Jagdamba Prasad Gupta, Delhi V. ACIT, New Delhi

ITA 1834/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6644 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KRITI GUPTA
• Keywords: Principle of natural justice
• Section: 271(1)(c); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBE R & SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO. 1834/DEL/2016 ASSESSMENT YEAR: 2011-12 JAGDAMBA PRASAD GUPTA 108, BLOCK-B, PHASE-1, VIVEK VIHAR, DELHI. AEEPG8550R VS ACIT CIRCLE 35(1) NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY MS. KRITI GUPTA, CA REVENUE BY SH. N.K. BANSAL, SR. DR ORDER PER SHRI BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST T HE ORDER OF LD. CIT(APPEALS)-19, NEW DELHI DATED 15/01/2016 FOR AY 2011-12, CHALLENGING THE LEVY OF PENALTY U/S 271(1)(C ) OF T HE I.T. ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE AIR I NFORMATION IN THE CASE OF THE ASSESSEE REVEALED THAT ASSESSEE HAD SOL D A HOUSE PROPERTY WHICH WAS NOT DISCLOSED IN THE RETURN OF I NCOME FILED BY THE ASSESSEE. THE ASSESSEE EXPLAINED THAT HE HAS S OLD THE HOUSE PROPERTY FOR RS. 55 LAKHS, HOWEVER, THE SAME WAS NO T TAXABLE AS THE CAPITAL GAINS HAD BEEN INVESTED IN THE PURCHASE OF ANOTHER DATE OF HEARING 21.01.2019 DATE OF PRONOUNCEMENT 21.01.2019 2 ITA NO. 1834/DEL /2016 PROPERTY, THEREFORE, INCOME WAS EXEMPT U/S 54 OF TH E ACT. THE AO, HOWEVER, FOUND THAT PROPERTY PURCHASED WAS A FREE H OLD COMMERCIAL PLOT AND NOT A RESIDENTIAL HOUSE AS IS REQUIRED TO BE PURCHASED IN COMPLIANCE WITH THE PROVISIONS OF SECTION 54 OF THE ACT. THIS AMOUNT WAS, THEREFORE, ADDED TO THE INCOME. ANOTHE R ADDITION WAS MADE IN RESPECT OF AMOUNT OF INTEREST WHICH WAS CLA IMED DEDUCTION IN RESPECT OF THE SAID PROPERTY. THE PENALTY PROCEE DINGS WERE INITIATED AND IN ABSENCE OF ANY EXPLANATION FROM TH E SIDE OF THE ASSESSEE, PENALTY U/S 271(1)(C ) WAS LEVIED. THE L D. CIT(A) CONFIRMED THE LEVY OF PENALTY. 3. LD. COUNSEL FOR ASSESSEE SUBMITTED THAT THE AO I SSUED SHOW CAUSE NOTICE DATED 31/12/2013 U/S 274 READ WITH SEC TION 271(1)(C) OF THE ACT BEFORE LEVY OF THE PENALTY WHICH IS ILLE GAL AND BAD IN LAW BECAUSE THE SHOW CAUSE NOTICE CONTAINED THE FOLLOWI NG: HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME IN TERMS OF E XPLANATION 1,2,3,4 AND 5. 4. SHE HAS SUBMITTED THAT SINCE THE SHOW CAUSE NOTI CE CONTAINED BOTH THE LIMBS OF SECTION 271(1)(C) OF THE ACT, THE REFORE, IT IS VOID, THEREFORE, NO PENALTY COULD BE IMPOSED. IN SUPPORT OF HER CONTENTION, SHE HAS RELIED UPON DECISION OF THE KAR NATAKA HIGH COURT IN THE CASE OF CIT VS. M/S SSAS EMERALD MEAD OWS REPORTED IN 73 TAXMANN.COM 241 IN WHICH IN THE SIMILAR CIRCU MSTANCES PENALTY WAS HELD TO BE RIGHTLY CANCELLED. THIS JUD GMENT IS CONFIRMED BY THE SUPREME COURT BY DISMISSING THE SL P OF THE DEPARTMENT REPORTED IN 73 TAXMANN.COM 248. ON THE OTHER HAND, 3 ITA NO. 1834/DEL /2016 LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE DID NOT RAISE THE PLEA BEFORE THE AUTHORITIES BELOW THAT THERE IS A DEFECT IN THE NOTICE, THEREFORE, AD DITIONAL GROUND CANNOT BE RAISED AT THIS STAGE AND RELIED UPON JUDG MENT OF THE MADRAS HIGH COURT IN THE CASE OF SUNDRAM FINANCE LT D. VS. ACIT 403 ITR 407 WHICH IS CONFIRMED BY THE SUPREME COURT BY DISMISSING THE SLP REPORTED IN 99 TAXMANN.COM 152. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IT IS ADMITTED FACT THAT THE A O BEFORE LEVY OF THE PENALTY U/S 271(1)(C) OF THE ACT ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE DATED 31/12/2013, COPY OF WHICH IS FILED A T PAGE 1 OF THE PAPER BOOK. IN THE SAID NOTICE THE AO HAS MENTIONE D HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISH ED INACCURATE PARTICULARS OF SUCH INCOME IN TERMS OF EXPLANATION 1,2,3,4 AND 5. IN THIS NOTICE THE AO HAS MENTIONED BOTH THE LIMBS OF SECTION 271(1)(C) OF THE ACT THAT ASSESSEE HAVE CONCEALED THE PARTICU LARS OF THE INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. AO HAS NOT SPECIFIED IN THE NOTICE AS TO UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT A SHOW CAUSE NOTICE HAS BEEN I SSUED AGAINST THE ASSESSEE FOR LEVY OF THE PENALTY. THE HONBLE KARN ATAKA HIGH COURT IN THE CASE OF CIT VS. M/S SSAS EMERALD MEADOWS (S UPRA) CONFIRMED THE ORDER OF THE TRIBUNAL BY DISMISSING T HE DEPARTMENTAL APPEAL IN WHICH THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY AO U/S 274 RE AD WITH SECTION 271(1)(C) OF THE ACT TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEE DINGS HAD BEEN 4 ITA NO. 1834/DEL /2016 INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULA RS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH E SLP OF THE DEPARTMENT HAS ALSO BEEN DISMISSED BY THE SUPREME C OURT. THE AO IN THE ASSESSMENT ORDER WHILE MAKING THE ADDITIO N HAS ALSO NOTED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE INITIATED SEPARATELY FOR FILING INACCURATE PARTICULARS/CONCEA LMENT OF INCOME. AO WAS NOT SURE AS TO UNDER WHICH LIMB OF SECTION 2 71(1)(C) OF THE ACT PENALTY PROCEEDINGS HAVE BEEN INITIATED IN THE ASSESSMENT ORDER. THE ASSESSEE WHILE CHALLENGING THE PENALTY ORDER BEFORE LD.CIT(A) HAS RAISED A SPECIFIC GROUND THAT THE ORD ER PASSED BY THE AO IS ERRONEOUS, ILLEGAL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND EQUITY. THE SAME GROUND IS RAISED IN THE PRESE NT APPEAL AS WELL. THUS, THE ASSESSEE CHALLENGED THE LEGALITY O F THE PENALTY ORDER BEFORE LD. CIT(A) WHICH INCLUDES THE LEGALITY OF TH E SHOW CAUSE NOTICE FOR LEVY OF THE PENALTY. SINCE THE NOTICE I SSUED BEFORE LEVY OF THE PENALTY DATED 31/12/2013 IS VOID, ILLEGAL AND B AD IN LAW, THEREFORE, IT WAS RIGHTLY CHALLENGED THAT ENTIRE PE NALTY PROCEEDINGS ARE ILLEGAL AND VITIATED. THUS, ASSESSEE PRACTICAL LY DID NOT RAISE ANY ADDITIONAL GROUND IN THIS REGARD. SINCE THE NOTICE DATED 31/12/2013 IS VOID, BAD IN LAW AND ILLEGAL, THEREFO RE, ENTIRE PENALTY PROCEEDINGS ARE VITIATED AND ARE LIABLE TO BE QUASH ED. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT I N THE CASE OF SSAS EMERALD MEADOWS (SUPRA). THE DECISION RELIED UPON BY THE LD. DR, THUS, WOULD NOT SUPPORT THE CASE OF THE REV ENUE. 5 ITA NO. 1834/DEL /2016 6. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE TH E ORDER OF THE AUTHORITIES BELOW AND QUASHED THE PENALTY PROCEEDIN GS. PENALTY CANCELLED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (O.P. KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21.01.2019 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 21/01/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21/01/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 21/01 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 21/01 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21/0 1 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 6 ITA NO. 1834/DEL /2016