Shri Prateek Kumar Singh, Lucknow V. Income Tax Officer, Range- 1(3), Lucknow

ITA 603/LKW/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3614 (ITAT-LUCKNOW)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 24-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K SINGH
• Assessee Lawyers: K R RASTOGI
• Keywords: Capital asset; Principle of natural justice; Question of law
• Section: 271(1)(c)

Judgement Text

I.T.A. NO.603/LKW/2018 ASSESSMENT YEAR:2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.603/LKW/2018 ASSESSMENT YEAR:2013-14 SHRI PRATEEK KUMAR SINGH, 3/184, VISHAL KHAND, GOMTI NAGAR, LUCKNOW. PAN:AQRPS 6655 A VS. INCOME TAX OFFICER, RANGE-1(3), LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE O RDER OF LEARNED CIT(A)-1, LUCKNOW DATED 17/05/2018 PERTAINING TO AS SESSMENT YEAR 2013- 2014. 2. AT THE OUTSET, LEARNED A. R. INVITED OUR ATTENTI ON TO PETITION FOR ADMISSION OF ADDITIONAL GROUND WHICH WAS FILED BY T HE ASSESSEE ON 15/02/2019. LEARNED A. R. SUBMITTED THAT THE GROUND TAKEN BY THE ASSESSEE IS A LEGAL GROUND WHICH GOES TO THE ROOT OF THE MAT TER AND WHICH COULD NOT BE TAKEN AT THE TIME OF FILING OF THE APPEAL AND TH EREFORE, IT WAS PRAYED THAT THE SAME MAY BE ADMITTED. LEARNED D. R. DID NOT OB JECT TO THE ADMISSION OF ADDITIONAL GROUND OF APPEAL AND THEREFORE, THE S AME WAS ADMITTED. APPELLANT BY SHRI K. R. RASTOGI, C. A. RESPONDENT BY SHRI C. K. SINGH , D.R. DATE OF HEARING 15/02/2019 DATE OF PRONOUNCEMENT 22 /0 2 /201 9 I.T.A. NO.603/LKW/2018 ASSESSMENT YEAR:2013-14 2 3. IN THIS APPEAL, THE GRIEVANCE OF THE ASSESSEES I S AGAINST IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH HA S BEEN CONFIRMED BY THE LEARNED CIT(A). 4. AT THE TIME OF HEARING BEFORE ME, THE LD. A.R. O F THE ASSESSEE INVITED OUR ATTENTION TO THE PAPER BOOK FILED BEFORE ME WHE REIN SHOW CAUSE NOTICE FOR PENALTY UNDER SECTION 274 READ WITH 271(1)(C) O F THE ACT WAS PLACED. IT WAS SUBMITTED THAT FROM A PERUSAL OF THIS NOTICE, I T IS CRYSTAL CLEAR THAT THE CHARGE IS NOT SPECIFIC FOR WHICH PENALTY IS LEVIED UNDER SECTION 271(1)(C) OF THE ACT, WHETHER FOR CONCEALMENT OF INCOME OR FOR F URNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. A.R. OF THE ASSESSE E VEHEMENTLY ARGUED THAT IT IS SETTLED POSITION OF LAW THAT IF NOTICE UNDER SECTION 274 READ WITH 271(1)(C) IS NOT SPECIFIC ABOUT THE CHARGE OR LIMB UNDER WHICH PENALTY IS BEING LEVIED UNDER SECTION 271(1)(C) OF THE ACT, TH EN ANY PENALTY LEVIED ON THE BASIS OF SUCH NOTICE IS BAD IN LAW AND LIABLE T O BE DELETED. LEARNED A. R. ARGUED THAT ASSESSMENT ORDER HAS CHARGED THE ASSESS EE WITH BOTH LIMBS OF SECTION WHEREAS THE ASSESSEE HAD NOT DISCLOSED THE CAPITAL GIVEN ON SALE OF PROPERTY ASSUMING THE SAME TO BE CAPITAL ASSET. 5. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDERS OF THE AUTHORITIES BELOW. 6. I HAVE PERUSED THE CASE RECORDS AND HEARD THE RI VAL CONTENTIONS AND AS APPARENT FROM NOTICE UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT, I FIND THAT THE CHARGE ON WHICH PENALTY IS LEVIED IS NOT SPECIFIC. THE COPY OF SHOW CAUSE NOTICE HAS BEEN MADE PART OF THIS ORDER, WHICH IS AS UNDER: I.T.A. NO.603/LKW/2018 ASSESSMENT YEAR:2013-14 3 FROM A PERUSAL OF THIS NOTICE, IT IS CRYSTAL CLEAR THAT THE CHARGE IS NOT SPECIFIC FOR WHICH PENALTY IS LEVIED UNDER SECTION 271(1)(C) OF THE ACT, WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME. THE NOTICE HAS SPECIFIED BOTH CHARGES I.E. CONCEALM ENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AND HAS NOT SPECIFIED THE I.T.A. NO.603/LKW/2018 ASSESSMENT YEAR:2013-14 4 CHARGE FOR WHICH ACTION HAS BEEN TAKEN AGAINST ASSE SSEE. AS PER RECORD THE ASSESSEE HAD NOT DISCLOSED CAPITAL GAIN EARNED ON A LAND ASSESSING THE SAME TO BE CAPITAL ASSET WHICH IS ONLY ONE CHARGE AND TH EREFORE, THE ASSESSING OFFICER SHOULD NOT HAVE USED WORD AND. THE NON S PECIFIC NATURE OF NOTICE INDICATES NON APPLICATION OF MIND BY ASSESSING OFFI CER. IT IS A SETTLED POSITION OF LAW THAT IF NOTICE UNDER SECTION 274 READ WITH 2 71(1)(C) IS NOT SPECIFIC ABOUT THE CHARGE OR LIMB UNDER WHICH PENALTY IS BEI NG LEVIED UNDER SECTION 271(1)(C) OF THE ACT, THEN ANY PENALTY LEVIED ON TH E BASIS OF SUCH NOTICE IS BAD IN LAW AND LIABLE TO BE DELETED. 7. THE LAW MANDATES THAT THE AUTHORITY WHO IS PROP OSING TO IMPOSE PENALTY SHALL BE CERTAIN AS TO WHAT BASIS PENALTY I S BEING LEVIED AND NOTICE MUST REFLECT THAT SPECIFIC REASON SO THAT ASSESSEE TO WHOM SUCH NOTICE IS GIVEN CAN WELL PREPARE HIMSELF REGARDING DEFENCE WH ICH HE LIKES TO TAKE TO SUPPORT HIS CASE. THIS IS EVEN ENSHRINED IN THE PR INCIPLES OF NATURAL JUSTICE AND AS HAS BEEN UPHELD BY HON'BLE APEX COURT AND OT HER HIGH COURTS. I WOULD LIKE TO RELY ON THE FOLLOWING CASES:- (1) CIT VS. SSAS EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 (SC). IN THIS CASE THE HON'BLE APEX COURT LOOKED I NTO THE FACTS BEFORE THEM THAT TRIBUNAL RELYING ON THE DECISION O F DIVISION BENCH OF HON'BLE KARNATAKA HIGH COURT IN THE CASE O F CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACTORY (SUP RA) ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT NOT ICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WIT H SECTION 271(1)(C) OF THE ACT WAS BAD IN LAW AS IT DID NOT S PECIFY UNDER WHICH LIMB OF 271(1)(C) PENALTY PROCEEDINGS HAS BEE N INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WH EN THE MATTER TRAVELLED UPTO THE HIGH COURT, IT SUPPORTED THE JUD GMENT OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACTORY (SUPRA) AND DECIDED THAT THERE WAS THEREFORE NO SUBSTANTIAL QUESTION OF LAW TO BE DECIDED. THEREAFTER AN SLP WAS FILED BEFORE THE HO N'BLE APEX COURT AND THE APEX COURT DISMISSED THE SLP OF THE R EVENUE I.T.A. NO.603/LKW/2018 ASSESSMENT YEAR:2013-14 5 FINDING NO MERIT THEREIN AND CONFIRMING THE ISSUE I N FAVOUR OF THE ASSESSEE. (2) CIT AND ANOTHER VS. MANJUNATH COTTON & GINNING FACT ORY [2013] 359 ITR 565 (KARN.). IN THIS CASE, IT HAS B EEN CLEARLY MENTIONED AND HELD BY THE HON'BLE HIGH COURT THAT N OTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF TH E ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN 271(1)( C) I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURN ISHING OF INACCURATE PARTICULARS OF INCOME. SENDING PRINTED FORM WHERE ALL THE GROUNDS MENTIONED WOULD NOT SATISFY THE REQ UIREMENT OF LAW. ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS NO PEN ALTY COULD BE IMPOSED TO THE ASSESSEE. PENALTY PROCEEDINGS AR E DISTINCT FROM ASSESSMENT PROCEEDINGS THOUGH IT EMANATES FROM THE ASSESSMENT PROCEEDINGS STILL IT IS SEPARATE AND IND EPENDENT PROCEEDINGS ALL TOGETHER. (3) MEHERJEE CASSINATH HOLDINGS PVT. LTD VS. ACIT (ITAT MUMBAI) ITA NO. 2555/MUM/2012, ORDER DATED 28/04/2017 WHERE IN THE OBSERVATION OF THE BENCH WAS THAT PENALTY PROCEEDIN GS UNDER SECTION 271(1)(C) OF THE ACT ARE 'QUASI-CRIMINAL' P ROCEEDINGS AND OUGHT TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE. THE NON-STRIKING OF THE IRRELEVANT PORTION IN THE SHOW- CAUSE NOTICE MEANS THAT THE ASSESSING OFFICER IS NOT FIRM ABOUT THE CHARGE AGAINST THE ASSESSEE AND THE ASSESSEE IS NOT MADE A WARE AS TO WHICH OF THE TWO LIMBS OF S. 271(1)(C) HE HAS TO RE SPOND. (1) CHANDRA PRAKASH BUBNA VS. INCOME TAX OFFICER, WARD 27(3), KOLKATA (ITAT KOLKATA BENCH) [2015] 64 TAXMANN.COM 155 WHEREIN IT WAS HELD THAT WHEN THE ASSESSING OFFICER LEVIED PENALTY WITHOUT BRINGING OUT ANY SPECIFIC CHARGE FO R WHICH PENALTY HAD BEEN IMPOSED, PENALTY WAS LIABLE TO BE DELETED. 8. THE SETTLED LEGAL POSITION ON THE ISSUE AS ENSHR INED IN THE AFORESAID CASES IS APPARENT AND I ARRIVE AT THE CONSIDERED VI EW THAT NOTICE UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT WHICH HA S NOT SPECIFIED THE CHARGE AND LIMB UNDER WHICH PENALTY SHOULD BE LEVIE D, IT IS VOID AB INITIO AND ANY CONSEQUENT PENALTY IMPOSED ON THE BASIS OF SUCH NOTICE IS, THEREFORE, I.T.A. NO.603/LKW/2018 ASSESSMENT YEAR:2013-14 6 ILLEGAL AND BAD IN LAW AND LIABLE TO BE DELETED. I , THEREFORE, DIRECT DELETION OF PENALTY. 12. IN VIEW OF THE ABOVE, ADDITIONAL GROUND IS ALLO WED AND SINCE I HAVE ALLOWED THE APPEAL ON ADDITIONAL GROUND, OTHER GROU NDS TAKEN BY THE ASSESSEE HAVE NOT BEEN ADJUDICATED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 22/02/2019) SD/. ( T. S. KAPOOR ) ACCOUNTANT MEMBER DATED:22/02/2019 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW