KORPUS FINANCIAL SERVICES PVT LTD, FORT MUMBAI V. D.C.I.T. CIRCLE -44, MUMBAI, MUMBAI

ITA 1852/MUM/2021

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0814 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 11-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SONI
• Keywords: Question of law
• Section: 271(1)(c); 250; 274; 271B; 44AB; 73; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H”, MUMBAI BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 1852/Mum/2021 (A.Y. 2011-12) Korpus Financial Services Pvt. Ltd., 1 2 3 Gundecha Chambers, Nagindas Master Road, Fort, Mumbai-400001. PAN: AACCK4562A ...... Appellant Vs. DCIT, Circle-44, Aayakar Bhavan, M.K. Road, Mumbai-400020. ..... Respondent Appellant by : Sh. Nitesh Thakkar, CA Respondent by : Sh. Vijay Kumar Soni, Sr-DR Date of hearing : 12/05/2022 Date of pronouncement : 03/08/2022 Order PER GAGAN GOYAL, A.M: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-50, Mumbai, [hereinafter referred to as ‘the CIT (A)’] through National Faceless Appeal Centre (NFAC) vide order dated 25.08.2021 for the Assessment Year (AY) 2011-12. The assessee has raised the following grounds of appeal: “Your appellant being aggrieved by the Order passed by the learned Commissioner of Income tax, (Appeals), National Faceless Appeal Centre, u/s 250 of the Income Tax Act presents this appeal against the same on the following grounds. 1. The learned CIT (A) has erred in confirming the penalty levied of Rs. 1, 00,000/- u/s 271B of the Income Tax Act, 1961. It is submitted that on the facts and 2 ITA No. 1852/Mum/2021 (A.Y. 2011-12) circumstances of the case, the provisions of Section 271B of the Act are just not applicable in case of Appellant and therefore the penalty confirmed by incorrect application Section 271B of Rs. 1, 00,000/- be deleted. The same be held now. 2. The learned CIT (A) has failed in appreciating the facts of the case and detailed submission made during the course of appellate proceeding for not getting the books of accounts audited u/s 44AB of Income Tax Act, 1961 for the year. It is submitted that the total turnover of the Appellant company did not exceed threshold limit for the year as provided u/s 44AB of the Act and therefore was not liable to get its books of audited under the provisions of Income tax Act,1961. On facts and circumstances of the case, the incorrect penalty levied of Rs 1, 00,000/- wrongly invoking the provisions of Section 271B of the Act be deleted in the interest of justice. 3. The order passed by the learned CIT (A) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now. 4. Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing.” 2. Brief facts of the case are that the assessee filed its return of income under section 153C of the Income Tax Act, 1961 (for short ‘the Act’) declaring a loss of Rs. 47,022/-. A search was conducted on 04.02.2011 in the case of M/s JIK Industries Ltd. And at the premises of CMD Shri R.G. Parikh, the assessee company is a subsidiary of the JIK Industry Ltd. In the search, documents and computer backup was found and seized which pertains to the assessee company as well, therefore, the case of the assessee was covered under section 153C of the Act. Accordingly, notice under section 153C of the Act was issued on 30.04.2012 for filing return of income. 3. Before any finding on ground no.2 pertaining to the merits of the case, after going through the record of the appeal as produced before us i.e. assessment order, appeal order of Ld. CIT (A), copy of penalty notice issued and penalty order, we observed that there is a substantial legal issued involved which needs to be decided first as raised through ground no.1 and 3 by the assessee, keeping in view the decision of the Hon’ble Jurisdictional High Court of Mumbai in 3 ITA No. 1852/Mum/2021 (A.Y. 2011-12) the case of Mohd. Farhan A. Shaikh Vs. DCIT (2021) 434 ITR 1 (Bombay) dated 11.03.2021. 4. We have heard both the parties and perused the records. At the outset, the Ld. AR assailing the action of the AO levying penalty u/s 271B of the Act brought to our notice that the show cause notice issued by AO u/s 274 r.w.s 271B of the Act dated 22.03.2013 & 08.07.2013 has not spelled out specifically the fault/charge for which the assessee was being proceeded against with the proposed penalty i.e. whether the assessee has “is liable for penalty under section 271F, 271(1)(b), 271A, 271B & 272A(1)(c) of the Act”. Having not done so, according to him, the assessee was in the dark as to what fault it has to defend against the proposed penalty. Therefore, according to him, since the show cause notice itself is bad in law, the resultant penalty levied is vitiated. For that, he relied on the decisions of the Full bench of the Hon’ble Jurisdictional High Court in the case of Mohd. Farhan A. Shaikh Vs. DCIT (2021) 434 ITR 1 (Bombay) dated 11.03.2021 wherein their Lordships has held that the show cause notice issued prior to levy of penalty without specifying the fault/charge against which the assessee is being proceeded, would vitiate the penalty itself. And thus the Hon’ble Court upheld the view of the division bench order in the case of PCIT Vs. Goa Dourado Promotions (P.) Ltd. (Tax Appeal No.18 of 2019, dated 26.11.2019) and held that the contrary view taken by another division bench in the case of CIT Vs. Smt. Kaushalya (1995) 216 ITR 660 (Bom) does not lay down the correct proposition of law. 5. As noted earlier, we find that the penalty notice dated 22.03.2013 & 08.07.2013 did not explicitly convey to the assessee the specific fault/charge the assessee is being proceeded for levy of penalty. Resultantly, the show cause notice is found to be defective/invalid, and therefore it is held to be bad in law. 4 ITA No. 1852/Mum/2021 (A.Y. 2011-12) For doing that we rely on the decision of the Hon’ble Karnataka High Court in the case of CIT vs Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565 (Kar) and the Department’s SLP against it has been dismissed by the Hon’ble Supreme Court. We also find that Hon’ble Karnataka High Court in the case of CIT Vs. SSA’s Emerald Meadows, reported in (2016) 73 taxmann.com 241 (Kar) endorsed the same view in Manjunatha Cotton and Ginning Factory (supra) and held as under:- “3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under section 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 Section 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 on the decision of the Division Bench of this Court rendered in the case of CIT Vs. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565/218 Taxman 423/35 taxmann.com 250(Kar). 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed.” 6. Respectfully following the judicial precedents as well as the binding decision of the Full bench decision of the Hon’ble jurisdiction High Court’s in the case of Mohd. Farhan A. Shaikh (supra), we direct the deletion of the penalty levied in this case. 7. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 3 rd day of August, 2022. Sd/- Sd/- ABY T. VARKEY) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, िदनांक/Dated: 03/08/2022 SK, Sr.PS 5 ITA No. 1852/Mum/2021 (A.Y. 2011-12) Copy of the Order forwarded to: 1. अपीलाथŎ/The Appellant , 2. Ůितवादी/ The Respondent. 3. आयकर आयुƅ(अ)/ The CIT(A)- 4. आयकर आयुƅ CIT 5. िवभागीय Ůितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाडŊ फाइल/Guard file. BY ORDER, //True Copy// (Dy. /Asstt. Registrar) ITAT, Mumbai