RAIGARH NAGRIK SAHKARI BANK MARYADIT, RAIGARH(CG) V. INCOME TAX OFFICER-1, RAIGARH, RAIGARH(CG)

ITA 116/BIL/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9978 (ITAT-RAIPUR)
• Duration Of Justice: 5 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 24-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 271(1)(c); 274

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER Sl. No. ITA No. Name of Appellant Name of Respondent Asst. Year 1. 116/RPR/2017 Raigarh Nagrik Sahkari Bank Maryadit, Darogapara, Raigarh-496 001 (C.G.) PAN : AAGFR6341B The Income Tax Officer-1, Raigarh (C.G.) 2008-09 2. 118/RPR/2017 Raigarh Nagrik Sahkari Bank Maryadit, Darogapara, Raigarh-496 001 (C.G.) PAN : AAGFR6341B The Income Tax Officer-1, Raigarh (C.G.) 2010-11 Assessee by :Shri S.R. Rao, Advocate Revenue by :Shri G.N Singh, DR स ु नवाई कȧ तारȣख / Date of Hearing :22.07.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 23.09.2022 2 Raigarh Nagrik Sahakari Bank Maryadit ITA Nos.116 & 118/RPR/2017 आदेश / ORDER PER RAVISH SOOD, JM: The captioned appeals filed by the assessee bank are directed against the respective orders passed by the CIT(Appeals), Bilaspur dated 30.08.2016, which in turn arises from the respective orders passed by the A.O u/s. 271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’) for the assessment years 2008-09 & 2010-11. As common issues are involved in the aforementioned appeals, therefore, the same are being taken up and disposed off together by way of a consolidated order. 2. We shall take up the appeal in ITA No.118/RPR/2017 for the assessment year 2010-11 as the lead matter and the order therein passed shall apply mutatis mutandis for disposal of the other appeal i.e ITA No. 116/RPR/2017 for AY 2008-09. Before us the assessee has assailed the impugned order on the following grounds of appeal: “1. In the facts and circumstances of the case, the Ld. Commissioner of Income tax (Appeals) is not justified in confirming penalty of Rs.2,00,000/- imposed u/s.271(1)(C) of the Income Tax Act, 1961 with upward variation to Rs.3,15,850/- without affording reasonable opportunity of being heard. 2. The impugned order is bad in law and on facts”. 3 Raigarh Nagrik Sahakari Bank Maryadit ITA Nos.116 & 118/RPR/2017 Also, the assessee has raised additional grounds of appeal which reads as under: “1. In the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) has erred in confirming penalty levied by ld. Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961 on the basis of Show Cause Notice issued under section 274 r.w.s. 271(1)(c) without ascertaining and mentioning the specific charge of default hence the penalty order is bad in law and void ab initio. 2. In the facts and circumstances of the case and in law, the impugned order is illegal and unsustainable as per law laid down in the case of CIT V/ s SSA's Emerald Meadows (73 Taxmann.com 248 SLP dismissed on 05/ 08/2016). As the assessee by raising the aforesaid additional grounds of appeal sought our indulgence for adjudicating a legal issue which requires looking for facts beyond those available on record, therefore, we admit the same. 3. Succinctly stated, the case of the assessee which is a non- scheduled bank was reopened by the AO u/s.147 of the Act. In compliance to the notice issued u/s.148 of the Act the assessee filed its return of income for AY 2010-11 on 05.11.2012, declaring an income of Rs.4,50,320/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. Assessment was thereafter framed by the A.O vide his order passed u/s.143(3)/148 dated 26.12.2013, wherein the income of the 4 Raigarh Nagrik Sahakari Bank Maryadit ITA Nos.116 & 118/RPR/2017 assessee was determined at Rs.6,26,750/- after, inter alia, making the following additions/disallowances: The A.O while culminating the assessment proceedings also initiated penalty proceedings u/s. 271(1)(c) of the Act on the ground that the assessee had concealed his income or furnished inaccurate particulars of such income. Notice u/s. 274 r.w.s. 271(1)(c) dated 30.12.2013 was also issued by the A.O. 4. Aggrieved with the assessment the assessee carried the matter in appeal before the CIT(Appeals) who enhanced its income. After the order was passed by the CIT(Appeals) disposing off the quantum appeal, the A.O vide his order passed u/s.271(1)(c) r.w.s. 274 of the Act dated Nil imposed upon the assessee a penalty of Rs.2 lacs for the reason that it had furnished inaccurate particulars of income and concealed its income. Sr. No. Particulars Amount 1. Disallowance of the assessee’s claim of excess deduction u/s.36(1)(viii) Rs.57,645/- 2. Disallowance of the assessee’s claim of legal expenses Rs.40,000/- 5 Raigarh Nagrik Sahakari Bank Maryadit ITA Nos.116 & 118/RPR/2017 5. Aggrieved, the assessee assailed the order passed by the A.O u/s.271(1)(c) of the Act before the CIT(Appeals), who not only confirmed the penalty imposed by the A.O, but also considering the fact that the assessee’s claim for deduction u/s.36(1)(viii) while disposing off the assessee’s quantum appeal declined by him a/w. enhancement of the disallowance of the assessee’s claim for deduction of legal expenses as was made by the AO, the CIT(Appeals) enhanced the penalty by an amount of Rs.3,15,850/-.Accordingly, the CIT(Appeals) saddled the assessee with a penalty of Rs. 5,15,850/- u/s.271(1)(c) of the Act. 6. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 7. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 8. As the Ld. Authorized Representative (for short ‘AR’) for the assessee has assailed the validity of the jurisdiction that was 6 Raigarh Nagrik Sahakari Bank Maryadit ITA Nos.116 & 118/RPR/2017 assumed by the A.O for imposing penalty u/s.271(1)(c) of the Act, therefore, we shall first deal with the same. Elaborating on his aforesaid contention, it was the claim of the Ld. AR that the as the A.O had failed to validly put the assessee to notice as regards the specific default for which penalty u/s.271(1)(c) of the Act was proposed to be imposed on it, therefore, he had invalidly assumed jurisdiction and wrongly saddled the assessee with penalty u/s.271(1)(c) of the Act. In order to support his aforesaid contention the Ld. AR had drawn our attention to the copy of the “Show Cause” Notice (“SCN”), dated 30.12.2013”. On a perusal of the aforesaid “SCN”, the claim of the Ld. AR that the A.O had failed to strike-off the irrelevant default in the body of the “SCN” dated 30.12.2013 for which the impugned penalty proceedings were initiated by him was duly fortified. Apart from that the Ld. AR took us through the assessment order which as pointed out by him revealed that the penalty proceedings were initiated by the A.O for both the two grounds, viz. (i) claim of deduction u/s.36(1)(viia) of the Act; and (ii) claim of legal expenses; for concealment of its income OR furnishing of inaccurate particulars of income. It was submitted by the Ld. AR that even otherwise, in the penalty order passed by the A.O 7 Raigarh Nagrik Sahakari Bank Maryadit ITA Nos.116 & 118/RPR/2017 u/s.271(1)(c) dated Nil, the impugned penalty had been imposed by the A.O for furnishing of inaccurate particulars of income AND concealment of income. On the basis of his aforesaid contentions, it was submitted by the Ld. AR that as the A.O had failed to validly put the assessee to notice as regards the nature of default for which penalty u/s. 271(1)(c) of the Act was proposed to be imposed on it, therefore, the penalty imposed by him u/s.271(1)(c) of the Act could not be sustained and was liable to be struck down on the said count itself. It was further submitted by the Ld. AR that even otherwise penalty imposed by the A.O could not be sustained as the same had been initiated by him in the body of the assessment order for either of the two defaults and thereafter, had been imposed for both the said defaults. 9. Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. 10. After deliberating at length on the aforesaid contentions advanced by the Ld. Authorized representatives for both the parties, we find substance in the claim of the Ld. AR that the A.O had without validly putting the assessee to notice as regards the nature 8 Raigarh Nagrik Sahakari Bank Maryadit ITA Nos.116 & 118/RPR/2017 of default for which penalty u/s.271(1)(c) of the Act was proposed to be imposed on it, invalidly assumed jurisdiction and imposed penalty on the assessee u/s.271(1)(c) of the Act. 11. Admittedly, it is a matter of fact borne from record that the A.O in the ‘SCN’, dated 30.12.2013 that was issued a/w the assessment order had while initiating the penalty proceedings u/s. 271(1)(c) of the Act failed to strike-off the irrelevant default and thus, failed to validly put the assessee to notice as regards the specific default for which the impugned penalty proceedings were initiated by him. Be that as it may, we find that though the AO while framing the assessment vide his order passed u/ss.143(3)/148 of the Act, dated 26.12.2013, had initiated penalty proceedings u/s. 271(1)(c) alleging that the assessee had concealed its income OR furnished inaccurate particulars of such income, however, the same, thereafter, was imposed by him vide his order passed u/s.271(1)(c) of the Act, dated nil for both the defaults i.e. concealment of income and furnishing of inaccurate particulars of income. In our considered view as both the defaults i.e., ‘concealment of income’ and ‘furnishing of inaccurate particulars of income’ are separate and distinct defaults which operate in their exclusive fields, therefore, imposition of penalty by 9 Raigarh Nagrik Sahakari Bank Maryadit ITA Nos.116 & 118/RPR/2017 the A.O qua the aforesaid solitary addition for both of the aforesaid defaults contemplated in Section 271(1)(c) of the Act cannot not be sustained and is liable to be struck down on the said count itself. We find that the fine distinction between the said two defaults contemplated in Sec. 271(1)(c), viz. ‘concealment of income’ and ‘furnishing of inaccurate particulars of income’ had been appreciated at length by the Hon’ble Supreme Court in its judgments passed in the case of Dilip & Shroff Vs. Jt. CIT (2007) 210 CTR (SC) 228 and T. Ashok Pai Vs. CIT (2007) 292 ITR 11 (SC). The Hon’ble Apex Courtin in its aforesaid judgments, had observed, that the two expressions, viz. ‘concealment of particulars of income’ and ‘furnishing of inaccurate particulars of income’ have different connotation. We are of the considered view that not only for the failure on the part of the AO to validly put the assessee bank to notice as regards the specific default for which penalty was sought to be imposed on it under Sec. 271(1)(c) of the Act reveals beyond doubt the invalid assumption of jurisdiction on his part; but also the fact that he had while culminating the assessment initiated the penalty proceedings for the reason that the assessee had concealed its income OR furnished inaccurate particulars of such income, but 10 Raigarh Nagrik Sahakari Bank Maryadit ITA Nos.116 & 118/RPR/2017 thereafter imposed the same vide his order passed u/s.271(1)(c) of the Act, dated nil for both the defaults i.e. concealment of income and furnishing of inaccurate particulars of income, therefore, on the said count too the impugned penalty could not be sustained and is liable to be struck down. We, thus, for the aforesaid reasons not being able to persuade ourselves to subscribe to the imposition of penalty by the A.O, therefore, set-aside the order of the CIT(A) who had not only upheld but in fact enhanced the same. Accordingly, the penalty of Rs.5,15,850/-imposed under Sec. 271(1)(c) by the A.O, which thereafter was enhanced by the CIT(Appeals) is quashed in terms of our aforesaid observations. 12. In the result, the appeal of the assessee in ITA No.118/RPR/2017 for the assessment year 2010-11 is allowed in terms of our aforesaid observations. ITA No.116/RPR/2017 A.Y.2008-09 13. As the facts and the issue involved in the present appeal to the extent relevant to the issue of validity of jurisdiction assumed by the AO under Sec. 271(1)(c) of the Act, viz. i) initiation of penalty 11 Raigarh Nagrik Sahakari Bank Maryadit ITA Nos.116 & 118/RPR/2017 proceedings under Sec. 271(1)(c) for either of the defaults in the body of the assessment order, i.e furnishing inaccurate particulars of income or concealment of income; (ii). non-striking off the irrelevant default in the body of the “SCN”, date 27.11.2013; and (iii). imposition of penalty for both the defaults, i.e furnishing of inaccurate particulars of income and concealment of income, remains the same as were there before us in the aforementioned appeal of the assessee ITA No.118/RPR/2017 for the assessment year 2010-11, therefore, our order therein passed while disposing off the said appeal shall to the said extent apply mutatis-mutandis for disposing off the present appeal in ITA No.116/RPR/2017 for the assessment year 2008-09. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(A) who had upheld the penalty of Rs. 1 lac imposed by the AO under Sec. 271(1)(c) of the Act. Accordingly, the penalty of Rs. 1 lac imposed by the AO under Sec. 271(1)(c) by the A.O is quashed in terms of our aforesaid observations. 14. In the result, the appeal of the assessee in ITA No.116/RPR/2017 for the assessment year 2008-09 is allowed in terms of our aforesaid observations. 12 Raigarh Nagrik Sahakari Bank Maryadit ITA Nos.116 & 118/RPR/2017 15. In the combined result, both the appeals of the assessee are allowed in terms of our aforesaid observations. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 23 rd September, 2022 SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals), Bilaspur (C.G) 4. The CIT, Bilaspur (C.G) 5.ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur.