MONA INFOTECH PVT. LTD., NEW DELHI V. ACIT, CENTRAL CIRCLE- 6, NEW DELHI

ITA 5116/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9026 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 08-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Question of law
• Section: 271(1)(c); 153A; 274; 73

Judgement Text

1 ITA NOS. 5114, 5115, 5116 & 5117/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 5114/DEL/20 17 (A.Y 2006-07) I.T.A. NO. 5115/DEL/20 17 (A.Y 2008-09) I.T.A. NO. 5116/DEL/20 17 (A.Y 2009-10) I.T.A. NO. 5117/DEL/2017 (A.Y 2010-11) (THROUGH VIDEO CONF ERENCING) MONA INFOTECH PVT. LTD. C-30, PANCHSHEEL ENCLAVE, NEW DELHI AAECM1412F (APPELLANT) VS ACIT CENTRAL CIRCLE-6 NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THESE FOUR APPEALS ARE FILED BY THE ASSESSEE AGAIN ST THE ORDER DATED 29/06/2017 PASSED BY CIT(A)-24, NEW DELHI FOR ASSE SSMENT YEAR 2006-07, 2008-09, 2009-10 & 2010-11 RESPECTIVELY. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- I.T.A. NO. 5114/DEL/2017 (A.Y 2006-07) 1. THAT THE LD. GIT (APPEAL) HAS ERRED IN UPHOL DING THE PENALTY OF RS.9,08,820/-,IMPOSED BY THE AO., INVOKING THE PROV ISIONS OF SEC 271(1)( C) OF IT ACT 1961. 2. THAT THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDIN G THE PENALTY OF APPELLANT BY SH. P. C YADAV, ADV RESPONDENT BY SH. GAURAV PUNDIR, SR. DR DATE OF HEARING 27.07.2021 DATE OF PRONOUNCEMENT 11.08.2021 2 ITA NOS. 5114, 5115, 5116 & 5117/DEL/2017 RS.9,08,820/-,WITHOUT CONSIDERING THE FACTS AND CIR CUMSTANCES OF THE CASE AND RELYING ON IRRELEVANT JUDICIAL PRONOUNCEMENTS. 3. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY , ILLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF CONTE MPORARY JURISPRUDENCE. ADDITIONAL GROUNDS A) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS VOID AS THE N OTICE U/S 274 READ WITH SEC. 271 IS BAD AND DEFECTIVE AS IT IS ISSUED WITHOUT DE LETING THE APPROPRIATE CLAUSE UNDER WHICH THE PENALTY IS PROPOSED TO BE IM POSED IS EITHER FOR FILING OF INACCURATE PARTICULAR OF INCOME OR CONCEALMENT OF P ARTICULAR OF INCOME AND AS SUCH THE NOTICE IS NOT SUSTAINABLE AND NOT CURABLE. I.T.A. NO. 5115/DEL/2017 (A.Y 2008-09) 1. THAT THE LD. GIT (APPEAL) HAS ERRED IN UPHOL DING THE PENALTY OF RS.1,18,656/- IMPOSED BY THE AO., INVOKING THE PROV ISIONS OF SEC 271(1)( C) OF IT ACT 1961. 2. THAT THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDI NG THE PENALTY OF RS.1,18,656/- WITHOUT CONSIDERING THE FACTS AND CIR CUMSTANCES OF THE CASE AND RELYING ON IRRELEVANT JUDICIAL PRONOUNCEMENTS. 3. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY , ILLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF CONTE MPORARY JURISPRUDENCE. I.T.A. NO. 5116/DEL/2017 (A.Y 2009-10) 1. THAT THE LD. GIT (APPEAL) HAS ERRED IN UPHOL DING THE PENALTY OF RS.30,900/- IMPOSED BY THE AO., INVOKING THE PROVIS IONS OF SEC 271(1)( C) OF IT ACT 1961. 2. THAT THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDI NG THE PENALTY OF RS.30,900/- WITHOUT CONSIDERING THE FACTS AND CIRCU MSTANCES OF THE CASE AND RELYING ON IRRELEVANT JUDICIAL PRONOUNCEMENTS. 3. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY , ILLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF CONTE MPORARY JURISPRUDENCE. 3 ITA NOS. 5114, 5115, 5116 & 5117/DEL/2017 I.T.A. NO. 5117/DEL/2017 (A.Y 2010-11) 1. THAT THE LD. GIT (APPEAL) HAS ERRED IN UPHOL DING THE PENALTY OF RS. 30,900/- IMPOSED BY THE AO., INVOKING THE PROVISION S OF SEC 271(1)( C) OF IT ACT 1961. 2. THAT THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDI NG THE PENALTY OF RS.30,900/- WITHOUT CONSIDERING THE FACTS AND CIRCU MSTANCES OF THE CASE AND RELYING ON IRRELEVANT JUDICIAL PRONOUNCEMENTS. 3. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY , ILLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF CONTE MPORARY JURISPRUDENCE. 3. A SEARCH WAS CONDUCTED IN ROCK LAND GROUP AS A R ESULT OF WHICH PROCEEDINGS U/S 153A WERE INITIATED AGAINST THE ASS ESSEE AND ASSESSMENT U/S 153A WAS FRAMED BY THE ASSESSING OFFICER VIDE HIS ORDER DATED 20/6/2014. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER MADE FOLLOWING ADDITIONS:- A.Y & QUANTUM NATURE OF ADDITION AND POSITION AFTER CIT(A) ORDER REMARKS 2006-07 (27,00,000/-) ADDITIONAL INCOME DISCLOSED B EFORE SETTLEMENT COMMISSION ASSESSMENT WERE UNDER SECTION 153A AND NOTHING WAS FOUND IN SEARCH 2008-09(2,00,000/-) ADDITIONAL INCOME DISCLOSED BEF ORE SETTLEMENT COMMISSION 2009-10(1,00,000/-) ADDITIONAL INCOME DISCLOSED BEF ORE SETTLEMENT COMMISSION 2010-11(1,00,000/-) ADDITIONAL INCOME DISCLOSED BEF ORE SETTLEMENT COMMISSION NOTICE DATED 20/06/2014 U/S 274 READ WITH SECTION 2 71(1)(C) WAS ISSUED TO THE ASSESSEE RELATING TO PENALTY. IN THE MEANWHILE , ADDITIONS MADE IN QUANTUM PROCEEDINGS WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL 4 ITA NOS. 5114, 5115, 5116 & 5117/DEL/2017 AVAILABLE ON RECORD SUSTAIN BY THE CIT(A). THE PEN ALTY U/S 271(1)(C) WAS IMPOSED FOR EACH YEAR AS FOLLOWS:- A.Y AMOUNT OF PENALTY SECTION 2006-07 9,08,820/- 271(1)(C) 2008-09 1,18,656/- 271(1)(C) 2009-10 30,900/- 271(1)(C) 2010-11 30,900/- 271(1)(C) 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE A SSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE AS SESSEE. 5. THE LD. AR SUBMITTED THAT THE ASSESSING O FFICER HAS SIMPLY INITIATED PENALTY PROCEEDINGS WITHOUT RECORDING HIS CLEAR SAT ISFACTION AND WITHOUT LEVYING THE SPECIFIC CHARGE AGAINST THE ASSESSEE. THE REQUIREMENT OF RECORDING OF SATISFACTION NOW DISPENSE WITH BY LEGISLATURE BY INSERTION OF CLAUSE 1B. HOWEVER, THERE ARE MANY JUDGMENTS WHEREIN IT HAS BE EN HELD THAT REQUIREMENT OF SATISFACTION OF THE ASSESSING OFFICER IS SINE QU A NONE EVEN AFTER AMENDMENT. THE LEVY OF SPECIFIC CHARGE AGAINST THE ASSESSEE IN THE BODY OF ASSESSMENT ORDER OR IN THE NOTICE OF PENALTY ISSUED ON THE DATE OF C OMPLETION OF ASSESSMENT PROCEEDINGS IS SINE QUA NONE FOR AFFIRMING THE JURI SDICTION OF SECTION 271(1)(C) OF THE ACT. IT IS THE CASE OF THE REVENUE THAT BOT H CHARGES I.E. FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME AR E APPLICABLE IN THIS CASE. BUT THE NOTICE ISSUED BY THE REVENUE CONTAIN THAT T HERE IS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME. THUS, NO SPECIFIC CHARGE WAS POINTED OUT BY THE ASSESSING OF FICER IN PENALTY NOTICE AND HENCE, ADDITION GROUNDS BE ADMITTED. THE LD. AR RE LIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF SSA EMERALD AN D THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF SAHARA INDIA TH AT THE NOTICE ISSUED FOR 5 ITA NOS. 5114, 5115, 5116 & 5117/DEL/2017 ASSUMING JURISDICTION OF 271(1)(C) WOULD BE UNAMBIG UOUS. THE JUDGMENTS WERE CONSIDERED BY THE COORDINATE BENCH IN ASSESSESES O WN CASE IN ITA NO. 5088/DEL/2017 DATED 21/1/2021. THE LD. AR FURTHER SUBMITTED HAT THE THIRD MEMBER BENCH OF THE TRIBUNAL HAS EXAMINED THE ISSUE OF SPECIFIC CHARGE IN NOTICE OF PENALTY IN A VERY EXTENSIVE MANNER AND HE LD THAT IN CASE THE ASSESSING OFFICER WOULD OF THE VIEW THAT BOTH CHARG ES ARE APPLICABLE THEN HE SHOULD USE THE EXPRESSION AND BETWEEN THE CHARGE OF CONCEALMENT AND INACCURATE PARTICULARS. THE LD. AR RELIED UPON THE DECISION OF HPCL VS. ADDL. CIT IN ITA NO. 554 & 555/DEL/2017. THE LD. AR SUBM ITTED THAT THE PERUSAL OF THE PENALTY NOTICE AND ORDER WOULD SHOW THAT THERE WAS NO SPECIFIC CHARGE AGAINST THE ASSESSEE AND HENCE PENALTY CANNOT BE SU STAINED. THE COORDINATE BENCH OF THE TRIBUNAL IN CASE OF AKHIL MEDITECH AND RADHIKA SURGICAL PVT. LTD. WHEREIN THE FACTS ARE SIMILAR AND THE ASSESSEE THER EIN WAS ALSO ASSESSED DUE TO THE SEARCH ACTION IN ROCKLAND GROUP HAS QUASHED THE PROCEEDINGS OF SECTION 271(1)(C). THEREFORE, THE PENALTY LEVIED IS NOT SU STAINABLE AS THE ASSESSING OFFICER HAS INITIATED THE PENALTY ON SOME OTHER CHA RGE AND LEVIED ON SOME OTHER CHARGE. IT IS SETTLED POSITION OF LAW THAT CONCEAL MENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS ARE TWO SEPARATE THINGS A ND THE ASSESSING OFFICER HAS TO SPECIFY THE CHARGE UNDER WHICH HE IS GOING TO IM POSE PENALTY ON THE ASSESSEE. THUS, THE LD. AR PRAYED THAT THE APPEALS OF THE ASSESSEE MAY BE ALLOWED. 6. THE LD. DR SUBMITTED THAT THE PENALTY ORDER IS VERY CLEAR AND THE PENALTY IS IMPOSED ON CONCEALMENT OF INCOME AND, THEREFORE, MERELY NOT MENTIONING THE SPECIFIC LIMB OF SECTION 271(1)(C) WILL NOT MAKE TH E PENALTY ORDER BAD IN LAW. THE LD. DR RELIED UPON THE ASSESSMENT ORDER, PENALT Y ORDER AND ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED A LL THE RELEVANT MATERIALS AVAILABLE ON RECORD. FIRST OF ALL, IN THE NOTICE IS SUED U/S 274 R.W.S 271(1)(C) OF THE INCOME TAX ACT, 1961, THERE WAS NO SPECIFIC CHA RGES AS RELATES TO 6 ITA NOS. 5114, 5115, 5116 & 5117/DEL/2017 CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. FROM THE NOTICE DATED 20/06/2014 (A.Y. 2006-07) PRO DUCED BY THE LD. AR DURING THE HEARING, IT CAN BE SEEN THAT THE ASSESSI NG OFFICER WAS NOT SURE UNDER WHICH LIMB OF PROVISIONS OF SECTION 271 OF TH E INCOME TAX ACT, 1961, THE ASSESSEE IS LIABLE FOR PENALTY. BESIDES THAT THE AS SESSMENT ORDER ALSO DID NOT SPECIFY THE CHARGE AS TO WHETHER THERE IS CONCEALME NT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN ASSESSEES C ASE. BESIDES THIS, THE PRESENT CASE IS RELATING TO SEARCH CONDUCTED BY THE REVENUE IN THE PREMISES OF THE ASSESSEE, WHILE THE DECISION RELIED BY THE ASSESSIN G OFFICER AS WELL AS CIT (A) THAT OF HONBLE SUPREME COURT IN CASE OF MAK DATA P . LTD. VS. CIT 358 ITR 593 IS RELATING TO SURVEY AND THERE IS NO ISSUE INVOLVE D ABOUT THE NOTICE ISSUED U/S 271(1)(C) R.W.S. 274 OF THE ACT. THIS CASE RELIED B Y THE REVENUE IS NOT APPLICABLE IN THE PRESENT CASE DUE TO THE DISTINGUISHING FACTS . THERE IS SEPARATE PROVISION FOR PENALTY IN SEARCH CASES GIVEN UNDER THE STATUTE AFTER 01.07.2012 THAT OF SECTION 271AAB OF THE ACT WHICH WAS TOTALLY IGNORED BY THE ASSESSING OFFICER. THUS, THE PENALTY ITSELF IS BASED ON INCORRECT SECT ION. THEREFORE WE ARE TAKING UP THE CONTENTION OF THE ASSESSEE THAT THERE IS NO PARTICULAR LIMB MENTIONED IN THE NOTICE ISSUED UNDER SECTION 271(1)(C) R.W.S. 27 4 OF THE ACT. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUP REME COURT IN CASE OF M/S SSA EMERALD MEADOW. THE EXTRACT OF THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN M/S SSA EMERALD MEADOWS ARE AS UNDER WHICH WAS CONFIRMED BY THE HONBLE APEX COURT: '3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'T HE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE ITA NO. 4913/DEL/2015 DECISION OF THE DIVISION BENCH OF THI S COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 7 ITA NOS. 5114, 5115, 5116 & 5117/DEL/2017 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIA L QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE AP PEAL IS ACCORDINGLY DISMISSED.' THUS, ADDITIONAL GROUND NO. (II) OF THE ASSESSEE'S APPEAL IS ALLOWED. SINCE THE INCEPTION OF THE NOTICE ISSUED U/S 271(1)(C) HAS BE COME NULL AND VOID, THERE IS NO NEED TO COMMENT ON MERIT OF THE CASE. THE PENALT Y U/S 271(1)(C) OF THE ACT IS QUASHED. SINCE IN THE INSTANT CASE ALSO THE INAPPROPRIATE W ORDS IN THE PENALTY NOTICE HAS NOT BEEN STRUCK OFF AND THE NOTICE DOES NOT SPECIFY AS TO UNDER WHICH LIMB OF THE PROVISIONS, THE PENALTY U/S 271(1 )(C) HAS BEEN INITIATED, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E PENALTY LEVIED U/S 271(1)(C) IS NOT SUSTAINABLE AND HAS TO BE DELETED. ALTHOUGH THE LD. DR SUBMITTED THAT MERE NON-STRIKING OFF OF THE INAPPROPRIATE WORDS WI LL NOT INVALIDATE THE PENALTY PROCEEDINGS, HOWEVER, THE DECISION OF THE HONBLE K ARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) WHERE THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED IS DIRECTLY ON THE ISSUE CONTEST ED HEREIN BY THE ASSESSEE. FURTHER, WHEN THE NOTICE IS NOT MENTIONING THE CONC EALMENT OR THE FURNISHING OF INACCURATE PARTICULARS, THE RATIO LAID DOWN BY T HE HONBLE HIGH COURT IN CASE OF M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (S UPRA) WILL BE APPLICABLE IN THE PRESENT CASE. THE HONBLE DELHI HIGH COURT HELD AS UNDER: 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, WHICH W AS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT I N CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR) AND OBSE RVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIG H COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIO NER OF INCOME TAX V. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 241(KAR) , THE APPEAL AGAINST 8 ITA NOS. 5114, 5115, 5116 & 5117/DEL/2017 WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA I N SLP NO. 11485 OF 2016 BY ORDER DATED 5 TH AUGUST, 2016. 22. ON THIS ISSUE AGAIN THIS COURT IS UNABLE TO FIN D ANY ERROR HAVING BEEN COMMITTED BY THE ITAT. NO SUBSTANTIAL QUESTION OF LAW ARISES. IN FACT, IN IDENTICAL FACTS IN RESPECT OF SEARCH CO NDUCTED IN ROCKLAND GROUP OF CASES ON 06.09.2011 AND THE APPLICATIONS FILED F OR SETTLEMENT U/S 245C OF THE ACT BEFORE THE INCOME TAX SETTLEMENT COMMISSION IN THE CAPACITY OF RELATED PERSON IN CASE OF RADHIKA SURGICAL PVT. LTD. VS. AC IT (ITA NO. 5088/DEL/2017 ORDER DATED 21.01.2021), THE TRIBUNAL HAS DEALT THE ISSUE OF PENALTY ITSELF. THE SAME WAS DECIDED IN FAVOUR OF THE ASSESSEE THEREIN, THEREBY DELETING THE PENALTY. IN FACT, IN THE PRESENT ASSESSEES CASE TH E LD. DR COULD NOT POINT OUT ANY DISTINGUISHING FACTS TO THAT OF THE DECISION OF THE TRIBUNAL IN RADHIKA SURGICAL (SUPRA). THUS, NOTICE UNDER SECTION 271(1 )(C) R.W.S. 274 OF THE ACT ITSELF IS BAD IN LAW. WE, THEREFORE, SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO CANCEL THE PENALTY SO LEVI ED. ALL THESE FOUR APPEALS ARE IDENTICAL AND THE ISSUE CONTESTED THERE IS COMMON, THEREFORE, THE APPEALS ARE ALLOWED. 8. IN RESULT, ALL THE APPEALS OF THE ASSESSEE ARE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF AUGUST, 2021. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 11/08/2021 9 ITA NOS. 5114, 5115, 5116 & 5117/DEL/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI