Ravinder Kumar Walia, Haridwar V. ITO Ward-2, Haridwar

ITA 2774/DEL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4154 (ITAT-DEHRADUN)
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 01-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N C UPPADHAY
• Assessee Lawyers: TARUNDEEP; RAMAN JAIN
• Keywords: Initiation of penalty proceedings; Condonation of delay; Set aside
• Section: 271(1)(c); 143(3); 274; 13; 27; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN CIRCUIT BENCH: DEHRADUN BEFORE, SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.2774/DEL/2019 (ASSESSMENT YEAR 2011-12) RAVINDER KUMAR WALIA VILLAGE SARAI JWALAPUR, HARIDWAR (UTTRAKHAND) PAN AASPW 1067H VS. ITO WARD-2, HARIDWAR (APPELLANT) (RESPONDENT) A PPELLANT BY SH. TARUNDEEP, ADV. & SH. RAMAN JAIN, CA RESPONDENT BY SH. N.C. UPPADHAY, SR. DR DATE OF HEARING 04.03.2021 DATE OF PRONOUNCEMENT 31.05.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 1 ST FEBRUARY, 2016 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- DEHRADUN {CIT (A)} FOR ASSESS MENT YEAR 2011-12 WHEREIN THE LD. CIT(A) HAS UPHELD LEVY OF PE NALTY OF 2 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO RS.16,52,935/- U/S 271(1) (C) OF THE INCOME TAX ACT , 1961 (HEREINAFTER CALLED THE ACT). 2.0 THE BRIEF FACTS OF THE CASE ARE THAT VIDE O RDER OF ASSESSMENT DATED 28 TH MARCH, 2014 PASSED BY THE ASSESSING OFFICER (AO) U/S 143(3) OF THE ACT, THE INCOME OF THE ASSE SSEE WAS ASSESSED AT A TOTAL INCOME OF RS.70,06,610/- AS AGAINST THE RETURNED TOTAL INCOME OF RS.12,76,202/-. THE ADDITIONS MADE BY THE AO IN THE ORDER OF ASSESSMENT WERE ACCEPTED BY THE ASSESSEE A ND NO FURTHER APPEAL WAS FILED CHALLENGING THE ASSESSMENT FRAMED. THEREAFTER, VIDE PENALTY ORDER DATED 23 RD SEPTEMBER, 2014 PASSED BY THE AO U/S 271(1)(C) OF THE ACT, THE AO HAS LEVIED A PENAL TY OF RS.16,52,935/-. ON APPEAL, THE LD. CIT (A) HAS UPHE LD THE IMPOSITION OF PENALTY AND NOW THE ASSESSEE IS IN APP EAL BEFORE US CHALLENGING THE CONFIRMATION OF PENALTY. 2.1 ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THAT ON FACTS AND IN LAW THE CIT(A) HAS ERRED I N UPHOLDING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON FOLLOWING ADDITIONS/DISALLOWANCES MADE BY AO IN ORD ER DATED 28 TH MARCH, 2014 PASSED U/S 143(3) OF THE ACT : 3 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO (A) INCOME FROM COMMISSION AND BROKERAGE OF RS.1,89,000/- (B) ADVANCES FROM CUSTOMERS OF RS.51,65,300/- 2. THAT ON FACTS AND IN LAW, THE AO/CIT(A) HAVE ERR ED IN HOLDING / UPHOLDING THAT APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND / OR CONCE ALED PARTICULARS OF HIS INCOME. 2.1 THAT ON FACTS AND IN LAW THE CIT(A) HAS ERRED I N INVOKING PROVISIONS OF EXPLANATION 1 TO SECTION 271 OF THE INCOME TAX ACT, 1961. 3.0 FROM THE RECORDS IT IS SEEN THAT PURSUANT TO THE DEFECTS POINTED OUT BY THE REGISTRY, THE ASSESS EE HAS FILED FRESH APPEAL MEMO STATING THAT THE IMPUGNED ORDER WAS SER VED ON 01 ST FEBRUARY 2016. 3.1 THE LD. AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT THERE WAS A DELAY IN FILING OF THE A PPEAL BEFORE THIS TRIBUNAL. IT WAS SUBMITTED THAT AS PER THE APPLICABL E STATUTORY PROVISIONS, THE APPEAL SHOULD HAVE BEEN FILED BY 1 ST APRIL, 2016. HOWEVER, THE APPEAL HAS ACTUALLY BEEN FILED ON 1 ST APRIL, 2019. IN SUPPORT OF REQUEST MADE FOR CONDONATION OF DELAY, T HE LD. AR ALSO INVITED OUR ATTENTION TO THE AFFIDAVIT FILED BY THE ASSESSEE. IN ORDER 4 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO TO JUSTIFY THE SUFFICIENT CAUSE FOR DELAY IN FILING OF APPEAL, WRITTEN SUBMISSIONS WERE FILED ON BEHALF OF THE ASSESSEE WHI CH ARE BEING REPRODUCED AS UNDER:- (A) THE ASSESSEE HAS AUTHORISED SH. ANIL KUMAR AND SH. ARPIT VERMA, CA FOR REPRESENTATION OF CASES BEFORE THE HO NORABLE CIT (APPEALS) DEHRADUN. ALL THE NOTICES AND THE APP ELLATE ORDER WAS RECEIVED BY AUTHORISED REPRESENTATIVE THE MSELVES. (B) IN JANUARY 2016, DISPUTES REGARDING PROPERTY AROSE BETWEEN ASSESSEE AND OTHERS AND POLICE COMPLAINTS WERE FILE D AGAINST ASSESSEE (COPY ENCLOSED VIDE PAGES 7 TO 13) . (C) DUE TO THE ABOVE MENTIONED POLICE COMPLAINTS, THE A SSESSEE WAS FACING TRAUMA MENTALLY, FINANCIALLY AS WELL AS SOCIETY AS HE WAS UNDER CONSTANT QUESTIONNAIRE NOT ONLY FROM P OLICE DEPARTMENT BUT WAS ALSO FACING UNAWKARD AND UNPLEAS ANT RELATIONSHIPS IN SOCIETY, AS THE PUBLIC AT LARGE GO T AWARE OF PROCEEDINGS DUE TO NEWS PUBLISHED IN NEWS PAPER. (D) THIS HUGE STRESS DRAINED THE REPUTATION OF ASSESSEE SOCIALLY AND DAILY HUMILIATION COMPELLED THE ASSESSEE TO LEA VE THE TOWN, (WHERE HE RESIDED DURING APPELLATE PROCEEDING S), AND WENT ALONG WITH HIS FAMILY TO HIS SISTER, SMT KAVIT A W/O SH. MOHINDER SINGH RESIDING IN AGE B/R-1 GE, HUSSAR CAN TT, HISAAR, HARYANA IN FEBRUARY 2016. MOREOVER HEALTH O F ASSESSEE ALSO DETERIORATED DURING THE SAID PERIOD. (COPY OF MEDICAL CERTIFICATE ENCLOSED AS PER PAGE 14). 5 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO (E) THE ASSESSEE RETURNED BACK TO HIS RESIDENCE IN HARI DWAR IN 2019 AND WHEN INCOME TAX DEPARTMENT STARTED FOLLOWI NG UP FOR RECOVERY OF OUTSTANDING DEMAND (COPY OF NOTICE U/S 221 DATED 24 TH JANUARY 2019 IS ENCLOSED AT PAGE 17) THEN THE ASSESSEE CAME TO KNOW THAT THERE WAS SUCH AN APPELL ATE ORDER PASSED BY HONOURABLE CIT (APPEALS), AGAINST W HICH APPEAL BEFORE ITAT WAS TO BE FILED. (F) ASSESSEE THEN AVAILED SERVICES OF MR. ROMAL JAIN, C A (FROM DEHRADUN) TO FILE A BELATED APPEAL WITH HONBLE ITA T. IN THIS REGARD A POWER OF ATTORNEY WAS ISSUED TO MR. ROMAL JAIN ON 25 TH MARCH 2019 (COPY ENCLOSED AT PAGE 16). APPEAL WAS THEN REDRAFTED BY MR. ROMAL JAIN, CA IN MARCH 2019 (COPY OF INVOICE RAISED BY MR. JAIN FOR HIS PROFESSIONAL SER VICES IS ENCLOSED PAGE 15). (G) THE APPEAL WAS FINALLY FILED WITH OFFICE OF HONBLE ITAT IN DELHI ON 1 ST APRIL, 2019. 3.2 THE LD. AR PRAYED THAT IN VIEW OF THE CIRCUMSTANCES AS ELABORATED AFORE SAID, THE DELAY B E CONDONED. 4.0 ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY OPPOSED THE REQUEST MADE FOR CONDONATION OF DELAY. 5.0 HAVING HEARD BOTH THE PARTIES ON THE ISSUE O F CONDONATION OF DELAY, IT IS SEEN THAT IT IS SETTLED LAW THAT THE COURTS 6 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO AND THE QUASI-JUDICIAL BODIES ARE EMPOWERED TO COND ONE THE DELAY IF THE LITIGANT SATISFIES THE COURT THAT THERE WERE SU FFICIENT REASONS FOR AVAILING THE REMEDY AFTER THE EXPIRY OF THE LIMITAT ION. SUCH REASONING SHOULD BE TO THE SATISFACTION OF THE COUR T. THE EXPRESSION SUFFICIENT CAUSE OR REASON AS PROVIDED IN SUB-SEC TION (5) OF SECTION 253, SUBSECTION (3) SECTION 249 OF THE INCOME TAX A CT, 1961 IS USED IN IDENTICAL TERMS IN THE LIMITATION ACT AND THE CI VIL PROCEDURE CODE. SUCH EXPRESSION HAS ALSO BEEN USED IN OTHER S ECTIONS OF THE INCOME TAX ACT SUCH AS SECTIONS 274, 273 ETC. THE E XPRESSION SUFFICIENT CAUSE WITHIN THE MEANING OF SECTION 5 O F THE LIMITATION ACT AS WELL AS SIMILAR OTHER PROVISIONS AND THE AMB IT OF EXERCISE OF POWERS THERE UNDER HAVE BEEN THE SUBJECT-MATTER OF CONSIDERATION BEFORE THE HONBLE APEX COURT ON VARIOUS OCCASIONS. IN THE CASE OF STATE OF WEST BENGAL V. ADMINISTRATOR; HOWRAH MUNIC IPALITY AIR 1972 SC 749 , THE HONBLE SUPREME COURT, WHILE CONSIDERING THE S COPE OF THE EXPRESSION SUFFICIENT CAUSE FOR CONDONATION O F DELAY, HAS HELD THAT THE SAID EXPRESSION SHOULD RECEIVE A LIBERAL C ONSTRUCTION SO AS TO ADVANCE SUBSTANTIAL JUSTICE WHEN NO NEGLIGENCE OR INACTION OR WANT OF BONA FIDE IS IMPUTABLE TO THE PARTY. 7 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO 5.1.0 IN THE CASE OF N. BALAKRISHNAN V. M. KRISHNAMURTHY AIR 1998 SC 3222 , THERE WAS A DELAY OF 883 DAYS IN FILING AN APPLICATION FOR SETTING ASIDE THE EX PARTE DECREE FOR WHICH THE APPLICATION FOR CONDONATION OF DELAY WAS FILED. THE TRIAL COURT HAVING FOUND THAT SUFFICIENT CAUSE WAS MADE OUT FOR CONDONATION OF DELAY CONDONED THE DELAY. HOWEVER, THE HONBLE COUR T REVERSED THE ORDER OF THE TRIAL COURT. THE HONBLE SUPREME COURT WHILE RESTORING THE ORDER OF THE TRIAL COURT HAS OBSERVED IN PARA 8 , 9 AND 10 AS UNDER:- 8. THE APPELLANTS CONDUCT DOES NOT ON THE WHOLE W ARRANT TO CASTIGATE HIM AS AN IRRESPONSIBLE LITIGANT. WHAT HE DID IN DEFENDING THE SUIT WAS NOT VERY MUCH FAR FROM WHAT A LITIGANT WOULD BROADLY DO. OF COURSE, IT MAY BE SAID THAT HE SHOULD HAVE BEEN MORE VIGILANT BY VISITING HIS ADVOCATE AT SHOR T INTERVALS TO CHECK UP THE PROGRESS OF THE LITIGATION. BUT DURING THESE DAYS WHEN EVERYBODY IS FULLY OCCUPIED WITH HIS OWN AVOCA TION OF LIFE, AN OMISSION TO ADOPT SUCH EXTRA VIGILANCE NEED NOT BE USED AS GROUND TO DEPICT HIM AS A LITIGANT NOT AWARE OF HIS RESPONSIBILITIES AND TO VISIT HIM WITH DRASTIC CONS EQUENCES. 9. IT IS AXIOMATIC THAT CONDONATION OF DELAY IS A M ATTER OF DISCRETION OF THE COURT. SECTION 5 OF THE LIMITATIO N ACT DOES NOT SAY THAT SUCH DISCRETION OF THE COURT. SECTION 5 OF THE LIMITATION 8 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO ACT DOES NOT SAY THAT SUCH DISCRETION CAN BE EXERCI SED ONLY IF THE DELAY IS WITHIN A CERTAIN LIMIT. LENGTH OF DELA Y IS NO MATTER, ACCEPTABILITY OF THE EXPLANATION IS THE ONLY CRITER ION. SOMETIMES DELAY OF THE SHORTEST RANGE MAY BE UNCONDEMNABLE DU E TO A WANT OF ACCEPTABLE EXPLANATION, WHEREAS IN CERTAIN OTHER CASES, DELAY OF A VERY LONG RANGE CAN BE CONDONED AS THE E XPLANATION THEREOF IS SATISFACTORY. ONCE THE COURT ACCEPTS THE EXPLANATION AS SUFFICIENT, IT IS THE RESULT OF POSITIVE EXERCIS E OF DISCRETION AND NORMALLY THE SUPERIOR COURT SHOULD NOT DISTURB SUCH FINDING, MUCH LESS IN REVISIONAL JURISDICTION, UNLESS THE EX ERCISE OF DISCRETION WAS ON WHOLLY UNTENABLE GROUNDS OR ARBIT RARY OR PERVERSE. BUT IT IS A DIFFERENT MATTER WHEN THE FIR ST COURT REFUSES TO CONDONE THE DELAY. IN SUCH CASES, THE SUPERIOR C OURT WOULD BE FREE TO CONSIDER THE CAUSE SHOWN FOR THE DELAY AFRE SH AND IN ITS OWN FINDING EVEN UNTRAMMELED BY THE CONCLUSION OF T HE LOWER COURT. 10. THE PRIMARY FUNCTION OF A COURT IS TO ADJUDICATE TH E DISPUTE BETWEEN THE PARTIES AND TO ADVANCE SUBSTANTIAL JUST ICE. THE TIME-LIMIT FIXED FOR APPROACHING THE COURT IN DIFFE RENT SITUATION IS NOT BECAUSE ON THE EXPIRY OF SUCH TIME A BAD CAUSE WOULD TRANSFORM INTO A GOOD CAUSE. 9 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO 5.1.1 THE HONBLE SUPREME COURT FURTHER OBSERVED THAT RULES OF LIMITATION ARE NOT MEANT TO DESTROY THE RI GHTS OF THE PARTIES. THEY ARE MEANT TO SEE THAT THE PARTIES DO NOT RESOR T TO DILATORY TACTICS BUT SEEK THE REMEDY PROMPTLY. THE HONBLE A PEX COURT FURTHER OBSERVED THAT REFUSAL TO CONDONE THE DELAY WOULD RESULT IN FORECLOSING A SUITOR FROM PUTTING FORTH HIS CAUSE. THERE IS NO PRESUMPTION THAT THE DELAY IN APPROACHING THE COURT IS ALWAYS DELIBERATE. 5.2 THE HONBLE SUPREME COURT IN SLP [CIVIL NO.12 980 OF 1986, DECIDED ON 19 TH FEB., 1987, IN THE CASE OF COLLECTOR, LAND ACQUISITION V. MST. KATIJI [1987] 2 SCC 107 , HAS LAID DOWN THE FOLLOWING GUIDELINES: 1. ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN MERITORI OUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS WHEN DELAY IS CONDO NED THE HIGHEST THEN CAN HAPPEN IS THAT A CAUSE WOULD BE DE CIDED ON MERITS WAFTER HEARING THE PARTIES. 10 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO 3. EVERY DAYS DELAY MUST BE EXPLAINED DOES NOT M EAN THAT A PEDANTIC APPROACH SHOULD BE MADE, WHY NOT EVERY H OURS DELAY, EVERY SECONDS DELAY. THE DOCTRINE UST BE AP PLIED ON A RATIONAL COMMONSENSE PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUS TICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON-DELI BERATE DELAY. 5. THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MALA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT HE RUNS A SERIOUS RISK. 6. IT MUST BE GRASPED THAT JUDICIARY IS RESPECTED N OT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHN ICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO SO. 5.3 IN THE LIGHT OF THE ABOVE CITED JUDGMENTS, I F WE EXAMINE THE FACTS OF THE PRESENT CASE, IT IS APPARE NT THAT THE ASSESSEE HAS BEEN VIGILANT IN HIS APPROACH AND HAS NOT NEGLECTED THE INCOME TAX PROCEEDINGS. THE HONBLE APEX COURT IN THE CASE OF N. BALAKRISHNAN (SUPRA) HAS OBSERVED THAT THE LENGT H OF DELAY IS IMMATERIAL. THE ACCEPTABILITY OF THE EXPLANATION IS THE ONLY CRITERIA 11 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO FOR CONDONING THE DELAY. IN A GIVEN CASE, DELAY OF THE SHORTEST PERIOD OF TIME MAY BE UN-CONDONABLE DUE TO UNACCEPTABLE EX PLANATION, WHEREAS IN CERTAIN OTHER CASES, DELAY OF A LONG PERI OD CAN BE CONDONED IF THE EXPLANATION IS SATISFACTORY. IN EVE RY CASE OF DELAY, THERE MIGHT BE SOME OMISSIONS OR NEGLIGENCE ON THE PART OF THE ASSESSEE BUT TO OUR MIND SUCH OMISSION/NEGLIGENCE H AS TO BE WEIGHED IN LIGHT OF FACTS AND CIRCUMSTANCES OF EACH CASE. IF THE NEGLIGENCE OR OMISSION IS A BY-PRODUCT OF A DELIBER ATE ATTEMPT WITH MALA FIDE INTENTION FOR DELAYING THE PROCESS OF LITIGATION WH ICH COULD GIVE SOME BENEFIT TO THE LITIGANT, THEN PROBABLY TH E DELAY WOULD NOT DESERVE TO BE CONDONED. HOWEVER, IF NO MALA FIDE CAN BE ATTRIBUTED TO THE DELAY, THE DELAY WILL BE CONDONABLE. THEREFOR E, ON THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION T HAT THE ASSESSEE HAS BEEN ABLE TO DEMONSTRATE SUFFICIENT REASONS, IN THE SHAPE OF APPROACHING WRONG REMEDY, FOR FILING AN APPEAL BEFOR E THE TRIBUNAL. THEREFORE, WE DEEM IT FIT TO CONDONE THE DELAY AND ADMIT THE APPEAL. 6.0 NOW COMING TO THE MERITS OF THE APPEAL, THE LD . AR HAS DRAWN OUR ATTENTION TO THE NOTICE DATED 28 TH MARCH 2014 ISSUED U/S 274 OF THE ACT AND IT WAS SUBMITTED BY HIM THAT IN THIS NOTICE, 12 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO PENALTY HAS BEEN PROPOSED TO BE IMPOSED FOR HAVING CONCEALED THE PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IT WAS SUBMITTED THAT, THUS, THE ASSESSEE WAS NOT MADE AWARE OF THE CHARGE FOR WHICH THE PENALTY WAS BEING PR OPOSED TO BE IMPOSED. IT WAS SUBMITTED THAT IT WAS SETTLED LAW THAT THE ASSESSEE SHOULD BE MADE AWARE OF THE CHARGE FOR WHICH THE PENA LTY IS BEING PROPOSED TO BE IMPOSED AND A DEFECT IN THE NOTICE I N THE NATURE OF THE SPECIFIC LIMB NOT BEING SATISFIED WOULD VITIATE THE ENTIRE PENALTY PROCEEDINGS. IT WAS SUBMITTED THAT SUCH A VIEW HAS A LSO NOW BEEN UPHELD BY THE HONBLE HIGH COURT OF DELHI IN THE CA SE OF SAHARA INDIA INSURANCE COMPANY LTD VIDE ORDER DATED 02 ND AUGUST 2019 IN ITA 475/2019. THE LD. AR ALSO DREW OUR ATTENTION TO PAGE 3 OF THE PENALTY ORDER WHEREIN THE AO HAS HELD THAT THE ASSE SSEE HAD FURNISHED INACCURATE PARTICULARS. IT WAS SUBMITTED T HAT THE PENALTY OUGHT TO BE DELETED IN VIEW OF THE DEFECT IN THE NOT ICE AS AFORESAID. THE LD. AR PLACED HIS RELIANCE ON NUMEROUS JUDICIAL PRECEDENTS IN SUPPORT OF HIS CONTENTION THAT THE DEFECT IN NOTICE WOULD MAKE THE IMPOSITION OF PENALTY UNSUSTAINABLE IN LAW. 13 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO 7.0 PER CONTRA, THE LD. SR. DR PLACED EXTENSIVE RELIANCE ON THE OBSERVATIONS AND FINDINGS OF BOTH T HE LOWER AUTHORITIES. IT WAS ALSO POINTED OUT THAT THE GROUND RELATING TO THE DEFECT IN NOTICE WAS NOT RAISED BEFORE THE LD CIT ( A) AND, THEREFORE, THE ASSESSEE SHOULD NOT BE PERMITTED TO RAISE THIS GROUND AT THIS JUNCTURE. IT WAS ARGUED BY THE LD. SR. DR THAT THE P ENALTY SHOULD NOT BE DELETED ON A MERE TECHNICALITY. 8.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. THE LD. AR FOR THE ASSESSEE HAS CHALLENGED TH E IMPUGNED ORDER CONTENDING THAT THE SHOW-CAUSE NOTICE ISSUED BY THE AO IS NOT A VALID NOTICE TO INITIATE THE PENALTY PROCEEDI NGS AS THE ASSESSEE HAS NOT BEEN MADE AWARE AS TO WHETHER HE HAS CONCEALE D THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. IT IS SETTLED PRINCIPLE OF LAW THAT PEN ALTY CANNOT BE IMPOSED MERELY ON THE GROUND THAT ADDITIONS MADE IN THE INCOME OF THE ASSESSEE HAVE BEEN CONFIRMED. RATHER TO PROCEED WITH THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT, THE AO HAS TO PROVE 14 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF SU CH INCOME. 8.1 A BARE PERUSAL OF THE NOTICE ISSUED TO THE ASSESSEE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT GOES TO PROVE THAT ASSESSEE HAS NOT BEEN CALLED UPON TO EXPLAIN I F HE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME. THE HONBLE KARNATAKA H IGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY & ORS 359 ITR 565(KAR) HAS DEALT WITH THE IDENTICAL ISSUE THREADBARE AND C OME TO THE FOLLOWING CONCLUSION:- 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EME RGES IS AS UNDER: A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIABI LITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSIN G PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIE NT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 27 1(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. 15 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCE RNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTH ORITY OR REVISIONAL AUTHORITY. F) EVER IF THERE IS NO SPECIFIC FINDING REGARDING T HE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT L EAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BECAUSE O F DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASS ESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDIN GS UNDER SECTION 271(L)(C) IS A SINE QUA NON FOR THE ASSESSM ENT OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PRO VISION CONTAINED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE T O THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMI SSIONER. I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORDE R OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TA X AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PE NALTY, UNLESS 16 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, I T IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORIT IES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILI TY CAME TO BE ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPLA NATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT BONAFIDE, AN ORDER IMPOS ING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUBS TANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONAFIDE AND ALL F ACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMP OSED. N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO S ECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SA TISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PR OCEEDINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFAC TION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APP ELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECI FICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., W HETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORREC T PARTICULARS OF INCOME Q) SENDING PRINTED FORM WHERE ALL THE GRO UND 17 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SA TISFY REQUIREMENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HA S TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLE OF NATURAL JUSTI CE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE AS SESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENA LTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEP ENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDI NGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF I NCORRECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN T HE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESS MENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR RE ASSESSMENT CANNOT BE DECLARED AS INVALID IN THE PENALTY PROCEE DINGS. 8.2 THEREFORE, RESPECTFULLY FOLLOWING THE LAW AS LAID DOWN BY THE HONBLE HIGH COURT OF KARNATAKA, AS STAT ED ABOVE, WE 18 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO ARE OF THE CONSIDERED VIEW THAT WHEN THE ASSESSEE HAS NOT BEEN SPECIFICALLY MADE AWARE OF THE CHARGES LEVELED AGAIN ST HIM AS TO WHETHER THERE IS A CONCEALMENT OF INCOME OR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME ON HIS PART, THE P ENALTY U/S 271(1)(C) OF THE ACT IS NOT SUSTAINABLE. RECENTLY, THE HONBLE DELHI HIGH COURT HAS APPROVED THE ORDER OF THE HONBLE KA RNATAKA HIGH COURT IN THE CASE OF SAHARA INDIA LIFE INSURANCE (SUPRA) . ACCORDINGLY, RESPECTFULLY FOLLOWING THE JUDICIAL PRE CEDENTS AS AFOREMENTIONED, WE SET ASIDE THE ORDER OF THE LD. FI RST APPELLATE AUTHORITY AND DIRECT THE AO DELETE THE PENALTY. 9.0 IN THE FINAL RESULT, APPEAL FILED BY THE ASSE SSEE IS ALLOWED. ORDER PRONOUNCED ON 31/05/2021 . SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 31/05/2021 *DRAGON* 19 ITA NOS.2774 /DEL/2019 RAVINDER KUM AR WALIA VS. ITO COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI (DEHRADUN CIRCUIT BENCH, DEHRADUN)