MESERS SUTLEJ COACH BUILDERS LIMITED, JALANDHAR V. INCOME TAX OFFICER I(2), JALANDHAR

ITA 345/ASR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7087 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 28-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAVANI SHANKAR
• Assessee Lawyers: S S KALRA
• Keywords: Procedural lapse
• Section: 271(1)(c); 143(1)

Judgement Text

PAGE | 1 ITA NO. 345/ASR/2018 A.Y. 2010-11 SUTLEJ COACH BUILDERS LTD. VS. INCOME TAX OFFICER-1(2) IN THE INCOME TAX APPELLATE TRIBUNAL CAMP BENCH AT JALANDHAR BEFORE SHRI N.K. SAINI, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.345/ASR./2018 (ASSESSMENT YEARS: 2010-11) SUTLEJ COACH BUILDERS LTD VILL. SANGAL SOHAL KAPURTHALA ROAD JALANDHAR. VS. INCOME TAX OFICER, 1(2) JALANDHAR. PAN AAACL9970D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.S.KALRA, A.R. RESPONDENT BY: SHRI BHAVANI SHANKAR, D.R DATE OF HEARING: 09.01.2019 DATE OF PRONOUNCEMENT: 15.01.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-1, JALANDHAR, DATED 29.03.2018, WHICH IN TURN ARISES FROM AN UNDATED ORDER PASSED BY THE A.O UNDER SEC.271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT I.T. ACT) FOR A.Y. 2010-11. THE ASSESSEE ASSAILING THE ORDER PASSED BY THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 1. THE ORDER OF THE LD. C.I.T.(A) IS AGAINST LAW AND FACTS OF THE CASE. 2. THAT THE LD. C.I.T.(A) HAS ERRED IN SUSTAINING PENALTY OF RS. 64,759/- U/S 271(1)(C) @ 110% ' OF THE TAX SOUGHT TO BE EVADED ON INSUFFICIENT AND ERRONEOUS GROUNDS. 3. THAT THE C.I.T.(A) HAS NOT APPRECIATED THE ISSUE THAT THIS WAS A CASE WHERE THE PENALTY NOTICE ISSUED DID NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE AS TO WHETHER IT WAS A CASE OF CONCEALMENT OR THAT OF FURNISHING OF INACCURATE PARTICULARS AND IN SUCH LIKE SITUATION THE PENALTY IS NOT EXIGIBLE. PAGE | 2 ITA NO. 345/ASR/2018 A.Y. 2010-11 SUTLEJ COACH BUILDERS LTD. VS. INCOME TAX OFFICER-1(2) 4. EVEN OTHERWISE ON FACTS THE ADDITION MADE WAS PURELY VOLUNTARY AND WHICH OTHERWISE COULD NOT BE MADE IN VIEW OF DECISION OF APEX COURT IN 152 CTR (SC) AND THE C.I.T.(A) HAS APPRECIATED THE SAME AND FURTHER EVEN THE AMOUNTS WHICH HAVE BEEN CONSIDERED FOR PENALTY HAD BEEN LIQUIDATED IN SUBSEQUENT YEARS. 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF BUS CHASSIS AND REPAIR WORK HAD FILED ITS RETURN OF INCOME FOR A.Y. 2010-11 ON 24.09.2010, DECLARING TOTAL INCOME AT RS.3,06,280/-. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE I.T. ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC.143(2). 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O. CALLED UPON THE ASSESSEE TO FURNISH CONFIRMATIONS WITH RESPECT TO FOUR CREDITORS AMOUNTING TO RS.1,64,525/-. HOWEVER, AS THE ASSESSEE COULD NOT OBTAIN THE CONFIRMATIONS OF THE PARTIES, THEREFORE, IN ORDER TO PURCHASE PEACE OF MIND AND TO AVOID LITIGATION IT REQUESTED THAT THE OUTSTANDING AMOUNTS REFLECTED AGAINST THE NAMES OF THE SAID CREDITORS MAY BE ADDED TO ITS INCOME UNDER SEC. 41(1) OF THE I.T. ACT. THE A.O YIELDED TO THE REQUEST OF THE ASSESSEE AND BROUGHT THE AFORESAID AMOUNT OF RS. 1,64,525/- TO TAX IN ITS HANDS. THE A.O WHILE CULMINATING THE ASSESSMENT ALSO INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) OF THE I.T ACT FOR CONCEALING THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. SUBSEQUENTLY, THE A.O AFTER CULMINATION OF THE ASSESSMENT PROCEEDINGS IMPOSED PENALTY OF RS. 64,759/- UNDER SEC. 271(1)(C) I.E. @ 110% OF THE TAX SOUGHT TO BE EVADED. 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). HOWEVER, THE CIT(A) WAS NOT PERSUADED TO SUBSCRIBE TO THE CONTENTIONS THAT WERE ADVANCED BY THE ASSESSEE TO IMPRESS UPON HER THAT NO PENALTY UNDER SEC. 271(1)(C) WAS LIABLE TO BE IMPOSED IN ITS HANDS. THE CIT(A) BEING OF THE VIEW THAT AS THE ASSESSEE HAD NOT SUO MOTTO DECLARED THE AFORESAID AMOUNT OF RS. 1,64,525/- AS ITS INCOME AND HAD CAME FORTH TO OFFER THE SAME ONLY WHEN THE ISSUE WAS TAKEN UP BY THE A.O, THUS CONCLUDED THAT THE DISCLOSURE MADE BY THE ASSESSEE COULD NOT BE HELD TO HAVE BEEN VOLUNTARILY MADE. ON PAGE | 3 ITA NO. 345/ASR/2018 A.Y. 2010-11 SUTLEJ COACH BUILDERS LTD. VS. INCOME TAX OFFICER-1(2) THE BASIS OF HER AFORESAID DELIBERATIONS THE CIT(A) UPHELD THE PENALTY IMPOSED BY THE A.O UNDER SEC.271(1)(C). 6. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL ASSAILED THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O FOR IMPOSING PENALTY UNDER SEC. 271(1)(C) IN THE HANDS OF THE ASSESSEE. IT WAS SUBMITTED BY THE LD. A.R THAT THE A.O IN THE BODY OF THE ASSESSMENT ORDER HAD INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C), BOTH FOR CONCEALING THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE ADDITION OF RS.1,64,525/- WHICH IN ITSELF WAS MADE AT THE INSTANCE OF THE ASSESSEE. THE LD. A.R AVERRED THAT EVEN IN THE SHOW CAUSE NOTICE (FOR SHORT SCN), DATED -03-2013 ISSUED BY THE A.O, THE PENALTY WAS INITIATED FOR BOTH THE DEFAULTS VIZ. CONCEALMENT OF THE PARTICULARS OF INCOME/ FURNISHING OF INACCURATE OF PARTICULARS OF INCOME. APART THEREFROM, IT WAS SUBMITTED BY THE LD. A.R THAT AS WAS DISCERNIBLE FROM THE PENALTY ORDER PASSED UNDER SEC.271(1)(C), THE A.O HAD IMPOSED PENALTY OF RS.58,872/- ON ACCOUNT OF ALLEGED CONCEALMENT OF INCOME. THE LD. A.R IN SUPPORT OF HIS CONTENTION THAT THE DEFAULT ON THE PART OF THE A.O IN NOT PUTTING THE ASSESSEE TO NOTICE AS REGARDS THE DEFAULT FOR WHICH THE PENALTY WAS SOUGHT TO BE IMPOSED WAS NOT A MERE PROCEDURAL IRREGULARITY AS THE SAME DID GO TO THE VERY ROOTS OF ASSUMPTION OF JURISDICTION BY THE A.O, THEREIN RELIED ON A THIRD MEMBER DECISION OF THE ITAT, AMRITSAR BENCH, AMRITSAR IN THE CASE OF HPCL METTAL ENERGY LTD., BHATINDA VS. THE ADDL. CIT, CIT-1, BHATINDA, (ITA 554 & 555/ASR/2014; DATED 03.05.2018). 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE ASSESSEE HAD NOT VOLUNTARILY OFFERED FOR TAX THE AMOUNT OF RS.1,64,525/- UNDER SEC.41(1) OF THE I.T. ACT, HENCE THE A.O HAD RIGHTLY IMPOSED PENALTY UNDER SEC.271(1)(C) IN RESPECT OF THE SAME. PAGE | 4 ITA NO. 345/ASR/2018 A.Y. 2010-11 SUTLEJ COACH BUILDERS LTD. VS. INCOME TAX OFFICER-1(2) 8. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. AS THE ASSESSEE HAS ASSAILED THE VERY VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O FOR IMPOSING PENALTY UNDER SEC. 271(1)(C), THEREFORE, WE SHALL FIRST DEAL WITH THE MAINTAINABILITY OF THE SAME. WE HAVE PERUSED THE ASSESSMENT ORDER AND ARE IN AGREEMENT WITH THE CONTENTION ADVANCED BY THE LD. A.R THAT THE A.O WHILE CULMINATING THE ASSESSMENT HAD INITIATED PENALTY PROCEEDINGS UNDER SEC.271(1)(C), BOTH FOR CONCEALING THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN CONTEXT OF THE ADDITION OF RS.1,64,525/-. APART THEREFROM, A PERUSAL OF THE SCN, DATED - /03/2013 ISSUED UNDER SEC.274 R.W.S. 271, REVEALS A SIMILAR STORY, WHEREIN THE SPECIFIC DEFAULT FOR WHICH THE PENALTY PROCEEDINGS HAD BEEN INITIATED IN THE HANDS OF THE ASSESSEE IS NOT DISCERNIBLE. ADMITTEDLY, THE A.O HAD FAILED TO STRIKE OFF THE IRRELEVANT DEFAULT IN THE BODY OF THE SCN, DATED -/03/2013 THAT WAS ISSUED TO THE ASSESSEE. SUBSEQUENTLY, THE A.O HAD IMPOSED PENALTY UNDER SEC.271(1)(C) IN RESPECT OF THE ADDITION OF RS.1,64,525/- MADE UNDER SEC.41(1) OF THE I.T. ACT, ON THE GROUND THAT THE ASSESSEE HAD CONCEALED ITS INCOME TO THE SAID EXTENT. WE ARE PERSUADED TO SUBSCRIBE TO THE CLAIM OF THE LD. A.R THAT IN THE ABSENCE OF THE ASSESSEE BEING PUT TO NOTICE AS REGARDS THE NATURE OF DEFAULT FOR WHICH PENALTY WAS SOUGHT TO BE IMPOSED BY THE A.O UNDER SEC.271(1)(C), NO VALID PENALTY UNDER THE SAID STATUTORY PROVISION COULD HAVE VALIDLY BEEN IMPOSED IN ITS HANDS. OUR AFORESAID VIEW IS FORTIFIED BY THE ORDER OF THE THIRD MEMBER OF THE ITAT AMRITSAR BENCH, AMRITSAR IN THE CASE OF HPCL METTAL ENERGY LTD., BHATINDA VS. THE ADDL. CIT, CIT-1, BHATINDA, (ITA 554 & 555/ASR/2014; DATED 03.05.2018), WHEREIN IT WAS OBSERVED AS UNDER: 26. THE SUM AND SUBSTANCE OF HER SUBMISSIONS IS THAT THE PENALTY ORDERS CANNOT BE DECLARED INVALID ON A WRONG MENTIONING OF THE CHARGE EITHER IN THE PENALTY NOTICES OR PENALTY ORDERS, SINCE SUCH A WRONG MENTIONING IS NOTHING BUT A MERE PROCEDURAL IRREGULARITY. IN MY CONSIDERED OPINION, THE VIEW CANVASSED BY THE LD. DR CANNOT BE COUNTENANCED BECAUSE THE ACTION OF THE AO, AS DISCUSSED ABOVE, IS NOT A MERE PROCEDURAL ERROR. THESE DEFAULTS GO TO THE ROOT OF THE MATTER. ALL THE HONBLE HIGH COURTS ARE CONSENSUS AD IDEM IN THEIR OPINION ON THE ABOVE ISSUE. NOT EVEN A SINGLE CONTRARY JUDGMENT HAS BEEN BROUGHT ON RECORD BY THE LD. DR. INSOFAR AS INVOKING SECTION 292B OF THE ACT IS CONCERNED, IN MY VIEW, THE SAME HAS NO APPLICABILITY, AS IT IS TRIGGERED ONLY WHEN THERE IS SOME MISTAKE, DEFECT OR OMISSION IN A NOTICE OR AN ORDER ETC., WHICH IS OTHERWISE IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. THE EXTANT DEFAULTS IN THE PENALTY NOTICES/ORDERS ARE SO PAGE | 5 ITA NO. 345/ASR/2018 A.Y. 2010-11 SUTLEJ COACH BUILDERS LTD. VS. INCOME TAX OFFICER-1(2) FUNDAMENTAL THAT THEY CANNOT BE CONSTRUED AS ELEMENTARY OR BASIC MISTAKES ETC. SO AS TO LEAVE THEM IN SUBSTANCE AND EFFECT IN CONFORMITY WITH THE INTENT AND PURPOSE OF THE ACT. WE THUS BEING OF THE CONSIDERED VIEW THAT AS THE A.O HAD FAILED TO MENTION THE SPECIFIC CHARGE FOR WHICH PENALTY UNDER SEC. 271(1)(C) WAS SOUGHT TO BE IMPOSED IN THE HANDS OF THE ASSESSEE, EITHER WHILE INITIATING THE PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER OR IN THE SCN ISSUED UNDER SEC.274 R.W.S. 271 OF THE I.T. ACT, HENCE, THE IMPUGNED PENALTY OF RS.64,759/- IMPOSED IN ITS HANDS CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. 9. WE THUS NOT BEING ABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE VIEW TAKEN BY THE CIT(A), THUS SET ASIDE HER ORDER AND QUASH THE PENALTY OF RS.64,759/- IMPOSED BY THE A.O UNDER SEC.271(1)(C). THE GROUNDS OF APPEAL NOS 1 & 2 ARE ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 10. AS WE HAVE QUASHED THE PENALTY IMPOSED BY THE A.O UNDER SEC. 271(1)(C) FOR WANT OF JURISDICTION ON THE PART OF THE A.O, THEREFORE, WE REFRAIN FROM ADVERTING TO AND THEREIN ADJUDICATING UPON THE MERITS OF THE CASE. THE GROUND OF APPEAL NO. 4 IS DISPOSED OFF IN TERMS OF OUR AFORESAID OBSERVATIONS. 11. THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.01.2019 SD/- SD/- ( N.K. SAINI) (RAVISH SOOD) VICE PRESIDENT JUDICIAL MEMBER PLACE :JALANDHAR; DATE: 15 .01.2019 PS. ROHIT PAGE | 6 ITA NO. 345/ASR/2018 A.Y. 2010-11 SUTLEJ COACH BUILDERS LTD. VS. INCOME TAX OFFICER-1(2) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , / DR, ITAT, AMRITSAR 6. [ / GUARD FILE. //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) /ITAT, AMRITSAR SR.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS 15.1.2019 SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON 15.1.2019 SR.PS/PS 7 FILE SENT TO THE BENCH CLERK . 2019 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH OF ORDER