Shree Mahadev Cotex, Panipat V. ITO, Ward-4, Panipat

ITA 6447/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9422 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 08-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: SUNIL KUMAR GUPTA
• Keywords: Retrospective amendment; Question of law
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 6447/DEL/2018 ASSESSMENT YEAR: 2014-15 SHREE MAHADEV COTEX C/O SUNIL RITU & CO., CAS, P-1, GREEN PARK EXTENSION, NEW DELHI. PAN NO. ABVFS2579J VS ITO WARD 4, PANIPAT. APPELLANT RESPONDENT ASSESSEE BY SH. SUNIL KUMAR GUPTA, CA REVENUE BY SHRI S.L. ANURAGI, SR. DR ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(APPEALS) KARNAL DATED 23.07.2018. 2. THE SOLE ISSUE INVOLVED IN THE APPEAL IS THAT TH E CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C ) OF THE INCOME TAX ACT, 1961 OF RS. 1,05,973/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE AO COMP LETED THE ASSESSMENT FOR THE ASSESSMENT YEAR UNDER APPEAL BY MAKING ADDITION ON RS. 5,72,246/- UNDER THE HEAD KITTI SC RAP SALE. THEREAFTER, HE ISSUED NOTICE U/S 274 READ WITH SECT ION 271 OF THE ACT ON 24.10.2016 WHICH READS AS UNDER: DATE OF HEARING 04.04.2019 DATE OF PRONOUNCEMENT 05.04.2019 2 ITA NO. 6447/DEL /2018 SHREE MAHADEV COTEX WHEREAS IN THE COURSE OF PROCEEDING BEFORE ME FOR T HE AY 2014-15 IT APPEARS TO ME THAT YOU: - HAVE CONCEALED TO PARTICULARS OF YOUR INCOME OR FU RNISHED INACCURATE PARTICULARS OF SUCH INCOME. THEREAFTER, HE LEVIED PENALTY U/S 271(1)(C ) OF THE ACT OF RS. 1,05,973/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E AO. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE SHRI SUNIL KU MAR GUPTA, CA ARGUED THAT THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF VEERBHADRAPPASANGAPPA & CO. & OTHERS (2013) 359 ITR 565 (KARN) HAS HELD THAT THE SHOW CAUSE NOTICE U/S 274 OF THE ACT DOES NOT SPECIFY AS TO THE EXACT CHARGE VIZ., WHETHER TH E CHARGE IS THAT THE ASSESSEE HAS 'FURNISHED INACCURATE PARTICULARS OF INCOME' OR 'CONCEALED PARTICULARS OF INCOME' BY STRIKING OUT T HE IRRELEVANT PORTION OF PRINTED SHOW CAUSE NOTICE, THEN THE IMPO SITION OF PENALTY ON THE BASIS OF SUCH INVALID SHOW CAUSE NOT ICE CANNOT BE SUSTAINED. THE ABOVE RULING HAS ALSO BEEN RELIED BY KOLKATA IT AT IN CASE OF SUFAPRASANNA BHATTACHARYA VS. ACIT [ITA NO. 1303/KOL/2010]. RECENTLY HON'BLE SC IN CASE OF VEERBHADRAPPASANGAPPA & CO. [TS-381-SC-2016] DISMISSED THE REVENUE SLP AGAINST KARNATAKA HC JUDGEMENT ON LAW OF PENALTY. 5. HE SUBMITTED THAT IN THE CASE OF THE ASSESSEE, THE ASSESSING OFFICER IN THE PENALTY NOTICE HAS HELD THAT THE ASS ESSEE HAS 3 ITA NO. 6447/DEL /2018 SHREE MAHADEV COTEX CONCEALED THE PARTICULARS OF HIS INCOME AND HAS ALS O FURNISHED INACCURATE PARTICULARS THEREOF FOR LEVY PENALTY U/S 271(1)(C) OF THE ACT. THEREFORE, IN VIEW OF THE DECISION OF THE HON' BLE KARNATAKA HIGH COURT IN THE CASE OF VEERBHADRAPPASANGAPPA & C O. & ORS. (SUPRA) THE PENALTY LEVIED IS LIABLE TO BE DELETED. 6. THE DEPARTMENTAL REPRESENTATIVE COULD NOT CONTR OVERT THE ABOVE SUBMISSION OF LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . WE FIND THAT THE FACTS IN THE PRESENT APPEAL ARE NOT IN DISPUTE AND THE ASSESSING OFFICER IN THE NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C) DATED 24.10.2016 HAS NOT SPECIFIED THE EX ACT CHARGE, VIZ., WHETHER THE CHARGE IS THAT THE ASSESSEE HAS FURNISH ED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF INCOME BY STRIKING OUT THE IRRELEVANT PORTION OF PRINTED SHOW CAUSE NOTICE. 8. 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 REVENUE AGA INST THE JUDGMENT RENDERED BY HON'BLE HIGH COURT OF KARNATAK A WHEREBY IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESS EE. 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 :- 4 ITA NO. 6447/DEL /2018 SHREE MAHADEV COTEX '2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWIN G SUBSTANTIAL QUESTIONS OF LAW: (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLI CITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATE D FOR FURNISHING OJ INACCURATE PARTICULARS OR THAT FO R CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABL E 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 JUSTIFI ED IN LAW IN. HOLDING THAT THE PENALTY NOTICE 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 TH E APPEALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED, UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESSEE H AS CONCEALED PARTICULARS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') TO BE BAD IN LA W AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. .THE TRIBUNAL, WH ILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED 01 THE DERISION OF THE DIVISION BENCH OF THIS COURT RENDER ED IN THE CASE OF COMMISSIONER OR INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 5 ITA NO. 6447/DEL /2018 SHREE MAHADEV COTEX 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT 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.' 9. BARE PERUSAL OF THE NOTICE ISSUED U/S 27I(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 O PPORTUNITY TO THE ASSESSEE TO EXPLAIN THE SHOW CAUSE NOTICE. RATH ER NOTICE IN THIS CASE HAS BEEN ISSUED IN A STEREOTYPED MANNER W ITHOUT APPLYING ANY MIND WHICH IS BAD IN LAW, HENCE IS NOT A VALID NOTICE SUFFICIENT TO IMPOSE PENALTY U/S 271(1)(C) OF THE A CT. 10. THE PENALTY PROVISIONS OF SECTION 27L(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 MEANINGS. THEREFORE, IT WAS IMPERATIVE FOR THE ASSESSING OFFICER TO STRI KE- OFF THE IRRELEVANT LIMB SO AS TO MAKE THE ASSESSEE AWARE AS TO WHAT IS THE CHARGE MADE AGAINST HIM SO THAT HE CAN RESPOND ACCO RDINGLY. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNA THA COTTON & GINNING FACTORY, 359 ITR 565 (KAR) OBSERVED THAT TH E LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB UNDER WHICH IT IS BEING LEVIED. AS PER HON'BLEHIGH COURT, WHERE THE ASSESSI NG OFFICER 6 ITA NO. 6447/DEL /2018 SHREE MAHADEV COTEX PROPOSED TO INVOKE FIRST LIMB BEING CONCEALMENT, TH EN THE NOTICE HAS TO BE APPROPRIATELY MARKED. THE HON'BLE HIGH CO URT HELD THAT THE STANDARD PROFORMA OF NOTICE UNDER SECTION 274 OF THE ACT WITHOUT STRIKING OF THE IRRELEVANT CLAUSES WOULD LE AD TO AN INFERENCE OF NON-APPLICATION OF MIND BY THE ASSESSI NG OFFICER. THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROF F VS. JCIT, 291 ITR 519(SC) HAS ALSO NOTICED THAT WHERE THE ASSESSI NG OFFICER ISSUES NOTICE UNDER SECTION 274 OF THE ACT IN THE STANDARD PROFORMA AND THE INAPPROPRIATE WORDS ARE NOT DELETE D, THE SAME WOULD POSTULATE THAT THE ASSESSING OFFICER WAS NOT SURE AS TO WHETHER HE WAS TO PROCEED ON THE BASIS THAT THE ASS ESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF INCOME. ACCORDING TO THE HON'BLE SUP REME COURT, IN SUCH A SITUATION, LEVY OF PENALTY SUFFERS FROM NON- APPLICATION OF MIND. IN THE BACKGROUND OF THE AFORESAID LEGAL POSI TION AND, HAVING REGARD TO THE MANNER IN WHICH THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT DATED 19.03.2013 WITHOUT STRIKING OFF THE IRRELEVANT WORD S, THE PENALTY PROCEEDINGS SHOW ANON-APPLICATION OF MIND BY THE AS SESSING OFFICER AND IS, THUS, UNSUSTAINABLE. 11. THE FACTS OF THE PRESENT APPEAL ARE IDENTICAL TO THE FACTS OF THE CASE BEFORE THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SSA'S. EMARLD MEADOWS (SUPRA). IN THE INSTANT CASE THE AO IN THE NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C ) OF THE ACT HAS NOT SPECIFIED AS TO WHETHER THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME OR CONCEALED HIS INCOME. HENCE, 7 ITA NO. 6447/DEL /2018 SHREE MAHADEV COTEX RESPECTFULLY FOLLOWING THE QUOTED DECISION OF HON'B LE KARNATAKA HIGH COURT, WE CANCEL THE ORDER OF THE ASSESSING OF FICER DATED 26.04.2017 LEVYING PENALTY OF RS.1,05,973/- AND ALL OW THE GROUND OF APPEAL OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/04/2019 SD/- (N.S. SAINI) ACCOUNTANT MEMBER DATED: 05.04.2019 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 8 ITA NO. 6447/DEL /2018 SHREE MAHADEV COTEX DATE OF DICTATION 03/04/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03/04/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 05/04 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 05/04 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 05/04 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 05/0 4 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER