Shri Vivek Chugh, Indore V. Assistant Commissioner of Income Tax (Central)-2, Indore

ITA 636/Ind/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0693 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-03-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 28-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C SELVAMANI
• Assessee Lawyers: APRIT GAUR CAS
• Keywords: Set aside
• Section: 153A; 250; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCHE, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.636/IND/2017 ASSESSMENT YEAR: 2013-14 SHRI VIVEK CHUGH KHASRA NO.84/3/5, GRAND EXOTICA, NEAR AGRAWAL PUBLIC SCHOOL, BICHOLI MARDANA ROAD, INDORE / VS. A CIT - (CENTRAL) - 2 INDORE ( APPELLANT ) ( RE VENUE ) P.A. NO. AKZPC9018K APPELLANT BY SHRI ANIL KAMAL GARG & APRIT GAUR, CAS RE VENUE BY SMT. K.C. SELVAMANI, SR. DR DATE OF HEARING: 20.03.2019 DATE OF PRONOUNCEMENT: 28.03.2019 / O R D E R PER KUL BHARAT, J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-III, INDORE DA TED SHRI VIVEK CHUGH 2 31/07/2017 PERTAINING TO ASSESSMENT YEAR 2013-14. T HE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: GROUNDS OF INCOME-TAX APPEAL BEFORE THE HON'BLE IN COME-TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE, AGAINST THE APPELLA TE ORDER PASSED, UNDER S. 250 OF THE INCOME TAX ACT, 1961, BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-III, INDORE, PERTAINING TO THE A.Y. 2013-14 IN RESPONSE TO THE APPEAL FILED AGAINST THE PENALTY OR DER UNDER S. 271AAB OF THE ACT, PASSED BY THE LEARNED ASSISTANT COMMISSION ER OF INCOME- TAX (CENTRAL)-2, INDORE. 1. THAT, THE LEARNED CIT (A) GROSSLY ERRED IN LAW IN C ONFIRMING THE PENALTY OF RS.3,50,000/- OUT OF TOTAL PENALTY OF RS.7,00,000/- IMPOSED BY THE ASSESSING OFFICER UNDER S.271AAB OF THE INCOME-TAX ACT, 1961 WITHOUT CONSIDERING AND APPRECIATING THE MATERIAL FACT THAT THE AO IMPOSED THE PENALTY WITHOUT ISSUING A PROPER SHOW-CAUSE NOTICE AS CONTEMPLATED UNDER THE PROVISIONS OF SECTION 274 OF THE INCOME-TAX ACT, 1961. 2. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED C IT(A) GROSSLY ERRED IN CONFIRMING THE PENALTY OF RS.3,50,000/- OUT OF TOTA L PENALTY OF RS.7,00,000/IMPOSED BY THE ASSESSING OFFICER UNDER S.271 AAB OF THE INCOME-TAX ACT, 1961 WITHOUT CONSIDERING AND APPREC IATING THE MATERIAL FACT THAT THE APPELLANT HAD FULLY ADMITTED UNDISCLO SED INCOME AND ALSO SPECIFIED THE MANNER, IN A VERY UNEQUIVOCAL AND UNA MBIGUOUS WAY, IN WHICH SUCH UNDISCLOSED INCOME HAS BEEN DERIVED DURI NG THE COURSE OF SEARCH, IN A STATEMENT OF HIS FATHER NAMELY SHRI MO HANLAL CHUGH RECORDED UNDER S. 132(4) OF THE ACT . 2. BRIEFLY STATED FACTS ARE THAT A SEARCH AND SEIZU RE OPERATION U/S 132 WAS CARRIED OUT ON THE BUSINESS AS WELL AS RESI DENTIAL PREMISES OF THE CHUGH GROUP OF INDORE INCLUDING THE ASSESSEE . THEREAFTER, A NOTICE U/S 153A WAS ISSUED, IN RESPONSE THERETO, TH E ASSESSEE FILED HIS RETURN OF INCOME ON 22.12.2014 INCLUDING ADDITI ONAL INCOME OF RS.35,00,000/- DECLARED DURING THE SEARCH. THE ASSE SSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT SPECIFY AND SU BSTANTIATE THE SHRI VIVEK CHUGH 3 MANNER IN WHICH THE SAID UNDISCLOSED INCOME HAS BEE N DERIVED HENCE PENALTY PROCEEDINGS U/S 271AAB WAS INITIATED. SUBSEQUENTLY, THE ASSESSING OFFICER IMPOSED A PENAL TY OF RS.7,00,000/- @ 20% OF THE CONCEALED INCOME. 4. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APP EAL BEFORE THE LD. CIT(A) WHO HOWEVER REDUCED THE PENALTY AND RESTRICT ED THE SAME @10% OF THE UNDISCLOSED INCOME I.E. AMOUNTING TO RS .3,50,000/-. THE ASSESSEE IS IN PRESENT APPEAL AGAINST THE ORDER OF THE LD. CIT(A). AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT INITIATION OF PENALTY U/S 271AAB OF THE IS EX FACIE BAD IN LAW. HE DREW OUR ATTENTION TOWARDS THE NOTICE DATED 05.08.2 015 AND ENCLOSED AT PAGE NO.25 OF THE PAPER BOOK. HE SUBMIT TED THAT THE AO INITIATED PENALTY PROCEEDINGS IN A CASUAL MECHANICA L MANNER. THAT GOES TO DEMONSTRATE THAT ASSESSING OFFICER HAS NOT MADE A SPECIFIC CHARGE. FURTHER LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE VARIOUS CASE LAWS MORE PARTICULARLY IN THE CASE OF SANDEEP CHANDAK, VS. ACIT IN ITANOS.416,417 AND 418/LKW/2016 DATED 30.01 .2017. FURTHER RELIANCE HAS MADE ON THE DECISION OF THE HO N'BLE SUPREME COURT RENDERED IN THE CASE OF CIT VS. M/S. SSAS EM ERALD MEADOWS (2016) 8 TMI 1145(SC), JUDGMENT OF THE KARNATAKA HI GH COURT IN SHRI VIVEK CHUGH 4 THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FAC TORY (2012) 83 CCH 282 (KAR. HC). LD. COUNSEL HAS ALSO PLACED RELI ANCE ON THE FOLLOWING DECISIONS OF THE TRIBUNAL RENDERED IN THE CASES OF: TO BUTTRESS HIS CONTENTION THAT NOTICE SO ISSUED IS ILLEGAL AND THEREFORE, IS NOT SUSTAINABLE IN THE EYES OF LAW. S.NO. CITATION 1 SANDEEP CHANDAK & ORS. VS. ACIT (2017) 55 I TR 209 (LUCK. TRIB.) 2 SHRIANUJ MATHUR VS. DCIT 2018 (6) TMI 1311 ITAT JAIPUR) 3 SHRI RAVI MATHUR VS. DCIT 2018 (6) TMI 1128 ITAT JAIPUR) 4 SHRI SURESH CHAND MITTAL VS. DCIT 2018 (7) TMI 220 (ITAT JAIPUR) 5 DCIT VS. MANISH AGARWALA 2018 (2) TMI 972 (ITAT KOL.) 6 DCIT VS. SUBHAS CHANDRA AGARWALA 2018 (5) TMI 1602 (ITAT KAL.) 7 PANKAJ JALAN VS. DCIT 2018 (5) TMI 1591 (ITAT KAL.) 8 DCIT VS. SANWAR MAL AGARWALA AND ADTAM SARAN KHEMKA 2018 (5) TMI 422 (ITAT 9 ACIT VS. MIS. AMRIT HATCHERIES PVT. LTD. 2018 (3) TMI 44 (ITAT K 10 DCIT VS. SUBHAS CHANDRA AGARWALA & SONS (HUF) 2018 (3) TMI 214(ITAT KOL.) 11 M I MARVEL SSOCIATES VS. ACIT 2018 (3) TMI 946 (ITAT VISHAKHAPATNAM) SHRI VIVEK CHUGH 5 5. ON THE CONTRARY LD. DR OPPOSES THE SUBMISSIONS AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. LD. DR SUBMITTE D THAT THERE NO AMBIGUITY UNDER THE LAW IN CASE ASSESSEE ADMITS AMO UNT BEING IN DISCLOSED THEN IT IS TO BE DEALT WITH IN THE MANNER PRESCRIBED UNDER 271AAB OF THE ACT. IN REJOINDER LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN THE LD. CIT(A) HAS SUSTAINED PE NALTY U/S 271AAB(1)(A) OF THE ACT WHILE THE ASSESSING OFFICER HAD INITIATED PENALTY U/S 271AAB(1)(B) OF THE ACT. NO NOTICE OF I NITIATING PENALTY U/S 271AAB(1)(A) WAS GIVEN TO THE ASSESSEE. THIS FA CT IS SUFFICIENT TO SET ASIDE THE IMPUGNED ORDER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSING OFFICER HAD GIVEN A NOTICE WHICH ENCLOSED IN THE PAPER BOOK AT PAGE 25 FOR THE SAKE OF CLARITY NOTICE IS REPRODUCED AS UNDER: SHRI VIVEK CHUGH 6 SHRI VIVEK CHUGH 7 7. A BARE READING OF THE ABOVE NOTICE SUGGESTS THAT THE NOTICE HAS BEEN ISSUED IN A CASUAL FASHION. THE ASSESSING OFFI CER HAS NOT APPLIED HIS MIND AND NO SPECIFIC CHARGE IS MENTIONE D FOR WHICH THE ASSESSEE WAS REQUIRED TO BE SHOW CAUSED. IN ABSENCE OF THE REQUISITE CONTENTS OF SPECIFIC CHARGE THE INITIATIO N OF PROCEEDINGS CANNOT BE SUSTAINED BEING BAD IN LAW. ADMITTEDLY, L D. CIT(A) REDUCED THE PENALTY BY APPLYING THE PROVISIONS OF S ECTION 271AAB(1)(A). THERE IS NO AMBIGUITY UNDER THE LAW S O FAR POWERS OF LD. CIT(A) IS CONCERNED, HE CAN MODIFY THE PENALTY ORDER BY ENHANCING OR REDUCING THE PENALTY. HOWEVER, WHERE T HE ACT PROVIDES FOR TWO DIFFERENT RATES UNDER DIFFERENT TWO PROVISI ONS OF LAW IN OUR CONSIDERED VIEW, THE ASSESSEE OUGHT TO HAVE BEEN GI VEN AN OPPORTUNITY OF HEARING ON THIS ASPECT. HOWEVER, IN THE PRESENT CASE AT THE VERY INCEPTION NOTICE INITIATING PENALTY IS NOT IN ACCORDANCE WITH MANDATES OF LAW. MOREOVER, IT IS SETTLED POSIT ION OF LAW THAT SUCH DEFECT IS NOT CURABLE U/S 292BB OF THE ACT. TH EREFORE, WE HEREBY QUASH THE PENALTY ORDER. SHRI VIVEK CHUGH 8 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITANO.636/IND/2017 IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28.03.20 19. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 28/03/2019 PATEL, P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE