Jagdish Prasad Avdesh Kumar HUF, New Delhi V. ITO, Ward-36(4), New Delhi

ITA 7091/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7309 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 06-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Question of law; Initiation of penalty proceedings
• Section: 271(1)(c); 143(3); 143(1); 68; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A .NO.-7091/DEL/2018 (ASSESSMENT YEAR - 2014-15) JAGDISH PRASAD AVDESH KUMAR HUF C/O KAPIL GOEL, ADVOCATE, F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: AAAHJ9657A) (APPELLANT) VS ITO, WARD 36(4), NEW DELHI (RESPONDENT) I.T.A .NO.-7092/DEL/2018 (ASSESSMENT YEAR - 2014-15) JAGDISH PRASAD BHARAT KUMAR HUF C/O KAPIL GOEL, ADVOCATE, F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: AAAHJ9657A) (APPELLANT) VS ITO, WARD 36(4), NEW DELHI (RESPONDENT) APPELLANT BY SHRI KAPIL GOEL, ADVOCATE RESPONDENT BY SHRI S.L. ANURAGI, SR. DR ORDER THESE APPEALS FILED BY THE SEPARATE ASSESSEES ARE D IRECTED AGAINST THE RESPECTIVE ORDERS OF THE LD. CIT(A)-12, NEW DELHI RELEVANT TO ASSESSMENT YEAR 2014-15. SINCE THE ISSU ES INVOLVED IN THESE APPEALS ARE COMMON AND IDENTICAL, HENCE, THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE, BY DEALING WITH ITA NO . 7091/DEL/2018 (AY 2014-15) JAGDISH PRASAD AVDESH KUMAR- HUF AND BY ONLY REPRODUCING THE GROUNDS OF THIS APP EAL. 2 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE A SSESSEE IN APPEAL NO. 7091/DEL/2018 (AY 2014-15):- INVALID PENALTY ORDERS U/S. 271(1) : JURISDICTIONA L CHALLENGE 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN SUSTAINING THE PENALTY ORDER PASSED BY THE AO U/S. 271(1)(C) AS IN ASSESSMENT ORDER PASSED DATED 26.12.2016 SAME IS DELIGHTFULLY VAGUE AS TO REQUISITE SATISFACTION OF AO TO VALIDLY INITIATE PENALTY PROCEEDINGS U/S. 271(1B) OF THE ACT AND SAID ASSESSMENT ORDER ALSO DOES NOT DISCLOSE UNDER WHICH SPECIFIC LIMB PENALTY CHARGE IS MADE BY THE AO, ACCORDINGLY PENALTY ORDER PASSED BY AO AND ORDER OF LD. CIT(A) MAY PLEASE BE QUASHED; 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN SUSTAINING THE PENALTY ORDER PASSED BY AO U/S. 271(1)(C) AS AO HAS LEVIED PENALTY WITHOUT ANY APPLICATION OF MIND IN ROUTINE AND CASUAL MANNER WHICH IS CONFIRMED IN ARBITRARY MANNER BY LD. CIT(A), ACCORDINGLY PENALTY ORDER PASSED BY AO AND ORDER OF LD. CIT(A) MAY PLEASE BE QUASHED; MERITS OF PENALTY ORDER U/S 271(L)(C) RS 433,132 3 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE PENALTY ORDER PASSED BY LD AO U/S 27L(L)(C) WITHOUT APPRECIATING ASSESSEE S CONTENTION THAT: I) FIRSTLY ADDITION MADE BY LD AO IN QUANTUM PROCEEDINGS U/S 68 OF THE ACT IS ITSELF INCORRECT A ND MADE IN GRAVE VIOLATION TO PRINCIPLE OF NATURAL JUS TICE AS NO CASE SPECIFIC INCRIMINATING MATERIAL IS BROUG HT ON RECORDS AT ANY STAGE SO AS TO DRAW ADVERSE INFERENC E U/S 68 IN WAKE OF INUNDATED DOCUMENTARY EVIDENCE WHICH HAVE REMAINED TOTALLY UNCONTROVERTED AND SIMPLY ON BASIS OF INNOCUOUS SURRENDER FROM ASSESSE E , ADDITION U/S 68 WAS MADE, WHICH CAN NEVER GIVE RI SE TO VALID PENALTY U/S 271(L)(C) OF THE ACT; II) SECONDLY THERE IS NO ANIMUS AND CONSCIOUS CONCEALMENT (INTENTIONAL WRONG DOING) ON PART OF ASSESSEE AS EVIDENT FROM FACT THAT ASSESSEE HAS GIV EN A BONAFIDE EXPLANATION IN SUPPORT OF EXEMPTION CLAIMED U/S 10(38) ON STALED LTCG WHICH IS BASED ON VALID DOCUMENTARY EVIDENCE ,SO PENALTY LEVIED U/S 271(1)(C) IS PATENTLY WRONG; III) THIRDLY BONAFIDE CONDUCT OF ASSESSEE HAS BEEN ABOVE BOARD IN EXTANT CASE AS NO MATERIAL FACT IS E VER SUPPRESSED/HIDED OR WRONGLY MENTIONED IN RETURN FILED/ASSESSMENT PROCEEDINGS, SO AS TO ATTRACT LETH AL CONSEQUENCES OF SECTION 271 (1) (C) OF THE ACT; IV) FOURTHLY, ON MERITS OF THE CLAIM NO WHERE IT I S OBJECTED BY LD AO/CIT-A THAT EXTANT CLAIM U/S 10(38 ) OF THE ACT IS ALREADY DECIDED IN FAVOR OF ASSESSEE BY VARIOUS HIGHER COURT RULINGS SO PENALTY U/S 271(L)( C) CANNOT BE LEVIED WHEN ADDITION ITSELF IS SERIOUSLY QUESTIONABLE; 4 V) FIFTHLY , PENALTY U/S 271(1)(C) CANT BE LEVIED WHERE FACTS ARE NOT VALIDLY DISPROVED BY LD AO AND CASE O NLY FALLS IN CATEGORY OF FACTS NOT PROVED, AS IS THE CA SE HERE; VI) LASTLY, ON HOLISTIC CONSIDERATION OF ENTIRE CONSPECTUS OF THE CASE PENALTY U/S 271(1)(C) IS WRONGLY LEVIED HERE AS NO CASE IS MADE OUT AGAINST ASSESSEE TO BE VISITED WITH DRACONIAN CONSEQUENCES OF PENALTY U/S 271(1) (C) OF THE ACT AS LAW DOES NOT COMPLETELY BAR ASSESSEES TO MAKE AND VALIDLY TEST A CLAIM THROUGH RETURN OF INCOME, WHICH IS GOING TO B E SCRUTINIZED AND EXAMINED BY REVENUE AUTHORITIES; 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE P ENALTY ORDER PASSED BY LD AO U/S 271(L)(C) WITHOUT APPRECI ATING ANY OF THE CONTENTION OF ASSESSEE, ERGO, PENALTY OR DER PASSED BY LD AO AND ORDER OF LD CIT-A MAY PLEASE BE QUASHED; THAT THE APPELLANT CRAVES LEAVE TO ADD / ALTER ANY/ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. I WILL FIRST TAKE UP THE APPEAL IN THE CASE OF J AGDISH PRASAD AVDESH KUMAR HUF BEING ITA NO. 7091/DEL/2018 (AY 2014-15) AND MY FINDING GIVEN THEREIN WILL APP LY MUTATIS MUTANDIS IN OTHER APPEAL, SINCE SIMILAR FACTS AND FINDINGS ARE PERMEATING IN OTHER APPEAL ALSO. 5 4. THE BRIEF FACTS OF THE CASE ARE THAT RETURN OF I NCOME DECLARING TOTAL INCOME AT RS. 4,51,430/- WAS FILED BY THE ASSESSEE ON 15.07.2014. THE CASE OF THE ASSESSEE WA S PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THE ASS ESSEE DURING THE YEAR WAS DERIVING INCOME UNDER THE GARB OF INCOME FROM OTHER SOURCES. AS PER THE AIR INFORMATION DURI NG THE YEAR UNDER REVIEW, IT WAS OBSERVED BY THE AO THAT ASSESS EE HAS MADE INVESTMENT IN THE SHARES AND EARNED LONG TERM CAPITA! GAIN EXEMPTED U/S 10(38) OF RS. 14,01,720/- ACCORDI NGLY. IN ORDER TO BRING IN LIGHT THE MODUS OPERAND! OF THE A SSESSEE TO EARN THE LONG TERM CAPITAL GAIN, THE ASSESSEE WAS S HOW CAUSED VIDE THIS OFFICE LETTER BEARING NO. 727 DATED 28.11 .2016. IN REPLY, THE ASSESEEE SUBMITTED VIDE ITS LETTER DATED 05.12.2016 THAT ITS PURCHASED THE SHARES OF M/S KAPPAC PHARMA LTD. AND SOLD THESE SHARES ON BSE PLATFORM BUT IN ORDER TO A VOID THE LITIGATION WITH THE INCOME. TAX DEPARTMENT; IT OFFERED/SURRENDERED THE AMOUNT OF RS. 14,01,720/-. KEEPING IN VIEW ABOVE FACTS, THE AO DISALLOWED THE AMOUNT OF 14,01,720/- CLAIMED AS CAPITAL GAIN EXEMPTED U/S 10 (38) AND TREATED IT AS INCOME OF THE ASSESSEE FOR THE A.Y. 2 014-15 U/S 68 OF THE I.T. ACT, 1961 AND THE SAME WAS ACCORDING LY ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S 271(1)(C) R.W.S. 274 OF THE INCOME TAX ACT WAS ALSO INITIATED SEPARATELY AS THE AO WAS SATISFI ED THAT THE 6 ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOM E OR FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDI NGLY, A SHOW CAUSE NOTICE DATED 09.05.2017 & 29.05.2017 WERE ISS UED. IN RESPONSE THERETO, AR OF THE ASSESSEEE APPEARED AND FILED SUBMISSION THROUGH LETTER DATED 05.06.2017 AND REQU ESTED TO DROP THE PENALTY PROCEEDINGS WHICH HAS BEEN CONSIDE RED BY THE UNDERSIGNED. IN THE REPLY THE ASSESSEE HAS MENTIONE D THAT IT HAS OFFERED THE INCOME CLAIMED AS EXEMPT FOR TAXATI ON VOLUNTARILY. AO OBSERVED THAT THIS CLAIM OF ASSESS EE IS NOT TENABLE ON THE GROUND THAT ASSESSEE SURRENDERED THE INCOME OF RS. 14,01,720/- CLAIMED AS EXEMPT U/S 10(38) OF THE I.T. ACT NOT VOLUNTARILY BUT AFTER RECEIPT OF SHOW CAUSE NOT ICE DATED 28.11.2016 ISSUED AT THE FINAL STAGE OF THE ASSESSM ENT PROCEEDINGS. AO NOTED THAT ASSESSEE HAS FAILED TO D ISCHARGE THE ONUS CAST UPON IT BY THE EXPLANATION 1 TO SECTION 2 71(L)(C) OF THE I.T. ACT, 1961 AND HAS FAILED TO PROVE THAT SU CH EXPLANATION IS BONAFIDE AND THAT ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF ITS TOTAL INCOME HAVE BEEN DISCLOSED BY IT. THEREFORE, AO OBSERVED THAT IN VIE W OF THE PROVISION OF SECTION 271(1)(C) IT WAS OBLIGATORY ON THE PART OF THE ASSESEEE TO FURNISH TRUE AND ACCURATE PARTICULA RS OF INCOME. BUT IN THE INSTANT CASE, THE ASSESSEEE INTENTIONALL Y AND KNOWINGLY HAS CONCEALED PARTICULARS OF INCOME. IN T HESE CIRCUMSTANCES, THE STATUTORY PENALTY AMOUNTING TO R S. 7 4,33,132/- WAS IMPOSED VIDE ORDER DATED 28.6.2017 U/S. 271(1) OF THE ACT. AGAINST THE PENALTY ORDER DAT ED 28.6.2017, ASSESSEE APPEALED BEFORE THE LD. CTI(A), WHO VIDE HIS IMPUGNED ORDER DATED 13.7.2018 HAS DISMISSED T HE APPEAL OF THE ASSESSEE. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE HAS STATED THAT ASSESSEE HAS RAISED 04 GROUNDS OF APPE AL, BUT HE IS ARGUING ONLY THE GROUND NO. 1 WHICH IS LEGAL IN NA TURE. HE STATED THAT LD. CIT(A) HAS WRONGLY SUSTAINED THE P ENALTY ORDER PASSED BY THE AO U/S. 271(1)(C) AS IN ASSESSMENT OR DER PASSED DATED 26.12.2016 SAME IS DELIGHTFULLY VAGUE AS TO R EQUISITE SATISFACTION OF AO TO VALIDLY INITIATE PENALTY PROC EEDINGS U/S. 271(1B) OF THE ACT AND THE SAID ASSESSMENT ORDER A LSO DOES NOT DISCLOSE UNDER WHICH SPECIFIC LIMB PENALTY CHAR GE IS MADE BY THE AO, ACCORDINGLY PENALTY ORDER PASSED BY AO A ND ORDER OF LD. CIT(A) MAY PLEASE BE QUASHED. HE DRAW MY ATTENT ION TOWARDS THE ASSESSMENT ORDER DATED 26.12.2016 PASSE D U/S. 143(3) OF THE I.T. ACT, 1961 ESPECIALLY THE LAST PA GE OF THE ASSESSMENT ORDER AND STATED THAT THE AO HAS INITIAT ED THE PENALTY PROCEEDINGS U/S. 271(1)(C) READ WITH SECTIO N 274 OF THE I.T. ACT ON BEING SATISFIED THAT ASSESSEE HAS CONC EALED THE PARTICULARS OF HER INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, WHICH IS A FATAL ERROR AND NOT SUSTAINABLE IN THE EYES OF LAW. THEREFORE, HE REQUESTED THAT THE PENALTY IMPOSED IS 8 LIABLE TO BE QUASHED ON LEGAL GROUND AS THE ISSUE I S SQUARELY COVERED BY THE FOLLOWING DECISIONS.: - HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE OF CIT & ORS. VS. M/S MANJUNATHA COTTON AND GINNIG FACTORY & ORS. (2013) 359 ITR 565 - APEX COURT DECISION IN THE CASE OF CIT & ANR. VS. M/S SSAS EMERALD MEADOWS IN CC NO. 11485/2016 DATED 05.8.2016. 5.1 ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION FOR CONCEA LMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PAR TICULARS OF INCOME. WHEN THE BURDEN TO OFFER EXPLANATION PLACE D BY THE EXPLANATION 1 TO SECTION 271(1) IS NOT DISCHARGED BY THE ASSESSEE SUPPORTED BY COGENT AND RELIABLE EVIDENCE THE ONUS DOES NOT SHIFT ON THE REVENUE. HENCE, THE FACT OF S URRENDER OF INCOME DOES NOT ALTER THE POSITION VIS--VIS THE EX PLANATION 1 TO SECTION 271(1) AND THEREFORE, THE AO IS JUSTIF IED IN IMPOSING THE PENALTY OF RS. 4,00,747/-. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTH ORITIES ALONGWITH THE PROVISIONS OF LAW AS WELL AS THE CAS E LAW CITED BY THE LD. COUNSEL OF THE ASSESSEE. I HAVE ALSO PERUS ED THE 9 ASSESSMENT ORDER DATED 26.12.2016 PASSED U/S. 143(3 ) OF THE ACT. FOR THE SAKE OF CONVENIENCE, THE RELEVANT F INDING OF THE ASSESSING OFFICER ARE REPRODUCED AS UNDER:- ..KEEPING IN VIEW ABOVE FACTS, I DISALLOW THE AMOUNT OF RS. 12,96,916/- CLAIMED AS CAPITAL GAIN EXEMPTED U/S. 10(38) AND TREAT IT AS INCOME OF THE ASSESSEE FOR THE AY 2014-15 U/S. 68 OF THE I.T. ACT , 1961 AND THE SAME IS ACCORDINGLY ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S. 271(1) R.W.S. 284 OF THE INCOME TAX ACT ARE BEING INITIATED SEPARATELY AS I AM THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HER INCOME OR FURNISHED INACCURATE PARTICUALRAS OF INCOME. 6.1 AFTER PERUSING THE AFORESAID CONTENTS OF THE AS SESSMENT ORDER DATED 26/12/2016, I AM OF THE VIEW THAT THE AO HAS INITIATED THE PENALTY FOR CONCEALMENT OF PARTICULAR S OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, WHICH IS CONT RARY TO THE PROVISIONS OF LAW. I AM ALSO OF THE VIEW THAT ASSE SSMENT ORDER ISSUED BY THE AO IS BAD IN LAW AS IT DOES NOT SPECI FY UNDER WHICH LIMB OF SECTION 271(1) OF THE ACT, THE PENA LTY PROCEEDINGS HAD BEEN INITIATED I.E. WHETHER FOR CON CEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS. 10 THEREFORE, THE PENALTY IN DISPUTE IS NOT SUSTAINABL E IN THE EYES OF LAW. MY AFORESAID VIEW IS SUPPORTED BY THE FOLL OWING DECISIONS:- I) CIT & ANR. VS. M/S SSAS EMERALD MEADOWS 2015 (11) TMI 1620 KARNATAKA HIGH COURT HAS HELD THAT TRIBUNAL HAS CORRECTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) 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. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) (7) TMI 620- KARANATAKA HIGH COURT. THUS SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION NO SUBSTANTIAL QUESTION OF LAW ARISES DECIDED IN FAVOUR OF ASSESSEE. II) CIT & ANR. VS. M/S SSAS EMERALD MEADOWS HONBLE SUPREME COURT OF INDIA REPORTED IN 2016 (8) TMI 1145 11 SUPREME COURT. THE APEX COURT HELD THAT HIGH COURT ORDER CONFIRMED (2015) (11) TMI 1620 (SUPRA) KARNATAKA HIGH COURT. NOTICE ISSUED BY AO UNDER SECTION 274 READ WITH SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) 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 DECIDED IN FAVOUR OF ASSESSEE. III) ITAT, A BENCH, NEW DELHI DECISION DATED 05.12.2017 IN THE CASE OF ASHOK KUMAR CHORDIA VS. DCIT PASSED IN ITA NO. 5788 TO 5790/DEL/2014 WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER:- 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH THE RELEVANT RECORDS AVAILABLE WITH US. FIRSTLY, WE HAVE PERUSED THE NOTICE DATED 26.3.2013 ISSUED BY THE AO FOR INITIATING THE PENALTY AND DIRECTING THE ASSESSEE TO APPEAR BEFORE HIM AT 11.30 AM ON 26/04/2013 AND ISSUED A SHOW CAUSE TO THE ASSESSEE STATING THEREIN THAT ..YOU HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE 12 PARTICULARS OF SUCH INCOME. AFTER PERUSING THE NOTICE DATED 26.3.2013 ISSUED BY THE AO TO THE ASSESSEE, WE ARE OF THE VIEW THAT THE AO HAS INITIATED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME AS WELL AS IN THE PENALTY ORDER DATED 30.9.2013 AO HAS STATED THAT HE IS SATISFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME, WHICH IS CONTRARY TO LAW. IN VIEW OF ABOVE, THE PENALTY IS NOT SUSTAINABLE IN THE EYES OF LAW. OUR AFORESAID VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS:- I) CIT & ANR. VS. M/S SSAS EMERALD MEADOWS 2015 (11) TMI 1620 KARNATAKA HIGH COURT HAS HELD THAT TRIBUNAL HAS CORRECTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) OF THE ACT, THE PENALTY PROCEEDINGS HAD 13 BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) (7) TMI 620- KARANATAKA HIGH COURT. THUS SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION NO SUBSTANTIAL QUESTION OF LAW ARISES DECIDED IN FAVOUR OF ASSESSEE. II) CIT & ANR. VS. M/S SSAS EMERALD MEADOWS HONBLE SUPREME COURT OF INDIA REPORTED IN 2016 (8) TMI 1145 SUPREME COURT. THE APEX COURT HELD THAT HIGH COURT ORDER CONFIRMED (2015) (11) TMI 1620 (SUPRA) KARNATAKA HIGH COURT. NOTICE ISSUED BY AO 14 UNDER SECTION 274 READ WITH SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) 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 DECIDED IN FAVOUR OF ASSESSEE. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENTS, WE DELETE THE PENALTY IN DISPUTE AND DECIDE THE ISSUE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE. IV) ITAT, D BENCH, NEW DELHI DECISION DATED 26.5.2017 IN THE CASE OF RAJENDER JAIN VS. ACIT PASSED IN ITA NO. 6804/DEL/2013 WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER:- 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH THE RELEVANT RECORDS AVAILABLE WITH US. FIRSTLY, WE HAVE PERUSED THE ASSESSMENT ORDER WHEREIN THE AO HAS 15 RECORDED HIS SATISFACTION ON THE PAGE 2, 2 ND PARA VIZ. I AM SATISFIED THAT IT IS A FIT CASE FOR INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME. WE HAVE ALSO PERUSED THE NOTICE DATED 31.12.2007 ISSUED BY THE AO FOR INITIATING THE PENALTY AND DIRECTING THE ASSESSEE TO APPEAR BEFORE HIM AT ---------AM/PM ON --------200----- - AND ISSUED A SHOW CAUSE TO THE ASSESSEE STATING THEREIN THAT WHY AN ORDER IMPOSING THE PENALTY OF AMOUNT SHOULD NOT BE MADE U/S. 271(1)(C) OF THE I.T. ACT, 1961. AFTER PERUSING THE NOTICE DATED 31.12.2007 ISSUED BY THE AO TO THE ASSESSEE, WE ARE OF THE VIEW THAT THE AO HAS INITIATED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME, BUT IN THE PENALTY ORDER DATED 06.11.2009 HE HAS STATED THAT HE IS SATISFIED THAT THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULARS OF INCOME. 16 7.1 HOWEVER, THE LD. CIT(A) HAS GIVEN CLEAR FINDING REGARDING THE FURNISHING OF INACCURATE PARTICULARS. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PARA NO. 5.3.1 OF THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS REPRODUCED AS UNDER:- 5.3.1 THE ABOVE FINDINGS OF THE LD. CIT(A) CLEARLY ESTABLISHES THAT THE APPELLANT HAS CONCEALED THE INCOME OF RS. 26,50,500/- AND DID NOT DECLARE IN THE RETURN OF INCOME INSPITE OF ADMITTING A DISCLOSURE OF RS. 40,00,000/- DURING SURVEY. THUS, THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF HIS 17 INCOME. THE FACTS OF THE CASE CLEARLY REVEAL THAT THE APPELLANT TRIED TO EVADE PAYMENT OF TAXES BY FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, I HOLD THAT THE AO WAS FULLY JUSTIFIED IN LEVYING THE PENALTY U/S. 271(1)(C) OF THE ACT. THE PENALTY LEVIED BY THE AO IS UPHELD. THIS GROUND OF APPEAL IS REJECTED. 8. KEEPING IN VIEW OF THE AFORESAID FINDING OF THE LD. CIT(A), WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS PASSED THE ASSESSMENT ORDER WHEREIN THE AO HAS RECORDED HIS SATISFACTION ON THE PAGE 2, 2 ND PARA VIZ. I AM SATISFIED THAT IT IS A FIT CASE FOR 18 INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME. FURTHER THE AO VIDE HIS NOTICE DATED 31.12.2007 FOR INITIATING THE PENALTY AND DIRECTED THE ASSESSEE TO APPEAR BEFORE HIM AT ---------AM/PM ON -------- 200------ AND ISSUED A SHOW CAUSE TO THE ASSESSEE STATING THEREIN THAT WHY AN ORDER IMPOSING THE PENALTY OF AMOUNT SHOULD NOT BE MADE U/S. 271(1)(C) OF THE I.T. ACT, 1961. AFTER PERUSING THE NOTICE DATED 31.12.2007 ISSUED BY THE AO TO THE ASSESSEE, WE ARE OF THE VIEW THAT THE AO HAS INITIATED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME/ CONCEALMENT OF INCOME, BUT IN THE PENALTY ORDER DATED 06.11.2009 HE HAS STATED THAT HE 19 IS SATISFIED THAT THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULARS OF INCOME. IN OUR VIEW THE PENALTY IN DISPUTE IS NOT SUSTAINABLE IN THE EYES OF LAW, BECAUSE THE AO HAS NOT RECORDED ANY CLEAR FINDING WHETHER THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. SECONDLY, THE NOTICE U/S. 271(1)(C) HAS BEEN ISSUED TO THE ASSESSEE LEVYING THE PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME, WHEREAS THE PENALTY IN DISPUTE HAS BEEN LEVIED BY THE AO ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS. IN OUR VIEW THE PENALTY IS NOT SUSTAINABLE IN THE EYES OF LAW. OUR AFORESAID VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS:- 20 I) CIT & ANR. VS. M/S EMERALD MEADOWS 2015 (11) TMI 1620 KARNATAKA HIGH COURT HAS HELD THAT TRIBUNAL HAS CORRECTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) 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. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT 21 RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) (7) TMI 620- KARANATAKA HIGH COURT. THUS SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION NO SUBSTANTIAL QUESTION OF LAW ARISES DECIDED IN FAVOUR OF ASSESSEE. II) CIT & ANR. VS. M/S SSAS EMERALD MEADOWS HONBLE SUPREME COURT OF INDIA REPORTED IN 2016 (8) TMI 1145 SUPREME COURT. THE APEX COURT HELD THAT HIGH COURT ORDER CONFIRMED (2015) (11) TMI 1620 (SUPRA) KARNATAKA HIGH COURT. NOTICE ISSUED BY AO UNDER SECTION 274 READ WITH 22 SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) 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 DECIDED IN FAVOUR OF ASSESSEE. 8.1 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENTS, WE DELETE THE PENALTY IN DISPUTE AND DECIDE THE ISSUE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE. 7. KEEPING IN VIEW OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE AFORESAID PRECEDENTS, I CANCEL THE PENALTY IN DISPUTE BY RESPECTFULLY FOLLOWING THE AF ORESAID 23 DECISIONS AND ALLOW THE LEGAL GROUND NO.1 RAISED B Y THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE STANDS ALLOWED. 9. SINCE IN OTHER APPEAL I.E. IN THE CASE OF JAGDIS H PRASAD BHARAT KUMAR HUF VS. ITO (AY 2014-15), SIMILAR FACT S ARE PERMEATING, THEREFORE, MY FINDING GIVEN ABOVE WIL L APPLY MUTATIS MUTANDIS IN THIS APPEAL ALSO, BECAUSE THE GROUNDS ARE EXACTLY SIMILAR. THUS, THIS APPEAL IS ALSO ALLOWED. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 11.01.2019. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 11/01/2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI