M/s. Tefal India Household Appliances Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 3727/DEL/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9341 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 08-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILESH KUMAR
• Keywords: Retrospective amendment; Question of law
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.-3727/DEL/2017 ( ASSESSMENT YEAR: 2005-06) TEFAL INDIA HOUSEHOLD APPLIANCES PVT. LTD. A-25, 1 ST FLOOR, REAR TOWER, MOHAN COOPERATIVE INDUSTRIAL ESTATE, MATHURA ROAD NEW DELHI PAN : AAACT2568D VS ACIT CIRCLE-16(1) NEW DELHI ASSESSEE BY SHRI PRADIP DINODIA, CA, SH. R.K. KAPOOR, CA REVENUE BY SHRI SHAILESH KUMAR , SR . DR ORDER PER N.S.SAINI, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-9, NEW DELH I DATED 06.03.2017 FOR ASSESSMENT YEAR 2005-06. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS. 32,8 8,663/- U/S DATE OF HEARING 12.12.2018 DATE OF PRONOUNCEMENT 17.12.2018 2 ITA N O. 3727/DEL/2017 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER OBSERVED THAT WHILE MAKING THE ASSESSMENT FOR THE ASSESSMENT YEAR UNDER APPEAL BY DISALLOWING THE EXP ENSES OF RS. 69,74,864/- OUT OF TOTAL EXPENSES OF RS. 70,08, 764/-. FURTHER DISALLOWANCE WAS MADE OF RS. 7,67,758/- UND ER THE HEAD WARRANTY PROVISIONS. FURTHER ADDITION OF RS. 12,44,642/- WAS MADE UNDER THE HEAD SUNDRY CREDITO RS. THE ASSESSING OFFICER OBSERVED THAT HE WAS OF THE OPINI ON THAT IN VIEW OF THE AFORESAID UNDISPUTED DISALLOWANCES / AD DITIONS THERE IS SUFFICIENT MATERIAL ON RECORD TO PROVE THA T ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME AND HAS ALSO FURNISHED INACCURATE PARTICULARS THEREOF. THEREFORE , HE LEVIED PENALTY U/S 271(1)(C) OF THE ACT OF RS. 32,88,663/ - BEING HUNDRED PERCENT OF THE TAX SOUGHT TO BE EVADED. 4. ON APPEAL THE CIT(A) CONFIRMED THE ACTION OF THE AO ON THE GROUND THAT DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAD NOT CARRIED OUT ANY BUSINESS ACTIVITY AND HAD CLAIMED EXPENDITURE ON ACCOUNT OF BUSINESS. THE ASS ESSEE FAILED TO FURNISH ANY DETAILS BEFORE THE ASSESSING OFFICER AND ALSO BEFORE HIM DURING THE APPEAL PROCEEDINGS. 5. BEFORE US THE LD. AUTHORISED REPRESENTATIVE SHRI PRADIP DINODIA, CA, SH. R.K. KAPOOR, CA ARGUED THAT IN THE PENALTY ORDER, THE ASSESSING OFFICER IN PARA 4 AT PAGE 3 OF THE ORDER HAS STATED AS UNDER :- 3 ITA N O. 3727/DEL/2017 THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME AND HAS ALSO FURNISHED INACCURATE PARTICULARS THEREOF. HE SUBMITTED THAT THE HONBLE KARNATAKA HIG H COURT IN THE CASE OF VEERBHADRAPPASANGAPPA & CO. & OTHERS (2 013) 359 ITR 565 (KARN) HAS HELD THAT THE SHOW CAUSE NOT ICE U/S 274 OF THE ACT DOES NOT SPECIFY AS TO THE EXACT CHA RGE VIZ., WHETHER THE CHARGE IS THAT THE ASSESSEE HAS FURNIS HED INACCURATE PARTICULARS OF INCOME OR CONCEALED PAR TICULARS OF INCOME BY STRIKING OUT THE IRRELEVANT PORTION OF P RINTED SHOW CAUSE NOTICE, THEN THE IMPOSITION OF PENALTY ON THE BASIS OF SUCH INVALID SHOW CAUSE NOTICE CANNOT BE SUSTAINED. THE ABOVE RULING HAS ALSO BEEN RELIED BY KOLKATA I TAT IN CASE OF SUFAPRASANNA BHATTACHARYA VS. ACIT [ITA NO. 1303/KOL/2010]. RECENTLY HONBLE SC IN CASE OF VEERBHADRAPPASANGAPPA& CO. [TS-381-SC-2016 ] DISMISSED THE REVENUE SLP AGAINST KARNATAKA HC JUDGEMENT ON L AW OF PENALTY. 6. HE SUBMITTED THAT IN THE CASE OF THE ASSESSEE, T HE ASSESSING OFFICER IN THE PENALTY ORDER HAS HELD THA T THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOM E AND HAS ALSO FURNISHED INACCURATE PARTICULARS THEREOF FOR LEVY PENALTY U/S 271(1)(C) OF THE ACT. THEREFORE, IN VIEW OF THE REVISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF VEERBHADRAPPASANGAPPA & CO. & ORS. (SUPRA) THE PENA LTY LEVIED IS LIABLE TO BE DELETED. 4 ITA N O. 3727/DEL/2017 7. THE DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVER T THE ABOVE SUBMISSION OF LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . WE FIND THAT THE FACTS IN THE PRESENT APPEAL ARE NOT IN DISPUTE AND THE ASSESSING OFFICER IN THE ORDER PASSED U/S.271(1)(C) DATED 25.3.2008 LEVIED PENALTY OF RS.RS.32,88,663/-. 9. 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 R EVENUE AGAINST THE JUDGMENT RENDERED BY HON'BLE HIGH COURT OF KARNATAKA WHEREBY IDENTICAL ISSUE WAS DECIDED IN FA VOUR OF THE ASSESSEE. OPERATIVE PART OF THE JUDGMENT IN CA SE 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 RAI SING THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLI CITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATE D FOR FURNISHING OJ INACCURATE PARTICULARS OR THAT FOR 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 ? (2 WHETHER, ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN. HOLDING THAT THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 27 1(1)(C) IS HAD IN LAW AND. INVALID INSPITE THE AMENDMENT OF SECTION 271(1 B) WITH RETROSPECTIVE EFFECT AND BY V IRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIAT ED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? 5 ITA N O. 3727/DEL/2017 (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE AP PEALS 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 PARTICULA RS 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(1)(C) OF THE INCO ME TAX ACT, 1961 (FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. .THE TRIBUNAL, WH ILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED 01 THE DERISION OF THE DIVISION BENCH OF THIS COURT RENDER ED 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 JU DGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPI NION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL F OR DETERMINATION BY THIS COURT, THE APPEAL IS ACCORDIN GLY DISMISSED.' 10. BARE PERUSAL OF THE NOTICE ISSUED U/S 27I(1) (C) APPARENTLY GOES TO PROVE THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUING THE NOTICE U/S 274/271(1)(C) OF THE ACT WITHOUT SPECIFYING WHETHER THE ASSESSEE HAS CONCEAL ED ''PARTICULARS OF INCOME' OR ASSESSEE HAS FURNISHED 'INACCURATE PARTICULARS OF INCOME', SO AS TO PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE SHOW CAUSE NOTICE. RATH ER NOTICE IN THIS CASE HAS BEEN ISSUED IN A STEREOTYPED MANNER W ITHOUT 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 A CT. 6 ITA N O. 3727/DEL/2017 11. THE PENALTY PROVISIONS OF SECTION 27L(1)(C) OF THE ACT ARE ATTRACTED WHERE THE ASSESSEE HAS CONCEALED THE PART ICULARS 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 CARRY DIFFERENT MEANIN GS. 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 ACCO RDINGLY. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNA THA 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'BLEHIGH COURT, WHERE THE ASSESSI NG OFFICER PROPOSED TO INVOKE FIRST LIMB BEING CONCEALMENT, TH EN THE NOTICE HAS TO BE APPROPRIATELY MARKED. THE HON'BLE HIGH CO URT HELD THAT THE STANDARD PROFORMA OF NOTICE UNDER SECTION 274 O F THE ACT WITHOUT STRIKING OF THE IRRELEVANT CLAUSES WOULD LE AD TO AN INFERENCE OF NON-APPLICATION OF MIND BY THE ASSESSI NG OFFICER. THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROF F VS. JCIT, 291 ITR 519(SC) HAS ALSO NOTICED THAT WHERE THE ASS ESSING OFFICER ISSUES NOTICE UNDER SECTION 274 OF THE ACT IN THE STANDARD PROFORMA AND THE INAPPROPRIATE WORDS ARE NOT DELETE D, THE SAME WOULD POSTULATE THAT THE ASSESSING OFFICER WAS NOT SURE AS TO WHETHER HE WAS TO PROCEED ON THE BASIS THAT THE ASS ESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF INCOME. ACCORDING TO THE HON'BLE SUP REME COURT, IN SUCH A SITUATION, LEVY OF PENALTY SUFFERS FROM N ON-APPLICATION OF MIND. IN THE BACKGROUND OF THE AFORESAID LEGAL POSI TION AND, HAVING REGARD TO THE MANNER IN WHICH THE ASSESSING OFFICER HAS 7 ITA N O. 3727/DEL/2017 ISSUED NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT DATED 15.1.2014 WITHOUT STRIKING OFF THE IRRELEVANT WORDS , THE PENALTY PROCEEDINGS SHOW ANON-APPLICATION OF MIND BY THE AS SESSING OFFICER AND IS, THUS, UNSUSTAINABLE. 12. THE FACTS OF THE PRESENT APPEAL ARE IDENTICAL T O THE FACTS OF THE CASE BEFORE THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SSAS. EMARLD MEADOWS (SUPRA). IN THE INSTANT CASE THE AO WHILE LEVYING PENALTY U/S 271(1)(C) HAS OBSERVED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME AND HAS ALS O FURNISHED INACCURATE PARTICULARS THEREOF. THUS, HE IS NOT SPE CIFIC AS TO WHETHER THE PENALTY IS LEVIED FOR CONCEALMENT OF IN COME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HENCE, RESPECTFULLY FOLLOWING THE QUOTED DECISION OF HONBLE KARNATAKA HIGH COURT, WE CANCEL THE ORDER OF THE ASSESSING OFFICER DATED 25.3.2008 LEVYING PENALTY OF RS..32,88,663/- AND ALLOW THE G ROUND OF APPEAL OF THE ASSESSEE. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 17 TH DECEMBER, 2018 AT NEW DELHI. SD/- SD/- (KULDIP SINGH) (N.S.SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17.12.2018 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 8 ITA N O. 3727/DEL/2017 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 12 .1 2 .2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.12.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 13.12.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 17.12.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 17.12.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 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