M/s Amit Upadhyay, Meerut V. ITO, Meerut

ITA 3309/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3184 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 25-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: P S KASHYAP
• Keywords: Opportunity of being heard; Bonafide belief; Question of law; Initiation of penalty proceedings; Reasonable cause
• Section: 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC , NEW DELHI BEFORE SH. N. K. SAINI, ACCOUNTANT MEMBER ITA NO. 3309 /DEL/2017 : ASSTT. YEAR : 2012 - 1 3 AMIT UPADHYAY, D - 8, SHASTRI NAGAR, MEERUT (U.P.) VS IN COME TAX OFFICER, WARD - 1(1), MEERUT (APPELLANT) (RESPONDENT) PAN NO. A AJPU3692H ASSESSEE BY : SH. P. S. KASHYAP, CA REVENUE BY : MS. ASHIMA NEB , SR. DR DATE OF HEARING : 13.1 2 .201 7 DATE OF PRONOUNCEMENT : 01 . 0 3 .201 8 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 16.07.2015 OF LD. CIT(A) , ALIGARH . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. AO HAS ERRED IN IMPOSING PENALTY A GAINST THE ASSESSEE U/S 271(1)(C) OF THE ACT. 2. THAT THE LD. AO HAS NOWHERE IN THE SHOW CAUSE NOTICE HAS SPECIFIED WHETHER THE PENALTY PROCEEDINGS ARE INITIATED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME HENCE THE PROCEE DINGS ARE ILLEGAL WITHOUT ANY BASIS AND LIABLE TO BE QUASHED. 3. THE ASSESSEE CRAVES TO ADD, WITHDRAW ANY OTHER GROUNDS IN APPEAL BEFORE OR DURING THE COURSE OF APPELLATE PROCEEDINGS. ITA NO. 3309 /DEL /201 7 AMIT UPADHYAY 2 3. THE MAIN GRIEVANCE OF THE ASSESSEE RELATES TO THE SUSTENANCE OF PE NALTY LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 30.07.2012 DECLARING AND INCOME OF RS.7,01,340/ - . LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO MADE THE ADDITION OF RS.5,24,105/ - ON ACCOUNT OF INTEREST EARNED FROM FOREIGN SAVING BANK ACCOUNT NO. 567795 WITH POLICE ASSOCIATION CREDIT COOPERATIVE LIMITED NOW KNOWN AS BANK VIC, 121, CARDIGAN STREET, CARLTON VIC 3053, AUSTRALIA. THE BANK STATEMENT OF THE SAID ACCOUNT WAS FURNISHED BY THE ASSESSEE AND EXPLANATION WAS GIVEN THAT THE SAID AMOUNT WAS NOT INCLUDED UNDER BONAFIDE BELIEF THAT INCOME FROM FOREIGN SOURCES NEITHER ACCRUED/EARNED NOR RECEIVED IN INDIA , SO IT WAS NOT TAXABLE. 5 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO SUSTAINED THE ADDITION MADE BY THE AO. THEREAFTER, THE AO LEVIED THE PENALTY AMOUNTING TO RS.1,55,000/ - U/S 271(1)(C) OF THE ACT. THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD. CIT(A) AND STATED THAT THE INTEREST INCOME WAS SUO MOTO OFFERED AND THE AO HAD NOT POINTED OUT ANYTHING DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, THE LD. CIT(A) DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND CONFIRMED THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 6. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO WHILE INITIATING THE PENALTY PROCEEDINGS DID NOT MENTION AS TO WHETHER THE PENALTY WAS TO BE LEVIED ON FURNISHING OF INACCURATE PARTICULARS OF INCOME OR ON ACCOUNT OF CONCEALMENT OF INCOME. THEREFORE, IN THE ABSENCE OF SPECIFIC CHARGE, THE PENALTY LEVIED BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: ITA NO. 3309 /DEL /201 7 AMIT UPADHYAY 3 K. C . BUILDERS VS ACIT (2004) 265 ITR 562 (SC) CIT & ANR. VS M/S SSA S EMERALD MEADOWS IN SLP CC NO. 11485/2016 ORDER DATED 23.11.2015 (SC) ITO VS M/S MANJUNATHA COTTON AND GINNING FACTORY IN ITA 2564, 2565/2005 ORDER DATED 13.12.2012 (KAR. HC) HINDUSTAN COCA COLA MARKETING COMPANY (P) LTD. VS DCIT, CIR 12(1), NEW DELHI (2014) 49 TAXMANN.COM 61 EMILO RUIZ BERDEJO VS DCIT, CIR - 7, PUNE (2012) 26 TAXMANN.COM 24 NEW SORATHIA ENGINEERING CO. VS CIT (2006) 282 ITR 642 (GUJ.) IT WAS FURTHER SUBMITTED AS UNDER: I) T HAT THE LD A.O HAS NOT SPECIFIED IN THE INITIA L SHOW CAUSE NOTICE THAT UNDER W HICH LIMB HE INTENDS TO IMPOSE PENALTY ON THE ASSESSEE, EVEN THE A.O HAS NOT TICKED THE CLAUSE F OR INITIATION OF PROCEEDINGS. ( PG 22 OF THE PAPER BOOK) II) THAT THE LD A.O HAS NOT CONSIDERED THE FACT THAT THE PENALTY PROCEEDINGS ARE ALL TOGETHER DIFFER ENT FROM ASSESSMENT PROCEEDINGS. III) THAT THE ADDITION WAS MADE ON THE INTEREST INCOME OFFERED BY THE A S SESSEE HIMSELF WITHOUT BEING DETECTED BY THE A.O . IV) THAT FULL FACTS AN D BONA FIDE BELIEF WERE EXPLAINED TO THE A.O IN ASSESSMENT PROCEEDINGS AND THE SAME WAS ACCEPTED AS IT IS BY THE A.O AND NO SPECIFIC FAULT WAS POINTED OUT BY THE A.O. 7 . IN HIS RIVAL SUBMISSIONS, THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIE S BELOW. 8 . I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE AO ISSUED THE NOTICE U/S 274 R.W.S. 271 OF THE ACT (COPY OF WHICH IS PLACED AT PAGE NO. 22 OF T HE ASSESSEE S PAPER BOOK). ON 26.06.2015, WHICH IS REPRODUCED VERBATIM AS UNDER : ITA NO. 3309 /DEL /201 7 AMIT UPADHYAY 4 TO SH. AMIT UPADHYAY D - 8, SHASTRI NAGAR, MEERUT WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME THE ASSESSMENT YEAR 2012 - 13 IT APPEARS TO ME THAT YOU: - (A.) HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A N OTICE GIVEN UNDER SECTION 22(1)/ 22(2)34 OF INDIAN INCOME TAX ACT, 1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139 (1) OR BY A NOTICE GIVEN UNDER S ECTION 139 (2)/148 OF THE INCOME - TAX ACT, 1961, NO.....................,.......DATED.....................,....OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FURN ISH IT WITHIN THE TIME ALLOWED AND THE MANNER REQUIRED BY THE SAID SECTION 139(1) OR BY SUCH NOTICE. (B.) HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH A NOTICE UNDER SECTION 22(4)723(20 OF THE INDIAN INCOME TAX ACT, 1922 OR UNDER SECTION 142 (1)7143(2) OF THE INCOME TAX ACT, 1961. NO..........................DATED.................. (C.) HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11:00 A.M. ON 29.01.2015 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271 OF THE INCOME TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIVE, YOU MAY SHOW CA USE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY S UCH ORDER IS MADE UNDER SECTION 271. SD/ - (GAMBHIR SINGH) INCOME TAX OFFICER WARD - 1(1), MEERUT 9 . FROM THE AFORESAID NOTICE, IT IS CRYSTAL CLEAR THAT THE AO HAS NOT POINTED OUT THE SPECIFIC CHARGE ON THE BASIS OF WHICH, THE PENALTY U/S 271(1)(C) OF THE ACT WAS INITIATED . ITA NO. 3309 /DEL /201 7 AMIT UPADHYAY 5 10 . AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS BEEN ADJUDICATED BY THE ITAT BENCH E , NEW DELHI IN ITA NO. 2201 TO 2204/DEL/2016 FOR THE ASSESSMENT YEARS 2001 - 02 TO 2004 - 05 IN THE CASE OF M/S ACCURATE TRANSFORMERS LTD., DELHI V S DCIT WHEREIN IN THE IDENTICAL FACTS, A SIMILAR PENALTIES U/S 271(1)(C) OF THE ACT WERE DELETED VIDE ORDER DATED 26.02.2018 . THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 12 TO 17 OF THE SAID ORDER WHICH ARE REPRODUCED AS UNDER: 12. WE HAVE CONSIDERED T HE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS REGARDS TO THIS OBJECTION OF THE LD. SR. DR THAT THE LEGAL ISSUE ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE WAS NOT RAISED BEFORE THE AUTHORITIES BEFORE IS CONCERNED. IT IS NOTICED THAT THE LD. CIT(A) IN PARAS 5 TO 5.3 OF THE IMPUGNED ORDER MENTIONED THE ARGUMENTS OF THE ASSESSEE ON THE SIMILAR ISSUE AND ADJUDICATED THIS ISSUE. THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 7.6 OF THE IMPUGNED ORDER WHICH READ AS UNDER: 7.6 WITH REFERENCE TO THE OBJECTION OF THE APPELLANT THAT THE SATISFACTION WAS NOT RECORDED BY THE AO IN THE ASSESSMENT ORDER REGARDING INITIATION OF PENALTY, IT IS TO BE MENTION ED THAT THIS ISSUE WAS NOT AGITATED OR DISPUTED BEFORE THE AO DURING THE PENALTY PROCEEDINGS AND AS MENTIONED ABOVE, WHILE IMPOSING PENALTY, THE AO HAS GIVEN HIS CLEAR FINDING IN THE PENALTY ORDER. THEREFORE, THIS OBJECTION OF THE APPELLANT IS ALSO NOT TENABLE. 13. ON THE BASIS OF AFORESAID OBSERVATIONS OF THE LD. CIT(A), IT CAN SAF ELY BE HELD THAT ON THE LEGAL ISSUE, THE ASSESSEE ARGUED THE MATTER BEFORE THE LD. CIT(A). IN THE PRESENT CASE, IT IS NOTICED THAT THE AO IN THE ASSESSMENT ORDER DATED 29.12.2008, SIMPLY STATED THAT THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT HAVE BEE N INITIATED SEPARATELY. HE DID NOT MENTION AS TO WHETHER THE PENALTY PROCEEDINGS WERE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME, SO, THERE WAS NO SATISFACTION OF THE AO. MOREOVER, THE ESTIMATED ADDITIONS WHICH WE RE MADE BY THE AO WERE DELETED BY THE ITA NO. 3309 /DEL /201 7 AMIT UPADHYAY 6 LD. CIT(A) AND THE ONLY ADDITION SUSTAINED WAS ON ACCOUNT OF SCRAP SALES WHICH WAS DISCLOSED BY THE ASSESSEE ITSELF. IT IS AN ADMITTED FACT THAT NO PENALTY PROCEEDINGS WERE INITIATED BY THE AO IN RESPECT OF THAT SUSTAI NED ADDITION WHICH IS EVIDENT FROM THE COPY OF SHOW CAUSE NOTICE DATED 29.12.2008 ISSUED BY THE AO WHEREIN IT HAS BEEN MENTIONED AS UNDER: WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2001 - 2002 IT APPEARS TO ME THAT YOU: HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH A NOTICE UNDER SECTION 142(1)/143(2) OF THE INCOME TAX ACT, 1961 DATED .. HAVE CONCEALED THE PARTICULARS OF YOUR INCOME AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME IN TERMS OF EXPLANATION 1, 2, 3, 4 A ND 5. 14. FROM THE ABOVE, SHOW CAUSE NOTICE (COPY OF WHICH IS PLACED AT PAGE NO. 41 OF THE ASSESSEE S PAPER BOOK), IT IS NOT CLEAR AS TO WHETHER THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED BY THE AO ON ACCOUNT OF CONCEALMENT OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, CHARGE FRAMED WAS NOT CLEAR. 15. ON A SIMILAR ISSUE, THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT M/S SSA S EMERALD MEADOWS, BANGALORE (SUPRA) HELD AS UNDER: 3. THE TRIBUNAL HAS ALL OWED 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 ON WHICH LIMB OF SECTION 271(1)( C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE D IVISION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS ITA NO. 3309 /DEL /201 7 AMIT UPADHYAY 7 MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. 16. IT IS ALSO RELEVANT TO POINT OUT THAT THE SLP FILED BY THE DEPARTMENT AGAINST THE AFORESAID ORDER HAS BEEN DISMISSED BY THE H ON BLE APEX COURT VIDE ORDER DATED 05.08.2016. IT IS ALSO NOTICED THAT THE HON BLE KARNATAKA HIGH COURT CONSIDERED THE RATIO LAID DOWN IN ITS OWN JUDGMENT IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY REPORTED AT (2013) 359 ITR 565 (SUPRA) WHER EIN IT HAS BEEN HELD (HEAD NOTE) AS UNDER: CHAPTER XXI OF THE INCOME - TAX ACT, 1961, ENACTS PROVISIONS FOR THE LEVY, IMPOSITION AND COLLECTION OF PENALTY. THE GENERAL PRINCIPLES RELATING TO PENALTY OR CONCEALMENT OF INCOME ARE: (A) PENALTY UNDER SECTION 2 71(1)(C) IS A CIVIL LIABILITY; (B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSING PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES; (C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY; (D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 271(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271; (E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REVISIONAL AUTHORITY; (F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) AND (B) SHOULD BE DISCERNIBLE FROM THE ORDER WHICH WOULD BY FICTION CONSTITUTE CONCEALMENT BECAUS E OF DEEMING PROVISION; (G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASSESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 271(1)(C) IS A SINE QUA NON FOR THE ASSESSING OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE D EEMING PROVISION CONTAINED IN SUB - SECTION (1B). ITA NO. 3309 /DEL /201 7 AMIT UPADHYAY 8 17. IN THE PRESENT CASE ALSO AS WE HAVE ALREADY POINTED OUT IN THE FORMER PART OF THIS ORDER THAT THE AO HAS NOT RECORDED THE SATISFACTION IN THE ASSESSMENT ORDER AS TO WHETHER THE ASSESSEE CONCEALED THE IN COME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND ALSO IN THE SHOW CAUSE NOTICE ISSUED U/S 274 R.W.S. 271 OF THE ACT, THE AO DID NOT MENTION THE SPECIFIC CHARGE ON THE BASIS OF WHICH THE PENALTY U/S 271(1)(C) OF THE ACT WAS INITIATED I.E. WHETHER IT W AS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE SIMPLY SENT A PRINTED FORM WHERE ALL THE CONDITIONS RELATING TO SECTION 271 OF THE ACT WERE MENTIONED. THEREFORE, THE SAID NOTICE WOULD NOT SATISFY A REQUIREMENT OF LAW BECAUSE THE ASSESSEE SHOULD KNOW THE GROUND WHICH HE HAS TO DEFEND SPECIFICALLY. WE, THEREFORE, BY CONSIDERING THE TOTALITY OF THE FACTS AND THE RATIO LAID DOWN BY THE HON BLE KARNATAKA HIGH COURT IN THE AFORESAID REFERRED TO CASE, DELETE THE PENALTY LEVIE D U/S 271(1)(C) OF THE ACT BY THE AO AND SUSTAINED BY THE LD. CIT(A). 11 . SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 26.02.2018, THE PENALTY LEIVED BY THE AO U/S 271(1)(C) OF THE A CT AND SUSTAINED BY THE LD. CIT(A) IS DELETED. 12 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. (ORD E R PRONOUNCED IN THE COU RT ON 01 /0 3 /2018 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DAT ED: 01 /0 3 /2018 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR