M/S EARTHTECH ENGINEERS, PATHANKOT V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - VI, PATHANKOT

ITA 580/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3402 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 08-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Question of law
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. S. SAINI, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER ITA NO. 553/ASR./2017 : ASSTT. YEAR : 2009-10 M/S EARTHTECH ENGINEERS, C/O SHRI VAISHNO MALHOTRA, OUTSIDE MANN MARKET, MAIN BAZAR, PATHANKOT VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-VI, PATHANKOT (APPELLANT) (RESPONDENT) PAN NO. AACFE1819R ASSESSEE BY : WRITTEN SUBMISSION REVENUE BY : SMT. RATIND ER KAUR, DR ITA NO. 580/ASR./2017 : ASSTT. YEAR : 2009-10 M/S EARTHTECH ENGINEERS, LIC LANE, DHANGU ROAD, PATHANKOT VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-VI, AMRITSAR (APPELLANT) (RESPONDENT) PAN NO. AACFE1819R ASSESSEE BY : SHRI. SALIL KAPOOR, ADV. & SHRI. SANAT KAPOOR, ADV. REVENUE BY : SMT. RATINDE R KAUR, DR DATE OF HEARING : 20 .02 .201 9 DATE OF PRONOUNCE MENT : 21 .02 .201 9 ORDER PER N. S. SAINI, AM: THESE ARE THE TWO APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2009-10 CHALLENGING THE LEVY OF PEN ALTY U/S 271(1)(C) OF THE ACT BY DCIT-VI, PATHANKOT OF RS.9, 77,480/-. ITA NOS. 553 & 580/ASR./20 17 EARTHTECH ENGINE ERS 2 2. IN VIEW OF THE ABOVE STATED FACTS, THE APPEAL NO . 553/ASR./2017 IS DISMISSED ON THE GROUND OF FILING DUPLICATE APPEAL. 3. NOW WE PROCEED TO ADJUDICATE THE APPEAL NO. 580/ASR./2017. 4. THE AR OF THE ASSESSEE SHRI SALIL KAPOOR, ADV. A ND SHRI SANAT KAPOOR, ADV. HAS FILED BEFORE US AT PAGE NO. 13 OF THE PAPER BOOK NOTICE U/S 274 R.W.S. 271(1)(C) OF THE A CT DATED 22.12.2011. HE SUBMITTED THAT IT WILL BE SEEN FROM THE NOTICE THAT THE SAME HAS BEEN ISSUED FOR LEVY OF PENALTY U /S 271(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSE E HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME. THEREFORE, THE ORDER OF PENALTY DATED 30.05.2013 LEVY OF PENALTY OF RS.9,77,480/- U /S 271(1)(C) OF THE ACT IS BAD IN LAW AND HENCE NOT SU STAINABLE. 5. THE DEPARTMENTAL REPRESENTATIVE COULD NOT CONTRO VERT THE ABOVE SUBMISSION OF LD. AUTHORISED REPRESENTATIVE O F THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON REC ORD. WE FIND THAT THE FACTS IN THE PRESENT APPEAL ARE NOT IN DIS PUTE AND THE ASSESSING OFFICER IN THE ORDER PASSED U/S.271(1)(C) DATED 30.05.2013 LEVIED PENALTY OF RS.9,77,480/-. 7. THE HON'BLE APEX COURT VIDE JUDGMENT IN CASE OF M/S. SSA'S EMERALD MEADOWS, (2016) 73 TAXMANN.COM 248(SC ) DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE R EVENUE ITA NOS. 553 & 580/ASR./20 17 EARTHTECH ENGINE ERS 3 AGAINST THE JUDGMENT RENDERED BY HON'BLE HIGH COURT OF KARNATAKA WHEREBY IDENTICAL ISSUE WAS DECIDED IN FA VOUR OF THE ASSESSEE. OPERATIVE PART OF THE JUDGMENT IN CASE OF M/S. SSA'S EMERALD MEADOWS (SUPRA) DECIDED BY HON'BLE HIGH COURT OF KARNATAKA IS REPRODUCED BELOW: '2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OJ INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE 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? (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN. HOLDING THAT THE PENALTY NOTIC E UNDER SECTION 274 R.W.S. 271(1)(C) IS HAD IN LAW AND. INVALID INSPITE THE AMENDMENT OF SECTION 271(1)( B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING 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 INT O CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME? 8. 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(1)(C) OF THE INCO ME 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 PENALTY ITA NOS. 553 & 580/ASR./20 17 EARTHTECH ENGINE ERS 4 PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISIO N BENCH OF THIS COURT RENDERED IN THE CASE OF CIT VS MANJUNATH A COTTON AND GINNING FACTORY (2013) 359 ITR 565. 9. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JU DGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPI NION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL F OR DETERMINATION BY THIS COURT, THE APPEAL IS ACCORDIN GLY DISMISSED.' 10. BARE PERUSAL OF THE NOTICE ISSUED U/S 271(1)(C) APPARENTLY GOES TO PROVE THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUING THE NOTICE U/S 274/271(1)(C) OF THE ACT WITHOUT SPECIFYING WHETHER THE ASSESSEE HAS CONCEAL ED ''PARTICULARS OF INCOME' OR ASSESSEE HAS FURNISHED 'INACCURATE PARTICULARS OF INCOME', SO AS TO PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE SHOW CAUSE NOTICE. R ATHER NOTICE IN THIS CASE HAS BEEN ISSUED IN A STEREOTYPED MANNE R WITHOUT APPLYING ANY MIND WHICH IS BAD IN LAW, HENCE IS NOT A VALID NOTICE SUFFICIENT TO IMPOSE PENALTY U/S 271(1)(C) O F THE ACT. 11. THE PENALTY PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE ATTRACTED WHERE THE ASSESSEE HAS CONCEALED THE PART ICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS ALSO A WELL-ACCEPTED PROPOSITION THAT THE AFORESAID TWO LIMBS OF SECTION 271(1)(C) OF THE ACT CARRY DIFFERENT MEANIN GS. THEREFORE, IT WAS IMPERATIVE FOR THE ASSESSING OFFI CER TO STRIKE- OFF THE IRRELEVANT LIMB SO AS TO MAKE THE ASSESSEE AWARE AS TO ITA NOS. 553 & 580/ASR./20 17 EARTHTECH ENGINE ERS 5 WHAT IS THE CHARGE MADE AGAINST HIM SO THAT HE CAN RESPOND ACCORDINGLY. THE HON'BLE KARNATAKA HIGH COURT IN TH E CASE OF MANJUNATHA COTTON & GINNING FACTORY, 359 ITR 565 (K AR) OBSERVED THAT THE LEVY OF PENALTY HAS TO BE CLEAR A S TO THE LIMB UNDER WHICH IT IS BEING LEVIED. AS PER HON'BLE HIGH COURT, WHERE THE ASSESSING OFFICER PROPOSED TO INVOKE FIRS T LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATEL Y MARKED. THE HON'BLE HIGH COURT HELD THAT THE STANDARD PROFO RMA OF NOTICE UNDER SECTION 274 OF THE ACT WITHOUT STRIKIN G OF THE IRRELEVANT CLAUSES WOULD LEAD TO AN INFERENCE OF NO N-APPLICATION OF MIND BY THE ASSESSING OFFICER. THE HON'BLE SUPRE ME COURT IN THE CASE OF DILIP N. SHROFF VS. JCIT, 291 ITR 51 9(SC) HAS ALSO NOTICED THAT WHERE THE ASSESSING OFFICER ISSUE S NOTICE UNDER SECTION 274 OF THE ACT IN THE STANDARD PROFOR MA AND THE INAPPROPRIATE WORDS ARE NOT DELETED, THE SAME WOULD POSTULATE THAT THE ASSESSING OFFICER WAS NOT SURE AS TO WHETH ER HE WAS TO PROCEED ON THE BASIS THAT THE ASSESSEE HAD CONCE ALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF INCOME. ACCORDING TO THE HON'BLE SUPREME COURT, IN SUCH A SITUATION, LEVY OF PENALTY SUFFERS FROM NON-APPLICA TION OF MIND. IN THE BACKGROUND OF THE AFORESAID LEGAL POSITION A ND, HAVING REGARD TO THE MANNER IN WHICH THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE AC T DATED 22.12.2011 WITHOUT STRIKING OFF THE IRRELEVANT WORD S, THE PENALTY PROCEEDINGS SHOW ANON-APPLICATION OF MIND BY THE ASSESSING OFFICER AND IS, THUS, UNSUSTAINABLE. 12. THE FACTS OF THE PRESENT APPEAL ARE IDENTICAL T O THE FACTS OF THE CASE BEFORE THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SSAS. EMARLD MEADOWS(SUPRA). IN THE INSTAN T CASE THE ITA NOS. 553 & 580/ASR./20 17 EARTHTECH ENGINE ERS 6 AO WHILE LEVYING PENALTY U/S 271(1)(C) HAS OBSERVED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOM E AND HAS ALSO FURNISHED INACCURATE PARTICULARS THEREOF. THUS , HE IS NOT SPECIFIC AS TO WHETHER THE PENALTY IS LEVIED FOR CO NCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HENCE, RESPECTFULLY FOLLOWING THE QUOTED DECISION O F HONBLE KARNATAKA HIGH COURT, WE CANCEL THE ORDER OF THE AS SESSING OFFICER DATED 30.05.2013 LEVYING PENALTY OF RS.9,77 ,480/- AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.553/ASR./2017 IS DISMISSED AND THE APPEAL IN ITA NO.580/ASR./2017 IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 21/02/2019) SD/- SD/- (N. K. CHOUDHRY) (N. S. SAINI) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 21/02/2019 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR