Sh. Piyush Saraf, Jammu V. The Income Tax Officer, Jammu

ITA 146/ASR/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0544 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-12-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 20-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMAN DAMATHIA
• Keywords: Question of law
• Section: 271(1)(c); 250; 274; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. K. CHOUDHRY, JUDICIAL MEMBER AND SH. O. P. MEENA ACCOUNTANT MEMBER I.T.A. NO. 146/ASR/2017 A SSESSMENT YEAR: 2011-12 SH. PIYUSH SARAF H. NO-230 TALAB TILLO, JAMMU [PAN: CAJPS 3268R] VS. I.T.O. WARD-2(2), JAMMU (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY: SMT. RAMAN DAMATHIA DR DATE OF HEARING: 17.12.2019 DATE OF PRONOUNCEMENT: 19.12.2019 ORDER PER O. P. MEENA, AM: THIS APPEAL BY THE ASSESSEE IS FILED AGAINST THE OR DER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), JAMMU U/S 250 (6) OF THE I.T. ACT, 1961 DATED 22.06.2016 FOR THE ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER UNDER APPEAL IS AGAINST THE LAW AND FACTS OF THE CASE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE NO PENALTY IS IMPOSABLE UPON THE APPELLANT. 3. THAT THE LD.C.I.T.(A), JAMMU HAS NOT BEEN JUSTIF IED IN CONFIRMING THE PENALTY IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. ITA NO. 146/ASR/2017 (AY 2011-12) SH. PIYUSH SARAF V. ITO 2 4. ANY OTHER GROUND WHICH MAYBE URGED AND ALLOWED AT THE TIME OF HEARING. 3. DURING THE CURRENCY OF APPEAL, THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND WHICH READS AS UNDER: THAT THE CIT(A) HAS ERRED IN LAW WHILE CONFIRMING THE PENALTY ORDER OF AO U/S 271(1)(C) OF INCOME TAX ACT, BEING ILLEGAL, INV ALID AND VOID AB-INITIO, IN AS MUCH AS, THE REASONS FOR INITIATION OF PENALTY P ROCEEDINGS ARE DIFFERENT IN QUANTUM ORDER FROM THE PENALTY ORDER, SO MUCH SO, T HE NOTICE U/S 274 ISSUED BY THE AO IS ILLEGAL, INVALID AND VOID AB-INITIO. 4. WE HAVE HEARD THE PARTIES. WE FIND THAT ADDITION AL GROUND IS BEING PURELY LEGAL AND ARISES FROM IMPUGNED ORDER AND GOES TO TH E ROOT OF MATTER, HENCE, SAME IS ADMITTED IN THE LIGHT OF DECISION OF HONBLE SUPREM E COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383 (SC). 5. THE ASSESSEE CHALLENGED THE PENALTY ORDER ON VAR IOUS GROUNDS AND ALSO CLAIMED THAT THE ISSUE UNDER CONSIDERED IS SQUARELY COVERED BY THE DECISIONS OF TRIBUNAL, ON THE CONTRARY, THE LD. CIT(DR) ALSO RE LIED UPON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN SUPPORT OF REVENUE'S C ASE, HOWEVER WE REALIZED THAT IN THE INSTANT CASE, THE AO INITIATED PENALTY PROCE EDINGS ON BOTH OF THE LIMBS AS SPECIFIED IN SECTION 271(1)(C) OF THE ACT I.E. CON CEALMENT OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREAFTER IS SUED THE NOTICE U/S 274 WITHOUT SPECIFYING THE LIMB OF THE PENALTY IMPOSABLE AND FI NALLY IMPOSED PENALTY FOR CONCEALMENT OF INCOME, THEREFORE WE FIND IT APPROPR IATE TO DECIDE THE LEGAL ISSUE INVOLVED IN THE INSTANT CASE, INSTEAD OF GOING INTO MERITS AND ANALYZING THE FACTS AND DECISION RELIED UPON BY THE PARTIES. ITA NO. 146/ASR/2017 (AY 2011-12) SH. PIYUSH SARAF V. ITO 3 6. HON'BLE APEX COURT IN CASE OF M/S. SSA'S EMERALD MEADOWS, (2016) 73 TAXMANN.COM 248(SC) DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE JUDGMENT RENDERED BY HON'BLE HIGH COURT OF KARNATAKA WHEREBY IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESS EE. OPERATIVE PART OF THE JUDGMENT IN CASE OF M/S. SSA'S EMERALD MEADOWS (SUPRA) DECIDED BY HON'BLE HIGH COURT OF KARNATAKA IS REPRODUCED BELOW:- '2. THIS APPEAL HAS BEEN FILED RAI SING THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLI CITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISH ING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF I NCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE ? (2 WHETHER, ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN. HOLDING THAT THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) IS HAD IN LAW AND. INVALID INSPITE THE AMENDMENT OF SECTION 271(1 B) WITH RETR OSPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFIC ER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAI NST THE REVENUE ON THE BASIS OF NOTICE ISSUED, UNDER SECTION 274 WI THOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSI NG OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY T HE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SE CTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECT ION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E ., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME .THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED UPON THE DECISION OF THE DIVI SION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OR INCOME T AX - VS - MANJUNATHA C OTTON AND G INNING F ACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY J UDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBS TANTIAL QUESTION OF LAW ITA NO. 146/ASR/2017 (AY 2011-12) SH. PIYUSH SARAF V. ITO 4 ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COU RT, THE APPEAL IS ACCORDINGLY DISMISSED.' 7. THE PENALTY PROVISIONS OF SECTION 271(1)(C) O F THE ACT ARE ATTRACTED WHERE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS ALSO A WELL-ACCEPTED PROPOSIT ION THAT THE AFORESAID TWO LIMBS OF SECTION 271(1)(C) OF THE ACT CARRY DIFFERENT MEA NINGS. THEREFORE, IT WAS IMPERATIVE FOR THE ASSESSING OFFICER TO STRIKE - OF F THE IRRELEVANT LIMB SO AS TO MAKE THE ASSESSEE AWARE AS TO WHAT IS THE CHARGE MADE AG AINST HIM SO THAT HE CAN RESPOND ACCORDINGLY. THE HON'BLE KARNATAKA HIGH COU RT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY, 359 ITR 565 (KAR) OBSERVE D THAT THE LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB UNDER WHICH IT IS BE ING LEVIED. AS PER HON'BLE HIGH COURT, WHERE THE ASSESSING OFFICER PROPOSED TO INVO KE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATEL Y MARKED. THE HON'BLE HIGH COURT HELD THAT THE STANDARD PROFORMA OF NOTICE UND ER SECTION 274 OF THE ACT WITHOUT STRIKING OF THE IRRELEVANT CLAUSES WOULD LE AD TO AN INFERENCE OF NON- APPLICATION OF MIND BY THE ASSESSING OFFICER. THE H ON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF VS. JCIT, 291 ITR 519(SC) H AS ALSO NOTICED THAT WHERE THE ASSESSING OFFICER ISSUES NOTICE UNDER SECTION 274 O F THE ACT IN THE STANDARD PROFORMA AND THE INAPPROPRIATE WORDS ARE NOT DELETE D, THE SAME WOULD POSTULATE THAT THE ASSESSING OFFICER WAS NOT SURE AS TO WHETH ER HE WAS TO PROCEED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED THE PARTICULA RS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDING TO THE HON'BLE SUPREME COURT, IN SUCH A SITUATION, LEVY OF PENALTY SUFFERS FROM NON-APPLI CATION OF MIND. IN THE BACKGROUND OF THE AFORESAID LEGAL POSITION AND, HAV ING REGARD TO THE MANNER IN WHICH THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT DATED 30-08-2013 WITHOUT STRIKING OFF THE I RRELEVANT WORDS, APPARENTLY GOES ITA NO. 146/ASR/2017 (AY 2011-12) SH. PIYUSH SARAF V. ITO 5 TO PROVE THAT THE ASSESSING OFFICER INITIATED THE P ENALTY PROCEEDINGS BY ISSUING THE NOTICE U/S 274/271(1)(C) OF THE ACT WITHOUT SPECIFY ING WHETHER THE ASSESSEE HAS CONCEALED ''PARTICULARS OF INCOME' OR ASSESSEE HAS FURNISHED 'INACCURATE PARTICULARS OF INCOME', SO AS TO PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESS EE TO EXPLAIN THE SHOW CAUSE NOTICE. RATHER NOTICE IN THI S CASE HAS BEEN ISSUED IN A STEREOTYPED MANNER WITHOUT APPLYING MIND WHICH IS B AD IN LAW, HENCE CANNOT BE CONSIDERED A VALID NOTICE SUFFICIENT TO IMPOSE PENA LTY U/S 271(1)(C) OF THE ACT. EVEN THE MIND OF THE AO, WHILE INITIATING THE PENAL TY PROCEEDINGS, ISSUING NOTICE U/S 274 OF THE ACT AND IMPOSING THE PENALTY ITSELF, WAS NOT CLEAR UNDER WHICH LIMB, THE ASSESSEE HAD TO REPLY AND TO DEFEND ITS CASE, T HEREFORE WE ARE OF THE VIEW THAT UNDER THESE CIRCUMSTANCES, THE PENALTY IS NOT LEVIA BLE AS HELD BY THE VARIOUS COURT INCLUDING APEX COURT AND HENCE, WE HAVE NO HESITATI ON TO DELETE THE PENALTY LEVIED BY THE AO. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 19, 2019 SD/- SD/- (N. K. CHOUDHRY) (O. P. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 19.12.2019 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: (2) THE RESPONDENT: (3) THE CIT(APPEALS), (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER