HBN INSURANCE AGENCIES PRIVATE LIMITED, NEW DELHI V. DCIT, CC- 29, NEW DELHI

ITA 4014/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9733 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 19-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Assessee Lawyers: DEWNATH ARORA
• Keywords: Opportunity of being heard; Question of law; Right to appeal
• Section: 271(1)(c); 274; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 4013/DEL/2017 : ASSTT. YEAR : 2005-06 ITA NO. 4014/DEL/2017 : ASSTT. YEAR : 2006-07 HBN INSURANCE AGENCIES PVT. LTD., 527B, 5 TH FLOOR, HBN OFFICER, D-MALL, PLOTOD, DISTT. CENTRE, PASCHIM VIHAR, NEW DELHI VS ACIT, CENTRAL CIRCLE-29, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AABCH4386E ASSESSEE BY : SH. DEWNATH ARORA, CA REVENUE BY : SH. PRAKASH DUBEY, SR. DR DATE OF HEAR ING: 1 9 . 0 1 .20 2 1 DATE OF PRONOUNCEMENT: 18 .03 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN FILED BY THE ASSESSE E AGAINST THE ORDERS OF THE LD. CIT(A)-30, NEW DELHI DATED 07.04.2017. 2. SINCE, THE ISSUES INVOLVED IN BOTH THE APPEALS A RE COMMON, THEY WERE HEARD TOGETHER. 3. THE ASSESSEE HAS FILED APPLICATION UNDER RULE 11 OF THE INCOME TAX(APPELLATE TRIBUNAL) RULES, 1963 FOR ADMI SSION OF ADDITIONAL GROUNDS OF APPEAL. THE ADDITIONAL GROUND TAKEN UP BY THE ASSESSEE IS AS UNDER: ITA NO. 4013 & 4014/DEL/2017 HBN INSURANCE AGENCIES PVT. LTD. 2 1. UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE ORDER OF PENALTY PASSED UNDER SECTION 271(1)(C) OF THE ACT IS BAD IN LAW AS THE NOTICE IS SUED UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT IS NOT DISCERNABLE AS TO WHETHER THE PENALTY PROCEEDIN GS IS INITIATED FOR FURNISHING OF INACCURATE PARTICULA RS OF INCOME OR CONCEALMENT OF INCOME AND THEREFORE, THE IMPUGNED PENALTY ORDER PASSED DESERVES TO BE CANCELLED. 4. ADMISSION OF THE ADDITIONAL GROUND HAS BEEN OPPOSED IN PRINCIPLE BY THE LD. DR. KEEPING IN VIEW, THE JUDGMENT OF THE HON BLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS CIT (1998) 229 ITR 383, THE ADDITIONAL GROUND FILED BY THE ASSESSEE IS ACCEPTED. THE R ELEVANT PORTION OF THE JUDGMENT IS AS UNDER: 5. UNDER SECTION 254 OF THE INCOME-TAX ACT, THE APPELLATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE A PPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREON AS IT THINKS FIT. THE POWER OF THE TRIBUNAL IN DEALING WIT H APPEALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PURPOSE O F THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIES I S TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A J UDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TAXE D OR A PERMISSIBLE DEDUCTION IS DENIED, WE DO NOT SEE ANY REASO N WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO L ONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THAT ITEM. WE DO NOT SEE ANY REASON TO RESTRICT THE POWER OF THE TRIBUNA L UNDER SECTION 254 ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APP EALS). BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CROSS-OBJECTIONS BEFORE THE TRIBUNAL. W E FAIL TO SEE WHY THE TRIBUNAL SHOULD BE PREVENTED FROM CONSIDER ING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER. 6. IN THE CASE OF JUTE CORPORATION OF INDIA LTD. V. C .I.T. . THIS COURT, WHILE DEALING WITH THE POWERS OF THE APPELLAT E ASSISTANT COMMISSIONER OBSERVED THAT AN APPELLATE AUTHOR ITY HAS ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HA VE IN ITA NO. 4013 & 4014/DEL/2017 HBN INSURANCE AGENCIES PVT. LTD. 3 DECIDING THE QUESTION BEFORE IT SUBJECT TO THE RESTRICTI ONS OR LIMITATIONS, IF ANY, PRESCRIBED BY THE STATUTORY PROV ISIONS. IN THE ABSENCE OF ANY STATUTORY PROVISION, THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHICH T HE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. THERE IS NO GOOD REASON TO JUSTIFY CURTAILMENT OF THE POWER OF TH E APPELLATE ASSISTANT COMMISSIONER IN ENTERTAINING AN ADDITIONAL GROUND RAISED BY THE ASSESSEE IN SEEKING MODIFICATION OF THE ORDER OF ASSESSMENT PASSED BY THE INCOME-TAX OFFICER. THIS COURT FURTHER OBSERVED THAT TH ERE MAY BE SEVERAL FACTORS JUSTIFYING THE RAISING OF A NEW P LEA IN AN APPEAL AND EACH CASE HAS TO BE CONSIDERED ON ITS OWN FACTS. THE APPELLATE ASSISTANT COMMISSIONER MUST BE SATISFIED THAT THE GROUND RAISED WAS BONA FIDE AND THAT THE SAME COULD NOT HAVE BEEN RAISED EARLIER FOR GOOD REASON S. THE APPELLATE ASSISTANT COMMISSIONER SHOULD EXERCISE HIS DISCRETION IN PERMITTING OR NOT PERMITTING THE ASSESSEE T O RAISE AN ADDITIONAL GROUND IN ACCORDANCE WITH LAW AND REASON. THE SAME OBSERVATIONS WOULD APPLY TO APPEALS BEFORE THE TRIBUNAL ALSO. 7. THE VIEW THAT THE TRIBUNAL IS CONFINED ONLY TO ISS UES ARISING OUT OF THE APPEAL BEFORE THE COMMISSIONER OF INCOME- TAX (APPEALS) TAKES TOO NARROW A VIEW OF THE POWERS OF THE APPELLATE TRIBUNAL [VIDE, E.G., C.I.T, V. ANAND PRA SAD (DELHI), C.I.T. V. KARAMCHANDPREMCHAND P. LTD. AND C.I.T. V. CELLULOSE PRODUCTS OF INDIA LTD. . UNDOUBTEDLY, THE TR IBUNAL WILL HAVE THE DISCRETION TO ALLOW OR NOT ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER A QUESTION OF LAW ARISING FROM THE FACTS WHICH ARE ON RE CORD IN THE ASSESSMENT PROCEEDINGS WE FAIL TO SEE WHY SUCH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. 8. THE REFRAMED QUESTION, THEREFORE, IS ANSWERED IN T HE AFFIRMATIVE, I.E., THE TRIBUNAL HAS JURISDICTION TO EX AMINE A QUESTION OF LAW WHICH ARISES FROM THE FACTS AS FOUND BY TH E AUTHORITIES BELOW AND HAVING A BEARING ON THE TAX LI ABILITY OF THE ASSESSEE. WE REMAND THE PROCEEDINGS TO THE TRIBUNAL F OR CONSIDERATION OF THE NEW GROUNDS RAISED BY THE ASSESSEE ON THE MERITS. ITA NO. 4013 & 4014/DEL/2017 HBN INSURANCE AGENCIES PVT. LTD. 4 5. RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT OF THE HO NBLE APEX COURT, THE ADDITIONAL GROUNDS TAKEN UP BY THE ASSESSEE A RE HEREBY ADMITTED. 6. ADJUDICATION AFTER ADMITTING THE ADDITIONAL GROU NDS. 7. AT THE OUTSET, THE LD. AR ARGUED THAT THE NOTICE ISSUED WAS BAD IN LAW AND VOID AB INITIO AS THE NOTICE PRIMA FACIE DID NOT SATISFY THE CONDITION AS TO WHICH LIMB OF SECTION 2 71(1)(C) THE PENALTY HAS BEEN LEVIED EITHER CONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IT WAS ARGUED TH AT THAT IT IS ELEMENTARY THAT FOR ASSUMING VALID JURISDICTION TO IMP OSE PENALTY, THE ASSESSING OFFICER MUST, FIRST BE SATISFIED, THOUGH PRIMA FA CIE, THAT THE ASSESSEE HAS EITHER CONCEALED INCOME OR FURNISHED INACCURA TE PARTICULARS OF INCOME AND ON THE BASIS OF SUCH SATISFACTI ON A SHOW CAUSE NOTICE HAS TO BE ISSUED UNDER SECTION 274 OF THE ACT TO T HE ASSESSEE SPECIFYING THE ADDITION/ DISALLOWANCE IN RESPECT OF WHICH PENALTY IS SOUGHT TO BE IMPOSED AND ALSO THE PRECISE CHARGE/ GROUND ON WH ICH PENALTY IS PROPOSED TO BE IMPOSED THEREON. IT WAS ARGUED THAT NOT ICE ISSUED UNDER SECTION 274 SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOM E OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME. SENDING PRINTED FOR M, WHERE BOTH THE GROUNDS MENTIONED IN SECTION 271 OF THE ACT ARE MENTION ED, DOES NOT SATISFY REQUIREMENT OF LAW. 8. LD. DR ARGUED THAT THE ASSESSED WAS WELL AWARE O F THE REASON OF LEVY OF PENALTY AND HAS INDEED REPLIED TO THE SHOW CAUSE NOTICE. 9. WE HAVE GONE THROUGH THE PENALTY NOTICE ISSUED B Y THE ASSESSING OFFICER AND FIND THAT THE PENALTY NOTICE DOES NOT ITA NO. 4013 & 4014/DEL/2017 HBN INSURANCE AGENCIES PVT. LTD. 5 SPECIFY WHETHER THE PENALTY WAS PROPOSED FOR CONCEA LMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME IN TERMS OF PROVISIONS OF SECTION 271(1 )(C). 10. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY: 359 ITR 565 HELD THAT NO TICE UNDER SECTION 274 SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN S ECTION 271(1)(C) OF THE ACT, I.E., WHETHER IT IS FOR CONCEALMENT OF INCOM E OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME. SENDING PRINTED FORM WH ERE ALL THE GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED WOULD N OT SATISFY REQUIREMENT OF LAW. 11. THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. SAHARA INDIA LIFE INSURANCE CO. LTD. IN ITA NO. 475 OF 2019, REITE RATED THAT NOTICE UNDER SECTION 274 SHOULD SPECIFICALLY STATE THE GROUNDS ON WHICH PENALTY WAS SOUGHT TO BE IMPOSED AS THE ASSESSEE SHOULD KNOW THE GRO UNDS WHICH HE HAS TO MEET SPECIFICALLY. 12. THE AFORESAID PRINCIPLE HAS BEEN REITERATED IN TH E IN THE CASE OF CIT VS. SSA'S EMERALD MEADOWS: 73 TAXMANN.COM 241 (KAR) [ REVENUES SLP DISMISSED IN 242 TAXMAN 180] 13. IN THE PRESENT CASE, TOO, IN NOTICE DATED 05.12.201 1 AND ON 08.12.2014 ISSUED UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT, INITIATED PENALTY AGAINST THE APPELLANT FOR ALLEGED CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME, THAT IS TO SAY, THE SPECIFIC DEFAULT WAS NOT SPECIFIED BY THE ASSESSING OFFICER I N THE NOTICE ISSUED. 14. HENCE, RESPECTFULLY FOLLOWING THE ORDER OF THE JURISDICTIONAL HIGH COURT, SINCE THE NOTICE U/S 274 HAS NOT BEEN S PECIFIED AS ITA NO. 4013 & 4014/DEL/2017 HBN INSURANCE AGENCIES PVT. LTD. 6 TO WHETHER PENALTY IS PROPOSED FOR ALLEGED CONCEALME NT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME , THE PENALTY LEVIED IS HEREBY OBLITERATED. 15. AS A RESULT, BOTH THE APPEALS OF THE ASSESSEE A RE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/03/2021. SD/- SD/- (BHAVNESH SAINI) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 18/03/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR