Smt. Janak Rani Dhingra, Haryana V. The Income Tax Officer, Moga

ITA 294/ASR/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4140 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-02-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 17-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Assessee Lawyers: P N ARORA
• Keywords: Retrospective amendment; Question of law
• Section: 54; 271(1)(c); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. S. SAINI, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I. T. A. NO. 294/(ASR)/2016 ASSES SMENT YEAR: 2006-07 SMT. JANAK RANI DHINGRA, W/O SHRI A.P.DHINGRA, 138, MANGE WALA HOUSE, PATI WALI GALI, MOGA, (NOW 28, GROUND FLOOR, ASHOKA ENCLAVE, SECTOR 34, FARIDABAD (HARYANA) PAN NO. ACQPD3274B VS. INCOME TAX OFFICER, WARD-1, MOGA (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P.N. ARORA, ADVOCATE RESPONDENT BY: SH. BHAWANI SHANKAR, DR DATE OF HEARING : 11.2.2019 DATE OF PRONOUNCEMENT : 12.2.2019 ORDER PER N.S. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-3, LUDHIANA DA TED 4.3.2016. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS. 1,60,000/- BY THE ASSESS ING OFFICER (AO ) U/S 271(1)(C) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT ', IN SHORT). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME ON 10.2.2006 AND CLAIMED DEDUCTION OF RS. 4,40,000/ ON PURCHASE OF RESIDENTIAL PLOT AGAINST LONG TERM CAPITAL GAINS ARISING OUT OF SALE OF RESIDENTIAL HOUSE. THE AO WAS ! OF THE VIEW THAT DEDUCTION U/S 54 AND SEC. 54F OF T HE ACT ARE ALLOWABLE TO THE ASSESSEE ONLY ON CONSTRUCTION OR PURCHASE OF NEW RE SIDENTIAL HOUSE, THEREFORE, HE MADE ADDITON OF RS. 4,40,000/- DISALLOWING THE DE DUCTION OF LONG TERM CAPITAL GAINS FROM SALE OF RESIDENTIAL HOUSE AS DECLARED BY THE ASSESSEE. THEREAFTER, THE AO LEVIED PENALTY U/S 271(1)(C) OF THE ACT OF RS. 1 ,60,000/- BEING 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED BY THE ASSESSEE O N THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ORDER OF THE AO. 5. BEFORE US, THE AR OF THE ASSESSEE REFERRED TO NO TICE ISSUE U/S 271(1)(C) OF THE ACT, COPY OF WHICH IS PLACED AT PAGE 3 OF THE PAPER BOOK FILED BY THE ASSESSEE AND POINTED OUT THEREFROM THAT THE AO HAS ISSUED NOTICE ON THE GROUND THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. HE SUBMITTED THAT AS THE NOTICE U/S 271(1)( C) OF THE ACT TO THE ASSESSEE IS NOT SPECIFIC ABOUT THE CHARGE WHETHER IT WAS FOR FURNIS HING OF CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULA R OF INCOME, THE SAID NOTICE WAS BAD IN LAW AND CONSEQUENTLY THE PENALTY ORDER PASSED BY THE AO ON 26.6.2009 IS BAD IN LAW AND LIABLE TO BE CANCELLED. FOR THIS PROPOSITI ON HE RELIED ON THE DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF MRS. MALTI GUPTA, JALANDHAR VS ITO, JALANDHAR PASSED IN ITA NO.757/ASR./2017 FOR ASSES SMENT YEAR 2008-09 DATED 17.1.2009 AND SUBMITTED THAT FOLLOWING THE SAME, T HE ORDER FOR LEVYING PENALTY U/S 271(1)(C) OF THE ACT SHOULD BE CANCELLED. ! 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. WE FIND A NOTICE DATED 18.12.2008, ISSUED U/S 274 READ WITH SECTION 271(1)(C) OF THE I.T. ACT, 1961 READS AS UNDER:- WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR ASSESSMENT YEAR 2006-07 IT APPEARS TO ME THAT HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME 8. HON'BLE APEX COURT VIDE JUDGMENT 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 HI GH COURT OF KARNATAKA WHEREBY IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESS EE. 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 RAI SING THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLI CITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATE D FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABL E FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED 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 CIRC UMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN. HOL DING THAT ! THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)( C) IS HAD IN LAW AND. INVALID INSPITE THE AMENDMENT OF SE CTION 271(1 B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE 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 O F THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE AP PEALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED, UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPE CIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCO ME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY T HE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX A CT, 1961 (FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT DID NOT SPE CIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDIN GS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. .TH E TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELI ED 01 THE DERISION OF THE DIVISION BENCH OF THIS COURT RENDER ED IN THE CASE OF COMMISSIONER OR INCOME T AX - VS - MANJUNATHA C OTTON AND G INNING F ACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY J UDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION , NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL F OR DETERMINATION BY THIS COURT, THE APPEAL IS ACCORDINGLY DISMISSED. ' 9. BARE PERUSAL OF THE NOTICE ISSUED U/S 271(1)( C) APPARENTLY GOES TO PROVE THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUING THE NOTICE U/S 274/271(1)(C) OF THE ACT WITHOUT SPECIFYING WHETHER THE ASSESSEE HAS CONCEALED ''PARTICULARS OF INCOME' OR ASSESSEE HAS FURNISHED 'INACCURATE PARTICULARS OF INCOME', SO AS TO PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESS EE TO EXPLAIN THE SHOW CAUSE NOTICE. RATHER NOTICE IN THIS CASE HAS BEEN ISSUED IN A STE REOTYPED MANNER WITHOUT APPLYING ANY MIND WHICH IS BAD IN LAW, HENCE IS NOT A VALID NOTICE SUFFICIENT TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. ! 10. 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 MEANIN GS. THEREFORE, IT WAS IMPERATIVE FOR THE ASSESSING OFFICER TO STRIKE - OFF THE IRRELEVAN T LIMB SO AS TO MAKE THE ASSESSEE AWARE AS TO WHAT IS THE CHARGE MADE AGAINST HIM SO THAT HE CAN RESPOND ACCORDINGLY. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MAN JUNATHA COTTON & GINNING FACTORY, 359 ITR 565 (KAR) OBSERVED THAT THE LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB UNDER WHICH IT IS BEING LEVIED. AS PER HON'BLE HIGH COURT, WHERE THE ASSESSING OFFICER PROPOSED TO INVOKE FIRST LIMB BEING CONCEAL MENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. THE HON'BLE HIGH COURT HELD T HAT THE STANDARD PROFORMA OF NOTICE UNDER SECTION 274 OF THE ACT WITHOUT STRIKIN G OF THE IRRELEVANT CLAUSES WOULD LEAD TO AN INFERENCE OF NON-APPLICATION OF MIND BY THE ASSESSING OFFICER. THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF VS. JC IT, 291 ITR 519(SC) HAS ALSO NOTICED THAT WHERE THE ASSESSING OFFICER ISSUES NOT ICE UNDER SECTION 274 OF THE ACT IN THE STANDARD PROFORMA AND THE INAPPROPRIATE WORDS A RE NOT DELETED, THE SAME WOULD POSTULATE THAT THE ASSESSING OFFICER WAS NOT SURE A S TO WHETHER HE WAS TO PROCEED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED THE PARTI CULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDING TO THE HON'BLE SUPREME COURT, IN SUCH A SITUATION, LEVY OF PENALTY SUFFERS FROM NON-APPLICA TION OF MIND. IN THE BACKGROUND OF THE AFORESAID LEGAL POSITION AND, HAVING REGARD TO THE MANNER IN WHICH THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT DATED 15.1.2014 ! WITHOUT STRIKING OFF THE IRRELEVANT WORDS, THE PENA LTY PROCEEDINGS SHOW ANON- APPLICATION OF MIND BY THE ASSESSING OFFICER AND IS , THUS, UNSUSTAINABLE. 11. THE FACTS OF THE PRESENT APPEAL ARE IDENTICAL T O THE FACTS OF THE CASE BEFORE THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SSAS. EMARLD MEADOWS(SUPRA). IN THE INSTANT CASE THE AO WHILE LEVYING PENALTY U/S 271(1 )(C) HAS OBSERVED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME AND HAS ALSO FURNISHED INACCURATE PARTICULARS THEREOF. THUS, HE IS NOT SPECIFIC AS TO WHETHER THE PENALTY IS LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. HENCE, RESPECTFULLY FOLLOWING THE QUOTED DECISION OF HONB LE KARNATAKA HIGH COURT, WE CANCEL THE ORDER OF THE ASSESSING OFFICER DATED 26. 9.2009 LEVYING PENALTY OF RS. 1,60,000/- AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COUR T ON 12.2.2019 SD/- SD/- (N. K. CHOUDHRY) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 12.02.2019 RKK COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) THE CIT(APPEALS) (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T.