Sri. K. Srinath Reddy, Davangere V. ITO, Davangere

ITA 616/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8438 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 28-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ITA NO.616/BANG/2016 ASSESSMENT YEAR : 2011-12 SHRI. K. SRINATH REDDY, #1814, I ST MAIN, 9 TH CROSS, BAPUJI VIDYANAGAR, DAVANGERE. PAN : BCJPS8041K VS. INCOME TAX OFFICER, WARD-2, DAVANGERE. APPELLANT RESPONDENT ASSESSEE BY : SHRI. NARENDRA SHARMA, ADVOCATE REVENUE BY : SHRI. M. K. BIJU, JCIT DATE OF HEARING : 27.3.2017 DATE OF PRONOUNCEMENT : 31.3.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A) CONFIRMING THE PENALTIES LEVIED UNDER SECTION 271(1 )(C) OF THE ACT. ITA NO.616/BANG/2016 PAGE 2 OF 5 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSE L FOR THE ASSESSEE INVITED OUR ATTENTION TO THE NOTICE ISSUED UNDER SE CTION 247 R.W.S. 271(1) OF THE ACT FOR INITIATING THE PENALTY PROCEEDINGS WITH THE SUBMISSION THAT IN THIS NOTICE THE AO HAS NOT SPECIFICALLY MENTIONED AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULARS OF THE INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. THEREFORE, THE NOTICE IS BAD AND D EFECTIVE AND THE PENALTY ORDER PASSED CONSEQUENT TO THE NOTICE IS NOT SUSTAI NABLE IN THE EYES OF LAW. 3. HE HAS FURTHER INVITED OUR ATTENTION TO THE JUDG MENTS OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 AND OTHER JUDGMENTS OF THE JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT VS. ANKITHA ELECTRONICS PVT. LTD., 379 ITR 50 ( KARNATAKA) AND JUDGMENT IN THE CASE OF CIT VS. M/S. SSAS EMERALD MEADOWS IN ITA NO. 380/2015 THROUGH WHICH THE LORDSHIP OF JURISDICTIONAL HIGH COURT HAS HELD THAT THE NOTICE ISSUED BY THE AO UNDER SECTION 274 R.W.S. 271(1) OF THE INCOME TAX ACT TO BE BAD IN LAW AS IT DID NOT SPECI FY WHICH LIMB OF SECTION 271(1)(C) OF THE INCOME TAX ACT THE PENALTY PROCEED INGS HAD BEEN INITIATED I.E., FOR CONCEALING OF PARTICULARS OF INCOME OR FU RNISHING OF INACCURATE PARTICULARS OF INCOME. WHILE HOLDING SO, THE LORDS HIP HAS RELIED UPON THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 . AGAINST THE JUDGMENT, THE REVENUE HAS FILED SLP BEFORE THE SUPREME COURT AND VIDE ITS ORDER DATED 5.8.2016, THE HONBLE APEX COURT HAS DISMISSED THE WRIT PETITION HAVING FOUND NO MERIT IN THE PETITION, COPY OF THE ORDER O F THE JUDGMENT OF ITA NO.616/BANG/2016 PAGE 3 OF 5 JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. SSAS EMERALD MEADOWS AND JUDGMENTS OF THE APEX COURT IS PLACED ON RECOR D. 4. THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE UPON THE ORDER OF THE CIT(A). 5. HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTH ORITIES BELOW AND DOCUMENTS FILED ON RECORD IN THE LIGHT OF THE JUDIC IAL PRONOUNCEMENTS REFERRED TO BY THE ASSESSEES, WE FIND THAT IN THE C ASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) THE LORDSHIP HAS EXAMINED THIS ISSUE IN DETAIL AND HAVE HELD THAT IF THE AO HAS NOT SPECIFICALLY MENTIONED IN THE NOTICE AS TO WHETHER THE ASSESSEE HAS CONCEALED THE INCOME OR HAS FURNISHED THE INACCURAT E PARTICULARS OF ITS INCOME, THE NOTICE IS DEFECTIVE FOR WHICH PENALTY P ROCEEDINGS CANNOT BE INITIATED. THEIR LORDSHIP IN THAT CASE HAS QUASHED THE PENALTY PROCEEDINGS. THE VIEW TAKEN BY THE JURISDICTIONAL HIGH COURT HAS BEEN FOLLOWED BY THE TRIBUNAL. THIS VIEW WAS REITERATED BY THE JURISDIC TIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. SSAS EMERALD MEADOWS AND THE RELEVANT OBSERVATION OF THE HONBLE HIGH COURT IS EXTRACTED HEREIN UNDER FOR THE SAKE OF REFERENCE: 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(1)(C) OF THE INCOME TAX A CT, 1961 (FOR ITA NO.616/BANG/2016 PAGE 4 OF 5 SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPE CIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDIN GS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH E TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CA SE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AN D GINNING FACTORY (2013) 359 ITR 565. 6. AGAINST THIS JUDGMENT OF JURISDICTIONAL HIGH COU RT, THE REVENUE HAS FILED SLP BEFORE THE HONBLE SUPREME COURT IN CC NO .11485/2016 AND THROUGH ITS ORDER DATED 5.8.2016, THE HONBLE APEX COURT HAS DISMISSED THE SLP HAVING OBSERVED THAT THERE WAS NO MERIT IN THE PETITION. ACCORDINGLY, THE VIEW TAKEN BY THE HONBLE HIGH COURT HAS BEEN A PPROVED BY THE HONBLE SUPREME COURT. THE COPIES OF THE ORDERS OF THE HONBLE HIGH COURT AND HONBLE SUPREME COURT ARE PLACED ON RECOR D. 7. IN THE INSTANT CASE, THE AO HAS NOT CATEGORICALL Y MENTIONED IN THE NOTICE ISSUED UNDER SECTION 274 R.W.S.271 OF THE AC T, AS TO WHETHER THE ASSESSEE HAS CONCEALED THE INCOME OR HAS FURNISHED INACCURATE PARTICULARS. THEREFORE, THE NOTICE IS DEFECTIVE IN TERMS OF JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT. THEREFORE, WE H OLD THAT THE PENALTY ORDER PASSED CONSEQUENT TO DEFECTIVE NOTICE IS NOT SUSTAI NABLE IN THE EYES OF THE LAW. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CI T(A) AND DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. ITA NO.616/BANG/2016 PAGE 5 OF 5 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MARCH, 2017. SD/- SD/- (S. JAYARAMAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE. DATED: 31 ST MARCH, 2017. /NS/ COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.