M/s Dinesh Oils Ltd., Kanpur V. Astt. Commissioner of Income Tax, Kanpur

ITA 309/LKW/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6483 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-06-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 08-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K
• Assessee Lawyers: P K KAPOOR
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 309/LKW/2017 ASSESSMENT YEAR: 2010 - 11 M/S DINESH OILS LTD. 3/44, VISHNUPURI KANPUR V. ACIT CENTRAL CIRCLE 1 KANPUR T AN /PAN : AAACD4990K (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI P.K. KAPOOR, C.A. RESPONDENT BY: SHRI H.K. PANDEY, D.R. DATE OF HEARING: 26 0 6 201 8 DATE OF PRONOUNCEMENT: 26 0 6 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) IV, KANPUR DATED 30/11/2016. 2 . THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER UN DER SECTIO N 271(1)(C) OF THE ACT . 3 . AT THE TIME OF HEARING, THE LD. A.R. OF THE ASSESSEE INVITED OUR ATTENTION TO THE COPY OF PENALTY NOTICE UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT WHEREIN CHARGE FOR IMPOSITION OF PENALTY IS NOT SPECIFIED. THE LD. A.R. OF TH E ASSESSEE VEHEMENTLY ARGUED THAT WHEN CHARGE IS NOT SPECIFIC, THERE CANNOT BE ANY IMPOSITION OF PENALTY. THE LD. A.R. OF THE ASSESSEE ALSO PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 WITH THE SUBMISSION THAT NOTICE UNDER ITA NO.309/LKW/2017 PAGE 2 OF 4 SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT WAS BAD IN LAW AS IT DID NOT SPECIFY UNDER WHICH LIMB OF 271(1)(C) PENALTY PROCEEDINGS HAS BEEN INITIATED . 4 . THE LD. D.R., ON THE OTHER HAND, PLACED RELI ANCE UPON THE ORDERS OF THE SUBORDINATE AUTHORITIES. 5 . WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS AND AT THE OUTSET WE FIND THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT MENTIONS BOTH T HE CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. FOR THE SAKE OF READY REFERENCE, THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT IS REPRODUCED HEREUNDER: - ITA NO.309/LKW/2017 PAGE 3 OF 4 6 . A PERUSAL OF AFORESAID NOTICE SHOWS THAT THE DEPARTMENT HAS NOT SPECIFIED IN WHICH CHARGE PENALTY HAS TO BE LEVIED. THE POSITION BY FAR AND NOW IS WELL SETTLED THAT IMPOSITION OF PENALTY CAN ONLY BE DONE IF A VALID NOTICE IS SERVED ON THE ASSESSEE SPECIFYING THE CH ARGE ON WHICH SUCH PENALTY IS LEVIED. THE LEGAL JUSTIFICATION FOR THIS FLOWS FROM THE PRINCIPLES OF NATURAL JUSTICE THAT ASSESSEE SHOULD BE READY WITH HIS DEFENSE REGARDING THE CHARGE FOR WHICH PENALTY IS PROPOSED TO BE LEVIED BY HIM AND THE ASSESSEE CAN PREPARE HIS SUBMISSION PUT FORTH BEFORE THE CONCERNED AUTHORITY. VARIOUS COURTS HAVE HELD THAT IF CHARGE IS NOT SPECIFIC THERE CANNOT BE ANY IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THERE HAS BEEN SEVERAL DECISIONS ON THIS ISSUE STARTING FROM THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 WHEREIN IT WAS HELD THAT NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT WAS BAD IN LAW AS IT DID NOT SPECIFY UNDER WHICH LI MB OF 271(1)(C) PENALTY PROCEEDINGS HAS BEEN INITIATED. 7 . THERE HAS BEEN PLETHORA OF JUDGMENTS WHEREBY THE TRIBUNALS AND HIGH COURTS HAVE QUASHED THE PENALTY ON THE BASIS OF DEFECTIVE NOTICE, SOME OF WHICH ARE AS UNDER: - (1) IN JEHANGIR HC JEHANGIR VS. ACIT (ITAT MUMBAI) I.T.A. NO.1261/MUM/2011, ORDER DATED MAY 17, 2017. (2) MEHERJEE CASSINATH HOLDINGS PVT. LTD VS. ACIT (ITAT MUMBAI) ITA NO. 2555/MUM/2012, ORDER DATED 28/04/2017 WHEREIN THE OBSERVATION OF THE BENCH WAS THAT PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ARE 'QUASI - CRIMINAL' PROCEEDINGS AND OUGHT TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE. THE NON - STRIKING OF THE IRRELEVANT PORTION IN THE SHOW - CAUSE NOTICE MEANS THAT THE ASSESSING OFFICER IS NOT FIRM ABOUT THE CHARGE AGAINST THE ITA NO.309/LKW/2017 PAGE 4 OF 4 ASSESSEE AND THE ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO LIMBS OF S. 271(1)(C) HE HAS TO RESPOND. (3) CHANDRA PRAKASH BUBNA VS. INCOME TAX OFFICER, WARD 27(3), KOLKATA (ITAT KOLKATA BENCH) [2015] 64 TAXMANN.COM 155 WHEREIN IT WAS HELD THAT WHEN T HE ASSESSING OFFICER LEVIED PENALTY WITHOUT BRINGING OUT ANY SPECIFIC CHARGE FOR WHICH PENALTY HAD BEEN IMPOSED, PENALTY WAS LIABLE TO BE DELETED. 8 . FACTUALLY, WE OBSERVE THAT NOTICE ITSELF DOES NOT SPECIFY THE CHARGE AND LEGALLY AS PER JUDICIAL PRONOUNCEMEN TS IF SUCH IS THE CASE, THEN NO PENALTY CAN BE LEVIED. WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT IN THIS CASE NOTICE UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT IS ITSELF BAD IN LAW AND THEREFORE PENALTY IMPOSED ON THE BASIS OF SUCH NOTICE IS DE LETED. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 / 0 6 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 TH JUNE , 201 8 JJ: 2606 COPY FORWARDED TO: 1 . APPE LLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR