Boyina Janardhana Rao, Visakhapatnam V. The ITO, Visakhapatnam

ITA 412/VIZ/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6444 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 10-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Keywords: Principle of natural justice; Question of law
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER ITA NO. 411 / VIZ /201 6 (ASST. YEAR : 20 0 8 - 0 9 ) SMT. ANDHAVARAPU VINODHA, 58 - 20 - 33, APSEB COLONY, BUTCHIRAJUPALEM, VISAKHAPATNAM. V S . IT O , WARD - 4( 2 ) , VISAKHAPATNAM . PAN NO. AJHPA 1843 K ITA NO. 412 / VIZ /201 6 (ASST. YEAR : 20 08 - 09 ) BOYINA JANARDHANA RAO, 58 - 21 - 4 , APSEB COLONY, BUTCHIRAJUPALEM, VISAKHAPATNAM. VS . IT O , WARD - 4(2), VISAKHAPATNAM. PAN NO. AHXPB 8801 C ITA NO. 413 / VIZ /201 6 (ASST. YEAR : 20 08 - 09 ) TANKALA DILLESWARA RAO, D.NO. 49 - 23 - 16, VIGNESWARA RESIDENCY, LALITHANAGAR, VISAKHAPATNAM. VS . IT O , WARD - 4( 1 ), VISAKHAPATNAM. PAN NO. AFBPA 5317 K ITA NO. 414 / VIZ /201 6 (ASST. YEAR : 20 08 - 09 ) ANDHAVARAPU NAGESWARA RAO, D.NO. 5 5 - 20 - 33, APSEB COLONY, BUTCHIRAJUPALEM, VISAKHAPATNAM. VS . IT O , WARD - 4( 2 ), VISAKHAPATNAM. PAN NO. ADYPA 5926 C 2 ITA NO S . 411 - 415/VIZ/2016 ( ANDHAVARAPU VINODHA & OTHERS ) ITA NO. 415 / VIZ /201 6 (ASST. YEAR : 20 08 - 09 ) SMT. BOYINA MANIKRISHNA, 49 - 46 - 27, NGGOS COLONY, AKKAYYAPALEM , VISAKHAPATNAM. VS . IT O , WARD - 4( 1 ), VISAKHAPATNAM. PAN NO. AFNPB 7552 C (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI I. KAMA SASTRY FC A. DEPARTMENT BY : SHRI D.J.P. ANAND SR. DR DATE OF HEARING : 27 / 1 1 /201 7 . DATE OF PRONOUNCEMENT : 2 0 / 1 2 /201 7 . O R D E R THESE ARE THE APPEALS FILED BY THE DIFFERENT ASSESSEE S AGAINST THE SEPARATE ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS) - 2 , VISAKHAPATNAM , ALL DATED 01 /0 7 /201 6 FOR THE ASSESSMENT YEAR 200 8 - 0 9 . 2. IN ALL THESE APPEALS , THE ASSESSEE HAS RAISED A COMMON GROUND , WHICH READS AS UNDER: - THE LD. CIT(A) IS NOT CORRECT IN REJECTING THE PLEA OF THE ASSESSEE THAT THE IMPOSITION OF PENALTY IS NOT VALID AS THE NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) IS VAGUE. 3. WHEN THESE APPEALS ARE TAKEN UP FOR HEARING, LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS SUBMITTED THAT SHOW - CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 R . W . S . 3 ITA NO S . 411 - 415/VIZ/2016 ( ANDHAVARAPU VINODHA & OTHERS ) 271 OF THE ACT IS NOT CLEAR WHETHER ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTIC ULARS OF SUCH INCOME. THEREFORE, THIS GROUND WAS RAISED IN APPEAL BEFORE THE LD.CIT(A), WHO S I MPLY REJECTED THE SAME ON THE GROUND THAT IT IS A CURABLE MISTAKE UNDER SECTION 292B OF THE ACT. 4 . LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BY PLACING RELIANCE ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS [(2016) 73 TAXMAN.COM 248 (SC)] AND ALSO THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF TELANGANA & A.P. IN I.T.T.A. NO. 684/2016 IN THE CASE OF PCIT VS. SMT. BAISETTY REVATHI , BY ORDER DATED 30/07/2017 HAS SUBMITTED THAT NOTICE ISSUED BY THE ASSESSING OFFICER IS IN VALID, THEREFORE , SAME MAY BE QUASHED. 5 . ON THE OTHER HAND , LD. DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT IF THE ORDER OF PENALTY IS NOT HAVING SPECIF ICATION ON CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME , IS A CURABLE MISTAKE . THEREFORE, H E STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 6 . I HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW . 7 . I HAVE GONE THROUGH THE SHOW - CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER IN ALL THE APPEAL S AND FIND THAT ASSESSING OFFICER 4 ITA NO S . 411 - 415/VIZ/2016 ( ANDHAVARAPU VINODHA & OTHERS ) IS NOT CLEAR WHETHER SHOW - CAUSE NOTICE IS ISSUED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISH ED INACCURATE PARTICULARS OF SUCH INCOME. THE ASSESSEE HAS FILED A PAPER BOOK AND DREW MY ATTENTION AT PAGE NO.3, A NOTICE ISSUED BY THE ASSESSING OFFICER DATED 09/12/2 011. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE NOTICE IN THE CASE OF SMT. ANDHAVARAPU VINODHA IS EXTRACTED AS UNDER: - WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE A.Y. 2008 - 09 IT APPEARS TO ME THAT YOU HAVE CONCEALED THE PARTICUL ARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' 8 . FROM THE ABOVE, IT IS NOT CLEAR WHETHER ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INC OME . THEREFORE, THE NOTICE ISSUED BY THE ASSESSING OFFICER IS A VAGUE NOTICE AND IS LIABLE TO BE QUASHED IN THE LIGHT OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. BAISETTY REVATHI (SUPRA) AND ALSO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA). THE COORDINATE BENCH OF ITAT, VISAKHAPATNAM IN THE CASE OF KONCHADA SREERAM VS. ITO IN ITA NO. 388/VIZ/2015, BY ORDER DATED 06/10/2017 HAS CONSIDERED THE VALIDITY OF NOTICE BY FOLLOWING THE ABOVE REFERRED TO JUDGMENTS AND HELD THAT NOTICE ISSUED BY THE ASSESSING OFFICER IS NOT A VALID NOTICE AND ACCORDINGLY QUASHED. 5 ITA NO S . 411 - 415/VIZ/2016 ( ANDHAVARAPU VINODHA & OTHERS ) FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME. THE DEPARTMENT HAS CONDUCTED THE SURVEY U/S 133A AND COMPLETED THE ASSESSMENT U/S 143(3) ON TOTAL INCOME OF RS. 15,43,041/ - AND INITIATED PENALTY PROCEEDINGS U/S 271(1)(C). THE FACT IS THAT LONG TERM CAPITAL GAINS FOR SALE OF THE PROPERTY HAVE COME TO THE NOTICE OF THE ASSESSING OFFICER BECAUSE OF THE EFFORTS MADE BY THE DEPARTMENT. THEREFORE, THE AO HAS INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) AND ISSUED SHOW CAUSE NOTICE IN THE PRINTED PROFORMA OF PENALTY. THE AO HAS ISSUED THE PENALTY NOTICE WHICH READS AS UNDER : WHEREAS IN THE COURSE OF THE PROCEEDING BEFORE ME FOR THE ASST. YEAR 2007 - 08 IT APPEARS TO M E THAT YOU HAVE CONCEALED THE PARTICULARS OF YOUR SOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 6.1. FROM THE NOTICE ISSUED BY THE AO, IT IS OBSERVED THAT THE ASSESSING OFFICER HAD ISSUED THE NOTICE FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS. AS PER THE NOTICE, THE ASSESSING OFFICER WAS NOT SURE OF WHICH LIMB OF THE OFFENCE HE SOUGHT THE EXPLANATION FROM THE ASSESSEE, WHETHER IT WAS FOR THE CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS. AS PER T HE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT CITED, FOR STARTING THE PENALTY PROCEEDINGS, THE CONDITION PRECEDENT IS THAT THE ASSESSING OFFICER MUST BE SATISFIED THAT A PERSON HAS EITHER CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME. THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE AWARE OF THE GROUNDS ON WHICH IMPOSITION OF PENALTY IS PROPOSED AS HE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE THE FULL OPPOR TUNITY TO MEET THE CASE OF THE REVENUE SO AS TO SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT EXIST AND THAT HE IS NOT LIABLE TO PAY THE PENALTY. THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE LAW CITED HELD THAT THE PRACTICE OF THE REV ENUE IN SENDING THE PRINTED FORM WHERE ALL THE GROUNDS MENTIONED IN 271(1)(C) ARE MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW WHEN THE CONSEQUENCE OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NATURE AND HAS TO PAY THE PENALTY RANGING FROM 100% TO 300% OF THE TAX LIABILITY. AS THE PROVISIONS OF SECTION 271(1)(C) HAVE TO BE STRICTLY CONSTRUED, THE HONBLE HIGH COURT OF KARNATAKA MANDATED THAT THE NOTICE ISSUED SHOULD BE SET OUT THE GROUNDS WHICH THE ASSESSEE HAS TO MEET SPECIFI CALLY, OTHERWISE THE PRINCIPLES OF NATURAL JUSTICE WOULD BE OFFENDED AS THE SHOW CAUSE NOTICE WOULD BE VAGUE. ON THE SIMILAR FACTS, HONBLE SUPREME COURT DISMISSED THE SLP IN THE CASE OF SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 248(SC). LD. DRS ARGUMEN T THAT THE CASE IS DISTINGUISHABLE ON FACTS IS NOT ACCEPTABLE SINCE THE LD. DR RELIED ON THE PASSING OBSERVATION OF THE HONBLE HIGH COURT OF AP. IN THE ASSESSEES CASE, THE ISSUE IS THE DEFECTIVE NOTICE U/S 271(1)(C) BUT NOT THE PENALTY ORDER. UNLESS THE NOTICE 6 ITA NO S . 411 - 415/VIZ/2016 ( ANDHAVARAPU VINODHA & OTHERS ) ISSUED U/S 271(1)(C) IS VALID THE PENALTY ORDER CANNOT BE HELD TO BE VALID. THE ASSESSING OFFICER DID NOT STRIKE OFF THE IRRELEVANT COLUMN IN THE NOTICE AND MADE KNOWN THE ASSESSEE WHETHER THE PENALTY WAS INITIATED FOR THE CONCEALMENT OF INCOME OR FOR FURNISHING THE INACCURATE PARTICULARS. IN THE ASSESSMENT ORDER ALSO THE AO SIMPLY RECORDED THAT THE PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED SEPARATELY. NEITHER IN THE ASSESSMENT ORDER NOR IN THE PENALTY NOTICE, THE ASSESSING OFFICER HAS PUT THE ASSESSEE ON NOTICE FOR WHICH OFFENCE, THE PENALTY U/S 271 WAS INITIATED. THEREFORE, THE CASE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF CITED (SUPRA) WHEREIN THE HONBLE HIGH COURT HELD AS UNDER: ON PRINCIPLE, WHEN PENALTY PROCEEDINGS ARE SOUGHT TO BE INITIATED BY THE REVENUE UNDER SECTION 271(1)(C) OF THE ACT OF 1961, THE SPECIFIC GROUND WHICH FORMS THE FOUNDATION THEREFORE HAS TO BE SPELT OUT IN CLEAR TERMS OTHERWISE , ON ASSESEE WOULD NOT HAVE P ROPER OPPORTUNITY TO PUT FORTH HIS DEFENCE. WHEN THE PROCEEDINGS ARE PENAL IN NATURE RESULTING IN IMPOSITION OF PENALTY RANGING FROM 100% TO 300% OF THE TAX LIABILITY, THE CHARGE MUST BE UNEQUIVOCAL AND UNAMBIGUOUS. WHEN THE CHARGE IS EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THEREOF , THE REVENUE MUST SPECI F Y AS TO WHICH ONE OF THE TWO IS SOUGHT TO BE PRESSED INTO SERVICE AND CANNOT BE PERMITTED TO CLUB BOTH BY INTERJECTING AN 'OR' BETWEEN THE TWO, AS IN THE PRESENT CASE. THIS AMBIGUITY IN THE SHOW - CAUSE NOTICE IS FURTHER COMPOUNDED PRESENTLY BY THE CONFUSED FINDING OF THE ASSESSING OFFICER THAT HE WAS SATISFIED THAT THE ASSESSEE WAS GUILTY OF BOTH. WE ARE THEREFORE OF THE OPINION THAT THE ORDER UNDER APPEAL DOES NO T BROOK INTERFERENCE ON ANY GROUND. WE FIND NO QUESTION OF LAW, MUCH LESS A SUBSTANTIAL ONE, ARISING FOR CONSIDERATION WARRANTING ADMISSION OF THIS APPEAL. 6.2. ON THE SIMILAR FACTS, THE COORDINATE BENCH OF ITAT, VISAKHAPATNAM IN ITA NO.229/VIZ/2015 IN T HE CASE OF NARAYANA REDDY ENTERPRISES, FOLLOWING THE ORDER OF THE COORDINATE BENCH IN THE CASE OF SMT. MAKINA ANNAPURNA VS. ITO, VISAKHAPATNAM IN ITA NOS.604 & 605/VIZAG/2014 DATED 2.2.2017 HELD THAT NON - STRIKING OF THE IRRELEVANT COLUMN RENDERS THE NOTICE ISSUED U/S 271 AS INVALID. RESPECTFULLY, FOLLOWING THE DECISION OF THE HONBLE AP HIGH COURT CITED SUPRA AND THE DECISION OF THIS TRIBUNAL CITED (SUPRA), WE HOLD THAT THE NOTICE ISSUED U/S 271 IS INVALID AND CONSEQUENT PENALTY IMPOSED BY THE AO IS CANCEL LED. 9 . R ESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) AND ALSO THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. 7 ITA NO S . 411 - 415/VIZ/2016 ( ANDHAVARAPU VINODHA & OTHERS ) BAISETTY REVATHI (SUPRA) AND ALSO THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF KONCHADA SREERAM (SUPRA), I HOLD THAT THE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271 IS INVALID AND, THEREFORE PENALTY IMPOSED BY THE ASSESSING OFFICER IS CANC ELLED . 10. IN REMAINING APPEALS ALSO, THE ASSESSING OFFICER ISSUED A SIMILAR NOTICE TO THE ASSESSEES . AS I HAVE ALREADY H E LD THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER IS INVALID , PENALTY IMPOSED IN THESE APPEALS ARE ALSO CANCELLED. 1 1 . IN THE RESULT, ALL THE APPEAL S FILED BY THE ASSESSEE S ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 0 T H DAY OF DEC . , 201 7 . S D / - ( V. DURGA RAO ) JUDICIAL MEMBER D ATED : 2 0 T H DECEMBER , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE A) SMT. ANDHAVARAPU VINODHA, A) BOYINA JANARDHANA RAO B) TANKALA DILLESWARA RAO C) ANDHAVARAPU NAGESWARA RAO D) SMT. BOYINA MANIKRISHNA 2. THE REVENUE B) ITO, WARD - 4(2), VISAKHAPATNAM. C) ITO, WARD - 4(1), VISAKHAPATNAM . 3. THE CIT - 2 , VISAKHAPATNAM . 4. THE CIT(A) , VISAKHAPATNAM . 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER