Shri Prabhu Shankar Agarwal, Kolkata V. DCIT, Central Circle - 4(1), Kolkata, Kolkata

ITA 562/KOL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6030 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 02-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: S M SURANA
• Keywords: Question of law; Initiation of penalty proceedings
• Section: 143(3); 132

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) BEFORE . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VA RKEY, JM] I.T.A. NO. 562/KOL/2018 ASSESSMENT YEARS: 2014-15 SHRI PRABHU SHANKAR AGARWAL (PAN: ADEPA4448F) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-4(1), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 28.06.2018 DATE OF PRONOUNCEMENT 10.07.2018 FOR THE APPELLANT SHRI S. M. SURANA, ADVOCATE FOR THE RESPONDENT SHRI SAURABH KUMAR, ADDL. CIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A)-21, KOLKATA DATED 14.02.2018 FOR ASSESSMENT YEAR 2014-1 5 AGAINST THE CONFIRMATION OF PENALTY LEVIED U/S. 271(1)(C) OF THE INCOME-TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT). 2. AT THE OUTSET ITSELF, THE LD. COUNSEL DREW OUR A TTENTION TO THE NOTICE ISSUED BY THE AO DATED 18.10.2016 WHICH IS AS UNDER: 2 ITA NO.562/KOL/2018 PRABHU SHANKAR AGARWAL, AY 2014-15 2 3 ITA NO.562/KOL/2018 PRABHU SHANKAR AGARWAL, AY 2014-15 3 3. FROM A PERUSAL OF THE AFORESAID NOTICE WE FIND T HAT THOUGH THE AO HAD STRICKEN OFF THE CHARGE HAVE CONCEALED THE PARTICULARS OF INCO ME AND HAS NOT STRICKEN OFF THE CHARGE FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. WE ALSO NOTE FROM PERUSAL OF THE NOTICE THAT SEVERAL OTHER FAULTS LIKE (I) FAILED TO COMPLY WITH THE NOTICES U/S. 142(1)/143(2) OF THE ACT (II) FAILED TO FURNISH RETURN OF INCOME GIVEN U NDER NOTICE U/S. 139(2)/148 OF THE ACT ETC. THEREFORE, AS PER THE ORDER OF THE HONBLE KARNATAK A HIGH COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS IN ITA NO.380 OF 2015 DATED 2 3.11.2015 THE PENALTY NOTICE ITSELF SUFFERS FROM INFIRMITY OF NOT GIVING SPECIFIC CHARG E. 4. EVEN IF WE ASSUME THAT THE ASSESSEE HAD TAKEN NO TE OF THE FAULT OF ONLY NOTICE FOR PENALTY I.E. FURNISHING INACCURATE PARTICULARS OF SUCH INCOME STILL WE FIND THAT THE AO WHILE LEVYING PENALTY VIDE PARA 5 AND 6 OF HIS ORDE R 21.03.2017 HAS HELD AS UNDER: 5. THE PENALTY PROCEEDINGS WAS FIXED FOR HEARING ON 17.11.2016 AT 01.30 PM VIDE PENALTY NOTICE DATED 18.1.2016, IN REPLY TO THE SAID NOTICE THE ASSESSEE HAS SUBMITTED A LETTER ALONG WITH A COPY OF CHALLAN OF RS.15,16,120/- AS OUTSTANDING DEMAND RAISED BY ORDER U/S. 143(3) ON 18.10.2016 AND ONLY REQUESTING TO DROP THE PENALTY PROCEEDING INITIATED U/S. 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HENCE IT MAY CONSIDER THAT THE ASSESSEE HAS NOTHING TO SAY AGAINST THE PENALTY PROCEEDINGS INIT IATED U/S. 271(1)(C) OF THE I. T. ACT AND WE HAVE TO DECIDE ON THE MERIT OF THE CASE. 6. IN VIEW OF THE SAID FACTS, IT IS CLEARLY SEEN TH AT IN THIS CASE, THE ASSESSEE MUST BE DEEMED TO HAVE CONCEALED PARTICULARS OF INCOME WITHIN THE MEA NING OF EXPLANATION 5A TO SEC. 271(1)(C). (EMPHASIS GIVEN BY US) 5. A PERUSAL OF THE AFORESAID ORDER REVEALS THAT TH OUGH THE PENALTY NOTICE WAS ISSUED AGAINST THE ASSESSEE FOR FURNISHING INACCURATE PART ICULARS OF INCOME THE AO HAS HELD THE ASSESSEE TO BE AT FAULT FOR CONCEALING THE PARTICUL ARS OF HIS INCOME WHICH IS ILLEGAL AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . SHRI SAMSON PERINCHERY IN ITA NOS. 1154, 953, 1097 AND 1226 OF 2014 DATED 05.01.2 017 WHEREIN SIMILAR QUESTION OF LAW WAS RAISED BY THE DEPARTMENT AGAINST THE ORDER OF T HE TRIBUNAL WHEREIN THEIR LORDSHIPS HELD AS UNDER: 2.ALL THESE APPEALS RAISES AN IDENTICAL QUESTION OF LAW SAVE THE DIFFERENCE IN THE QUANTUM, WHICH READ AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASEAND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN DELETING THE PENALTY LEVIED UNDER SEC TION 271(1)(C) OF THE IT ACT, 1961? 4 ITA NO.562/KOL/2018 PRABHU SHANKAR AGARWAL, AY 2014-15 4 3. THE IMPUGNED ORDER OF THE TRIBUNAL DELETED THE PENALTY IMPOSED UPON THE RESPONDENT-ASSESSEE. THIS BY HOLDING THAT THE INITI ATION OF PENALTY UNDER SECTION 271 (1) (C) OF THE ACT BY ASSESSING OFFICER WAS FOR FURNISHING INA CCURATE PARTICULARS OF INCOME WHILE THE ORDER IMPOSING PENALTY IS FOR CONCEALMENT OF INCOME . THE IMPUGNED ORDER HOLDS THAT THE CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THEREFORE, THE ASSESSING OFFICER SHOU LD BE CLEAR AS TO WHICH OF THE TWO LIMBS UNDER WHICH PENALTY IS IMPOSABLE, HAS BEEN CONTRAVE NED OR INDICATE THAT BOTH HAVE BEEN CONTRAVENED WHILE INITIATING PENALTY PROCEEDINGS. I T CANNOT BE THAT THE INITIATION WOULD BE ONLY ON ONE LIMB I.E: FOR FURNISHING INACCURATE PARTICUL ARS OF INCOME WHILE IMPOSITION OF PENALTY ON THE OTHER LIMB I.E. CONCEALMENT OF INCOME. FURTH ER, THE, TRIBUNAL ALSO NOTED THAT NOTICE ISSUED UNDER SECTION 274 OF THE ACT IS IN A STANDAR D PROFORMA, WITHOUT HAVING STRIKED OUT IRRELEVANT CLAUSES THEREIN. THIS INDICATES NON-APP LICATION OF MIND ON THE PART OF THE ASSESSING OFFICER WHILE ISSUING THE PENALTY NOTICE. . 4. THE IMPUGNED ORDER RELIED UPON THE FOLLOWING E XTRACT OF KARNATAKA HIGH COURT'S DECISION IN CIT VS. MANJUNATH COTTON AND GINNING FA CTORY 359 ITR 565 TO DELETE THE PENALTY:- THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT T O INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDIN GS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF T OTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF I NCOME ARE DIFFERENT. THUS, THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT AS CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PA I REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE, OF MANU ENGINEERING REPORTED IN 122 ITR 306 A ND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING P. LTD., REPORTED, IN 171 T AXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE, CLEAR AS TO THE LIMB FOR WHICH I T IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE N OTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCUR ATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. 5. THE GRIEVANCE OF THE REVENUE BEFORE US IS THAT THERE IS NO DIFFERENCE BETWEEN FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. THUS, DISTINCTION DRAWN BY THE IMPUGNED ORDER IS BETWEEN TWEEDLEDUM A ND TWEEDLEDEE. IN THE ABOVE VIEW, THE DELETION OF THE PENALTY, IS JUSTIFIED. 6. THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN ASHOK PAI VS. CIT 292 ITR 11 [RELI ED UPON IN MANJUNATH COTTON & GINNING FACTORY (SUPRA)] - WHEREIN IT IS OBSERVED THAT CONC EALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271 (1) (C) OF THE ACT, CARRY DIFFERENT MEANINGS/ CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE AS SESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271 (1) (C ) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING I MPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON W HICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER I MPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN IN ITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 5 ITA NO.562/KOL/2018 PRABHU SHANKAR AGARWAL, AY 2014-15 5 7. THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED. IN FAVOUR OF THE RESPONDENT-ASSESSEE BY THE DECISION OF THE KARNATAKA HIGH COURT IN THE CAS E OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). NOTHING HAS BEEN SHOWN TO US IN TH E PRESENT FACTS WHICH WOULD WARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNATAKA HIGH COU RT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). 8. IN VIEW OF THE ABOVE, THE QUESTION AS FRAMED D O NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED. THEREFORE, WE FIND THE PENALTY ORDER PASSED BY THE AO IS UNSUSTAINABLE IN LAW AND, THEREFORE, HAS TO BE STRUCK DOWN AND WE DO SO. MOR EOVER, WE ALSO NOTE THAT THE AO HAS TAKEN THE AID OF EXPLANATION 5A TO SEC. 271(1)(C) O F THE ACT WHICH IS ALSO BAD IN LAW BECAUSE THE SAID EXPLANATION 5A IS APPLICABLE ONLY IN CASE OF AN ASSESSEE WHERE SEARCH HAS BEEN INITIATED U/S. 132 OF THE ACT ON OR AFTER 1 ST DAY OF JUNE, 2007 WHERE THE ASSESSEE IS FOUND TO BE THE OWNER OF MONEY, BULLION ETC. IN THI S CASE, THE ASSESSEE WAS NOT SEARCHED U/S. 132 OF THE ACT. IN THE AFORESAID FACTS AND CIRCUMST ANCES OF THE CASE AS DISCUSSED ABOVE, THE PENALTY NOTICE AND THE PENALTY ORDER SUFFER FROM LE GAL INFIRMITIES AS DISCUSSED ABOVE AND, THEREFORE, CANNOT BE SUSTAINED IN THE EYES OF LAW A ND THEREFORE, WE CANCEL THE PENALTY ORDER PASSED BY THE AO WHICH HAS BEEN ERRONEOUSLY CONFIRM ED BY THE LD. CIT(A). APPEAL OF ASSESSEE IS ALLOWED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 10.07.20 18 SD/- SD/- (J. SUDHAKAR REDDY) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10TH JULY, 2018 JD(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI PRABHU SHANKAR AGARWAL, P-420, KAZI NAZRUL ISLAM SARANI, VIP MAIN ROAD, KOLKATA-700 052. 2 RESPONDENT DCIT, CENTRAL CIRCLE-4(1), KOLKATA. 3. THE CIT(A)-21, KOLKATA - (SENT THROUGH E-MAIL) 4. 5. CIT , KOLKATA DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY