M/s K.P.SINGH BHADORIA CONTRACTOR, Gwalior V. DEPUTY COMMISSIONER OF INCOME TAX, JAIPUR

ITA 312/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4580 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 05-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Keywords: Principle of natural justice
• Section: 143(3); 153A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 312/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2011-12 M/S K.P. SINGH BHADORIA CONTRACTOR E-46-A, BALWANT NAGAR, GANDHI ROAD, THATIPUR, GWALIOR (M.P.) CUKE VS. THE DCIT, CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAFFK 6124 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J.C. KULHARI (DCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/07/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT :07/08/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), JAIPUR DATED 29.01.2018 FOR THE ASSESSMENT YEAR 2011-12 WHEREIN THE ASSESSEE HAS CHALLENGED THE CONFIRMATIO N THE LEVY OF PENALTY AMOUNTING TO RS. 2,04,970/- U/S 271(1)(C) O F THE ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSMENT WAS COMPETED U/S 143(3) R.W.S 153A OF THE ACT WHEREIN T HE AO BROUGHT TO TAX INTEREST INCOME AMOUNTING TO RS. 6,63,336/- W HICH IS DIFFERENCE BETWEEN THE INTEREST INCOME REFLECTED IN FORM 26AS AND WHAT HAS ITA NO. 312/JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 2 BEEN DECLARED BY THE ASSESSEE IN HIS RETURN OF INCO ME. SEPARATELY PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE I NITIATED FOR CONCEALMENT OF INCOME /FURNISHING OF INACCURATE PAR TICULARS OF INCOME. IN THE NOTICE ISSUED U/S 274 R.W.S 271(1)(C) DATED 22.03.2016, THE NOTICE WAS ISSUED FOR CONCEALING PARTICULARS OF INC OME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREAFTER, THE A O PASSED THE PENALTY ORDER DATED 21.09.2016 WHEREIN THE PENALTY AMOUNTIN G TO RS. 2,04,970/- WAS LEVIED FOR CONCEALING THE PARTICULAR S OF INCOME TO THE EXTENT OF RS. 6,63,336/-, THE SAME HAS BEEN CONFIRM ED BY THE LD. CIT(A) AND THE ASSESSEES IS NOW IN APPEAL BEFORE U S. 3. DURING THE COURSE OF HEARING, THE LD. AR HAS SUB MITTED THAT THE AO IN THE BODY OF THE ASSESSMENT ORDER HAS MENTIONE D THAT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IS BEING INITI ATED FOR CONCEALMENT OF INCOME/FURNISHING INACCURATE PARTICULARS OF INCO ME AND IN THE NOTICE U/S 274 R.W.S. 271(1)(C), PENALTY PROCEEDINGS HAVE BEEN INITIATED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THUS, IN THE ABSENCE OF ANY SPECIFIC CHARGE AGAINST THE ASSESSEE IN THE PENALTY NOTICE, CONSEQUENT PENALTY IMPOSED BY THE A O IS ILLEGAL AND BAD IN LAW. IN SUPPORT, RELIANCE WAS PLACED ON THE DECI SION OF HONBLE SUPREME COURT IN CASE OF CIT VS. SSAS EMERALD MEAD OWS (2016) 242 TAXMAN 180 AND HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. M/S MANJUNATHA COTTON & GINNING FACTORY & ORS. 359 ITR 565. IT WAS FURTHER SUBMITTED THAT A SIMILAR VIEW ISSUE HAS BEE N TAKEN BY THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF SHRI C HANDMAL KUMAWAT VS. ITO (ITA NO. 441/JP/2017 ORDER DATED 21.12.2017) WHEREIN THE BENCH HAS HELD IN PARAS 15 TO 18 AS UNDER:- ITA NO. 312/JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 3 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, REGARDING THE PRELIM INARY PLEA OF THE LD AR THAT IN ABSENCE OF A SPECIFIC CHARGE AGAINST THE AS SESSEE IN THE PENALTY NOTICE, CONSEQUENT LEVY OF PENALTY BY THE AO IS ILL EGAL AND BAD IN LAW, WE REFER TO THE PENALTY NOTICE DATED 18.03.2013 WHI CH TALKS ABOUT ASSESSEE CONCEALING THE PARTICULARS OF INCOME OR FU RNISHING INACCURATE PARTICULARS OF INCOME. THE NOTICE DOESNT SPECIFY T HE EXACT CHARGE AGAINST THE ASSESSEE AS TO WHETHER IT RELATES TO CO NCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. THE SUBSEQUENT NOTICE DATED 17.08.2015 IS AGAINST S ILENT ON THE EXACT CHARGE AGAINST THE ASSESSEE. IT IS A SETTLED POSIT ION IN LAW THAT THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) IS IN VITED WHEN THE CONDITIONS SPECIFIED THEREIN ARE SATISFIED AND FURT HER, THE TWO EXPRESSIONS CONCEALING THE PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME DENOTE DIFFERENT CONNOTATIONS. IT IS THEREFORE IMPERATIVE THAT THE ASSESSEE BE MADE AWAR E AS TO WHICH OF THE TWO CHARGES, HE IS REQUIRED TO SUBMIT HIS DEFEN CE AND SUPPORTIVE ARGUMENTS. IN THE INSTANT CASE, AS WE HAVE NOTED A BOVE, THE NOTICE TALKS ABOUT BOTH THE CHARGES AND IT DOESNT CONVEY TO THE ASSESSEE AS TO WHICH CHARGE HE HAS TO RESPOND. THE NOTICE THUS DEM ONSTRATE NON- APPLICATION OF MIND ON THE PART OF THE AO. FURTHER , WE REFER TO THE ASSESSMENT ORDER WHERE, AFTER DISCUSSING THE ISSUE RELATING TO COMPUTATION OF CAPITAL GAINS, THE AO HELD THAT BY S HOWING LESS CAPITAL GAINS, THE ASSESSEE HAS FURNISHED INACCURATE PARTIC ULARS OF INCOME AND PENALTY PROCEEDINGS ARE BEING INITIATED SEPARATELY AND THEREAFTER, TOWARDS THE END OF THE ASSESSMENT ORDER, THE AO STA TES THAT PENALTY PROCEEDINGS U/S 271(1)(C) READ WITH SECTION 274 HAV E BEEN INITIATED SEPARATELY FOR CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS THUS SHOWS THAT THE AO HIMSELF IS UNSURE ABOUT THE CHARGE AGAINST THE ASSESSEE DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. CONSIDERING THE OBSERVATIONS OF THE A O IN THE ASSESSMENT ORDER ALONGSIDE HIS ACTION OF NON-STRIKING OFF THE IRRELEVANT CLAUSE IN THE PENALTY NOTICE SHOWS THAT THE CHARGE BEING MADE AGA INST THE ASSESSEE QUA 271(1)(C) IS NOT FIRM, SHOWS NON-APPLICATION OF MIND ON THE PART OF ITA NO. 312/JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 4 THE AO, AND THE VAGUENESS AND AMBIGUITY IN THE NOTI CE HAS THUS PREJUDICED THE RIGHT OF REASONABLE OPPORTUNITY TO T HE ASSESSEE IN AS MUCH AS THE ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO CHARGES, HE HAS TO SUBMIT HIS DEFENCE. 16. HERE, WE REFER TO THE DECISION OF HONBLE SUPRE ME COURT IN CASE OF DILIP N SHROFF REPORTED IN 161 TAXMAN 218 WHERE IT WAS HELD AS UNDER: 83. IT IS OF SOME SIGNIFICANCE THAT IN THE STANDAR D PROFORMA USED BY THE ASSESSING OFFICER IN ISSUING A NOTICE DESPIT E THE FACT THAT THE SAME POSTULATES THAT INAPPROPRIATE WORDS AND PA RAGRAPHS WERE TO BE DELETED, BUT THE SAME HAD NOT BEEN DONE. THUS, THE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHE R HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEA LED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS. EVEN BEFORE US, THE LEARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING THE ORDER OF ASSESSMENT LAID EMPHASIS THAT HE HAD DEALT WITH BOTH THE SITUATIONS. 84. THE IMPUGNED ORDER, THEREFORE, SUFFERS FROM NON -APPLICATION OF MIND. IT WAS ALSO BOUND TO COMPLY WITH THE PRINC IPLES OF NATURAL JUSTICE. [SEE MALABAR INDUSTRIAL CO. LTD. V . CIT [2000] 2 SCC 718]. 17. WE FIND THAT SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN CASE OF MANJUNATHA COTTON A ND GINNING FACTORY (SUPRA) WHICH HAS BEEN FOLLOWED IN CASE OF SSA EMER ALD MEADOWS (SUPRA) AND THE SLP AGAINST THE LATTER DECISION HAS SINCE BEEN DISMISSED BY THE HONBLE SUPREME COURT. FURTHER, WE NOTE THA T THE HONBLE BOMBAY HIGH COURT IN CASE OF SHRI SAMSON PERINCHERY (IN ITA NO. 1154 AND OTHERS DATED 5.01.2017) AND KARNATAKA HIGH COUR T IN ITS LATEST DECISION IN CASE OF S. CHANDRASHEKHAR (SUPRA) HAS R EAFFIRMED THE SAID LEGAL PROPOSITION. 18. IN LIGHT OF ABOVE LEGAL AUTHORITIES WHERE THE F ACTUM OF NON-STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE HAS BEEN HELD AS REFLECTIVE OF NON-APPLICATION OF MIND BY THE AO AND IN LIGHT OF F ACTS AND ITA NO. 312/JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 5 CIRCUMSTANCES OF THE PRESENT CASE AND THE ABOVE DIS CUSSIONS, THE PENALTY IMPOSED UNDER SECTION 271(1)(C) IS LIABLE T O BE DELETED. 4. IN THE FACTS OF THE PRESENT CASE, UNDISPUTEDLY, THE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) DOESN T SPECIFY THE EXACT CHARGE AGAINST THE ASSESSEE AS TO WHETHER IT RELATE S TO CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. RESPECTFULLY FOLLOWING THE DECISIONS REFERRED SUPRA , THE FACTUM OF NON- STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) IS HEREBY HELD AS R EFLECTIVE OF NON- APPLICATION OF MIND BY THE AO, THE PENALTY IMPOSED U/S 271(1)(C) IS DELETED. 5. REGARDING OTHER CONTENTIONS RAISED BY THE LD AR ON THE MERITS OF THE CASE, IN VIEW OF ABOVE DISCUSSIONS, WE DONT TH INK IT WOULD BE RELEVANT TO EXAMINE SAID CONTENTIONS SO RAISED BY T HE LD AR AND HENCE, THE SAME ARE NOT BEING DEALT WITH. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/08/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07/08/2018. ITA NO. 312/JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 6 *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S K.P. SINGH BHADORIA CONTRACTOR, GWALIOR (M.P.) 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CENTRAL CIRCLE-3, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 312/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR