VIJAYABEN KANJI ASHRA, MUMBAI V. DCIT CENT. CIR. 40, MUMBAI

ITA 2254/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0054 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 12-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVI RAM CHANDRAN
• Keywords: Opportunity of being heard; Principle of natural justice; Question of law; Initiation of penalty proceedings; Assessment record
• Section: 143(3); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO S. 2254 / MUM/ 20 1 6 ( / ASSESSMENT YEAR: 20 0 8 - 09 ) SMT.VIJAYABEN KANJI ASHRA , 40, GROUND FLOOR, HASHIM BUILDING, VEER NARIMAN ROAD, FORT, MUMBAI - 400001. / VS. DY.COMMISSIONER OF INCOME TAX - 7(1), OLD RANGE DCIT CC - 40, 633, 6 TH FLOOR, AAYAKAR BAVAN M K ROAD, MUMBAI - 400020 ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : AAVPA0092M ( / APPELLANT) : ( / RESPONDENT ) / A SSESSEE BY : SHRI RA HUL HAKANI /R EVENUE BY : SHRI K.RAVI RAMCHANDRAN / DATE OF HEARING : 12.6. 2017 / DATE OF PRONOUNCEMENT : 21. . 6 . 201 7 / O R D E R PER RAJESH KUMAR , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 4 9, MUMBAI , DATED 2.2 .201 6 , PERTAINING TO THE ASSESSMENT YEAR 20 08 - 09 WHICH I N TURN HA S ARISEN FROM THE ORDER PASSED BY THE 2 ITA NOS. 2254 /MUM/201 6 ASSESSING OFFICER DATED 29.1.2014 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2. IN THE ORIGINAL GROUNDS OF APPEAL, THE ASSESSEE RAISED THE ISSUE OF CONFIRMATION OF PENALTY LEVIED BY THE AO U/S 271(1)(1)( C ) OF THE INCOME TAX ACT, 1961. 2.(I) IN ADDITION TO THE ABOVE GROUND, THE ASSESSEE ALSO TAKEN ADDITIONAL GROUNDS OF APPEAL WHICH READS AS UNDER : 1. THE LEARNED CIT(A) ERRED IN CONFIRMING ORDER OF ASSESSING OFFICER LEVYING PEN ALTY U/S. 271(1)(C) OF RS.5,50,000/ - WITHOUT APPRECIATING THAT THE PENALTY NOTICE IS BAD IN LAW AS IT DID NOT SPECIFY THE GROUND FOR LEVYING PENALTY, THEREBY VIOLATING PRINCIPLE OF NATURAL JUSTICE AND HENCE PENALTY OF RS. 5,50,000/ - MAY BE DELETED. 2. TH E LEARNED CIT(A) ERRED IN CONFIRMING ORDER OF ASSESSING OFFICER LEVYING PENALTY U/S. 271(1)(C) OF RS. 5,50,000/ - WITHOUT APPRECIATING THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH AND HENCE NO ADDITION COULD HAVE BEEN MADE IN THE ASSESSMENT O RDER PASSED U/ S . 153A R.W.S. 143(3) AND CONSEQUENTLY NO PENALTY COULD HAVE BEEN LEVIED AND HENCE, PENALTY OF RS. 5,50,000/ - MAY BE DELETED. 3. AT THE OUTSET, THE LD.AR DREW OUR ATTENTION TO THE ADDITION GROUND FILED BY THE ASSESSEE VIDE APPLICATION DATED 21.2.2017 WHICH IS REPRODUCED ABOVE. THE LD. AR VEHEMENTLY SUBMITTED THAT T HE ISSUE RAISED BY WAY OF ADDITIONAL GROUNDS OF APPEAL IS PURELY LEGAL AND TECHNICAL ONE AND EMANATED FROM THE RECORD OF ASSESSMENT BEFORE THE AUTHORITIES BELOW AND THEREFORE THE SAME SHOULD BE ADMITTED FOR ADJUDICATION AS THE SAME GOES TO THE ROOT OF THE MATTER. 3 ITA NOS. 2254 /MUM/201 6 4. THE LD. DR ON THE OTHER HAND, OPPOSED THE ADMISSION OF ADDITIONAL GROUND BY SUBMITTING THAT THE GROUND WAS NOT RAISED BY THE ASSESSEE AT THE TIME OF FILING OF THE APPEA L BY THE ASSESSEE. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS , PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CASE LAW RELIED UPON BY THE PARTIES. WE FIND THAT THE ISSUE RAISED BY THE ASSESSEE IS PURELY TEC HNICAL AND LEGAL ONE ARISING OF THE ASSESSMENT RECORD BEFORE THE AUTHORITIES BELOW AND FUNDAMENTAL TO THE BASIS OF THE ORDER PASSED UNDER SECTION 271(1)( C ). IT IS SETTLED LAW THAT THE ASSESSEE IS ENTITLED TO RAISE ANY ISSUE LEGALLY ARISING OUT OF THE R ECORD BEFORE THE AUTHORITIES BELOW . ACCORDINGLY, WE ADMIT THE ADDITIONAL GROUND FOR ADJUDICATING THE SAME. 6 . THE LD COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED BEFORE US THAT T HE AO , WHILE PASSING THE ASSESSMENT ORDER DID NOT RECORD ANY SATISFACTION AND INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT BY SIMPLY STATING IN THE ASSESSMENT ORDER THAT THE PENALTY PROCEEDINGS WERE BEING INITIATED SEPARATELY WITHOUT RECORDING ANY SATISFACTION FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR FOR C ONCEALMENT OF INCOME AND THUS AO HAS NOT MENTIONED CLEARLY UNDER WHICH OF THE TWO LIMB S, THE PENALTY U/S 271(1) OF THE ACT WAS PROPOSED TO BE LEVIED I.E WHETHER IT IS ON CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE LD . COUNSEL FOR THE ASSESSEE ARGUED THAT NO PENALTY U/S 271(1)(C) OF 4 ITA NOS. 2254 /MUM/201 6 THE ACT COULD BE IMPOSED WHEN THE AO HAS NOT MENTIONED THE SPECIFIC CHARGE ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED I.E WHETHER IT IS PROPOSED TO BE LEV IED FOR INACCURATE PARTICU LARS OF INCOME OR FOR CONCEALMENT OF INCOME . SO WITHOUT GOING INTO THE MERIT OF LEVYING PENALTY, WE ARE FIRST DECIDING THE ISSUE OF VALIDITY OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. IN SUPPORT OF HIS CONTENTION, THE LD.AR RELIED UPON THE FOLLOWI NG DECISIONS: I) SHRI SAMSON PERINCHERY V/S ACIT IN ITA NO.4625/MUM/2013 (AY - 2003 - 04) DATED 11.10.2013 ITAT E BENCH; II) JEHANGIR H C JEHANGIR V/S ACIT IN ITA NO.1261 /MUM/2011(AY - 2006 - 07) DATED 17.5.2017 AND III) MEHERJEE CASSINATH HOLDINGS V/S ACIT I N ITA NO.2555/MUM/2012 (AY - 2008 - 09) DATED 28.4.2017 7 . ON THE OTHER HAND, THE LD. DR WHILE CONTROVERTING THE ARGUMENTS OF THE LD.AR DEFENDED THE INITIATION OF PENALTY PROCEEDINGS AND PENALTY IMPOSED BY THE AO. THE LD. DR SUBMITTED THAT UNDER THE PROVISION S OF INCOME TAX THE MANDATORY CONDITIONS WERE THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO REPLY THE SHOW CAUSE. NO SPECIFIC FORMAT HAS BEEN PRESCRIBED UNDER THE ACT OF THE SAID NOTICE. HENCE IT WAS SUFFICIENT IF THE ASSESSEE WAS AWARE OF THE CHARG ES, HE HAD TO MEET ON AN OPPORTUNITY OF BEING HEARD AND THE INADVERTENT MISTAKE IN THE NOTICE WOULD NOT INVALIDATE THE PENALTY PROCEEDINGS. THE LD. DR SPECIFICALLY CONTENDED THAT THE AO HAS APPLIED HIS MIND WHILE INITIATING PENALTY PROCEEDINGS AS VARIOUS A DDITIONS HAVE BEEN MADE AFTER DISCUSSING THE SAME AT LENGTH WITH REASONING FOR 5 ITA NOS. 2254 /MUM/201 6 MAKING SUCH ADDITIONS AND ALSO CLEARLY MENTIONED IN THE ASSESSMENT ORDER PENALTY PROCEEDINGS WILL BE INITIATED SEPARATELY U/S 271(1)(C) OF THE ACT. UNDER THESE CIRCUMSTANCES, THE ARGUMENTS OF THE LD.AR THAT THE LIMB OF THE PENALTY NOTICE UNDER WHICH THE PENALTY WAS INITIATED WAS NOT STRUCK - OFF WAS WRONG AND WITHOUT SUBSTANCE. THE LD. DR HEAVILY RELIED ON THE DECISION IN THE CASE OF CIT V/S SMT. KAUSHALYA AND ATHERS(1995) 216 ITR 660 (BOM) IN WHICH IT HAS BEEN HELD THAT MERE MISTAKE IN THE LANGUAGE USED OR MERE NON - STRIKING OF THE INACCURATE PORTION CANNOT BY ITSELF INVALIDATE THE NOTICE . 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE MATERIAL PLACED B EFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CASE LAW RELIED UPON BY THE PARTIES. THE PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE AO HAS NOT SPECIFIED UNDER WHICH CHARGE THE PENALTY WAS PROPOSED TO BE LEVIED I.E WHETHER IT IS FOR CONCEALMEN T OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE AO, WITHOUT SPECIFYING THE CHARGES INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C ) OF THE ACT I.E. WHETHER THE ASSESSEE HAS CONCEALED A PARTICULARS OF INCOME OR FURNISHED INACCURATE PAR TICULARS OF INCOME. WE ALSO FIND FROM THE ORDER UNDER SECTION 271(1) (C) R.W.S.274 OF THE ACT AS EXTRACTED HEREINAFTER THAT THE NOTICE HAS BEEN ISSUED WITHOUT STRIKING OFF ONE OF THE TWO LIMBS I.E. FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHI NG INACCURATE PARTICULARS 6 ITA NOS. 2254 /MUM/201 6 OF INCOME OF SUCH INCOME UNDER WHICH THE PENALTY WAS INITIATED AGAINST THE ASSESSEE. IN THE CASE OF CIT VS. SSA'S EMERALD MEADOWS ITA 380 OF 2015, THE HONBLE KARNATAKA HIGH COURT HAS ALSO DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW AROSE FOR DETERMINATION IN THIS APPEAL WHICH WAS FILED AGAINST THE ORDER OF THE TRIBUNAL WHEREIN THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE BY QUASHING THE PENALTY PROCEEDINGS AND CONSEQU ENT ORDER WHERE THE AO DID NOT SPECIFY UNDER WHICH LIMB THE PENALTY HAD BEEN INITIATED BY FOLLOWING AND RELYING ON THE DECISION IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY (2013)359ITR 565. THE REVENUE FILED SLP AGAINST THE DECISION OF KAR NATAKA HIGH COURT IN THE ABOVE DECISION WHICH HAS ALSO BEEN DISMISSED BY THE HONBLE SUPREME COURT 05.08.2016. IN THE CASE OF CIT V/S SAMSON PERINCHERY IN INCOME TAX APPEAL NO. 1154 OF 2014(BOM) ORDER DATED 5.1.2017 THE HONBLE BOMBAY HIGH COURT HAS B EEN HELD AS UNDER: 6 THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN ASHOK PAI V/S. CIT 292 ITR 11 [RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY (SUPRA)] WHEREIN IT IS OBSERVED THAT CONCEALME NT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C) OF THE ACT, CARRY DIFFERENT MEANINGS/ CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTIO N 271(1)(C) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT PENALTY BEING IMPOSED 7 ITA NOS. 2254 /MUM/201 6 FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, T HEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 7 THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FAVOUR OF THE RESPONDENT ASSESSEE BY THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). NOTHING HAS BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOULD WARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNATA KA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). 9 . WE ARE, THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE HIGH COURTS INCLUDING THE JURISDICTIONAL HIGH COURT AND SUPREME COURT HOLD THAT THE ORDER OF THE CI T(A) UPHOLDING THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT WHERE THE AO HAD NOT SPECIFIED OR MENTIONED THE CHARGE ON WHICH THE PENALTY HAS BEEN IMPOSED IS NOT CORRECT AND CANNOT BE SUSTAINED. THE ORDER REFERRED BY THE LD DR CAN NOT BE APPLIED AS THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S SAMSON PERINCHERY HAS TAKEN A DIFFERENT VIEW AS STATED HEREINABOVE WHICH IS OF LATTER DATE. IN VIEW OF THE FOREGOING DISCUSSION, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)( C ) OF THE ACT. 8 ITA NOS. 2254 /MUM/201 6 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST JUNE , 2017. SD SD ( MAHAVIR SINGH ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 21 . 6 .2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPE LLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI