Smt. Ratnawali Singh, Lucknow V. Income Tax Officer- 1(3), Lucknow

ITA 496/LKW/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0243 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 27-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 11-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Question of law
• Section: 271(1)(c); 274; 64

Judgement Text

I.T.A. NO.496/LKW/2018 ASSESSMENT YEAR:2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.496/LKW/2018 ASSESSMENT YEAR:2013-2014 SMT. RATNAWALI SINGH, 3/184, VISHAL KHAND, GOMTI NAGAR, LUCKNOW. PAN:AIJPS 2272 B VS. INCOME TAX OFFICER, RANGE-1(3), LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF LEARNED CIT(A)-1, LUCKNOW DATED 16/03/2018 PERTAINING TO AS SESSMENT YEAR 2013- 2014. 2. IN THIS APPEAL, THE ONLY GRIEVANCE OF THE ASSESS EE IS AGAINST IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH HAS BEEN CONFIRMED BY THE LEARNED CIT(A). 3. AT THE TIME OF HEARING BEFORE US, THE LEARNED A. R. OF THE ASSESSEE INVITED OUR ATTENTION TO THE PAPER BOOK FILED WHERE IN SHOW CAUSE NOTICE FOR PENALTY UNDER SECTION 274 READ WITH 271(1)(C) OF TH E ACT WAS PLACED. IT WAS SUBMITTED THAT FROM A PERUSAL OF THIS NOTICE, I T IS CRYSTAL CLEAR THAT THE CHARGE IS NOT SPECIFIC FOR WHICH PENALTY IS LEVIED UNDER SECTION 271(1)(C) OF APPELLANT BY SHRI K. R. RASTOGI, C. A. RESPONDENT BY S HRI C. K. SINGH, D.R. DATE OF HEARING 16/05/2019 DATE OF PRONOUNCEMENT 16 / 05 /201 9 I.T.A. NO.496/LKW/2018 ASSESSMENT YEAR:2013-14 2 THE ACT, WHETHER FOR CONCEALMENT OF INCOME OR FOR F URNISHING OF INACCURATE PARTICULARS OF INCOME. THE LEARNED A.R. OF THE ASS ESSEE VEHEMENTLY ARGUED THAT IT IS SETTLED POSITION OF LAW THAT IF NOTICE U NDER SECTION 274 READ WITH 271(1)(C) IS NOT SPECIFIC ABOUT THE CHARGE OR LIMB UNDER WHICH PENALTY IS BEING LEVIED UNDER SECTION 271(1)(C) OF THE ACT, TH EN ANY PENALTY LEVIED ON THE BASIS OF SUCH NOTICE IS BAD IN LAW AND LIABLE T O BE DELETED. 4. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDERS OF THE AUTHORITIES BELOW. 5. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE R IVAL CONTENTIONS AND AS APPARENT FROM NOTICE UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT, WE FIND THAT THE CHARGE ON WHICH PENALTY IS LE VIED IS NOT SPECIFIC. THE COPY OF SHOW CAUSE NOTICE HAS BEEN MADE PART OF THI S ORDER, WHICH IS AS UNDER: I.T.A. NO.496/LKW/2018 ASSESSMENT YEAR:2013-14 3 FROM A PERUSAL OF THIS NOTICE, 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 INACCURA TE PARTICULARS OF INCOME. THE NOTICE HAS SPECIFIED BOTH CHARGES I.E. CONCEALM ENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AND HAS NOT SPECIFIED THE CHARGE FOR WHICH ACTION HAS BEEN TAKEN AGAINST ASSE SSEE. THE NON SPECIFIC NATURE OF NOTICE INDICATES NON APPLICATION OF MIND BY ASSESSING OFFICER. IT IS A SETTLED POSITION OF LAW THAT IF NOTICE UNDER SECT ION 274 READ WITH 271(1)(C) IS NOT SPECIFIC ABOUT THE CHARGE OR LIMB UNDER WHIC H PENALTY IS BEING LEVIED UNDER SECTION 271(1)(C) OF THE ACT, THEN ANY PENALT Y LEVIED ON THE BASIS OF SUCH NOTICE IS BAD IN LAW AND LIABLE TO BE DELETED. 6. THE LAW MANDATES THAT THE AUTHORITY, WHO IS PRO POSING TO IMPOSE PENALTY, SHALL BE CERTAIN AS TO WHAT BASIS PENALTY IS BEING LEVIED AND NOTICE MUST REFLECT THAT SPECIFIC REASON SO THAT ASSESSEE, TO 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 PR INCIPLES OF NATURAL JUSTICE AND AS HAS BEEN UPHELD BY HON'BLE APEX COURT AND OT HER HIGH COURTS. I WOULD LIKE TO RELY ON THE FOLLOWING CASES:- (1) CIT VS. SSAS EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 (SC). IN THIS CASE THE HON'BLE APEX COURT LOOKED I NTO THE FACTS BEFORE THEM THAT TRIBUNAL RELYING ON THE DECISION O F DIVISION BENCH OF HON'BLE KARNATAKA HIGH COURT IN THE CASE O F CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACTORY (SUP RA) ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT NOT ICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WIT H SECTION 271(1)(C) OF THE ACT WAS BAD IN LAW AS IT DID NOT S PECIFY UNDER WHICH LIMB OF 271(1)(C) PENALTY PROCEEDINGS HAS BEE N INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WH EN THE MATTER TRAVELLED UPTO THE HIGH COURT, IT SUPPORTED THE JUD GMENT 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 I.T.A. NO.496/LKW/2018 ASSESSMENT YEAR:2013-14 4 DECIDED. THEREAFTER AN SLP WAS FILED BEFORE THE HO N'BLE APEX COURT AND THE APEX COURT DISMISSED THE SLP OF THE R EVENUE FINDING NO MERIT THEREIN AND CONFIRMING THE ISSUE I N FAVOUR OF THE ASSESSEE. (2) CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACT ORY [2013] 359 ITR 565 (KARN.). IN THIS CASE, IT HAS B EEN CLEARLY MENTIONED AND HELD BY THE HON'BLE HIGH COURT THAT N OTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF TH E ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN 271(1)( C) I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURN ISHING OF INACCURATE PARTICULARS OF INCOME. SENDING PRINTED FORM WHERE ALL THE GROUNDS MENTIONED WOULD NOT SATISFY THE REQ UIREMENT OF LAW. ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS NO PEN ALTY COULD BE IMPOSED TO THE ASSESSEE. PENALTY PROCEEDINGS AR E DISTINCT FROM ASSESSMENT PROCEEDINGS THOUGH IT EMANATES FROM THE ASSESSMENT PROCEEDINGS STILL IT IS SEPARATE AND IND EPENDENT PROCEEDINGS ALL TOGETHER. (3) MEHERJEE CASSINATH HOLDINGS PVT. LTD VS. ACIT (ITAT MUMBAI) ITA NO. 2555/MUM/2012, ORDER DATED 28/04/2017 WHERE IN THE OBSERVATION OF THE BENCH WAS THAT PENALTY PROCEEDIN GS UNDER SECTION 271(1)(C) OF THE ACT ARE 'QUASI-CRIMINAL' P ROCEEDINGS AND OUGHT TO COMPLY WITH 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 A WARE AS TO WHICH OF THE TWO LIMBS OF S. 271(1)(C) HE HAS TO RE SPOND. (4) CHANDRA PRAKASH BUBNA VS. INCOME TAX OFFICER, WARD 27(3), KOLKATA (ITAT KOLKATA BENCH) [2015] 64 TAXMANN.COM 155 WHEREIN IT WAS HELD THAT WHEN THE ASSESSING OFFICER LEVIED PENALTY WITHOUT BRINGING OUT ANY SPECIFIC CHARGE FO R WHICH PENALTY HAD BEEN IMPOSED, PENALTY WAS LIABLE TO BE DELETED. 7. THE SETTLED LEGAL POSITION ON THE ISSUE, AS ENSH RINED 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 H AS NOT SPECIFIED THE CHARGE AND LIMB UNDER WHICH PENALTY SHOULD BE LEVIE D, IT IS VOID AB INITIO AND ANY CONSEQUENT PENALTY IMPOSED ON THE BASIS OF SUCH NOTICE IS, THEREFORE, I.T.A. NO.496/LKW/2018 ASSESSMENT YEAR:2013-14 5 ILLEGAL AND BAD IN LAW AND LIABLE TO BE DELETED. W E, THEREFORE, DIRECT DELETION OF PENALTY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 16/05/2019) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:16/05/2019 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSISTANT REGISTRAR