Late. Surja Mishra (Th. L/H Shri Mukesh Misra), Kanpur V. Income Tax Officer (3)4, Kanpur

ITA 517/LKW/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0181 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 10 month(s) 16 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: 2009-2010
• Appeal Filed On: 10-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Question of law
• Section: 271(1)(c)

Judgement Text

I.T.A. NO.517/LKW/2017 ASSESSMENT YEAR:2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO.517/LKW/2017 ASSESSMENT YEAR:2009-10 LATE SURJA MISRA, THROUGH L/H MUKESH MISRA, 2A/184, AZAD NAGAR, KANPUR. PAN:AANPM 6501 B VS. INCOME TAX OFFICER - 3(4), KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE O RDER OF THE LEARNED CIT(A)- I, KANPUR DATED 25/05/2017. 2. IN THIS APPEAL, THE GRIEVANCE OF THE ASSESSEES IS AG AINST IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH HA S BEEN CONFIRMED BY THE LEARNED CIT(A). 3. AT THE TIME OF HEARING BEFORE US, THE LD. A.R. O F THE ASSESSEE INVITED OUR ATTENTION TO THE PAPER BOOK FILED BEFORE US WHEREIN SHOW CAUSE NOTICE FOR PENALTY UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT W AS PLACED. IT WAS SUBMITTED THAT FROM A PERUSAL OF THIS NOTICE, IT IS CRYSTAL C LEAR 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 LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT IT IS SETTLED POSITION OF LAW THAT IF APPELLANT BY SHRI J. J. MEHROTRA, FCA RESPONDENT BY SHRI BHARAT AWASTHI, D.R. DATE OF HEARING 31/05/2018 DATE OF PRONOUNCEMENT 31 /05/2018 NOTICE UNDER SECTION 274 READ WITH 271(1)(C) IS NOT SPECIFIC ABOUT THE CHARGE OR LIMB UNDER WHICH PENALTY IS BEING LEVIED UNDER SECT ION ANY PENALTY LEVIED ON THE BASIS OF SUCH NOTICE IS B AD IN LAW AND LIABLE TO BE DELETED. 3. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW. 8. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVA L CON APPARENT FROM NOTICE UNDER SECTION 274 READ WITH 27 1(1)(C) OF THE ACT, WE FIND THAT THE CHARGE ON WHICH PENALTY IS LEVIED IS NOT S PECIFIC. THE COPY OF SHOW CAUSE NOTICE HAS BEEN MADE PART OF THIS ORDER, WHICH IS AS I.T.A. NO.517 /LKW/2017 ASSESSMENT YEAR:20 NOTICE UNDER SECTION 274 READ WITH 271(1)(C) IS NOT SPECIFIC ABOUT THE CHARGE OR LIMB UNDER WHICH PENALTY IS BEING LEVIED UNDER SECT ION 271(1)(C) OF THE ACT, THEN ANY PENALTY LEVIED ON THE BASIS OF SUCH NOTICE IS B AD IN LAW AND LIABLE TO BE THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDE RS OF THE AUTHORITIES WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVA L CON TENTIONS AND AS APPARENT FROM NOTICE UNDER SECTION 274 READ WITH 27 1(1)(C) OF THE ACT, WE FIND THAT THE CHARGE ON WHICH PENALTY IS LEVIED IS NOT S PECIFIC. THE COPY OF SHOW CAUSE BEEN MADE PART OF THIS ORDER, WHICH IS AS UNDER: /LKW/2017 ASSESSMENT YEAR:20 09-10 2 NOTICE UNDER SECTION 274 READ WITH 271(1)(C) IS NOT SPECIFIC ABOUT THE CHARGE OR 271(1)(C) OF THE ACT, THEN ANY PENALTY LEVIED ON THE BASIS OF SUCH NOTICE IS B AD IN LAW AND LIABLE TO BE THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDE RS OF THE AUTHORITIES TENTIONS AND AS APPARENT FROM NOTICE UNDER SECTION 274 READ WITH 27 1(1)(C) OF THE ACT, WE FIND THAT THE CHARGE ON WHICH PENALTY IS LEVIED IS NOT S PECIFIC. THE COPY OF SHOW CAUSE I.T.A. NO.517/LKW/2017 ASSESSMENT YEAR:2009-10 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 INACCURATE PARTICULARS OF INCOME. THE LD. A.R. OF THE ASSESSE E 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 LIABL E TO BE DELETED. 9. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDERS OF THE AUTHORITIES BELOW. 10. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL 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 LAW MANDATES THAT THE AUTHORITY WHO IS PROPOSIN G TO IMPOSE PENALTY SHALL BE CERTAIN AS TO ON WHAT BASIS PENALTY IS BEI NG LEVIED AND NOTICE MUST REFLECT THAT SPECIFIC REASON SO THAT ASSESSEE TO WHOM SUCH NOTICE IS GIVEN CAN WELL PREPARE HIMSELF REGARDING DEFENCE WH ICH 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 COUR T AND OTHER HIGH COURTS. WE WOULD LIKE TO RELY ON THE FOLLOWING CAS ES:- (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 DECI SION OF DIVISION BENCH OF HON'BLE KARNATAKA HIGH COURT IN T HE CASE OF CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACT ORY (SUPRA) ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 271(1)(C) OF THE ACT WAS BAD IN LAW AS IT DID NOT SPECIFY UNDER WHICH LIMB OF 271(1)(C) PENALTY PROCE EDINGS HAS BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME. WHEN THE MATTER TRAVELLED UPTO THE HIGH COURT, IT S UPPORTED I.T.A. NO.517/LKW/2017 ASSESSMENT YEAR:2009-10 4 THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACT ORY (SUPRA) AND DECIDED THAT THERE WAS THEREFORE NO SUB STANTIAL QUESTION OF LAW TO BE DECIDED. THEREAFTER AN SLP W AS FILED BEFORE THE HON'BLE APEX COURT AND THE APEX COURT DI SMISSED THE SLP OF THE REVENUE FINDING NO MERIT THEREIN AND CONFIRMING THE ISSUE IN 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 FURNISHING OF INACCURATE PARTICULARS OF INCOME. SENDING PRINT ED FORM WHERE ALL THE GROUNDS MENTIONED WOULD NOT SATISFY T HE REQUIREMENT OF LAW. ASSESSEE SHOULD KNOW THE GROUN DS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, THE P RINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. PENAL TY PROCEEDINGS ARE DISTINCT FROM ASSESSMENT PROCEEDING S THOUGH IT EMANATES FROM THE ASSESSMENT PROCEEDINGS STILL I T IS SEPARATE AND INDEPENDENT PROCEEDINGS ALL TOGETHER. (3) MEHERJEE CASSINATH HOLDINGS PVT. LTD VS. ACIT (ITAT MUMBAI) ITA NO. 2555/MUM/2012, ORDER DATED 28/04/20 17 WHEREIN THE OBSERVATION OF THE BENCH WAS THAT PENAL TY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ARE 'QUASI- CRIMINAL' PROCEEDINGS AND OUGHT TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE. THE NON-STRIKING OF THE IRRELEV ANT PORTION IN THE SHOW-CAUSE NOTICE MEANS THAT THE ASSESSING OFFI CER IS NOT FIRM ABOUT THE CHARGE AGAINST THE ASSESSEE AND THE ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO L IMBS OF S. 271(1)(C) HE HAS TO RESPOND. (1) 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. 11. THE SETTLED LEGAL POSITION ON THE ISSUE AS ENSH RINED IN THE AFORESAID CASES IS APPARENT AND WE ARRIVE AT THE CONSIDERED V IEW THAT NOTICE UNDER I.T.A. NO.517/LKW/2017 ASSESSMENT YEAR:2009-10 5 SECTION 274 READ WITH 271(1)(C) OF THE ACT WHICH HA S 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, ILLEGAL AND BAD IN LAW AND LIABLE TO BE DELETED. WE, THEREFORE, DIRECT DELETION OF PENALTY. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEES IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/05/2018. SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:31/05/2018 *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