GUPTA STEEL CORPORATION P.LTD, RAIPUR V. ACIT CC 45, KALYAN

ITA 3729/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7310 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH RAJORE
• Section: 271(1)(c); 143(3)

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 3729/MUM/2017 (ASSESSMENT YEAR 2010-11 ) M/S GUPTA STEEL CORPORATION PVT. LTD. RING ROAD NO.2, VILLAGE GOGAON, NEAR URLA TELEPHONE EXCHANGE, RAIPUR (C.G.)- 492001 PAN: AABCP5835C VS. ACIT CC - 45 ROOM NO. 658, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. APPELLANT RESPONDE NT APPELLANT BY : SHRI ANUJ KISNADWALA (C.A.) RESPONDENT BY : SHRI SATISH RAJORE (SR.DR) DATE OF HEARING : 12.06.2019 DATE OF PRONOUNCEMEN T : 22.07.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-50, [THE LD. CIT(A)], MUMBAI D ATED 22.03.2017 FOR ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE SHOW-CAUSE NOTICE UNDER SECTION 274 READ WIT H SECTION 271 OF THE INCOME TAX ACT, 1961 DATED 28 TH MARCH 2013 IS NULL AND VOID. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF DEALING IN IRON AND STEEL TRADING. THE ASSESSEE FIL ED ITS RETURN OF INCOME ON 15.10.2010 DECLARING LOSS AT RS. 7,47,860/-. THE CA SE WAS SELECTED FOR ITA NO. 3729 MUM 2017-M/S GUPT A STEEL CORPORATION PVT. LTD. 2 SCRUTINY AND THE ASSESSMENT WAS COMPLETED ON 28.03. 2013 UNDER SECTION 143(3) WHEREIN THE LOSS ON ACCOUNT OF PURCHASE AND SALE OF SHARES OF SK ISPAT WAS HELD AS A SHAM TRANSACTION AND THE LONG TERM CA PITAL LOSS WAS NOT ALLOWED TO CARRY FORWARD. THE ASSESSING OFFICER WHILE PASSI NG THE ASSESSMENT ORDER INITIATED THE PENALTY. THE ASSESSING OFFICER LEVIED THE PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED. THE ASSESSING OFFICER WORK ED OUT THE PENALTY OF RS. 2,97,44,556/- VIDE ORDER DATED 30.09.2013. ON APPEA L BEFORE THE LD. CIT (A), THE ACTION OF ASSESSING OFFICER IN LEVYING THE PENA LTY WAS CONFIRMED. HOWEVER, THE LD. CIT(A) DIRECTED THAT TAX SOUGHT TO BE EVADED ON LONG TERM CAPITAL GAIN (LTCG) IS TO BE COMPUTED AT 20% OF LON G TERM CAPITAL LOSS (LTCL). THEREFORE, THE ASSESSING OFFICER WAS DIRECT ED TO RE-COMPUTE THE TAX SOUGHT TO BE EVADED/QUANTUM OF PENALTY. FURTHER AGG RIEVED, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) F OR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OU TSET OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITS THAT THE GROUND OF APPEAL R AISED BY ASSESSEE IS COVERED IN ASSESSEES GROUP CASE IN RADHAKRISHNA RO ADWAYS PVT. LTD. VS. ACIT IN ITA NO. 3728/MUM/2017 DATED 14.03.2019, WH EREIN SIMILAR PENALTY WAS DELETED. ON MERIT, THE LD. AR OF THE AS SESSEE SUBMITS THAT THE LOSS HAS BEEN LAPSED AND THE ASSESSEE HAS NOT CLAIMED SE T OFF OF SUCH LOSS. ACCORDINGLY, THERE IS NO EVASION OF TAX ON CLAIMING AND DISALLOWANCE OF SUCH ITA NO. 3729 MUM 2017-M/S GUPT A STEEL CORPORATION PVT. LTD. 3 LONG TERM CAPITAL LOSS. THE LD. AR OF THE ASSESSEE ALSO FILED THE COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN (ITR) FOR ASSE SSMENT YEAR 2018- 19. IN OTHER ALTERNATIVE SUBMISSION, THE LD. AR OF THE ASSESSEE SUBMITS THAT NO SPECIFIC CHARGE WAS SPECIFIED IN THE NOTICE DATED 2 8.03.2014, ISSUE UNDER SECTION 274 R.W.S. 271(1)(C). THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER HAS NOT SPECIFIED UNDER WHICH LIMB OF CLAUSE (C) OF SECTION 271(1) THE PENALTY WAS INITIATED. ACCORDINGLY, THE LD. AR OF THE ASSESSEE SUBMITS THAT IN ABSENCE OF SPECIFIC CHARGE, THE PEN ALTY LEVIED BY ASSESSING OFFICER IS NOT SUSTAINABLE IN SUPPORT OF HIS SUBMIS SIONS RELIED ON THE DECISION IN ASSESSEES GROUP CASE IN RADHAKRISHNA VS ACIT (I TA NO.3728/M/2017 DATED 14.03.2019) , BOMBAY HIGH COURT IN SAMSON PER INCHARY (ITA NO. 1154 OF 2014), KARNATAKA HIGH COURT IN CIT VS MANJ UNATHA COTTON AND GINNING FACTORY (359ITR 565 KAR) AND ANDHRA PRADESH HIGH COURT IN PCIT VS SMT BAISETTY REVATHI [2017] 398 ITR 88 T& AP). 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE SUBMITS THAT THE ASSESSEE HAS SHOWN A NON-GENUINE T RANSACTION FOR SALE AND PURCHASE OF SHARE. IT IS A CLEAR CASE OF INACCURATE PARTICULARS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO DELIBERATED ON THE VARIOUS DECISIONS CITED BY LEARNED AR. THERE IS NO DISPUTE THAT THE AO WHI LE PASSING THE ASSESSMENT ORDER MADE DISALLOWANCE OF LONG TERM CAPITAL LOSS A ND TREATED THE CAPITAL GAIN FOR THE SAID YEAR AS NIL. NO FURTHER APPEAL AGAINST SUCH ACTION/ TREATMENT WAS ITA NO. 3729 MUM 2017-M/S GUPT A STEEL CORPORATION PVT. LTD. 4 FILED BY THE ASSESSEE. THE ASSESSEE BEFORE US HAS F ILED THE COPY OF THE ITR FOR AY 2018-19 WHEREIN THE ASSESSEE HAS SHOWN THE LOSS ON ACCOUNT OF LONG TERM CAPITAL LOSS HAS NOT BEEN SET OFF THE ASSESSEE. THE REFORE, THE ASSERTION OF THE LD. AR FOR THE ASSESSEE THAT THERE IS NO TAX EVASIO N ON THE PART OF THE ASSESSEE AS THE DISALLOWED LOSS HAS NOT BEEN SET OFF, WHICH HAS BEEN LAPSED, IS A CONVINCIBLE FORCE. NO CONTRARY FACT IS BROUGHT BY L D. DR FOR THE REVENUE TO OUR NOTICE THAT THE ALLEGED DISALLOWANCE OF LOSS WA S SET OFF BY THE ASSESSEE. 6. THE UNDISPUTED FACTS ARE THAT THE ASSESSING OFFICE R WHILE FRAMING ASSESSMENT U/S. 143(3) OF THE ACT INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WITHOUT MENTIONING WHETHER THE SAME RELA TES TO CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOM E. SIMILARLY, THE NOTICE U/S. 271(1)(C) DATED 28.03.2013 WAS ALSO ISSUED WITHOUT STRIKING OFF THE INAPPROPRIATE PORTION OF THE NOTICE. 7. EVEN ON LEGAL ISSUE RAISED BY THE ASSESSEE, WE HAVE NOTED THAT ON SIMILAR CASE IN ASSESSEES GROUP CASE THE COORDINATE BENCH OF TH E TRIBUNAL ON SIMILAR SET OF FACTS IN RADHAKRISHNA ROADWAY PVT LTD VS ACT (SU PRA) DELETED THE PENALTY HOLDING AS UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE VARIOUS DECISION C ITED BY THE LEARNED AR. THE UNDISPUTED FACTS ARE THAT THE ASSESSING OFFICER WHI LE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT INITIATED THE PENALTY U/S 271 (1) OF THE ACT WITHOUT MENTIONING WHETHER THE SAME RELATES TO CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULARS OF INCOME. SIMILARLY, WHEN T HE NOTICE U/S 271(1) WAS ISSUED ON 28.03.2013 THE SAME WAS ISSUED IN MECHANI CAL MANNER WITHOUT ITA NO. 3729 MUM 2017-M/S GUPT A STEEL CORPORATION PVT. LTD. 5 STRIKING OFF IRRELEVANT LIMB AND THEREFORE THERE WA S NO APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER. EVEN IN THE ORD ER IMPOSING PENALTY, THE ASSESSING OFFICER MENTIONED BOTH LIMBS. IN OUR VIEW IT IS MANDATORY ON THE PART OF THE ASSESSING OFFICER TO SPECIFICALLY STATE THE PARTICULAR CHARGE ON WHICH PENALTY IS PROPOSED TO BE LEVIED AND NON-STRIKING O FF OF THE IRRELEVANT LIMB WILL GO TO THE ROOT OF JURISDICTION OF THE ASSESSING OFF ICER TO PASS PENALTY ORDER. IN THE CASE OF MANJUNATH COTTON & GINNING FACTORY (SUP RA) AND M/S. SSAS EMERALD MEADOWS, ITA NO. 38 OF 2015 DATED 23.11.201 5, IT HAS BEEN HELD THAT NO PENALTY CAN BE IMPOSED WHERE ONE OF THE TWO LIM BS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS O F INCOME ON WHICH PENALTY WAS PROPOSED TO BE IMPOSED IS NOT MENTIONED. IN THE CASE OF M/S. SSAS EMERALD MEADOWS (SUPRA) SLP FILED IN HON'BLE SUPREM E COURT BY THE DEPARTMENT HAS ALSO BEEN DISMISSED. IN THE CASE OF SHRI SAMSON PERINCHERY (SUPRA) HON'BLE BOMBAY HIGH COURT HAS HELD THAT PEN ALTY TO BE IMPOSED ON THE GROUND/LIMB ON WHICH PENALTY HAS BEEN INITIATED. TH US, IN VIEW OF THE RATIO LAID DOWN BY VARIOUS COURTS AND JUDICIAL FORUMS, WE ARE OF THE VIEW THAT PENALTY ORDER IS BAD IN LAW. ACCORDINGLY, WE DIRECT THE ASS ESSING OFFICER TO DELETE THE PENALTY . 8. THE HONBLE TELANGANA & ANDHRA PRADESH IN PCIT VS S MT. BAISETTY REVATHI (SUPRA) ALSO HELD THAT WHEN PENALTY PROCEEDINGS AR E SOUGHT TO BE INITIATED BY THE REVENUE UNDER SECTION 271(1)( C ), THE SPECIFIC GROUND WHICH FORMS THE FOUNDATION ,THEREFORE, HAS TO BE SPELT OUT IN CLEA R TERMS. OTHERWISE, AN ASSESSEE WOULD NOT HAVE PROPER OPPORTUNITY TO PUT F ORTH HIS DEFENSE. WHEN THE PROCEEDINGS ARE PENAL IN NATURE, RESULTING IN I MPOSITION OF PENALTY RANGING FROM 100 PER CENT TO 300 PER CENT OF THE TAX LIABIL ITY, THE CHARGE MUST BE UNEQUIVOCAL AND UNAMBIGUOUS. WHEN THE CHARGE IS EIT HER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS THEREOF, THE REVENUE MUST SPECIFY AS TO WHICH ONE OF THE TWO IS SOUGHT TO BE PRESSED INTO ITA NO. 3729 MUM 2017-M/S GUPT A STEEL CORPORATION PVT. LTD. 6 SERVICE AND CANNOT BE PERMITTED TO CLUB BOTH BY INT ERJECTING ONE OR BETWEEN THE TWO. 9. CONSIDERING THE ABOVE FACTUAL AND LEGAL DISCUSSIONS NARRATED ABOVE, IN OUR VIEW THE PENALTY ORDER LEVIED BY ASSESSING OFFICER AND CONFIRMED BY LD CIT(A) IS NOT SUSTAINABLE ON FACTUAL AS WELL AS ON LEGAL ASPECT. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ENTIRE P ENALTY LEVIED UNDER SECTION 271(1) (C) OF THE ACT. IN THE RESULT THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/07/2019. SD/- SD/- M. BALAGANESH, PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 22.07.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI