Dy.Commissioner of Income Tax, Lucknow V. Shri Lal Chand Agarwal, Lucknow

ITA 314/LKW/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2002 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 24-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRADEEP KAPOOR
• Keywords: Principle of natural justice
• Section: 143(3); 153A; 27; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCHES: B LUCKNOW BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDI CIAL MEMBER ITA NO: 314/LKW/2014 AY: - 2006-07 DY. COMMISSIONER OF INCOME TAX VS. SH RI LAL CHAND AGARWAL, CENTRAL CIRCLE-II, 1/78, SECTOR-B, ALIGANJ, LUCKNOW LUCKNOW (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. ALKA SINGH, DR RESPONDENT BY : SHRI PRADEEP KAPOOR, CA DATE OF HEARING : 13.8.2015 DATE OF PRONOUNCEMENT : 3 0.10.2015 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS DEPARTMENTS APPEAL HAS BEEN FILED AG AINST THE ORDER DATED 31.12.2013 PASSED BY THE LD. CIT(A) III, LUCKNOW DELETING PEN ALTY OF RS. 12 LACS IMPOSED BY THE ACIT , CENTRAL CIRCLE-II, LUCKNOW U/S 271(1)(C ) OF THE INCOME TAX ACT, 1961 THROUGH ORDER DATED 28.6.2012. 2. THE FACTS IN BRIEF, AS BORNE OUT FROM THE RE CORDS, ARE THAT THE ASSESSEE IS AN INDIVIDUAL BY STATUS. FOR AY 2006-07 HE HAD FILED T HE RETURN U/S 139 OF THE ACT ON 28.7.2006. NO NOTICE U/S 143 (2) HAD BEEN ISSUED WI TH REFERENCE TO THIS RETURN OF INCOME. SUBSEQUENTLY, THERE WAS A SEARCH AND SEIZUR E ACTION U/S 132 OF THE INCOME TAX ACT, 1961 ON 25.6.2009. THE BANK LOCKER NO. 257 WITH BANK OF INDIA, MAIN ITA NO.314/LKW/ 2014 DCIT VS. S HRI LAL CHAND AGARWAL 2 ROAD, BARABANKI STANDING IN THE JOINT NAME OF SHRI LAL CHAND AGARWAL, (ASSESSEE) AND SMT. TRIBENI DEVI WAS SUBJECTED TO A PROHIBITOR Y ORDER U/S 132 (3) OF THE ACT AND ON OPERATION OF THE SAID LOCKER, A SUM OF RS. 2 9,50,000/- WAS FOUND TO BE KEPT THEREIN. DURING THE COURSE OF ASSESSMENT PROCEEDING S CONSEQUENT TO ISSUANCE OF NOTICE U/S 153 A OF THE ACT, INQUIRES WERE MADE BY THE AO AND NOTICE U/S 142 (1) WAS ISSUED. NO ADVERSE MATERIAL WAS FOUND AND FINAL LY THE ASSESSMENT WAS FRAMED VIDE ORDER DATED 30.12.2011 WHEREIN THE INCOME SHOW N IN THE RETURN FILED U/S 153A WAS ACCEPTED. AS SUCH THE INCOME DISCLOSED U/S 153A WAS ACCEPTED BY THE AO. DURING THE PENALTY PROCEEDINGS U/S 271(1)(C ) OF TH E ACT, THE AO WAS OF THE VIEW THAT THE ASSESSEE WAS NOT HAVING ANY INTENTION TO D ISCLOSE THE INCOME FOUND IN THE LOCKER PRIOR TO SEARCH OPERATION AND THAT HE HAD DI SCLOSED THIS INCOME FOR TAX PURPOSE ONLY IN THE COURSE OF SEARCH. HE ACCORDINGL Y CONCLUDED THAT THE ASSESEE HAD CONCEALED THE PARTICULARS OF INCOME OR FURNISHED AC CURATE PARTICULARS OF INCOME AND ACCORDINGLY IMPOSED A PENALTY OF RS. 12 LACS U/S 27 1(1)(C) OF THE ACT. THE LD. CIT (A), HOWEVER, DELETED THE PENALTY ON THE GROUND THA T IT WAS NEITHER A CASE OF CONCEALMENT NOR A CASE OF ACCURATE PARTICULARS AS E VERYTHING WAS SHOWN IN THE INCOME TAX RETURN AND THE ASSESSEE HAD HIMSELF DECL ARED THE INCOME. 3. IN THE APPEAL BEFORE US, IT IS THE DEPARTMENTS PLEA THAT THE PENALTY WAS WRONGLY DELETED BY THE LD. CIT (A) BECAUSE THE ASSE SSEE HAD DECLARED THE INCOME FOUND IN THE LOCKER ONLY AFTER THE SAME WAS FOUND I N HIS LOCKER. THE LD. DR STRONGLY URGED THAT THE PENALTY ORDER SHOULD BE UPHELD. 4. LD. AR FOR THE ASSESSEE DREW OUR ATTENTION TO PAGE 6 OF THE PAPER BOOK WHICH CONTAINS A COPY OF NOTICE DATED 30.12.2011 ISSUED U /S 274 READ WITH SECTION ITA NO.314/LKW/ 2014 DCIT VS. S HRI LAL CHAND AGARWAL 3 271(1)(C) OF THE INCOME TAX ACT, 1961. HE POINTED O UT THAT IN THE SHOW CAUSE NOTICE, IT HAS NOT BEEN CLEARLY MENTIONED AS WHETHE R THE PENALTY U/S 271(1)(C ) IS PROPOSED TO BE IMPOSED FOR CONCEALING PARTICULARS O F INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE LD. AR VEHEME NTLY ARGUED THAT THE PENALTY ORDER ALSO DOES NOT MAKE IT CLEAR AS TO WHETHER THE PENALTY HAS BEEN IMPOSED FOR CONCEALING PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HE DREW OUR ATTENTION TO PAGE 2 OF THE PENALTY ORDE R IN SUPPORT OF HIS CONTENTION. HE ACCORDINGLY PLEADED FOR UPHOLDING THE ORDER OF LD. CIT (A). 5. WE HAVE GONE THROUGH THE FACTS AND RECORDS O F THE CASE AND HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS MADE BEFORE US. A PERUSAL OF THE NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C) AS APPEARING ON PAG E 6 OF THE PAPER BOOK SHOWS THAT NOTICE HAS BEEN ISSUED IN MECHANICAL MANNER B Y MERELY FILLING UP THE FORMAT OF THE NOTICE AND IT IS NOT CLEAR AS TO WHETHER THE PE NALTY IS PROPOSED TO BE IMPOSED FOR CONCEALMENT OR FOR FURNISHING INACCURATE PARTICULAR S AS THE RELEVANT PORTIONS IN THE NOTICE HAVE BEEN CROSSED OUT. SIMILARLY, THE ASSESS MENT ORDER DATED 30.12.2011 PASSED U/S 143(3) / 153A OF THE ACT ALSO MENTIONS I NITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT BUT DOES NOT RECORD WHETHE R THE PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING INACCURATE PARTICULA RS OF INCOME OR FOR CONCEALING PARTICULARS OF INCOME. SIMILARLY, THE PENALTY ORDER DATED 28.6.2012 PASSED U/S 271(1)(C) OF THE ACT MENTIONS THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E AND DOES NOT SPECIFY WHETHER THE PENALTY IS BEING IMPOSED FOR CONCEALMENT OR FOR FURNISHING INACCURATE PARTICULARS. IT IS OUR CONSIDERED OPINION THAT THE AO IS EMPOWER ED TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDIN GS THAT THERE IS CONCEALMENT OF ITA NO.314/LKW/ 2014 DCIT VS. S HRI LAL CHAND AGARWAL 4 INCOME OR FURNISHING INACCURATE PARTICULARS OF INC OME U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. CONCEALMENT AND FURNISHING INACCURAT E PARTICULARS ARE DIFFERENT. THE AO, WHILE ISSUING NOTICE, HAS TO COME TO THE CONCLU SION AS TO WHETHER IT IS A CASE OF CONCEALMENT OF INCOME OR WHETHER IT IS A CASE OF FU RNISHING OF INACCURATE PARTICULARS. THE HONBLE APEX COURT IN THE CASE OF T. ASHOK PAI VS. CIT REPORTED IN 292 ITR 11 (SC) HAS HELD THAT CONCEALMENT OF INCOME AND FURNIS HING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE HONBLE GU JARAT HIGH COURT IN THE CASE OF CIT VS. MANU ENGINEERING WORKS REPORTED IN 122 ITR 306 (GUJ.) AND THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. VIRGO MARKE TING LTD. REPORTED IN 171 TAXMAN 156 (DELHI) HAVE HELD THAT LEVY OF PENALTY HAS TO B E CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. MERE FILLING UP OF THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEV ANT CLAUSES WILL LEAD TO INFERENCE AS TO NON APPLICATION OF MIND. RELIANCE IS PLACED O N THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF COMMISSIONER OF I NCOME TAX & ANOTHER VS. MANJUNATHA COTTON & GINNING FACTORY (2012) 83 CCH 0 282 (KAR.) WHEREIN THE HONBLE KARNATAKA HIGH COURT HAS HELD : (I) NOTICE U/S 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) , I.E. WHETHER IT IS FOR CONCEALM ENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME; (II) SENDING PRINTED FORM WHERE ALL THE GROUND MENT IONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW; (III) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE PRINCIPLE OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. ITA NO.314/LKW/ 2014 DCIT VS. S HRI LAL CHAND AGARWAL 5 6. THEREFORE, ON THE FACTS OF THE PRESENT CASE AND RESPECTFULLY FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF COMMISSIONER OF INCOME TAX & ANOTHER VS. MANJUNATHA COTTON & GINNING FACTORY ( SUPRA) WE HOLD THAT THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT WAS IMPROPERLY IMP OSED BY THE AO. WE UPHOLD THE ORDER OF THE LD. CIT (A) AND REFUSE TO INTERFER E WITH THE SAME. 7. IN THE RESULT THE APPEAL OF THE DEPARTME NT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2015. SD/- SD/- (A.K. GARODIA) (SUDHAN SHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 30 TH OCTOBER. 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 20.10.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 20.10 .2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS ITA NO.314/LKW/ 2014 DCIT VS. S HRI LAL CHAND AGARWAL 6 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER