Gottumukkala Satyanrayana Raju, Visakhapatnam V. The ACIT, Visakhapatnam

ITA 131/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6653 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 13-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SATYANANDAM
• Keywords: Unexplained investment
• Section: 143(3)

Judgement Text

ITA NO.131/VIZAG/2017 GOTTUMUKKALA SATYANARAYANA, VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.131/VIZAG/2017 ( / ASSESSMENT YEAR: 2013-14) GOTTUMUKALA SATYANARAYANA VISAKHAPATNAM ACIT, CENTRAL CIRCLE - 2, VISAKHAPATNAM [PAN NO. ACYPG8865B ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI T. SATYANANDAM, DR / DATE OF HEARING : 20.09.2017 / DATE OF PRONOUNCEMENT : 27.09.2017 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3 {CIT-A}, VIS AKHAPATNAM DATED 6.1.2017 FOR THE ASSESSMENT YEAR 2013-14. 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE PEN ALTY IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME T AX ACT, 1961 ITA NO.131/VIZAG/2017 GOTTUMUKKALA SATYANARAYANA, VSKP 2 (HEREINAFTER CALLED AS 'THE ACT'). THE ASSESSEE FI LED THE APPEAL IN FORM 36 WITH THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE FACT S AND ALSO THE LAW APPLICABLE TO THE FACTS OF THE CASE. 2. THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING TO TH E EXTENT OF ` 2,32,727/- PENALTY LEVIED U/S 271(1)(C) OF THE INCOM E TAX ACT, 1961 3. THE NOTICE ISSUED U/S 271(1)(C) IS NOT IN ACCORDANC E WITH LAW AND HENCE SAME IS LIABLE TO BE QUASHED. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF A PPEAL HEARING. 3. SUBSEQUENTLY, BY PETITION DATED 5.9.2017, ASSESS EE FILED THE ADDITIONAL GROUND AS FOLLOWS: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ORDER DT.31.08.2015 LEVYING PENALTY U/S 271(1)(C) I S LIABLE TO BE CANCELLED IN AS MUCH AS THE NOTICE DT.27.02.2015 IN ITIATING THE PENALTY PROCEEDINGS DID NOT SPECIFY CLEARLY AS TO W HETHER THE PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME.' 4. THE ADDITIONAL GROUND IS RELATED TO THE DEFECT I N ISSUE OF NOTICE U/S 271(1)(C) OF THE ACT I.E. WITHOUT PUTTING THE ASSE SSEE ON NOTICE FOR WHICH OFFENCE, THE PENALTY WAS INITIATED. THE LD. A.R. ARGUED THAT THE AO HAD ISSUED THE NOTICE WITHOUT STRIKING THE IRREL EVANT COLUMN IN THE PRE PRINTED NOTICE U/S 271 RELATING TO FURNISHING O F INACCURATE PARTICULARS OR THE CONCEALMENT OF INCOME AND HENCE THE ADDITION AL GROUND HAS DIRECT IMPACT ON THE PENALTY INITIATED BY THE A.O., THEREFORE REQUESTED TO ADMIT THE SAME. WE HEARD BOTH THE PARTIES, SINCE TH E ADDITIONAL GROUND IS A LEGAL GROUND AND HONBLE JURISDICTIONAL HIGH C OURT OF TELENGANA & ITA NO.131/VIZAG/2017 GOTTUMUKKALA SATYANARAYANA, VSKP 3 ANDHRA PRADESH HAS RENDERED THE JUDGEMENT ON THE SA ME ISSUE, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ADMITTE D. 5. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 DECLARING TOTAL INCOME OF ` 30,97,040/-. A SEARCH & SEIZURE OPERATION WAS CONDUCTED IN THE CASE OF THE ASSESSEE AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND IN THE ASSESSMENT THE A.O. MADE THE ADDITION OF ` 16,00,185/- AND COMPUTED THE TOTAL INCOME AT ` 46,97,225/- AND PENALTY U/S 271(1)(C) OF THE ACT W AS INITIATED. THE A.O. CALLED FOR THE EXPLANATION AS TO WHY THE PENALTY SHOULD NOT BE IMPOSED AND THE ASSESSEE FILED REPLY STATING THAT THE ADDITION WAS ACCEPTED TO AVOID PROTRACTED LITIGATIO N AND THERE WAS NO WILLFUL CONCEALMENT OR FURNISHING OF INACCURATE PAR TICULARS, HENCE REQUESTED TO DROP THE PENALTY PROCEEDINGS. NOT BEI NG CONVINCED WITH THE EXPLANATION OF THE ASSESSEE, THE A.O. LEVIED TH E PENALTY OF ` 11,12,457/- U/S 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) REDUCED THE PENALTY TO ` 2,32,727/- ON THE ADDITION OF ` 7,53,159/-. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. ITA NO.131/VIZAG/2017 GOTTUMUKKALA SATYANARAYANA, VSKP 4 6. APPEARING FOR THE ASSESSEE, THE LD. A.R. ARGUED THAT THE A.O. HAD ISSUED PENALTY NOTICE WITHOUT STRIKING THE IRRELEVA NT COLUMN RELATING TO FURNISHING OF INACCURATE PARTICULARS OR THE CONCEAL MENT OF INCOME THEREBY PUTTING THE ASSESSEE IN AMBIGUITY AND CONFU SION FOR WHICH OFFENCE THE ASSESSEE REQUIRED TO SUBMIT THE EXPLANA TION. IT IS MANDATORY ON THE PART OF THE A.O. TO PUT ON THE ASS ESSEE ON NOTICE FOR WHICH OFFENCE, THE ASSESSEE REQUIRED TO SUBMIT EXPL ANATION WHETHER IT IS FOR FURNISHING OF INACCURATE PARTICULARS OR FOR CON CEALMENT OF INCOME. THE LD. A.R. REFERRING TO PAGE NO.42 OF THE PAPER B OOK HAS SHOWN US THE NOTICE ISSUED BY THE AO WHICH CONFIRMS THAT THE AO HAS NOT STRUCK OFF THE IRRELEVANT COLUMN. THE LD AR SUBMITTED THAT SINCE THE A.O. FAILED TO STRIKE THE IRRELEVANT COLUMN IN THE NOTIC E ISSUED U/S 274 R.W.S. 271 OF THE ACT, NOTICE ISSUED U/S 271 OF THE ACT IS BAD IN LAW AND THE CONSEQUENT PENALTY IMPOSED BY THE A.O. REQUIRED TO BE CANCELLED. 7. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE OR DER OF THE LD. CIT(A) AND ARGUED THAT A.O. HAS ISSUED NOTICE FOR B OTH INACCURATE PARTICULARS AND CONCEALMENT OF INCOME AND HENCE THE NOTICE ISSUED U/S 271 OF THE ACT REQUIRED TO BE TREATED AS VALID AND PENALTY IMPOSED BY THE A.O. NEEDS TO BE CONFIRMED. ITA NO.131/VIZAG/2017 GOTTUMUKKALA SATYANARAYANA, VSKP 5 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. MADE THE ADDITION OF ` 16,00,185/- TO THE RETURNED INCOME RELATED TO UNEXPLAINED INVESTMENT AND IMPOSED THE PENALTY U /S 271(1)(C) OF THE ACT. THE PENALTY PROCEEDINGS WERE INITIATED DURING THE ASSESSMENT PROCEEDINGS BUT IN THE ASSESSMENT ORDER THE AO HAS NOT MADE NOTING WITH REGARD TO WHICH OFFENCE THE PENALTY WAS INITIA TED I.E. FOR FURNISHING OF INACCURATE PARTICULARS OR THE CONCEALMENT OF INC OME. WE HAVE GONE THROUGH THE PENALTY NOTICE ISSUED U/S 271 OF THE AC T AND THE ASSESSMENT ORDER AND IT WAS NOTICED THAT THE A.O. HAS NOT STRU CK OFF THE IRRELEVANT COLUMN OR MADE KNOWN TO THE ASSESSEE BY MENTIONING FOR WHICH OFFENCE, THE PENALTY WAS INITIATED. AS PER THE S ETTLED CASE LWAS, THE A.O. HAS TO MADE KNOWN THE ASSESSEE FOR WHICH REASO N THE PENALTY WAS INITIATED AND FOR WHICH LIMB OF THE NOTICE, EXPLANA TION REQUIRED TO BE SUBMITTED. HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF PRINCIPAL CIT VISAKHAPATNAM VS. BAISETTY REVATI IN I.T.T.A NO.684 OF 2016 DATED 13.7.2017 HELD THAT THE A.O. REQUIRED TO MADE KNOWN THE SPECIFIC GROUND FOR WHICH THE PENALTY HAS BEEN INITIATED. F OR READY REFERENCE, WE REPRODUCE THE RELEVANT PARAGRAPH OF THE THE HON BLE HIGH COURT ORDE MADE AVAILABLE IN PAGE NOS.10 & 11, WHICH READS AS UNDER: ITA NO.131/VIZAG/2017 GOTTUMUKKALA SATYANARAYANA, VSKP 6 ON PRINCIPLE, WHEN PENALTY NPROCEEDINGS ARE SOUGHT TO BE INITIATED BY THE REVENUE UNDER SECTION 271(1)(C) OF THE ACT O F 1961, THE SPECIFIC GROUND WHICH FORMS THE FOUNDATION THERE FO R HAS TO BE SPELT OUT IN CLEAR TERMS. OTHERWISE, AN ASSESSEE WO ULD NOT HAVE PROPER OPPORTUNITY TO PUT FORTH HIS DEFENCE. WHEN T HE PROCEEDINGS ARE PENAL IN NATURE, RESULTING IN IMPOS ITION OF PENALTY RANGING FROM 100% TO 300% OF THE TAX LIABIL ITY, THE CHARGE MUST BE UNEQUIVOCAL AND UNAMBIGUOUS. WHEN TH E CHARGE IS EITHER CONCEALMENT OF PARTICULARS OF INCOME OR F URNISHING OF INACCURATE PARTICULARS THEREOF, THE REVENUE MUST SP ECIFY AS TO WHICH ONE OF THE TWO IS SOUGHT TO BE PRESSED INTO S ERVICE AND CANNOT BE PERMITTED TO CLUB BOTH BY INTERJECTING AN 'OR' BETWEEN THE TWO, AS IN THE PRESENT CASE. THIS AMBIGUITY IN THE SHOW- CAUSE NOTICE IS FURTHER COMPOUNDED PRESENTLY BY THE CONFUSED FINDING OF THE ASSESSING OFFICER THAT HE WAS SATISF IED THAT THE ASSESSEE WAS GUILTY OF BOTH. WE ARE THEREFORE OF THE OPINION THAT THE ORDER UNDE R APPEAL DOES NOT BROOK INTERFERENCE ON ANY GROUND. WE FIND NO QUESTI ON OF LAW, MUCH LESS A SUBSTANTIAL ONE, ARISING FOR CONSIDERATION W ARRANTING ADMISSION OF THIS APPEAL. THE APPEAL IS ACCORDINGLY DISMISSED. NO ORDER AS TO COSTS. 9. ON SIMILAR FACTS, THIS TRIBUNAL IN THE CASE OF M /S. NARAYANA REDDY ENTERPRISES, MANDAPETA VS. ITO WARD-1, KAKINADA IN I TA NO.229/VIZAG/2015 DATED 18.8.2017 ALSO HELD THAT T HE NOTICE ISSUED U/S 271 OF THE ACT WITHOUT STRIKING IRRELEVANT COLUMN I S INVALID AND CONSEQUENT PENALTY WAS CANCELLED BY THIS TRIBUNAL. IN THE INSTANT CASE, THE FACTS ARE IDENTICAL AND THE CASE IS SQUARELY CO VERED BY THE HONBLE JURISDICTIONAL HIGH COURT JUDGEMENT AND THE DECISIO N OF THIS TRIBUNAL CITED (SUPRA). THEREFORE, WE HOLD THAT THE PENALTY NOTICE ISSUED U/S 271 OF THE ACT IS INVALID AND THE CONSEQUENT PENALTY IS UNSUSTAINABLE. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE LOWER AU THORITIES AND CANCEL THE PENALTY. ITA NO.131/VIZAG/2017 GOTTUMUKKALA SATYANARAYANA, VSKP 7 SINCE WE HAVE HELD THAT THE NOTICE ISSUED U/S 271 OF THE ACT WAS INVALID, WE CONSIDER IT NOT NECESSARY TO ADJUDICATE THE OTHER GROUNDS RAISED BY THE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 27 TH SEPT17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 27.09.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT GOTTUMUKKALA SATYANARAYANA RAJU, D.NO. 54-13-6/1,F.NO.203, WHITE HOUSE, SEETHAMMADHARA, VI SAKHAPATNAM 2. / THE RESPONDENT THE ACIT, CENTRAL CIRCLE-2, VIS AKHAPATNAM 3. + / THE CIT, VISAKHAPATNAM 4. + ( ) / THE CIT (A)-3, VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM