Income Tax Officer, Ward-1, Srikakulam V. Sai Gold Palace, , Srikakulam

ITA 440/VIZ/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8267 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 23-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: C V S MURTHY
• Keywords: Question of law
• Section: 271(1)(c); 143(3); 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 440 /VIZ/201 8 ( / ASSESSMENT YEAR : 20 1 4 - 1 5 ) INCOME TAX OFFICER WARD - 1 SRIKAKULAM VS. M/S SAI GOLD PALACE D.NO.13 - 14A, MARKET STREET NARSANNAPETA SRIKAKULAM [PAN : ABVFS9256Q ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : S MT.SUMAN MALIK, DR / RESPONDENT BY : S HRI C.V.S.MURTHY, AR / DATE OF HEARING : 0 3 . 0 7 . 201 9 / DATE OF PRONOUNCEMENT : 17 .0 7 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 2, VISAKHAPATNAM VIDE I.T.A. NO.1003 - /2017 - 18/ITO,W - 1,SKM/2017 - 18 DATED 18.06.2018 FOR THE ASSESSMENT YEAR (A.Y.)2014 - 15. 2 I.T.A. NO . 440 /VIZ/201 8 . A.Y.201 4 - 1 5 M/S SAI GOLD PALACE, SRIKAKULAM 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). IN THIS CASE, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,13,03 , 0 68/ - ON 29 . 11 . 2014 AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON TOTAL INCOME OF RS.1,38,12,136/ - . A SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 31 . 10 . 2013 AND DURING THE SURVEY THE EXCESS STOCK OF GOLD JEWELLERY WAS FOUND AMOUNTING TO RS.1,37,66,588/ - AND THE SAME WAS ADMITTED BY THE ASSESSEE AS ADDITIONAL INCOME FOR THE A.Y 2014 - 15. IN THE ASSESSMENT, THE ASSESSING OFFICER (AO) MADE THE ADDITION O F RS.24,81,568/ - RELATING TO DIFFERENCE BETWEEN THE REMUNERATION CLAIMED BY THE PARTNERS AND THE REMUNERATION ALLOWE D AS PER THE ACT. THE AO INITIATED THE PENALTY U/S 271(1)(C) OF THE ACT AND LEVIED THE PENALTY OF RS.42,53,875/ - BY AN ORDER DATED 30.06.20 17. 3. AGAINST THE ORDER OF THE AO PASSED U/S 271(1)(C), THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CANCELLED THE PENALTY, SINCE, THE NOTICE ISSUED U/S 271(1)(C) WAS DEFECTIVE, IN AS MUCH AS NON - STRIKING OF THE IRRELEVANT COLUMN IN TH E NOTICE LEADING TO AMBIGUITY FOR WHICH ACT OF THE ASSESSEE, THE AO SOUGHT THE EXPLANATION WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS. THE LD.CIT(A) FOLLOWED 3 I.T.A. NO . 440 /VIZ/201 8 . A.Y.201 4 - 1 5 M/S SAI GOLD PALACE, SRIKAKULAM THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE C ASE OF BAISETTY REVATHY IN ITTA.NO.684/2016 AND THE DECISION OF THIS TRIBUNAL IN THE CASE OF KONCHADA SREERAM IN ITA NO . 388/VIZAG/2015 AND CANCELLED THE PENALTY AND ALLOWED THE APPEAL OF THE ASSESSEE . FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT R ELEVANT PART OF THE ORDER OF THE LD.CIT(A) IN PARA NO. 6 TO 6.2 WHICH READS AS UNDER : 6. I HAVE CONSIDERED THE SUBMISSIONS MADE AND ALSO GONE THROUGH THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE AR. THE PENALTY NOTICE ISSUED BY THE AO READS AS UNDER : WHEREAS IN THE COURSE OF PROCEEDING BEFORE ME FOR THE ASSESSMENT YEAR 2014 - 15 IT APPEARS TO ME THAT YOU HAVE CONCEALED THE PAR TICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 6.. FROM THE NOTICE ISSUED, IT IS SEEN THAT AO ISSUED NOTICE FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS, WHICH PROVES THAT THE ASSESSING OFFICER WAS NOT SURE OF WHICH OF THE OFFENCE HE SOUGHT THE EXPLANATION. IN THIS REGARD, IT IS RELEVANT TO REFER TO THE DECISION RENDERED BY THE H ON'BLE JURISDICTIONAL H IGH COURT IN THE CASE OF SMT.BAISETTY R EVATHI ( I TTA.NO.684/2016) , WHEREIN THE HONBLE COURT HAS HELD AS UNDER : ON PRINCIPLE, WHICH 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, AN ASSESSEE WOULD NOT HAVE PROPER OPPORTUNITY TO PUT FORTH HIS DEFENSE. WHEN THE PROCEEDINGS ARE PENAL IN NATURE RESULTING IN IMPOSITION OF PENALTY RANGING FROM 1000IO TO 3000/O OF THE TAX LIABILITY, THE CHARGE MUST BE UNEQUIVOCAL AND UNAMBIGUOUS. WHEN THE CHARGE IS EITHER CONCEALM ENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THEREOF, THE REVENUE MUST SPECIFY 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 P RESENT 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. 4 I.T.A. NO . 440 /VIZ/201 8 . A.Y.201 4 - 1 5 M/S SAI GOLD PALACE, SRIKAKULAM W E ARE THEREFORE OF THE OPINION THAT THE ORDER UNDER APPEAL DO ES NOT 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 H ON'BLE ITAT IN THE CASE OF KONCHADA SREERAM(ITA.NO 388/VIZAG / 20 15) FOLLOWING THE DECISION OF THE H ON'BLE AP H IGH COURT CITED SUPRA AND ITS O WN DECISION IN THE CASES OF NARAYANA REDDY ENTERPRISES (229/VIZ / 2015) AND SMT.MA KIN A ANNAPURNA (ITA NOS.604 & 605JVIZAGJ2014) HELD THAT NON - STRIKING OF THE IRRELEVANT COLUMN RENDE RS THE NOTICE ISSUED U/S 271 AS INVALID. 4. AGAINST THE ORDER OF THE LD.CIT(A), THE REVENUE FILED APPEAL BEFORE THIS TRIBUNAL. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THERE IS NO DISPUTE THAT THE AO HAD ISSUED THE NOTICE SEEKING EXPLANATION OF THE ASSESSEE WITHOUT REFERRING TO THE SPECIFIC CHARGE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCUR ATE PARTICULARS. AS PER THE NOTICE T HE AO SOUGHT EXPLANATION FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS WHICH LEADS TO AMBIGUITY AND CONFUSION TO THE ASSESSEE AS WELL AS THE AO. ON IDENTICAL FACTS, THIS TRIBUNAL HELD THAT THE NOTICE ISSUED U/S 271(1)(C) WITHOUT STRIKING IRRELEVANT COLUMN RENDERS THE NOTICE INVALID. SINCE THE LD.CIT(A) HAS FOLLOWED THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT AND THE ORDER OF THIS TRIBUNAL, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. 5 I.T.A. NO . 440 /VIZ/201 8 . A.Y.201 4 - 1 5 M/S SAI GOLD PALACE, SRIKAKULAM 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JULY 2019. S D / - S D / - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 17 .0 7 .2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - M/S SAI GOLD PALACE, D.NO.13 - 14A, MARKET STREET NARSANNAPETA, SRIKAKULAM 2. / THE REVENUE INCOME TAX OFFICER , WARD - 1 , SRIKAKULAM 3. THE COMMISSIONER OF INCOME TAX - 2 , VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME - TAX (APPEALS) - 2, VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM