 1 . '( / APPELLANT 3. ) () / CIT(A) 5. %+, # - / DR 2. #.'( / RESPONDENT 4. ) / CIT 6. ,/ 0 / GF