Crew Bos Products Ltd., Gurgaon V. DCIT, Faridabad

ITA 5236/DEL/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8719 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 05-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA BEG SENIOR
• Keywords: Invalid notice; Search and seizure; Opportunity of being heard; Principle of natural justice; Earning of tax free income; Question of law; Initiation of penalty proceedings; Reasonable cause
• Section: 271(1)(c); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5235/DEL./2016 (ASSESSMENT YEAR : 2005-06) ITA NO.5236/DEL./2016 (ASSESSMENT YEAR : 2006-07) CREW BOS PRODUCTS LTD., VS. DCIT, CENTRAL CIRCLE 1, 37, SECTOR 4, IMT MANESAR, FARIDABAD. GURGAON. (PAN : AAACC3222F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH, ADVOCATE REVENUE BY : MS. ASHIMA BEG, SENIOR DR DATE OF HEARING : 18.12.2018 DATE OF ORDER : 19.12.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, CREW BOS PRODUCTS LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEALS , SOUGHT TO SET ASIDE THE IMPUGNED ORDERS BOTH DATED 29.07.2016 PAS SED BY LD. CIT (APPEALS)-3, GURGAON QUA THE ASSESSMENT YEARS 2005-06 & 2006-07 CONFIRMING THE PENALTIES LEVIED U/S 271(1)( C) OF THE ITA NO.5235 & 5236/DEL./2016 2 INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) ON THE I DENTICAL GROUNDS INTER ALIA THAT :- 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) BAD BOTH ON LAW AND FACTS. 2. THAT THE APPELLANT HAS NOT BEEN AFFORDED, ENOUGH OPPORTUNITY, OF BEING HEARD. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN CONFIRMING THE ACTION OF THE LEARNED A SSESSING OFFICER IN INITIATING AND LEVYING PENALTY UNDER SEC TION 271(1)(C) OF THE ACT DESPITE THE FACT THAT THE APPELLANT HAS NEITHER CONCEALED ANY PARTICULAR OF INCOME NOR FILED INACCU RATE PARTICULARS OF ITS INCOME. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER, IN A MECHANICAL MANNER WITHOUT APPRECIATING AND THUS INDEPENDENTLY ADJUDICATING THE BASIS FOR LEVY OF PENALTY U/S 271( 1)(C) OF THE ACT, IN COMPLETE DISREGARD OF SETTLED PRINCIPLE OF LAW. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY IN BOTH THE AFORESAID IDENTICAL APPEALS AT HAND ARE : ON THE BASIS OF COMPLETED ASSESSMENT UNDER SECTION 143 (3)/153A ASSESSING THE INCOME OF THE ASSESSEE AT RS.1,33,34, 120/- AND RS.1,27,77,850/- BY MAKING ADDITION OF RS.57,88,881 /- & RS.1,15,10,832/- FOR AYS 2005-06 AND 2006-07 RESPEC TIVELY, OUT OF WHICH ADDITION OF RS.53,80,723/- AND RS.60,85,154/- FOR AYS 2005-06 AND 2006-07 RESPECTIVELY WAS CONFIRMED AND PENALTY PROCEEDINGS WERE INITIATED. DECLINING THE CONTENTI ONS RAISED BY ASSESSEE, AO PROCEEDED TO LEVY THE PENALTY OF RS.20 ,93,773/- AND ITA NO.5235 & 5236/DEL./2016 3 RS.21,31,076/- @ 100% FOR AYS 2005-06 AND 2006-07 RESPECTIVELY. 3. ASSESSEE CARRIED THE MATTER BY WAY OF APPEALS BE FORE THE LD. CIT (A) WHO HAS CONFIRMED THE PENALTIES BY DISMISSI NG THE APPEALS. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, THE ASSESSEE HAS ACCEPTED THE ADDI TION MADE BY THE AO AND PARTLY CONFIRMED BY LD. CIT (A) AS WE LL AS BY THE TRIBUNAL. IT IS ALSO NOT IN DISPUTE THAT INITIALLY ASSESSMENT WAS COMPLETED U/S 143 (3) OF THE ACT AND THEREAFTER ON THE BASIS OF SEARCH AND SEIZURE OPERATION CONDUCTED ON 12.04.201 0, AGAIN ASSESSMENT WAS COMPLETED U/S 143(3)/153A. 6. UNDISPUTEDLY, ADDITIONS MADE AGAINST THE ASSESSE E DURING QUANTUM PROCEEDINGS HAVE ALREADY BEEN CONFIRMED. I T IS SETTLED PRINCIPLE OF LAW THAT THE PENALTY CANNOT BE IMPOSED MERELY ON THE GROUND THAT ADDITIONS MADE IN THE INCOME OF THE ASS ESSEE HAS BEEN CONFIRMED RATHER TO PROCEED WITH IMPOSITION OF PENA LTY U/S 271(1)(C), THE AO HAS TO PROVE THAT THERE WAS CONCE ALMENT OF ITA NO.5235 & 5236/DEL./2016 4 PARTICULARS OF INCOME OR ASSESSEE HAS FURNISHED INA CCURATE PARTICULARS OF SUCH INCOME. 7. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, ORDER PASSED BY THE LOWER REVENUE AUTHORI TIES AND ARGUMENTS ADDRESSED BY THE LD. AR TO THE PARTIES, T HE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS:- AS TO WHETHER ASSESSEE HAS CONCEALED PARTICULARS O F INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF S UCH INCOME DURING THE ASSESSMENT PROCEEDINGS SO AS TO ATTRACT THE PROVISIONS CONTAINED U/S 271(1)(C) OF T HE ACT? 8. THE LD. AR FOR THE ASSESSEE CHALLENGING THE IMPU GNED ORDER CONTENDED INTER ALIA THAT THE PENALTY PROCEEDINGS H AVE BEEN INITIATED AGAINST THE ASSESSEE ON THE BASIS OF GENE RAL SATISFACTION WITHOUT APPLYING HIS MIND; THAT SHOW-CAUSE NOTICE N O.1323 DATED 28.02.2013 BROUGHT N RECORD BY THE ASSESSEE DURING THE ARGUMENTS BEFORE THE BENCH, IS NOT A VALID NOTICE TO INITIATE THE PENALTY PROCEEDINGS AS THE ASSESSEE HAS NOT BEEN MADE AWARE IF IT HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHE D INACCURATE PARTICULARS OF INCOME AND RELIED UPON THE DECISION RENDERED BY HONBLE KARNATAKA HIGH COURT CIT VS. MANJUNATHA COTTON AND GINNING FACTORY & ORS. 359 ITR 565 (KARN.), CONFIRMED BY HONBLE SUPREME COURT; THAT THE ASSESSEE HAS BONAFI DELY CLAIMED ITA NO.5235 & 5236/DEL./2016 5 THE APPORTIONMENT OF CERTAIN EXPENSES BETWEEN EXPOR T ORIENTED UNIT (EOU) AND NON-EOU UNIT, PROPORTIONATE TO THEIR TURNOVER RATIO; THAT THE ASSESSEE HAS MADE FULL AND COMPLETE DISCLOSURES IN TERMS OF THE ENTRIES MADE IN THE BOOKS OF ACCOUNT A ND AS SUCH, THERE IS NO ELEMENT OF CONCEALMENT. 9. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVEN UE TO REPEL THE ARGUMENTS ADDRESSED BY LD. AR FOR THE ASSESSEE CONTENDED INTER ALIA THAT THE NOTICE ISSUED BY THE AO U/S 274 OF TH E ACT IS NOT STANDALONE DOCUMENT WHICH IS BASED ON ASSESSMENT OR DER; THAT THE NOTICE HAS BEEN ISSUED IN RESPECT OF FURNISHING INA CCURATE PARTICULARS OF INCOME AND RELIED UPON THE CASES OF CIT VS. ZOOM COMMUNICATION (P.) LTD. 327 ITR 510 (DELHI); MAK DATA P. LTD. VS. CIT 358 ITR 593 (SC); UOI VS. DHARAMENDR A TEXTILE PROCESSORS 295 ITR 244; B.A. BALASUBRAMANIAM & BR OS. CO. VS. CIT 236 ITR 977; CIT VS. GATES FOAM & RUBBER CO. 91 ITR 467; CIT VS. PRASANNA DUGAR 371 ITR 19 (CAL.) ; ACIT VS. SMT. J. MYTHILI 35 TAXMANN.COM 86; SMT. KRAN DEVI VS. ACIT (2009) 125 TTJ 631 (DELHI); CIT VS. S.J. PRASAD ( 2008) 220 CTR 169 (KER.); AND CIT VS. SMT. MEERA DEVI (2012 ) 26 TXMANN.COM 132 (DELHI). 10. FIRST OF ALL, WHEN WE EXAMINE SATISFACTION RECO RDED BY THE AO IN PARA 3 OF THE ASSESSMENT ORDER WHICH READS AS , FOR THE ITA NO.5235 & 5236/DEL./2016 6 ABOVE MENTIONED REASONS, I AM SATISFIED THAT ASSESS EE COMPANY CONCEALED THE INCOME/FILED INACCURATE PARTICULARS, HENCE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT HAVE BEEN INITIATED SEPARATELY., IT GOES TO PROVE THAT AT THE STAGE OF INITIATION OF PENALTY PROCEEDINGS, THE AO WAS NOT CATEGORIC ENOUG H AS TO UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT THE PENA LTY PROCEEDINGS ARE BEING INITIATED VIZ. AS TO WHETHER ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE P ARTICULARS OF INCOME. 11. FURTHERMORE, EVEN AT THE STAGE OF ISSUANCE OF T HE NOTICE, THE AO HAS NOT RECTIFIED THE INITIAL MISTAKES COMMITTED WHILE RECORDING THE SATISFACTION IN THE ASSESSMENT ORDER TO INITIAT E THE PROCEEDINGS U/S 271(1)(C) RATHER ISSUED THE NOTICE IN VAGUE, AM BIGUOUS AND MECHANICAL MANNER. 12. TO DECIDE THIS ISSUE, WE WOULD LIKE TO EXTRACT NOTICE ISSUED U/S 271(1)(C) BY THE AO FOR READY PERUSAL :- NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961 F.NO.1322 OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE I, FARIDABAD. DATED : 28.02.2013 TO M/S. M/S CREW BOS PRODUCTS LTD. 813/C, JAINA TOWER 1,, ITA NO.5235 & 5236/DEL./2016 7 DISTRICT CENTRE, JANAKPURI, NEW DELHI. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2005-06 IT APPEARS TO ME THAT YOU:- HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVEN UNDER SECTION 22(1)/22(2)/34 OF THE INDIAN IN COME-TAX ACT, 1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SE CTION 139(1) OR BY A NOTICE GIVEN UNDER SECTION 139(2)/148 OF TH E INCOME-TAX ACT, 1961, NODATED.. OR HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH A NOTICE UND ER SECTION 22(4)/23(2) OF THE INDIAN INCOME-TAX ACT, 1922 OR U NDER SECTION 142(1)/143(2) OF THE INCOME TAX ACT, 1961 NOTICE UN DER SECTION.. NO DATED. HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR . FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11 .00 AM ON 18.03.2013 AND SHOW CAUSE WHY AN ORDER IMPOSI NG A PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271 OF THE INCOME TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUG H AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . SD/- (VANDANA V MOHITE) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I, FARIDABAD 13. BARE PERUSAL OF THE NOTICE ISSUED TO THE ASSESSEE U /S 271(1)(C) OF THE ACT REPRODUCED ABOVE GOES TO PROVE THAT ASSESSEE HAS NOT BEEN CALLED UPON TO EXPLAIN IF HE HAS CONCE ALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF SUCH INCOME RATHER A TICK HAS BEEN MARKED AGAINST BOTH T HE CHARGES MENTIONED IN THE PRINTED PROFORMA. HONBLE KARNATA KA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY & ITA NO.5235 & 5236/DEL./2016 8 ORS. (SUPRA) DEALT WITH THE IDENTICAL ISSUE THREADBARE A ND CAME TO THE FOLLOWING CONCLUSION :- 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EME RGES IS AS UNDER: A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIABI LITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDI ENT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 2 71(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISC ERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REVISIONAL AUTHORITY. F) EVER IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), A T LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BECAUSE O F DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE AS SESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PRO CEEDINGS UNDER SECTION 271(L)(C) IS A SINE QUA NON FOR THE ASSESSM ENT OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PRO VISION CONTAINED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AN D THE COMMISSIONER. I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORD ER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TA X AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTH ORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNL ESS IT IS ITA NO.5235 & 5236/DEL./2016 9 DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, IT IS O N ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILI TY CAME TO BE ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPL ANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE F AILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT BONAFIDE, AN OR DER IMPOSING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUB STANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONAFIDE AND AL L FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMP OSED. N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUIT Y. O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY S ATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFAC TION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APP ELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPEC IFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I .E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF I NCORRECT PARTICULARS OF INCOME Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIRE MENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE H AS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AN D FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE A SSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENA LTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEP ENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF I NCORRECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN T HE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID ITA NO.5235 & 5236/DEL./2016 10 PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIE D, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSE SSMENT OR REASSESSMENT CANNOT BE DECLARED AS INVALID IN THE P ENALTY PROCEEDINGS. 14. HONBLE SUPREME COURT IN CASE CITED AS CIT VS. SSAS EMERALD MEADOWS (2016) 73 TAXMANN.COM 248 (SC) DISMISSED THE SLP FILED BY THE REVENUE CHALLENGING THE DELETI ON OF PENALTY ON GROUND OF INVALID NOTICE ISSUED U/S 274 READ WIT H SECTION 271(1)(C) BY RETURNING THE FOLLOWING FINDINGS :- SECTION 274, READ WITH SECTION 271(1)(C). OF THE INCOME-TAX ACT, 1961 - PENALTY - PROCEDURE FOR IMPOSITION OF (CONDITIONS PRECEDENT) - ASSESSMENT Y EAR 2009-10 - TRIBUNAL, RELYING ON DECISION OF DIVISION BENCH OF KARNATAKA HIGH COURT RENDERED IN CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250, ALLOWED APPEAL OF ASSESSEE HOLDING THAT NOTICE ISSU ED BY ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTI ON 271(1)(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UND ER WHICH LIMB OF SECTION 271 (1)(C) PENALTY PROCEEDING S HAD BEEN INITIATED, I.E., WHETHER FOR CONCEALMENT O F PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME - HIGH COURT HELD THAT MATTER WAS COVERED BY AFORESAID DECISION OF DIVISION BENCH AND , THEREFORE, THERE WAS NO SUBSTANTIAL QUESTION OF LAW ARISING FOR DETERMINATION - WHETHER SINCE THERE WAS NO MERIT IN SLP FILED BY REVENUE, SAME WAS LIABLE TO B E DISMISSED - HELD, YES [PARA 2] [IN FAVOUR OF ASSESS EE] 15. THE LD. DR FOR THE REVENUE BY RELYING UPON THE DECISION RENDERED BY HONBLE MADRAS HIGH COURT IN CASE CITED AS SUNDARAM FINANCE LTD. VS. CIT (2018) 403 ITR 407 (MADRAS) CONTENDED THAT WHEN THE ASSESSEE HAS UNDERSTOOD THE PURPORT AND ITA NO.5235 & 5236/DEL./2016 11 IMPORT OF NOTICE, NO PREJUDICE WAS CAUSED TO THE AS SESSEE. HOWEVER, WHEN WE PERUSE PARA 16 OF THE JUDGMENT IN SUNDARAM FINANCE LTD. VS. CIT (SUPRA), IT IS CATEGORICALLY RECORDED THEREIN THAT, WE HAVE PERUSED THE NOTICES AND WE FIND THAT THE R ELEVANT COLUMNS HAVE BEEN MARKED, MORE PARTICULARLY, WHEN T HE CASE AGAINST THE ASSESSEE IS THAT THEY HAVE CONCEALED PA RTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCO ME. THEREFORE, THE CONTENTION RAISED BY THE ASSESSEE IS LIABLE TO BE REJECTED ON FACTS. MOREOVER, CONTENTION OF THE ASSESSEE AS TO THE D EFECTIVE NOTICE WAS REJECTED BY THE HONBLE HIGH COURT ON TH E GROUND THAT THIS ISSUE CAN NEVER BE A QUESTION OF LAW IN THE AS SESSEES CASE AS IT IS PURELY A QUESTION OF FACT AND THE ASSESSEE HAD N EVER RAISED THIS ISSUE AT EARLIER POINT OF TIME RATHER RAISED THIS I SSUE AFTER 10 YEARS BEFORE THE HONBLE HIGH COURT. SO, IN THESE CIRCUM STANCES, THE AFORESAID DECISION RELIED UPON BY THE LD. DR IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 16. SO, FOLLOWING THE LAW LAID DOWN BY HONBLE HIGH COURT IN CASE CITED AS CIT VS. MANJUNATHA COTTON AND GINNING FACTORY & ORS. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT WHEN TH E ASSESSEE HAS NOT BEEN SPECIFICALLY MADE AWARE OF THE CHARGES LEVELED AGAINST HIM AS TO WHETHER THERE IS A CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON HIS PART, TH E PENALTY U/S ITA NO.5235 & 5236/DEL./2016 12 271(1)(C) OF THE ACT IS NOT SUSTAINABLE. THE CASE LAW RELIED UPON BY THE LD. DR ARE NOT APPLICABLE TO THE FACTS AND C IRCUMSTANCES OF THIS CASE IN THE FACE OF THE DECISIONS RENDERED BY THE HONBLE HIGH COURT IN MANJUNATHA COTTON AND GINNING FACTORY & ORS. (SUPRA), AFFIRMED BY THE HONBLE APEX COURT. 17. FURTHERMORE, IT IS UNDISPUTED FACT THAT THE ADD ITION IN THIS CASE WAS MADE BY WAY OF APPORTIONMENT OF CERTAIN EX PENSES BETWEEN EOU AND NON-EOU PROPORTIONATE TO THEIR TURN OVER RATIO AND ON ACCOUNT OF DISALLOWANCE OF RS.50,000/- U/S 1 4A OF THE ACT AND BY DISALLOWING THE PRIOR PERIOD EXPENSES. IT I S ALSO NOT IN DISPUTE THAT OUT OF TOTAL ADDITION OFRS.57,88,881/- , LD. CIT (A) CONFIRMED THE ADDITION OF RS.53,80,723/-. IT IS AL SO NOT IN DISPUTE THAT THE ENTIRE CLAIM FOR APPORTIONMENT OF CERTAIN EXPENSES BETWEEN EOU AND NON-EOU, CLAIMING EXEMPT INCOME U/S 14A AND CLAIMED PRIOR PERIOD EXPENSES HAS BEEN MADE AS PER BOOKS OF ACCOUNT DULY AUDITED. WHEN THE ASSESSEE HAS COMPUTED THE DISALL OWANCE CLAIMED IN ACCORDANCE WITH THE DULY AUDITED BOOKS O F ACCOUNT WHICH HAVE BEEN DULY ACCEPTED BY THE REVENUE, IT WO ULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF I NCOME SO AS TO ATTRACT THE PROVISIONS CONTAINED U/S 271(1)(C) OF T HE ACT. 18. HONBLE SUPREME COURT IN A CASE CITED AS CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) DECIDED THE ITA NO.5235 & 5236/DEL./2016 13 IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. OPERATI VE PART OF WHICH IS REPRODUCED FOR READY REFERENCE AS UNDER :- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, TH ERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAIL OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN T HE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE C ANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN OR DER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTL Y COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAM OUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULA RS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO AT TRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. 19. SO, WHEN IT IS NOT THE CASE OF THE ASSESSEE THA T ANY DETAILS SUPPLIED BY THE ASSESSEE IN RETURN IS INCORRECT OR ERRONEOUS OR FALSE RATHER MADE A BONAFIDE CLAIM IN ACCORDANCE WITH THE ENTRIES IN THE AUDITED BOOKS OF ACCOUNT, PENALTY PROCEEDINGS CONTA INED U/S 271(1)(C) OF THE ACT ARE NOT ATTRACTED. 20. FURTHERMORE, WHEN WE EXAMINE THE CHRONOLOGY OF THE EVENTS AS TO THE PASSING OF THE ASSESSMENT ORDER, PASSING OF THE APPELLATE ITA NO.5235 & 5236/DEL./2016 14 ORDER AND PASSING OF PENALTY ORDER, THE PENALTY ORD ER IS BARRED BY LIMITATION. UNDISPUTEDLY, INITIALLY ASSESSMENT PRO CEEDINGS WERE COMPLETED U/S 143 (3) FOR AY 2005-06 ON 28.12.2007 AND FOR BOTH THE ASSESSMENT YEARS 2005-06 & 2006-07, APPEAL ON Q UANTUM WAS DECIDED BY LD. CIT (A) CONFIRMING THE ADDITION MADE BY THE AO ON 29.12.2008 AND 16.06.2009 FOR AYS 2005-06 & 2006-07 RESPECTIVELY. PENALTY ORDERS IN THESE CASES WERE P ASSED ON 30.03.2015 WHICH WAS REQUIRED TO BE PASSED WITHIN S IX MONTHS FROM THE DATE OF CONFIRMING THE ADDITION BY THE LD. CIT (A). 21. THE LD. DR FOR THE REVENUE CONTENDED THAT THE L IMITATION IS TO BE SEEN FROM THE DATE OF ASSESSMENT ORDER AND CO NSEQUENT APPEALS ORDER PASSED U/S 143(3)/153A. HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT LIMITATION STARTED RUNNING FRO M THE DATE OF ORIGINAL ASSESSMENT ORDER WHEN THE RIGHT ACCRUED TO THE REVENUE TO INITIATE THE PENALTY PROCEEDINGS BUT THEY HAVE NOT PREFERRED TO INITIATE THE SAME. SO, WE ARE OF THE CONSIDERED VI EW THAT PENALTY ORDERS PASSED BY THE AO IN BOTH THE CASES ARE ALSO BARRED BY LIMITATION. 22. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, CASE LAWS REFERRED IN PRECEDING PARA NO.9 RELIED UPON BY THE LD. DR AR E NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE AS AO HA S FAILED TO MAKE OUT THE CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE ITA NO.5235 & 5236/DEL./2016 15 PARTICULARS OF SUCH INCOME BY THE ASSESSEE SO AS TO ATTRACT THE PROVISIONS CONTAINED U/S 271(1)(C) OF THE ACT AND CONSEQUENTLY, BOTH THE AO AS WELL AS LD. CIT (A) HAVE ERRED IN LEVYING/CONFIRMING THE PENALTY WHICH IS NOT SUSTAIN ABLE IN THE EYES OF LAW, HENCE ORDERED TO BE DELETED. CONSEQUENTLY, BOTH THE APPEALS FILED BY THE ASSESSEE ARE HEREBY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19TH DAY O F DECEMBER, 2018. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 19TH DAY OF DECEMBER , 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-3, GURGAON. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.