Vamsi Chit Funds Pvt Ltd, Hyderabad V. ITO, Ward-17(3), Hyd, Hyderabad

ITA 1297/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2529 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 11-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 07-10-2016
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: G VENKATESWARLU

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.1297/HYD/2016 ASSESSMENT YEAR 2010-2011 M/S. VAMSI CHIT FUNDS PVT LTD., H.NO.6-3-248/1/1A, ROAD NO.1, BANJARA HILLS, HYDERABAD. PAN: AABCV3351M VS. INCOME TAX OFFICER, WARD-17(3), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI G.VENKATESWARLU FOR REVENUE : SHRI B. KURMI NAIDU, DR DATE OF HEARING : 11.05.2017 DATE OF PRONOUNCEMENT : 11.05.2017 ORDER PER D. MANMOHAN, VP. THIS APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A)-5, HYDERABAD. PENALTY LEVIED BY THE A.O. U/S 271(1)(C) OF THE ACT IS THE SUBJECT MATTER OF DISPUTE BEFORE US. 2. ASSESSEE RAISED THE ADDITIONAL GROUND BEFORE THE TRIBUNAL WHEREIN THE PROCEDURE FOLLOWED BY THE A.O. WAS CHALLENGED. THE SAID ADDITIONAL GROUND READS AS UNDER:- GROUND NO.2. THE ORDER OF PENALTY IS BAD IN LAW FO R THE REASON THAT THE NOTICE FOR INITIATING THE PENALTY AS TO WHETHER IT WAS FOR CONCEALMENT OF INCOME OR FOR FILING INACCURATE PARTICULARS OF INCOME IS NOT DISCERNIBLE FROM THE NOTICE ISSUED. CONSEQUENTLY, THE ORDER OF THE PENALTY PASS ED IN PURSUANCE OF SUCH A NOTICE IS BAD IN LAW AND DESERVES TO BE DELETED. 2 3. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ABOVE MENTIONED ADDITIONAL GROUND RAISES AN IMPORTANCE LEGAL ISSUE AND THEREFO RE, IT CAN BE ADMITTED AT THIS STAGE. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED UPON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO RPORATION LTD VS. CIT [1998] 229 ITR 352 (SC) AND ALSO RELIED UPON ANOTHER JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 (SC), WHEREIN THE HONBLE SUPREME COURT AFFIRMED THE ORDER OF THE HON BLE KARNATAKA HIGH COURT WITH REGARD TO PROCEDURE FOLLOWED BY THE ASSESSING OFFIC ER IN ISSUING A NOTICE; SINCE THE NOTICE DOES NOT SPECIFY THE LIMB UNDER WHICH PENALT Y PROCEEDINGS U/S 271(1)(C) OF THE ACT HAD BEEN INITIATED, THE NOTICE ISSUED U/S 274 R EAD WITH SECTION 271(1)(C) OF THE ACT WAS HELD TO BE BAD IN LAW. LD. COUNSEL FOR THE ASSE SSEE ALSO PLACED BEFORE US COPIES OF THE ORDERS OF THE ITAT, HYDERABAD WHEREIN SIMILA R ISSUE WAS DECIDED BY HOLDING THAT UNLESS THE NOTICE ISSUED U/S 274 R.W.S. 271(1) (C) SPECIFIES THE REASON FOR ISSUANCE OF NOTICE, THE PROCEEDINGS BASED ON SUCH NOTICE DES ERVED TO BE QUASHED. IN THIS CASE, PAGE 20 OF THE PAPER BOOK INDICATES THAT THE ASSESS ING OFFICER HAS NOT SPECIFIED THE REASON FOR WHICH PENALTY PROCEEDINGS WERE INITIATED . 4. LD. DR ON THE OTHER HAND SUBMITS THAT THE PENALT Y PROCEEDINGS WERE INITIATED ON THE GROUND OF CONCEALMENT OF PARTICULARS OF INC OME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME, WHEREAS THE CASE OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT IF BOTH THE LIMBS ARE TO BE TAKEN UNDER CON SIDERATION THE ASSESSING OFFICER OUGHT TO HAVE SPECIFIED AND BY NOT LEAVING THE PRINTED FORMAT AS IT IS, WHICH IS ONLY RELEVANT WHEN ONE OF THE REASONS ARE TO BE OPTED FOR ISSUANC E OF NOTICE BY SPECIFYING THE WORD OR; IF THE ASSESSING OFFICER SEEKS TO ISSUE A NOT ICE U/S 271(1)(C) OF THE ACT FOR BOTH THE REASONS, THE WORD OR SHOULD HAVE BEEN CORRECT ED AS AND, WHEREAS SENDING A STANDARD FORMAT DOES NOT GIVE ANY INDICATION AS TO WHY THE PENALTY PROCEEDINGS ARE INITIATED AND THUS, IT IS NOT POSSIBLE FOR AN ASSES SEE TO RESPOND TO THE NOTICE ISSUED. ISSUANCE OF NOTICE BEING THE SOUL OF THE PROCEEDING S, ABSENCE OF PROPER NOTICE WOULD VITIATE THE PROCEEDINGS. 5. WE HAVE HEARD BOTH THE PARTIES, CAREFULLY CONSID ERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ITAT, HYDERABAD B BENCH IN THE CASE OF SRI MULA CHANDRA MOHAN GOUD VS. ITO IN I.T.A. NO.594/HYD/201 6 (A.Y. 2006-07), DATED 3 30.12.2016 CONSIDERED AN IDENTICAL ISSUE AND OBSERV ED THAT IN THE ABSENCE OF SPECIFIC CHARGE RAISED BY THE ASSESSING OFFICER IN THE NOTIC E, PENALTY PROCEEDINGS DESERVE TO BE HELD AS INVALID AND JUST BECAUSE OF AN ADDITION MADE IS ACCEPTED AND IT DOES NOT AUTOMATICALLY LEAD TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 6. CONSISTENT OF THE VIEW TAKEN BY THE TRIBUNAL, HA VING REGARD TO THE FACT THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER IN THIS CASE IS VERY VAGUE, WE ADMIT THE ADDITIONAL GROUND AND HOLD THAT THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT IS NOT VALID IN LAW AND ACCORDINGLY THE PENALTY LEVIED BY THE A. O., AS AFFIRMED BY THE CIT (A), DESERVES TO BE SET ASIDE. WE ORDER ACCORDINGLY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY,2017. SD/- SD/- (B. RAMAKOTAIAH) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED: 11 TH MAY, 2017 OKK, SR.PS COPY TO 1. M/S. VAMSI CHIT FUNDS PVT LTD., H.NO.6-3-248/1/1A, ROAD NO.1, BANJARA HILLS, HYDERA BAD. 2. INCOME TAX OFFICER, WARD-17(3), HYDERABAD. 3. CIT(A)-5, HYDERABAD. 4. PR. CIT-5, HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE