M/s Narayana Reddy Enterprises, Mandapeta V. THE ITO, Kakinada

ITA 229/VIZ/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6774 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND

Judgement Text

ITA NO.229/VIZAG/2015 NARAYANA REDDY ENTERPRISES, MANDAPETA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.229/VIZAG/2015 ( / ASSESSMENT YEAR: 2009-10) M/S. NARAYANA REDDY ENTERPRISES, MANDAPETA ITO, WARD - 1, KAKINADA [PAN NO. AABFN8259K ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI D.J.P. ANAND, DR / DATE OF HEARING : 08.08.2017 / DATE OF PRONOUNCEMENT : 18.08.2017 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2 {CIT(A)}, VI SAKHAPATNAM VIDE ITA NO.44/2013-14/760/ITO, W-2, KKD/2014-15 DATED 2 4.3.2015 FOR THE ASSESSMENT YEAR 2009-10. ITA NO.229/VIZAG/2015 NARAYANA REDDY ENTERPRISES, MANDAPETA 2 2. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE PENALTY IMPOSED BY THE A.O. ON THE ADDITIONS MADE IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2009-10. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE AS UNDER: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE FAC TS OF THE CASE AND ALSO THE LAW APPLICABLE TO THE FACTS OF THE CASE. 2. THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE P ENALTY OF ` 29,50,000/- LEVIED BY THE ASSESSING OFFICER U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961. 3. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THERE WAS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE CASE OF THE APPELLANT. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF A PPEAL HEARING. 3. GROUND NOS.1 & 4 ARE GENERAL IN NATURE, WHICH DO NOT REQUIRE ADJUDICATION. GROUND NOS.2 & 3 ARE RELATED TO THE PENALTY OF ` 29,50,000/- LEVIED BY THE A.O. U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT'). 4. THE LD. A.R. RAISED ADDITIONAL GROUNDS VIDE PETI TION DATED 23.6.2017 AS UNDER: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ORDER DT.11.10.2013 LEVYING PENALTY U/S 271(1)(C) I S LIABLE TO BE CANCELLED IN AS MUCH AS THE NOTICE DT.30.12.2011 IN ITIATING THE PENALTY PROCEEDINGS DID NOT SPECIFY CLEARLY AS TO W HETHER THE PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME.' ITA NO.229/VIZAG/2015 NARAYANA REDDY ENTERPRISES, MANDAPETA 3 5. APPEARING FOR THE ASSESSEE, LD. A.R. ARGUED THA T THE A.O. HAS ISSUED PENALTY NOTICE WITHOUT STRIKING THE RELEVANT COLUMN RELATING TO FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. IT IS MANDATORY ON THE PART OF THE A.O. TO PUT ON THE ASS ESSEE ON NOTICE FOR WHICH OFFENCE THE ASSESSEE REQUIRED TO SUBMIT HIS E XPLANATION, WHETHER IT IS FOR FURNISHING OF INACCURATE PARTICULARS OR F OR CONCEALMENT OF INCOME. SINCE THE A.O. FAILED TO STRIKE THE IRRELE VANT COLUMN IN THE NOTICE ISSUED U/S 274 R.W.S. 271 OF THE ACT THE NOT ICE ISSUED U/S 271 OF THE ACT IS BAD IN LAW AND THE CONSEQUENT PENALTY IM POSED BY THE A.O. REQUIRED TO BE CANCELLED. 6. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE OR DERS OF THE LD. CIT(A) AND ARGUED THAT THE A.O. HAS ISSUED NOTICE F OR BOTH INACCURATE PARTICULARS AND CONCEALMENT OF INCOME, HENCE, THE N OTICE ISSUED U/S 274 R.W.S. 271 OF THE ACT REQUIRED TO BE TREATED AS VAL ID AND PENALTY IMPOSED BY THE A.O. NEEDS TO BE CONFIRMED. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. MADE THE ADDITION OF ` 95,43,358/- REPRESENTING INFLATED PURCHASES OF ` 31.36 LAKHS AND BOGUS SUNDRY CREDITORS OF ` 64.66 LAKHS AND COMPLETED THE ASSESSMENT. IN THE ASSESSMENT ORDER, THE ASSESSING ITA NO.229/VIZAG/2015 NARAYANA REDDY ENTERPRISES, MANDAPETA 4 OFFICER RECORDED THAT THE PENALTY PROCEEDINGS U/S 2 71(1)(C) OF THE ACT ARE INITIATED SEPARATELY. IT WAS NOT MENTIONED WHE THER THE PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOM E OR FOR FURNISHING OF INACCURATE PARTICULARS. IN THE NOTICE ISSUED U/ S 274 R.W.S. 271 OF THE ACT, THE A.O. HAS NOT STRIKED OFF THE IRRELEVANT CO LUMN AND MADE KNOWN THE ASSESSEE FOR WHICH REASON THE PENALTY WAS INITI ATED AND FOR WHICH LIMB OF THE NOTICE EXPLANATION REQUIRED TO BE SUBMI TTED. THE COORDINATE BENCH IN THE CASE OF SMT. MAKINA ANNAPURNA VS. ITO WARD -5(2), VISAKHAPATNAM IN ITA NOS.604 & 605/VIZAG/2014 DATED 2.2.2017 ON IDENTICAL FACTS HELD THAT NON-STRIKING OF THE IRREL EVANT COLUMN RENDERS THE NOTICE ISSUED U/S 271 OF THE ACT INVALID. FOR READ Y REFERENCE, WE EXTRACT RELEVANT PARA OF THE DECISION OF THIS BENCH: 17. IN THIS CASE, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE A.O. HAS ISSUED PRINTED FORM OF NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT, WHEREIN HE HAS PUT A RIGHT MARK ON THE POR TION OF THE NOTICE HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNIS HED INACCURATE PARTICULARS OF SUCH INCOME WITHOUT SPECIFYING THE REASONS FOR WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED. UNLESS THE A.O. SPECIFIES THE REASONS FOR WHICH PENALTY PROCEEDINGS ARE INITIATED I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME, IT WOULD BE DIFFICULT FOR THE ASSESSEE TO JUSTIFY THE CASE BEFORE THE A.O., THUS IT WOULD AMOUNT TO VIOLATION OF PRINCIPLES OF NATUR AL JUSTICE, THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT INITIATION OF PENAL TY PROCEEDINGS WITHOUT A VALID NOTICE IS BAD IN LAW AND LIABLE TO BE QUASHED . HENCE, WE QUASHED PENALTY PROCEEDINGS INITIATED BY THE A.O. U/S 271(1 )(C) OF THE ACT, FOR THE ASSESSMENT YEARS 2007-08, 2008-09 & 2009-10. 8. IN THE INSTANT CASE, THE A.O. HAS ISSUED THE NOT ICE WITHOUT STRIKING OFF THE IRRELEVANT COLUMN AND IN THE ASSESSMENT ORDER, THE A.O. DID NOT ITA NO.229/VIZAG/2015 NARAYANA REDDY ENTERPRISES, MANDAPETA 5 MENTION FOR WHICH OFFENCE THE PENALTY WAS INITIATED . THEREFORE, THE CASE LAW CITED ABOVE IS SQUARELY APPLICABLE IN THE ASSES SEES CASE. RESPECTFULLY FOLLOWING DECISION OF COORDINATE BENCH , WE HOLD THAT THE NOTICE ISSUED U/S 271 OF THE ACT IS INVALID AND CON SEQUENT PENALTY IS CANCELLED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18 TH AUG17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 18.08.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT M/S. NARAYANA REDDY ENTERPRISES, CINEMA ROAD, MANDAPETA, EAST GODAVARI DISTRICT. 2. / THE RESPONDENT THE ITO, WARD-1, KAKINADA 3. + / THE CIT, RAJAHMUDRY 4. + ( ) / THE CIT (A)-11, MUMBAI, CAMP AT VISAKHAPATNAM 5. THE PRINCIPAL CIT-2, VISAKHAPATNAM 6. # . , . , # / DR, ITAT, VISAKHAPATNAM 7 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM