SHRI VIJAY HARIRAMANI, Bhopal V. THE ACIT 4(1), Bhopal

ITA 161/Ind/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5264 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 23-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S AMBEDKAR
• Assessee Lawyers: GIRISH AGRAWAL
• Keywords: Principle of natural justice; Non compliance; Set aside
• Section: 271(1)(c); 143(3)

Judgement Text

VIJAY HARIRAMANI ITA NO.161/IND/2018 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.161/IND/2018 ASSESSMENT YEAR 2009-10 REVENUE BY S HRI R.S. AMBEDKAR , SR.DR ASSESSEE BY SHRI GIRISH AGRAWAL , CA DATE OF HEARING 08.05 .2019 DATE OF PRONOUNCEMENT 16 . 0 5 .2019 O R D E R PER MANISH BORAD, AM. THIS APPEAL IS FILED AT THE INSTANCE OF THE ASSESSE E PERTAINING TO ASSESSMENT YEAR 2009-10 AND IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-2 (IN SHORT CI T(A)), BHOPAL DATED 05.01.2018 WHICH IS ARISING OUT OF THE ORDER U/S 271(1)(C) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 2 1.03.2016 FRAMED BY ACIT-4(1), BHOPAL. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF AP PEAL; SHR I VIJAY HARIRAMANI, 61-B, KASTURBA NAGAR, BHOPAL VS. ASSTT. COMMISSIONER OF INCOME TAX -4(1), BHOPAL ( APPELLANT ) (RESPONDENT ) PAN NO. A AGPH6333P VIJAY HARIRAMANI ITA NO.161/IND/2018 2 1. THAT ON THE FACTS OF THE CASE AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, THE ORDER OF PENALTY IS BAD IN LAW AND WITHOUT JURISDICTION, HENCE BE CANCELLED. 2. THAT ON THE FACTS OF THE CASE AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, THE PENALTY HAS BEEN LEVIED ON THE BASIS OF VAGUE AND NON SPECIFIC SHOW CAUSE NOTI CE, HENCE THE ORDER OF PENALTY IS UNSUSTAINABLE IN LAW, HENCE BE CANCELLED. 3. THAT ON THE FACTS OF THE CASE AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, IN ABSENCE OF CLEAR FINDING S ABOUT THE CHARGE FOR WHICH THE PENALTY IS IMPOSED, THE PE NALTY ORDER IS BAD IN LAW AND, THEREFORE, BE CANCELLED. 4. THAT ON THE FACTS OF THE CASE AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, THE ADDITION SUSTAINED AT RS.821000 DOES NOT REPRESENT THE CONCEALED INCOME O F THE ASSESSEE OF THE YEAR WITHIN THE MEANING OF SECT ION 271(1)(C ) OF THE ACT, HENCE THE LEVY OF PENALTY IS NOT JUSTIFIED AND, THEREFORE, BE CANCELLED. 5. THAT ON THE FACTS OF THE CASE AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, AND HAVING REGARD TO THE EXPLANATION FURNISHED BEFORE THE LEARNED LOWER AUTHORITIES, IT BE HELD THAT THE LEVY OF PENALTY IS NEITHER JUSTIFIED NOR LAWFUL AND, THEREFORE, THE SAME BE KI NDLY CANCELLED. VIJAY HARIRAMANI ITA NO.161/IND/2018 3 3. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOME ON 29.07.2009 FOR ASSESSMENT YEAR 2009-10 DECLARING IN COME OF RS.34,55,060/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 1 6.12.2011 ASSESSING TOTAL INCOME AT RS.52,57,720/- BY MAKING VARIOUS DISALLOWANCES. THE PENALTY PROCEEDINGS U/S 271(1)(C ) AT RS.9,21,000/- ON ADDITION OF UNDISCLOSED INTEREST I NCOME WAS INITIATED. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFO RE LD. CIT(A) BUT PARTLY SUCCEED IN GETTING RELIED OF RS.1,00,000/- AGAINST THE PENALTY IMPOSED. 4. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE THE T RIBUNAL CHALLENGING THE LEGALITY OF THE PENALTY PROCEEDING S AS WELL AS RAISING GROUNDS ON MERITS AGAINST THE PENALTY LEVI ED U/S 271(1)(C) OF THE ACT AT RS. 8,21,000/-. 5. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS P ER PROVISIONS OF SECTION 271(1)(C) OF THE ACT THE PENALTY CAN BE INITIATED EITHER FOR CONCEALING THE PARTICULARS OF INCOME OR FOR FURNISH ING INACCURATE PARTICULARS OF INCOME, WHEREAS THE LD.A.O HAS NOT R ECORDED ANY VIJAY HARIRAMANI ITA NO.161/IND/2018 4 CHARGE ON THE ASSESSEE, AS TO WHETHER PENALTY IS TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CON CEALING THE PARTICULARS OF INCOME. PLACING RELIANCE ON THE JU DGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS KU LWANT SINGH BHATIA ITA NO.9 OF 2018 DATED 9.5.2018, THE LD. COU NSEL FOR THE ASSESSEE CONTENDED THAT THE LD.A.O HAS FAILED IN CO MPLY THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT BY INITI ATING THE PENALTY PROCEEDINGS WITH NO SPECIFIC CHARGE. RELIANCE WAS ALSO PLACED ON INDORE TRIBUNAL DECISION IN THE CASE OF VARAD MEHTA ITA NO.693/IND/16 DATED 06.12.2018. 6. PER CONTRA DEPARTMENTAL REPRESENTATIVE VEHEMENTL Y ARGUED SUPPORTING THE ORDERS OF LOWER AUTHORITIES. 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THE ISSUES RAISED BY THE ASSESSE E REVOLVES AROUND THE LEVY OF PENALTY AT RS.8,21,000/- LEVIED BY THE LD. A.O AND CONFIRMED BY LD.CIT(A). 8. LD. COUNSEL FOR THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL, FIRSTLY RAISING THE LEGAL ISSUE PLEADED THAT LD. A. O HAS WRONGLY INITIATED THE PENALTY PROCEEDINGS BY NOT SPECIFYING THE CHARGE FOR LEVY OF PENALTY I.E. WHETHER THE PENALTY PROCEEDING S HAS BEEN VIJAY HARIRAMANI ITA NO.161/IND/2018 5 INITIATED FOR CONCEALING PARTICULARS OF INCOME OR F OR FURNISHING THE INACCURATE PARTICULARS OF INCOME. IT WAS ALSO PLEAD ED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THOUGH THE LD. ASSESS ING OFFICER HAS MADE PROPER SATISFACTION ON RECORD IN THE ASSESSMEN T ORDER FOR INITIATING PENALTY PROCEEDINGS BUT IN THE NOTICE IS SUE U/S 274 R.W.S. 271(1)(C) OF THE ACT, LD. A.O REMAINED SILENT BY N OT SPECIFYING AS FOR WHICH CHARGE THE PENALTY PROCEEDINGS HAVE BEEN INITIATED. TO EXAMINE THIS FACT WE HAVE GONE THROUGH THE IMPUGNED NOTICE ISSUED ON 16.12.2011 FOR INITIATING THE PENALTY PROCEEDING S U/S 271(1)(C) OF THE ACT FOR ASSESSMENT YEAR 2009-10. FOR REFERE NCE WE REPRODUCE BELOW THE NOTICE U/S 271(1)(C) OF THE ACT FOR ASSESSMENT YEAR 2009-10; NOTICE UNDER SECTION 271(1)(C) OF INCOME TAX ACT, 1 961 OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX-RANGE-2 AAYAKAR BHAWAN, HOSHANGABAD ROAD, BHOPAL BHOPAL DA TED 16/12/2011 PAN AAGPH6333P TO SHRI VIJAY HARIRAMANI, 11, NEW MARKET, BHOPAL SIR, SUB:- PENALTY PROCEEDINGS U/S 271(1)(C) OF THE IN COME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2009-10 VIJAY HARIRAMANI ITA NO.161/IND/2018 6 IN CONNECTION WITH THE PENALTY PROCEEDINGS U/S 271( 1)(C ) FOR THE ASSESSMENT YEAR(S) 2009-10 YOU ARE REQUESTED TO ATT END MY OFFICE ON OR BEFORE 31/01/2012 AT 11.30 AM TO SHOW CAUSE WHY PEN ALTY SHOULD NOT BE IMPOSED. HOWEVER, IF YOU DO NOT WISH TO BE HEAR D IN PERSON IN THIS REGARD, YOU MAY SUBMIT YOUR WRITTEN SUBMISSIONS SO AS TO REACH ME BY THE ABOVE DATE WHICH WILL BE CONSIDERED BEFORE DISP OSAL OF THE MATTER. SD/- ( D.N. PARAKH) JOINT COMMISSIONER OF 1NCOME T AX, RANGE-2, BHOPAL 9. FROM PERUSAL OF THE ABOVE SHOW CAUSE NOTICES WE FIND THAT THE LD.A.O HAS MERELY MENTIONED THE SECTION BUT THE SPE CIFIC CHARGE I.E. WHETHER THE PENALTY HAVE BEEN INITIATED FOR CONCEAL MENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME HAS NOT BEEN MENTIONED. NOW WHETHER SUCH TY PE OF NOTICE WHICH DOES NOT SPEAK ABOUT THE SPECIFIC CHARGE LEVE LED AGAINST THE ASSESSEE IS VALID AND TENABLE IN THE EYES OF LAW N EEDS TO BE EXAMINED. 10. WE FIND THAT SIMILAR LEGAL ISSUE CAME UP FOR AD JUDICATION BEFORE US IN THE CASE OF VARAD MEHTA ITA NO.693/IND /16 DATED 06.12.2018 (SUPRA) WHEREIN WE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, RELYING ON THE JUDGMENT IN CASE OF KULWAN T SINGH BHATIA (SUPRA ) OBSERVING AS FOLLOWS; 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E RECORDS PLACED BEFORE US. THE ISSUES RAISED BY THE ASSESSEE REVOL VES AROUND THE LEVY OF PENALTY AT RS.16,00,000/- LEVIED BY THE LD. A.O AND CONFIRMED BY LD.CIT(A) ON THE ADDITION OF RS.51,00,000/- FROM UN DISCLOSED SOURCES FOR VIJAY HARIRAMANI ITA NO.161/IND/2018 7 PURCHASE OF IMMOVABLE PROPERTIES. PERUSAL OF RECOR DS SHOWS THAT THE ASSESSEE REMAINING NEGLIGENT AND NON COMPLIANT TO V ARIOUS OPPORTUNITIES PROVIDED BY THE LD. A.O AS WELL AS LD.CIT(A) DURING THE COURSE OF PENALTY PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS TOWARD S THE LEVY OF PENALTY. 12. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL, FIRSTLY RAISING THE LEGAL ISSUE PLEADING THAT LD. A.O HAS WRONGLY I NITIATED THE PENALTY PROCEEDINGS BY NOT SPECIFYING THE CHARGE FOR LEVY O F PENALTY I.E. WHETHER THE PENALTY PROCEEDINGS HAS BEEN INITIATED FOR CONC EALING OF PARTICULARS OF INCOME OR FOR FURNISHING THE INACCURATE PARTICULARS OF INCOME. IT WAS ALSO PLEADED BY THE LD. COUNSEL FOR THE ASSESSEE THAT TH OUGH THE LD. ASSESSING OFFICER HAS MADE PROPER SATISFACTION ON R ECORD IN THE ASSESSMENT ORDER FOR INITIATING PENALTY PROCEEDINGS BUT IN THE NOTICE ISSUE U/S 274 R.W.S. 271(1)(C) OF THE ACT, BUT LD. A.O REMAINED SILENT BY NOT SPECIFYING AS TO WHICH CHARGE THE PENALTY PROC EEDINGS HAVE BEEN INITIATED. TO EXAMINE THIS FACT WE HAVE GONE THROU GH THE IMPUGNED NOTICE ISSUED FOR INITIATING THE PENALTY PROCEEDING S U/S 271(1)(C) OF THE ACT WHICH IS PLACED AT PAGE-52 OF THE PAPER BOOK AN D THE RELEVANT EXTRACT IS REPRODUCED BELOW: TO SHRI VARAD MEHTA 239, SUNNY PALACE M P NAGAR ZONE-1, BHOPAL SIR / MADAM, SUB:- PENALTY PROCEEDING U/S .. 271( 1 ) ( C) .. OF THE INCOME TAX ACT 1961 FOR THE AY 2008.09 IN CONNECTION WITH THE PENALTY PROCEEDINGS U/S, 271 (1) (C) FOR THE ASSESSMENT YEAR(S) 2008-09 YOU ARE REQUESTED TO ATT END MY OFFICE ON 18.01. 2010 AT 11.00 AM TO SHOW CAUSE WHY PENALTY S HOULD NOT BE IMPOSED. HOWEVER. IF YOU DO NOT WISH TO BE HEARD IN PERSON IN THIS REGARD, YOU MAY SUBMIT YOUR WRITTEN SUBMISSIONS SO AS TO REACH ME BY THE ABOVE DATE WHICH WILL BE CONSIDERED BEFORE DISP OSAL OF THE MATTER. VIJAY HARIRAMANI ITA NO.161/IND/2018 8 SD/- ( SHRLKANT NAMDEO ) DEPUTY GOMMISSFSONEROF1NCO ME TAX-1(1}, BHOPAL BHOPAL 13. FROM PERUSAL OF THE ABOVE SHOW CAUSE NOTICE WE FIND THAT THE LD.A.O HAS MERELY MENTIONED THE SECTION BUT THE SPE CIFIC CHARGE I.E. WHETHER THE PENALTY HAVE BEEN INITIATED FOR CONCEAL MENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME HAS NOT BEEN MENTIONED. NOW WHETHER SUCH TYPE OF NOTICE WHICH D OES NOT SPEAK ABOUT THE SPECIFIC CHARGE LEVELED AGAINST THE ASSES SEE IS VALID AND TENABLE IN THE EYES OF LAW NEEDS TO BE EXAMINED. 14. WE FIND THAT SIMILAR ISSUE CAME UP BEFORE THE J URISDICTIONAL HIGH COURT IN THE CASE OF SHRI KULWANT SINGH BHATIA (SUP RA) WHEREIN THE HON'BLE COURT DISCUSSED THE JUDGMENT OF HON'BLE HI GH COURT IN THE CASE OF CIT V/S MANJUNATHA COTTON GINNING FACTORY (SUPRA) AND CIT V/S SSAS EMERALAD MEADOWS (SUPRA) HELD THAT ON DUE CONSIDERATION OF THE ARGUMENTS OF THE LD. COUNSEL FOR THE APPELLANT, SO ALSO CONSIDERING THE FACT THAT THE GROUND MENTIONED IN SHOW CAUSE NOTICE WOUL D NOT SPECIFY THE REQUIREMENT OF LAW, AS NOTICE WAS NOT SPECIFIC, WE ARE OF THE VIEW THAT LD. TRIBUNAL HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSE SSEE AND SET ASIDE THE ORDER OF PENALTY ENFORCED BY THE AUTHORITY. 15. SIMILARLY IN THE CASE OF CIT V/S MANJUNATHA GIN NING FACTORY, HON'BLE HIGH COURT OF KARNATAKA HELD THAT THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT SHOULD SPECIFICALLY MEN TION THE GROUND IN SECTION 271(1)(C) WHETHER CONCEALMENT OF INCOME OR FOR FURN ISHING IN ACCURATE PARTICULARS OF INCOME. SENDING PRINTED FORM WHERE ALL GROUND OF SECTION 271(1)(C ) WOULD NOT MENTIONED THE SPECIFIC REQUIRE MENT OF LAW. ASSESSEE SHOULD KNOW THE GROUNDS ON WHICH HE HAS CHARGED SPE CIFIC OTHERWISE OPPORTUNITIES OF NATURAL JUSTICE DENIED. ON THE BA SIS OF SUCH PROCEEDINGS NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. TAKIN G UP THE PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSSEE I N ANOTHER LIMB IS BAD VIJAY HARIRAMANI ITA NO.161/IND/2018 9 IN LAW. THOUGH IN THE INSTANT APPEAL THE LD. A.O HAS MADE PROPER SATISFACTION IN THE BODY OF THE ASSESSMENT ORDER BU T IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT HE FAILED TO ME NTION THE LIMBS FOR WHICH PENALTY PROCEEDINGS HAVE BEEN INITIATED. IT IS THE NEGLIGENCE OF THE LD. A.O IN NOT MAKING PROPER SPECIFIC CHARGE IN THE NOTICE U/S 274 ABOUT THE ADDITION FOR WHICH PENALTY PROCEEDINGS HAVE BEE N INITIATED. LD. A.O SHOULD BE CLEAR AS TO WHETHER THE ALLEGED ADDITION GOES UNDER THE LIMB OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHI NG INACCURATE PARTICULARS OF INCOME. MERELY ISSUING NOTICE IN G ENERAL PROFORMA WILL NEGATE THE VERY PURPOSE OF NATURAL JUSTICE AS HELD BY THE HON'BLE APEX COURT IN THE CASE OF DILIP N SHRAF 161 TAXMANN 218 THAT THE QUASI- CRIMINAL PROCEEDINGS U/S 271(1)(C) OF THE ACT OUGHT TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE. 14. WE THEREFORE RESPECTFULLY FOLLOWING ABOVE REFER RED JUDGMENTS AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AR E OF THE CONSIDERED VIEW THAT THE ALLEGED NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 31.12.10 IS INVALID, UNTENABLE AND SUFFERS FR OM THE INFIRMITY OF NON APPLICATION OF MIND BY THE ASSESSING OFFICER. WE AC CORDINGLY DIRECT TO DELETE THE PENALTY OF RS.16,00,000/- IMPOSED U/S 27 1(1)(C) ON THIS GROUND ITSELF. WE ACCORDINGLY ALLOW THE ADDITIONAL GROUND RAISED BY THE ASSESSEE ON THE LEGALITY OF THE PENALTY PROCEEDINGS INITIATED U/S 271(1)(C) OF THE ACT. SINCE THE PENALTY U/S 271(1)(C) ALSO H AS BEEN DEALT ON THE PRELIMINARY POINTS OTHER ARGUMENTS OF THE ASSESSEE DEALING WITH THE MERITS OF THE LEVY OF PENALTY ARE NOT BEEN DEALT WI TH, AS THE SAME ARE RENDERED ACADEMIC IN NATURE AND THE APPEAL OF THE A SSESSEE FOR THE ASSESSMENT YEAR 2008-09 IS ALLOWED. 11. WE THEREFORE RESPECTFULLY FOLLOWING ABOVE REFER RED JUDGMENTS AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CAS E ARE OF THE CONSIDERED VIEW THAT THE ALLEGED NOTICE ISSUED U/S 271(1)(C) OF THE VIJAY HARIRAMANI ITA NO.161/IND/2018 10 ACT DATED 16.12.2011 IS INVALID, UNTENABLE AND SUFF ERS FROM THE INFIRMITY OF NON APPLICATION OF MIND BY THE ASSESSI NG OFFICER. SINCE WE HAVE HELD THE NOTICE U/S 274 OF THE ACT AS INVA LID, THE SUBSEQUENT PROCEEDING U/S 271(1)(C) OF THE ACT IS T HUS HELD VOID AB INITIO. WE ACCORDINGLY DIRECT TO DELETE THE PENALTY OF RS. 8,21,000/- FOR ASSESSMENT YEARS 2009-10 IMPOSED U/S 271(1)(C) ON THIS GROUND ITSELF. 13. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.05.20 19. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 16 MAY, 2019 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER ASSISTANT REGISTRAR, ITAT, INDORE