Chandra Brothers, Kanpur V. DY. Commissioner of Income Tax-II, Kanpur

ITA 293/LKW/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0551 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 26-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K VISHWAKARMA
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 293/LKW/2016 ASSESSMENT YEAR: 2006 - 07 CHANDRA BROTHERS 84/105, G.T. ROAD KANPUR V. DCIT RANGE 2 KANPUR T AN /PAN : AABFC3002D (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI R. K. VISHWAKARMA, D.R. DATE OF HEARING: 12 12 201 7 DATE OF PRONOUNCEMENT: 14 12 201 7 O R D E R PER P ARTHA SARATHI CHAU DHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - I, KANPUR DATED 1/3/2016. 2 . THE SOLE GRIEVANCE OF THE ASSESSEE IS AGAINST IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WITHOUT SPECIFYING THE LIMB UNDER WHICH PENALTY IS BEING IMPOSED , WHETHER FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. 3 . THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND FILED ITS RETURN DECLARING NIL INCOME ALONG WITH AUDITED PROFIT & LOSS ACCOUNT AND TAX AUDIT REPORT. AGAINST THE RETURNED INCOME, ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 29/12/2008 AT A TOTAL INCOME OF RS.1,99,54,180/ - . HOWEVER, AFTER SETTING OFF OF LOSS ES VIDE ORDER UNDER SECTION 154 OF THE ACT DATED 30/3/2009, THE TOTAL INCOME WAS ASSESSED AT RS.1,05,081/ - . IN THE ASSESSMENT ORDER, INTER ALIA, THE FOLLOWING ADDITIONS/DISALLOWANCES WERE [ ITA NO.293/LKW/2016 ] 2 MADE BY THE ASSESSING OFFICER ON WHICH PENALTY UNDER SECTION 271(1)(C) WAS IMPOSED: - ( I ) DISALLOWANCE OF RS.14,198/ - OUT OF INTEREST ON BORROWED FUNDS UNDER SECTION 36(I)(III) OF THE ACT. ( II ) CAPITAL GAIN ON SALE OF AGRICULTURAL LAND TREATED AS NON - AGRICULTURAL LAND AND THEREBY MAKING AN ADDITION OF RS.15,63,000/ - ON THIS ACCOUNT. 4 . BEFORE THE LD. CIT(A), ASSESS EE HAS MADE A DETAILED WRITTEN SUBMISSION STATING THAT PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT WAS UNJUSTIFIED AND AS HELD BY THE HON'BLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD., 322 ITR 158 (SC) , CHARGE FOR PENALTY I MPOSED HAS TO BE SPECIFIED AND PROCEEDINGS OF PENALTY IS NOT A REGULAR PROCEEDINGS LIKE ASSESSMENT AND, THEREFORE, FOR WHICH CHARGE PENALTY IS IMPOSED HAS TO BE SPECIFICALLY MENTIONED BY THE AUTHORITY. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE AND THE PENALTY ORDER AND ALSO FOR THE REASONS AS APPEARING IN HIS ORDER , SUSTAINED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 5 . BEING FURTHER AGGRIEVED, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE US. THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT IN THE PENALTY NOTICE ISSUED BY THE DEPARTMENT IT IS WRITTEN THAT HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THEREFORE, THERE IS NO SPECIFIC LIMB UNDER WHICH PENALTY IS IMPOSED ON THE ASSESSEE. THE LD. A.R. OF THE ASSESSEE FURTHER RELIED UPON THE DECISION OF TELENGANA AND ANDHRA PRADESH HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME - TAX VS. SMT. BAISETTY REVATHI [2017] 398 ITR 88 (T&AP) WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT F OR IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT , CHARGE MUST BE UNEQUIVOCAL AND UNAMBIGUOUS. THE SHOW CAUSE NOTICE SHOULD SPECIFY CHARGE FOR IMPOSITION OF PENALTY AND IF IT IS NOT DONE, THEN SUCH NOTICE AND IMPOSITION [ ITA NO.293/LKW/2016 ] 3 OF PENALTY IS INVALID. THE LD . A.R. OF THE ASSESSEE FURTHER REFERRED TO THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT & ANOTHER VS. M/S S S AS EMERALD MEADOWS IN CC NO.11485/2016 WHEREIN THE HON'BLE APEX UPH ELD THE ORDER OF THE TRIBUNAL ALLOWING THE APPEAL OF THE ASSESSEE , WHICH WAS BASED UPON THE DECISION IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY [2013] 359 ITR 565 WHEREIN IT IS HELD THAT IF THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT PENALTY PROCEEDINGS IS INITIATED, THEN SUCH NOTICE SHOULD BE BAD IN LAW. 6 . THE LD. D.R., ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE SUBORDINATE AUTHORITIES. 7 . WE HAVE PERUSED THE CASE RECORD AND WE FIND T HAT NOTICE UNDER SECTION 271(1)(C) OF THE ACT IS NOT SPECIFIC AS IT DID NOT MENTION SPECIFICALLY AS TO WHICH LIMB PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS IMPOSED UPON THE ASSESSEE BY THE ASSESSING OFFICER. TAKING GUIDANCE FROM THE AFORESAID JUDICIAL PRONOUNCEMENT, WE ARE OF THE CONSIDERED VIEW THAT NOTICE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ISSUED IN THE CASE OF THE ASSESSEE IS BAD IN LAW, INVALID AND , THEREFORE , LIABLE TO BE QUASHED. WE, THEREFORE, SET ASIDE THE ORDER OF TH E LD. CIT(A) AND THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) UNDER SECTION 271(1)(C) OF THE ACT IS DELETED . 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/ 12/ 201 7 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14 TH DECEMBER , 2017 JJ: 1212 [ ITA NO.293/LKW/2016 ] 4 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR