Mahabir Agri Processors Pvt. Ltd., Jajpur V. ITO, Jajpur Ward, Jajpur

ITA 25/CTK/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9877 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-06-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 25-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Question of law; Set aside
• Section: 271(1)(c); 274; 73; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE MAHABIR AGRI LTD., NANPUR, BALICHANDRAPUR, JAJPUR PAN/GIR NO. (APPELLANT REVENUE BY THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE OR CIT(A), CUTTACK DATED 25.1.2019 2. THE ONLY GRIEVANCE OF THE ASSESSEE ERRED IN CONFIRMING THE PENALTY OF THE ACT. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN BUSINESS OF PROCUREMENT OF PADDY AND PROCESSING OF RICE. THE HAD FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012 TOTAL INCOME OF RS.2,68,820/ IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK SMC BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL ITA NO. 25/CTK/2021 ASSESSMENT YEAR : 2012- 2013 MAHABIR AGRI PROCESSORS PVT LTD., NANPUR, BALICHANDRAPUR, VS. ITO, JAJPUR WARD, JAJPUR NO. AAGCM 0856 R (APPELLANT ) .. ( RESPONDENT ASSESSEE BY : SHRI MOHIT SHETH REVENUE BY : SHRI SOVESH CHANDRA MOHANTY DATE OF HEARING : 29/06 / 20 DATE OF PRONOUNCEMENT : 23/ 0 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE OR CIT(A), CUTTACK DATED 25.1.2019 FOR THE ASSESSMENT YEAR THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS.9,27,000/- UNDER SECTION 271(1)(C) OF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN BUSINESS OF PROCUREMENT OF PADDY AND PROCESSING OF RICE. THE HAD FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012 TOTAL INCOME OF RS.2,68,820/ - . THE CASE WAS SELECTED FOR SCRUTINY UNDER P A G E 1 | 6 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH, CUTTACK JUDICIAL MEMBER 2013 ITO, JAJPUR WARD, RESPONDENT ) MOHIT SHETH , AR MOHANTY , ADDL. CIT (DR) / 20 21 0 7/2021 THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE OR DER OF THE FOR THE ASSESSMENT YEAR 2012-13. IN THIS APPEAL IS THAT THE LD CIT(A) UNDER SECTION 271(1)(C) OF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN BUSINESS OF PROCUREMENT OF PADDY AND PROCESSING OF RICE. THE ASSESSEE HAD FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012 -13 DISCLOSING . THE CASE WAS SELECTED FOR SCRUTINY UNDER ITA NO. 25/CTK/2020 ASSESSMENT YEAR : 2012-2013 P A G E 2 | 6 CASS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT OUT OF TOTAL SHARE APPLICATION MONEY OF RS.92,00,000/- REFLECTED IN THE BALANCE SHEET, THE ASSESSEE HAD INTRODUCED SHARE APPLICATION MONEY OF RS.30,00,000/-. THE AO ASKED THE ASSESSEE TO EXPLAIN THE DETAILS OF SUCH SHARE APPLICATION MONEY OF RS.30,00/-- WITH CORROBORATIVE EVIDENCE. ALTHOUGH THE ASSESSEE FURNISHED THE IDENTITY OF THE PERSONS FROM WHOM SHARE APPLICATION MONEY IS RECEIVED BUT COULD NOT FURNISH SUBSTANTIAL DOCUMENTS TO VERIFY THE GENUINENESS OF THE TRANSACTION AND THEIR CREDITWORTHINESS. THEREFORE, THE AO TREATED RS.,30,00,000/- RECEIVED FROM UNDISCLOSED SOURCE AND THE ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 OF THE ACT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT ON 31.3.2015 DETERMINING THE TOTAL INCOME OF RS.32,68,824/- AS AGAINST THE RETURNED INCOME OF RS.2,68,824/-. AS THE ASSESSEE HAS CONCEALED ITS INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME, THE AO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT AND ISSUED SHOW CAUSE NOTICE AS TO WHY PENALTY PROCEEDINGS WILL NOT BE INITIATED. THE ASSESSEE DID NOT RESPOND TO THE SHOW CAUSE NOTICE AND, THEREFORE, THE ASSESSING OFFICER LEVIED PENALTY OF RS.9,27,000/- BEING 100% OF TAX SOUGHT TO BE EVADED. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) BUT WITHOUT ANY SUCCESS. ITA NO. 25/CTK/2020 ASSESSMENT YEAR : 2012-2013 P A G E 3 | 6 5. LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE A.O. IN THE SHOW CAUSE NOTICE DATED 31 ST MARCH, 2015 ISSUED BEFORE LEVY OF THE PENALTY HAVE MENTIONED BOTH THE LIMBS OF SECTION 271(1)(C) OF THE I.T. ACT FOR LEVY OF THE PENALTY, THEREFORE, THE SHOW CAUSE NOTICE IS INVALID, BAD IN LAW AND DEFECTIVE AND AS SUCH ENTIRE PENALTY PROCEEDINGS ARE VITIATED AND ARE LIABLE TO BE QUASHED ON THIS REASON ALONE. LD A.R. RELIED ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY, 359 ITR 565 (KAR) AND ALSO THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ANANTA GOPAL KARATKALA VS ITO, BALASORE IN ITA NO.30 OF 2005. LD A.R. ALSO RELIED ON VARIOUS JUDGMENTS OF JURISDICTIONAL TRIBUNAL ON THE FOLLOWING CASES: I) JAIPRAKASH DIDWANIA IN ITA NO.238 TO 240/CTK/2020 II) ANITA DIDWANIA ITA NO.241 TO 243/CTK/2020 III) BINA DIDWANIA IN ITA NO.244 TO 247/CTK/2020 IV) OMPRAKASH DIDWANIA IN ITA NO.248 TO 251/CTK/2020 6. ON THE OTHER HAND, THE LD. D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT A.O. HAS RECORDED PROPER SATISFACTION IN THE IMPUGNED ORDERS. THEREFORE, PENALTY PROCEEDINGS NEED NOT BE CANCELLED. 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. IT IS AN ADMITTED FACT THAT BEFORE LEVY OF THE PENALTY A.O. HAS ISSUED SHOW CAUSE NOTICE DATED 31.3.2015, IN WHICH A.O. HAS MENTIONED ITA NO. 25/CTK/2020 ASSESSMENT YEAR : 2012-2013 P A G E 4 | 6 BOTH THE LIMBS OF SECTION 271(1)(C) OF THE I.T. ACT THAT ASSESSEE HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THUS THE A.O. HAS NOT MENTIONED AS TO FOR WHICH LIMB OF SECTION 271(1)(C) OF THE I.T. ACT PENALTY SHALL HAVE TO BE LEVIED AGAINST THE ASSESSEE. ACCORDING TO SECTION 274 OF THE I.T. ACT, 1961 NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER UNLESS THE ASSESSEE HAS BEEN HEARD OR HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. THE A.O. IN ORDER TO GIVE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE ISSUED SHOW CAUSE NOTICE U/S.274 R.W.S 271 OF THE ACT DATED 31.3.2015. LD A.R. SUBMITTED THAT SINCE THE AO HAS NOT SPECIFIED ON WHICH LIMBS, THE PENALTY IS LEVIABLE, IN VIEW OF THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY, 359 ITR 565 (2013). LD A,R RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. M/S. SSAS EMERALD MEADOWS, 73 TAXMANN.COM 248 (SC) HAS HELD THAT OMISSION BY THE AO TO EXPLICITLY SPECIFIED IN THE PENALTY NOTICE AS TO WHETHER PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OR FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION. FURTHER, THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD., 2019-(8)-TMI-409-(DEL.) VIDE JUDGMENT DATED 02.08.2019 IN PARAS 21 AND 22 HELD AS UNDER : 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271(1) (C) OF THE ACT, WHICH WAS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT IN CIT ITA NO. 25/CTK/2020 ASSESSMENT YEAR : 2012-2013 P A G E 5 | 6 V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR) AND OBSERVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) (C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIGH COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIONER OF INCOME TAX V. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 241 (KAR), THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA IN SLP NO.11485 OF 2016 BY ORDER DATED 5TH AUGUST, 2016. 22. ON THIS ISSUE AGAIN THIS COURT IS UNABLE TO FIND ANY ERROR HAVING BEEN COMMITTED BY THE ITAT. NO SUBSTANTIAL QUESTION OF LAW ARISES. 8. CONSIDERING THE ISSUE IN THE LIGHT OF ABOVE MATERIAL, IT IS CLEAR THAT A.O. HAS ISSUED INVALID AND DEFECTIVE NOTICE UNDER SECTION 271(1)(C) OF THE I.T. ACT READ WITH SECTION 274 OF THE I.T. ACT DATED 31.3.2015 BEFORE LEVY OF THE PENALTY. THEREFORE, IN VIEW OF JUDGMENT OF HONBLE ORISSA HIGH COURT IN THE CASE OF ANANTA GOPAL KARATKALA (SUPRA) AND OTHER DECISIONS RELIED BY THE APPELLANT, I AM OF THE CONSIDERED OPINION THAT THE ENTIRE PENALTY PROCEEDINGS ARE VITIATED AND ARE LIABLE TO BE QUASHED. IN VIEW OF THE ABOVE, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE PENALTY OF RS.9,27,000/- LEVIED UNDER SECTION 271(1)(C) OF THE ACT. SINCE, I HAVE QUASHED THE PENALTY PROCEEDINGS ON TECHNICAL GROUND, THERE IS NO NEED TO DECIDE THE PENALTY MATTERS ON MERITS. 9. .IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 23/07/2021. SD/- (CHANDRA MOHAN GARG) JUDICIAL MEMBER CUTTACK; DATED 23/07/2021 ITA NO. 25/CTK/2020 ASSESSMENT YEAR : 2012-2013 P A G E 6 | 6 B.K.PARIDA, SPS (OS) COPY OF THE ORDER FORWARDED TO : BY ORDER SR.PVT.SECRETARY ITAT, CUTTACK 1. THE APPELLANT : MAHABIR AGRI PROCESSORS PVT LTD., NANPUR, BALICHANDRAPUR, JAJPUR 2. THE RESPONDENT. ITO, JAJPUR WARD, JAJPUR 3. THE CIT(A) , CUTTACK 4. PR.CIT - , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//