P. Krishna, Hyderabad, Hyderabad V. ITO, Ward-8(2), Hyderabad, Hyderabad

ITA 1577/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6207 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 24-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1577/HYD/2016 ASSESSMENT YEAR: 2008-09 P. KRISHNA, HYDERABAD. PAN AJXPP 5226H VS. INCOME-TAX OFFICER, WARD 8(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.C. DEVDAS REVENUE BY : SHRI K.J. RAO DATE OF HEARING : 02-02-2017 DATE OF PRONOUNCEMENT : 10-02-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS IS AN APPEAL OF THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 2, HYDE RABAD, DATED 28/06/2016, FOR AY 2008-09, CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT A SSESSEE, AN INDIVIDUAL, HAS FILED RETURN OF INCOME FOR THE AY 2008-09 ON 26 /06/2008 DECLARING A TOTAL INCOME OF RS. 60,19,070/- BESIDES AGRICULTU RAL INCOME OF RS. 55,000/-. THE ASSESSEE IS INVOLVED IN CHIT BUSINESS . THIS CASE WAS SELECTED FOR SCRUTINY AS PER THE NORMS LAID DOWN BY THE CBDT AND ACCORDINGLY, AN ORDER U/S 143(3) WAS PASSED DETERMI NING THE TAXABLE INCOME AT RS. 4,04,37,363/- INCLUDING AGRICULTURAL INCOME BY MAKING FOLLOWING ADDITIONS: ADDITION MADE BY THE AO SUSTAINED BY CIT/ITAT I) RENTAL AND HOARDING INCOME 3,98,375/- 2,28,375/- II) CHIT COMMISSION 3,49,000/- 2,31,000/- 2 ITA NO. 1577/H/16 SHRI P. KRISHNA III) INCOME ON ACCOUNT OF LAND DEAL 1,77,00,000/- 7,77,000/- IV) INVESTMENT IN BROTHER-IN- LAWS NAME 93,000/- 93,000/- V) INVESTMENT IN THE NAME OF SRI A. BHASKAR 22,560/- 22,560/- VI) UNEXPLAINED LOANS 17,55,000/- 3,18,900/- VII) INVESTMENT IN THE NAME OF A MAHENDER 7,55,855/- 7,55,855/- 3. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, OBSERVING, INTER-ALIA, THAT THE ASSESSE E DID NOT REFLECT THE CORRECT INCOME DURING THE YEAR UNDER CONSIDERATION AND NEVER BOTHERED TO FURNISH EXPLANATION FOR THE ADDITIONS M ADE TO DEMONSTRATE THAT THESE ADDITIONS DO NOT ATTRACT PENAL PROVISION S. FURTHER, HE OBSERVED THAT THE ADDITIONS WERE ULTIMATELY SUSTAIN ED BY THE APPELLATE AUTHORITIES FOR THE REASON THAT THE ASSESSEE COULD NOT CONVINCE THE HIGHER AUTHORITIES BY WAY ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THAT THE ADDITIONS MADE WERE INCORRECT. ACCORDINGLY , THE AO ISSUED SHOW CAUSE NOTICE DATED 26/06/2014 AS TO WHY PENALT Y U/S 271(1)(C) SHOULD NOT BE LEVIED FOR THE ADDITIONS MADE IN THE ASSESSMENT AND WERE EVEN SUSTAINED BY THE APPELLATE AUTHORITIES. A S THERE WAS NO REPLY TO THE SAID SHOW CAUSE NOTICE, THE AO PROCEED ED TO LEVY PENALTY ON THE GROUND THAT THE ASSESSEE FAILED TO FURNISH A NY COGENT REASON TO SUBSTANTIATE THAT THE ADDITIONS DO NOT WARRANT ANY PENALTY. THUS, HE LEVIED A MINIMUM PENALTY OF RS. 8,25,000/- U/S 271( 1)(C). 4. ON AN APPEAL BEFORE THE CIT(A), THE CIT(A) CONFI RMED THE PENALTY LEVIED BY THE AO BY HOLDING THAT THE ASSESS EE NEITHER FURNISHED ANY EVIDENCE DURING THE APPEAL PROCEEDING S NOR REBUTTED THE CONCLUSIONS DRAWN BY AO. 5. AGGRIEVED WITH THE ABOVE ORDER OF CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF A PPEAL: 1. THE ORDER OF THE HON'BLE CIT(A) IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 3 ITA NO. 1577/H/16 SHRI P. KRISHNA 2. THE HON'BLE CIT(A) FINALIZED THE APPEAL PROCEEDI NGS WITHOUT ALLOWING SUFFICIENT OPPORTUNITY TO THE APPELLANT AN D THEREFORE, THE ORDER IS NOT SUSTAINABLE. 3. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT T HE ADDITIONS WERE MADE ON ESTIMATION BASIS AND WITHOUT ANY SUPPO RTING MATERIAL ON RECORD AND THEREFORE, OUGHT NOT TO HAVE SUSTAINED THE PENALTY LEVIED. 4. THE HON'BLE CIT(A) OUGHT TO HAVE TAKEN INTO CONS IDERATION THE FACT THAT THE INCOME COMPUTED WAS REDUCED BY THE OR DER OF THE HON'BLE CIT(A) AND FURTHER REDUCED BY THE ORDER OF THE HON'BLE ITAT, HYDERABAD AND THUS THE ADDITION SUSTAINED WAS ONLY AN ESTIMATED FIGURE AND HENCE THERE WAS NO CASE FOR LE VYING PENALTY. 5.1 THE ASSESSEE FILED A PETITION REQUESTING FOR A DMISSION OF THE ADDITIONAL GROUND, WHICH IS AS UNDER: 1. THE NOTICE U/S.274 R.W.S 271(1)(C) OF THE I.T. ACT, 1961 DATED 30/09/2013 NOT HAVING SPECIFIED THE DEFAULT U NDER ANY SPECIFIC SECTION AND FURTHER WHERE THE NOTICE ISSUE D U/S.271(1)(C) DOES NOT SPECIFY THE DEFAULT WHETHER IT IS FOR CANC ELLATION OF INCOME OR FURNISHING INACCURATE PARTICULARS, THE EN TIRE NOTICE ISSUE IS INVALID AND WITHOUT JURISDICTION AND THERE FORE THE PENALTY LEVIED U/S 271(1)(C) AT RS.8,25,000 IS BAD IN LAW, INVALID AND UNSUSTAINABLE. 6. AS THE SAID ADDITIONAL GROUNDS ARE LEGAL GROUNDS , WHEREIN, THE FACTS ARE ON RECORD AND FACTS DO NOT REQUIRE FRESH INVESTIGATION, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO., LIMITED VS. CIT 229 ITR 383 (SC), WE ADMIT THE SAID ADDITIONAL GROUND OF ASSESSEE. 7. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUE OF A NOTICE U/S 274 R.W.S. 271(1)(C) ON 30.09.2013. HE SUBMITTED THAT W HILE ISSUING THE SAID NOTICE, THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THE NOTICE IS NOT VALIDLY ISSUED. CONSEQUENTLY, THE ORDER PASSED U/S 271(1)(C) ALSO I S NOT VALID. FOR 4 ITA NO. 1577/H/16 SHRI P. KRISHNA THIS PROPOSITION, HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC). 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 9. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SS AS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHEREIN THE APEX COURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN W HICH, THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE, WHO CAME IN APPEAL AGAINST T HE ORDER OF THE TRIBUNAL. THE TRIBUNAL RELYING ON A DECISION OF KA RNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACT ORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE ASSESSEE HOLD ING THAT NOTICE ISSUED BY ASSESSING OFFICER U/S 274 READ WITH SECTI ON 271(1)(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E. WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. 9.1 IN THE CASE UNDER CONSIDERATION, ON PERUSAL OF THE SHOW CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 274 R.W .S. 271(1)(C) OF THE IT ACT, 1961, DATED 30/09/2013, IT IS SEEN THAT TH E ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CO NCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, AS PER THE RATIO LAID DOWN BY THE HONBL E SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS, THE NOTICE ISSU ED BY THE ASSESSING OFFICER IS NOT VALID AND CONSEQUENTLY, TH E ORDER PASSED U/S 271(1)(C) IS ALSO NOT VALID. HENCE, WE SET ASIDE TH E ORDER OF THE CIT(A) AND QUASH THE ORDER PASSED BY THE ASSESSING OFFICER U/S 5 ITA NO. 1577/H/16 SHRI P. KRISHNA 271(1)(C) OF THE ACT. ACCORDINGLY, THE APPEAL OF TH E ASSESSEE IS ALLOWED. 10. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED:10 TH FEBRUARY, 2017. KV COPY TO:- 1) SHRI P. KRISHNA, C/O B. NARSING RAO & CO., CAS, PLOT NO. 554, ROAD NO. 92, JUBILEE HILLS, HYDERABAD 500 096. 2) ITO, WARD 8(2), HYD. 3) CIT(A) - 2, HYDERABAD 4 PR. CIT - 2, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE