Shri Rajendra Aggarwal, New Delhi V. CIT(A), New Delhi

ITA 2477/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2844 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 03-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K JIWANI
• Assessee Lawyers: RAJ KUMAR SHRI SUM IT GOEL
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI SMC BENCH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO. 247 7 /DEL/201 6 [A.Y. 20 07 - 08 ] SHRI RAJENDRA AGARWAL VS. THE I . T .O 56, F.F. NRI COLONY WARD 13 ( 1 ) MA NDAKINI , GREATER KAILASH IV NEW DELHI N EW DELHI PAN : A CRPA 4040 F [ ASSESSEE ] [RESPONDENT] DATE OF HEARING : 2 0 . 0 2 .201 8 DATE OF PRONOUNCEMENT : 07 .0 3 .201 8 ASSESSEE BY : SHRI RAJ KUMAR SHRI SUM IT GOEL , CA REVENUE BY : SHRI V.K. JIWANI , SR. DR ORDER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER OF LD. CIT (A) - 10, NEW DELHI DTD.30.03.16 LEVYING A P ENALTY OF RS.3,67,200/ - U/S.271 (1)(C) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] . 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT ASSESSMENT OF THE ASSESSEE FOR A.Y.2007 - 08 WAS COMPLETED BY THE A.O. VIDE ORDER 2 ITA NO. 2477 /DEL/201 6 DTD. 15.12.09 U/S.143 (3)/148. IN THE SAID ASSTT. AN ADDITION OF RS.10,35,000/ - WAS MADE U/S.69A BY HOLDING THE SAID AMOUNT AS UNEXPLAINED CASH DEPOSIT IN THE BANK. THE ASSESSEE FILED APPEAL AGAINST THE SAID ADDITION BEFORE CIT (A) - 10, NEW DELHI. WHILE DISPOSIN G OFF THE SAID APPEAL VIDE HIS ORDER DTD.26.05.14, THE CIT (A), APART FROM CONFIRMING THE ADDITION OF RS.10,35,000/ - , MADE FURTHER ADDITION BY WAY OF ENHANCEMENT FOR RS.12,24,000/ - . FOR SAID ENHANCEMENT, THE CIT (A) - 10 INITIATED PENALTY PROCEEDINGS U/S. 27 1 (1) (C) VIDE HIS QUANTUM APPEAL ORDER DTD.26.05.14. THE IMPUGNED CIT (A) ORDER DTD.30.03.16 WHICH IS IN APPEAL BEFORE US LEVIES A PENALTY OF RS.3,67,200/ - U/S. 271 (1) (C) ON THE SAID ENHANCED INCOME OF RS.12,24,000/ - MADE BY THE CIT (A). 3. IN APPEAL BEFORE US, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, LD. CIT (A) ERRED IN LAW AS WELL AS ON MERITS IN LEVYING A PENALTY OF RS. 3,67,200/ - U/S. 271 (1) (C) @100% OF THE TAX SOUGHT TO BE EVADED ON T HE ENHANCED INCOME OF RS. 12,24,000/ - . 3 ITA NO. 2477 /DEL/201 6 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE IMPUGNED ORDER IS BARRED BY LIMITATION. 3. THAT INITIATION OF PENALTY IN THE CIT (A) ORDER BEING FATALLY DEFECTIVE AS NOT SPECIFYING THE SPECIFIC CHARGE AS TO WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME, MAKES THE WHOLE INITIATION AND CONSEQUENTIAL PROCEEDINGS UN SUSTAINABLE IN LAW. 4. THAT THE PENALTY SHOW CAUSE NOTICE, SINCE, BEING FATALLY DEFECTIVE AND NOT IN ACCORDAN CE WITH LAW, MAKES THE WHOLE PROCEEDINGS WITHOUT JURISDICTION AND ILLEGAL. 5. THAT WITHOUT PREJUDICE , WITHOUT ADMITTING, IN ANY CASE, THE ALLEGED ADDITION CANNOT BE TAKEN AS IN THE NATURE OF CONCEALMENT OF INCOME, THEREFORE, THE PENALTY LEVIED ON THE WR ONG CHARGE IS OTHERWISE UN SUSTAINABLE IN LAW. 6. THAT NO PROPER AND REASONABLE OPPORTUNITY OF HEARING HAS BEEN ALLOWED. 7. THAT ON MERITS, ADDITION OF RS. 12,24,000/ - IS NOT IN THE NATURE OF CONCEALED INCOME, HENCE, NO PENALTY U/S. 271 (1) (C) CAN BE LEVIED EVEN ON MERITS. 4 ITA NO. 2477 /DEL/201 6 4. IN SUBSTANCE, THE ASSESSEE H AS CHALLENGED THE ACTION OF CIT (A) OF LEVYING PENALTY OF RS.3,67,200/ - U/S. 271 (1) (C) ON LEGAL GROUNDS AS WELL AS ON MERITS. 5. THE FIRST LEGAL CONTENTION OF THE ASSESSEE IS THAT THE INITIATION OF PENALTY IN THE CIT (A) QUANTUM APPEAL ORDER DTD.26.05.14 IS NOT AS PER LAW AND IS FATALLY DEFECTIVE. SIMILARLY, IT HAS BEEN CONTENDED THAT EVEN THE SHOW CAUSE NOTICE ISSUED U/S. 271 (1) (C) DTD.01.03.16 IS ALSO NOT LEGALLY VALID AND FATALLY DEFECTIVE. THE APPELLANT HAS POINTED OUT FROM THE CIT (A) QUANTUM APPEAL ORDER DTD.26.05.14 THAT THE PENALTY HAS BEEN INITIATED VIDE PARA - 7.8 OF HIS ORDER IN TERMS AS PENALTY PROCEEDINGS U/S. 271 (1) (C) OF THE ACT ARE INITIATED AGAINST THE ENHANCED INCOME . IT HAS BEEN ARGUED THAT THE PENALTY PROCEEDINGS HAVE BEEN INITIATED VIDE THE SAID ORDER, HOWEVER IN INITIATION, THE SPECIFIC CHARGE I.E. WHETHER IT IS A CASE OF CONCEALMENT OF INCOME OR A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, HAS NOT BEEN SPECIF IED. IT HAS BEEN ARGUED THAT IT IS MANDATORY FOR A LEGALLY VALID INITIATION THAT IT SHOULD SPECIFICALLY MAKE CLEAR THE CHARGE I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IT HAS BEEN ARGUED THAT THE ABSE NCE OF ANY MENTION OF SUCH SPECIFIC CHARGE IN INITIATION ITSELF, MAKES THE INITIATION LEGALLY 5 ITA NO. 2477 /DEL/201 6 INCOMPETENT FOR ANY FURTHER ACTION IN THE MATTER. THE ASSESSEE, FURTHER REFERRED TO SHOW CAUSE NOTICE U/S. 271 (1) (C) DTD.01.03.16 WHICH HAS BEEN FILED ON PG. NO .1 OF THE PAPER BOOK. IT HAS BEEN CONTENDED THAT IT IS A PRINTED STEREO TYPED NOTICE WHEREIN ALSO, NO SPECIFIC CHARGE HAS BEEN MENTIONED AND THE IRRELEVANT AND INAPPLICABLE PORTION OF THE SAID NOTICE I.E. THE CHARGE WHICH IS NOT APPLICABLE IS NOT DELETED. THE CONTENTION IS THAT, IT IS A PRINTED MECHANICALLY ISSUED SHOW CAUSE NOTICE WHEREIN BOTH THE CHARGES I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS APPEARS. THE ASSESSEE FURTHER CONTENDED THAT AS PER PARA - 2 OF THE SAID SHOW CAUSE NOT ICE DTD.01.03.16 WHEREIN BOTH THE CHARGES ARE MENTIONED, IT CONTAINS THE WORD OR (TRANSLATED IN ENGLISH) BETWEEN BOTH THE CHARGES I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT HAS BEEN CLAIMED THAT SUCH PRINTED PROFOR MAS WHERE INAPPLICABLE CHARGE IS NOT DELETED. IT HAS BEEN FURTHER CONTENDED THAT BY THE USE OF WORD OR IN BETWEEN BOTH THE CHARGES, IT BECOMES MORE CONFUSING AND UNCLEAR AS TO FOR WHICH CHARGE THE NOTICE HAS BEEN ISSUED. IT HAS BEEN FURTHER ARGUED THAT S UCH NOTICE CANNOT PROVIDE A VALID JURISDICTION FOR IMPOSING PENALTY U/S. 271 (1) (C). THE LD. A.R. HAS PLACED RELIANCE ON CIT VS. MANJUNATH COTTON & GINNING FACTORY 359 ITR 565 (KAR.) AND ON CIT VS. SSAS EMERALD MEADOWS 242 TAXMANN 6 ITA NO. 2477 /DEL/201 6 180 (SC) . BY RELYING UP ON THESE AUTHORITIES, THE LD. A.R. HAS SUBMITTED THAT SINCE INITIATION IS BAD AS WELL AS THE SHOW CAUSE NOTICE IS ALSO EQUALLY FATALLY BAD IN LAW, THEREFORE ALL SUBSEQUENT PROCEEDINGS INCLUDING THE IMPUGNED PENALTY ORDER IS UNSUSTAINABLE IN LAW AND SHOULD BE QUASHED. 6. THE LD. D.R., HOWEVER SUBMITTED THAT THE CIT (A) IN IMPUGNED PENALTY ORDER DTD.30.03.16, IN PARA - 4.13 HAS DEALT WITH THE CONTENTION OF THE APPELLANT REGARDING SHOW CAUSE NOTICE DTD.01.03.16. CIT (A) IN THE PENALTY ORDER HAS MENTIONED AS FR OM THE PERUSAL OF NOTICE U/S.274 READ WITH SECTION 271, IT IS SEEN THAT CIT (A) HAS MARKED THE APPROPRIATE LIMB THAT APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME. THEREFORE, IT IS APPARENT THAT CIT (A) WAS SURE THAT ASSESSEE HAD CONCEALED THE PARTICUL ARS OF INCOME AND AFTER APPLYING HIS MIND, HE HAS TICKED THE APPROPRIATE LIMB FOR INITIATION OF PENALTY U/S. 271 (1) (C) . THE LD. DR HAS FURTHER RELIED UPON THE ORDER OF CIT (A) IMPOSING PENALTY U/S. 271 (1) (C) AND SUBMITTED THAT THE PENALTY HAS BEEN RIG HTFULLY LEVIED ON THE ADDITION OF RS.12,24,000/ - . 7 ITA NO. 2477 /DEL/201 6 7. I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE RELEVANT ORDERS AND OTHER MATERIAL ON RECORD. IN THE CIT (A) QUANTUM APPEAL ORDER DTD.26.05.14, THERE IS NO MENTION OF THE SPECIF IC CHARGE I.E. WHETHER THE PENALTY IS BEING INITIATED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE PENALTY HAS BEEN INITIATED BY SIMPLY MENTIONING THAT PENALTY PROCEEDINGS U/S. 271 (1) (C) OF THE ACT ARE INITIATED AGAIN ST THE ENHANCED INCOME. THE PENALTY SHOW CAUSE NOTICE DTD.01.03.16 AS PLACED ON PG. NO.1 OF THE PAPER BOOK BY THE ASSESSEE, ALSO DO NOT SPECIFY THE SPECIFIC CHARGE OF PENALTY. IN PARA - 2 OF THE SAID SHOW CAUSE NOTICE DTD.01.03.16, THE INAPPLICABLE CHARGE IS NOT DELETED OR CUT DOWN. THE PENALTY NOTICE IS ON A PRINTED PROFORMA WHEREIN BOTH THE CHARGES ARE MENTIONED. IT IS ALSO FOUND THAT THE WORD OR IS PRINTED IN BETWEEN BOTH THE CHARGES WHICH MAKES THE SHOW CAUSE NOTICE VAGUE AND UNWORKABLE. THUS, THE PENAL TY SHOW CAUSE NOTICE IS VAGUE AND UNSPECIFIC AND ON GOING THROUGH THE SAID SCN, ONE CANNOT UNDERSTAND AS TO FOR WHICH SPECIFIC CHARGE I.E. FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME, THE SAID NOTICE HAS BEEN ISSUED. THE FI NDINGS OF CIT (A) IN IMPUGNED PENALTY ORDER DTD.30.03.16, IN PARA - 4.13, THAT HE HAS TICKED THE APPROPRIATE LIMB FOR INITIATION OF PENALTY U/S. 271 (1) (C) IS APPARENTLY WRONG AND IS NOT BORN OUT FROM THE RECORDS. THUS THIS 8 ITA NO. 2477 /DEL/201 6 CONTENTION OF THE LD. DR IS FACTU ALLY INCORRECT. IN CIT VS. MANJUNATH COTTON & GINNING FACTORY 359 ITR 565 (KAR.) IT HAS BEEN HELD THAT NOTICE U/S.274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SEC.271 (1) (C) I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME. IN THE SAME CASE IT HAS BEEN FURTHER SPECIFICALLY HELD THAT SENDING PRINTED FORM WHERE ALL GROUNDS MENTIONED IN SEC.271 ARE MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE LAW LAID DOWN IN MANJUNATH COTTON & GINNING FACTORY (SUPRA) STANDS APPROVED BY HONBLE SUPREME COURT IN CIT VS. SSAS EMERALD MEADOWS 242 TAXMANN 180 (SC) . HENCE, IN THIS CASE I FIND THAT THE INITIATION OF PENALTY AT THE TIME OF INITIATION AS WELL AS PER SHOW CAUSE NOTICE DTD.01.03.16 IS NO T LEGALLY VALID AS THE SPECIFIC CHARGE FOR WHICH THE ACTION WAS INITIATED IS NOT MENTIONED AT ALL AS WELL AS NOT COMING OUT FROM THESE DOCUMENTS. SUCH INITIATION AND SUCH SHOW CAUSE NOTICE CANNOT PROVIDE THE VALID JURISDICTION TO PROCEED FURTHER WITH THE P ENALTY PROCEEDINGS. THIS LEGAL POSITION STANDS SETTLED IN THE CASE LAWS CITED ABOVE. HENCE IN VIEW OF THE FACTS OF CASE IN HAND AND FOLLOWING THE RATIO OF ABOVE MENTIONED CASE LAWS, I HOLD THAT THE PENALTY ORDER IS WITHOUT JURISDICTION AND UNSUSTAINABLE IN LAW, THUS STANDS QUASHED. 9 ITA NO. 2477 /DEL/201 6 8. THE LD. AR HAS TAKEN SEVERAL OTHER LEGAL CONTENTIONS ALSO. HE HAS ALSO STATED THAT THE IMPOSITION OF PENALTY IS UNSUSTAINABLE EVEN ON MERITS. HOWEVER SINCE THE PENALTY ORDER ALREADY STANDS QUASHED, THEREFORE, THERE IS NO NEED TO ADJUDICATE THE OTHER LEGAL CONTENTIONS AND THE MERITS OF THE CASE. 9. IN RESULT THE APPEAL OF THE ASSESSEE IN ITA NO. 2477/DEL/2016 IS ALLOWED. THE ORDER IS PRO NOUNCED IN THE OPEN COURT ON 07 . 0 3 .201 8 . SD/ - [B.P. JAIN] ACCOUNTANT MEMBER DATED: 07TH MARCH, 2018 VL/ COPY FORWARDED TO: 1 . ASSESSEE 2 . RESPONDENT 3 . CIT ASSISTANT REGISTRAR 4 . CIT(A) ITAT, NEW DELHI 5 . DR