Ram Singh Saini, Faridabad V. ITO WARD - 1(5), Faridabad

ITA 6167/DEL/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2899 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 22-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Opportunity of being heard; Principle of natural justice; Question of law
• Section: 271(1)(c); 274; 73; 144

Judgement Text

1 ITA NO.6167/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-2 NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 6167/DEL/20 19 (A.Y 2010-11) (THROUGH VIDEO CON FERENCING) RAM SINGH SAINI C/O RRA TAX INDIA D-28, SOUTH EXTENSION PART-1, NEW DELHI CNEPS9277E (APPELLANT) VS ITO WARD-1(5) FARIDABAD, HARYANA (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 31/05/2019 PASSED BY THE CIT(A)- FARIDABAD FOR ASSESSMENT YEAR 2011-12. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTAN CES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING T HE ACTION OF LD. A.O. IN IMPOSING PENALTY OF RS. 4,97,500/-, U/S 271(1 H C AND THAT TOO WITHOUT ASSUMING JURISDICTION AS PER LAW AND WITHOUT APPREC IATING THE FACTS, AND CIRCUMSTANCES OF THE CASE AN< THAT TOO WITHOUT GIVI NG ANY OPPORTUNITY OF HEARING. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, THE ACTION OF LD CIT(A) IN APPELLANT BY SH. SAUMIL AGARWAL, ADV RESPONDENT BY SH. FARHAT KHAN, SR. DR DATE OF HEARING 02.03.2021 DATE OF PRONOUNCEMENT 02.03.2021 2 ITA NO.6167/DEL/2019 CONFIRMING THE ACTION OF LD. A.O IN IMPOSING PENALT Y OF RS.4,97,500/- IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE SAME IS NOT SUSTAINABLE O VARIOUS LEGAL AND FACTUAL GROUNDS. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE; LD. A.O. HAS ERRED IN LAW AND ON FACTS IN IMPOSING A OF R 4, 97,500/- THAT TOO WITHOUT RECORDING MANDATORY SATISFACTION AS PER LAW. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE LD. A.O. HAS ERRED IN LAW AND ON FACTS IN THAT PENALTY NOTIC E WAS VAGUE AND INAPPLICABLE CLAUSE WAS NOT STRUCK OFF. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF CASE, LD. A.O HAS ERRED IN LAW AND ON FACTS IN IMPOSING PENALTY WITHO UT GIVING AN ADEQUATE OPPORTUNITY OF BEING HEARD AND BY NOT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 3. THE ASSESSEE IS AGRICULTURIST. THE ASSESSEE RE CEIVED AMOUNT AS ENHANCED COMPENSATION FOR ACQUISITION OF AGRICULTURAL LAND B Y HUDA AND INTEREST THEREON IN CONSEQUENT UPON THE DECISION OF THE HON BLE HIGH COURT DATED 21.02.2007. THE ASSESSING OFFICER MADE ADDITION OF RS. 19,30,036/- AS INTEREST INCOME RECEIVED IN RESPECT OF ENHANCED COM PENSATION OBSERVING THEREBY THAT THE ASSESSEE CONCEALED THE INCOME. TH E ASSESSMENT WAS PASSED U/S 144 OF THE ACT OBSERVING THEREBY THAT THE ASSES SEE CONCEALED THE INCOME. IN THE MEANWHILE, THE PENALTY PROCEEDINGS WERE INIT IATED AND THE PENALTY IS IMPOSED UNDER SECTION 271(C) OF THE ACT. THE PENALT Y IS IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 4. THE LD. AR SUBMITTED THAT THERE WAS NO INFORMATI ON WHICH SHOWS THE CONCEALMENT OF INCOME WHICH WILL ATTRACT THE CONCEA LMENT PENALTY. THIS IS NOT A REGULAR INCOME OF THE ASSESSEE WHICH CAN BE SAID AS CONCEALED. THIS WAS THE AMOUNT OF COMPENSATION AND INTEREST ON LATE PAYMENT OF COMPENSATION. THE COMPENSATION IS EXEMPT BUT THE INTEREST WAS TAXABLE . THE ASSESSEE HAS NO DETAIL OF CALCULATION OF THIS AMOUNT RECEIVED. THIS INFORMATION WAS LATER ON 3 ITA NO.6167/DEL/2019 TAKEN FROM HUDA WITH THE HELP OF THE ASSESSING OFFI CER. THE LD. AR SUBMITTED THAT THE NOTICE DATED 20/6/2014 HAS NOT GIVEN A SPE CIFIC CHARGE FOR PENALTY. THE LD. AR SUBMITTED THAT THE CIT(A) ERRED IN CONFI RMING THE PENALTY U/S 271(1)(C) OF THE ACT AS UNDER WHICH LIMB OF SECTION 271(1)(C), THE PENALTY IS LEVIED WAS NOT MENTIONED IN THE NOTICE ISSUED UNDER SECTION 271(1)(C) READ WITH SECTION 274 OF THE ACT. THE LD. AR SUBMITTED THAT W HETHER THE PENALTY IS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME WAS NOT EVIDENT FROM THE NOTICE NOR FROM THE PENALTY OR DER AS WELL. THE LD. AR FURTHER SUBMITTED THAT THE PENALTY PROVISION BEING QUASI JUDICIAL, UNLESS THERE IS SPECIFIC CHARGE THERE CANNOT BE LEVY OF PENALTY. THEREFORE, THE ORDER LEVYING PENALTY IS WRONG AND BAD IN LAW. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF CIT VS. SSAS EMER ALD MEADOWS (2016) 73 TAXMAN.COM 248 (SC) AND CIT V. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KAR). THE LD AR FURTHER SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN CASE OF PR. CIT VS. M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (ITA NO.475/2019 VIDE ORDER DATED 02.08.2019) HELD THAT NOTICE ISSUED BY THE ASSESSING OFFICER WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE PENALTY PROCEEDINGS HAD BEEN INITI ATED. 5. THE LD. DR SUBMITTED THAT THE PENALTY ORDER IS V ERY CLEAR THAT THE PENALTY IS IMPOSED ON CONCEALMENT OF INCOME AND, TH EREFORE, MERELY NOT MENTIONING THE SPECIFIC LIMB OF SECTION 271(1)(C) W ILL NOT MAKE THE PENALTY ORDER BAD IN LAW. THE LD. DR RELIED UPON THE ASSESS MENT ORDER, PENALTY ORDER AND THE ORDER OF THE CIT(A). THE ONLY GROUND PRESSE D BY THE LD. AR IS THAT APPROPRIATE LIMB OF SECTION 271(L)(C) HAS NOT BEEN STRUCK OFF. THE UNDERLYING CONTENTION IS THAT THE ASSESSEE WOULD THEREBY NOT K NOW WHAT ALLEGATION TO RESPOND TO. THE LD. DR RELIED ON THE RATIO IN THE C ASE OF M/S SUNDARAM FINANCE VS. ACIT (MADRAS HIGH COURT ORDER DATED 23. 04.2018) WHERE IT HAS BEEN HELD ON THE ISSUE OF NOT STRIKING ONE LIMB OR THE OTHER OF SECTION 271(L)(C) OF THE ACT. IN THIS CASE, ADMITTEDLY THERE HAS BEEN NO APPEARANCE BY THE ASSESSEE EITHER AT ASSESSMENT OR AT APPELLATE STAGE S. HENCE ASSESSEE IS 4 ITA NO.6167/DEL/2019 PRECLUDED FROM TAKING THE PLEA THAT HE HAS BEEN PUT TO PREJUDICE BY NOT STRIKING OFF THE APPROPRIATE LIMB OF SECTION 271(L) (C). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORD. FIRST OF ALL, IN THE NOTICE IS SUED U/S 274 R.W.S 271(1)(C) OF THE INCOME TAX ACT, 1961, THERE WAS NO SPECIFIC CHA RGES AS RELATES TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. FROM THE NOTICE DATED 14/02/2014 PRODUCED BY THE LD . AR DURING THE HEARING, IT CAN BE SEEN THAT THE ASSESSING OFFICER WAS NOT S URE UNDER WHICH LIMB OF PROVISIONS OF SECTION 271 OF THE INCOME TAX ACT, 19 61, THE ASSESSEE IS LIABLE FOR PENALTY. IN THE PRESENT CASE THE ENHANCED COMPENSAT ION AND INTEREST RECEIVED THEREON WAS TAKEN INTO ACCOUNT BUT THE ASSESSING OF FICER OBSERVED THAT THE INTEREST RECEIVED ON COMPENSATION OR INTEREST RECEI VED ON ENHANCED COMPENSATION IS TAXABLE UNDER THE INCOME FROM OTHER SOURCES AND WILL NOT COME UNDER THE PURVIEW OF THE EXEMPTION UNDER SECTI ON 10(37) OF THE ACT. THUS, THE ASSESSING OFFICER INITIATED PENALTY UNDER SECTION 271(1)(C) OF THE ACT AS RELATING TO CONCEALMENT OF INCOME DUE TO THE FAC T THAT THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME AND NEVER DECLARED THE C OMPENSATION AND THE INTEREST RECEIVED THEREON. MERELY NOT FILING THE RE TURN OF INCOME CANNOT AMOUNT TO CONCEALMENT OF INCOME. THEREFORE WE ARE TAKING U P THE CONTENTION OF THE ASSESSEE THAT THERE IS NO PARTICULAR LIMB MENTIONED IN THE NOTICE ISSUED UNDER SECTION 271(1)(C) R.W.S. 274 OF THE ACT. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF M/ S SSA EMERALD MEADOW. THE EXTRACT OF THE DECISION OF THE HONBLE KARNATAK A HIGH COURT IN M/S SSA EMERALD MEADOWS ARE AS UNDER WHICH WAS CONFIRMED BY THE HONBLE APEX COURT: '3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'T HE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE TRIBUNAL, WHILE 5 ITA NO.6167/DEL/2019 ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE ITA NO. 4913/DEL/2015 DECISION OF THE DIVISION BENCH OF THI S COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIA L QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE AP PEAL IS ACCORDINGLY DISMISSED.' THUS, ADDITIONAL GROUND NO. (II) OF THE ASSESSEE'S APPEAL IS ALLOWED. SINCE THE INCEPTION OF THE NOTICE ISSUED U/S 271(1)(C) HAS BE COME NULL AND VOID, THERE IS NO NEED TO COMMENT ON MERIT OF THE CASE. THE PENALT Y U/S 271(1)(C) OF THE ACT IS QUASHED. SINCE IN THE INSTANT CASE ALSO THE INAPPROPRIATE W ORDS IN THE PENALTY NOTICE HAS NOT BEEN STRUCK OFF AND THE NOTICE DOES NOT SPECIFY AS TO UNDER WHICH LIMB OF THE PROVISIONS, THE PENALTY U/S 271(1 )(C) HAS BEEN INITIATED, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E PENALTY LEVIED U/S 271(1)(C) IS NOT SUSTAINABLE AND HAS TO BE DELETED. ALTHOUGH THE LD. DR SUBMITTED THAT MERE NON-STRIKING OFF OF THE INAPPROPRIATE WORDS WI LL NOT INVALIDATE THE PENALTY PROCEEDINGS, HOWEVER, THE DECISION OF THE HONBLE K ARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) WHERE THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED IS DIRECTLY ON THE ISSUE CONTEST ED HEREIN BY THE ASSESSEE. FURTHER, WHEN THE NOTICE IS NOT MENTIONING THE CONC EALMENT OR THE FURNISHING OF INACCURATE PARTICULARS, THE RATIO LAID DOWN BY T HE HONBLE HIGH COURT IN CASE OF M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (S UPRA) WILL BE APPLICABLE IN THE PRESENT CASE. THE HONBLE DELHI HIGH COURT HELD AS UNDER: 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, WHICH W AS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT I N CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR) AND OBSE RVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF 6 ITA NO.6167/DEL/2019 INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIG H COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIO NER OF INCOME TAX V. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 241(KAR) , THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA I N SLP NO. 11485 OF 2016 BY ORDER DATED 5 TH AUGUST, 2016. 22. ON THIS ISSUE AGAIN THIS COURT IS UNABLE TO FIN D ANY ERROR HAVING BEEN COMMITTED BY THE ITAT. NO SUBSTANTIAL QUESTION OF LAW ARISES. THE RELIANCE OF THE LD. DR IN RESPECT OF SUNDERAM F INANCE LTD. (SUPRA) CANNOT BE TAKEN INTO ACCOUNT IN TOTO IN THE PRESENT CASE AS THE JURISDICTIONAL HIGH COURT IN CASE OF SAHARA INDIA LIFE INSURANCE C O. LTD. (SUPRA) HAS CLEARLY SET OUT THE NECESSITY OF THE ACTUAL PROVISIONS FOR WHICH THE PENALTY IS ISSUED BY THE REVENUE. THUS, NOTICE UNDER SECTION 271(1)(C) R .W.S. 274 OF THE ACT ITSELF IS BAD IN LAW. WE, THEREFORE, SET-ASIDE THE ORDER OF T HE CIT(A) AND DIRECT THE ASSESSING OFFICER TO CANCEL THE PENALTY SO LEVIED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT IN PRESENCE OF B OTH THE PARTIES ON THIS 02ND DAY OF MARCH, 2021 SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 02/03/2021 R. NAHEED * 7 ITA NO.6167/DEL/2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI