Shri Ramesh Chandra Pathak, Kanpur V. Income Tax Officer- 4(1), Kanpur

ITA 361/LKW/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7878 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAKESH GARG SHRI C K SING
• Keywords: Principle of natural justice; Bonafide belief; Question of law; Reasonable cause
• Section: 271(1)(c); 27

Judgement Text

I.T.A. NO.361/LKW/2018 ASSESSMENT YEAR:2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.361/LKW/2018 ASSESSMENT YEAR:2013-2014 SHRI RAMESH CHANDRA PATHAK, 1/476, AWAS VIKAS NO. 3, AMBEDKARPURAM, KANPUR. PAN:AIDPP 9972 F VS. INCOME TAX OFFICER-4(1), KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF LEARNED CIT(A)-I, KANPUR DATED 26/09/2017 PERTAINING TO ASS ESSMENT YEAR 2013- 2014. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LA W IN UPHOLDING THE LEVY OF PENALTY OF RS.40,000/- UNDER SECTION 27(1)(C) OF THE IT. ACT, 1961, WHICH PENALTY IS BAD IN LAW AND BE DELETED. 2. BECAUSE THERE BEING NEITHER ANY CONCEALMENT OF PARTICULARS OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE LEVY OF PENALTY OF RS.40,000/- UNDER SECTION 27 1(1)(C) OF THE IT. ACT, 1961. APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY SHRI C. K. SINGH, D.R. DATE OF HEARING 16/07/2019 DATE OF PRONOUNCEMENT 19 / 07 /201 9 I.T.A. NO.361/LKW/2018 ASSESSMENT YEAR:2013-14 2 3. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THE EXPLANATION FURNISHED BEFORE THE ASSESSING OFFICER AS WELL AS THE WRITTEN SUBMISSIONS FILED BEFORE HIM AND HAS AR BITRARILY HELD, THAT THE ASSESSEE IS LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. BECAUSE THE EXPLANATION FURNISHED BY THE ASSESSE E HAS NOT BEEN FOUND TO BE FALSE NOR UNTRUE, THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT IS BAD IN LAW AN D BE DELETED. 5. BECAUSE THE ASSESSEE WAS PREVENTED BY SUFFICIENT AND REASONABLE CAUSE BEING UNDER A BONAFIDE BELIEF TOTA LLY DEPENDING UPON THE PERSON FILING THE INCOME-TAX RET URN, THE CIT(A) HAS FAILED TO APPRECIATE THE FACTS AND CIRCU MSTANCES OF THE CASE, THE LEVY OF PENALTY OF RS.40,000/- UNDER SECTION 271(1)(C) IS BAD IN LAW AND BE DELETED. 6. BECAUSE THERE BEING NO SATISFACTION FOR INTIMATI ON OF PENALTY PROCEEDINGS NOR THERE BEING ANY SPECIFIC CH ARGE, THE PENALTY OF RS. 40,000/- IMPOSED US/ 271(1)(C) IS BA D IN LAW AND BE QUASHED. 2. AT THE OUTSET, LEARNED A. R. INVITED OUR ATTENTI ON TO ADDITIONAL GROUND OF APPEAL WHICH WAS FILED BY THE ASSESSEE ON 15/07/ 2019 AND IT WAS ARGUED THAT SINCE THE GROUND OF APPEAL TAKEN BY THE ASSESS EE IS COMING OUT FROM THE FACTS ON RECORD THEREFORE, THE SAME SHOULD BE A DMITTED. RELIANCE IN THIS RESPECT WAS PLACED ON THE JUDGMENT OF HON'BLE SUPRE ME COURT IN THE CASE OF NTPC LIMITED VS. CIT 229 ITR 383 (SC) AND ALSO G AUHATI HIGH COURT IN THE CASE OF ASSAM CO. INDIA LTD. 256 ITR 423. THE ADDITIONAL GROUND OF APPEAL TAKEN BY THE ASSESSEE READS AS UNDER: BECAUSE CHARGE BEING NOT SPECIFIC FOR INITIATION O F PENALTY IN THE NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)( C) OF I.T. ACT, THE PENALTY IMPOSED IS BAD IN LAW AND BE QUASH ED. I.T.A. NO.361/LKW/2018 ASSESSMENT YEAR:2013-14 3 2.1 LEARNED D. R. HAD NO OBJECTION TO THE ADMISSION OF ADDITIONAL GROUND AND THE GROUND COMING OUT FROM THE FACTS OF RECORD, THE SAME WAS ADMITTED AND ASSESSEE WAS ASKED TO PROCEED WITH HIS ARGUMENT S. 3. AT THE TIME OF HEARING BEFORE US, THE LEARNED A. R. OF THE ASSESSEE INVITED OUR ATTENTION TO THE PAPER BOOK FILED WHERE IN SHOW CAUSE NOTICE FOR PENALTY UNDER SECTION 274 READ WITH 271(1)(C) OF TH E ACT WAS PLACED. IT WAS SUBMITTED THAT FROM A PERUSAL OF THIS NOTICE, I T IS CRYSTAL CLEAR THAT THE CHARGE IS NOT SPECIFIC FOR WHICH PENALTY IS LEVIED UNDER SECTION 271(1)(C) OF THE ACT, WHETHER FOR CONCEALMENT OF INCOME OR FOR F URNISHING OF INACCURATE PARTICULARS OF INCOME. THE LEARNED A.R. OF THE ASS ESSEE VEHEMENTLY ARGUED THAT IT IS SETTLED POSITION OF LAW THAT IF NOTICE U NDER SECTION 274 READ WITH 271(1)(C) IS NOT SPECIFIC ABOUT THE CHARGE OR LIMB UNDER WHICH PENALTY IS BEING LEVIED UNDER SECTION 271(1)(C) OF THE ACT, TH EN ANY PENALTY LEVIED ON THE BASIS OF SUCH NOTICE IS BAD IN LAW AND LIABLE T O BE DELETED. LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE ORD ER OF THIS BENCH OF THE TRIBUNAL IN I.T.A. NO.570/LKW/2018 IN THE CASE OF J . S. TOWER VS ACIT, I.T.A. NO.548/LKW/2017 IN THE CASE OF TANEJA RICE & DALL MILLS VS. ACIT AND I.T.A. NO.486/LKW/2016 IN THE CASE OF PANKAJ KUMAR GUPTA VS. INCOME TAX OFFICER. 4. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDERS OF THE AUTHORITIES BELOW. 5. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE R IVAL CONTENTIONS AND AS APPARENT FROM NOTICE UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT, WE FIND THAT THE CHARGE ON WHICH PENALTY IS LE VIED IS NOT SPECIFIC. THE COPY OF SHOW CAUSE NOTICE HAS BEEN MADE PART OF THI S ORDER, WHICH IS AS UNDER: I.T.A. NO.361/LKW/2018 ASSESSMENT YEAR:2013-14 4 FROM A PERUSAL OF THIS NOTICE, IT IS CRYSTAL CLEAR THAT THE CHARGE IS NOT SPECIFIC FOR WHICH PENALTY IS LEVIED UNDER SECTION 271(1)(C) OF THE ACT, WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME. THE NOTICE HAS SPECIFIED BOTH CHARGES I.E. CONCEALM ENT OF INCOME AND I.T.A. NO.361/LKW/2018 ASSESSMENT YEAR:2013-14 5 FURNISHING OF INACCURATE PARTICULARS OF INCOME AND HAS NOT SPECIFIED THE CHARGE FOR WHICH ACTION HAS BEEN TAKEN AGAINST ASSE SSEE. THE NON SPECIFIC NATURE OF NOTICE INDICATES NON APPLICATION OF MIND BY ASSESSING OFFICER. IT IS A SETTLED POSITION OF LAW THAT IF NOTICE UNDER SECT ION 274 READ WITH 271(1)(C) IS NOT SPECIFIC ABOUT THE CHARGE OR LIMB UNDER WHIC H PENALTY IS BEING LEVIED UNDER SECTION 271(1)(C) OF THE ACT, THEN ANY PENALT Y LEVIED ON THE BASIS OF SUCH NOTICE IS BAD IN LAW AND LIABLE TO BE DELETED. 6. THE LAW MANDATES THAT THE AUTHORITY, WHO IS PRO POSING TO IMPOSE PENALTY, SHALL BE CERTAIN AS TO WHAT BASIS PENALTY IS BEING LEVIED AND NOTICE MUST REFLECT THAT SPECIFIC REASON SO THAT ASSESSEE, TO WHOM SUCH NOTICE IS GIVEN, CAN WELL PREPARE HIMSELF REGARDING DEFENCE, WHICH HE LIKES TO TAKE TO SUPPORT HIS CASE. THIS IS EVEN ENSHRINED IN THE PR INCIPLES OF NATURAL JUSTICE AND AS HAS BEEN UPHELD BY HON'BLE APEX COURT AND OT HER HIGH COURTS. I WOULD LIKE TO RELY ON THE FOLLOWING CASES:- (1) CIT VS. SSAS EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 (SC). IN THIS CASE THE HON'BLE APEX COURT LOOKED I NTO THE FACTS BEFORE THEM THAT TRIBUNAL RELYING ON THE DECI SION OF DIVISION BENCH OF HON'BLE KARNATAKA HIGH COURT IN T HE CASE OF CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACT ORY (SUPRA) ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 271(1)(C) OF THE ACT WAS BAD IN LAW AS IT DID NOT SPECIFY UNDER WHICH LIMB OF 271(1)(C) PENALTY PROCE EDINGS HAS BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME. WHEN THE MATTER TRAVELLED UPTO THE HIGH COURT, IT S UPPORTED THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACT ORY (SUPRA) AND DECIDED THAT THERE WAS THEREFORE NO SUB STANTIAL QUESTION OF LAW TO BE DECIDED. THEREAFTER AN SLP W AS FILED BEFORE THE HON'BLE APEX COURT AND THE APEX COURT DI SMISSED THE SLP OF THE REVENUE FINDING NO MERIT THEREIN AND CONFIRMING THE ISSUE IN FAVOUR OF THE ASSESSEE. I.T.A. NO.361/LKW/2018 ASSESSMENT YEAR:2013-14 6 (2) CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACT ORY [2013] 359 ITR 565 (KARN.). IN THIS CASE, IT HAS B EEN CLEARLY MENTIONED AND HELD BY THE HON'BLE HIGH COURT THAT N OTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF TH E ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN 271(1)(C) I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. SENDING PRINT ED FORM WHERE ALL THE GROUNDS MENTIONED WOULD NOT SATISFY T HE REQUIREMENT OF LAW. ASSESSEE SHOULD KNOW THE GROUN DS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, THE P RINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. PENAL TY PROCEEDINGS ARE DISTINCT FROM ASSESSMENT PROCEEDING S THOUGH IT EMANATES FROM THE ASSESSMENT PROCEEDINGS STILL I T IS SEPARATE AND INDEPENDENT PROCEEDINGS ALL TOGETHER. (3) MEHERJEE CASSINATH HOLDINGS PVT. LTD VS. ACIT (ITAT MUMBAI) ITA NO. 2555/MUM/2012, ORDER DATED 28/04/20 17 WHEREIN THE OBSERVATION OF THE BENCH WAS THAT PENAL TY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ARE 'QUASI- CRIMINAL' PROCEEDINGS AND OUGHT TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE. THE NON-STRIKING OF THE IRRELEV ANT PORTION IN THE SHOW-CAUSE NOTICE MEANS THAT THE ASSESSING OFFI CER IS NOT FIRM ABOUT THE CHARGE AGAINST THE ASSESSEE AND THE ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO L IMBS OF S. 271(1)(C) HE HAS TO RESPOND. (4) CHANDRA PRAKASH BUBNA VS. INCOME TAX OFFICER, WARD 27(3), KOLKATA (ITAT KOLKATA BENCH) [2015] 64 TAXMANN.COM 155 WHEREIN IT WAS HELD THAT WHEN THE ASSESSING OFFICER LEVIED PENALTY WITHOUT BRINGING OUT ANY SPECIFIC CHARGE FO R WHICH PENALTY HAD BEEN IMPOSED, PENALTY WAS LIABLE TO BE DELETED. 7. THE SETTLED LEGAL POSITION ON THE ISSUE, AS ENSH RINED IN THE AFORESAID CASES, IS APPARENT AND WE ARRIVE AT THE C ONSIDERED VIEW THAT NOTICE UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT, WHICH HAS NOT SPECIFIED THE CHARGE AND LIMB UNDER WHICH PENALTY S HOULD BE LEVIED, IT IS VOID AB INITIO AND ANY CONSEQUENT PENALTY IMPOSED O N THE BASIS OF SUCH I.T.A. NO.361/LKW/2018 ASSESSMENT YEAR:2013-14 7 NOTICE IS, THEREFORE, ILLEGAL AND BAD IN LAW AND LI ABLE TO BE DELETED. WE, THEREFORE, DIRECT DELETION OF PENALTY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 19/07/2019) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:19/07/2019 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSISTANT REGISTRAR