DCIT, New Delhi V. M/s. Sahara India Life Insurance Co. Ltd., Lucknow

ITA 3509/DEL/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4320 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 16-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S ANANT
• Keywords: Search and seizure; Audit objection; Retrospective amendment; Question of law; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 43B; 143(3); 147; 148; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.D.AGRAWAL, HONBLE VICE PRES IDENT & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 3509/DEL/2013, A.Y. 2004- 05 ITA NO. 6243/DEL/2013, A.Y. 2005- 06 ITA NO. 6244/DEL/2013, A.Y. 2006-07 ITA NO. 5624/DEL/2011, A.Y. 2007-08 ITA NO. 1347/DEL/2013, A.Y. 2008-09 ITA NO. 6245/DEL/2013, A.Y. 2009-10 ITA NO. 6246/DEL/2013, A.Y. 2010-11 DCIT CENT. CIRCLE 6 NEW DELHI VS . SAHARA INDIA LIFE INSURANCE CO. LTD. 1, KAPOORTHALA COMPLEX, ALIGANJ LUCKNOW PAN : AAHCS1334B APPELLANT RESPONDENT ITA NO. 3480/DEL/2012, A.Y. 2007-08 SAHARA INDIA LIFE INSURANCE CO. LTD. 1, KAPOORTHALA COMPLEX, ALIGANJ LUCKNOW PAN : AAHCS1334B VS . DCIT CENT. CIRCLE 6 NEW DELHI APPELLANT RESPONDENT ASSESSEE BY : SHRI AJAY VOHRA, SR. ADV., SHRI ADITY A VOHRA, ADV. ARPIT GOYAL, CA REVENUE BY : SHRI B.S.ANANT, SR. DR DATE OF HEARING 04.10.2018 DATE OF PRONOUNCEMENT 31.10.2018 2 ITA NO. 5624.DEL.2011, 3480.D EL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, ORDER PER BENCH : 1.0 THE ASSESSEE IS ENGAGED IN LIFE INSURANCE BUSINESS. ITA NO. 3509/DEL/2013 IS DEPARTMENTS APPEAL WHICH IS P REFERRED AGAINST ORDER DATED 15.03.2013 PASSED BY THE LD. CI T (APPEALS)-I, NEW DELHI FOR ASSESSMENT YEAR 2004-05. IN THIS YEAR THE ASSESSMENT U/S 143(3) OF THE INCOME TAX AC T, 1961 (HEREINAFTER CALLED THE ACT) WAS COMPLETED BY THE ASSESSING OFFICER ON 30.11.2006. SUBSEQUENTLY, NOTICE DATED 2 8.03.2011 WAS ISSUED U/S 148 OF THE ACT FOR INITIATING REASSE SSMENT PROCEEDINGS AND THEREAFTER ORDER U/S 147 READ WITH SECTION 143(3) OF THE ACT WAS PASSED ON 09.12.2011. IN THE REASSESSMENT ORDER, THE DIFFERENCE BETWEEN THE INTE REST ACCRUED AS PER THE BALANCE SHEET (WHICH INCLUDED IN TEREST PAID AT THE TIME OF PURCHASE OF SECURITIES) AND THE INTE REST AS PER THE PROFIT AND LOSS ACCOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE. THE ORIGINAL ASSESSMENT WAS COMPLETED AT A TAXABLE INCOME OF RS. 2,89,55,200/- WHEREAS THE REASSESSMEN T WAS COMPLETED AT A TOTAL INCOME OF RS. 5,00,21,010/- AF TER MAKING AN ADDITION OF RS. 2,10,65,809/- WHICH WAS IN RESPE CT OF THE AMOUNT OF INTEREST ALLEGED TO HAVE ESCAPED TAXATION AS PER THE 3 ITA NO. 5624.DEL.2011, 3480.D EL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, REVENUE AUDIT OBJECTION. IN THE APPEAL BEFORE THE L D. CIT (A), THE REOPENING OF THE ASSESSMENT BY THE ASSESSING OF FICER WAS ANNULLED. ON MERITS ALSO, THE LD. CIT (A) HELD IN F AVOUR OF THE ASSESSEE CONSIDERING THE FACT THAT THE ASSESSEE HAD FOLLOWED ACCOUNTING STANDARD 13 ISSUED BY THE INSTITUTE OF C HARTERED ACCOUNTANTS OF INDIA WHICH DEALT WITH PRE-ACQUISITI ON INTEREST PAID AND POST ACQUISITION INTEREST INCOME. THE REVE NUE IS IN APPEAL AGAINST THE ORDER OF THE LD. CIT (A) AND THE GROUND RAISED BY THE DEPARTMENT CHALLENGES THE ACTION OF T HE LD. CIT(A) IN DELETING THE ADDITION OF RS. 2,10,65,809/ - MADE BY THE AO ON ACCOUNT OF ACCRUED INCOME FROM INVESTMENT S. 1.1 ITA NO. 6243/DEL/2013 IS THE DEPARTMENTS AP PEAL PREFERRED AGAINST THE ORDER DATED 20.09.2013 PASSED BY THE LD. CIT (A)-I, NEW DELHI FOR ASSESSMENT YEAR 2005-0 6. THE ASSESSEE HAD FILED THE RETURN OF INCOME DECLARING A LOSS OF RS.9,67,15,218/-. THIS WAS COMPUTED AS PER PROVISIO NS OF SECTIONS 28 TO 43B OF THE ACT. THE AO MADE VARIOUS DISALLOWANCES UNDER DIFFERENT SECTIONS. THE ASSESSE E APPROACHED THE LD. CIT (A) AND TOOK THE GROUND THAT AS THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF LIFE INSURA NCE, PROVISIONS OF SECTION 28 TO 43B WERE NOT APPLICABLE AND THE 4 ITA NO. 5624.DEL.2011, 3480.D EL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, SAME WERE OVERRIDDEN BY SECTION 44 OF THE ACT. THE ASSESSEE ALSO FILED REVISED COMPUTATION OF INCOME WHEREIN TH E TOTAL INCOME WAS COMPUTED AS PER SECTION 44 OF THE ACT RE AD WITH THE FIRST SCHEDULE TO THE ACT. THE LD. CIT (A) HELD THAT THE PROVISIONS OF SECTION 44 OF THE ACT READ WITH THE F IRST SCHEDULE OF THE ACT WERE TO BE APPLIED IN THE ASSESSEES CAS E AND DELETED THE VARIOUS DISALLOWANCES MADE BY THE AO AND DIRECT ED THE ASSESSING OFFICER TO ASSESS THE INCOME OF THE ASSES SEE IN TERMS OF PROVISIONS OF SECTION 44 OF THE ACT. THE DEPARTM ENT IS IN APPEAL AGAINST THIS DIRECTION OF THE LD. CIT (A). 1.2 ITA NO. 6244/DEL/2013 IS DEPARTMENTS APPE AL PREFERRED AGAINST THE ORDER DATED 20.09.2013 PASSED BY THE LD. CIT (A)-I, NEW DELHI FOR ASSESSMENT YEAR 2006-0 7 AND THE FACTS IN THIS YEAR ARE IDENTICAL TO THE FACTS IN AS SESSMENT YEAR 2005-06 WHEREIN THE ASSESSEE HAD EARLIER FILED THE RETURN OF INCOME COMPUTING TOTAL INCOME AS PER SECTIONS 28 TO 43 OF THE ACT BUT HAD LATER FILED A REVISED COMPUTATION U/S 4 4 OF THE ACT BEFORE THE LD. CIT (A). IN THIS YEAR ALSO THE AO HA D MADE DISALLOWANCES WHICH ON APPEAL WERE DELETED BY THE L D. CIT (A) AND DIRECTION WAS GIVEN TO THE AO TO ASSESS INCOME OF THE ASSESSEE AS PER PROVISIONS OF SECTION 44. IN THIS Y EAR ALSO THE 5 ITA NO. 5624.DEL.2011, 3480.D EL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, DEPARTMENT HAS CHALLENGED THE ACTION OF THE LD. CIT (A) IN ISSUING SUCH DIRECTION. 1.3 ITA NO. 5624/DEL/2011 IS DEPARTMENTS APPEAL PREFERRED AGAINST ORDER DATED 05.09.2011 PASSED BY THE LD. CI T (A)-I, NEW DELHI FOR ASSESSMENT YEAR 2007-08 AND THE FACTS AND ISSUES ARE IDENTICAL TO THE FACTS AND ISSUES IN ASS ESSMENT YEAR 2005-06 AND 2006-07. IN THIS YEAR ALSO THE DEPARTME NT IS CHALLENGING THE ACTION OF THE LD. CIT (A) IN DIRECT ING THE AO TO COMPUTE THE INCOME OF THE ASSESSEE IN TERMS OF PROV ISIONS OF SECTION 44 OF THE ACT. 1.4 ITA NO. 1347/DEL/2013 IS THE DEPARTMENTS APP EAL FOR ASSESSMENT YEAR 2008-09 WHEREIN THE DEPARTMENT IS CHALLENGING THE ORDER DATED 05.12.2012 PASSED BY TH E LD. CIT (A)-I, NEW DELHI WHEREIN THE LD. CIT(A) HAS ISSUED DIRECTIONS TO THE AO TO COMPUTE THE INCOME OF THE ASSESSEE U/S 44 OF THE ACT. THUS, THIS YEAR IS ALSO IDENTICAL IN FACTS AND ISSUES TO ASSESSMENT YEARS 2005-06, 2006-07 AND 2007-08. 1.5 ITA NO. 6245/DEL/2013 IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2009-10 AND THE DEPARTMENT IS CHALL ENGING THE ORDER DATED 20.09.2013 PASSED BY THE LD. CIT (A )-I, NEW DELHI WHEREIN, AS IN EARLIER ASSESSMENT YEARS 2005- 06, 2006- 6 ITA NO. 5624.DEL.2011, 3480.D EL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, 07, 2007-08 AND 2008-09, THE LD. CIT (A) HAS DIRECT ED THE AO TO COMPUTE THE INCOME OF THE ASSESSEE IN TERMS OF P ROVISIONS OF SECTION 44 OF THE ACT. 1.6 ITA NO. 6246/DEL/2013 IS THE DEPARTMENTS AP PEAL FOR ASSESSMENT YEAR 2010-11 AND THE ORDER UNDER CHALLEN GE HAS BEEN PASSED BY THE LD. CIT (A)-I, NEW DELHI WHEREIN VIDE ORDER DATED 25.09.2013, THE LD. CIT (A) HAS DIRECTED THE AO TO DETERMINE THE INCOME OF THE ASSESSEE IN TERMS OF PR OVISIONS OF SECTION 44 OF THE ACT. THE FACTS AND ISSUES ARE IDE NTICAL IN THIS YEAR ALSO. 1.7 ITA NO. 3480/DEL/2012 IS THE ASSESSEES APPEA L FOR ASSESSMENT YEAR 2007-08 WHEREIN THE ASSESSEE HAS CH ALLENGED ORDER DATED 05.09.2011 PASSED BY THE LD. CIT (A)-I, NEW DELHI WHEREIN THE LD. CIT (A)-I, NEW DELHI HAS UPHELD THE IMPOSITION OF PENALTY OF RS. 6,13,947/- IMPOSED U/S 271(1)(C) OF THE ACT. 1.8 ALL THESE APPEALS WERE HEAD TOGETHER AND FOR THE SAKE OF CONVENIENCE THEY ARE BEING DISPOSED OF BY THIS COMM ON ORDER. 2.0 THE LD. SR. DEPARTMENTAL REPRESENTATIVE, ARGUI NG FOR THE SIX IDENTICAL APPEALS PREFERRED BY THE REVENUE, SUB MITTED THAT THE LD. CIT (A) HAD ERRED IN LAW AS WELL ON FACTS I N DIRECTING THE ASSESSING OFFICER TO DETERMINE THE INCOME OF THE AS SESSEE IN 7 ITA NO. 5624.DEL.2011, 3480.D EL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, TERMS OF PROVISIONS OF SECTION 44 OF THE ACT AS THE ASSESSEE, IN THE ORIGINAL RETURNS OF THE CAPTIONED YEARS UNDER A PPEAL, HAD ITSELF NOT FILED THE RETURNS OF INCOME UNDER PROVIS ION OF SECTION 44 OF THE ACT BUT HAD FILED THE RETURNS OF INCOME B Y TREATING THE LIFE INSURANCE BUSINESS AS NORMAL BUSINESS. IT WAS ALSO VEHEMENTLY ARGUED BY THE LD. SR. DEPARTMENTAL REPRE SENTATIVE THAT THE LD. CIT (A) HAD ALSO NOT APPRECIATED THE F ACT THAT APART FROM INSURANCE BUSINESS, THE ASSESSEE HAD ALS O SUBSTANTIAL INVESTMENT ACTIVITY AND, THEREFORE, THE CASE OF THE ASSESSEE WAS NOT COVERED BY PROVISIONS OF SECTION 4 4 OF THE ACT. THE LD. SR. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THE ORDERS OF THE LD. CIT (A) IN ALL THE CAPTIONED YEARS UNDER APPEAL BY THE DEPARTMENT DESERVED TO BE SET ASIDE A ND THE ORDERS OF THE ASSESSING OFFICER WERE TO BE RESTORED . 2.1 WITH RESPECT TO THE DEPARTMENTS APPEAL BEAR ING CAPTION NO. 3509/DEL/2013 FOR ASSESSMENT YEAR 2004-05, IT W AS SUBMITTED THAT THE LD. CIT (A) HAD ERRED IN DELETIN G THE VARIOUS ADDITIONS MADE BY THE AO ON MERITS AND THE ORDER OF THE LD. CIT (A) DESERVED TO BE SET ASIDE IN THIS CASE ALSO. IT WAS SUBMITTED THAT THE LD. CIT (A) HAD IGNORED THE FACT UAL FINDINGS OF THE AO AND HAD GIVEN RELIEF TO THE ASSESSEE. 8 ITA NO. 5624.DEL.2011, 3480.D EL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, 3.0 IN RESPONSE, THE LD. SR. ADVOCATE, SHRI AJAY VOHRA, APPEARING ON BEHALF OF THE ASSESSEE, SUBMITTED THAT AS FAR AS DEPARTMENTS APPEAL BEARING NO. 3509/DEL/2013 FOR ASSESSMENT YEAR 2004-05 WAS CONCERNED, THE APPEAL D ESERVED TO BE DISMISSED OUTRIGHT AS THE DEPARTMENT HAS CHAL LENGED THE DELETION OF ADDITIONS ONLY ON MERITS AND HAS NOT CH ALLENGED THE QUASHING OF THE RE-ASSESSMENT PROCEEDINGS. IT WAS S UBMITTED THAT THE EFFECT OF THIS WAS THAT SINCE THE REASSESS MENT PROCEEDINGS ITSELF HAD BEEN QUASHED BY THE LD. CIT (A) AND WERE NOT UNDER CHALLENGE BEFORE THE ITAT, THE ORDER OF THE LD. CIT (A) TO THAT EXTENT REMAINED UNCHALLENGED AND, T HEREFORE, THE QUASHING OF REASSESSMENT PROCEEDINGS STANDS ACC EPTED BY THE DEPARTMENT AND, ACCORDINGLY, THE APPEAL OF THE DEPARTMENT ONLY ON MERITS BECOMES MERE ACADEMIC IN NATURE. 3.1 FOR THE OTHER SIX APPEALS PREFERRED BY THE DE PARTMENT FOR ASSESSMENT YEARS 2005-06 TO 2010-11 ON IDENTICAL IS SUE, THE LD. SR. ADVOCATE PLACED RELIANCE ON THE ORDER OF TH E ITAT DELHI BENCH THE CASE OF MAX NEW YORK LIFE INSURANCE COMPA NY VS. DCIT REPORTED IN (2018) 91 TAXMAN.COM 477 (DELHI TR IB.) WHEREIN VIDE ORDER DATED 5 TH JANUARY, 2018 IT HAS BEEN INDICATED THAT SECTION 44 DEBARS THE REVENUE TO APP LY 9 ITA NO. 5624.DEL.2011, 3480.D EL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, PROVISIONS OF SECTION 28 TO 43 B OF THE ACT WHILE C OMPUTING PROFIT AND GAINS FOR AN INSURANCE COMPANY. IT WAS A LSO SUBMITTED THAT THE LD. CIT (A) HAD RIGHTLY ALLOWED THE ASSESSEES ADDITIONAL GROUND RAISED BEFORE HIM BECA USE IT IS THE MANDATE OF THE INCOME TAX LAW THAT CORRECT INCO ME HAS TO BE COMPUTED UNDER THE CORRECT PROVISIONS OF THE ACT AND ALTHOUGH INITIALLY THE ASSESSEE COMPANY HAD FILED I TS RETURN/S OF INCOME UNDER INCORRECT PROVISIONS, THE ASSESSEE COMPANY DID FILE THE REVISED COMPUTATION/S IN ALL THE YEARS UNDER APPEAL AS SOON AS THE MISTAKE WAS REALIZED. THE LD. SR. AD VOCATE SUBMITTED THAT THERE WAS NO FACTUAL INFIRMITY IN TH E ORDER OF THE LD. CIT (A) IN DIRECTING THE AO TO COMPUTE THE INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 44 OF THE ACT. 3.2 WITH RESPECT TO THE ASSESSEES APPEAL PERTAIN ING TO ASSESSMENT YEAR 2007-08 BEARING CAPTION NO. 3480/DE L/2012 WITH CHALLENGED THE CONFIRMATION OF IMPOSITION OF P ENALTY, THE LD. SR. ADVOCATE SUBMITTED THAT THE ASSESSEE HAD FI LED THE RETURN COMPUTING TOTAL INCOME UNDER PROVISIONS OF S ECTIONS 28 TO 43B OF THE ACT BUT DURING THE APPELLATE PROCEEDI NGS HAD FILED THE REVISED COMPUTATION, COMPUTING THE TOTAL INCOME AS PER SECTION 44 OF THE ACT AND THE PENALTY PROCEEDIN GS WERE 10 ITA NO. 5624.DEL.2011, 3480. DEL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, INITIATED BY THE LD. CIT (A) FOR FURNISHING INACCUR ATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. IT WAS SUBMITTED THAT THE PENALTY LEVIED BY THE LD. CIT (A ) DESERVED TO BE DELETED BECAUSE THE NOTICE ISSUED U/S 274 OF THE ACT IN THIS REGARD DID NOT SPECIFY THE EXACT CHARGE ON WHICH TH E PENALTY WAS PROPOSED TO BE LEVIED ON THE ASSESSEE. THE LD. SR. ADVOCATE DREW OUR ATTENTION TO THE NOTICE DATED 05. 09.2011 PLACED IN THE PAPER BOOK AND SUBMITTED THAT THE IRR ELEVANT PORTIONS HAD NOT BEEN CROSSED OUT. THE LD. SR. ADVO CATE ALSO PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE KARN ATAKA HIGH COURT IN THE CASE OF CIT VS. S.S.A.S EMERALD MEADO WS WHICH WAS LATER UPHELD BY THE HONBLE APEX COURT FOR THE PROPOSITION THAT NO PENALTY WAS LEVIABLE IF THE CHARGE WAS NOT SPECIFIC. 4.0 IN RESPONSE, THE LD. SR. DEPARTMENTAL REPRES ENTATIVE SUBMITTED THAT THE IMPUGNED PENALTY WAS LEVIED U/S 271(1)(C) OF THE ACT ON THE DIFFERENCE BETWEEN THE ORIGINAL C OMPUTED LOSS AND THE REVISED LOSS COMPUTED AS PER PROVISIONS OF SECTION 44 OF THE ACT AND, THEREFORE, THE PENALTY HAD BEEN LEV IED CORRECTLY. THE LD. SR. DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT THE NON-SPECIFICATION OF THE CHARGE WAS A MERE TECHNICA L INFRINGEMENT AND IT DID NOT ALTER THE FACT THAT THE RE WAS 11 ITA NO. 5624.DEL.2011, 3480. DEL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, DIFFERENCE BETWEEN THE ORIGINALLY COMPUTED LOSS AND THE REVISED COMPUTED LOSS. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOW TA KE UP THE APPEALS ONE BY ONE: 5.1 ITA NO. 3509/DEL/2013 A PERUSAL OF THE ORDER OF THE LD. CIT(A) SHOWS THAT THE LD. CIT(A) HAS OBSERVED I N PARA 4.3 OF THE IMPUGNED ORDER THAT EVEN IF IT WAS TO BE ASS UMED THAT THE IMPUGNED AMOUNT OF INTEREST HAD NOT BEEN TAXED, THE REVENUE AUDIT OBJECTION AS WELL AS THE CONSEQUENT REASSESSMENT PROCEEDING WAS NOT ON SOUND LEGAL FOOT ING IN THE ABSENCE OF FINDING THAT THE INCOME COMPUTED BY THE ASSESSEE WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF FIRST SCHEDULE OR THAT THE SAID AMOUNT OF INTEREST WAS TO BE INCLUDED AS PER THE COMPUTATION PROVIDED IN PARTS A OR B OF THE SAID SC HEDULE AND WAS NOT SO INCLUDED. THE LD. CIT (A) HAS FURTHE R OBSERVED THAT THERE IS NO SUCH FINDING BY THE C & AG OR THE REVENUE IN THIS REGARD AND THEREFORE THE REASSESSMENT ORDER WA S LIABLE TO BE ANNULLED. FURTHER, A PERUSAL OF PARA 5.5 OF THE IMPUGNED ORDER AGAIN SHOWS THAT THE FACTS CLEARLY INDICATE T HAT THERE WAS NO MATERIAL IN POSSESSION OF THE AO OTHER THAN THE OBSERVATION 12 ITA NO. 5624.DEL.2011, 3480. DEL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, OF REVENUE AUDIT TO PROCEED AGAINST THE ASSESSEE. T HE LD. CIT (A) HAS OBSERVED THAT THE CHANGE OF OPINION WAS NOT EVEN BASED ON ANY FACT OBSERVED BY THE AO BUT ON A PRESU MPTIVE OBSERVATION OF REVENUE AUDIT AND, THEREFORE, THE CA SE SQUARELY FELL WITHIN THE REALM OF CHANGE OF OPINION WHICH COULD NOT HAVE BEEN THE BASIS FOR REOPENING OF SETTLED ASSESS MENTS, PARTICULARLY AFTER THE LAPSE OF 4 YEARS. THE LD. CI T (A) HELD THAT ON THIS GROUND ALSO THE SAID PROCEEDINGS ARE NOT LE GALLY TENABLE. IN PARA 8, THE LD. CIT (A) HAS EXPRESSLY H ELD THAT THE REASSESSMENT ORDER PASSED U/S 147 OF THE ACT IS ANN ULLED. THUS, IT IS OBVIOUS THAT THE LD. CIT (A) HAS QUASHE D THE REASSESSMENT PROCEEDINGS BUT THE DEPARTMENT HAS NOT CHALLENGED SUCH ANNULMENT BEFORE US. THE DEPARTMENT HAS ONLY CHALLENGED THE DELETION OF ADDITION ON MERITS WHICH IS OBVIOUS FROM THE GROUNDS OF APPEAL AND, THEREFORE, WE ARE AFRAID THAT THE DEPARTMENT HAS NO CASE IN THIS REGA RD. ACCORDINGLY, IN ABSENCE OF A GROUND CHALLENGING THE QUASHING OF REASSESSMENT PROCEEDINGS BY THE LD. CIT (A), WE FIND NO REASON TO INTERFERE AND WE DISMISS THE APPEAL OF TH E DEPARTMENT BEARING CAPTION NO. 3509/DEL/2013 AS IN FRUCTUOUS. 13 ITA NO. 5624.DEL.2011, 3480. DEL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, 5.2 ITA NOS. 6244/DEL/2013, 6243/DEL/2013, 5624/DEL/2011, 1347/DEL/2013, 6245/DEL/2013 AND 6246/DEL/2013 ALL THESE SIX APPEALS RAISE CHALLENGE TO THE DIRECTION GIVEN BY THE LD. CIT (A) THAT THE ASSESSE ES INCOME SHOULD BE ASSESSED BY THE AO UNDER THE PROVISIONS O F SECTION 44 OF THE ACT. THE FACTS ARE UNDISPUTED THAT THE AS SESSEE COMPANY IS CARRYING ON BUSINESS OF LIFE INSURANCE A ND IS DULY REGISTERED AND GOVERNED BY IRDA. ACCORDINGLY, IT IS ALSO UNDISPUTED THAT THE ASSESSEE COMPANY HAS TO MAINTAI N ITS BOOKS OF ACCOUNTS AND PREPARE ITS FINANCIAL STATEME NTS ACCORDING TO THE INSURANCE ACT AND FURTHER AS PER T HE PROVISIONS OF SECTION 44 OF THE INCOME TAX ACT, 196 1 READ WITH THE FIRST SCHEDULE AND THE PROFIT AND GAINS FROM TH E LIFE INSURANCE BUSINESS ARE TO BE COMPUTED SEPARATELY FR OM ANY OTHER BUSINESS OF THE ASSESSEE. IT IS ALSO SETTLED POSITION THAT THESE PROVISIONS ARE NON OBSTANTE I.E. THEY OVERRIDE THE OTHER PROVISIONS OF THE ACT AND, THEREFORE, THE INCOME CH ARGEABLE OF TAX OF AN INSURANCE COMPANY HAS TO BE COMPUTED IN ACCORDANCE WITH PROVISIONS THEREOF. IT IS ALSO UNDI SPUTED THAT INITIALLY THE ASSESSEE HAD NOT FILED ITS RETURN/S O F INCOME UNDER THE CORRECT PROVISIONS OF THE ACT BUT LATER, DURING THE COURSE OF 14 ITA NO. 5624.DEL.2011, 3480. DEL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, FIRST APPELLATE PROCEEDINGS, HAD FILED REVISED COMP UTATION/S ALONG WITH ADDITIONAL GROUND AND THE LD. CIT (A) AL LOWED THE ADDITIONAL GROUND IN ALL THE YEARS UNDER APPEAL AND RESTORED THE APPEAL TO THE FILE OF THE ASSESSING OFFICER WIT H A DIRECTION TO COMPUTE THE INCOME OF THE ASSESSEE AS PER THE PR OVISIONS OF SECTION 44 OF THE ACT. SINCE IT IS SETTLED LAW THAT SECTION 44 OF THE ACT OVER RIDES OTHER PROVISIONS OF THE ACT FOR THE PURPOSE OF COMPUTATION OF PROFIT AND GAINS FROM THE LIFE INSUR ANCE BUSINESS, WE FIND NO REASON TO INTERFERE WITH THE D IRECTIONS OF THE LD. CIT (A) IN ALL THE CAPTIONED YEARS AND WE U PHOLD HIS DIRECTION THAT THE INCOME OF THE ASSESSEE SHOULD BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44 OF THE ACT. ACCORDINGLY WE DISMISS THE GROUNDS RAISED BY THE DE PARTMENT IN ALL THE SIX APPEALS. ACCORDINGLY ITA NOS. 6243/D EL/2013, 6244/DEL/2013, 5624/DEL/2011, 1347/DEL/2013, 6245/DEL/2013 AND 6246/DEL/2013 STAND DISMISSED. 5.3 ITA NO. 3480/DEL/2012 - IN THIS APPEAL THE ASSESSEE IS CHALLENGING THE UPHOLDING OF PENALTY OF RS. 6,13,94 7/- IMPOSED U/S 271(1)(C) OF THE ACT. IT IS EVIDENT FRO M THE NOTICE ISSUED U/S.274 R.W.S. 271 OF THE ACT DATED 05.09.2011 FOR THE IMPUGNED YEAR THAT THE ASSESSING 15 ITA NO. 5624.DEL.2011, 3480. DEL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, OFFICER HAS NOT SPECIFICALLY MENTIONED AS TO UNDER WHICH LIMB OF SECTION 271(L)(C) OF THE ACT THE PENA LTY PROCEEDINGS HAD BEEN INITIATED BY HIM, I.E., WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTOR, REPORTED IN 359 ITR 565 (KAR) HAS, UNDER IDENTICAL FACTS, HELD AS UNDER: '(P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(L)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. (Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW.' 5.3.1 THE SAID ABOVE-SAID JUDGMENT OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTOR (SUPRA) HAS BEEN FOLLOWED BY THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SSAS EMERAL D MEADOWS, REPORTED IN (2016) 73 TAXMANN.COM 241 (KAR ) 16 ITA NO. 5624.DEL.2011, 3480. DEL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, AND THE RELEVANT PARAGRAPHS OF THE SAID JUDGMENT RE AD AS UNDER- '2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWIN G SUBSTANTIAL QUESTIONS OF LAW, WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITL Y MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATE D FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FO R CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABL E FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYON D REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLD ING THAT THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(I)(C) IS BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 271 (1 B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSIN G OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECOR DING THE SATISFACTION FOR THE SAME ? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS 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 TH E 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 THE ACT: THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF T HE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISIO N BENCH OF THIS COURT RENDERED, IN THE CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 359ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 (KAR.). 17 ITA NO. 5624.DEL.2011, 3480. DEL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE AR E OF THE OPINION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE AP PEAL IS ACCORDINGLY DISMISSED. 5.3.2 FURTHER, THE SLP FILED BY THE REVENUE AGAINST THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CAS E OF COMMISSIONER OF INCOME TAX VS. SSAS EMERALD MEADOW S (SUPRA) WAS DISMISSED BY THE HONBLE SUPREME COURT OF INDIA. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGME NT OF THE HONBLE KARNATAKA HIGH COURT AS ABOVE-MENTIONED WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFIC ER IS REQUIRED TO SPECIFY 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 FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. FRO M THE PERUSAL OF THE NOTICE ISSUED U/S 274 R.W.S. 271 OF THE ACT, IT IS CLEAR THAT THE ASSESSING OFFICER HAS NOT SPECIFIED AS TO UNDER WHICH LIMB OF THE SECTION THE PENALTY WAS IMPOSABLE. THE NOTICE, IN FACT, IS IN T HE STANDARD PRO FORMA WHEREIN THE IRRELEVANT CLAUSES HAVE NOT BEEN STRUCK OFF. THIS INDICATES NON-APPLICATION OF 18 ITA NO. 5624.DEL.2011, 3480. DEL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, MIND ON THE PART OF THE ASSESSING OFFICER WHILE ISS UING THE PENALTY NOTICE. THUS, IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE PENALTY PROCEEDINGS INITIATED BY T HE ASSESSING OFFICER ARE BAD IN LAW AND DESERVE TO BE DELETED. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASI DE AND THE AO IS DIRECTED TO DELETE THE PENALTY IN BOTH TH E CASES. ACCORDINGLY ITA NO. 3480/DEL/2012 STANDS ALLOWED. 6.0 IN THE FINAL RESULT, ALL THE SEVEN APPEALS OF T HE DEPARTMENT STAND DISMISSED WHEREAS THE SOLE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2018 SD/- SD/- (G.D.AGRAWAL) (SUDHANSHU SRI VASTAVA) VICE PRESIDENT JUDICIAL MEMBE R DATED: 31.10.2018 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 19 ITA NO. 5624.DEL.2011, 3480. DEL.2012 ITA NO. 3509, 1347, 6243-46/DEL/2013, DATE OF DICTATION 30.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 30.10.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 30.10.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 31.10.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 31.10.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 31.10.2018 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