Ram Chandra Rungta, Ranchi V. DCIT Central CIRCLE-1, Ranchi

ITA 347/RAN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0329 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDERJI T SINGH
• Assessee Lawyers: M K CHOUDHARY
• Keywords: Opportunity of being heard; Question of law; Reasonable cause
• Section: 271(1)(c); 142(1)

Judgement Text

P A G E 1 | 7 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO S . 347 & 348 / RAN /201 6 ASSESSMENT YEAR S : 2006 - 07 & 2007 - 08 RAM CJHANDRA RUNGTA, E - 3, TIRUPATI APARTMENT, KANKE ROAD, RANCHI. VS. DCIT, CENTRAL CIRCLE - 1, RANCHI PAN/GIR NO. ABSPR 7421 D (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI M.K.CHOUDHARY, ADV REVENUE BY : SHRI INDERJIT SINGH CIT (DR) DATE OF HEARING : 1 9 / 11 / 2018 DATE OF PRONOUNCEMENT : 19 / 11 / 2018 O R D E R PER N.S.SAINI, AM THESE ARE APPEALS F ILED BY THE ASSESSEE AGAINST THE COMMON ORDER OF THE CIT (A) - 3, PATNA D ATED 21.10.2016 FOR THE ASSESSMENT YEARS 2006 - 07 & 2007 - 08. 2. THE SOLE ISSUE INVOLVED IN THESE APPEAL S IS THAT THE CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS.29,48,670/ - FOR THE ASSESSMENT YEAR 2006 - 07 AND RS.10,30,085/ - FOR THE ASSESSMENT YEAR 2007 - 08 LEVIED U/S.271(1)(C) OF THE ACT BY THE ASSESSING OFFICER. ITA NO S347 & 348 . / RAN/ 2016 ASSESSMENT YEAR S : 2006 - 07 & 2007 - 08 P A G E 2 | 7 3 . AT THE OUTSET, LD A.R. OF THE ASSESSEE BY FILING COPIES OF NOTICE S ISSUED U/S.271(1)(C) OF THE ACT BY THE ASSESSING OFFICER BOTH DATED 31 .12.2009 FOR ASSESSMENT YEAR S 2006 - 07 AND 2007 - 08 SUBMI TTED THAT THE ASSESSING OFFICER IN THE SAID NOTICE S HAS STATED AS UNDER: HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 4 . THUS, IT IS NOT CLEAR FROM THE SAID NOTICE ISSUED U/S.271(1)(C) OF THE ACT BY TH E ASSESSING OFFICER WHETHER THE SHOW CAUSE IS ISSUED TO THE ASSESSEE FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 5 . ON THE OTHER HAND, LD D.R RELIED ON THE ORDERS OF LOWER AUTHORITIES. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. T HE COMMON NOTICE ISSUED BY THE AO U/S 271(L)(C) FOR THE ASSESSMENT YEARS 2006 - 07 & 2007 - 08 ARE REPRODUCED AS UNDER : - WHERE IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE A SSESSMENT YEAR .. IT APPEARS TO ME THAT YOU: - *HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTICE BY U/S.22(L)/22(2)/B4 OF THE INDIAN INCOME TAX ACT, 1922 OR WH ICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139(1) OR BY A NOTICE GIVEN BY U/S. . 139(2) /148 OF THE INCOME TAX ACT, 1961. NO.___ DT. ____ OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND THE MANNER REQUIRED BY THE SAID SECTION 139(1) OR BY SUCH NOTICE. ITA NO S347 & 348 . / RAN/ 2016 ASSESSMENT YEAR S : 2006 - 07 & 2007 - 08 P A G E 3 | 7 ** HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH A NOTICE U/S. 22(4) /23(2) OF THE INDIAN TAX ACT, 1922 OR UNDER SECTION 142(1) / 143(2) OF THE INCOME - TAX ACT, 1961. ***HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11.30 AM ON 11.2.2010 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE U/S 271 OF THE INCOME - TAX ACT, 1 961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUGH AUTHORISED REPRESENTATIVE, YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE U/S.271. ' 7 . HON'BLE APEX COURT VIDE JUDGMENT IN CASE OF M/S. SSA'S EMERALD MEADOWS, (2016) 73 TAXMANN.COM 248(SC) DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE JUDGMENT RENDERED BY HON'BLE HIGH COURT OF KARNATAKA WHEREBY IDENTICAL ISSUE WAS D ECIDED IN FAVOUR OF THE ASSESSEE. OPERATIVE PART OF THE JUDGMENT IN CASE OF M/S. SSA'S EMERALD MEADOWS (SUPRA) DECIDED BY HON'BLE HIGH COURT OF KARNATAKA IS REPRODUCED BELOW : - '2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWING SUBS TANTIAL QUESTIONS OF LAW: (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OJ INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONA BLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? (2 WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN. HOLDING THAT THE PENALTY NOTICE UNDER SECTION ITA NO S347 & 348 . / RAN/ 2016 ASSESSMENT YEAR S : 2006 - 07 & 2007 - 08 P A G E 4 | 7 274 R.W.S. 271(L)(C) IS HAD IN LAW AND. INVALID INSPITE THE AMENDMENT OF SECTION 271(1 B) WITH RETROSP ECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APP EALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED, UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(L)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(L)(C) OF TH E 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 01 THE DERISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OR INCOME T AX - VS - MANJUNATHA C OTTON AND G INNING F ACTORY (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.' 8 . BARE PERUSAL OF THE NOTICE S ISSUED U/S 271(1)( C) APPARENTLY GO TO PROVE THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEED INGS BY ISSUING THE NOTICE U/S 274/271(1)(C) OF THE ACT WITHOUT SPECIFYING WHETHER THE ASSESSEE HAS CONCEALED ''PARTICULARS OF INCOME' OR ASSESSEE HAS FURNISHED 'INACCURATE PARTICULARS OF INCOME', SO AS TO ITA NO S347 & 348 . / RAN/ 2016 ASSESSMENT YEAR S : 2006 - 07 & 2007 - 08 P A G E 5 | 7 PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESSEE TO EX PLAIN THE SHOW CAUSE NOTICE. RATHER NOTICE IN THIS CASE HAS BEEN ISSUED IN A STEREOTYPED MANNER WITHOUT APPLYING ANY MIND WHICH IS BAD IN LAW, HENCE IS NOT A VALID NOTICE SUFFICIENT TO IMPOSE PENALTY U/S 271(1 )(C) OF THE ACT. 9 . THE PENALTY PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE ATTRACTED WHERE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS ALSO A WELL - ACCEPTED PROPOSITION THAT THE AFORESAID TWO LIMBS OF SECTION 271(1)(C) OF THE ACT CA RRY DIFFERENT MEANINGS. THEREFORE, IT WAS IMPERATIVE FOR THE ASSESSING OFFICER TO STRIKE - OFF THE IRRELEVANT LIMB SO AS TO MAKE THE ASSESSEE AWARE AS TO WHAT IS THE CHARGE MADE AGAINST HIM SO THAT HE CAN RESPOND ACCORDINGLY. THE HON'BLE KARNATAKA HIGH COUR T IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY, 359 ITR 565 (KAR) OBSERVED THAT THE LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB UNDER WHICH IT IS BEING LEVIED. AS PER HON'BLE HIGH COURT, WHERE THE ASSESSING OFFICER PROPOSED TO INVOKE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. THE HON'BLE HIGH COURT HELD THAT THE STANDARD PROFORMA OF NOTICE UNDER SECTION 274 OF THE ACT WITHOUT STRIKING OF THE IRREL EVANT CLAUSES WOULD LEAD TO AN INFERENCE OF NON - APPLICATION OF MIND BY THE ASSESSING OFFICER. THE HON'BLE SUPREME COURT IN THE CASE OF DILIP ITA NO S347 & 348 . / RAN/ 2016 ASSESSMENT YEAR S : 2006 - 07 & 2007 - 08 P A G E 6 | 7 N. SHROFF VS. JCIT, 291 ITR 519(SC) HAS ALSO NOTICED THAT WHERE THE ASSESSING OFFICER ISSUES NOTICE UNDER SECTION 2 74 OF THE ACT IN THE STANDARD PROFORMA AND THE INAPPROPRIATE WORDS ARE NOT DELETED, THE SAME WOULD POSTULATE THAT THE ASSESSING OFFICER WAS NOT SURE AS TO WHETHER HE WAS TO PROCEED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDING TO THE HON'BLE SUPREME COURT, IN SUCH A SITUATION, LEVY OF PENALTY SUFFERS FROM NON - APPLICATION OF MIND. IN THE BACKGROUND OF THE AFORESAID LEGAL POSITION AND, HAVING REGARD TO THE MANNER IN WHICH TH E ASSESSING OFFICER HAS ISSUED NOTICE S UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT DATED 31 .12.2009 FOR THE ASSESSMENT YEAR S 2006 - 07 AND 2007 - 08, WITHOUT STRIKING OFF THE IRRELEVANT WORDS, THE PENALTY PROCEEDINGS SHOW A NON - APPLICATION OF MIND BY TH E ASSESSING OFFICER AND IS, THUS, UNSUSTAINABLE. WE HOLD SO. 10 . THEREFORE, IN OUR CONSIDERED VIEW, THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY OF RS.29,48,670/ - FOR THE ASSESSMENT YEAR 2006 - 07 AND RS.10,30,085/ - FOR THE ASSESSMENT YEAR 2007 - 0 8 AND, THEREFORE, WE DELETE THE SAME AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSE. ITA NO S347 & 348 . / RAN/ 2016 ASSESSMENT YEAR S : 2006 - 07 & 2007 - 08 P A G E 7 | 7 11 . IN THE RESULT, A PPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 19 / 11 /2018. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER RANCHI ; DATED 19 / 11 /2018 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR. PVT. SECRETARY, ITAT, RANCHI ON TOUR 1. THE APPELLANT : 2. THE RESPONDENT. 3. THE CIT(A) - 4. PR.CIT - RANCHI 5. DR, ITAT, RANCHI 6. GUARD FILE. //TRUE COPY//