Fakhruddin Akbarali Magar, Hubbali V. The Deputy Commissioner of Income Tax, Central Circle, Belagavi

ITA 157/PAN/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1569 (ITAT-PANAJI)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Next Hearing Date: 18-06-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 20-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NADEEM LASANI
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI [THROUGH VIRTUAL HEARING AT ITAT : PUNE] BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER ITA.No.157/PAN/2023 Assessment Year 2013-2014 Shri Fakhruddin Akbarali Magar, Hubbali – 580 032 C/o. N.A. Lasani & Company, Advocates, 1-4, Opp. Bank of Baroda, Narasimharaja Road 3 rd Cross, Bangalore-560002 PAN AHPPM9644J vs. The DCIT, Central Circle, Saraf Colony Road, Hindwadi, Belgavi. Karnataka PIN – 590 011. (Appellant) (Respondent) For Assessee : Shri Nadeem Lasani For Revenue : Shri Badrinath Yamaji Chavan Date of Hearing : 19.06.2024 Date of Pronouncement : 20.06.2024 ORDER PER SATBEER SINGH GODARA, J.M.: This assessee’s appeal for assessment year 2013-14 arises against the CIT(A)-2, Panaji, Panaji’s Din and Order No. ITBA/APL/M/250/2021-22/1038588055(1), dated 10.01.2022, in proceedings u/s.271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act”). Heard both the parties. Case file perused. 2. The assessee pleads the following substantive grounds in the instant appeal : 2 ITA No.157/PAN/2023 “On facts and in law, 1) The Learned CIT(A) has erred in law as well as on fact in confirming penalty of Rs.21,67,128 imposed by the Ld. Assessing Officer under section 271(l)(c) of the Income Tax Act, 1961 without satisfying the condition of assigning plausible reasons to be given for rejection of the replies of the Appellant. 2) The Learned CIT(A) has failed to appreciate the fact that the Ld. Assessing Officer erred in initiating penalty proceedings under section 271AAB of the Income Tax Act, 1961 and subsequently rectifying the section to 271(l)(c) of the Income Tax Act, 1961 without appending a valid notice as required under the Act. The penalty proceedings are therefore void ab initio and hence the levy of penalty by the Ld. Assessing Officer ought to have been deleted by the Learned CIT(A) in the interest of justice and equity. 3) The Ld. CIT(A) has erred in rejecting the Appeal of the Appellant without appreciating a fact that the Appellant had still time to file his return of income under section 139(4) of the Income Tax Act, 1961 and that the Appellant being a regular income tax assessee the question of non- filing of return or concealing the income would not have arose as concluded by the Ld. Assessing Officer. The levy of penalty under section 271(l)(c) of the Income Tax Act, 1961 is therefore highly unjustified and illegal. 3 ITA No.157/PAN/2023 4) The Ld. CIT(A) has failed to appreciate the fact that the Ld. Assessing Officer ought to have issued a fresh notice under section 271(l)(c) of the Income Tax Act, 1961 and spell out clearly as to whether the proceedings initiated are for ‘concealment of income or furnishing of inaccurate of such income’ as held by the Honorable Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory reported in 359 ITR 56. 5) The Appellant craves the permission to add, alter, amend or delete any of the above Grounds of Appeal at the time of hearing.” 3. Suffice to say, the relevant factual backdrop is indeed in a narrow compass so far as the assessee’s first and foremost legal plea challenging initiation of the impugned penalty proceedings is concerned. There is hardly any dispute between the parties that the Assessing Officer herein had framed his sec.143(3) r.w.s.153C assessment on 29.03.2016 making the alleged undisclosed long term capital gains addition amounting to Rs.1,05,20,036/- involving twin capital assets. The same has admittedly attained finality. 4. We now advert to the impugned penalty proceedings. There is again no dispute between the parties that the Assessing Officer had in fact initiated sec.271AAB penalty vide sec.274 notice dated 29.03.2016 itself seeking to 4 ITA No.157/PAN/2023 levy the same as per the prescribed rate(s) therein. This admittedly followed his corrigendum dated 16.09.2016 that the said notice would indeed be read as to have been issued u/sec.271(1)(c) of the Act. Needless to say, the learned Assessing Officer thereafter levied sec. 271(1)(c) penalty amounting to Rs.21,67,128/- in his order dated 30.09.2016 which stands confirmed in the CIT(A)'s order herein. This leaves the assessee aggrieved. 5. Learned counsel representing the assessee has raised twin preliminary arguments apart from those dealing with the merits of the issue. His first and foremost vehement contention is that such a course of action changing the head of sec.271AAB penalty to that u/sec. 271(1)(c) is nowhere admissible in law. Further that even if the former plea is rejected; the fact remains that the learned lower authorities have not issued a separate notice u/sec. 271(1)(c) of the Act before levying the impugned penalty. Learned counsel submits that even if it is held that sec. 271(1)(c) penalty proceedings herein have been rightly initiated by way of corrigendum, the fact remains that it has nowhere been specified as to whether the assessee had in fact concealed or furnished inaccurate particulars of his taxable income. 5 ITA No.157/PAN/2023 6. The Revenue has placed strong reliance on both the learned lower authorities action imposing the impugned penalty. 7. We have given our thoughtful consideration to the foregoing vehement rival stands and find no reason to sustain the impugned penalty. We make it clear that the learned Assessing Officer herein had not issued any specific show cause notice in tune with sec.271(1)(c) of the Act pinpointing the assessee’s either of the specified defaults (supra). Case law Mohd. Farhan A.Shaikh vs. ACIT [2021] 434 ITR 1 (Bom) (FB) in old scheme of sec. 271(1)(c) of the Act, has settled the issue in assessee’s favour and against the department that such a failure at the Assessing Officer’s behest vitiates the entire proceedings. The Revenue at this stage sought to buttress the point that their lordships’ very recent decision in Veena Estates Pvt. Ltd. vs. CIT 461 ITR 483 (Bom.) has settled the law that even if such a failure is there, the same does not vitiate the penalty proceedings as no prejudice could be held to have been caused to the assessee concerned. 8. The Revenue’s instant latter plea fails to evoke our concurrence since the question before their lordships’ was that of framing of an additional substantial question of law in sec.260A proceedings which is distinguishable on facts before us as the assessee has all along in raising this plea which stands declined in CIT(A)'s lower appellate discussion. We thus conclude that the impugned penalty proceedings have to be 6 ITA No.157/PAN/2023 declared as vitiated in light of the Assessing Officer’s foregoing failure not only in not having issued a separate sec. 271(1)(c) notice but also in not specifying the corresponding limb i.e., concealment or furnishing of inaccurate particulars of income. We accordingly delete the impugned penalty in very terms. All other arguments raised hereinabove stand rendered academic. 9. This assessee’s appeal is allowed in above terms. Order pronounced in the open Court on 20.06.2024. Sd/- Sd/- [RAMA KANTA PANDA] [SATBEER SINGH GODARA] VICE PRESIDENT JUDICIAL MEMBER Pune, Dated 20 th June 2024 VBP/- Copy to 1. The applicant 2. The respondent 3. The Pr.CIT, Panaji concerned 4. D.R. ITAT, Panaji Bench, Panaji 5. Guard File. //By Order// //True Copy // Senior Private Secretary, ITAT, Pune Benches, Pune.