Kissan Engineering Works Pvt. Ltd., Ghaziabad V. DCIT, Circle- 1, Ghaziabad

ITA 6983/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1217 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 22-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARHAT KHAN SENIOR
• Keywords: Sale consideration of property below Jantri Value; Invalid notice; Question of law; Reasonable cause; Set aside
• Section: 271(1)(c); 274; 139(1); 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.6983/DEL./2017 (ASSESSMENT YEAR : 2010-11) M/S. KISSAN ENGINEERING WORKS PVT.LTD., VS. DCIT, C/O PRADEEP & CO., TAX ADVOCATES CIRCLE 1, 7, NAVYUG MARKET, GHAZIABAD. GHAZIABAD (U.P.) (PAN : AAACK5966G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SATYAJEET GOEL, CA REVENUE BY : SHRI FARHAT KHAN, SENIOR DR DATE OF HEARING : 28.06.2021 DATE OF ORDER : 09.07.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. KISSAN ENGINEERING WORKS PVT. LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 31.07.2017 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), GHAZIABAD AFFIRMING THE PENALTY ORDER DATED 28.03.2016 PASSED UNDER SECTION ITA NO.6983/DEL./2017 2 271(1)(C) OF THE INCOME-TAX ACT, 1961 (FOR SHORT T HE ACT) QUA THE ASSESSMENT YEAR 2010-11 ON THE GROUNDS INTER ALIA T HAT :- (I) THAT THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN CONFIRMING THE PENALTY U/S 271(1) (C) OF THE ACT IN RESPECT OF ADDITION MADE ON ACCOUNT OF DIFFERENCE I N THE SALE AMOUNT DISCLOSED BY ASSESSEE AND VALUE AS PER STAMP VALUATION AUTHORITY U/S.SOC OF THE ACT. THE PENALTY SO CONFIR MED BY LD. CIT (A) IS UNJUSTIFIED, UNWARRANTED AND BAD IN LAW. (II) THAT THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN CONFIRMING THE PENALTY U/S 271(1) (C) OF THE ACT IN RESPECT OF DISALLOWANCE OF ELECTRICITY EXPENSES AND TREATING THEM TO BE OF PRIOR PERIOD, EVEN WHEN RELEVANT DOCU MENTS TO JUSTIFY THE CLAIM WERE FILED DURING THE ASSESSMENT PROCEEDINGS. THE PENALTY FOR CONCEALMENT SO CONFIRMED BY LD. CIT (A) IS UNJUSTIFIED, UNWARRANTED AND BAD IN LAW. (III) THAT THE LD. COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED IN CONFIRMING THE PENALTY U/S 271(1) (C) OF THE ACT IN RESPECT OF DISALLOWANCE OF EXPENSES OF ONE OF THE U NITS OF THE ASSESSEE, M/S. SUSHILA STEELS ON THE BASIS THAT THE OPERATIONS OF THE SAID UNIT HAD CEASED TO EXIST. THE PENALTY FOR CONCEALMENT SO CONFIRMED BY LD. CIT (A) IS UNJUSTIFIED, UNWARRA NTED AND BAD IN LAW. (IV) THAT THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN CONFIRMING THE PENALTY U/S 271(1) (C) OF THE ACT IN RESPECT OF ADDITION ON ACCOUNT OF SURRENDER OF ADDI TIONAL INCOME. THE PENALTY FOR CONCEALMENT SO CONFIRMED BY LD. CIT (A) ON THIS COUNT IS UNJUSTIFIED, UNWARRANTED AND B AD IN LAW. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ON THE BASIS OF ASSESSMEN T FRAMED UNDER SECTION 143 (3) OF THE ACT AT THE INCOME OF RS.77,2 2,051/-, PENALTY PROCEEDINGS HAVE BEEN INITIATED BY THE ASSESSING OF FICER UNDER SECTION 271(1)(C) OF THE ACT ON THE BASIS OF ADDITI ON MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES, ON ACCOUNT OF SEC TION 50C, ON ACCOUNT OF DISALLOWANCE OF SUSHILA STEEL AND ON ACC OUNT OF ITA NO.6983/DEL./2017 3 SURRENDER OF ADDITIONAL INCOME, TOTAL AMOUNTING TO RS.39,03,618/-. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE, A O PROCEEDED TO LEVY THE PENALTY TO THE TUNE OF RS.18,09,327/- @ 15 0% OF THE TAX SOUGHT TO BE EVADED. 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS REDUCED THE PENALTY FROM 150% TO 100% BY PARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT (A), THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, PENALTY PROCEEDINGS HAVE BEEN INIT IATED ON THE BASIS OF FOUR DISALLOWANCES VIZ. ON ACCOUNT OF PRIO R PERIOD EXPENSES, ON ACCOUNT OF SECTION 50C, ON ACCOUNT OF DISALLOWANCE OF SUSHILA STEEL AND ON ACCOUNT OF SURRENDER OF ADDITI ONAL INCOME MADE BY THE AO. IT IS ALSO NOT IN DISPUTE THAT ASS ESSEE HAS TAKEN BENEFIT OF AMNESTY SCHEME FROM ELECTRICITY DEPARTME NT AND THEREBY MADE A BONAFIDE CLAIM. IT IS ALSO NOT IN D ISPUTE THAT GENUINENESS OF THE EXPENSES CLAIMED BY THE ASSESSEE HAS NEVER ITA NO.6983/DEL./2017 4 BEEN DISPUTED BY THE AO/LD. CIT (A) RATHER DISALLOW ED THE SAME BY TAKING DIFFERENT VIEW. 6. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, ORDER PASSED BY THE LOWER AUTHORITIES AND ARGUMENTS ADDRESSED BY THE AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS:- AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME D URING ASSESSMENT PROCEEDINGS? 7. LD. AR FOR THE ASSESSEE CONTENDED THAT AO HAS FA ILED TO SPECIFY IN THE SHOW-CAUSE NOTICE ISSUED UNDER SECTI ON 271(1)(C) READ WITH SECTION 274 OF THE ACT IF THE ASSESSEE HA S FILED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF I NCOME AND RELIED UPON THE DECISIONS OF HONBLE KARNATAKA HIGH COURT IN CIT VS. SSAS EMERALD MEADOWS -73 TAXMANN.COM 241 (KAR.) (REVENUES SLP DISMISSED IN 242 TAXMAN 180) AND HON BLE HIGH COURT OF DELHI IN PR. CIT VS. SAHARA INDIA LIF E INSURANCE COMPANY LTD. IN ITA 475/2019 ORDER DATED 02.08.2019 . 8. IN ORDER TO PROCEED FURTHER, WE WOULD LIKE TO PE RUSE THE NOTICE DATED 27.10.2020 ISSUED BY AO U/S 274 READ W ITH SECTION 271(1)(C) OF THE ACT TO INITIATE THE PENALTY PROCEE DINGS WHICH IS EXTRACTED AS UNDER FOR READY PERUSAL:- ITA NO.6983/DEL./2017 5 PENALTY NOTICE UNDER SECTION 271(1)(C) NOTICE U/S 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961. PAN AAACK5966G DATED: 28.12.2012 TO M/S. KISSAN ENGINEERING WORKS PVT. LTD., PLOT NO.3, SOUTH OF G.T. ROAD, BSR ROAD, INDL. AREA, GHAZIABAD. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2010-11 IT APPEARS TO ME THAT YOU : - HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTI CE GIVEN UNDER SECTION 139(1) OR BY A NOTICE GIVEN UNDER SECTION 1 39(2)/148 OF THE INCOME TAX ACT, 1961 DATED OR HAVE WITHOUT REAS ONABLE CAUSE FAILED TO FURNISH IT WHICH THE TIME ALLOWED I N THE MANNER REQUIRED BY THE SAID SECTION 139(1) OR BY SUCH NOTI CE. HAVE FAILED TO COMPLY WITH A NOTICE UNDER SECTION (1) OF SECTION 142 OR SUB SECTION (2) OF SECTION 143 OR FA ILED TO COMPLY WITH A DIRECTION ISSUED UNDER SUB SECTION (2A) OF THE IN COME-TAX ACT,1961 DATED HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR YO U HAVE FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11. 30 AM ON 14.01.2012 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271(1)(C) OF T HE INCOME TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL OF THIS OPPO RTUNITY OF BEING HEARD IN PERSON OR THROUGH YOUR AUTHORIZED REPRESEN TATIVES YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WH ICH WILL BE CONSIDERS BEFORE ANY SUCH ORDER IS MADE UNDER SECTI ON 271(1)(C). SD/- (S.K. YADAV) JOINT COMMISSIONER OF INCOME-TAX, RANGE-2, GHAZIABAD. 9. BARE PERUSAL OF THE NOTICE ISSUED U/S 274 READ W ITH SECTION 271(1)(C) OF THE ACT, EXTRACTED ABOVE, IN ORDER TO INITIATE THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE GOES TO PROVE THAT THE AO HIMSELF WAS NOT AWARE / SURE AS TO WHETHER HE IS ISSUING NOTICE TO INITIATE THE ITA NO.6983/DEL./2017 6 PENALTY PROCEEDINGS EITHER FOR CONCEALMENT OF PART ICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME BY THE ASSESSEE RATHER ISSUED VAGUE AND AMBIGUOUS N OTICE BY INCORPORATING BOTH THE LIMBS OF SECTION 271(1)(C). WHEN THE CHARGE IS TO BE FRAMED AGAINST ANY PERSON SO AS TO MOVE TH E PENAL PROVISIONS AGAINST HIM/HER, HE/SHE IS REQUIRED TO B E SPECIFICALLY MADE AWARE OF THE CHARGES TO BE LEVELED AGAINST HIM /HER. 10. HONBLE APEX COURT IN CASE OF CIT VS. SSAS EMERALD MEADOWS - (2016) 73 TAXMANN.COM 248 (SC) WHILE DISMISSING THE SLP FILED BY THE REVENUE QUASHING THE PENALTY B Y THE TRIBUNAL AS WELL AS HONBLE HIGH COURT ON GROUND OF UNSPECIF IED NOTICE HAS HELD AS UNDER:- SECTION 274, READ WITH SECTION 271(1)(C), OF THE I NCOME-TAX ACT, 1961 - PENALTY - PROCEDURE FOR IMPOSITION OF (CONDI TIONS PRECEDENT) - ASSESSMENT YEAR 2009-10 - TRIBUNAL, RE LYING ON DECISION OF DIVISION BENCH OF KARNATAKA HIGH COURT RENDERED IN CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 1TR 565/218 TAXMAN 423/35 TAXMANN.COM 250, ALLO WED APPEAL OF ASSESSEE HOLDING THAT NOTICE ISSUED BY AS SESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271 (1 )(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271 (1 )(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E., WHETHER FOR C ONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME - HIGH COURT HELD THAT MATTER WAS COVERED BY AFORESAID DECISION OF DIVISION BENCH AND, THEREFORE, THERE WA S NO SUBSTANTIAL QUESTION OF LAW ARISING FOR DETERMINATI ON - WHETHER SINCE THERE WAS NO MERIT IN SLP FILED BY REVENUE, S AME WAS LIABLE TO BE DISMISSED - HELD, YES [PARA 2] [IN FAVOUR OF ASSESSEE] ITA NO.6983/DEL./2017 7 11. HONBLE DELHI HIGH COURT IN CASE OF PR. CIT VS. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (SUPRA) WHILE DECIDING THE IDENTICAL ISSUE HELD AS UNDER :- 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING O F THE PENALTY IMPOSED UNDER SECTION 271 (1) (C) OF THE AC T, WHICH WAS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF T HE KARNATAKA HIGH COURT IN CIT V. MANJUNATHA COTTON & GINNING FA CTORY 359 ITR 565 (KAR) AND OBSERVED THAT THE NOTICE ISSU ED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIM B OF SECTION 271(1) (C) THE PENALTY PROCEEDINGS HAD BEEN INITIAT ED UNDER I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIGH COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE S UBSEQUENT ORDER IN COMMISSIONER OF INCOME TAX V. SSA'S EMERAL D MEADOWS (2016) 73 TAXMAN.COM 241 (KAR) , THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA I N SLP NO. 11485 OF2016 BY ORDER DATED 5TH AUGUST, 2016. 12. FOLLOWING THE DECISIONS RENDERED IN THE CASES O F CIT VS. MANJUNATHA COTTON AND GINNING FACTORY, CIT VS. SSA S EMERALD MEADOWS AND PR. CIT VS. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT WHEN THE NOTICE ISSUED BY THE AO IS BAD IN LAW BEING VAGUE AND AMBIGUOUS HAVING NOT SPECIFIED UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT THE SAME HAS BEEN ISSUED, THE PENALTY PROCEEDINGS INITIATED U/S 271(1)(C) ARE NOT SUSTAIN ABLE. 13. NOT ONLY THIS, EVEN AT THE TIME OF INITIATION O F PENALTY PROCEEDINGS, AO HAS NOT APPLIED HIS MIND TO RECORD HIS SATISFACTION IF IT IS A CASE OF CONCEALMENT OF PARTICULARS OF IN COME OR HAS ITA NO.6983/DEL./2017 8 FURNISHED INACCURATE PARTICULARS OF INCOME. OPERAT IVE PART OF THE ASSESSMENT ORDER IS EXTRACTED AS UNDER FOR READY PE RUSAL :- THEREFORE, TOTAL ADDITION UNDER THE ABOVE HEAD IS COMES TO THE TUNE OF RS.6,90,000/-. SINCE I AM SATISFIED THAT T HE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME, PE NALTY PROCEEDINGS UNDER SECTION 271(1)(C) ARE BEING INITI ATED SEPARATELY. 14. WHEN AO HAS NOT RECORDED A VALID SATISFACTION A ND HAS ALSO ISSUED INVALID NOTICE U/S 271(1)(C) / 274 OF THE AC T, AS DISCUSSED IN THE PRECEDING PARAS, THE ENTIRE PENALTY PROCEEDINGS ARE VITIATED AND NOT SUSTAINABLE IN THE EYES OF LAW. NOT ONLY THIS, AO WHILE RECORDING THE SATISFACTION FOR INITIATION OF PENALT Y PROCEEDINGS STATED THAT HE HAS FURNISHED INACCURATE PARTICULARS OF INCOME WHEREAS HE HAS LEVIED THE PENALTY FOR CONCEALMENT O F PARTICULARS OF INCOME. SO, THE ENTIRE EXERCISE AS TO INITIATING T HE PENALTY PROCEEDINGS AND LEVYING THE PENALTY ARE WITHOUT APP LICATION OF MIND, HENCE NOT SUSTAINABLE. 15. EVEN OTHERWISE, AO BY DISALLOWING THE PRIOR PER IOD EXPENSES HAS NOT TAKEN INTO ACCOUNT THE BENEFIT OF AMNESTY SCHEME TAKEN BY THE ASSESSEE FROM THE ELECTRICITY DEPARTME NT. EVEN AO HAS NOT DISPUTED GENUINENESS OF EXPENSES CLAIMED BY THE ASSESSEE RATHER DISALLOWED THE SAME BY TAKING A DIFFERENT VI EW WHICH DOES NOT ATTRACT THE PROVISIONS CONTAINED U/S 271(1)(C) OF THE ACT. ITA NO.6983/DEL./2017 9 16. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT INITIATING PENALTY U/S 271(1)( C) OF THE ACT ON THE BASIS OF VAGUE AND AMBIGUOUS NOTICE IS NOT SUST AINABLE IN THE EYES OF LAW. SO, THE QUESTION FRAMED IS ANSWERED I N THE NEGATIVE AND PENALTY LEVIED BY THE AO AND SUSTAINED BY THE L D. CIT (A) IS ORDERED TO BE DELETED. CONSEQUENTLY, THE APPEAL FI LED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 9 TH DAY OF JULY , 2021. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 9 TH DAY OF JULY, 2021 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), GHAZIABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.