Sh. Prem Gupta, Jammu V. The Income-tax Officer, Jammu

ITA 575/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0485 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 26-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Assessee Lawyers: P N ARORA
• Keywords: Opportunity of being heard
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.575(ASR)/2014 ASSESSMENT YEAR: 2006-07 SH. PREM GUPTA PROP. M/S. PREM & CO. SHIVAJI MARKET, RAILWAY ROAD, NANAK NAGAR, JAMMU. PAN:AHBPG-7383G VS. INCOME TAX OFFICER, WARD 1(2)-JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P. N. ARORA (ADV.) RESPONDENT BY: SH. S.S. KANWAL (DR.) DATE OF HEARING: 14.07.2016 DATE OF PRONO UNCEMENT: 25.07.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF LEARNED CIT(A), JAMMU, DATED 22.07.2014 FOR ASST. YEAR: 200 6-07. 2. THE ASSESSEE HAS TAKEN SEVEN GROUNDS OF APPEAL W HICH READ AS UNDER: 1. THAT THE ORDER OF THE ASSESSING OFFICER, THEREB Y LEVYING PENALTY OF RS.81,280/- UNDER SECTION 271(L)(C ) OF THE INCOME-TAX ACT, 1961, AS WELL AS THE ORDER OF THE LD. CIT (APPEALS) THEREBY CONFIRMING THE SAME ARE BOTH AGAINST THE FACTS OF THE CASE & UNTENABLE IN LAW. 2. THAT THE AUTHORITIES BELOW HAVE MISERABLY FAILED TO APPRECIATE THAT THIS CASE DOES NOT FALL WITHIN THE MISCHIEF OF SECTION 271 (1)( C) OF THE INCOME-TAX ACT, 1961. AS SUCH, THE PENALTY LEVIED BY THE AO SHOULD HAVE BEEN CANCELLED BY THE LD. CIT (APPEALS). 3. THAT THERE WAS NO PROPER SATISFACTION AND APPLIC ATION OF MIND BY THE AO WHILE INITIATING THE PENALTY PROCEEDINGS UNDER SECTION 27 1(1)( C) OF THE INCOME-TAX ACT, 1961. THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THE PENALTY PROCEEDINGS WERE ITA NO.575 (ASR)/2014 ASST. YEAR : 2006-07 2 INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING THE PARTICULARS OF INCOME WHICH IS CLEAR FROM THE CONCL USION OF THE AO IN THE ASSESSMENT ORDER). THUS THERE WAS NO APPLICATION OF MIND OF TH E ASSESSING OFFICER AS NO PROPER AND SPECIFIC CHARGE WAS FRAMED AGAINST THE ASSESSEE WHILE INITIATING THE PENALTY PROCEEDINGS. AS SUCH THE ORDER LEVYING PENALTY UNDE R SECTION 271(1)(C) OF THE ACT, IS BAD IN LAW AND LIABLE TO BE CANCELLED. SIMILARLY TH E LD. CIT (APPEALS) SHOULD HAVE CANCELLED THE SAME AS THERE WAS NO APPLICATION OF M IND AND THERE WAS NO SPECIFIC CHARGE AGAINST THE ASSESSEE DURING THE COURSE OF AS SESSMENT PROCEEDINGS. AS SUCH THE ORDER LEVYING PENALTY UNDER SECTION 271(1)( C) OF T HE INCOME-TAX ACT, 1961, MAY BE CANCELLED AS THE PENALTY ORDER IS ILLEGAL, INVALID AND VOID AB-INITIO AND THE SAME DESERVES TO BE CANCELLED. 4. THAT THE LD. CIT (APPEALS) AGAIN MISERABLY FAILED TO APPRECIATE THAT THERE WAS NO SPECIFIC & PROPER CHARGE AGAINST THE ASSESSEE AT TH E TIME OF INITIATION OF PROCEEDINGS U/S 271 (1)( C) OF THE INCOME-TAX ACT, 1961. AS SUC H THE ASSESSEE WAS DEPRIVED OF A REASONABLE OPPORTUNITY OF BEING HEARD AT THE TIME O F LEVY OF PENALTY UNDER SECTION 271(1)(C) INCOME-TAX ACT, 1961. AS SUCH THE ORDER IS BAD IN LAW AND THE SAME IS LIABLE TO BE CANCELLED. 5. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE TH AT EVEN ON MERITS NO PENALTY WAS AT ALL CALLED FOR ON THE FACTS & CIRCUMSTANCES OF THE CASE, INASMUCH AS, AIL THE MATERIAL FACTS WERE DULY DISCLOSED BEFORE THE AUTHORITIES BE LOW . AS SUCH THE PENALTY ORDER IS BAD IN LAW AND THE SAME MAY BE CANCELLED. 6. THAT THERE WAS NO INTENTION TO CONCEAL THE PARTI CULARS OF INCOME, INASMUCH, ALL THE MATERIAL FACTS WERE DULY DISCLOSED AT THE TIME OF C OMPLETION OF THE ASSESSMENT. AS SUCH THERE WAS NO DEFAULT UNDER SECTION 271(1)( C) OF THE INCOME-TAX ACT, 1961, AND THE PENALTY ORDER MAY BE CANCELLED. ALTERNATIVELY, THE PENALTY IMPOSED IS VERY HIGH & E XCESSIVE. 3. AT THE TIME OF HEARING THE LEARNED AR SUBMITTE D THAT HE WILL BE ARGUING GROUND NO.3. FIRST, WHICH WAS A JURISDICTIO NAL GROUND AND IN THIS RESPECT HE INVITED OUR ATTENTION TO GROUND NO.3 AND SUBMITTED THAT PENALTY PROCEEDINGS IN THIS CASE WERE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING THE PARTICULAR S OF INCOME. HE SUBMITTED THAT THERE WAS NO APPLICATION OF MIND BY THE ASSESSING OFFICER AS NO SPECIFIC CHARGE WAS FRAMED AGAINST THE ASSESS EE WHILE INITIATING THE PENALTY PROCEEDINGS. THE LEARNED AR IN THIS RESPECT INVITED OUR ATTENTION TO THE ASSESSMENT ORDER AND SUBMITTED THAT IN THE L AST CONCLUDING PARA ITA NO.575 (ASR)/2014 ASST. YEAR : 2006-07 3 THE ASSESSING OFFICER HAD NOTED DOWN THAT PENALTY PROCEEDINGS U/S 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT THE PARTICULARS OF INCOME ARE BEING INI TIATED. THE LEARNED AR, THEREFORE, SUBMITTED THAT THERE WAS NO SPECIFIC CHARGES FRAMED BY ASSESSING OFFICER. THE LEARNED AR ALSO TOOK US TO ( PB PAGE-2) WHERE A COPY OF SHOW CAUSE NOTICE WAS PLACED AND LEARNED AR SUBMITTED THAT IN THE SHOW CAUSE NOTICE ALSO THE ASSESSING OFFICER HA D CHARGED THE ASSESSEE REGARDING CONCEALMENT OF PARTICULARS OF IN COME AND FURNISHING INACCURATE PARTICULARS OF INCOME. HE SUBMITTED THAT THE CASE OF THE ASSESSEE WAS COVERED IN HIS FAVOUR BY VARIOUS DECIS IONS OF HONBLE HIGH COURTS AND HONBLE ITAT, AMRITSAR BENCH IN THE CASE OF TARLOCHAN SINGH & SONS (HUF) VS. ITO REPORTED IN 114 TTJ 82 AND FURTHER BY THE ORDER OF ITAT, AMRITSAR BENCH IN THE CASE OF SH. JAYESH R KAMANI VS. ITO NO.453(ASR)/2007 VIDE ORDER DATED 29.05.2009. THE LEARNED AR, IN TH IS RESPECT INVITED OUR ATTENTION TO (PB PAGES 1 TO 29) WHERE THE COPIES OF THESE TWO DECISIONS WAS PLACED. THE LEARNED AR ALSO TOOK US TO (PB PAGES 32 TO 33) WHERE A COPY OF DECISION OF HONBLE GUJRA T HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS. CIT REPORTED IN 28 2 ITR 642 WAS PLACED. SIMILARLY WE WERE TAKEN TO (PB PAGE 34 TO 3 8) WHERE A COPY OF DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE O F CIT VS. LAKHDHIR LAL JI REPORTED 85 ITR 77 WAS PLACED. ITA NO.575 (ASR)/2014 ASST. YEAR : 2006-07 4 4. THE LEARNED DR, HEAVILY PLACED HIS RELIANCE ON T HE ORDER OF AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESSI NG OFFICER INITIATED PENALTY ORDER BY RECORDING HIS SATISFACTION IN THE ASSESSMENT ORDER WHICH READ AS UNDER: PENALTY PROCEEDINGS U/S 271(1)(C) FOR FURNISHING I NACCURATE PARTICULARS OF INCOME AND CONCEALING THE PARTICULA RS OF INCOME ARE BEING INITIATED. SIMILARLY IN THE SHOW CAUSE NOTICE PLACED AT (PB PA GE-2), THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE U/S 274 AND CHARGE D THE ASSESSEE BY OBSERVING AS UNDER: YOU HAVE CONCEALED THE PARTICULARS OF YOUR INCOME AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THEREFORE, FROM THE ABOVE TWO FACTS IT IS OBSERVED THAT ASSESSING OFFICER WAS NOT SURE AS TO WHETHER THE ASSESSEE IS BEING CH ARGED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE GUJRAT HIGH COURT IN THE CASE O F NEW SORATHIA ENGINEERING CO. VS. CIT REPORTED IN 282 TTR 642 UND ER SIMILAR FACTS AND CIRCUMSTANCES HAS OBSERVED AS UNDER: ...WE FIND FROM THE ORDER OF THE IAC, IN THE PENAL TY PROCEEDINGS, THAT IS, THE FINAL CONCLUSION AS EXPRESSED IN PARA 4 OF THE ORDER: I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. NOW, THE LANGUAGE OF AND/OR MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OF FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FI NDINGS AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURN ISHED BY THE ASSESSEE. ITA NO.575 (ASR)/2014 ASST. YEAR : 2006-07 5 NO SUCH CLEAR-CUT FINDING WAS REACHED BY THE IAC AN D, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS L IABLE TO BE STRUCK DOWN. THE PENALTY ORDER AND THE ORDER OF CIT(A) SHOW THAT NO CLEAR-CUT FINDING HAS BEEN REACHED. THE TRIBUNAL HAS FAILED TO APPREC IATE THIS LEGAL ISSUE. APPLYING THE RATIO TO THE FACTS OF THE CASE IT IS A PPARENT THAT THE ORDER OF PENALTY CANNOT BE SUSTAINED AND THE TRIBUNAL COULD NOT HAVE SUSTAINED THE SAME. THE TRIBUNAL HAVING FAILED TO TAKE INTO C ONSIDERATION AND DEAL WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT IT WOULD CONSTITUTE AN ERROR IN LAW WHICH GOES TO THE VERY BASIS OF THE CO NTROVERSY INVOLVED AND HENCE, THE IMPUGNED ORDER OF THE TRIBUNAL CANNOT BE UPHELD. 12. IN THE VIEW THAT THE COURT HAS TAKEN IT IS NOT NECESSARY TO REPRODUCED AND DEAL WITH OTHER CONTENTIONS RAISED BY THE LEARN ED COUNSEL ON FACTS AND MERITS OF THE MATTER IN THE FACT SITUATION. 13. IN THE RESULT, THE QUESTION IS ANSWERED IN THE NEGATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE TRIBUN AL WAS NOT RIGHT IN UPHOLDING THE PENALTY UNDER S.271(1)(C) OF THE ACT , FOR THE REASONS STATED HEREINBEFORE. RESPECTFULLY, FOLLOWING THE ABOVE JUDICIAL PRECEDEN T RELIED UPON BY LEARNED AR, WE QUASH THE PENALTY ORDER AS IT IS NOT AS PER THE LAW. 6. IN VIEW OF THE ABOVE, THE APPEAL FILED BY ASSESS EE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 .07.2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED:25.07.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER