M/s Wanderland Real Estate Pvt. Ltd., Kolkata V. ITO, WD-6(4), KOLKATA, Kolkata

ITA 380/KOL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1854 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K TIWARI
• Assessee Lawyers: ARIVAND AGARWAL
• Keywords: Opportunity of being heard; Initiation of penalty proceedings
• Section: 153A; 132

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.380/KOL/2015 ASSESSMENT YEAR:2008-09 M/S WANDERLAND REAL ESTATE PVT. LTD., 19, R.N. MUKHERJEE ROAD, KOLKATA [ PAN NO. AAACW 6397 F ] / V/S . INCOME TAX OFFICER, WARD-6(4), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI ARIVAND AGARWAL, ADVOCATE /BY RESPONDENT SHRI A.K. TIWARI, CIT-DR /DATE OF HEARING 02-01-2018 /DATE OF PRONOUNCEMENT 25-01-2018 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DATED 09.01.2015. ASSESSME NT WAS FRAMED BY ITO WARD- 6(4), KOLKATA U/S 153 R.W.S. 153A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 28.03.2013 FOR A SSESSMENT YEAR 2008-09. THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT VIDE ORDER DATED 30.09.2013 BY THE ASSESSING OFFICER. ITA NO.380/KOL/2015 A.Y. 2008 -09 M/S WANDERLAND REAL ESTATE PVT. LTD. VS. ITO W D-6(4) KOL. PAGE 2 2. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE O RDER OF CIT(A) WHEREBY THE CIT(A) CONFIRMED THE ORDER OF AO IMPOSING PENALTY U /S 271(1)(C) OF THE. 3. THE FACTS AND CIRCUMSTANCES UNDER WHICH PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED ON THE ASSESSEE BY THE AO ARE AS FOLLOWS :- THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND CARRI ES ON THE BUSINESS OF REAL ESTATE DEVELOPMENT. A SEARCH OPERATION U/S 132 OF T HE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES SITUATED AT INDORE OF KALANI GROU P ON 16-04-2009. THE INCRIMINATING DOCUMENTS BELONGING TO THE ASSESSEE W ERE FOUND DURING SEARCH AND THEREFORE PROCEEDINGS U/S 153C OF THE ACT WAS INITI ATED. CONSEQUENTLY, THE ASSESSEE DISCLOSED AN ADDITIONAL INCOME OF RS. 60 LACS WHERE AS IN THE ORIGINAL RETURN THE INCOME OF RS. 2,56,300/- ONLY WAS DISCLOSED. THUS, THE ASSESSMENT WAS FRAMED UNDER SECTION 153C R.W.S. 153A AT A TOTAL INCOME OF RS. 6 2,56,300 ONLY VIDE ORDER DATED 28.3.2013. IN RESPECT OF THE AFORESAID ADDITION OF RS. 60 LACS MADE IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO INITIATED PENALTY PR OCEEDINGS U/S 271(1)(C) OF THE ACT. THE INITIATION OF PENALTY PROCEEDINGS WAS MADE BY THE AO BY OBSERVING AS FOLLOWS: PENALTY PROCEEDINGS U/S.271(1)( C) INITIATED SEPARA TELY 4. IN THE PENALTY PROCEEDINGS THE ASSESSEE TRIED T O EXPLAIN THAT THERE WAS NO CONCEALMENT OF INCOME. THIS EXPLANATION WAS NOT ACC EPTED IN THE PENALTY PROCEEDINGS AND PENALTY U/.S 271(1)(C) OF THE ACT WAS IMPOSED O N THE ASSESSEE BY THE AO. THE ORDER OF AO WAS SUBSEQUENTLY CONFIRMED BY LD. C IT(A). 5. AGGRIEVED BY THE ORDER OF LD. CIT(A) THE ASSESSE E HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE BEFORE US SUB MITTED THAT THE SHOW CAUSE NOTICE ISSUED U/S 274 OF THE ACT IMPOSING PENALTY DOES NOT CONTAIN THE SPECIFIC CHARGE AGAINST THE ASSESSEE NAMELY AS TO WHETHER THE ASSES SEE WAS GUILTY OF HAVING CONCEALED PARTICULARS OF INCOME OR HAVING FURNISHED INACCURAT E PARTICULARS OF INCOME. A COPY OF ITA NO.380/KOL/2015 A.Y. 2008 -09 M/S WANDERLAND REAL ESTATE PVT. LTD. VS. ITO W D-6(4) KOL. PAGE 3 THE SHOW CAUSE NOTICE U/S 274 OF THE ACT WAS FILED BEFORE US. THE SAME IS REPRODUCED FOR THE PURPOSE OF READY REFERENCE: HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 7. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTE NTION 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 ITR 565 TOOK A VIEW THAT IMPOSING OF PE NALTY U/S 271(1)(C) OF THE ACT IS BAD IN LAW AND INVALID FOR THE REASON THAT T HE SHOW CAUSE NOTICE U/S 274 OF THE ACT DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSE E AS TO WHETHER IT IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. COUNSEL FURTHER BROUGHT TO OUR NOTI CE THAT AS AGAINST THE DECISION OF THE HONBLE KARNATAKA HIGH COURT THE REVENUE PREFER RED AN APPEAL IN SLP IN CC NO.11485 OF 2016 AND THE HONBLE SUPREME COURT BY I TS ORDER DATED 05.08.2016 DISMISSED THE SLP PREFERRED BY THE DEPARTMENT. THE LD. COUNSEL ALSO BROUGHT TO OUR NOTICE THE DECISION OF THE HONBLE BOMBAY HIGH COUR T IN THE CASE OF CIT VS SHRI SAMSON PERINCHERY IN ITA NO.1154 OF 2014 DATED 05.01.2017 WHEREIN THE HONBLE BOMBAY HIGH COURT FOLLOWING THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) CAME TO THE CONCLUSION THAT IMPOSITION OF PENALTY ON DEFECTIVE SHOW CAUSE NOTICE WITHOUT SPECIFYING THE CHARGE AGAINST THE ASSESSEE CANNOT BE SUSTAINED. OU R ATTENTION WAS ALSO DRAWN TO THE DECISION OF ITAT IN THE CASE OF SUVAPRASANNA BHATTA CHARYA VS ACIT IN ITA NO.1303/KOL/2010 DATED 06.11.2015 WHEREIN IDENTICAL PROPOSITION HAS BEEN FOLLOWED BY THE TRIBUNAL. ON THE OTHER HAND, LD. DR AS SUMMARIZED BY HIS IN H IS WRITTEN SUBMISSIONS ARE REPRODUCED HEREUNDER:- IT IS SUBMITTED THAT THE ASSESSING OFFICER CORRECT LY INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C). IT IS ALSO SUBMITTED TH AT GROUND AS TO THE VALIDITY OF . NOTICE WAS NOT INCLUDED IN THE GROUNDS OF A:PPEAL F ILED BY THE ASSESSEE BEFORE EITHER CIT(A) OR THE HON'BLE ITAT, KOLKATA, NOR IS THE ISSUE THAT THERE WAS LACK OF OPPORTUNITY GRANTED TO THE ASSESSEE. ITA NO.380/KOL/2015 A.Y. 2008 -09 M/S WANDERLAND REAL ESTATE PVT. LTD. VS. ITO W D-6(4) KOL. PAGE 4 2. THE JUDGEMENT OF THE HON'BLE CALCUTTA HIGH COURT 111 THE CASE DR.SYAMAL BARAN MONDAL VS. CIT (2011) 244 CTR631 STATES THAT 'SECTION 271 NOWHERE MANDATES THAT RECORDING OF SATISFACTION ABOUT CONCE ALMENT OF ASSESSEE'S INCOME MUST BE IN SPECIFIC TERMS AND WORDS, SATISFACTION O F AO MUST REFLECT FROM THE ORDER EITHER WITH EXPRESSED WORDS RECORDED BY THE A SSESSING OFFICER HIMSELF OR BY HIS OVERT ACT AND ACTION.' 3. THE BANGALORE BENCH OF INCOME-TAX APPELLATE TRIB UNAL ('ITAT) IN A RECENT DECISION IN THE CASE OF JAYSONS INFRASTRUCTURE INDI A PRIVATE LIMITED VS ITO TS- 5873-ITAT-2017(BANGALORE-O] HELD THAT SINCE THE ASS ESSMENT ORDER CLEARLY MENTIONED THE REASON FOR INITIATION OF PENA LTY PROCEEDINGS, NOT MENTIONING THE REASON IN THE PENALTY NOTICE SHOULD NOT CAUSE ANY PREJUDICE TO THE TAXPAYER. THEREFORE, IT WAS HELD THAT THE REQUI REMENTS OF SECTION 271(1)(C), AS DISCUSSED BY THE KHC, WERE COMPLIED WITH IN THIS CASE. 4. THE ITAT MUMBAI IN ITS ORDER IN TRISHUL ENTERPRI SES VS. DCIT (ITA NOS.384 &, 385JMUMJ2014 FOR A.YRS.2006-07 &, 2007-0 8), DT.LO-02-2017, DISMISSED THE CONTENTION OF THE ASSESSEE REGARDING FAILURE OF THE AO TO STRIKE OFF THE RELEVANT PART OF THE NOTICE U/S.274 FOR INI TIATING PROCEEDINGS U/S.271(1)(C). THE ITAT RELIED UPON THE JUDGEMENT O F THE HON'BLE BOMBAY HIGH COURT IN CIT VS. SMT. KAUSHALYA (1992) 'WHEREI N IT WAS HELD THAT 'MERE NOT STRIKING OFF SPECIFIC LIMB CANNOT BY ITSELF INV ALIDATE NOTICE ISSUED U/ S.274 OF THE ACT. THE LANGUAGE OF THE SECTION DOES NOT SP EAK, ABOUT THE ISSUANCE OF NOTICE. AL! 11101 IS REQUIRED THAT THE ASSESSEE BE GIVEN AN OPPORTUNITY OF SHOW CAUSE .... 5. THE HON'BLE BOMBAY HIGH COURT (NAGPUR BENCH) IN THE CASE OF M/S. MAHARAJ GARAGE & COMPANY VS. CIT IN ITS JUDGEMENT D T.22-08-20 17, HELD THAT '15. THE REQUIREMENT OF SECTION 274 OF THE INC OME TAX ACT FOR GRANTING REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTE R CANNOT BE STRETCHED TO THE EXTENT OF FRAMING A SPECIFIC CHARGE OR ASKING THE A SSESSEE AN EXPLANATION IN RESPECT OF THE QUANTUM OF PENALTY PROPOSED TO BE IM POSED, AS HAS BEEN URGED ... ' 6. THE HON'BLE MUMBAI E BENCH IN THE CASE OF EART HMOVING EQUIPMENT SERVICE CORPORATION VS DCIT 22(2) MUMBAI (2017) 84 TAXMANN.COM 51 HELD 'THAT AFTER PERUSING THE RATIO OF THE JUDGEMENT REN DERED IN MANJUNATHA COTTON AND GINNING FACTORY, WE FIND THAT THE ASSESSEE'S AP PEAL WAS ALLOWED BY THE HON'BLE HIGH COURT AFTER CONSIDERING THE MULTIPLE F ACTORS AND NOT SOLELY ON THE BASIS OF DEFECT IN NOTICE U/S 274. THEREFORE WE ARE OF THE OPINION THAT THE PENALTY COULD NOT BE DELETED MERELY ON THE BASIS OF DEFECT POINTED BY THE LD AR IN THE NOTICE AND THEREFORE THE LEGAL GROUNDS RA ISED ARE REJECTED. 7. RELIANCE IS PLACED ON THE DECISION OF HON'BLE IT AT 'E' BENCH IN THE CASE OF EARTHMOVING EQUIPMENT SERVICE CORPORATION IN ITA NO . 6617/MUM/2014, ITA NO.380/KOL/2015 A.Y. 2008 -09 M/S WANDERLAND REAL ESTATE PVT. LTD. VS. ITO W D-6(4) KOL. PAGE 5 A.Y. 2010-11, WHEREIN ON IDENTICAL FACTS, THE TRIBU NAL HAS HELD THAT PENALTY COULD NOT BE DELETED MERELY ON THE BASIS OF DEFECT POINTED OUT (AS REGARDING NON STRIKING OFF ONE . LIMB). WHILE UPHOLDING THE VALID ITY OF PENALTY, THE HON'BLE TRIBUNAL ALSO CONSIDERED THE JUDGEMENT RENDERED IN THE CASE OF CIT VS. MANJUNATH COTTON & GINNING FACTORY [359 ITR 565] AN D THE DISMISSAL OF THE REVENUE'S SLP BY THE APEX COURT IN CIT VS. SSA EMER ALD MEADOWS. IN LIGHT OF AFORESAID DECISION OF THE MUMBAI TRIBUNAL THE IS SUE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE ON THIS LEGAL ISSUE. THEREFO RE, IT IS SUBMITTED THAT PENALTY PROCEEDINGS FOR LEVY OF PENALTY U/S.271(1)( C), WERE CORRECTLY INITIATED AND THE CASE MAY BE HEARD ON MERITS. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD AND THE JUDGMENT / OR DERS CITED BY THE REPRESENTATIVES OF BOTH THE PARTIES. THE FACTS OF THE CASE HAVE ALREAD Y BEEN ELABORATED IN THE PRECEDING PARAGRAPHS THEREFORE WE ARE NOT REPEATING THE SAME FOR THE SAKE OF BREVITY. THE LD DR SUBMITTED THAT THE HONBLE CALCUTTA HIGH COURT I N THE CASE OF DR.SYAMAL BARAN MONDAL VS. CIT (2011) 244 CTR 631 (CAL) HAS TAKEN A VIEW THAT SEC . 271 DOES NOT MANDATE THAT THE RECORDING OF SATISFACTION ABOUT CO NCEALMENT OF INCOME MUST BE IN SPECIFIC TERMS AND WORDS AND THAT SATISFACTION OF A O MUST REFLECT FROM THE ORDER EITHER WITH EXPRESSED WORDS RECORDED BY THE AO OR B Y HIS OVERT ACT AND ACTION. IN OUR VIEW THIS DECISION IS ON THE QUESTION OF RECORDING SATISFACTION AND NOT IN THE CONTEXT OF SPECIFIC CHARGE IN THE MANDATORY SHOW CAUSE NOTI CE U/S.274 OF THE ACT. THEREFORE REFERENCE TO THIS DECISION, IN OUR VIEW IS NOT OF A NY HELP TO THE PLEA OF THE REVENUE BEFORE US. WITH REGARD TO THE OTHER JUDGMENTS REFERRED BY THE LD. DR WE NOTE THAT THERE ARE CONFLICTING JUDGMENTS OF DIFFERENT HIGH COURTS. ONE IN FAVOUR OF THE ASSESSEE RENDERED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING (SUPRA) AND OTHER OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT. KAUSHALYA (SUPRA) . IT IS SETTLED LEGAL POSITION THAT WHERE TWO VIEWS ARE AVAILABLE ON AN ISSUE, THE VIEW FAVOURABLE TO THE ASSESSEE HAS T O BE FOLLOWED. WE THEREFORE PREFER TO FOLLOW THE VIEW EXPRESSED BY THE HONBLE KARNATA KA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING (SUPRA). WE HAVE ALREA DY OBSERVED THAT THE SHOW CAUSE NOTICE ISSUED IN THE PRESENT CASE U/S 274 OF THE ACT DOES NOT SPECIFY THE CHARGE ITA NO.380/KOL/2015 A.Y. 2008 -09 M/S WANDERLAND REAL ESTATE PVT. LTD. VS. ITO W D-6(4) KOL. PAGE 6 AGAINST THE ASSESSEE AS TO WHETHER IT IS FOR CONCEA LING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE SH OW CAUSE NOTICE U/S 274 OF THE ACT DOES NOT STRIKE OUT THE INAPPROPRIATE WORDS. IN THE SE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IMPOSITION OF PENALTY CANNOT BE SUSTAINED . THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE WHICH IS BASED ON THE DECISIONS REFERR ED TO IN THE EARLIER PART OF THIS ORDER HAS TO BE ACCEPTED. WE, THEREFORE HOLD THAT IMPOSIT ION OF PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED AND THE SAME IS DIRECTED TO BE CANCELLED. AO IS DIRECTED ACCORDINGLY. 9. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 25/01/2018 SD/- SD/- ( % ') ( ') (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ) - 25/01/2018 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S WANDERLAND REAL ESTATE PVT. LTD. 19, R.N. MUKHERJEE R OAD, KOLKATA-700001 2. /RESPONDENT-ITO WARD 6(4),AAYAKAR BHAWAN, P-7, CHOW RINGHEE SQ. KOL-69 3. , - / CONCERNED CIT 4. - - / CIT (A) 5. . %%, , , / DR, ITAT, KOLKATA 6. 2 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF OFFICE/DDO ,,