Deputy Commissioner of Income Tax Circle-2(1), Davangere V. Shri.C.S.Prasad , Challakere

ITA 359/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4188 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: MRINALINI R
• Keywords: Revised return
• Section: 271(1)(c); 139; 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO. 359/ BANG / 2018 ASSESSMENT YEAR : 2009 - 10 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(1), DAVANGERE. VS. SHRI C.S. PRASAD, PROP. SRINIVASA & CO., BANGALORE ROAD, CHALLEKERE. (CHITRADURGA DIST.). PAN: AJZPP 6365P APP ELL ANT RESPONDENT APPELLANT B Y : DR. P.V. PRADEEP KUMAR, ADDL.CIT(DR)(ITA T), BENGALURU. RES PO NDENT BY : MS. MRINALINI R. , ADVOCATE DATE OF HEARING : 22 . 0 1 . 2 0 1 9 DATE OF PRONOUNCEMENT : 15 . 02 . 2 0 1 9 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDE R DATED 20.09.2017OF THE CIT(APPEALS), DAVANGERE RELATING T O ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL THE REVENUE HAS CHALLENGED THE OR DER OF THE CIT(APPEALS) WHEREBY THE CIT(A) CANCELLED THE ORDER OF THE AO IMPOSING ITA NO. 359/BANG/2018 PAGE 2 OF 6 PENALTY ON THE ASSESSEE U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT). 3. THERE IS A DELAY OF 29 DAYS IN FILING THIS APPE AL. THE DELAY IN FILING THE APPEAL IS EXPLAINED AS OWING TO ADMINISTRATIVE DIFFICULTIES. THE DELAY IS NOT INORDINATE AND IS CONDONED ACCEPTING THE REASON S GIVEN IN THE AFFIDAVIT FILED BY THE OFFICER CONCERNED. 4. AS FAR AS THE MERITS OF THE APPEAL OF THE REVEN UE ARE CONCERNED, THE FACTS ARE THAT PENALTY WAS IMPOSED ON THE ASSESSEE IN RESPECT OF AN ADDITION OF RS.75 LACS TO THE TOTAL INCOME OF THE A SSESSEE. THE ASSESSEE IS AN INDIVIDUAL. HE WAS DURING THE RELEVANT PREVI OUS YEAR ENGAGED IN THE BUSINESS OF ACTING AS CANVASING AGENT FOR EDIBLE SE EDS AND EDIBLE OILS UNDER THE NAME AND STYLE OF M/S. SRINIVASA & CO. O N 12.9.2009 WHEN THE ASSESSEE WAS TRAVELLING FROM CHALLEKERE, KARNATAKA TO ERODE, TAMIL NADU, HE WAS INTERCEPTED BY THE POLICE AND A SUM OF RS.75 LACS WHICH HE WAS CARRYING WITH HIM WAS SEIZED BY THE POLICE. THE AS SESSEE EXPLAINED THAT THE SUM IN QUESTION WAS MONEY OF PERSONS WHO HAD EN TRUSTED IT TO HIM FOR PURCHASE OF SF SEEDS. BASED ON THE AFORESAID SEIZU RE, THE INCOME TAX DEPARTMENT CARRIED OUT SURVEY U/S.133A OF THE ACT O N THE ASSESSEE ON 13.2.2009. IN HIS STATEMENT BEFORE THE AO RECORDED ON 16.2.2009, HE MAINTAINED THAT THE MONEY IN QUESTION DID NOT BELON G TO HIM AND BELONGED TO VARIOUS PARTIES FOR WHOM HE WAS TO PURCHASE SF S EEDS. LATER ON, THE ASSESSEE OFFERED TO TAX THE SUM OF RS.75 LACS AS HI S INCOME AND PAID TAXES THEREON BY FILING A REVISED RETURN. IT HAS B EEN THE STAND OF THE ASSESSEE THAT NOTWITHSTANDING THE FACT THAT THE SUM OF RS.75 LACS WAS OFFERED TO TAX, IT WAS FOR THE REASON THAT THE ASSE SSEE WAS NOT ABLE TO PRODUCE THE PARTIES FROM WHOM HE RECEIVED THE SUM O F RS.75 LACS AND NOT FOR THE REASON THAT IT WAS HIS MONEY FROM SOURCES W HICH HE COULD NOT EXPLAIN (UNEXPLAINED MONEY). ITA NO. 359/BANG/2018 PAGE 3 OF 6 5. IT IS IN RESPECT OF THE AFORESAID ADDITION, PEN ALTY PROCEEDINGS WERE INITIATED U/S.271(1)( C) OF THE ACT AND PENALTY WAS LEVIED BY THE AO BY ORDER DATED 31.5.2012. IN THE APPEAL FILED AGAINST THE S AID ORDER, THE ASSESSEE HAS SPECIFICALLY RAISED GROUND NO.2 BEFORE CIT(APPE ALS) CONTENDING THAT THE SHOW CAUSE NOTICE ISSUED U/S.274 OF THE ACT WAS DEFECTIVE IN AS MUCH AS THE SPECIFIC CHARGE AGAINST THE ASSESSEE HAS NOT BEEN SPELT OUT IN THE SAID NOTICE AND SUCH DEFECT RENDERS THE ORDER IMPOS ING PENALTY AS ILLEGAL, NULL AND VOID. THE CIT(A) HOWEVER CANCELLED THE PE NALTY ON THE GROUND THAT THE REVISED RETURN WAS NOT VALID IN THE EYE OF LAW BECAUSE THE ORIGINAL RETURN FILED BY THE ASSESSEE ITSELF WAS INVALID AND THEREFORE NO PENALTY COULD BE IMPOSED. THE FOLLOWING WERE THE RELEVANT FINDINGS OF THE CIT(A):- 6A. I FULLY AGREE WITH THE ARGUMENT OF THE AR AND AS THE RETURN OF INCOME FILED ON 22/01/2010 WAS NOT IN ACC ORDANCE WITH THE PROVISIONS OF SEC.139(1), SECOND RETURN OF INCO ME FILED BECOMES INVALID AS PER THE PROVISIONS OF SEC.139 OF THE I T ACT. THE FURNISHING OF A REVISED RETURN IS PROVIDED BY S UB-SECTION (5) OF SECTION 139. ACCORDING TO THIS SUB-SECTION 'ANY PER SON HAVING FURNISHED A RETURN UNDER SUB-SECTION (1) OR SUB-SEC TION (2)' MAY FURNISH A REVISED RETURN AT ANY TIME BEFORE THE ASS ESSMENT IS MADE IF HE DISCOVERS ANY OMISSION OR ANY WRONG STATEMENT IN THE ORIGINAL RETURN. THE VERY FACT THAT THIS RIGHT IS GIVEN TO A PERSON WHO HAS FILED A RETURN UNDER SUB-SECTION (1) OR SUB-SECTION (2) OF SECTION 139 MEANS BY NECESSARY IMPLICATION THAT SUCH A RIGH T IS DENIED TO A PERSON WHO FILES THE RETURN UNDER SECTION 139 (4). IT SHOULD ALSO BE NOTED THAT WHERE A BELATED RETURN IS FILED U/S 139( 4), NO REVISED RETURN U/S 139(5) CAN BE FILED AS ALSO HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF JAGDISH CHANDRA SINHA V. CIT 220 ITR 67 (SC) . 6B. IN VIEW OF THE FACTS, I HOLD THAT LEVY OF PEN ALTY HAS NO LEGS TO STAND. THUS, THE GROUND SUCCEEDS. ITA NO. 359/BANG/2018 PAGE 4 OF 6 6. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX(APP EALS), DAVANGERE, IS OPPOSED TO THE LAW AND NOT ON THE FAC TS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEAL) ERRED IN DELETING THE ADDITION MADE BY THE AO PURELY ON TECHNICAL GROUNDS WITHOUT GIVING R EASONS AS TO HOW THE DECLARATION WAS VOLUNTARY BY THE ASSESSEE. THE CIT(A) HAS NOT DISCUSSED THE MERITS OF THE CASE IN TERMS OF IN TENTIONAL CONCEALMENT AS PER PROVISIONS OF SECTION 271(1)(C). 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED U PON, THE ORDER OF THE CIT(A) MAY BE REVERSED AND THAT ASSESS MENT ORDER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OTHER GROUNDS OR BEFORE HEARING OF THE APPEAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT WITHOUT GOING INTO THE MERITS OF THE BASIS ON WHICH CIT(APPEALS) HAS CANCELLED THE ORDER IMPOSING PENALTY PASSED BY THE AO, THE PENALTY LEVIED IS NOT SUSTAINABLE FOR THE REASON THAT THE SHOW CAU SE NOTICE U/S.274 OF THE ACT BEFORE IMPOSING PENALTY WAS DEFECTIVE AND SUCH DEFECT WOULD HAVE THE EFFECT OF RENDERING THE ORDER IMPOSING PENALTY AS I LLEGAL, NULL AND VOID AS HELD BY THE HONBLE KARNATAKA HIGH COURT. IN TERMS OF RULE 27 OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963, THE TRIB UNAL CAN UPHOLD THE ORDER OF THE CIT(A) ON GROUNDS DECIDED AGAINST THE ASSESSEE (IN THIS CASE GROUND NO.2 RAISED BY ASSESSEE BEFORE CIT(A) WAS NO T ADJUDICATED AND HENCE DEEMED TO HAVE BEEN DISMISSED). ITA NO. 359/BANG/2018 PAGE 5 OF 6 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFOR E US THAT THE SHOW CAUSE NOTICE ISSUED U/S 274 OF THE ACT BEFORE IMPOS ING PENALTY DOES NOT CONTAIN THE SPECIFIC CHARGE AGAINST THE ASSESSEE, N AMELY, AS TO WHETHER THE ASSESSEE WAS GUILTY OF HAVING CONCEALED PARTICU LARS OF INCOME OR HAVING FURNISHED INACCURATE PARTICULARS OF INCOME. A COPY OF THE SHOW CAUSE NOTICE U/S 274 OF THE ACT WAS FILED BEFORE US AND PERUSAL OF THE SAME REVEALS THAT THE AO HAS NOT STRUCK OUT THE IRRELEVA NT PORTION IN THE SHOW CAUSE NOTICE AND THEREFORE THE SHOW CAUSE NOTICE DO ES NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE AS TO WHETHER THE CHARG E IS OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. 9. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENT ION TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS IN ITA NO.380 OF 2015 DATED 23.11.2015 WHEREIN THE HONBLE KARNATAKA HIGH COURT, FOLLOWING ITS OWN DECISION IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 IT R 565 , TOOK A VIEW THAT IMPOSING OF PENALTY U/S 271(1)(C) OF THE ACT I S BAD IN LAW AND INVALID FOR THE REASON THAT THE SHOW CAUSE NOTICE U/S 274 OF TH E ACT DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE AS TO, WHETHER IT I S FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE LD. COUNSEL FURTHER BROUGHT TO OUR NOTICE THAT AS A GAINST THE DECISION OF THE HONBLE KARNATAKA HIGH COURT THE REVENUE PREFERRED AN APPEAL IN SLP IN CC NO.11485 OF 2016 AND THE HONBLE SUPREME COURT BY ITS ORDER DATED 05.08.2016 DISMISSED THE SLP PREFERRED BY THE DEPARTMENT. 10. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED CO UNSEL FOR THE ASSESSEE AND ARE OF THE VIEW THAT THE SHOW CAUSE NO TICE ISSUED IN THE PRESENT CASE U/S 274 OF THE ACT DOES NOT SPECIFY TH E CHARGE AGAINST THE ASSESSEE AS TO, WHETHER IT IS FOR CONCEALING PARTIC ULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE SH OW CAUSE NOTICE U/S 274 ITA NO. 359/BANG/2018 PAGE 6 OF 6 OF THE ACT DOES NOT STRIKE OUT THE INAPPROPRIATE WO RDS. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IMPOSITION O F PENALTY CANNOT BE SUSTAINED. THE PLEA OF THE LD. COUNSEL FOR THE ASSE SSEE THAT IN SUCH CIRCUMSTANCES PENALTY U/S.271(1)(C) OF THE ACT CANN OT BE IMPOSED, HAS TO BE ACCEPTED, AS SUCH A PLEA IS BASED ON THE DECISIO NS REFERRED TO BY THE LEARNED COUNSEL FOR THE ASSESSEE. WE, THEREFORE, HO LD THAT IMPOSITION OF PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED AND THE SAME WAS RIGHTLY CANCELLED BY THE CIT(A). 11. IN THE RESULT, APPEAL BY THE REVENUE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF FEBRUARY, 2019. SD/- SD/- ( B.R. BASKARAN ) ( N.V . VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 15 TH FEBRUARY, 2019. / D ESAI S MURTHY / COPY TO: 1 . APPELLANT 2. RESP O NDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.