M/S Shri Ram Power & Steel Pvt. Ltd., Kolkata V. ACIY, C.C.1, Ranchi

ITA 284/RAN/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8705 (ITAT-RANCHI)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Ranchi
• Assessment Year: 2016-2017
• Appeal Filed On: 20-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Question of law; Reasonable cause; Set aside
• Section: 27; 132; 271(1)(c); 139; 153A; 201; 292BB; 274; 139(1); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH E COURT AT KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 2 84 / RAN / 201 9 ASSESSMENT YEAR :2016-17 M/S SHRI RAM POWER & STEEL PVT. LTD., PREMISES NO. 128/3, HAZRA ROAD, POLICE STATION, BHAWANIPUR, KOLKATA-26 [ PAN NO.AAFCS 1323 N ] V/S . ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, 7 TH FLOOR, MAHABIR TOWER, RANCHI- 834001 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI DEVESH PODDAR, ADVOCATE /BY RESPONDENT SHRI A.K. MOHANTI, ADDL. CIT-SR-DR /DATE OF HEARING 21-07-2020 /DATE OF PRONOUNCEMENT 21-07-2020 / O R D E R PER BENCH (ORAL):- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2016-17 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-DHANBADS ORDE R DATED 05.09.2019 PASSED IN CASE NO. CIT(A) DHANBAD/10069/2018-19, AF FIRMING ASSESSING OFFICERS ACTION IMPOSING PENALTY OF 35,67,610/- IN PROCEEDINGS U/S271AAB THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE THAT A RISES FOR OUR APT ADJUDICATION IS THAT OF CORRECTNESS OF THE LOWER AU THORITIES INVOKING THE PENAL ACTION IN QUESTION. WE NOTICE AT THE OUTSET THAT TH E ASSESSING OFFICERS PENALTY ITA NO.284/RAN/2019 A.Y. 2016-17 M/S SHRI RAM POWER & STEEL PVT. LTD. VS. ACIT, C.C.-1, RNC PA GE 2 NOTICE DATED 28.12.2017 NOWHERE SPECIFIED AS TO UND ER WHICH LIMB SOUGHT TO INVOKE SEC. 271AAB SINCE THE SAME STOOD ISSUED U/S 271(1)(C) OF THE ACT ONLY. THIS TRIBUNALS CO-ORDINATE BENCH IN SHRI ASHOK BHATIA VS. DCIT CENTRAL-1, INDORE IN ITA NO.869/IND/2018 DECIDED ON 05.02.2020 DELETE IDENTICAL SEC. 271AAB IN SIMILAR CIRCUMSTANCES AS UNDER:- 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RE CORDS PLACED BEFORE US. THE LEGAL ISSUE BEFORE US IS THAT WHETHER THE NOTICE IS SUED U/S 274 R.W.S. 271AAB OF THE ACT SUFFERS FROM FATAL ERROR AND TECHNICAL DEFECT T HEREBY NOT PROVIDING AN OPPORTUNITY TO THE ASSESSEE TO PLEAD HIS CASE. SINCE THE LEGAL GROUND GOES TO BE ROOT CAUSE OF THE ISSUE LEVYING PENALTY U/S 271AAB OF THE ACT, WE IN VIEW OF THE RATIO HELD BY THE HON'BLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER COMPANY LIMITED (SUPRA) ADMIT THE ADDITIONAL LEGAL GROUND FOR ADJUDICATION. FOR LEVYING PENALTY U/ S 271AAB OF THE ACT THE LD. A.O NEEDS TO PRIMARILY ISSUE NOTICE U/S 274 OF THE ACT SO FOR INITIATING PROCEEDINGS U J S 271AAB OF THE ACT THE LD.. A.O HA S TO FIRST PASS THROUGH THE HURDLE OF SECTION 274 OF THE ACT. FOR BETTER UNDERSTANDING WE REPRODUCE THE PROVISIONS OF SECTION 271MB AND 274 OF THE ACT WHICH READS AS FOL LOWS:- 271AAB . PENALTY WHERE SEARCH HAS BEEN INITIATED.-(1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIA TED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM,- (A) A SUM COMPUTED AT THE RATE OF TEN PER CENT OF T HE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) ON OR BEFORE THE SPECIFIED DATE- (A) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN R ESPECT OF THE UNDISCLOSED INCOME; AND (B) FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED P REVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN; (B) A SUM COMPUTED AT THE RATE OF TWENTY PER CENT O F THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, DOES NOT ADMIT THE UNDISCLOSED INCOME; AND (II) ON OR BEFORE THE SPECIFIED DATE- (A) DECLARES SUCH INCOME IN THE RETURN OF INCOME FURNI SHED FOR THE SPECIFIED PREVIOUS YEAR; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN R ESPECT OF THE UNDISCLOSED INCOME; ITA NO.284/RAN/2019 A.Y. 2016-17 M/S SHRI RAM POWER & STEEL PVT. LTD. VS. ACIT, C.C.-1, RNC PA GE 3 (C) A SUM WHICH SHALL NOT BE LESS THAN THIRTY PER C ENT BUT WHICH SHALL NOT EXCEED NINETY PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED BY THE PROVISIONS OF CLA USES (A) AND (B). (2) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF S UB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT O F THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (3) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, AS F AR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION . EXPLANATION.-FOR THE PURPOSES OF THIS SECTION,- (A) ' SPECIFIED DATE ' MEANS THE DUE DATE OF FURNISHING OF RETURN OF INC OME UNDER SUB-SECTION (I) OF SECTION 139 OR THE DATE ON WHICH THE PERIOD SPECIFIED IN THE NOTICE ISSUED UNDER SECTION 153A FOR FURNISH ING OF RETURN OF INCOME EXPIRES, AS THE CASE MAY BE; (B) ' SPECIFIED PREVIOUS YEAR ' MEANS THE PREVIOUS YEAR-- (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 1 39 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE D ATE OF SEARCH; OR (II) IN WHICH SEARCH WAS CONDUCTED; (C) ' UNDISCLOSED INCOME ' MEANS- (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER V ALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS- (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSI ONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECOR DED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. '. SECTION 274 OF THE ACT (1) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHA LL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD} OR HAS BEEN GIVEN A REASON ABLE OPPORTUNITY OF BEING HEARD. (2) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHA LL BE MADE- (A) BY THE INCOME- TAX OFFICER, WHERE THE PENALTY EXCE EDS TEN THOUSAND RUPEES; ITA NO.284/RAN/2019 A.Y. 2016-17 M/S SHRI RAM POWER & STEEL PVT. LTD. VS. ACIT, C.C.-1, RNC PA GE 4 (B) BY THE ASSISTANT COMMISSIONER} WHERE THE PENALTY E XCEEDS TWENTY THOUSAND RUPEES) EXCEPT WITH THE PRIOR APPROVAL OF THE DEPUTY COMMISSIONER.] (3) AN INCOME- TAX AUTHORITY ON MAKING AN ORDER UNDER THIS CHAPTER IMPOSING A PENALTY, UNLESS HE IS HIMSELF THE ASSESSING OFFIC ER, SHALL FORTHWITH SEND A COPY OF SUCH ORDER TO THE ASSESSING OFFICER'] 8. FROM PERUSAL OF THE ABOVE PROVISION WE OBSERVE THA T SUB SECTION 3 OF SECTION 271AAB OF THE ACT TALKS ABOUT ISSUING THE NOTICE U/ S 274 OF THE ACT. SO FOR INITIATING THE PENALTY PROCEEDINGS U/S 271AAB OF THE ACT THE F IRST STEP TO BE TAKEN BY LD. A.O IS TO ISSUE A VALID NOTICE U/S274 OF THE ACT. SUB-SECT ION (1) TO SECTION 274 OF THE ACT PROVIDES A PROCEDURE THAT NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHAL L BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD, OR HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD '. TO COMPLY WITH THIS REQUIREMENT THE NOTICE U/S 2 74 SHOULD BE CLEAR ENOUGH TO CONVEY THE ASSESSEE ABOUT THE CHARGE WHICH IS TO BE LEVIED AGAINST HIM/HER/IT FOR LEVYING THE PENALTY F OR THE CONTRAVENTION OF THE RELATED PROVISIONS OF THE ACT WHICH IN THE INSTANT CASE REL ATES TO NOT SURRENDERING OF UNDISCLOSED AMOUNT DURING THE COURSE OF SEARCH WHIC H IS SUBSEQUENTLY ADMITTED DURING THE COURSE OF ASSESSMENT AND NOT CHALLENGED BEFORE THE LD. CIT(A). SO IT WAS INCUMBENT FOR LD. A.O THAT IN THE NOTICE ISSUED U/S 274 OF THE ACT HE SHOULD HAVE MENTIONED THAT PENALTY U/S 271MB OF CLAUSES (A)/(B) /(C) OF SECTION 271AAB OF THE ACT. HE SHOULD HAVE THE ACT MAY BE LEVIED @10 /20 / 30% SINCE THE ASSESSEE FALLS IN CLAUSES (A) / (B) / (C) OF SECTION 271AAB OF THE AC T. HE SHOULD HAVE FURTHER MENTIONED THAT AS THE ASSESSEES CASE FALLS UNDER C LAUSE-C OF SECTION 271AAB OF THE ACT, WHY SHE SHOULD NOT BE VISITED BY PENALTY @ 30% OF THE UNDISCLOSED INCOME. AGAINST THIS CHARGE THE ASSESSEE SHOULD HAVE BEEN G IVEN A REASONABLE OPPORTUNITY OF BEING HEARD. 9. NOW LET US REVERT BACK TO THE FACT OF THE INSTANT CASE OF THE ASSESSEE AND LOOK INTO WHAT HAS BEEN MENTIONED IN THE ALLEGED NOTICES ISSU ED U/S 274 R.W.S. 2371AAB OF THE ACT, WHICH ARE REPRODUCED BELOW; NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE INCOME TAX ACT, 1961 PAN. ACFPB4590H OFFICE OF THE ASSTT. COMMISSIONER OF INCOME TAX (CENTRALL-I, INDORE DATE: 22.03.2016 TO SHRI ASHOK KUMAR BHATIA 33-A RADHA NAGAR NEELKANTH COLONY INDORE-452006 WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2014-15 IT APPEARS TO ME THAT YOU :- *HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WITH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVEN UNDE R SECTION 22(1)/22(2)/34 OF THE INDIA INCOME TAX ACT, 1922 OR WHICH YOU WERE RE QUIRED TO FURNISH UNDER SECTION 193( 1) OR BY A NOTICE GIVEN UNDER SECTION 193(2)/148 OF THE INCOME TAX ACT 1961, NO ..... DATED ..... OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH IT WITHIN THE ALLOWED AND THE MANNER REQUIR ED BY THE SIDE SECTION 139(1) OR BY SUCH NOTICE. ITA NO.284/RAN/2019 A.Y. 2016-17 M/S SHRI RAM POWER & STEEL PVT. LTD. VS. ACIT, C.C.-1, RNC PA GE 5 *HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WIT H A NOTICE UNDER SECTION 22(4}/23(2) OF THE INDIA INCOME TAX ACT, 1922 OR UN DER SECTION 142(1)/143(2) OF THE INCOME TAX ACT 1961, NO. DATED HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FU RNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME ON 21. 04.2016 AT 3.30 PM AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON Y OU SHOULD NOT BE MADE UNDER SECTION 271AAB OF THE INCOME TAX ACT 1961 IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEARING HEARD IN PE RSON OR THROUGH AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SIDE DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS M ADE UNDER SECTION 271AAB. SD/- (AMIT KUMAR SONI) ASSTT. COMMISSIONER OF INCOME TAX ( CENTRAL}-I I NDORE OFFICE OF THE DEPUTY C OMMISSIONER OF INCOME TAX (CENTRAL)-I, INDORE PAN. ACFPB4590H DATE: 03.06.2016 TO SHRI ASHOK KUMAR BHATIA 33-A RADHA NAGAR NEELKANTH COLONY INDORE-452006 SIR, SUB: PENALTY FIXATION U/S 271AAB OF THE INCOME TAX ACT, 1961 FOR THE A.Y. 2014-15-REG. PLEASE REFER TO THE PENALTY PROCEEDINGS U/S 271AAB OF THE INCOME TAX ACT 1961 FOR THE A.Y. 2014-15 IN THE ABOVE MENTIONED CASE, YOU A RE HEREBY REQUESTED TO APPEAR BEFORE THE UNDERSIGNED ON 10.06.2016 AT 11.50AM IN MY OFFICE AT ROOM NO.101, AAYAKAR BHAWAN, MAIN OPP. WHITE CHURCH, INDORE PERS ONALLY OR THROUGH AUTHORIZED REPRESENTATIVE TO SHOW CAUSE AS TO WHY PENALTY U/S 271AAB OF THE LT. ACT 1961 BE NOT LEVIED AGAINST YOU? IF YOU DO NOT WANT TO APPEA R PERSONALLY, YOU MAY SEND YOUR WRITTEN REPLY ON OR BEFORE ABOVE MENTIONED DATE, OT HERWISE PENALTY PROCEEDINGS SHALL BE DECIDED ON MERITS. SD/- (AMIT KUMAR SONI) DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL)-I INDORE OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL)-I, INDO RE PAN. ACFPB4590H DATE: 16.09.2 016 TO SHRI ASHOK KUMAR BHATIA 33-A RADHA NAGAR NEELKANTH COLONY INDORE-452006 SIR, SUB: PENALTY FIXATION U/S 271AAB R.W.S. 1~9 OF THE INCOME TAX ACT, 1961 -REG, ITA NO.284/RAN/2019 A.Y. 2016-17 M/S SHRI RAM POWER & STEEL PVT. LTD. VS. ACIT, C.C.-1, RNC PA GE 6 PLEASE REFER TO THE ABOVE THE FOLLOWING PENALTY PROCEEDING ARE INITIATED DURI NG ASSESSMENT AS MENTIONED BELOW: S.NO. A.Y. SECTION PENALTY INITIATED ON 1 2014-15 271AAB 22.03.2016 YOU ARE REQUESTED TO APPEAR BEFORE THE UNDERSIGNED ON 19.09.2016 AT 11.00 AM IN MY OFFICE AT ROOM NO.101, AAYAKAR BHAWAN, MAIN OPP. WHITE CHURCH, INDORE PERSONALLY OR THROUGH AUTHORIZED REPRESENTATIVE TO SHOW CAUSE AS TO WHY PENALTY U/S 271AAB OF THE I.T. ACT 1961 BE NOT LEVIED AGAINST Y OU? IF YOU DO NOT WANT TO APPEAR PERSONALLY, YOU MAY SEND YOUR WRITTEN REPLY ON OR B EFORE ABOVE MENTIONED DATE. IF ANY THAT YOU HAVE NOTHING TO SAY IN THIS REGARD. IT IS TO BROUGHT TO YOUR NOTICE THAT THERE IS A CHANGE IN INCUMBENT HENCE THIS NOTICE IS ISSUED TO PROVIDE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SD/- (AMIT KUMAR SONI) DEPUTY COMMISSIONER OF INCOME T AX (CENTRAL}-I INDORE 10. FROM GOING THROUGH THE ABOVE THREE NOTICES ISSUED TO THE ASSESSEE ON 22.03.2016, 03.06.2016 AND 16.09.2016, WE FIND THAT THERE IS NO MENTION ABOUT VARIOUS CONDITIONS PROVIDED U/S 271 AAB OF THE ACT. THE LD. A.O HAS VE RY CASUALLY USED THE PROFORMA USED FOR ISSUING NOTICE BEFORE LEVYING PENALTY U/S 271(1)(C) OF THE ACT FOR THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. EXCEPT MENTIONING THE SECTION 271AAB OF THE ACT IN THE NOTICE IT DOES NOT TALK ANYTHING ABO UT THE PROVISION OF SECTION 271MB. CERTAINLY SUCH NOTICE HAS A FATAL ERROR AND TECHNICALLY IS NO T A CORRECT NOTICE IN THE EYES OF LAW BECAUSE IT INTENDS TO PENALIZE AN ASSESSEE WITHOUT SPELLING ABOUT THE CHARGE AGAINST THE ASSESSEE. 11. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF P CIT V/S KULWANT SINGH BHAIIA (SUPRA) DEALT THE ISSUE OF DEFECTIVE NOTICE ISSUED II] 274 R.W.S. 271(1)(C) OF THE ACT AND HON'BLE COURT AFTER RELYING JUDGMENT OF HON'BLE SUPREME COU RT IN THE CASE OF CIT V/S MANJUNATHA COTTON GINNING FACTORY AND CIT V/S SSA'S EMERALD ME ADOWS (SUPRA) HELD THAT SUCH SHOW CAUSE NOTICES WOULD NOT SATISFY THE REQUIREMENT OF LAW AS NOTICE WAS NOT SPECIFIC. MERELY ISSUING NOTICE IN GENERAL PROFORMA WILL NEGATE THE VERY PURPOSE OF NATURAL JUSTICE. HON'BLE APEX COURT IN THE CASE OF DILIP N SHRAF 161 TAXMANN 218 HELD THAT ' THE QUASI CRIMINAL PROCEEDINGS U/ S 271 (1 )(C) OF THE ACT OUGHT TO CO MPLY WITH THE PRINCIPLES OF NATURAL JUSTICE '. 12. IN THE CASE OF DCIT VIS R. ELANGOVAN LTD (SUPRA) , CO-ORDINATE BENCH, CHENNAI WHILE DEALING WITH THE LEGAL GROUND CHALLENGING THE VALID ITY OF NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT OBSERVED THAT ; 'IT IS CLEAR FROM THE SUB SECTION (3) OF SECTION 27 1 AAB THAT SECTIONS 274 AND SECTION 275 OF THE ACT SHALL, SO FAR AS MAY BE, APP LY. SUB SECTION (1) OF SECTION 274 OF THE ACT MANDATES THAT ORDER IMPOSING PENALTY HAS TO BE IMPOSED ONLY AFTER HEARING THE ASSESSEE OR GIVING A ASSESSEE OPPORTUNITY OF HE ARING. OPPORTUNITY THAT IS TO BE GIVEN TO THE ASSESSEE SHOULD BE A MEANINGFUL ONE AN D NOT A FARCE. NOTICE ISSUED TO THE ASSESSEE REPRODUCED (SUPRA), DOES NOT SHOW WHET HER PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOME OR FOR FURNISHI NG INACCURATE PARTICULARS OF INCOME OR FOR HAVING UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAB OF THE ACT. NOTICE IN OUR OPINION WAS VAGUE. HON'BLE KAMATAKA H IGH COURT IN THE CASE OF SSA 'S ITA NO.284/RAN/2019 A.Y. 2016-17 M/S SHRI RAM POWER & STEEL PVT. LTD. VS. ACIT, C.C.-1, RNC PA GE 7 EMERALD MEADOWS (SUPRA) RELYING IN ITS OWN JUDGMENT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAD HELD AS UNDE R:- ' 2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWING S UBSTANTIAL QUESTIONS OF LAW. (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICIT LY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISH ING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVE D BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED IN COME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE P ENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) IS BAD IN LAW AND INVA LID DESPITE THE AMENDMENT OF SECTION 271 (1B) WITH RETROSPECTIVE EF FECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIAT ED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAI NST THE REVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOU T TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSI NG OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE A SSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 271 (L)(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 CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. 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 CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGME NT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIA L QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE AP PEAL IS ACCORDINGLY DISMISSED '. IN THE EARLIER CASE OF MANJUNATHA COTTON AND GINNIN G FACTORY (SUPRA) THEIR LORDSHIP HAD OBSERVED AS UNDER:- 'NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFI CALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) , I.E., WHETHER IT I S FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOM E. SENDING PRINTED FORM WHERE ALL THE GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW; THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS T O MEET SPECIFICALLY. OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE ARE OF FENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASS ESSEE) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASS ESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW; PENALTY PROCEEDINGS ARE DISTINC T FROM THE ASSESSMENT PROCEEDINGS: THOUGH PROCEEDINGS FOR IMPOSITION OF P ENALTY EMANATE FROM ITA NO.284/RAN/2019 A.Y. 2016-17 M/S SHRI RAM POWER & STEEL PVT. LTD. VS. ACIT, C.C.-1, RNC PA GE 8 PROCEEDINGS OF ASSESSMENT, THEY ARE INDEPENDENT AND A SEPARATE ASPECT OF THE PROCEEDINGS; THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS ' CONCEALMENT OF INCOME ' AND ' FURNISHING OF INCORRECT PARTICULARS ' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDI NGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE PROCEEDINGS ON THE MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHIC H PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS . THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED INVALID IN THE PENA LTY PROCEEDINGS'. VIEW TAKEN BY THE HON'BLE KARNATAKA HIGH COURT IN T HE ABOVE JUDGMENT WAS INDIRECTLY AFFIRMED BY THE HORI 'BLE APEX COURT, WH EN IT DISMISSED AN SLP FILED BY THE REVENUE AGAINST THE JUDGMENT IN THE CASE OF SSA'S EMERALD MEADOWS (SUPRA), SPECIFICALLY OBSERVING THAT THERE WAS NO M ERITS IN THE PETITION FILED BY THE REVENUE. CONSIDERING THE ABOVE CITED JUDGMENTS, WE HOLD THAT THE NOTICE ISSUED U/S.274 R. W.S. 271AAB OF THE ACT, REPRODUCE D BY US AT PARA 5 ABOVE WAS NOT VALID. EX-CONSEQUENTI, THE PENALTY ORDER IS SET ASIDE . 13. THE VIEW TAKEN BY THE CO-ORDINATE BENCH OF CHENNAI IN THE CASE OF DCIT V/S R. ELANGOVAN 1199JCHNY/2017 ORDER DATED 05.04.2018 HAS BEEN SUBSEQUENTLY FOLLOWED BY THE CO-ORDINATE BENCH OF JAIPUR IN THE CASE OF RAM MATHUR VS. DCIT, ITA NO.969/JP/2017 HOLDING THAT SUCH SHOW CAUSE NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT ARE NOT SUSTAINABLE IN LAW. 14. AS REGARDS TO JUDGMENT OF HON'BLE ALLAHABAD HIGH C OURT IN THE CASE OF PR. CIT VS SANDEEP CHANDAK (SUPRA) WHICH HAS BEEN RELIED BY TH E DEPARTMENTAL REPRESENTATIVE IS CONCERNED, WE FIND THAT IN THE DE CISION RENDERED BY THE CO- ORDINATE BENCH OF JAIPUR IN THE CASE OF RAM MATHUR VS DCIT (SUPRA) WHEREIN ALSO SIMILAR ISSUE OF DEFECTIVE NOTICE U/S 274 R.W.S. 27 1AAB WAS ADJUDICATED, THE JUDGMENT OF HON'BLE A1LAHABAD HIGH COURT IN THE CAS E OF PR. CIT VS SANDEEP CHANDAK (SUPRA) HAS BEEN DISCUSSED AND DISTINGUISHE D OBSERVING AS FOLLOWS:- IT IS FURTHER SUBMITTED THAT IN PARA 5 OF THIS JUDG MENT (RAUI MATHUR), THE CASE QUOTED BY ID CIT(A) PR. CIT VS SANDEEP CHANDAK (ALL.) WAS DISTINGUISHED AS UNDER: 5. BEFORE WE PROCEED FURTHER, THE DECISIONS RELIED UP ON BY THE LD D/R ARE TO BE CONSIDERED. IN THE CASE OF PRINCIPAL CIT VS SAND EEP CHANDAK & OTHERS [ TS-6389-HC-20 17(ALLAHABAD)-O] (SUPRA) THE ISSUE BEFORE THE HON 'BLE HIGH COURT WAS THE DEFECT IN THE NOTICE ISSUED UNDER SEC TION 271AAB ON ACCOUNT MENTIONING WRONG PROVISION OF THE ACT BEING 271(1)( C) OF THE ACT. THE HON'BLE HIGH COURT AFTER CONSIDERING THE FACT THAT THE SHOW CAUSE NOTICE ISSUED BY THE AO THOUGH MENTIONS SECTION 271(1) IN THE CAPTION OF THE SAID NOTICE, HOWEVER, THE BODY OF THE SHOW CAUSE NOTICE CLEARLY MENTIONS SECTION 271AAB, WHICH WAS FULLY COMPREHENDED BY THE ASSESSEE AS REVEALS I N THE REPLY FILED BY THE ASSESSEE AGAINST THE SAID SHOW CAUSE NOTICE. HENCE THE HON'BLE HIGH COURT HAS HELD AS UNDER: - 'THE ID A.RS HAVE ALSO CHALLENGED THAT THE CAPTION OF THE NOTICE MENTIONED ONLY SECTION 271 AND NOT 271AAB. IN THIS RESPECT, THE COPY OF NOTICE HAS BEEN PRODUCED BY THE ID. A.R. BEFORE ME. IT IS SEEN THAT THE ID A.R IS CORRECT IN OBSERVING THAT THE SECTION OF PENALTY HAS NOT BEEN CORRECTLY MENTIONED BY THE AO IN THE CAPTION. HOWEVER, THE AO WILL GET THE BENEFIT OF SECTION 292BB OF THE INCOME TAX ACT, 1961 BECAUSE FIRSTLY, THE ASSESSEE HAS RAISED NO OBJECTI ON BEFORE THE AO IN THIS REGARD. SECONDLY, LAST LINE OF THE NOTICE CLEA RLY MENTIONS SECTION ITA NO.284/RAN/2019 A.Y. 2016-17 M/S SHRI RAM POWER & STEEL PVT. LTD. VS. ACIT, C.C.-1, RNC PA GE 9 271AAB. THIRDLY, THE ASSESSEE HAS GIVEN REPLY TO SA ID NOTICE WHICH SHOWS THAT THE ASSESSEE FULLY COMPREHENDED TH E IMPLICATION OF THE NOTICE THAT IT IS FOR SECTION 27 1 AAB. THE ASSESSEE HAS ALSO CHALLENGED THAT THE PRINCIPLE S OF NATURAL JUSTICE HAS NOT FOLLOWED BY THE AD. THE DETAILED SU BMISSIONS OF A.R. IN THIS REGARD HAS ALREADY BEEN REPRODUCED ABO VE. THE A.R. DID NOT PRODUCE ANY EVIDENCE TO SHOW THAT HE W AS NOT GIVEN PROPER OPPORTUNITY OF HEARING. IT IS CLEAR FR OM THE PENALTY ORDER THAT THE AO HAS GIVEN NOTICE AND WHICH WAS AL SO REPLIED BY THE ASSESSEE. THEREFORE, IN MY OPINION, PRINCIPL E OF NATURAL JUSTICE HAS NOT BEEN VIOLATED. THUS IN VIEW OF ABOV E DISCUSSION PENALTY IMPOSED BY AO U/. 271AAB OF THE ACT IS CONFIRMED .' THUS IT WAS FOUND BY THE HON'BLE HIGH COURT THAT TH E MISTAKE IN MENTIONING THE SECTION IN THE SHOW CAUSE NOTICE IS COVERED UNDER SECTION 292BB AND THE AO WILL GET THE BENEFIT OF TH E SAME. THE SAID DECISION WILL NOT HELP THE CASE OF THE REVENUE SO F AR AS THE ISSUE INVOLVES THE MERITS OF LEVY OF PENALTY UNDER SECTIO N 271AAB. AS REGARDS THE DECISION OF KOLKATA BENCHES OF THE TRIB UNAL IN THE CASE OF DCIT VS AMIT AGRAWAL ( TS-7675-ITAT-2017(KOLKATAJ-O ) (SUPRA), WE FIND THAT THE SAID DECISION WAS SUBSEQUENTLY RECALL ED BY THE TRIBUNAL AND A FRESH ORDER DATED 14TH MARCH, 2018 WAS PASSED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. THEREFORE, THE DECISION RELIED UPON BY THE LD D/R IS NO MORE IN EXISTENCE. ' 15. WE, THEREFORE RESPECTFULLY FOLLOWING THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT V/S KULWANT SINGH BHATIA (SUPRA), DECISION OF CO- ORDINATE BENCH OF CHENNAI IN THE CASE OF DCIT V/S R . ELANGOVAN (SUPRA) AND JAIPUR BENCH IN THE CASE OF RAM MATHUR VS DCIT (SUP RA) AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WHEREIN THE MAT TER WRITTEN IN THE BODY OF THE NOTICE ISSUED U/S 274 OF THE ACT DOES NOT REFER TO THE CHARGES OF PROVISION OF SECTION 271AAB OF THE ACT MAKES THE ALLEGED NOTI CE DEFECTIVE AND INVALID AND THUS DESERVES TO BE QUASHED. SINCE THE PENALTY PROCEEDINGS ITSELF HAS BEEN QUASHED THE IMPUGNED PENALTY OF RS.64,22,348/- STANDS DELETED. THUS ASSESSEE SUCCEEDS ON LEGAL GROUND CHALLENGING THE V ALIDITY OF NOTICE ISSUED U/S 274 R.W.S. 271AAB OF THE ACT. 16. SINCE THE PENALTY U/S 271AAB HAS BEEN DEALT AND DE LETED ON THE PRELIMINARY LEGAL POINTS, OTHER ARGUMENTS OF THE AS SESSEE DEALING WITH THE MERITS OF THE LEVY OF PENALTY ARE NOT BEEN DEALT WI TH, AS THE SAME ARE RENDERED ACADEMIC IN NATURE. THUS GROUNDS RAISED ON MERITS A RE DISMISSED AS INFRUCTUOUS. APPEAL OF THE ASSESSEE FOR THE ASSESSM ENT YEARS 2014-15 IS PARTLY ALLOWED . WE ADOPT THE ABOVE EXTRACTED DETAILED REASONING MUT ATIS MUTANDIS TO DELETE THE IMPUGNED PENALTY. ITA NO.284/RAN/2019 A.Y. 2016-17 M/S SHRI RAM POWER & STEEL PVT. LTD. VS. ACIT, C.C.-1, RNC PA GE 10 3. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT AT THE CLOSE OF HEAR ING ON TUESDAY 21 ST JULY, 2020 SD/- SD/- ( ') ($% ') (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) *DKP SR.P.S. &- 21 / 07/ 20 20 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-CHANDRA SHEKHAR MISHRA, PLOT NO. 403, SH RADHA APPT., ABHAY SUNDARI GIRLS SCHOOL ROA D, HIRAPUR, DHANBAD-826001 2. /RESPONDENT-INCOME TAX OFFICER, WD-1(2), AAYKAR BHA WAN, LUBY CIRCULAR ROAD DHANBAD-826001 3. 0 3 / CONCERNED CIT RANCHI 4. 3- / CIT (A) RANCHI 5. 6 %%0, 0, / DR, ITAT, RANCHI 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ 0,