Sahara Global Vision Pvt. Ltd., Mumbai V. DCIT, New Delhi

ITA 5724/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2771 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 09-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 25-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Assessee Lawyers: HARDEEP SINGH
• Keywords: Business income; Principle of natural justice; Question of law; Initiation of penalty proceedings; Revised return
• Section: 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DLEHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO.5724/DEL/2013 ASSESSMENT YEAR: 2009-10 SAHARA GLOBAL VISION PVT. LTD., VS DY. COMMISSION ER OF INCOME-TAX CTS 40-44, SAHARA INDIA POINT, CENTRAL CIRCLE-6, NEW DELHI. S.V. ROAD, GOREGAON, MUMBAI. (PAN: AAFCS2904P) (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI DINESH VERMA & HARDEEP SINGH RESPONDENT BY: SHRI RAVI KANT GUPTA, SR. DR ORDER DATE OF HEARING: 19.03.2018 DATE OF PRONOUNCEMENT: 22 .03.2018 PER K. NARASIMHA CHARY, JM AGGRIEVED BY THE ORDER DATED 13/09/2013 IN APPEAL NO . 540/11-12 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 1, NEW DELHI (FOR SHORT LD. CIT(A)), ASSESSEE PREFERRED THIS APPEAL CHALLENGIN G THE LEVYING AND SUSTAINING THE PENALTY. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY FORMED WITH THE OBJECT OF CARRYING ON THE REFINING, MANUFACTURING A ND THE DEALING ETC IN PETROLEUM AND CHEMICAL PRODUCTS. FOR THE AY 2009-10, ASSESSEE FILED THEIR RETURN OF INCOME ON 30/09/2009 DECLARING A TOTAL INCOME OF RS. 54,62 1/-. THEY HAVE ALSO SHOWN A SUM OF RS. 31,53,114/- AS DIVIDEND INCOME FROM MUTU AL FUNDS. SUBSEQUENT TO THE ISSUANCE OF NOTICE UNDER SECTION 143 (2) OF THE INC OME-TAX ACT, 1961 (FOR SHORT THE ACT), ASSESSEE FILED THE REVISED COMPUTATION OF INCOME ON 24/08/2011 SHOWING A SUM OF RS. 26,71,666/-AS DIVIDEND AND A S UM OF RS. 4,81,448/- AS CAPITAL GAINS IN ADDITION TO THE BUSINESS INCOME OF RS. 55, 621/-. LD. AO HELD THAT THE REVISED COMPUTATION IS NOT IN THE FORM OF REVISED R ETURN AND THAT TOO WAS FILED BEYOND THE DATE PERMISSIBLE FOR FILING OF REVISED RE TURN AS PER PROVISIONS OF SECTION 139(5) OF THE ACT, AS SUCH, THE SAME CANNOT BE ENTERTAINED. LD. AO PROCEEDED TO COMPUTE THE INCOME AND HELD THAT RS.4, 81,448/-SHALL BE CHARGEABLE TO TAX AT APPLICABLE RATES. HE ALSO INITIATED PENAL TY PROCEEDINGS UNDER SECTION 271(1) (C) OF THE ACT FOR FURNISHING INACCURATE PAR TICULARS OF INCOME IN THE RETURN. BY ORDER DATED 14/02/2012, LD.AO IMPOSED A PENALTY OF RS.1,31,900/-, FOR FURNISHING INACCURATE PARTICULAR OF INCOME WHICH AM OUNTS TO CONCEALMENT THEREOF, WHICH THE LD. CITA CONFIRMED IN APPEAL. 3. IT IS ARGUED ON BEHALF OF THE ASSESSEE THAT THE MOMENT ASSESSEE CAME TO KNOW THE ERROR THAT HAD CREPT IN THE RETURN OF INCO ME, THEY HAVE FILED A REVISED RETURN OF INCOME AND THE MISTAKE WAS PURELY ACCIDENT AL AND NOT INTENTIONAL, BUT THE LD. AO WITHOUT APPRECIATING THIS FACT OPINED TH AT THERE WAS FURNISHING OF INACCURATE PARTICULARS. HOWEVER WHILE ISSUING NOTIC E UNDER SECTION 271 READ WITH SECTION 274 OF THE ACT, THERE WAS NO CLARITY AS TO W HETHER IT WAS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING THE INACCURA TE PARTICULARS THEREOF FOR WHICH 3 SUCH A NOTICE WAS GIVEN. PLACING RELIANCE ON THE DE CISION REPORTED IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY, 359 ITR 565 (KAR) AND IN CIT VS. SSAS EMERALD MEADOWS (ITA 380/2015), IT IS ARGUED THAT SINCE THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT, SUCH A NOTICE IS LIABLE TO BE BAD IN LAW AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDING S HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4 . PER CONTRA, IT IS ARGUED ON BEHALF OF THE REVENUE T HAT THE ASSESSMENT ORDER AND THE PENALTY ORDER SHOW THAT THE PENALTY WAS PROPO SED AND IMPOSED FOR FURNISHING OF INACCURATE PARTICULARS, AND INASMUCH AS THERE IS NO AMBIGUITY ON THIS ASPECT, THE NOTICE DOES NOT SUFFER ANY ILLEGALITY OR IRREGULARITY. 5. WE HAVE CAREFULLY PERUSED THE MATERIAL PLACED ON RECORD IN THE LIGHT OF THE STATEMENTS MADE ON BEHALF OF THE ASSESSEE INCLUDING THE JUDGMENT RELIED UPON BY HIM IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNI NG FACTORY (SUPRA). NOTICE ISSUED IN THIS MATTER CLEARLY SHOW THAT IT WAS ISSUE D, STATING THAT THE ASSESSEE, HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME IN TERMS OF EXPLANATION 1, 2, 3, 4 AND 5. IT IS, THEREFORE, CLEAR THAT THE NOTICE DOES NOT SP ECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BE EN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. FURTHER THE PENALTY ORDER READS THAT THE PEN ALTY WAS LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME WHICH AMOUNTS T O CONCEALMENT THEREOF, THEREBY MAKING AN OMNIBUS ALLEGATION. 4 6. VIDE PARAGRAPH 60 IN CIT VS MANJUNATHA COTTON & GINNING FACTORY (SUPRA), THE HONBLE KARNATAKA HIGH COURT HAS HELD AS FOLLOW S :- 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, T HAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENC ES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFEN CES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSE E GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INI TIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOS E GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO A NSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOS E PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. O THERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, T HE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHI CH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. THE VALIDIT Y OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME T HE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSI TION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, W AS NOT SUSTAINABLE. 7. IN CIT VS. SSAS EMERALD MEADOWS (ITA 380/2015) THE HONBLE KARNATAKA HIGH COURT CONSIDERED THE QUESTION OF LAW AS TO,- WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITL Y MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF I NACCURATE PARTICULARS OR THAT FOR 5 CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABL E FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? AND THE HONBLE HIGH COURT RULED ANSWERING THE SAME IN FAVOUR OF THE ASSESSEE OBSERVING THAT: THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE AS SESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 R EAD WITH SECTION 271(1)(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(1)(C) OF THE ACT, THE PEN ALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHI LE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISIO N BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX -VS- MANJUNAT HA COTTON AND GINNING FACTORY (2013) 359 ITR 565. IN OUR VIEW, SI NCE 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 DETERMINA TION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. 8. THE SPECIAL LEAVE PETITION FILED BY THE REVENUE C HALLENGING THE AFORESAID JUDGEMENT OF THE HIGH COURT WAS DISMISSED BY THE HON BLE SUPREME COURT HOLDING: WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPEC IAL LEAVE PETITION IS, ACCORDINGLY, DISMISSED. 9. IN THE CIRCUMSTANCES, IN VIEW OF THE SUBMISSION ON BEHALF OF THE ASSESSEE THAT THE NOTICE WHICH CONFERS JURISDICTION ON THE R EVENUE TO LEVY PENALTY UNDER SECTION 271 (1) (C) OF THE ACT AND THE SETTLED PREP ARATION OF LAW ON THIS ASPECT WERE OF THE CONSIDERED OPINION THAT THE PENALTY CAN NOT BE SUSTAINED. WE ACCORDINGLY CRASH THE PENALTY PROCEEDINGS AND DIRECT THE LD. AO TO DELETE THE PENALTY. 6 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF MARCH, 2018. SD/- SD/- (G.D. AGRAWAL) (K. NARASIMHA CHARY) PRESIDENT JUDICIAL MEMBER DATED: 22 ND MARCH, 2018 VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR, ITAT