Income Tax Officer -(Exemption), Lucknow V. M/s APS Academy, Lucknow

ITA 471/LKW/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6591 (ITAT-LUCKNOW)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-05-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 25-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT AWASTHI
• Keywords: Principle of natural justice; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 470 & 471/LKW/2017 ASSESSMENT YEAR: 2006 - 07 & 2008 - 09 INCOME TAX OFFICER (EXEMPTION ) LUCKNOW V. M/S A.P.S. ACADEMY LEELA BUILDING 235, SENANI VIHAR, LUCKNOW T AN /PAN : (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI BHARAT AWASTHI, D.R. RESPONDENT BY: SHRI RAKESH GARG, ADVOCATE DATE OF HEARING: 31 0 5 201 8 DATE OF PRONOUNCEMENT: 01 06 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THESE APPEALS PREFERRED BY THE REVENUE EMANATE FROM RESPECTIVE ORDERS PASSED BY THE LD. CIT(A) - 4, LUCKNOW, BOTH DATED 28/6/2017. 2 . THE ONLY GRIEVANCE OF THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A) DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) BY THE ASSESSING OFFICER. 3 . AT THE TIME OF HEARING, THE LD. A.R. OF THE ASSESSEE BROUGHT TO OUR NOTICE THE FACT THAT NOTICE UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT DOES NOT SPECIFY THE CHARGE FOR WHICH PENALTY UNDER SECTION 271(1)(C) IS LEVIED. FOR THIS, HE INVITED OUR ATTENTION TO PAGE 19 OF THE PAPER BOOK WHEREIN THE RELEVANT NOTICE FOR ASSESSMENT YEAR 2006 - 07 IS PLACED. SIMILARLY , FOR ASSESSMENT YEAR 2008 - 09 THE RELEVANT NOTICE IS PLACED AT PA GE 25 OF THE PAPER BOOK FILED BEFORE US. THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT FROM A CAREFUL PERUSAL OF THESE NOTICES, IT IS APPARENT THAT THE CHARGE IS NOT SPECIFIC AND THAT THE LIMB UNDER WHICH ITA NO.470 & 471/LKW/2017 PAGE 2 OF 6 PENALTY IS PROPOSED TO BE LEVIED ON THE ASSESSEE UND ER SECTION 271(1)(C) OF THE ACT IS NOT SPECIFIC, THEREFORE, THERE IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND HENCE NOTICES ARE VOID AB - INITIO. THEREFORE, NO PENALTY CAN BE LEVIED ON THE BASIS OF THE NOTICE WHICH IS VOID AB - INITIO. 4 . THE LD. D.R., ON THE OTHER HAND, PLACED RELIANCE UPON THE ORDERS OF THE ASSESSING OFFICER. 5 . WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS . A PERUSAL OF THE NOTICES ISSUED UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT REVEALS THAT THE CHARGE IS NOT SPE CIFIC AND THAT THE LIMB UNDER WHICH PENALTY IS PROPOSED TO BE LEVIED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE ACT IS NOT SPECIFIC. FOR THE SAKE OF READY REFERENCE, THE NOTICES ISSUED BY THE ASSESSING OFFICER FOR BOTH THE YEARS ARE REPRODUCED HEREUND ER: - NOTICE FOR ASSESSMENT YEAR 2006 - 07: ITA NO.470 & 471/LKW/2017 PAGE 3 OF 6 NOTICE FOR ASSESSMENT YEAR 200 8 - 0 9 : 6 . FROM A PERUSAL OF THESE NOTICES, IT IS CRYSTAL CLEAR THAT THE CHARGE IS NOT SPECIFIC FOR WHICH PENALTY IS LEVIED UNDER SECTION 271(1)(C) OF THE ACT, WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LAW MANDATES THAT THE AUTHORITY ITA NO.470 & 471/LKW/2017 PAGE 4 OF 6 WHO IS PROPOSING TO IMPOSE PENALTY SHALL BE CERTAIN AS TO WHAT BASIS PENALTY IS BEING LEVIED AND NOTICE MUST REFLECT THAT SPECIFIC REASON SO THAT ASSESSEE T O WHOM SUCH NOTICE IS GIVEN CAN WELL PREPARE HIMSELF REGARDING DEFENCE WHICH HE LIKES TO TAKE TO SUPPORT HIS CASE. THIS IS EVEN ENSHRINED IN THE PRINCIPLES OF NATURAL JUSTICE AND AS HAS BEEN UPHELD BY HON'BLE APEX COURT AND OTHER HIGH COURTS. WE WOULD LI KE TO RELY ON THE FOLLOWING CASES: - 7 . IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 (SC) , THE HON'BLE APEX COURT LOOKED INTO THE FACTS BEFORE THEM THAT TRIBUNAL RELYING ON THE DECISION OF DIVISION BENCH OF HON'BLE KARNATAKA HIGH COUR T IN THE CASE OF CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACTORY (SUPRA) ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT WAS BAD IN LAW AS IT DID NOT SPE CIFY UNDER WHICH LIMB OF 271(1)(C) PENALTY PROCEEDINGS HAS BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WHEN THE MATTER TRAVELLED UPTO THE HIGH COURT, IT SUPPORTED THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACTORY (SUPRA) AND DECIDED THAT THERE WAS THEREFORE NO SUBSTANTIAL QUESTION OF LAW TO BE DECIDED. THEREAFTER AN SLP WAS FILED BEFORE THE HON'BLE APEX COURT AND THE APEX COURT DISMISSED THE SLP OF THE REVENUE FINDING NO MERIT THEREIN AND CONFIRMING THE ISSUE IN FAVOUR OF THE ASSESSEE. 8 . IN THE CASE OF CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACTORY [2013] 359 ITR 565 (KARN.) , IT HAS BEEN CLEARLY MENTIONED AND HELD BY THE HON'BLE HIGH COURT THAT NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN 271(1)(C) I.E. WHETHER IT IS FOR CONCEALMENT OF ITA NO.470 & 471/LKW/2017 PAGE 5 OF 6 INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INC OME. SENDING PRINTED FORM WHERE ALL THE GROUNDS MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW. ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE ARE OFFENDED. ON THE BASIS OF SUCH PROC EEDINGS NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. PENALTY PROCEEDINGS ARE DISTINCT FROM ASSESSMENT PROCEEDINGS THOUGH IT EMANATES FROM THE ASSESSMENT PROCEEDINGS STILL IT IS SEPARATE AND INDEPENDENT PROCEEDINGS ALL TOGETHER. 9 . IN THE CASE OF MEHERJEE CAS SINATH HOLDINGS PVT. LTD VS. ACIT (ITAT MUMBAI) ITA NO. 2555/M UM/2012, ORDER DATED 28/04/2017, THE OBSERVATION OF THE ITAT MUMBAI BENCH WAS THAT PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ARE 'QUASI - CRIMINAL' PROCEEDINGS AND OUGHT TO COMPLY WIT H THE PRINCIPLES OF NATURAL JUSTICE. THE NON - STRIKING OF THE IRRELEVANT PORTION IN THE SHOW - CAUSE NOTICE MEANS THAT THE ASSESSING OFFICER IS NOT FIRM ABOUT THE CHARGE AGAINST THE ASSESSEE AND THE ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO LIMBS OF S . 271(1)(C) HE HAS TO RESPOND. 10 . IN THE CASE OF CHANDRA PRAKASH BUBNA VS. INCOME TAX OFFICER, WARD 27(3), KOLKATA (ITAT KOLKATA B ENCH) [2015] 64 TAXMANN.COM 155, IT WAS HELD BY ITAT KOLKATA BENCH THAT WHEN THE ASSESSING OFFICER LEVIED PENALTY WITHOUT BRINGIN G OUT ANY SPECIFIC CHARGE FOR WHICH PENALTY HAD BEEN IMPOSED, PENALTY WAS LIABLE TO BE DELETED. 11 . THE SETTLED LEGAL POSITION ON THE ISSUE AS ENSHRINED IN THE AFORESAID CASES IS APPARENT AND WE ARRIVE AT THE CONSIDERED VIEW THAT NOTICE UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT WHICH HAS NOT SPECIFIED THE CHARGE AND LIMB UNDER WHICH PENALTY SHOULD BE LEVIED, IT IS VOID AB INITIO AND ANY CONSEQUENT PENALTY IMPOSED ON THE BASIS OF SUCH NOTICE IS, THEREFORE, ILLEGAL AND BAD IN LAW AND LIABLE TO BE DELETED. ITA NO.470 & 471/LKW/2017 PAGE 6 OF 6 12 . BEFORE THE LD. CIT(A) ALSO, THE SUBMISSION OF THE ASSESSEE WAS THAT CHARGE FOR LEVY OF PENALTY IS NOT SPECIFIC AND IN SUPPORT THEREOF, ASSESSEE HAS PLACED RELIANCE UPON THE DECISION OF THE HON'BLE APEX COURT CIT VS. SSAS EMERALD MEADOWS [2016] 73 TAXMAN N.COM 248 (SC) . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE PENALTY ORDER S PASSED BY THE INCOME TAX OFFICER (EXEMPTIONS) UNDER SECTION 271(1)(C) OF THE ACT, THE LD. CIT(A) DELETED THE PENALTY. WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A), THEREFORE, WE CONFIRM THE ORDERS OF THE LD. CIT(A) DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT FOR BOTH THE ASSESSMENT YEARS. 13 . IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COUR T ON 01 / 0 6 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 ST JUNE , 201 8 JJ: 3105 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR