Anshumali Dwivedi, Lucknow V. DY. Commissioner of Income Tax, Lucknow

ITA 237/LKW/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1108 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 06-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: YOGESH AGARWAL
• Keywords: Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 237/LKW/2016 ASSESSMENT YEAR: 2011 - 12 ANSHUMALI DWIVEDI 202, ROHTAS RESIDENCY SHAHN AJAF ROAD LUCKNOW V. DY. CIT - 2, LUCKNOW T AN /PAN : AJBPD4480B (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI YOGESH AGARWAL, ADVOCATE RESPONDENT BY: SMT. MANJU THAKUR, D.R. DATE OF HEARING: 28 02 201 8 DATE OF PRONOUNCEMENT: 05 0 3 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A), LUCKNOW DATED 28/1/2016 ON THE FOLLOWING GROUNDS OF APPEAL: - I. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I, LUCKNOW [HERE - IN - AFTER REF ERRED TO AS THE LD. CIT (A)'S] ERRED ON FACTS AND IN LAW IN CONFIRMING THE INITIATION AND LEVY OF PENALTY U/S 271( 1 )(C) OF THE I.T. ACT, 1961 FOR AN AMOUNT OF RS.2,50,000/ - ON THE PRESENT SET OF FACTS AND CIRCUMSTANCES AS NEITHER HAD THE APPELLANT CONCEALE D THE PARTICULARS OF HIS INCOME NOR FURNISHED INACCURATE PARTICULARS THEREOF. II. THE LD. CIT (A)'S WAS NOT AT ALL JUSTIFIED IN CONFIRMING THE IMPOSITION OF PENALTY LEVIED BY THE A.O. IN A MECHANICAL MANNER WHICH WAS LEVIED BY HIM WITHOUT APPLICATION OF MI ND. ITA NO.237/LKW/2016 PAGE 2 OF 7 III. THE IMPOSITION OF PENALTY AND ITS CONFIRMATION BY THE LD. CIT (APPEALS) IS BAD - IN - LAW BECAUSE THE INCOME FROM OTHER SOURCES AND RENTAL INCOME WAS INADVERTENTLY LEFT TO BE INCLUDED IN THE RETURN OF INCOME AND AS SOON AS THE APPELLANT REALIZED HIS MISTAKE HE OFFERED THE SAME FOR TAXATION VOLUNTARILY AND SUO - MOTU PRIOR TO DETECTION BY THE DEPARTMENT AND PAID THE TAXES WITH INTEREST AND THUS THE INITIATION OF PENALTY CULMINATING IN THE PASSING OF THE SAME DOES NOT REPRESENT CONCEALED INCOME AND THUS T HE PENALTY SO CONFIRMED MAY KINDLY BE ORDERED TO BE DELETED. IV. THE LD. CIT (APPEALS) WAS NOT AT ALL JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY IN THE PRESENT CASE MORE SO BECAUSE THE APPELLANT HAD PREPARED AND FILED THE RETURN HIMSELF AND IS NOT AWARE R EGARDING THE INTRICACIES OF TAX LAWS AND AS SOON AS HE REALIZED THIS INADVERTENT MISTAKE HE HAS RECTIFIED THE SAME BY FILING REVISED COMPUTATION OF INCOME BEFORE THE AO HIMSELF AND PAYING THE DUE TAXES WITH INTEREST THEREUPON AND THUS THE LEVY OF PENALTY I S NOT AT ALL VALID IN LAW AND FURTHER THAT THE A.O. HAS NOT DISCHARGED HIS ONUS OF PROVING THAT THE APPELLANT WAS GUILTY OF CONCEALMENT OR HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS THEREOF. V. T H E PENALTY SO LEVIED AND CONFIRMED BY THE LD. CIT (A)' S IS BAD - IN - LAW, CONTRARY TO FACTS, LAWS AND PRINCIPLES OF NATURAL JUSTICE AND FAIR - PLAY AND THUS MAY KINDLY BE ORDERED TO BE DELETED. VI. THAT THE LD. CIT (A)'S DID NOT AFFORD THE APPELLANT FIRM ANY PROPER OR SUFFICIENT OPPORTUNITY TO HAVE ITS SAY OR MAKE NECESSARY COMPLIANCE OF THE REASONS RELIED UPON BY HIM IN PASSING THE PRESENT ORDER AND THUS THE ORDER PASSED WITHOUT AFFORDING ADEQUATE OPPORTUNITY MAY KINDLY BE ORDERED TO BE QUASHED. 2 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN EMPLOYEE WORKIN G WITH ESSAR PORTS LTD., MUMBAI , FILED HIS RETURN OF INCOME ON 30/7/2011 SHOWING TOTAL INCOME AT RS.19,77,240/ - IN THE STATUS OF INDIVIDUAL. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON A TOTAL INC OME OF ITA NO.237/LKW/2016 PAGE 3 OF 7 RS.26,86,312/ - BY MAKING ADDITIONS OF RS.6,54,282/ - UNDER THE HEAD HOUSE PROPERTY AND RS.54,790/ - BEING INTEREST ON SAVING BANK. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. BEING NOT SATISFIED WITH THE SUBMISSIONS MADE BY THE ASSESSEE DURING THE PENALTY PROCEEDINGS , ASSESSING OFFICER IMPOSED A PENALTY OF RS.2.50 LAKHS VIDE HIS ORDER DATED 29/4/2014. 3 . AGGRIEVED WITH THE PENALTY ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND REITERATED TH E SUBMISSIONS AS MADE BEFORE THE ASSESSING OFFICER. THE SUM AND SUBSTANCE OF THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND REITERATED BEFORE THE LD. CIT(A) IS AS UNDER: - THE ASSESSEE VIDE REPLY DATED 13.01.2014 SUBMITTED THAT INTEREST INCOME FROM SAVING BANK OF RS. 54,790/ - COULD NOT BE DISCLOSED DUE TO THE OVERSIGHT AND NON AWARENESS OF THE FINANCIAL TRANSACTION AND TAX PROVISIONS AND HE UNINTENTIONALLY MISSED THE DISCLOSURE OF THIS INCOME IN THE ITR AND ALSO HE WAS ALSO WAYS DILIGENT IN PAYING DU E TAXES AND HAVING NO INTENTION OF DIVERTING OR CONCEALING ANY OF HIS INCOME AND IMMEDIATELY REVISED HIS ITR DURING THE COURSE OF HEARING ITSELF AND VOLUNTARY PAID THE DUE TAX ALONG WITH INTEREST. REGARDING ADDITION IN IN COME FROM HOUSE PROPERTY OF RS. 6,54 ,282/ - , THE ASSESSEE HAS SUBMITTED THAT DUE TO NON AWARENESS OF THE TAX PROVISIONS, HE UNINTENTIONALLY MISSED THE DISCLOSURE OF THIS INCOME IN THE ITR AND SINCE HE WAS OF THE OPINION THAT IF THE TAX HAS BEEN DEDUCTED AT SOURCE, THE DUE TAX HAS BEEN PAID. H OWEVER, HE WAS ALWAYS BEING DILIGENT IN PAYING DUE TAXES AND HAVING NO INTENTION OF DIVERTING OR CONCEALING ANY OF HIS INCOME AND IMMEDIATELY REVISED HIS ITR DURING THE COURSE OF HEARING ITSELF AND VOLUNTARY PAID THE DUE TAX ALONG WITH THE INTEREST. THE AS SESSEE HAS NO INTENTION OF DIVERTING OR CONCEALING ANY OF ITS INCOME. ITA NO.237/LKW/2016 PAGE 4 OF 7 4 . BEING NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE PENALTY OF RS.2.50 LAKHS LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 2 . BEING FURTHER AGGRIEVED, THE A SSESSEE IS IN APPEAL BEFORE US. DURING THE COURSE OF HEARING BEFORE US, THE LD. A.R. OF THE ASSESSEE INVITED OUR ATTENTION TO THE NOTICE DATED 31/10/2013 UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT, WITH THE SUBMISSION THAT IT IS MENTIONED IN THE NOT ICE THAT HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR.FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE NOTICE ISSUED BY THE AUTHORITY IS NOT CLEAR WHETHER PENALTY IS PROPOSED FOR CONCEALMENT OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCO ME. THEREFORE, THERE IS NO SPECIFIC LIMB UNDER WHICH PENALTY IS IMPOSED ON THE ASSESSEE. THE LD. A.R. OF THE ASSESSEE PLACING RELIANCE UPON THE DECISION OF LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF ASHOKA F OODS & DEHYDRATES SANSTHAN, KANP UR VS. ITO (E XEMPTION), KANPUR IN ITA NO.302/LKW/ 2017, ORDER DATED 8/1/2018, SUBMITTED THAT ON IDENTICAL CIRCUMSTANCES, THIS BENCH OF THE TRIBUNAL HAS DECIDED THE CASE IN FAVOUR OF THE ASSESSEE AND DELETED THE PENALTY . THE LD. A.R. OF THE ASSESSEE HAS ALSO PLACED RELI ANCE UPON THE JUDGMENT OF THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF PRINCIPAL CIT - 1, VISHAKAPATNAM VS. SMT. BAISETTY REVATHI REPORTED IN 398 ITR 88 IN SUPPORT OF HIS CONTENTION THAT SPECIFIC GROUND , WHICH FORMS THE FOUNDATION , HAS TO BE SPELT OU T IN CLEAR TERMS FOR INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THEREFORE, NOTICE UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT IS BAD IN LAW, INVALID AND, THEREFORE, LIABLE TO BE QUASHED AND THE PENALTY IS LIABLE TO BE DELETED . 3 . THE LD. D.R., ON THE OTHER HAND, PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A). ITA NO.237/LKW/2016 PAGE 5 OF 7 5 . WE HAVE PERUSED THE CASE RECORDS, ANALYSED THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE NOTICE ISSUED U/S 274 READ WITH S ECTION 271(1)(C) AS APPEARING ON PAGE 1 OF THE PAPER BOOK SHOWS THAT NOTICE HAS BEEN ISSUED IN MECHANICAL MANNER BY MERELY FILLING UP THE FORMAT OF THE NOTICE AND IT IS NOT CLEAR AS TO WHETHER THE PENALTY IS PROPOSED TO BE IMPOSED FOR CONCEALMENT OR FOR FU RNISHING INACCURATE PARTICULARS. SIMILARLY, THE ASSESSMENT ORDER DATED 3 1/10/2013 PASSED U/S 143(3) OF THE ACT ALSO MENTIONS PENALTY NOTICE UNDER SECTION 271(1)(C) BEING ISSUED SEPARATELY BUT DOES NOT RECORD WHETHER THE PENALTY PROCEEDINGS ARE BEING INIT IATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR CONCEALING PARTICULARS OF INCOME. IT IS OUR CONSIDERED OPINION THAT THE AO IS EMPOWERED TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEAL MENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME U/S 271(1)(C) OF THE ACT . CONCEALMENT AND FURNISHING INACCURATE PARTICULARS ARE DIFFERENT. THE AO, WHILE ISSUING NOTICE, HAS TO COME TO THE CONCLUSION AS TO WHETHER IT IS A CASE OF CONCEALMENT O F INCOME OR WHETHER IT IS A CASE OF FURNIS HING OF INACCURATE PARTICULARS I.E. THE LIMB UNDER WHICH PENALTY IS PROPOSED TO BE IMPOSED IS MISSING. 6 . ON AN IDENTICAL ISSUE, THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF ASHOKA FOODS & DEHYDRATES SANSTHAN, KAN PUR VS. ITO (EXEMPTION), KANPUR (SUPRA) HAS HELD AS UNDER: - 8. WE HAVE PERUSED THE CASE RECORD AND WE FIND THAT NOTICE UNDER SECTION 271(1)(C) OF THE ACT IS NOT SPECIFIC AS IT DID NOT MENTION SPECIFICALLY AS TO WHICH LIMB PENALTY UNDER SECTION 271(1)(C) O F THE ACT IS IMPOSED UPON THE ASSESSEE BY THE ASSESSING OFFICER. TAKING GUIDANCE FROM THE AFORESAID JUDICIAL PRONOUNCEMENT, WE ARE OF THE CONSIDERED VIEW THAT NOTICE FOR ITA NO.237/LKW/2016 PAGE 6 OF 7 IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ISSUED IN THE CASE OF THE AS SESSEE IS BAD IN LAW, INVALID AND, THEREFORE, LIABLE TO BE QUASHED. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) UNDER SECTION 271(1)(C) OF THE ACT IS DELETED. 7 . THE H ON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF PRINCIPAL CIT - 1, VISHAKAPATNAM VS. SMT. BAISETTY REVATHI (SUPRA) IN A RECENT JUDGMENT HELD AS UNDER: - ON PRINCIPLE, WHEN PENALTY PROCEEDINGS ARE SOUGHT TO BE INITIATED BY THE REVENUE UNDER SECTION 271(1)(C) OF THE ACT OF 1961, THE SPECIFIC GROUND WHICH FORMS THE FOUNDATION THEREFOR HAS TO BE SPELT OUT IN CLEAR TERMS. OTHERWISE, AN ASSESSEE WOULD NOT HAVE PROPER OPPORTUNITY TO PUT FORTH HIS DEFENCE. WHEN THE PROCEEDINGS ARE PENAL IN NATURE, RESULTING IN IMPOSI TION OF PENALTY RANGING FROM 100% TO 300% OF THE TAX LIABILITY, THE CHARGE MUST BE UNEQUIVOCAL AND UNAMBIGUOUS. WHEN THE CHARGE IS EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THEREOF, THE REVENUE MUST SPECIFY AS TO W HICH ONE OF THE TWO IS SOUGHT TO BE PRESSED INTO SERVICE AND CANNOT BE PERMITTED TO CLUB BOTH BY INTERJECTING AN OR BETWEEN THE TWO, AS IN THE PRESENT CASE. THIS AMBIGUITY IN THE SHOW - CAUSE NOTICE IS FURTHER COMPOUNDED PRESENTLY BY THE CONFUSED FINDING OF THE ASSESSING OFFICER THAT HE WAS SATISFIED THAT THE ASSESSEE WAS GUILTY OF BOTH. 8 . TAKING GUIDANCE FROM THE AFORESAID JUDGMENT, WE ARE OF THE CONSIDERED VIEW THAT W HEN THE CHARGE IS EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PA RTICULARS THEREOF, THE REVENUE MUST SPECIFY AS TO WHICH ONE OF THE TWO IS SOUGHT TO BE PRESSED INTO SERVICE AND CANNOT BE PERMITTED TO CLUB BOTH BY INTERJECTING AN OR BETWEEN THE TWO . WE, THEREFORE, R ESPECTFULLY FOLLOWING THE ORDER OF THE HON'BLE ANDHRA P RADESH HIGH COURT IN THE CASE OF PRINCIPAL CIT - 1, ITA NO.237/LKW/2016 PAGE 7 OF 7 VISHAKAPATNAM VS. SMT. BAISETTY REVATHI (SUPRA) , HOLD THAT INITIATION OF PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IS NOT VALID AND ACCORDINGLY QUASH THE PENALTY. ACCORDINGLY, PENALTY CONFIRMED BY THE LD. CIT(A) IS HEREBY DELETED AFTER SETTING ASIDE THE ORDER OF THE LD. CIT(A). 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 / 0 3 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 5 TH FEBR UARY , 201 8 JJ: 2802 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR