Bishan Bansal , Faridabad V. DCIT, Central Circle- II , Gurgaon

ITA 6958/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8519 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 02-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• 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. 6958/DEL/2018 ASSESSMENT YEAR: 2008-09 BISHAN BANSAL C/O M/S RRA TAX INDIA, D-28, SOUTH EXTENSION, PART-1, NEW DELHI. PAN NO. AEZPS1452H VS DCIT CENTRAL CIRCLE-II GURGAON. APPELLANT RESPONDENT ASSESSEE BY SHRI SOMIL AGGARWAL, ADV. SHRI DEAPESH GARG, ADV. REVENUE BY SHRI S.L. ANURAGI, SR. DR ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(APPEALS)-III, GURGAON DATED 02.08.2018. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS. 1,71,961/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER COMPLETED THE ASSESSMENT FOR THE ASSESSMENT YEAR UN DER CONSIDERATION AT AN INCOME OF RS. 12,35,050/- BY MA KING ADDITION OF RS. 4,50,000/- AS INCOME FROM UNDISCLOSED SOURCE S IN PLACE OF THE RETURNED INCOME BY THE ASSESSEE AT RS. 7,85,050 /-. DATE OF HEARING 09.04.2019 DATE OF PRONOUNCEMENT 10.04.2019 2 ITA NOS. 6958/DE L/2018 4. THEREAFTER, THE AO LEVIED PENALTY OF RS. 1,71,96 1/- BEING 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED BY TH E ASSESSEE U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME. 5. ON APPEAL, LD. CIT(A) CONFIRMED THE ACTION OF TH E ASSESSING OFFICER. 6. AT THE OUTSET, LD AUTHORISED REPRESENTATIVE OF T HE ASSESSEE FILED BEFORE US COPY OF NOTICE ISSUED U/S.271(1)(C) OF THE ACT DATED 26.02.2015, COPY OF WHICH IS PLACED ON RECORD AND P OINTED OUT THERE FROM THAT IN THE SAID NOTICE, THE ASSESSING O FFICER HAS STATED AS UNDER: 'WHERE IN THE COURSE OF PROCEEDINGS BEFORE ME FOR T HE ASSESSMENT YEAR 2008-09, IT APPEARS TO ME THAT YOU: - ................ HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR... .... FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' 7. HE SUBMITTED THAT IT IS NOT CLEAR FROM THE SAID NOTICE ISSUED U/S.271(1)(C) OF THE ACT BY THE ASSESSING OFFICER W HETHER THE SHOW CAUSE IS ISSUED TO THE ASSESSEE FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 8. HE SUBMITTED THAT THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SSA 'S. EMARLD MEADOWS DATED 11TH JANUARY, 2017 PASSED IN SPECIAL LEAVE TO APPEAL (CC NO.11485/2016 )/73 TAXMANN.COM 248 (SC) HAS HELD THAT OMISSION BY THE AO TO EXPLICITLY SPECIFY IN THE PENALTY NOTICE AS TO WHET HER PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF I NACCURATE 3 ITA NOS. 6958/DE L/2018 PARTICULARS OR FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION. HENCE, HE SUBMITTED THAT P ENALTY OF RS. 1,71,961/- IMPOSED BY THE ASSESSING OFFICER U/S.271 (1)(C) IS, THEREFORE, LIABLE TO BE CANCELLED. 9. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE D ECISION REPORTED IN K.P.MADHUSUDHANAN VS. CIT [2001] 118 TAXMAN 324 (SC)/[2001] 251 ITR 99 (SC)/ [2001] 169 CTR 489 (SC ); UNION OF INDIA VS DHARAMENDRA TEXTILE PROCESSORS /2007 ) 295 ITR 244; CIT VS ZOOM COMMUNICATION P.LTD . (191 TAXMAN 179 [DELHI])/[2010] 327 ITR 510 (DELHI)/ [2010)233 CTR 465; MAKDATA P.L TD. VS CIT[38 TAXMANN.COM 448 (SC)/ [2013] 358 ITR 593 (SC )/(2013) 263 CTR 1]; B.A. BALASUBRAMANIAM & BROS. CO VS CIT [116 TAXMAN 842, 236 ITR 977, 157 CTR 556]; AND CIT VS ESCORTS FINANCE LTD . [183 TAXMAN 453 (DEL), 920100 328 ITR 44 (DELHI)/ (2009) 226 CTR 105], WHENEVER THE CLAIM MADE IN THE RETURN OF INCOME WAS FOUND TO BE EX-FACIE BOGUS, SUCH A CASE WOULD BE TREATED AS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS AND THE PENALTY PROCEEDINGS ARE JUSTIFIED. 10. 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 ORDER PASSED U/S.271(1)(C) DATED 27.02.2018 LEVIED PENALTY OF RS. 1,71,961/-. 4 ITA NOS. 6958/DE L/2018 11. HON'BLE APEX COURT VIDE JUDGMENT IN CASE OF M/ S. SSA'S EMERALD MEADOWS, (2016) 73 TAXMANN.COM 248(SC) DISM ISSED THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE JUDGMENT RENDERED BY HON'BLE HIGH COURT OF KARNATAKA WHEREBY IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. OPERAT IVE PART OF THE JUDGMENT IN CASE OF M/S. SSA'S EMERALD MEADOWS (SUP RA) DECIDED BY HON'BLE HIGH COURT OF KARNATAKA IS REPRODUCED BE LOW :- '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 OF INACCURATE PARTICULARS OR THAT FO R CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABL E FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYON D 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 JUSTIFIED IN LAW IN. HOL DING 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 (1B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFIC ER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F 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 BA D IN LAW 5 ITA NOS. 6958/DE L/2018 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 CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. .TH E TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE , HAS RELIED 01 THE DERISION OF THE DIVISION BENCH OF THI S COURT RENDERED IN THE CASE OF COMMISSIONER OR 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 OPI NION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL F OR DETERMINATION BY THIS COURT, THE APPEAL IS ACCORDIN GLY DISMISSED.' 12. 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. 13. 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 6 ITA NOS. 6958/DE L/2018 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 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 15.1.2014 WITHOUT STRIKING OFF THE IRRELEVANT WORDS , THE PENALTY PROCEEDINGS SHOW ANON-APPLICATION OF MIND BY THE AS SESSING OFFICER AND IS, THUS, UNSUSTAINABLE. 7 ITA NOS. 6958/DE L/2018 14. THE FACTS OF THE PRESENT APPEAL ARE IDENTICAL T O THE FACTS OF THE CASE BEFORE THE HON'BLE SUPREME COURT IN THE CASE O F SSA'S. EMARLD MEADOWS(SUPRA) AND, THEREFORE, THE DECISION OF HON'BLE SUPREME COURT SQUARELY APPLIES TO THE CASE OF THE A SSESSEE. HENCE, RESPECTFULLY FOLLOWING THE SAME, WE CANCEL T HE ORDER OF THE ASSESSING OFFICER DATED 27.02.2018 LEVYING PENALTY OF RS. 1,71,961/- AND ALLOW THE GROUND OF APPEAL OF THE AS SESSEE. 15. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/04/2019 SD/- (N.S. SAINI) ACCOUNTANT MEMBER DATED: 10.04.2019 *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 NOS. 6958/DE L/2018 DATE OF DICTATION 10/04/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10/04/19 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 10.4.19 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 10.4.19 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 11.4.19 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11.4 .19 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