Sri G Lakshminarayanan , Bangalore V. The Assistant Commissioner of Income Tax Circle-5(3)(1), Bangalore

ITA 2443/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7911 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-04-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 28-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUGADEVI
• Assessee Lawyers: V K GURUNATHAN
• Keywords: Retrospective amendment; Question of law; Set aside
• Section: 271(1)(c); 143(3); 142(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BENCH: BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA. NO. 2443 /BANG/2018 ASSESSMENT YEAR: 2014 - 15 SRI G. LAKSHMINARAYANAN, NO. TG - 902, 9 TH FLOOR, PURVA MIDTOWN, RESIDENCIES, FCI GODOWN MAIN ROAD, VIJINAPURA, DOORVANI NAGAR, BENGALURU 560 016. PAN: AAIPL 8942 J VS. ACIT, CIRCLE - 5(3)(1), BENGALURU. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SRI V.K. GURUNATHAN FOR REVENUE : SMT. RENUGA DEVI, JCIT DATE OF HEARING : 09.04.2019 DATE OF PRONOUNCEMENT : 15 .04.2019 ORDER PER PAVAN KUMAR GADALE, JM . THE ASSESSEE HAS FILED AN APPEAL AG AINST THE ORDER OF THE CIT (A) - 5, BANGALORE, DATED 29 /06/2018 PASSED U/S 271(1)(C) AND U/S 250 OF THE IT ACT, 1961 FOR THE ASSESSMENT YEAR 20 14 - 15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD CIT (A) UPHOLDING THE PENALTY U/S 271(1)(C) OF THE ACT IS OPPOSED TO LAW AND LIABLE TO BE CANCELLED. 2. THE UPHOLDING OF THE LEVY OF PENALTY BY CIT (A) WHICH WAS INITIATED ON A DEFECTIVE NOTICE WITHOUT CONSIDERING THE LAW LAID BY THE JURISDICTIONAL HIGH 2 COURT IS NOT SUSTAINABLE IN LAW, AS THE PENALTY NOTICE U/S 2 71(1)(C) DID NOT SPECIFICALLY MENTION WHETHER THE PROCEEDINGS WERE INITIATED ON THE GROUND OF CONCEALMENT OF INCOME OR ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. WHILE UPHOLDING THE PENALTY ORDER, THE CIT (A) HAS NOT CONSIDERED THAT M ISTAKE WAS CAUSED DUE TO HUMAN ERROR. 4. WITHOUT PREJUDICE, THE LD CIT (A) OUGHT TO HAVE ACCEPTED THE EXPLANATION OF THE APPELLANT AND REFRAINED FROM UPHOLDING THE LEVY OF PENALTY. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SALARIED EMPLOYEE AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014 - 15 ELECTRONICALLY, DECLARING THE INCOME OF RS. 1,53,33,653 / - AND THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE NOTICE U/S 143(2) AND 142(1) OF THE ACT WAS ISSUED. IN COMPLIANCE LD AR APPEARED FROM TIME TO TIME AND SUBMITTED DETAILS. ASSESSING OFFICER , ON PERUSAL OF THE INFORMATI ON SUBMITTED BY THE ASSE SSEE, OBSERVED THAT THE ASSESSEE DERIVED INCOME FROM SHORT TERM CAPITA L GAINS ON SALE OF SHARES AND HAS NOT OFFERED FOR TAXATION. THE ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEE HAS INTEREST INCOME FROM BANKS AND AFTER ALLOWING DEDUCTION U/S 80TTA OF R S. 10,000/ - BALANCE WAS SUBJECT TO TAX AND ASSESSED TOTAL INCOME OF RS. 1,96,15,722/ - AND PASSED THE ORDER U/S 143(3) OF THE ACT ON 09/12/2016. SUBSEQUENTLY, ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AND ISSUED NOTICE U/S 271(1)(C) AND THE REPLY WAS FILED BY THE ASSESSEE ON 19/ 01/2017 REFERRED AT PARA 3 OF THE PENALTY ORDER. THE ASSESSING OFFICER CONSIDERING THE REPLY AND THE SUBMISSIONS AND THE 3 JUDICIAL DECISIONS FOUND THAT IT IS A FIT CASE FOR LEVY OF PENALTY. THEREFORE, LEVIED PENALTY OF RS. 8,0 7,757/ - VIDE ORDER DATED 30/06/2017. 3. AGGRIEVED BY THE ORDER, ASSESSEE IS IN APPEAL WITH THE CIT (A) AND THE CIT (A) HAS CONFIRMED THE PENALTY ORDER AND DISMISSED THE ASSESSEES APPEAL. AGGRIEVED BY THE CIT (A) ORDER ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. 4. LD AR AT THE TIME OF HEARING SUBMITTED THAT THE ASSESSING OFFICER WHILE INITIATING THE PENALTY HAS NOT CONSIDERED THE REASONS FOR LEVY OF PENALTY I.E., FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND LD AR REF ERRED TO PAGE 1 OF THE PAPER BOOK WHERE THE COPY OF NOTICE WAS ENCLOSED AND IN SUPPORT OF HIS ARGUMENT RELIED ON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL AND PRAYED THAT THE NOTICE U/S 274 R.W.S 271(1)(C) BE QUASHED. 5. CONTRA, THE LD DR SUPPO RTED THE ORDER OF THE CIT (A). 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND THE ORDERS OF THE LOWER AUTHORITIES. THE ONLY PRIMA FACIE ISSUE BEING THE ASSESSING OFFICER HAS PASSED THE ORDER U/S 271(1)(C) OF THE ACT BY LEVYING PE NALTY. WE FOUND, THE HONBLE APEX COURT DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE JUDGMENT OF THE HONBLE 4 KARNATAKA HIGH COURT IN ITA NO.380 OF 2015 DATED 23/11/2015 IN THE CASE OF CIT VS. M/S.SSAS EMERALD MEADOWS WHERE AN IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. WE CONSIDER IT APPROPRIATE TO REFER TO THE OPERATIVE PART OF THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF M/S. SSAS EMERALD MEADOWS (SUPRA) WHICH IS AS UNDER : 2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: ( 1 ) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF IN COME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? ( 2 ) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TR IBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) IS BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 27.41 13) WITH RETROSPECTIVE EFFECT AND BRA VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INIT IATED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? ( 3 ) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOU T TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICE R 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 COMMISSIONER OF INCOMETAX - VS - MANJUNAT HA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 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 5 QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. 7. WE ARE OF THE OPINION THAT PENALTY PROVISIONS U/S 271(1)(C) OF THE ACT ARE ATTRACTED WHERE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS WELL ACCEP TED PROPOSITION THAT THE AFORESAID TWO LIMBS OF SECTION 271(1)(C) OF THE ACT CARRY DIFFERENT MEANING. THEREFORE, IT WAS IMPERATIVE FOR THE AO TO STRIKE OFF IRRELEVANT LIMB SO AS TO MAKE THE ASSESSEE AWARE AS TO WHAT IS THE CHARGE MADE AGAINST HIM AND SO T HAT HE CAN RESPOND ACCORDINGLY. FURTHER, THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. MANJUNATHA COTTON GINNING FACTORY (2013) 359 ITR 565 OBSERVED THAT THE LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB UNDER WHICH IT IS BEING LEVIED. AS P ER THE HONBLE HIGH COURT, WHERE THE AO PROPOSES TO INVOKE THE FIRST LIMB BEING THE CONCEALMENT THEN, NOTICE HAS TO BE APPROPRIATELY MARKED. FURTHER, THE HONBLE HIGH COURT HAS HELD THAT THE STANDARD PROFORMA OF NOTICE U/S 274 OF THE ACT, WITHOUT STRIKING OF THE RELEVANT CLAUSES WOULD LEAD TO INFERENCE OF NON - APPLICATION OF MIND BY THE AO. IN THE PRESENT CASE, THE AO IS NOT SURE WHETHER HE WAS TO PROCEED ON THE BASIS THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PAR TICULARS OF INCOME. THE HONBLE HIGH COURT ALSO 6 OBSERVED THAT IN SUCH A SITUATION, THE LEVY OF PENALTY SUFFERS FROM NON - APPLICATION OF MIND. 8. WE, CONSIDERING THE LEGAL POSITION AND THE ACTION OF THE AO IN PASSING THE PENALTY ORDER U/S 271(1)(C) SHOWS THAT THERE IS NON - APPLICATION OF MIND THEREBY THE PENALTY ORDER IS NOT SUSTAINABLE AND RESPECTFULLY FOLLOW THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S.SSAS EMERALD MEADOWS (SUPRA) AND MANJUNATHA COTTON GINNING FACTORY (SUPR A), SET ASIDE T HE ORDER OF THE C IT(A) AND CANCEL THE ORDER OF THE AO DATED 30/06/2017 LEVYING PENALTY U/S 271(1)(C) OF THE ACT AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON 1 5 T H DAY OF APRIL, 2019. S D / - S D / - (A.K. GARODIA) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 5 T H APRIL , 2019 . OKK, SR.PS COPY TO 7 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE