Blackrock Securities Pvt Ltd, New Delhi V. ACIT Circle-5(1), New Delhi

ITA 3251/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1959 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 15-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY GOEL
• Keywords: Reasonable cause; Set aside
• Section: 271(1)(c); 143(3); 201; 274; 73

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA ACCOUNTANT MEMBER ITA NO. 3251/DEL/2019 [A.Y. 2014-15] M/S BLACKROCK SECURITIES PVT LTD VS. THE A.C. I.T 102, KRISHNA APRA BUSINESS SQUARE CIRCLE 5(1) NETAJI SUNHASH PLACE, NEW DELHI NEW DELHI PAN : AABCO 0054 C [APPELLANT] [RESPONDENT] DATE OF HEARING : 05.03.2020 DATE OF PRONOUNCEMENT : 05.05.2020 ASSESSEE BY : SHRI SALIL KAPOOR, A DV MS. ANANYA KAPOOR, ADV SHRI SUMIT LALCHANDANI, ADV REVENUE BY : SHRI SANJAY GOEL, CI T-DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE CIT(A) - 2, NEW DELHI DATED 28.0 2.2019 PERTAINING TO A.Y 2014-15. 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE AS SESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS. 7,99,90,570/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF TH E INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHOR T] AND, IN PARTICULAR, GROUND RELATING TO CLARITY IN THE NOTICE ISSUED U/S 271(1)(C) OF THE ACT. 3. THE ROOTS FOR LEVY OF PENALTY LIE IN THE ASSESSM ENT ORDER DATED 28.12.2016 FRAMED U/S 143(3) OF THE ACT WHEREIN, IN TER ALIA, ADDITION OF RS. 23.53 CRORES WAS MADE BY THE ASSESSING OFFIC ER BY INVOKING THE PROVISIONS OF SECTION 56(2)((VII)(B) OF THE ACT R.W .R. 11UA OF THE I.T. RULES. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STRO NGLY DREW OUR ATTENTION OF THE NOTICE ISSUED U/S 274 R.W.S 271(1) (C) OF THE ACT, WHICH IS AS UNDER: NOTICE UNDER SECTION 274 READ WITH SECTION 271(L)(C ) OF THE INCOME TAX ACT-1961 LTD. 101, KRISHNA APARA BUSINESS SQU, NETAJ1 SUBHASH PLACE, PITAMPURA, DELHI-110034. WHERE IN THE COURSE OF PROCEEDING BEFORE ME FOR THE ASSESSMENT YEAR 2014-16 3 IT APPEARS TO ME THAT YOU:- HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH A NOTICE UNDER SECTION 42(1)/143(2) OF THE INCOME TAX ACT, 1 961 DATED *HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME N TERMS OF EX PLANATION 1,2,3,4 AND S. YOU ARE REQUESTED TO APPEAR BEFORE ME AT 11:30 A.M./P.M. ON 16.01.2017 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON Y OU SHOULD NOT BE MADE UNDER SECTION 271 OF THE INCOME TAX ACT , 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNI TY OF BEING HEARD IN PERSON OR THROUGH AUTHORISED REPRESENTATIV E YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WH ICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECT ION 271. 5. IT IS THE SAY OF THE LD. COUNSEL FOR THE ASSESSE E THAT THE NOTICE IS NOT CLEAR AS TO WHETHER THE PROCEEDINGS HAVE BEEN I NITIATED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE LD. COUNSEL FOR THE ASSESSEE STATED TH AT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF SAHARA 4 INDIA LIFE INSURANCE COMPANY LTD ITA NO. 475 OF 201 9 ORDER DATED 02.08.2019. 6. PER CONTRA, THE LD. DR VEHEMENTLY STATED THAT IN THE ASSESSMENT ORDER ITSELF, WHILE MAKING ADDITION OF RS. 23.53 CR ORES, FILING OF INACCURATE PARTICULAR OF INCOME WAS DETECTED AND PE NALTY HAS ALSO BEEN LEVIED FOR FILING OF INACCURATE PARTICULARS OF INCOME AS IS EVIDENT FROM THE CONCLUDING PARA OF THE PENALTY ORDER. 7. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE OR DERS OF THE AUTHORITIES BELOW. NOTICE U/S 274 OF THE ACT IS EXH IBITED ELSEWHERE. THERE IS NO DISPUTE THAT WHILE ISSUING NOTICE, THE ASSESSING OFFICER DID NOT MAKE HIS INTENTION CLEAR WHETHER THE PENALTY IS GOING TO BE LEVIED FOR CONCEALING PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME. THIS IS FURTHER FORTIFIED AT PARA 4 OF THE PENALTY ORDER WHICH READS AS UNDER: SINCE, THE ABOVE ADDITIONS WERE TREATED AS CONCEAL MENT OF INCOME/FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE, A NOTICE U/S. 274 R.W.S. 271 (1 )(C) OF T HE INCOME TAX ACT 1961 DATED 28.12.2016 AND 14.06.2017 WERE ISSUE D AND DULY SERVED UPON THE ASSESSEE COMPANY. 'THE AR OF THE AS SESSEE COMPANY FILED ITS REPLY TO THE NOTICE VIDE LETTER D ATED 5 23.06.2016. THE PENALTY PROCEEDINGS U/S 271(1) (C) ARE DECIDED ON THE BASIS OF THE INCOME TAX PROVISIONS, JUDICIAL PRONOUNCEMENTS & THE MATERIAL AVAILABLE ON RECORD A ND THE SUBMISSION OF THE ASSESSEE. 8. THE CONTENTION OF THE LD. DR THAT WHILE MAKING A DDITIONS, THE ASSESSING OFFICER HAD MADE HIS INTENTION VERY CLEAR IS ILL-FOUNDED, IN AS MUCH AS, IN PARA 5.8, THE ASSESSING OFFICER SAYS, FOR THE ABOVE MENTIONED REASON, I AM SATISFIED THAT THE ASSESSEE COMPANY CONCEALED THE INCOME/FILED INACCURATE PARTICULARS, HENCE PEN ALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE INITIATED. 9. MOREOVER, THE PENAL PROCEEDINGS ARE SEPARATE FRO M ASSESSMENT PROCEEDINGS AND WHILE INITIATING PENALTY PROCEEDING S U/S 271(1)(C) OF THE ACT, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO DEMONSTRATE UNDER WHICH LIMB HE IS PROPOSING LEVY OF PENALTY. 10. ON IDENTICAL CIRCUMSTANCES, THE HON'BLE HIGH CO URT OF DELHI [SUPRA] HAS HELD AS UNDER: 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, WHICH W AS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF THE KARNAT AKA HIGH 6 COURT IN CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR) AND OBSERVED THAT THE NOTICE ISSUED BY TH E AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF S ECTION 271(1) (C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDE R I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INC ME OR FOR FUR NISHING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIG H COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIONER OF INCOME TAX V. SSA'S EMERALD MEADOWS (2016) 73 TAXMAN.COM 241 (KAR) , THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA IN SLP NO. 11485 OF2016 BY ORDER DATED 5TH AUGUST, 2016. 11. IF THE NOTICE IS READ WITH THE DECISION OF THE HON'BLE HIGH COURT OF DELHI [SUPRA], IN OUR CONSIDERED OPINION, THE PE NALTY WILL NOT SURVIVE. IT WOULD NOT BE OUT OF PLACE TO REFER TO THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF VIRGO MA RKETING PVT LTD [2008] 171 TAXMANN 156 [DELHI] WHEREIN THE HON'BLE HIGH COURT HELD AS UNDER: WE ARE UNABLE TO DISCERN FROM A READING OF THE ASS ESSMENT ORDER WHY THE ASSESSING OFFICER CHOSE TO INITIATE P ENALTY PROCEEDINGS AGAINST THE ASSESSED AND UNDER WHICH PA RT OF SECTION 271(1)(C) OF THE ACT. IN OTHER WORDS, WE ARE UNABLE TO DISCERN FROM THE ASSESSMENT ORDER THE REASON FOR IN ITIATING 7 PENALTY PROCEEDINGS. THEREFORE, THE CONCURRENT VIEW HELD BY BOTH THE AUTHORITIES BELOW MUST BE ACCEPTED. 12. FURTHER, THE HON'BLE SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS PVT LTD [2016] 8 TMI 1145 THE HON'BLE APE X COURT HELD THAT THE HIGH COURT ORDER CONFIRMED IN [2015] (11) TMI 1 620 KARNATAKA HIGH COURT. NOTICE ISSUED BY THE ASSESSING OFFICER U/S 274 R.W.S 271(1)(C) OF THE ACT TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT THE PENALTY PROCEEDING S HAD BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ISSUE WAS DE CIDED IN FAVOUR OF THE ASSESSEE. 13. CONSIDERING THE FACTS OF THE CASE IN TOTALITY, IN THE LIGHT OF JUDICIAL DECISIONS REFERRED TO HEREINABOVE, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY OF RS. 7,99,90,570/-. 8 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 2351/DEL/2019 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 05.05 .2020. SD/- SD/- [H.S. SIDHU] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 05 TH MAY, 2020. VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 9 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 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