Shri Tejinder Pal Singh Lall, Vasco V. Assistant Commissioner of Income Tax, Circle - 2, Margao

ITA 104/PAN/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4242 (ITAT-PANAJI)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Assessment Year: 2010-2011
• Appeal Filed On: 12-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Initiation of penalty proceedings; Reasonable cause; Assessment record; Audi alteram partem
• Section: 147; 148; 271(1)(c); 139; 143(3); 133A; 250; 274; 143(2); 271B

Judgement Text

ITAT-Panaji Page 1 of 10 आयकर अपीलीय न्यायाधिकरण, पणजी न्यायपीठ, पणजी में। IN THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI (Through Virtual Court at Raipur) BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI JAMLAPPA D BATTULL, ACCOUNTANT MEMBER आयकर अपील स ं . / ITA No.: 104/PAN/2018 करधििाारण वर्ा / Assessment Year : 2010-2011 Tejinder Pal Singh Lall 201, 2 nd Fl. Anand Trade Centre, Nr MMC, Vasco-da-Gama, Goa. PAN : ABEPL 1171 C . . . . . . . अपीलार्थी / Appellant बिाम / V/s Asstt. Commissioner of Income Tax, Circle-2, Margoa, Goa. . . . . . . . . प्रत्यर्थी / Respondent द्वारा / Appearances Assessee by : Shri P. K. Bansal Revenue by : Shri Sourabh Nayak स ु नवाई की तारीख / Date of conclusive Hearing : 22/02/2022 घोषणा की तारीख / Date of Pronouncement : 20/04/2022 आदेश / ORDER PER JAMLAPPA D BATTULL, AM; The present appeal of the assessee is assailed against the order of Commissioner of Income Tax-(Appeals), Panaji-1 [for short “CIT(A)”] vide order dt 05/12/2017 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”] which in turn leapt out of penalty order [for short “PO”] dt 10/09/2014 of Asstt. Commissioner of Income Tax, Circle-2, Margoa, [for short “AO”] u/s 271(1)(c) of the Act for the assessment year [for short “AY”] 2010-11. Shri Tejinder Pal Singh Lall ITA No. : 104/PAN/2018 AY : 2010-2011 ITAT-Panaji Page 2 of 10 2. In advancing the matter for adjudication, it is essential to reproduce grounds challenged by the appellant as under; “1. The learned CIT(A) erred in upholding penalty of Rs. 11,02,138/- considering there is a concealment of income without appreciating the facts of the case. 2. The notice u/s 274 do not specifically state whether penalty is being proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. 3. The appellant craves, leaves to / alter any other grounds at the time of hearing.” (Emphasis Supplied) 3. Succinctly stated facts of the case are; 3.1 The appellant assessee is an individual and proprietor of “Cable India Corporation” engaged in the business cable network operator and providing banking courier services and distribution of satellite channels. There was absence of return u/s 139 of the Act, and consequent to survey u/s 133A of the Act on the assessee, a return of income [for short “ROI/ITR”] for AY 2010-2011 was filed on 17/05/2012 declaring total income of ₹38,886,793/-. The case was subsequently re-opened by issue of notice dt 02/08/2012 u/s 148 of the Act, in reply thereto assessee requested to treat the earlier return filed on 17/05/2012 as a return in response to notice u/s 148 of the Act. On a change on incumbent a notice u/s 129 was served and a statutory notice u/s 143(2) was served subjecting the scrutiny of return and finally the return filed in response to notice u/s 148 was inertia accepted by an order u/s 143(3) of the Act Shri Tejinder Pal Singh Lall ITA No. : 104/PAN/2018 AY : 2010-2011 ITAT-Panaji Page 3 of 10 and thereby initiated the penalty proceedings u/s 271(1)(c), 271F and 271B of the Act. 3.2 Ld. AO by issue of show cause notice [for short “SCN”] dt 15/03/2014 u/s 274 r.w.s. 271(1)(c) of the Act, assuming the jurisdiction called upon the assessee to showcase as to why a penalty u/s 271(1)(c) for concealment of income should not be levied. In the event of failure to make any representation, further notice dt 06/08/2014 was also served upon the assessee providing further opportunity, and in reply thereto the assessee made futile written submission contending that, there has been no concealment of income in his case. Ld. AO, however finding no reasonable cause to displace with levy, relying on plethora of judicial precedents, by an order u/s 271(1)(c) levied a minimum penalty at the rate of 100% of the tax sought to be evaded for concealment of income on the basis of income assessed u/s 147 of the Act. 3.3 Ld. CIT(A) echoing the views of assessing officer, confirmed the penalty imposed by Ld. AO. Aggrieved therewith, the appellant assessee is before us with the grounds of appeal assailed at para 2 herein above. 4. During the course of hearing, the learned counsel for the assessee [for short “AR”] took us through the relevant facts of the case vis-à-vis paper book and case law compilation filed on record and in support of legal ground, it is submitted that, the initiation as well imposition of penalty suffers from voice of non-application of mind of the Ld. AO and therefore penalty deserves to be deleted. Insofar the merits of the case Shri Tejinder Pal Singh Lall ITA No. : 104/PAN/2018 AY : 2010-2011 ITAT-Panaji Page 4 of 10 concern, Ld. AR contended that, penalty u/s 271(1)(c) is initiated not on the foundation of assessment culminated u/s 147 of the Act, but on the basis of survey assessment records and such action of the tax authorities is bad in law, ab-initio void. Au contraire, the learned departmental representative [for short “DR”] supported the orders of the lower tax authority reiterating the facts and conduct of the assessee. 5. After hearing to the rival contentions of both the parties; perused material placed on records and duly considered the facts of the case in the light of settled legal position and the case laws relied upon by the appellant assessee as well the respondent revenue. 6. It is apt to quote relevant text of the provision to arrive at the applicability in the instant case before us; 271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) If the [Assessing] Officer or the [Commissioner (Appeals)] [or the Commissioner] in the course of any proceedings under this Act, is satisfied that any person — (a ) . . . . . (b ) . . . . . (c ) has concealed the particulars of his income or [* * *] furnished inaccurate particulars of [such income, or] ( d) . . . . . he may direct that such person shall pay by way of penalty,— (i ) . . . . . Shri Tejinder Pal Singh Lall ITA No. : 104/PAN/2018 AY : 2010-2011 ITAT-Panaji Page 5 of 10 (ii) . . . . . (iii) in the cases referred to in clause (c) [or clause (d)], [in addition to tax, if any, payable] by him, a sum which shall not be less than, but which shall not exceed [three times], the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. (Emphasis Supplied) 6.1 One can observe that the provisions of section 271(1)(c) of the Act lex lata, postulates that, penalty prescribed therein can only be levied on the occurrence of either of the situation, namely either for concealment of particulars of income or for furnishing of inaccurate particulars of such income. It has been judicially well settled by now that, the “concealment of particulars of income” and “furnishing of inaccurate particulars of income” referred into section 271(1)(c) of the Act signifies two distinct connotations, and the said proposition can be witnessed from the judgments of the Hon'ble Supreme Court in the case of “Dilip N Shroff Vs JCIT” reported at 291 ITR 519 (SC), and “Ashok Paid Vs CIT” reported at 292 ITR 11. In the light of aforesaid judicial precedents, it is imperative on the part of Ld. AO to make the assessee aware in the notice issued u/s 274 r.w.s. 271(1)(c) of the Act as to which one of the two limbs is alleged against him for the purposes of imposition of penalty and unless it is made aware of any specific charge against him, the proceedings shall be violative of the principles of natural justice inasmuch as the assessee would not be in a position to put up his necessary defence appropriately. Shri Tejinder Pal Singh Lall ITA No. : 104/PAN/2018 AY : 2010-2011 ITAT-Panaji Page 6 of 10 6.2 One has to appreciate the point being canvassed by the assessee before us, which is based on the tone and drift of the notice issued u/s 274 r.w.s. 271(1)(c) of the Act dt. 15/03/2014, a copy of which has been placed on record which de-facto reads as under; Whereas in the course of proceedings before me for the assessment year 2010-11 it appears to me that you;- • Have without reasonable cause failed . . . . . . . • Have without reasonable cause . . . . . . . • Have concealed the particulars of your Income or furnished inaccurate particulars of such Income. • Have concealed the . . . . . . . (Emphasis Supplied) 6.3 The infirmity in the notice was sought to demonstrate a reflection of non-application of mind by the Ld. AO ex facie and in support thereof a reference can be made to the specific discussion laid by the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra); “It is of some significance that in the standard proforma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done. Thus, the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income, or he had furnished inaccurate particulars. Even before us, the learned Additional Solicitor General while placing the order of assessment laid emphasis that he had dealt with both the situations.” (Emphasis Supplied) 6.4 Factually speaking, the aforesaid plea of assessee is borne out of record and having regard to the parity of reasoning laid down by the Shri Tejinder Pal Singh Lall ITA No. : 104/PAN/2018 AY : 2010-2011 ITAT-Panaji Page 7 of 10 Hon'ble Supreme Court in the case of Dilip N. Shroff (supra), the notice in the instant case apparently endures from non-application of mind by Ld. AO and a similar proposition was also articulated by the Hon'ble Karnataka High Court in “CIT Vs M/s SSA’s Emerald Meadows” (ITA 380/2015), which the Ld. AR heavily relied upon in support of legal ground raised as “fumus boni iuris.” 6.5 The Ld. DR did not dispute the factual matrix, but sought to point out that, there was a due application of mind by Ld. AO in the assessment order passed u/s 147 of the Act, wherein after discussing the conduct of the assessee, has initiated the penalty proceedings u/s 271(1)(c) which can be evinced from para 6 of the assessment order; “6. Assessed u/s 143(3) r.w.s. of the IT Act, 1961. Prepaid taxes credits have been given as per OLTAS. Interest u/s 234A, 234B, 234C & 234D of the IT Act are charged, as applicable. Computation of tax and charging of interest is attached herewith as ITNS 150, which forms the part of this order. Demand notice and challan issued. Initiate penalty u/s 271(1)(c) of the IT Act, 271F of the IT Act & 271B of the IT Act.” (Emphasis Supplied) 6.6 In our considered opinion, the attempt of the Ld. DR to demonstrate application of mind by the Assessing Officer is of no defence, inasmuch as the Hon'ble Supreme Court has approved the factum of non- specifying relevant clause in the notice is reflective of non- application of mind by the Assessing Officer. Further, it is also noticeable that such proposition has been considered by the Hon'ble Bombay High Court in plethora of cases inter-alia “CIT Vs Samson Shri Tejinder Pal Singh Lall ITA No. : 104/PAN/2018 AY : 2010-2011 ITAT-Panaji Page 8 of 10 Pericherry”, “PCIT Vs Goa Dorado” and “PCIT Vs New Era Sova Mine” wherein the Hon’ble Lordships have categorically held that; “No notice could be issued under Section 274, read with Section 271(1)(c), of the IT Act without indicating which particular limb of Section 271(1)(c) was invoked for initiating the penalty proceedings” (Emphasis Supplied) 6.7 To demonstrate the voice of non-application of mind by the Ld. AO, we shall also refer to the one of the pivotal feature of the present litigation that, in the assessment order the Ld. AO at the epilogue of para 6 on page 3 records that, “Initiate penalty u/s 271(1)(c) of the Act, 271F of the Act, & 271B of the Act”, however, in the notice u/s 274 r.w.s. 271(1)(c) of the Act was issued without alleging the specific limb of section 271(1)(c) of the Act which evidently brings out the reticence on the part of Assessing Officer, resultantly there is complete absentia of clear and crystallised charge being conveyed u/s 271(1)(c), which to be defended by the appellant assessee. In this regard we also refer a similar judgment of the Hon'ble Karnataka High Court in the case of “S Chandrashekar Vs ACIT,” reported at 396 ITR 538 (Karn) wherein a notice u/s 274 r.w.s. 271(1)(c) of the Act was issued in printed form without specifying the grounds of initiation of penalty proceedings, was held to be invalid and untenable in law. 7. In summation, as noted by the Hon'ble Supreme Court in the case of Dilip N. Shroff (supra), the quasi-criminal proceedings u/s 271(1)(c) of the Act ought to comply with the principles of natural justice, and in the present case, considering the observations in the assessment order Shri Tejinder Pal Singh Lall ITA No. : 104/PAN/2018 AY : 2010-2011 ITAT-Panaji Page 9 of 10 alongside in the action of issuing the notice without any limb or charge being made against the assessee qua section 271(1)(c) of the Act, establishes unfirm stance and therefore the proceedings suffered from non-compliance with the principles of “audi alteram partem”. 8. Albeit, in view of the aforesaid discussion, the legal issue securely stands concluded in favour of assessee, but we are mindful to adjudicate the merits of the present case too and in doing so, nota bene, the penalty proceedings u/s 271(1)(c) was initiated on the basis of an order of assessment dt. 15/03/2014 u/s 143(3) r.w.s. 147 of the Act, wherein the returned income has been accepted without any addition. In the event we are unable to persuade, as to how in the absence of any addition to the returned income, the conclusion of either concealment of income or furnishing of inaccurate particulars of such income could prudently be drawn. Since the return of income in response to notice u/s 148 was accepted indifferently, there remain no scope for alleging against the assessee, as both concealment of income or furnishing of inaccurate particulars of such fails, consequently the jurisdiction. Therefore, in view of the aforesaid discussion, the issue herein on both legal as well on merits stands concluded in favour of the assessee and nothing contrary has been shown to us in the present facts which would warrant our taking a view different from Hon'ble Karnataka High Court in the case of “S Chandrashekar Vs ACIT” (Supra). 9. Since the provision of section 271(1)(c) is calamitous, albeit commercial, consequences, the provision is mandatory and brooks no Shri Tejinder Pal Singh Lall ITA No. : 104/PAN/2018 AY : 2010-2011 ITAT-Panaji Page 10 of 10 trifling or dilution therewith, as a result we are of the considered view that, having regard to the fact that in the instant case the SCN dt. 15/03/2014 issued u/s 274 r.w.s. 271(1)(c) of the Act without specifying any limb or charge vis-à-vis absence of any default on account of acceptance of return indifferently, is invalid and untenable in the eyes of law, consequently the penalty imposed u/s 271(1)(c) of the Act is bad in law and hence same is quashed accordingly. 10. Resultantly, the appeal of the assessee is allowed in terms of aforestated observation. Order pronounced in open court on this Wednesday 20 th day of April, 2022. -S/d- -S/d- RAVISH SOOD JAMLAPPA D BATTULL JUDICIAL MEMBER ACCOUNTANT MEMBER रायप ु र / Raipur; दिना ां क / Dated : 20 th day of April, 2022 आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT, Panaji(Goa) 4. The CIT(A), Panaji (Goa) 5. दवभागीय प्रदतदनदि, आयकर अपीलीय न्यायादिकरण, पणजी / DR, ITAT, Panaji Bench, Panaji. 6. गार्डफ़ाइल / Guard File. आिेशान ु सार / BY ORDER, दनजीसदिव / Private Secretary आयकर अपीलीय न्यायादिकरण, पणजी / ITAT, Panaji (Goa)