M/s. Unitech Reliable Projects Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2908/DEL/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9656 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 08-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 271(1)(c); 274; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’ NEW DLEHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI N.K. CHOUDHRY, JUDICIAL MEMBER ITA No. 2908/Del/2017 Assessment Year: 2012-13 Unitech Reliable Projects Pvt. Ltd., C/o Luthra&Luthra, Law Offices, 103, Ashoka Estate, Barakhamba Road, New Delhi. PAN: AAACU8206H VersuS DCIT, Circle 27(1), New Delhi. (Appellant) (Respondent) Appellant by :Sh.RohitGarg, Ld. Adv. Respondent by :Ms.Sapna Bhatia, Ld. CIT/ DR Date of hearing : 15.09.2022 Date of order : 29.09.2022 ORDER PER N.K. CHOUDHRY, J.M. This appeal has been preferred by the Assessee against the order dated 09.02.2017, impugned herein, passed by the learned Commissioner of Income-tax (Appeals)-13, New Delhi (in short “Ld. Commissioner”), u/s. 250(6) of the Income-tax Act, 1961 (in short ‘the Act’) for the assessment year 2012-13. ITA No. 2908/Del/2017 2 2. Brief facts, relevant for adjudication of the instant appeal, are that in the instant case, the Assesseedeclared the loss of Rs.12,83,96,466/-by filing its return of income on dated 28.09.2012 for the assessment year under consideration. The Assessing Officer by noticing that the Assessee had claimed Real Estate Project Expenses of Rs.78,40,58,041/- as compared to the previous years’ claim of Rs.23,56,50,000/-, show caused the Assessee. In reply, it was contended by the Assessee that it has followed the percentage completion method in earlier years wherein the expenditure for ascertaining the revenue was based on expected estimate and the project was completed in the current year. The Assessing Officer however found that the project expenditure of Rs.78,40,58,041/- includesthe expenditure of Rs.35,34,96,000/- which yet to be incurred. Therefore, the Assessee was asked to explain details of such estimate of expenses. The Assessee voluntarily surrendered the loss claimed in its return of income and consequently, the Assessing Officer disallowed the said loss of Rs.12,83,96,466/-. 2.1. The Assessing Officer also made an addition of Rs.3,02,436/- on the ground that from the perusal of the details of trade payables of Rs.3,89,61,695/- submitted by the Assessee vide its letter dated 01.01.2015, the trade payables of Rs.3,02,436/- consisting of PG Industry Limited for Rs.1,89,130/- and Primesite Outdoor Advertising Pvt. Ltd. for Rs.1,13,306/- is shown as outstanding for more than three years and no legal proceedings are pending. As there is cessation/remission of liability, the same is added back as income of the Assessee company u/s. 41(1) of the Act. ITA No. 2908/Del/2017 3 2.2. The Assessing Officer in respect of 02 addition as mentioned above, also initiated penalty proceedings u/s. 271(1)(c) of the Act for concealment of Income and for furnishing inaccurate particulars of income and consequently issued the show cause notice dated 14.03.2015 u/s. 274 r.w.s. 271(1)(c) of the Act, for concealment of particulars of income or furnishing inaccurate particulars of such income. 2.3. In response to the said notice , the Assessee vide reply dated 10.09.2015, submitted that the disallowance of loss is based on the submission of the Assessee that the loss be disallowed subject to that no penalty be levied u/s. 271(1)(c) of the Act and that the genuineness of the expenditure is not disputed. Relying upon various decisions, it was also submitted that there was no conscious and deliberate concealment on the part of the Assessee. 2.4. Being not satisfied with the said explanation of the Assessee, the Assessing Officer vide order dated 23.09.2015 levied the penalty of Rs.4,36,41,961/- for concealing the particulars of its income on the amounts of returned income of Rs. (-)12,83,96,466/- and Rs.3,02,436/-. 3. Being aggrieved with the levy of penalty, the Assesseepreferred first appeal before the ld. Commissioner, who vide impugned order, dismissed the appeal of the Assessee by affirming the levy of penalty of Rs.4,36,41,959/- u/s. 271(1)(c) of the Act. ITA No. 2908/Del/2017 4 4. Being aggrievedwith the impugned order, the Assessee is in appeal before us. 5. We have heard the parties and perused the material available on record. Though the Assessee and the Ld. DR argued the matter on merit as well, however the Ld. AR emphasized that in the instant case, the notice dated 14.03.2015 (copy filed on record)issued u/s 274 read with 271(1)(c) of the Act by the AO is vague, having not specified any particular limb of the penalty and, therefore, the penalty is not leviable. The Assessee in support of its contention also relied upon various judgments of the Hon’ble Apex Court and High Courts. 6. On the contrary the Ld. DR supported the orders passed by the authorities below and submitted that order under challenge does not suffer from any perversity, impropriety and/or illegality and hence needs no interference . 7. Heard the parties and perused the material available on record. In the instant case, the AO initiated the penalty under section 271(1)(c) of the Act for concealment of income and furnishing inaccurate particulars of Incomeand thereafter issued the notice u/s 274 r.w.s. 271(1)© of Act for concealment of the particulars of income or filling of inaccurate particulars of income but without specifying any particular limb and finally vide penalty order dated 23.09.2015 imposed the penalty for concealment of the particulars of income. ITA No. 2908/Del/2017 5 7.1. The Assessee by way of raising the plea, which is legal in nature, challenged the Imposition of penalty mainly on the basis of notices itself, therefore we deem it appropriate to decide the legal issue involved in the instant case first,before dwelling into the merits of the case. 7.2 The Hon'ble Apex Court in case of M/s. SSA's Emerald Meadows, (2016) 73 taxmann.com 248(SC) dismissed the Special Leave Petition filed by the Revenue against the judgment rendered by Hon'ble High Court of Karnataka whereby identical issue was decided in favour of the Assessee. Operative part of the judgment in case of M/s. SSA's Emerald Meadows (supra) decided by Hon'ble High Court of Karnataka is reproduced below:- "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 income 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 Tribunal 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 inspite the amendment of Section 271(1 B) with retrospective effect and by virtue of the ITA No. 2908/Del/2017 6 amendment, the assessing officer has initiated 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 without 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 Officer 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 upon the decision of the Division Bench of this Court rendered In the case of COMMISSIONER or INCOME TAX -VS- MANJUNATHA 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 question of law arises in this appeal for determination by this Court, the appeal is accordingly dismissed." ITA No. 2908/Del/2017 7 7.3 The Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Kar) observed where the Assessing Officer proposed to invoke first limb being concealment, then the notice has to be appropriately marked. The Hon'ble High Court also held that the standard proforma of notice under section 274 of the Act without striking of the irrelevant clause would lead to an inference of non-application of mind by the Assessing Officer and levy of penalty would suffers from non-application of mind. 7.4 Even the Hon’ble High Court of Delhi in the case of M/s. Sahara India Life Insurance Company Ltd. 432 ITR 84 (Del.) while following the cases referred above, 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 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(l)(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. SSA’s 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. Thus, notice under Section 271(1)(c) r.w.s. 274 of the Act itself is bad in law. We, therefore, set-aside the order of the CIT(A) ITA No. 2908/Del/2017 8 and direct the Assessing Officer to cancel the penalty so levied.” 7.5 The penalty provisions of section 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 also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it is imperative for the Assessing Officer to specify the relevant limb so as to make the Assessee aware, as to what is the charge made against him so that he can respond accordingly. 7.6 In the background of the aforesaid legal position and, having regard to the manner in which the Assessing Officer has issued the notices referredto above under section 274 r.w.s. 271(1)(c) of the Act, without specifying the limb, under which the penalty proceeding has been initiated and proceeded with, apparently goes to prove that notice in this case has been issued in a stereotyped manner without applying mind which is bad in law, hence can not be considered valid notice sufficient to impose penalty u/s 271(1)(c) of the Act and therefore we are of the considered view that under these peculiar circumstances, the penalty is not leviable as held by the various Courts including the Hon’ble Apex Court and hence, we have no hesitation to delete the penalty under consideration, levied by the AO and affirmed by the Ld. Commissioner . ITA No. 2908/Del/2017 9 7.7 As we have decided the legalissuein favour of the Assessee and deleted the penalty, therefore not dwelling into the merits of the case as the same would become academic exercise only. 8. In the result, the appeal filed by the Assessee is allowed. Order pronounced in the open court on 29/09/2022 Sd/- Sd/- (PRADIP KUMAR KEDIA) (N.K. CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER *aks/-