INCOME TAX OFFICER, WARD-11(1), KOLKATA, AAYAKAR BHAWAN, CHOWRINGHEE SQUARE, KOLKATA V. POSITIVE DEVCON PVT. LTD., SONARPUR

ITA 1123/KOL/2023

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted a penalty imposed on Positive Devcon Pvt. Ltd. under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2011-12. The penalty was originally imposed due to alleged concealment of income amounting to Rs. 25,83,10,000. The CIT(A) had allowed the appeal of the assessee on technical grounds, noting non-compliance by the assessee and discrepancies in the address mentioned in the penalty order. The Tribunal found that the CIT(A) had not adequately considered the merits of the case and the findings of the Pr. CIT under section 263, which had directed the AO to reassess the income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469555 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Other Referred Cases: CIT vs. Gold Leaf Capital Corporation Ltd., M/s. Chemipol vs. Union of India, Tukoji Rao Holkar vs. CWT, CIT vs. B.N. Bhattachargee, Whirlpool of India Ltd. vs. DCIT, Chadha Finlease Ltd. vs. ACIT, CIT vs. Multiplan India Pvt. Ltd., Principal Commissioner of Income-tax vs. Thakur Prasad Sao & Sons (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside; Principle of natural justice; Search and seizure; Revision of order
• Section: 143(3); 250; 263; 271(1)(c); 153A; 274

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'डी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘D’ BENCH, KOLKATA श्री दुव्वुरु आरएल रेड्डी, उपाध्यक्ष (कोलकाता क्षेत्र) एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI DUVVURU RL REDDY, VICE PRESIDENT (KZ) & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 1123/KOL/2023 Assessment Year: 2011-12 Income Tax Officer, Ward-11(1), Kolkata Vs. Positive Devcon Pvt. Ltd. (Appellant) (Respondent) PAN: AAFCP7363K Appearances: Department represented by : Subhendu Datta, CIT-DR. Assessee represented by : None. Date of concluding the hearing : February 19th, 2025 Date of pronouncing the order : February 26th, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order dated 28.08.2023 of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as the ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2011-12, which has been passed against the penalty order u/s 271(1)(c) of the Act, dated 30.03.2017. Page | 2 I.T.A. No.: 1123/KOL/2023 Assessment Year: 2011-12 Positive Devcon Pvt. Ltd. 2. The Revenue is in appeal before the Tribunal raising the following grounds of appeal: “1. Whether on the facts and circumstances of the case in and in law, the Ld. CIT(A) was erred in allowing the appeal of the assessee ignoring the fact that the concealment of income, on which penalty was imposed, was deemed to have been admitted by the assessee by not contesting the original order where addition was made on account of concealment of income? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was erred in allowing the appeal of the assessee in the absence of any compliance from the assessee either during penalty proceedings or during appellate stage? 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was erred in allowing the appeal of the assessee based on merely on the issue of ignorable variance in the address of the assessee mentioned in the penalty order? 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was erred in not dismissing the appeal of the assessee who had shown no interest pursuing the appeal during the appellate stage which last for almost long two years? 5. The appellant craves leave to make any amend, addition, alternation, modification etc. of the grounds either before the appellate proceedings, or in the course of appellate proceedings.” 3. Brief facts of the case are that the assessee e-filed the return of income on 28.03.2012 declaring total income of Rs. 15,085/- and the assessment was made u/s 143(3) of the Act on 07.02.2014 determining the total income at Rs. 26,400/-. Subsequent to the order u/s 263 of the Act passed by Ld. Pr. CIT-4, Kolkata on 04.03.2014, the Ld. AO passed the consequential order assessing the total income at Rs. 25,83,36,400/- after making addition of Rs. 25,83,10,000/-. There was no compliance during the penalty proceedings. Further, as per the Ld. AO, the assessee had not preferred any appeal against the order u/s Page | 3 I.T.A. No.: 1123/KOL/2023 Assessment Year: 2011-12 Positive Devcon Pvt. Ltd. 143(3) r.w.s. 263 of the Act. Accordingly, the Ld. AO levied minimum penalty of Rs. 8,58,04,736/-. Aggrieved with the penalty order, the assessee filed appeal before the Ld. CIT(A), who vide the impugned order has discussed non-compliance on the part of the assessee as five notices of hearing were not complied with, and has also discussed the presumption as per section 114(g) of Indian Evidence Act, 1872, the decision of Hon’ble Delhi High Court in the case of CIT vs. Gold Leaf Capital Corporation Ltd. in ITA No. 798 of 2009 order dated 02.09.2011 in which it is held that a negligent assessee should not be given many opportunities just because quantum of amount involved is high and the necessary course of action is to draw adverse inference otherwise it would amount to giving premium to the assessee for his negligence, relied upon the decision of the Hon'ble Bombay High Court in the case of M/s. Chemipol vs. Union of India Central Excise Appeal No. 62 of 2009 in which it is stated that every court, judicial body or authority which has a duty to decide a lis between two parties, inherently possesses the power to dismiss the case in default and also several other judicial pronouncements reported in the cases of (i) Tukoji Rao Holkar vs. CWT (223 ITR 480), (ii) CIT vs. B.N. Bhattachargee (118 ITR 461), (iii) Whirlpool of India Ltd. vs. DCIT ITR No. 2006/Del/2011 dated 19/12/2001, (iv) Chadha Finlease Ltd. vs. ACIT (ITA No.3013/Del/2011 date of order 20/12/2011), (v) CIT vs. Multiplan India Pvt. Ltd. (38 ITD) 320 (Del) have been mentioned. However, on merits the Ld. CIT(A) has held in para 7 of the appeal order that though the appellant had not made any compliance but the Ld. AO has passed the penalty in a casual manner. Although the initial penalty notice was not complied with and second notice was also returned unserved which was again served by fixture but the Ld. CIT(A) has Page | 4 I.T.A. No.: 1123/KOL/2023 Assessment Year: 2011-12 Positive Devcon Pvt. Ltd. doubted whether the notices have been received by the appellant because in the penalty order dated 30.03.2017, the address is different from that give in Form No. 35 dated 30.06.2017. The Ld. CIT(A) has mentioned the supporting facts which are as under: • The Ld. AO has not made any effort to find out the address and serve the notice. • In the penalty order, there is no mention about the addition. The Ld. AO has not discussed anything about the addition and why the provisions of section 271(1)(c) are attracted. • Further, it is not clear whether the penalty is for furnishing of inaccurate particulars or concealment of income. • Thus, according to him, the Ld. AO has simply levied huge penalty on the ground that no further appeal has been filed. No effort has been made to make out a case for levying penalty u/s 271(1)(c) of the Act. The Ld. CIT(A) has allowed the appeal and deleted the penalty of Rs. 8,58,04,736/-. 4. Before us, none appeared on behalf of the assessee and therefore, the appeal was heard with the assistance of the Ld. DR. It was argued that the concealment of income on which penalty was imposed was deemed to have been admitted by the assessee by not contesting the original order where addition was made on the point of concealment of income. The Ld. AO has mentioned at page 2 of the order that the entirety of circumstances reasonably points to the conclusion that the disputed amount represents short shown income to the tune of Rs. 25,83,10,000/- and the assessee had consciously furnished inaccurate particulars of its income and the assessee had nothing to offer against Page | 5 I.T.A. No.: 1123/KOL/2023 Assessment Year: 2011-12 Positive Devcon Pvt. Ltd. the imposition of penalty u/s 271(1)(c) of the Act and therefore, it was a fit case for imposition of penalty. It was also argued that despite there being no compliance on the part of the assessee during the penalty proceedings or even during the appeal proceedings, relief has been granted by the Ld. CIT(A) and the appeal has been allowed and the variance in the address of the assessee mentioned in the penalty order which has weighed in for deletion of penalty was ignorable. The assessee had shown no interest in pursuing the appeal at the appellate stage which lasted for almost two long years. 5. We have considered the submissions made and have also gone through the statement of facts in which it is mentioned that the Ld. CIT(A) has deleted the penalty on the basis of the submission filed by the assessee without appreciating the finding of the ld. Pr. CIT. The reason for which the penalty has been deleted are mistakes which are curable u/s 292B of the Act. The Ld. Pr. CIT had passed the order u/s 263 of the Act after considering the assessee’s submission and also after relying on the details as available on records and the Ld. AO had given effect to the order u/s 263 of the Act on 25.09.2016 and assessed the income at Rs. 25,83,36,400/- after considering the submission of the assessee and the direction given by the ld. Pr. CIT. The assessee had accepted the additions and did not file any appeal against the said addition and therefore, the order of the Ld. CIT(A) is not acceptable. We have gone through the order of the Ld. CIT(A). Despite there being no compliance in pursuing the appeal, the appeal has been allowed and the penalty has been deleted on mere technical ground. In this regard it is relevant to refer to the decision of Hon'ble Calcutta High Court in the case of Principal Commissioner of Income-tax vs. Thakur Prasad Sao & Sons (P.) Ltd. [2024] 163 taxmann.com 449 (Calcutta) where Page | 6 I.T.A. No.: 1123/KOL/2023 Assessment Year: 2011-12 Positive Devcon Pvt. Ltd. the facts were that for Assessment year 2006-07 and 2007-08 after search and seizure operations, the assessee declared certain undisclosed income which was added to the income disclosed in the returns filed in response to the notice issued u/s 153A of the Act. The assessment orders were followed by notices u/s 271(1)(c) read with section 274 of the Act and after considering the assessee’s submissions, the Assessing Officer levied penalty u/s 271(1)(c) of the Act. On appeal, the Tribunal cancelled the penalty on the ground that show cause notice u/s 274 of the Act was defective as it did not spell out the grounds on which penalty was sought to be imposed. It has been held that when the Assessing Officer had recorded in assessment order particulars of concealed income/undisclosed income of the assessee and on that basis initiated penalty proceeding u/s 271(1)(c) of the Act then consequential notice u/s 274 of the Act issued by Assessing Officer to the assessee to afford him opportunity of hearing, was specifically a notice for penalty for concealment of particulars of income/undisclosed income. It is also held that such a notice complied with the principles of natural justice and was a valid notice u/s 274 of the Act and the Tribunal had committed a manifest error of law by setting aside the penalty order on the ground that ‘grounds for imposition of penalty were not mentioned in the show cause notice under section 274 of Act and thus, show cause notice was defective’. 6. The fact of concealment of income is evident from the assessment order against which no appeal has been filed by the assessee and the addition has been admitted by not contesting the original order as is mentioned in the penalty order and in the grounds of appeal. Hence, the findings of Ld. CIT(A) are contrary to the facts of the case. Therefore, in the interest of justice and fair play and as no opportunity was allowed Page | 7 I.T.A. No.: 1123/KOL/2023 Assessment Year: 2011-12 Positive Devcon Pvt. Ltd. to the Ld. AO to explain the discrepancies noted by the Ld. CIT(A), it is deemed appropriate to set aside the order of the Ld. CIT(A) and remit the appeal to him to be decided afresh after granting an opportunity of being heard to the Ld. AO as well as the assessee and thereby decide the appeal by passing a speaking order. 7. In the result, the appeal filed by the revenue is allowed for statistical purposes. Order pronounced in the open Court on 26th February, 2025. Sd/- Sd/- [Duvvuru RL Reddy] [Rakesh Mishra] Vice President (KZ) Accountant Member Dated: 26.02.2025 Bidhan (P.S.) Page | 8 I.T.A. No.: 1123/KOL/2023 Assessment Year: 2011-12 Positive Devcon Pvt. Ltd. Copy of the order forwarded to: 1. Income Tax Officer, Ward-11(1), Kolkata. 2. Positive Devcon Pvt. Ltd., House of Shri Mohan Lal Bajoria, P.O.- Govindpur, Sonarpur, Kolkata, West Bengal, 700145. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "