Hindon River Mills Ltd., Ghaziabad V. DCIT, Ghaziabad

ITA 5697/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3165 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 08-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S SENAPATI
• Assessee Lawyers: SANAT KAPOOR MS ANANYA KAPOOR
• Keywords: Retrospective amendment; Question of law; Initiation of penalty proceedings

Judgement Text

ITA NO. 5697/DEL/2015 ASSESSMENT YEAR 2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 5697/DEL/2015 AY: 2010-11 M/S HINDON RIVER MILLS LTD., P.O. HINDON NAGAR, DASNA, GHAZIABAD. VS DCIT, CIRCLE-1, GHAZIABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANAT KAPOOR, ADVOCATE MS ANANYA KAPOOR, ADVOCATE RESPONDENT BY : SHRI R.S. SENAPATI, SR. DR DATE OF HEARING: 15.02.2018 DATE OF PRONOUNCEMENT: 27.02.2018 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER PASSED BY THE LD. CIT(A), GHAZIABAD AND IT CH ALLENGES THE CONFIRMATION OF IMPOSITION OF PENALTY AMOUNTING TO RS. 3,70,865/- IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') 2. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ASS ESSEE HAD FIELD ADDITIONAL GROUNDS OF APPEAL WHICH RAISE AN I MPORTANT LEGAL ISSUE. IT WAS PRAYED THAT THE ADDITIONAL GROUNDS M AY BE ADMITTED. ITA NO. 5697/DEL/2015 ASSESSMENT YEAR 2010-11 2 3. THE LD. SR. DR OPPOSED THE PRAYER OF THE LD. AR . 4. HAVING HEARD THE RIVAL CONTENTIONS AND AFTER GO ING THROUGH THE ADDITIONAL GROUNDS, WE ARE OF THE CONSIDERED OP INION THAT THESE GROUNDS ARE ESSENTIALLY LEGAL GROUNDS AND GO TO THE VERY ROOT OF THE MATTER IN RESPECT OF THE PENALTY. THER EFORE, WE DEEM IT FIT TO ADMIT THE ADDITIONAL GROUNDS WHICH READ AS U NDER:- 3. THE NOTICE ISSUED U/S 271 (1) (C) AND ORDER IMPOSING PENALTY UNDER SAID SECTION ARE ILLEGAL, BA D IN LAW, AND WITHOUT JURISDICTION. 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT NO SATISFACTION WAS RECORDED BEFORE INITIATION OF PENALTY PROCEEDINGS U /S 271 (1) (C) AND AS SUCH THE NOTICE ISSUED U/S 271 (1) ( C) AND THE PENALTY ORDER PASSED UNDER SAID SECTION ARE WIT HOUT JURISDICTION AND ARC LIABLE TO BE QUASHED. 5. THAT IN VIEW OF THE FACTS AND CIRCUMSTANC E OF THE CASE THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE PENALTY IMPOSED U/S 271 (1) (C). 6. THAT PENALTY INDICATED AND LEVIED IS WITH OUT ANY SPECIFIC CHARGE AS TO CONCEALMENT OF INCOME OR FURN ISHING INACCURATE PARTICULARS. PENALTY LEVIED IS ILLEGAL A ND BAD IN LAW. 7. THAT THE INFORMATION FILED AND THE MATERIAL AVA ILABLE ON RECORD ARE NOT PROPERLY CONSIDERED AND AS SUCH T HE ORDER IMPOSING PENALTY U/S 271 (1) (C) IS ILLEGAL A ND BAD IN LAW. ITA NO. 5697/DEL/2015 ASSESSMENT YEAR 2010-11 3 8. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT THE MERE DISALLOWANCES OF EXPENSES CLAIMED DO NOT ATTRACT PENALTY U/S 271(1) (C) AND THE SAME HAS BEEN WRONGLY UPHELD. THE ABOVE GROUNDS ARE PURELY LEGAL. THE RELEVANT FACTS ARE ALREADY ON RECORD AND NO NEW FACT IS REQU IRED TO BE INVESTIGATED. THE ABOVE NOTED GROUNDS GO TO T HE ROOT OF THE MATTER. IT IS THEREFORE HUMBLY REQUESTE D THAT THE SAME MAY KINDLY BE ADMITTED AND ADJUDICATED IN THE INTEREST OF JUSTICE. RELIANCE IS PLACED ON THE DECI SION OF HON'BLE SUPREME COURT IN THE CASE NTPC 229 ITR 383 (SC). 5. THE LD. AR DREW OUR ATTENTION TO NOTICE U/S 274 R/W 271(1)(C) OF THE ACT AND PLACED AT ANNEXURE A OF THE ASSESS EES PAPER BOOK. THE LD. AR SUBMITTED THAT NOTICE DATED 28.03 .2013 WAS DEFECTIVE AS THE ASSESSING OFFICER HAD NOT SPECIFIE D THE CHARGE ON WHICH THE PENALTY U/S 271(1)(C) OF THE ACT WAS SOUG HT TO BE LEVIED. THE LD. AR SUBMITTED THAT THE AO HAD SIMPLY DISPATCHED THE PRINTED FORM OF NOTICE WITHOUT CROSS ING OUT THE IRRELEVANT PORTIONS. IT WAS FURTHER SUBMIT TED THAT AS PER THE PROVISIONS OF SECTION 271(1)(C) THE RE ARE TWO LIMBS UNDER WHICH PENALTY CAN BE IMPOSED AND TH E ASSESSING OFFICER HAS TO NECESSARILY SPECIFY UNDER WHICH LIMB, THE PENALTY IS BEING SOUGHT TO BE IMPOSED I.E . WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE LD. AR FURTH ER ITA NO. 5697/DEL/2015 ASSESSMENT YEAR 2010-11 4 SUBMITTED THAT SINCE IN THE NOTICE, BOTH THE CHARGE S WERE MENTIONED AND THE IRRELEVANT PORTIONS WERE NOT CROS SED OUT, THE NOTICE WAS NOT AS PER THE REQUIREMENTS OF THE ACT. HE RELIED UPON THE DECISIONS OF VARIOUS HONB LE COURTS ESPECIALLY ON THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY REPORTED IN (2013) 359 ITR 565 (KAR ) WHICH WAS FOLLOWED BY THE HONBLE KARNATAKA HIGH CO URT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS REPORT ED IN (2016) 73 TAXMANN.COM 241 (KAR) WHERE THE SLP FI LED BY THE REVENUE HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. 6. IN RESPONSE, THE LEARNED DR APPEARING ON BEHALF OF THE REVENUE ARGUED THAT PENALTY PROCEEDINGS HAVE BE EN VALIDLY INITIATED IN THE NOTICE U/S 274 R.W.S. 271 OF THE ACT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT IS EVIDENT FROM THE NOTICE U/S 274 R.W.S. 271 OF THE ACT DATED 28.03.2013 FOR THE IMPU GNED YEAR THAT THE ASSESSING OFFICER HAS NOT SPECIFICALL Y SPECIFIED AS TO UNDER WHICH LIMB OF SECTION 271(L)( C) OF ITA NO. 5697/DEL/2015 ASSESSMENT YEAR 2010-11 5 THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED BY HIM, I.E., WHETHER FOR CONCEALMENT OF PARTICULARS O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY, REPORTED I N 359 ITR 565 (KAR)HAS HELD AS UNDER: '(P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(L)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. (Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW.' 7.1 THE ABOVE-SAID JUDGMENT OF HONBLE HIGH COURT O F KARNATAKA IN THE CASE OF C IT VS. MANJUNATHA COTTON & GINNING FACTOR, REPORTED IN 359 ITR 565 (KAR) HAS BEEN FOLLOWED BY THE HONBLE HIGH COURT OF KARNATAK A IN THE CASE OF COMMISSIONER OF INCOME TAX VS SSAS EMERALD MEADOWS, REPORTED IN (2016) 73 TAXMANN.COM 241 (KAR) AND THE RELEVANT OBSERVATIONS OF THE HON BLE KARNATAKA HIGH COURT ARE AS UNDER- '2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWIN G SUBSTANTIAL QUESTIONS OF LAW, ITA NO. 5697/DEL/2015 ASSESSMENT YEAR 2010-11 6 WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITL Y MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATE D FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FO R CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABL E FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYON D REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLD ING THAT THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(I)(C) IS BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 271 (1B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSIN G OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECOR DING THE SATISFACTION FOR THE SAME ? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE 'ASSESSEE HAS CONCEALED PARTICULARS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(L)( C) OF THE INCOME TAX ACT. 1961 FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271 (L)(C) OF THE ACT: THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF T HE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISIO N BENCH OF THIS COURT RENDERED, IN THE CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 359ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 (KAR.). 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE AR E OF THE OPINION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE AP PEAL IS ACCORDINGLY DISMISSED. ITA NO. 5697/DEL/2015 ASSESSMENT YEAR 2010-11 7 7.2 FURTHER, THE SLP FILED BY THE REVENUE AGAINST THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS SSAS EMERALD MEADOWS (SUPRA) WAS DISMISSED BY THE HONBLE SUPREME COURT OF INDIA. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGME NT OF THE HONBLE KARNATAKA HIGH COURT AS ABOVE-MENTIONED WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFIC ER IS REQUIRED TO SPECIFY WHICH LIMB OF SECTION 271 (1)(C ) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED, I. E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. FRO M THE PERUSAL OF THE NOTICE U/S.274 R.W.S. 271 OF THE ACT IN THE PRESENT APPEAL, IT IS VERY MUCH OBVIOUS THAT THE ASSESSING OFFICER HAS NOT SPECIFIED THE SAME. THE N OTICE IN FACT IS IN STANDARD PRO FORMA WITHOUT THE IRRELEVANT CLAUSES THEREIN BEING STRUCK OFF. THIS INDICATES NO N APPLICATION OF MIND ON THE PART OF THE ASSESSING OF FICER WHILE ISSUING THE PENALTY NOTICE. IN THE CIRCUMSTAN CES AND FACTS OF THE CASE, THE PENALTY PROCEEDINGS INIT IATED BY THE ASSESSING OFFICER ARE BAD IN LAW AND ACCORDINGL Y THE ITA NO. 5697/DEL/2015 ASSESSMENT YEAR 2010-11 8 PENALTY SO INITIATED IS DIRECTED TO BE DELETED AND THE ORDER OF THE LEARNED CIT (A) IS SET ASIDE. 8. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH FEBRUARY, 2018. SD/- SD/- (N.K. SAINI) (SUDHANSHU SRIV ASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 27 TH FEBRUARY, 2018 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR