ANSHUL RAMNANI L/H OF LATE VALLABHDAS RAMNANI, RAIPUR V. INCOME TAX OFFICER, WARD 1(2), RAIPUR

ITA 41/RPR/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3187 (ITAT-RAIPUR)
• Duration Of Justice: 4 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 271(1)(c); 274; 73

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR (Through Virtual Court) BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI JAMLAPPA D BATTULL, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 41/RPR/2018 Ǔनधा[रण वष[ / Assessment Year : 2008-09 Anshul Ramnani Legal Heir of Late Vallabhdas Ramnani C/o. Bombay Cloth Syndicate, New Cloth Market, Pandri, Raipur (C.G.) PAN : ACNPR4012Q .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer-1(2), Raipur (C.G.) ......Ĥ×यथȸ / Respondent Assessee by : Shri R.B Doshi, AR Revenue by : Shri G.N Singh, DR 2 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 स ु नवाई कȧ तारȣख / Date of Hearing : 26.04.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 29.04.2022 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-1, Raipur dated 24.01.2018, which in turn arises from the order passed by the A.O under Sec. 271(1)(c) of the Income Tax Act, 1961 (for short the ‘Act’) dated 26.03.2013 for assessment year 2008-09. Before us the assessee has assailed the impugned order on the following grounds of appeal: “1. In the facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the penalty of Rs.3,13,172/- imposed by the AO u/s.271(1)(c). The penalty imposed by the AO and confirmed by the CIT(A) is not justified. 2. Ld. CIT(A) erred in not adjudicating upon Ground No.3 of appeal raised by the appellant, relating to the penalty order being barred by limitation. He erred in dismissing the ground. The penalty order passed by the AO is barred by limitation. 3. Without prejudice to ground No.1 and 2, the CIT(A) erred in confirming the penalty u/s.271(1)(c) inasmuch as the show cause notice issued by AO is invalid and it has been passed without complying with mandatory requirements of law. 3 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 4. The appellant reserves the right to add, amend or alter any of the ground/s of appeal.” 2. Succinctly stated, the assessee had filed his return of income for the assessment year 2008-09 on 27.03.2009, declaring an income of Rs.1,40,170/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. Original assessment was framed by the Assessing Officer u/s.143(3) of the Act, dated 27.12.2018 wherein the income of the assessee was determined at Rs.28,27,050/- after making the following additions: Sl. No. Particulars Amount 1. Addition towards LTCG on sale of property Rs.15,86,877/- 2. Addition towards unexplained cash balance Rs.11,00,000/- At the time of culminating the assessment proceedings the Assessing Officer had initiated penalty proceedings u/s.271(1)(c) of the Act for furnishing of inaccurate particulars of income in respect of the aforesaid additions made in the hands of the assessee. 4 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 4. On appeal, the CIT(Appeals) restricted the addition on account of Long Term Capital Gain (for short ‘LTCG’) on sale of land at Rs.14,36,877/- as against that made by the Assessing Officer at Rs.1,86,877/-, and thus, granted a relief of Rs.1,50,000/- to the assessee as well as vacated the addition of Rs.11,00,000/- that was made by the Assessing Officer on account of unexplained cash balance. 5. After culmination of the appellate proceedings, the Assessing Officer called upon the assessee to explain as to why penalty u/s.271(1)(c) of the Act may not be imposed upon him with respect to the additions that were sustained by the CIT(Appeals) vide his order dated 25.04.2011. As the contentions advanced by the assessee did not find favour with the Assessing Officer, therefore, he vide his order u/s.271(1)(c) of the Act, dated 26.03.2013 imposed a penalty of Rs.3,13,172/- for concealment of particulars of income and also furnishing of inaccurate particulars of income by the assessee. 5 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 6. Aggrieved, the assessee assailing the penalty imposed by the Assessing Officer u/s.271(1)(c) of the Act carried the matter in appeal before the CIT(Appeals) but without any success. 7. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 8. Before us, the Ld. Authorized Representative ( for short ‘AR’) for the assessee has assailed the validity of jurisdiction that was assumed by the Assessing Officer for imposing penalty u/s.271(1)(c) of the Act. Elaborating on his aforesaid contention, it was submitted by the Ld. AR that as the Assessing Officer had failed to validly put the assessee to notice as regards impugned default for which penalty u/s.271(1)(c) of the Act was sought to be imposed upon him, therefore, penalty u/s.271(1)(c) of the Act imposed by him could not be sustained and was liable to be quashed on the said count itself. In order to buttress his aforesaid contention, the Ld. AR had taken us through the copy of “Show Cause Notices” (SCN) which was issued by the Assessing Officer u/s.274 r.w.s. 271(1)(c) of the Act dated 27.12.2010, at Page No. 14 6 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 of APB. Adverting to the contents of the aforesaid “SCN”, it was submitted by the Ld. AR that as the Assessing Officer had failed to strike off irrelevant default i.e ‘concealment of particulars of income’ or ‘furnishing of inaccurate particulars of income’, therefore, the assessee remained divested of an opportunity of putting forth his case that no penalty under the said statutory provision was liable to be imposed upon him. It was submitted by the Ld. AR that the aforesaid ‘SNC” dated 27.12.2010 was followed by two reminder letters of the Assessing Officer dated 03.05.2012 & 15.03.2013 Page No.(s) 15 & 16 of APB, however, in the said two letters too there was no mention of the default for which the impugned penalty u/s.271(1)(c) of the Act was sought to be imposed. Also, it was submitted by the Ld. AR that not only the Assessing Officer had failed to point out the default for which impugned penalty was sought to be imposed on the assessee but even otherwise the said penalty had been imposed for both ‘concealment of particulars of income’ and ‘furnishing of inaccurate particulars’. In order to fortify his claim the Ld. AR had taken us through the order passed by the Assessing Officer u/s.271(1)(c) of the 7 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 Act, dated 26.03.2013. Backed by the aforesaid facts, it was submitted by the Ld. AR that the Assessing Officer had imposed the impugned penalty u/s.271(1)(c) of the Act without any application of mind and affording of any opportunity to the assessee to put forth an explanation that no such penalty was liable to be imposed on him. 9. Per contra, the Ld. Departmental Representative ( for short ‘DR’) relied on the orders of the lower authorities. It was submitted by the Ld. DR that as the assessee in his attempt to impress upon the Assessing Officer that no penalty u/s.271(1)(c) of the Act was called for in his case, had come forth with an explanation before the Assessing Officer in the course of penalty proceedings, therefore, it was not justifiable on his part claim that he had remained divested of an opportunity to demonstrate that no penalty was liable to be imposed on him. Apart from that, it was submitted by the Ld. DR that even otherwise no infirmity did emerge from the order of the Assessing Officer who had rightly observed that as furnishing of inaccurate particulars of income by the assessee had resulted to concealment of income, therefore, penalty u/s.271(1)(c) of the Act was liable to be 8 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 imposed on him. It was, thus, claimed by the Ld. DR that penalty imposed by the Assessing Officer u/s.271(1)(c) of the Act had rightly been upheld by the CIT(Appeals). 10. We have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Admittedly, on a perusal of the ‘SCN’, dated 27.12.2010, it transpires that the Assessing Officer had failed to point out the default qua which the assessee was called upon to explain as to why it may not be saddled with penalty u/s 271(1)(c) of the Act. 11. After having given a thoughtful consideration to the facts of the case, we are persuaded to subscribe to the claim of the Ld. AR that the A.O had in the aforesaid ‘SCN’, dated 27.12.2010 failed to point out the default for which penalty was sought to be imposed by him on the assessee company. In our considered view, as both of the two defaults envisaged in Sec. 271(1)(c), i.e, ‘concealment of income’ and 9 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 ‘furnishing of inaccurate particulars of income’ are separate and distinct defaults which operate in their independent and exclusive fields, therefore, it was obligatory on the part of the A.O to have clearly put the assessee to notice as regards the default for which he was called upon to explain as to why penalty under Sec. 271(1)(c) may not be imposed on him. As observed by us hereinabove, a perusal of the ‘Show cause’ notice issued in the present case by the A.O under Sec. 274 r.w. Sec. 271(1)(c), dated 27.12.2010 clearly reveals that there was no application of mind on the part of the A.O while issuing the same. We are of a strong conviction that the very purpose of affording a reasonable opportunity of being heard to the assessee as per the mandate of Sec. 274(1) would not only be frustrated but would be rendered as redundant if an assessee is not conveyed in clear terms the specific default for which penalty was sought to be imposed on him. In our considered view, the indispensable requirement on the part of the A.O to put the assessee to notice as regards the specific charge contemplated under the aforesaid statutory provision, viz. ‘concealment of income’ or ‘furnishing of inaccurate particulars of 10 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 income’ is not merely an idle formality but is a statutory obligation cast upon him, which we find had not been discharged in the present case as per the mandate of law. 12. We would now test the validity of the aforesaid ‘Show Cause’ notice and the jurisdiction emerging therefrom in the backdrop of the judicial pronouncements on the issue under consideration. Admittedly, the A.O is vested with the powers to levy penalty under Sec. 271(1)(c) of the Act, if in the course of the proceedings he is satisfied that the assessee had either ‘concealed his income’ or ‘furnished inaccurate particulars of his income’. In our considered view as penalty proceedings are in the nature of quasi criminal proceedings, therefore, the assessee as a matter of a statutory right is supposed to know the exact charge for which he is being called upon to explain that as to why the same may not be imposed on him. The failure to specify the charge in the ‘Show cause’ notice not only reflects the non-application of mind by the A.O, but in fact defeats the very purpose of giving a reasonable opportunity of being heard to the assessee as envisaged under Sec. 274(1) of the I.T Act. We find that the fine distinction 11 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 between the said two defaults contemplated in Sec. 271(1)(c), viz. ‘concealment of income’ and ‘furnishing of inaccurate particulars of income’ had been appreciated at length by the Hon’ble Supreme Court in its judgments passed in the case of Dilip N Shroff Vs. Jt. CIT (2007) 210 CTR (SC) 228 and T. Ashok Pai Vs. CIT (2007) 292 ITR 11 (SC). The Hon’ble Apex Court in its aforesaid judgments, had observed, that the two expressions, viz. ‘concealment of particulars of income’ and ‘furnishing of inaccurate particulars of income’ have different connotation. The Hon’ble Apex Court being of the view that the failure to clearly specify the default in the ‘Show Cause’ notice clearly reveals a non-application of mind by the A.O, had observed as under:- “83. It is of some significance that in the standard proforma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done. Thus, the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or he has furnished inaccurate particulars. Even before us, the learned Additional Solicitor General while placing reliance on the order of assessment laid emphasis that he had dealt with both the situations. 84. The impugned order, therefore, suffers from non- application of mind. It was also bound to comply with the 12 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 principles of natural justice [See Malabar Industrial Co. Ltd. Vs. CIT (2000) 2 SCC 718]. We are of the considered view, that now when as per the settled position of law the two defaults, viz. ‘concealment of income’ and ‘furnishing of inaccurate particulars of income’ are separate and distinct defaults, therefore, in case the A.O sought to have proceeded against the assessee for either of the said defaults, then, it was incumbent on his part to have clearly specified his said intention in the ‘Show cause’ notice, which we find he had failed to do in the case before us. The aforesaid failure on the part of the assessee cannot merely be dubbed as a technical default because the same had clearly divested the assessee of his statutory right of being heard and defend his case. 13. We find that the Hon’ble High Court of Karnataka in the case of CIT Vs. SSA’s Emerald Meadows (73 taxmann.com 241)(Kar) following its earlier order in the case of CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar), had held, that where the notice issued by the A.O under Sec. 274 r.w Sec. 271(1)(c) does not specify the limb of Sec. 271(1)(c) for which the penalty proceedings had been 13 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 initiated, i.e, whether for ‘concealment of particulars of income’ or ‘furnishing of inaccurate particulars’, then, the same has to be held as bad in law. The ‘Special Leave Petition’ (for short ‘SLP’) filed by the revenue against the aforesaid order of the Hon’ble High Court of Karnataka had been dismissed by the Hon’ble Supreme Court in CIT Vs. SSA’s Emerald Meadows (2016) 73 taxmann.com 248 (SC). Apart from that, we find that a similar view had been taken by the Hon’ble High Court of Bombay in the case of CIT Vs. Samson Perinchery (ITA No. 1154 of 2014; Dt. 05.01.2017) (Bom). 14. We find that as averred by the Ld. A.R the indispensable obligation on the part of the A.O to clearly put the assessee to notice as regards the charge under the aforesaid statutory provision, viz. Sec. 271(1)(c) had been deliberated upon by a coordinate bench of the Tribunal, i.e. ITAT “C” Bench, Mumbai in the case of M/s Orbit Enterprises Vs. ITO-15(2)(2), Mumbai, ITA No. 1596 & 1597/Mum/2014, dated 01.09.2017. The Tribunal in the aforementioned case had after considering the various judicial pronouncements, concluded, that the failure to specify the charge in 14 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 the ‘Show cause’ notice clearly reflects the non-application of mind by the A.O and would render the order passed by him under Sec. 271(1)(c) in the backdrop of the said serious infirmity as invalid and void ab initio. 15. We have given a thoughtful consideration to the issue before us and after deliberating on the facts, are of the considered view, that the failure on the part of the A.O to clearly put the assessee to notice as regards the default for which penalty under Sec. 271(1)(c) was sought to be imposed on him by specifying the default in the ‘SCN’, dated 27.12.2010, had left the assessee guessing of the default for which he was being proceeded against. In the backdrop of our aforesaid observations, we are of a strong conviction, that as the A.O had clearly failed to discharge his statutory obligation of fairly putting the assessee to notice as regards the default for which he was being proceeded against, therefore, the penalty under Sec. 271(1)(c) of Rs.3,13,172/- imposed by him being in clear violation of the mandate of Sec. 274(1) of the Act cannot be sustained. We, thus, for the aforesaid reasons not being able to persuade ourselves to subscribe to the imposition of 15 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 penalty by the A.O, therefore, set-aside the order of the CIT(A) who had upheld the same. The penalty of Rs.3,13,172/- imposed by the A.O under Sec.271(1)(c) is quashed in terms of our aforesaid observations. 16. As the penalty imposed on the assessee under Sec. 271(1)(c) of the Act has been quashed by us for want of jurisdiction on the part of the A.O, therefore, we refrain from adverting to and adjudicating the merits of the case. 17. The appeal of the assessee is allowed in terms of our aforesaid observations. Order pronounced in open court on 29 th day of April, 2022. Sd/- Sd/- JAMLAPPA D BATTULL RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 29 th April, 2022 SB 16 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 17 Anshul Ramnani Vs. ITO-1(2), Raipur ITA No. 41/RPR/2018 Date 1 Draft dictated on 26.04.2022 Sr.PS/PS 2 Draft placed before author 27.04.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order