Sh. Ashok Kumar Chauhan, New Delhi V. ITO, New Delhi

ITA 2988/DEL/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9246 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2002-2003
• Appeal Filed On: 14-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: S SINGHVI
• Keywords: Retrospective amendment; Question of law
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER & SHRI N.S.SAINI, ACCOUNTANT MEMBER ITA NO.-2988/DEL/2015 ( ASSESSMENT YEAR: 2002-03) ASHOK KUMAR CHAUHAN PROP. M/S. GURUCHARAN JEWELLERS 17/2, TILAK NAGAR NEW DELHI PAN : AAAPC1500F VS ITO WARD-26(2) NEW DELHI ASSESSEE BY SHRI S.SINGHVI, & SH. SATYAJIT GOEL, CA REVENUE BY SHRI S.S,RANA, CIT(DR) ORDER PER N.S.SAINI, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-15, NEW DEL HI DATED 25.02.2015. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE LEVY OF PENALTY OF RS. 8,36,592/- U/S 271(1)(C) OF THE ACT. 3. AT THE OUTSET, LD AUTHORISED REPRESENTATIVE OF T HE ASSESSEE FILED BEFORE US COPY OF NOTICE ISSUED U/S.271(1)(C) OF T HE ACT DATED DATE OF HEARING 19.12.2018 DATE OF PRONOUNCEMENT 21.12.2018 2 ITA N O. 2988/DEL/2015 31.12.2009, COPY OF WHICH IS PLACED ON RECORD AND P OINTED OUT THEREFROM THAT IN THE SAID NOTICE, THE ASSESSING OFFICER HAS STATED AS UNDER: WHERE IN THE COURSE OF PROCEEDINGS BEFORE ME FOR T HE ASSESSMENT YEAR 2002-03, IT APPEARS TO ME THAT YOU:- . HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR.. ..... FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 4. HE SUBMITTED THAT IT IS NOT CLEAR FROM THE SAID NOTICE ISSUED U/S.271(1)(C) OF THE ACT BY THE ASSESSING OFFICER W HETHER THE SHOW CAUSE IS ISSUED TO THE ASSESSEE FOR CONCEALMENT OF PARTIC ULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 5. HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SSAS. EMARLD MEADOWS DATED 11 TH JANUARY, 2017 PASSED IN SPECIAL LEAVE TO APPEAL (CC NO.11485/2016)/73 TAXMANN.COM 248 (S C) HAS HELD THAT OMISSION BY THE AO TO EXPLICITLY SPECIFY IN THE PEN ALTY NOTICE AS TO WHETHER PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OR FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION. HENCE, HE SUBMITTED THAT PENALTY OF RS. 8,36,592/- IMPOSED BY THE ASSESSING OFFICER U/S.271(1)(C) IS, THEREFORE, LIABLE TO BE CANCELLED. 6. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE D ECISION REPORTED IN K.P.MADHUSUDHANAN VS. CIT [2001] 118 TAXMAN 324 (SC)/[2001] 251 ITR 99 (SC)/ [2001] 169 CTR 489 (SC); UNION OF INDIA VS DHARAMENDRA TEXTILE PROCESSORS / 2007) 295 ITR 244; CIT VS ZOOM COMMUNICATION P.LTD. (191 TAXMAN 179 [DELHI])/[2010] 327 ITR 510 (DELHI)/ [2010)233 CTR 465; MAKDATA P.LTD. VS CIT[38 TAXMANN.COM 448 ( SC)/ [2013] 358 ITR 593 (SC)/(2013) 263 CTR 1]; B.A. BALASUBRAMANIA M & BROS. CO VS CIT [116 TAXMAN 842, 236 ITR 977, 157 CTR 556]; AND CIT VS ESCORTS FINANCE LTD. [183 TAXMAN 453 (DEL), 920100 328 ITR 44 (DELHI)/ (2009) 226 CTR 105], WHENEVER THE CLAIM MADE IN THE RETURN OF INCOME WAS FOUND TO BE EX-FACIE BOGUS, SUCH A CASE WOULD BE TR EATED AS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS AND THE PEN ALTY PROCEEDINGS ARE JUSTIFIED. 3 ITA N O. 2988/DEL/2015 7. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. WE F IND THAT THE FACTS IN THE PRESENT APPEAL ARE NOT IN DISPUTE AND THE ASSESSING OFFICER IN THE ORDER PASSED U/S.271(1)(C) DATED 26.07.2012 LEVIED PENALTYOF RS. RS.8,36,592/-. 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 HIGH COURT OF KARNATAKA WHEREBY IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. OPERATIVE PART OF THE JUDGMENT IN CA SE 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 INITIATED FOR FU RNISHING OJ INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF I NCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVE N WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANC ES OF THE CASE? (2 WHETHER, ON THE FACTS AND IN TH E 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 HAD IN LAW AND. INVALID INSPITE THE AMENDMENT OF SECTION 2 71(1 B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMEN DMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROP ERLY 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 APPEALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED, UNDER SECTIO N 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT OR DER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESS EE 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 W HICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD B EEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF 4 ITA N O. 2988/DEL/2015 INACCURATE PARTICULARS OF INCOME. .THE TRIBUNAL, WH ILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED 01 THE DERISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISS IONER 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 JU DGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION , NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINA TION BY THIS COURT, THE APPEAL IS ACCORDINGLY DISMISSED.' 9. BARE PERUSAL OF THE NOTICE ISSUED U/S 27I(1) (C) APPARENTLY GOES TO PROVE THAT THE ASSESSING OFFICER INITIATED THE PENA LTY PROCEEDINGS BY ISSUING THE NOTICE U/S 274/271(1)(C) OF THE ACT WIT HOUT 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 ASSESSEE TO EXPLAIN THE SHOW CAU SE NOTICE. RATHER NOTICE IN THIS CASE HAS BEEN ISSUED IN A STEREOTYPE D 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 A CT. 10. THE PENALTY PROVISIONS OF SECTION 27L(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 WAS IMPERAT IVE FOR THE ASSESSING OFFICER TO STRIKE- OFF THE IRRELEVANT LIMB SO AS TO MAKE THE ASSESSEE AWARE AS TO WHAT IS THE CHARGE MADE AGAINST HIM SO THAT H E CAN RESPOND ACCORDINGLY. THE HON'BLE KARNATAKA HIGH COURT IN TH E CASE OF MANJUNATHA COTTON & GINNING FACTORY, 359 ITR 565 (KAR) OBSERV ED THAT THE LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB UNDER WHICH IT IS BEING LEVIED. AS PER HON'BLEHIGH COURT, WHERE THE ASSESSING OFFICER PROPOSED TO INVOKE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS T O BE APPROPRIATELY MARKED. THE HON'BLE HIGH COURT HELD THAT THE STANDA RD PROFORMA OF NOTICE UNDER SECTION 274 OF THE ACT WITHOUT STRIKING OF TH E IRRELEVANT CLAUSES 5 ITA N O. 2988/DEL/2015 WOULD LEAD TO AN INFERENCE OF NON-APPLICATION OF MI ND BY THE ASSESSING OFFICER. THE HON'BLE SUPREME COURT IN THE CASE OF D ILIP N. SHROFF VS. JCIT, 291 ITR 519(SC) HAS ALSO NOTICED THAT WHERE THE ASS ESSING OFFICER ISSUES NOTICE UNDER SECTION 274 OF THE ACT IN THE STANDARD PROFORMA AND THE INAPPROPRIATE WORDS ARE NOT DELETED, THE SAME WOULD POSTULATE THAT THE ASSESSING OFFICER WAS NOT SURE AS TO WHETHER HE WAS TO PROCEED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED THE PARTICULA RS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDI NG TO THE HON'BLE SUPREME COURT, IN SUCH A SITUATION, LEVY OF PENALTY SUFFERS FROM NON- APPLICATION OF MIND. IN THE BACKGROUND OF THE AFORE SAID 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 AC T DATED 15.1.2014 WITHOUT STRIKING OFF THE IRRELEVANT WORDS, THE PENA LTY PROCEEDINGS SHOW ANON-APPLICATION OF MIND BY THE ASSESSING OFFICER A ND IS, THUS, UNSUSTAINABLE. 11. THE FACTS OF THE PRESENT APPEAL ARE IDENTICAL T O THE FACTS OF THE CASE BEFORE THE HONBLE SUPREME COURT IN THE CASE OF SSA S. EMARLD MEADOWS(SUPRA) AND, THEREFORE, THE DECISION OF HON BLE SUPREME COURT SQUARELY APPLIES TO THE CASE OF THE ASSESSEE. HENCE , RESPECTFULLY FOLLOWING THE SAME, WE CANCEL THE ORDER OF THE ASSESSING OFFI CER DATED 26.07.2012 LEVYING PENALTY OF RS. 8,36,592/- AND ALLOW THE GR OUND OF APPEAL OF THE ASSESSEE. 12 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE COURT ON 21 ST DECEMBER, 2018 AT NEW DELHI. SD/- SD/- (DIVA SINGH) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21.12.2018 6 ITA N O. 2988/DEL/2015 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 20 .1 2 .2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21 .1 2 .2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 21.12.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 21.12.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 21.12.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 21.12.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 21.12.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER