CHITRALEKHA, MUMBAI V. A.C.I.T.- 17(1), MUMBAI

ITA 6849/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1471 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 04-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHI RAM KARTIKEYAN LD
• Assessee Lawyers: AARTI VISSANJI LD
• Keywords: Question of law
• Section: 271(1)(c); 143(3); 250

Judgement Text

ITA NO.6849/MUM/2017 CHITRALEKHA ASSESSMENT YEAR :2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6849/MUM/2017 ( / ASSESSMENT YEAR:2010-11) M/S. CHITRALEKHA 25, ANDHERI INDUSTRIAL ESTATE NEAR JANKI CENTRE OFF VEERA DESAI ROAD ANDHERI (W), MUMBAI-400 053 / VS. ASST T . COMMISSIONER OF INCOME TAX -17(1) ROOM NO.117 AAYKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ./ ./PAN/GIR NO. AAAFC-1152-B ( ! /APPELLANT ) : ( '#! / RESPONDENT ) APPELLANT BY : MS. AARTI VISSANJI-LD.AR RESPONDENT BY : ABHI RAM KARTIKEYAN - LD.DR / DATE OF HEARING : 14/03/2019 / DATE OF PRONOUNCEMENT : 19/03/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1.1 AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEA R [IN SHORT REFERRED TO AS AY] 2010-11 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-28, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-28/IT-222/ACIT -17(1)/2013-14 DATED 13/06/2017 BY RAISING FOLLOWING GROUND OF APPEAL: - ITA NO.6849/MUM/2017 CHITRALEKHA ASSESSMENT YEAR :2010-11 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IT IS HUMBLY PRAYED THAT IT SHOULD BE HELD THAT THE PENALTY LEVI ED VIDE ORDER DATED 12 TH SEPTEMBER, 2013 U/S. 271(L)(C) OF THE ACT IN RELATI ON TO DISALLOWANCE OF RS.23,97,944/- REPRESENTING PART OF INTEREST EXPEND ITURE CONSIDERED AS ATTRIBUTABLE ON THE OUTSTANDING BALANCE DUE FROM CH ITRALEKHA PRINTERS AND PUBLISHERS PVT. LTD., IN ASSESSMENT OF THE INCO ME VIDE ORDER PASSED U/S. 143(3) OF THE ACT DATED 11 TH MARCH, 2013 IS TO BE DELETED. 1.2 HOWEVER, THE ASSESSEE HAS RAISED ADDITIONAL GRO UNDS OF APPEAL ON 13/03/2019 WHICH CONTEST THE IMPOSITION OF PENALTY ON LEGAL GROUNDS IN THE FOLLOWING MANNER: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, IT IS HUMBLY PRAYED THAT IT SHOULD BE HELD THAT THE NOTICE U/S 274 R.W. S 271 MUNCY OF THE ACT AS WELL AS THE CONSEQUENTIAL ORDER PASSED UNDER SECTIO N 271(1)(C) IS ILLEGAL, BAD-IN-LAW AND WITHOUT JURISDICTION AND ACCORDINGLY , THE AO BE DIRECTED TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT ON ACCOUNT OF FOLLOWING: (A) THE PENALTY PROCEEDINGS INITIATED BY ISSUANCE O F NOTICE U/S 274 R.W.S 271 (1)(C) OF THE ACT IS WITHOUT ANY SPECIFIC CHARGE; O R (B) THE CHARGE FOR LEVY OF PENALTY IS DIFFERENT THA N THE CHARGE STATED TO BE IN THE ASSESSMENT ORDER FOR INITIATION OF PENALTY PROC EEDING; OR (C) ON SIMILAR FACTS NO PENALTY WAS INITIATED FOR A SSESSMENT YEARS 2004- 2005 TO 2007-2008 AND THOUGH PENALTY PROCEEDINGS WE RE INITIATED FOR ASSESSMENT YEARS 2008-2009 AND 2009-2010 BUT NO PEN ALTY WAS LEVIED; OR (D) PROPER DISCLOSURE WAS MADE IN THE COMPUTATION O F TOTAL INCOME FOR THE LEGAL CLAIM. 1.3 THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [AR] PLEADED FOR ADMISSION OF ADDITIONAL GROUNDS BY PLACING RELIANCE ON THE DECISION OF HONBLE APEX COURT RENDERED IN NATIONAL THERMAL POWER CO. LTD. VS. CIT [229 ITR 383] & JUTE CORPORATION OF INDIA LTD V S CIT [187 ITR 688]. ALTHOUGH LD. DEPARTMENTAL REPRESENTATIVE FOR ASSESS EE AGITATED THE ADMISSION OF ADDITIONAL GROUNDS, HOWEVER, WE FIND T HE ADDITIONAL GROUNDS TO BE PURELY LEGAL IN NATURE WHICH DO NOT REQUIRE A PPRECIATION OF NEW FACTS AND THEREFORE, INCLINED TO ADMIT THE SAME IN TERMS OF THE CITED JUDICIAL PRONOUNCEMENTS. ITA NO.6849/MUM/2017 CHITRALEKHA ASSESSMENT YEAR :2010-11 3 1.4 SINCE THE LEGAL ISSUES BEING RAISED BY THE ASSE SSEE CONTEST THE VALIDITY OF ORDER PASSED BY LD. AO AND GOES TO THE ROOT OF THE MATTER, WE TAKE UP THE SAME FIRST. 2.1 FACTS LEADING TO THE IMPOSITION OF THE IMPUGNED PENALTY ARE THAT THE ASSESSEE BEING RESIDENT FIRM ENGAGED IN THE BUSINESS OF PUBLISHING MAGAZINES WAS ASSESSED U/S 143(3) ON 11/03/2013 WHEREIN THE ASSESSEE WAS SADDLED WITH INTEREST DISALLOWANCE U/S 36(1)(III) FOR RS.23.97 LACS. ACCORDINGLY, PENALTY PROCEEDINGS WER E INITIATED U/S 271(1)(C) AGAINST THE ASSESSEE IN THE QUANTUM ASSES SMENT ORDER AND THE ASSESSEE WAS SADDLED WITH IMPUGNED PENALTY OF R S.7.40 LACS VIDE ORDER DATED 12/09/2013. 2.2 AGGRIEVED, THE ASSESSEE AGITATED THE SAME ON LE GAL GROUNDS AS WELL AS ON MERITS, HOWEVER, WITHOUT ANY SUCCESS BEF ORE FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORDER DATED 13/06/2017 WHER EIN THE PENALTY GOT CONFIRMED, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. THE LD. AR, DRAWING OUR ATTENTION TO THE QUANTUM ASSESSMENT ORDER, SHOW-CAUSE NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C), SUBMITTED THAT LD. AO FAILED TO FRAME A SPECIFIC CH ARGE AGAINST THE ASSESSEE AND THEREFORE THE PENALTY PROCEEDINGS STOO D VITIATED ON LEGAL GROUNDS. RELIANCE HAS BEEN PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS FOR THESE SUBMISSIONS: - NO. TITLE RENDERED BY CITATION 1. SHRI SAMSON PERINCHERRY HONBLE BOMBAY HIGH COUR T ITA NO. 1154 OF 2014 DATED 05/01/2017 2. MANJUNATH COTTON & GINNING FACTORY HONBLE KARNATAKA HIGH COURT 359 ITR 565 (SLP DISMISSED ON 05/08/2016) 3. SSAS EMERALD MEADOWS HONBLE KARNATAKA HIGH COURT ITA NO. 380 OF 2015 4. GLOBAL PROSERV LTD. VS ACIT MUMBAI TRIBUNAL ITA NO. 7332/MUM/2014 DATED 14/03/2017 5. NEW SORATHIA ENGG. CO. HONBLE GUJARAT HIGH COUR T 282 ITR 642 ITA NO.6849/MUM/2017 CHITRALEKHA ASSESSMENT YEAR :2010-11 4 PER CONTRA , LD. DEPARTMENTAL REPRESENTATIVE [DR] SUBMITTED TH AT NO PREJUDICE WAS CAUSED TO THE ASSESSEE DURING PENALTY PROCEEDINGS AND THE ASSESSEE WAS WELL AWARE OF THE CHARGES FOR WHIC H THE PENALTY WAS BEING INITIATED AND THEREFORE, THERE WAS NO SUBSTAN CE IN THE SUBMISSIONS. RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE APEX COURT RENDERED IN JAIN BROTHERS VS. UNION OF INDIA [1970 77 ITR 107]. 4.1 WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED RELEVANT MATERIAL ON RECORD. THE UNDISPUTED POSITIO N THAT EMERGES IS THAT THE PENALTY WAS INITIATED BY LD. AO AGAINST QUANTUM ADDITION IN THE QUANTUM ASSESSMENT ORDER, VIDE PARA 5.4, BY OBSERVING AS UNDER: - PENALTY PROCEEDINGS U/S. 271(1)(C) INITIATED SEPARA TELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE PERUSAL OF SHOW-CAUSE NOTICE U/S 274 READ WITH SECTION 271 OF THE ACT DATED 11/03/2013, AS PLACED ON PAGE NOS. 17-18 OF THE PAPER-BOOK, REVEAL THAT THE LD. AO HAS FAILED TO MARK THE APPRO PRIATE CHARGE AS WELL AS APPROPRIATE LIMB FOR WHICH THE PENALTY WAS BEING INITIATED. FINALLY, THE PENALTY HAS BEEN IMPOSED ON THE ASSESSEE BY LD. AO VIDE ORDER DATED 12/09/2013, WHEREIN THE PENALTY HAS BEEN LEVIED BY MAKING FOLLOWING OBSERVATIONS: - I AM SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME FOR THE YEAR. THE AFORESAID THREE EVENTS, PUT TOGETHER, REVEAL TH AT ALTHOUGH THE PENALTY WAS INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME WHEREAS THE PENALTY HAS FINALLY BEEN LEVIED FOR CONCEALMENT OF INCOME. EVEN, IN THE SHOW-CAUSE NOTICE, LD. AO HAS FAILED TO MENTION THE SPECIFIC CHARGE AGAINST THE ASSESSEE. THESE TWO EXPRESSIONS I.E. FURNISHING OF ITA NO.6849/MUM/2017 CHITRALEKHA ASSESSMENT YEAR :2010-11 5 INACCURATE PARTICULARS AND CONCEALMENT OF INCOME, AS PER JUDICIAL PRONOUNCEMENTS OF HIGHER JUDICIAL AUTHORITIES, CARR Y DIFFERENT CONNOTATIONS AND NON-FRAMING OF SPECIFIC CHARGE AGA INST THE ASSESSEE VITIATES THE PENALTY PROCEEDINGS. 4.2 PROCEEDING FURTHER, WE FIND THAT THE FACTS OF T HE PRESENT CASE ARE SQUARELY COVERED BY THE OBSERVATION OF HONBLE BOMB AY HIGH COURT MADE IN CIT VS. SAMSON PERINCHERY [2017 88 TAXMANN.COM 413] WHEREIN IT HAS BEEN HELD AS UNDER: - 3. THE IMPUGNED ORDER OF THE TRIBUNAL DELETED THE PEN ALTY IMPOSED UPON THE RESPONDENT-ASSESSEE. THIS BY HOLDING THAT THE INITI ATION OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT BY ASSESSING OFFICER WAS FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHILE THE ORDER IMPOSING PENALTY IS FOR CONC EALMENT OF INCOME. THE IMPUGNED ORDER HOLDS THAT THE CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THEREFORE, THE ASSESSING OFFICER SHOULD BE CLEAR AS TO WHICH OF THE TWO LIMBS UNDER WHICH PENALTY IS IMPOSABLE, HAS BEEN CONTRAVENED OR INDICATE THAT BOTH HAVE BEEN CO NTRAVENED WHILE INITIATING PENALTY PROCEEDINGS. IT CANNOT BE THAT THE INITIATI ON WOULD BE ONLY ON ONE LIMB I.E. FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHILE I MPOSITION OF PENALTY ON THE OTHER LIMB I.E. CONCEALMENT OF INCOME. FURTHER, THE TRIBU NAL ALSO NOTED THAT NOTICE ISSUED UNDER SECTION 274 OF THE ACT IS IN A STANDARD PROFO RMA, WITHOUT HAVING STRIKED OUT IRRELEVANT CLAUSES THEREIN. THIS INDICATES NON-APPL ICATION OF MIND ON THE PART OF THE ASSESSING OFFICER WHILE ISSUING THE PENALTY NOTICE. 4. THE IMPUGNED ORDER RELIED UPON THE FOLLOWING EXTRA CT OF KARNATAKA HIGH COURT'S DECISION IN CIT V. MANJUNATHA COTTON & GINNING FACT ORY[2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 TO DELETE THE PENALTY : 'THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT T O INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDIN GS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF T OTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF I NCOME ARE DIFFERENT. THUS, THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT AS CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PA I[2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHI NG INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HI GH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI H IGH COURT IN THE CASE OF VIRGO MARKETING P. LTD., REPORTED IN 171 TAXMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFI CER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE A PPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF I NCOME. THE STANDARD PROFORMA ITA NO.6849/MUM/2017 CHITRALEKHA ASSESSMENT YEAR :2010-11 6 WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND.' 5. THE GRIEVANCE OF THE REVENUE BEFORE US IS THAT THE RE IS NO DIFFERENCE BETWEEN FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. THUS, DISTINCTION DRAWN BY THE IMPUGNED ORDER IS BETWEEN TWEEDLEDUM AND TWEEDLEDEE. IN THE ABOVE VIEW, THE DELETION OF THE PENALTY, IS UNJUSTIFIED. 6. THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN T. ASHOK PAI V. CIT[2007] 292 ITR 11/161 TAXMAN 340 [RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY (SUPRA)] - WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C) OF THE ACT, CARRY DIFFERENT MEANINGS/CONN OTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD T O ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR I NITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMPOSED FOR T HE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASS ESSEE HAS NO NOTICE. 7. THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FA VOUR OF THE RESPONDENT- ASSESSEE BY THE DECISION OF THE KARNATAKA HIGH COUR T IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY (SUPRA). NOTHING HAS BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOULD WARRANT OUR TAKING A VIEW DIFFERE NT FROM THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTOR Y (SUPRA). 8. IN VIEW OF THE ABOVE, THE QUESTION AS FRAMED DO NO T GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED. 9. ACCORDINGLY, ALL THESE APPEALS ARE DISMISSED. NO O RDER AS TO COSTS. SIMILAR IS THE RATIO OF OTHER DECISIONS AS TABULATE D IN PARA 3. 4.3 SO FAR AS THE RELIANCE OF THE REVENUE ON THE DE CISION OF HONBLE APEX COURT RENDERED IN JAIN BROTHERS VS. UNION OF INDIA [1970 77 ITR 107] IS CONCERNED, WE FIND THE SAME TO BE CONTEXTUALLY D IFFERENT WHICH IS QUITE EVIDENT FROM PERUSAL OF THE HEAD-NOTES OF THE SAID CASE LAW: - SECTION 271(1)(A), READ WITH SECTION 297(2)(G), OF THE INCOME-TAX ACT, 1961 - PENALTY - FOR LATE FILING OF RETURN - ASSESSMENT YEAR 1960- 61 - WHETHER CRUCIAL DATE FOR PURPOSES OF PENALTY IS DATE OF COMPLETION OF ASSESS MENT - HELD, YES - WHETHER APPLYING PENALTY PROVISIONS CONTAINED IN ACT OF 196 1 TO CASES OF PERSONS WHOSE ASSESSMENTS ARE COMPLETED AFTER 1-4-1962, IT CANNOT BE SAID THAT ANY CLASS HAS BEEN SINGLED OUT FOR SPECIAL TREATMENT AND, HENCE, SECTION 297(2)(G) CANNOT BE STRUCK DOWN AS DISCRIMINATORY UNDER ARTICLE 14 OF C ONSTITUTION - HELD, YES - WHETHER, THEREFORE, ASSESSEE WOULD BE LIABLE TO A PENALTY AS PROVIDED BY SECTION 271(1) FOR DEFAULT MENTIONED IN SECTION 28(1) OF ACT OF 1922, IF HIS CASE FALLS WITHIN TERMS OF SECTION 297(2)(G) - HELD, YES - WHETHER PROVISIONS OF SECTION 271 OF ACT OF 1961 WILL ITA NO.6849/MUM/2017 CHITRALEKHA ASSESSMENT YEAR :2010-11 7 APPLY MUTATIS MUTANDIS TO PROCEEDINGS RELATING TO P ENALTY INITIATED IN ACCORDANCE WITH SECTION 297(2)(G) OF THAT ACT - HELD, YES SECTION 271(2) OF THE INCOME-TAX ACT, 1961 - PENALT Y - REGISTERED FIRM - WHETHER IT IS OPEN TO LEGISLATURE TO GIVE BENEFIT OF A REDUCED RATE TO A REGISTERED FIRM FOR PURPOSE OF TAX BUT WITHHOLD SAME WHEN IT COMMITTED A DEFAULT AND BECAME LIABLE TO IMPOSITION OF PENALTY AND, THUS, PROVISIONS OF SECT ION 271(2) DO NOT CONTRAVENE ARTICLE 14 OF CONSTITUTION - HELD, YES 4.4 FINALLY, RESPECTFULLY FOLLOWING THE BINDING JUD ICIAL PRECEDENT IN THE SHAPE OF CITED DECISION OF HONBLE BOMBAY HIGH COUR T, WE DELETE THE IMPUGNED PENALTY ON LEGAL GROUNDS WHICH MAKES OUR I NDULGENCE IN EXAMINING THE IMPUGNED PENALTY ON MERITS MERELY ACA DEMIC IN NATURE AND THEREFORE, NOT DEALT WITH. 5. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH, 2019. SD/- SD/- (MAHAVIR SINGH) (MAN OJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 19/03/2019 SR.PS, JAISY VARGHESE !'#$ # / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +, '%- , - , / DR, ITAT, MUMBAI 6. ,./ / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.