M/S. Chandi Steel Industries Ltd., Kolkata V. DCIT, CC-XIII, Kolkata, Kolkata

ITA 2143/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1656 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 26-11-2014
• Court: TRIBUNAL
• Keywords: Search and seizure; Question of law
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH, KOLKATA (BENCH- C) BEFORE SHRI N. V. VASUDEVAN JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER, I.T.A. NO. 2143/KOL/2014 ASSESSMENT YEARS: 2009-10 ORDER PER M. BALAGANESH , AM THIS IS APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-CENTRAL-II, KOLKATA (HEREINAFTER REFERRED TO AS THE LD. CIT(A)), ARISING FROM THE APPEAL NO. 211/CC-XIII/CIT(A)C-II/14-15, DT. 23.09.2014, PASSED UNDER SECTION 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) RELATING TO ASSESSMENT YEAR 2009-10. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD.CIT(A) WAS JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY U/S 271(1)( C) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. M/S. CHANDI STEEL INDUSTRIES LTD. [PAN : AABCC0523C ] -VS- D.C.I.T., CC-XIII, KOLKATA (APPELLANT) (RESPONDENT) FOR THE ASSESSEE SHRI S.K. TULSIYAN, FCA FOR THE REVENUE NONE DATE OF HEARING 03.05.2017 DATE OF PRONOUNCEMENT 02.06.2017 2 I.T.A. NO. 2143/KOL/2014 ASSESSMENT YEARS: 2009-10 M/S. CHANDI STEEL INDUSTRIES LTD. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD. AO OBSERVED THAT THERE WAS A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT CONDUCTED IN JAI BALAJI GROUP OF CASES AT VARIOUS BUSINESS AND RESIDENTIAL PREMISES ON 9.62011. DURING THE COURSE OF SEARCH, DISCLOSURE OF RS 64 LAKHS WAS MADE U/S 132(4) OF THE ACT IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 ON ACCOUNT OF SHORTAGE OF STOCK AND THE SALE OF SCRAP. IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME ON 16.1.2013 DECLARING INCOME OF RS 1,00,09,048/- INCLUDING THE ADDITIONAL INCOME DISCLOSED IN THE SUM OF RS 64 LAKHS U/S 132(4) OF THE ACT. THE ASSESSMENT WAS COMPLETED U/S 153A / 143(3) OF THE ACT ON 30.10.2013 DETERMINING TOTAL INCOME AT RS 1,02,52,920/-. THE LD. AO IMITATED PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT FOR CONCEALMENT OF INCOME IN THE ORIGINAL RETURN FILED ON 29.9.2009 DECLARING INCOME OF RS 49,77,665/-. THE ASSESSEE PLEADED THAT NO PENALTY U/S 271(1)(C ) OF THE ACT WOULD BE ATTRACTED IN THE INSTANT CASE AS ADMITTEDLY THE ASSESSEE HAD MADE DISCLOSURE U/S 132(4) OF THE ACT IN THE SUM OF RS 64 LAKHS AND HAD DULY DISCLOSED THE SAME IN THE RETURN FILED U/S 153A OF THE ACT THEREBY RESULTING IN NIL CONCEALMENT ON ITS PART. HOWEVER, THE LD. AO PROCEEDED TO LEVY PENALTY THEREON BY RELYING ON EXPLANATION 5A TO SECTION 271(1)(C ) OF THE ACT IN THE SUM OF RS. 19,98,080/- WHICH WAS ALSO UPHELD BY THE LD.CIT(A) IN FIRST APPEAL. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY OF RS.19,98,080/- LEVIED UNDER SEC 271(1)(C) @ 100% OF THE TAX ALLEGEDLY SOUGHT TO BE EVADED ON THE ADDITIONAL INCOME OF RS.64,00,000/- DISCLOSED UNDER SEC 132(4) OF THE ACT, AND INCLUDED IN THE RETURN FILED UNDER SEC 153(A). THE ASSESSEE NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS THEREOF. THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE CIT(A) IS WRONG AND NEED TO BE DELETED. 3 I.T.A. NO. 2143/KOL/2014 ASSESSMENT YEARS: 2009-10 M/S. CHANDI STEEL INDUSTRIES LTD. 2. THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 4. THE LD. AR APART FROM REITERATING THE FACTS ALSO BROUGHT TO THE NOTICE OF THE BENCH THAT THE PENALTY NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C ) OF THE ACT HAD NOT STRUCK OFF THE RELEVANT PORTION BY SPECIFICALLY MENTIONING THE CHARGE OF OFFENCE COMMITTED BY THE ASSESSEE VIZ., WHETHER IT HAD CONCEALED THE PARTICULARS OF INCOME OR IT HAD FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDINGLY HE STATED THE SHOW CAUSE NOTICE FOR PENALTY PROCEEDINGS WAS DEFECTIVE AND IN SUPPORT OF THIS, HE PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS IN ITA NO. 380 OF 2015 DATED 23.11.2015 WHICH WAS LATER APPROVED BY THE HONBLE SUPREME COURT BY DISMISSAL OF SPECIAL LEAVE PETITION (SLP) BY THE REVENUE IN CC NO. 11485/2016 DATED 5.8.2016. IN RESPONSE TO THIS, THE LD. DR VEHEMENTLY RELIED ON THE ORDER OF THE LD. AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE PENALTY NOTICE U/S 274 R.W.S 271(1)(C ) OF THE ACT DOES NOT SPECIFY THE CHARGE OF OFFENCE COMMITTED BY THE ASSESSEE VIZ WHETHER IT HAD CONCEALED THE PARTICULARS OF INCOME OR IT HAD FURNISHED INACCURATE PARTICULARS OF INCOME. HENCE THE SAID NOTICE IS TO BE HELD AS DEFECTIVE. NOW THE SHORT QUESTION THAT ARISES FOR CONSIDERATION IS AS TO WHETHER THE PENALTY COULD BE VALIDLY LEVIED BASED ON THE DEFECTIVE SHOW CAUSE NOTICE. THIS ISSUE HAS BEEN ADDRESSED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS IN ITA NO. 380 OF 2015 DATED 23.11.2015 WHICH IN TURN PLACED RELIANCE ON ANOTHER JUDGEMENT OF THE SAME COURT IN THE CASE OF CIT VSMANJUNATHA COTTON AND GINNING FACTORY REPORTED IN 359 ITR 565 (KAR). IN THE SAID DECISION, THEIR LORDSHIPS OF HONBLE KARNATAKA HIGH COURT HELD THAT:- 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 4 I.T.A. NO. 2143/KOL/2014 ASSESSMENT YEARS: 2009-10 M/S. CHANDI STEEL INDUSTRIES LTD. 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 COMMISSIONER OD INCOME TAX VSMANJUNATHA COTTON AND GINNING FACTORY REPORTED IN (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGEMENT 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. 5.1. WE FIND THAT THE REVENUE HAD PREFERRED A SLP BEFORE THE HONBLE SUPREME COURT AGAINST THIS JUDGEMENT WHICH WAS DISMISSED IN CC NO. 11485/2016 DATED 5.8.2016 BY OBSERVING AS UNDER:- UPON HEARING THE COUNSEL, THE COURT MADE THE FOLLOWING ORDER DELAY CONDONED. WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPECIAL LEAVE PETITION IS , ACCORDINGLY DISMISSED. PENDING APPLICATION, IF ANY, STANDS DISPOSED OF. 5.2. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENTS, WE CANCEL THE LEVY OF PENALTY IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 02.06.2017. SD/- SD/- [N. V. VASUDEVAN] [M. BALAGANESH] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 02.06.2017 {SC SPS} 5 I.T.A. NO. 2143/KOL/2014 ASSESSMENT YEARS: 2009-10 M/S. CHANDI STEEL INDUSTRIES LTD. COPY OF THE ORDER FORWARDED TO: 1. ASSESSEE- M/S. CHANDI STEEL INDUSTRIES LTD., 5, BENTINCK STREET, KOLKATA-700001 2.REVENUE D.C.I.T., CC-XIII, KOLKATA 3.CIT(A)- KOLKATA. 4.CIT , KOLKATA. 5.CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE, DDO, KOLKATA BENCHES, KOLKATA.