SONY DADC MANUFACTURING (INDIA ) P.LTD, NAVI MUMBAI V. ASST CIT 11(1), MUMBAI

ITA 3648/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5380 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2003-2004
• Appeal Filed On: 26-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Principle of natural justice
• Section: 271(1)(c); 143(3); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.3648/M/2016 ASSESSMENT YEAR: 2003-04 M/S. SONY DADC MANUFACTURING (INDIA) PVT. LTD., C-106, TRANS THANE CREEK, MIDC INDUSTRIAL AREA, PAWANE VILLAGE, NAVI MUMBAI 400 705 PAN: AACCS1614B VS. ASSISTANT COMMISSIONER OF INCOME TAX, RANGE-11(1), ROOM NO.439, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NEERAJ SHETH, A.R. REVENUE BY : SHRI CHAUDHARY ARUNKUMAR SINGH, D.R . DATE OF HEARING : 30.04.2019 DATE OF PRONOUNCEMENT : 16.05.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 05.02.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2003-04. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE VAR IOUS GROUNDS OF APPEAL IS REGARDING THE UPHOLDING THE AC TION OF AO BY LD. CIT(A) IN LEVYING PENALTY UNDER SECTION 271(1)( C) OF THE ACT. THE ASSESSEE HAS CHALLENGED THE PENALTY ON VARIOUS GROUNDS ON LEGAL ISSUE AS WELL AS ON MERITS. ITA NO.3648/M/2016 M/S. SONY DADC MANUFACTURING (INDIA) PVT. LTD. 2 3. THE FACTS IN BRIEF ARE THAT THE PENALTY WAS INIT IATED IN THE ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) READ WITH SECTION 254 OF THE ACT ON 21.03.2014 WHEREIN THE PENALTY U/ S 271(1)(C) OF THE ACT HAS BEEN INITIATED FOR BOTH THE LIMBS I. E. FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS WELL AS FOR CONCEALMENT OF INCOME AS HAS BEEN STATED IN PARA 4.5, 5.5 & 6.5 OF THE ASSESSMENT ORDER DATED 21.03.2014. BESIDES , THE NO TICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT WAS ISSUED ON 21.03.2014 WITHOUT STRIKING OFF INAPPROPRIATE OR RE DUNDANT PART OF THE NOTICE. IN OTHER WORDS, THE NOTICE WAS ISSU ED IN A STANDARD FORMAT FOR CONCEALMENT OF PARTICULARS OR F OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREAFTER, T HE PENALTY WAS LEVIED UNDER SECTION 271(1)(C) VIDE ORDER DATED 23. 09.2014 BY INVOKING EXPLANATION 1 AND 4 TO SECTION 271(1)(C) O F THE ACT. 4. THE LD. CIT(A) ALSO DISMISSED THE APPEAL OF THE ASSESSEE AFTER TAKING INTO ACCOUNT THE SUBMISSIONS AND CONTE NTIONS RAISED DURING THE APPELLATE PROCEEDINGS AND HENCE T HE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE THE BEN CH THAT THE ORDER PASSED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT DATED 23.09.2014 IS INVALID AND BAD IN LAW FOR TH E REASON THAT AO INITIATED PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 21.3.2014 FOR FILING OF INACCURATE PARTICULARS OF INCOME AS WELL AS FOR CONCEALMENT OF INCOME AND THEREAFTER THE NOTICE UNDER SECTION 274 READ WITH S ECTION 271 DATED 21.3.2014 WAS ISSUED WITHOUT MENTIONING THERE IN THE PARTICULAR LIMB ON WHICH THE PENALTY WAS PROPOSED T O BE LEVIED. IN OTHER WORDS, THE NOTICE WAS ISSUED IN A MECHANIC AL MANNER ITA NO.3648/M/2016 M/S. SONY DADC MANUFACTURING (INDIA) PVT. LTD. 3 WITHOUT APPLICATION OF MIND AS THE AO FAILED TO STR IKE OFF THE INAPPROPRIATE WORDS IN THE NOTICE. THUS THE PENALT Y NOTICE WAS ISSUED UNDER BOTH THE LIMBS I.E. FOR CONCEALMENT OF PARTICULARS OF INCOME AND ALSO FOR FURNISHING OF INACCURATE PARTI CULARS OF INCOME. THEREAFTER, THE LD. A.R. FURTHER STATED TH AT THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) DATED 23.09.20 14, THE AO LEVIED THE PENALTY FOR CONCEALMENT OF PARTICULARS O F INCOME WHICH IS BLATANTLY WRONG AND AGAINST THE RATIO LAID DOWN BY THE VARIOUS JUDICIAL FORUMS. IN DEFENCE OF HIS ARGUMEN T, THE LD. A.R. RELIED ON THE FOLLOWING CASE LAWS: CIT VS. SSA'S EMERALD MEADOWS (SC) 73 TAXMANN.COM 248 DATED 5.8.2016 MRS. PIEDADE PERINCHERY (BOMHC) ITANO. 1310 OF 20 14 DATED 10.01.2017 SHRI SAMSON PERINCHERY VS. CIT (BOM HC ) 392 ITR 4 DATED 05.01.2017 CIT VS. SSA'S EMERALD MEADOWS (KAR HC) 73 TAXMANN .COM 241 DATED 23. 11. 20 15 CIT VS. MANJUNATHA COTTON & GINNING FACTORY 35 TA XMANN.COM 250 (KARNATAKA) K.M. BHATIA VS. CIT 62 TAXMAN 430 (GUJ.) CIT VS. LAKHDHIR LALJI 85 ITR 77 (GUJ.) PR.CITVS.BAISETTYREVATHI(APHC)ITANO684OF2016DATED L3.7.2017 SHRI S. NARENDRAKUMAR & CO. VS. ACIT- ITA NO.7334 /MUM/2016 DATED 22.03.2019 ACIT VS. BHUSHANKAMALNAYANVORA [2017] 60 ITR(T) 8 2 (MUMBAI -TRIB.) ORBIT ENTERPRISES VS. ITO (ITAT MUMBAI) ITA 1596& 1597 /M/2014 DATED 01.09.2017 JEHANGIR HC JEHANGIR VS. ACIT - ITA NO. 1261/MUM/ 201 1 DATED 17.05.2017 MEHERJEE CASSINATH HOLDINGS (P.) LTD. VS. ACIT (M UMBAI TRIB.) DATED 28.04.2017 PRINCE CONSULTANCY (P.) LTD. VS. DCIT [2017] 54 I TR(T) 334 (MUMBAI -TRIB.) EON AVIATION PVT LTD VS. DCIT (MUM ITAT) 301 L/M/ 2016 DHARNI DEVELOPERS VS. ACIT [2015] 61 TAXMANN.COM 208 (MUMBAI -TRIB.) CMS INFO SYSTEM PVT LTD VS ACIT ITA NO. 5391 OF 2017(MUM TRI) QUIKR INDIA PVT LTD. VS DCIT ITA NO. 1046 OF 201 7(MUM TRI) 6. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF AUTHORITIES BELOW BY SUBMITTING THAT THE ORDER PASS ED BY AO UNDER SECTION 271(1)(C) WAS AS PER THE PROVISIONS O F THE ACT AND WAS RIGHTLY UPHELD BY THE LD. CIT(A). THE LD. D.R. SUBMITTED THAT THE PENALTY PROCEEDINGS WERE INITIATED BY THE AO IN THE ASSESSMENT ORDER FOR FURNISHING OF INACCURATE PARTI CULARS OF INCOME AND FOR CONCEALMENT OF INCOME. THEREAFTER, THE NOTICE ITA NO.3648/M/2016 M/S. SONY DADC MANUFACTURING (INDIA) PVT. LTD. 4 UNDER 274 READ WITH SECTION 271(1)(C) OF THE ACT WA S ISSUED WHEREIN BOTH THE LIMBS OF THE PENALTY WERE MENTIONE D AND THUS THERE WAS NO DEFECT WHATSOEVER IN THE SAID NOTICE. THEREAFTER, THE PENALTY ORDER DATED 23.09.2014 WAS PASSED FOR CONCEALMENT OF PARTICULARS OF INCOME BY INVOKING EXP 1 AND 4 . SINCE THE AO HAS CORRECTLY INITIATED THE PENALTY PROCEEDINGS BY ISSUING NOTICE UNDER SECTION 274 READ WITH SECTION 271 AND THE ASS ESSEE DULY PARTICIPATED IN THE PENALTY PROCEEDINGS AND THE CON TENTIONS RAISED BY THE ASSESSEE WERE DULY CONSIDERED. THERE FORE, IT IS NOT OPEN TO THE ASSESSEE TO CLAIM THAT NO PROPER OPPORT UNITY WAS GIVEN AS PARTICULAR LIMB ON WHICH THE PENALTY WAS P ROPOSED TO BE LEVIED WAS NOT MENTIONED. THE LD. A.R. RELIED O N THE FOLLOWING DECISIONS: 1. UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS (2007) 295 ITR 244 2. RL TRADERS VS. ITO (2017-TIOL-2583-HC-DEL-IT) 3. CIT VS. ZOOM COMMUNICATION (P) LTD. (191 TAXMAN 179 (DELHI)/(2010) 327 ITR 510 (DELHI)/(2010) 233 C TR 465 4. CIT VS. MOSER BAER INDIA LTD. (184 TAXMAN 8 (SC) / (2009) 315 ITR 460 (SC)/(2009) 222 CTR 213 5. CIT VS. GOLD COIN HEALTH FOOD (P.) LTD. (172 TAX MAN 386 (SC)/(2008) 304 ITR 308 (SC)/(2008) 218 CTR 359 ) 6. MAK DATA P. LTD. VS. CIT (38 TAXMANN.COM 448 (SC)/(2013) 358 ITR 593 (SC)/(2013) 263 CTR 1 7. B.A. BALASUBRAMANIAM & BROS. CO VS. CIT (116 TAXMAN 842, 236 ITR 977, 157 CTR 556) 8. CIT VS. GATES FOAM & RUBBER CO (91 ITR 467) 9. STEEL INGOTS LTD. VS. CIT (296 ITR 228) 10. CIT VS. ESCORTS FINANCE LTD. (183 TAXMAN 453 (DELHI)/(2010) 328 ITR 44 (DELHI)/(2009) 226 CTR 10 5 11. CIT VS. R.M.P. PLASTO (P.) LTD. (184 TAXMAN 372 (SC)/(2009) 313 ITR 397 (SC)/(2009) 227 CTR 635) 12. K.P. MADHUSUDHANAN VS. CIT (2010) 118 TAXMAN 32 4 (SC)/(2001) 251 ITR 99 (SC)/(2001) 169 CTR 489 (SC) ITA NO.3648/M/2016 M/S. SONY DADC MANUFACTURING (INDIA) PVT. LTD. 5 7. THE LD. D.R. ALSO FILED THE WRITTEN SUBMISSIONS AT THE TIME OF HEARING. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE AO INITIAT ED PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER DATED 23.3.2014 FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND FOR CONCEALMENT OF INCOME IN STATED IN PARA 4.5, 5.5 & 6.5 OF THE ASSESSMENT ORDER DATED 21.03.2014 BY ISSUING NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT DATED 21.3.2014 WHEREIN THE AO HAS NOT MENTIONED THE PARTICULAR LIM B UNDER WHICH THE PENALTY WAS PROPOSED TO BE LEVIED. IN OT HER WORDS, THE NOTICE WAS ISSUED IN A STANDARD FORMAT WITHOUT ANY APPLICATION OF MIND AND THE INAPPROPRIATE/REDUNDANT WORDS WERE NOT DELETED BY THE AO. THEREAFTER, THE PENALTY WAS IMP OSED FOR CONCEALMENT OF PARTICULARS OF INCOME BY INVOKING EX P 1 AND 4 TO SECTION 271(1) OF THE ACT. IN OUR OPINION, BY THE SE ACTS OF THE AO IN NOT STRIKING OFF THE INAPPROPRIATE LIMB IN TH E NOTICE IS CLEAR CUT IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AS THE ASSESSEE WAS DEPRIVED OF REASONABLE OPPORTUNITY TO RESPOND A ND DEAL WITH THE PARTICULAR CHARGE ON WHICH THE PENALTY WAS LEVI ED. IN OUR VIEW, THE PENALTY ORDER IN SUCH A SCENARIO IS CLEAR LY BAD IN LAW AND CAN NOT BE SUSTAINED. THE CASE OF THE ASSESSEE IS CLEARLY SUPPORTED BY THE DECISION RELIED UPON BY THE ASSESS EE AS STATED HEREINABOVE IN THE CASE OF SHRI SAMSON PERINCHERY V S. CIT (SUPRA) AND CIT VS. MRS. PIEDADE PERINCHERY (BOM-HC ) (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS HELD THAT WHERE T HE AO HAS FAILED TO STATE PARTICULARLY THE ONE OF THE TWO LIM BS ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED THEN THE PENALTY ORDER WOULD BE BAD IN LAW AS THE ASSESSEE WAS NOT GIVEN PROPER OPPORTUNITY ITA NO.3648/M/2016 M/S. SONY DADC MANUFACTURING (INDIA) PVT. LTD. 6 TO RESPOND TO THE CHARGE ON WHICH THE PENALTY WAS L EVIED. THE SIMILAR RATIO HAS BEEN LAID DOWN IN THE CASE OF CIT VS. SSA SSA'S EMERALD MEADOWS (SUPRA)(KAR) WHICH HAS BEEN AFFIRME D BY THE HONBLE SUPREME COURT IN 73 TAXMAN.COM 248. WE HAV E ALSO PERUSED THE WRITTEN SUBMISSIONS FILED BY THE LD. D. R. AND ALSO THE CASE LAWS REFERRED BY THE LD. D.R. AND OBSERVE THAT THE RATIO LAID DOWN IN THE VARIOUS DECISIONS AS REFERRED TO B Y THE LD. D.R. IS NOT OF ANY HELP TO THE REVENUE IN VIEW OF ISSU E BEING COVERED BY THE DECISIONS OF THE HONBLE BOMBAY HIGH COURT AND HONBLE APEX COURT. ACCORDINGLY, WE HEREBY DIRECT THE AO T O DELETE THE PENALTY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 16.05.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 16.05.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.