Mihir Chandra Dutta, Kolkata V. ACIT, Cir-51, Kolkata, Kolkata

ITA 72/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9463 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 24-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2014
• Court: TRIBUNAL
• Department Lawyers: SNEHANSHU BISWAS
• Assessee Lawyers: ANIKESH BANERJEE
• Keywords: Principle of natural justice; Question of law; Initiation of penalty proceedings; Agreed addition
• Section: 143(3)

Judgement Text

I.T.A. NO. 72/KOL./2014 ASSESSMENT YEAR: 2009-2010 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 72/KOL/ 2014 ASSESSMENT YEAR : 2009-2010 MIHIR CHANDRA DUTTA,............................... .................APPELLANT L/H. SHYAMAL KUMAR DUTTA, J-7, ANANDAPURI, NONA CHANDANPUKUAR, BARRACKPORE, KOLKATA-700 122, [PAN: ADUPD 9445 K] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX,.............. ...............RESPONDENT CIRCLE-51, KOLKATA, BLOCK-DS-2 & 3, MANIKTALA CIVIC CENTRE, UTTARAPAN, KOLKATA-700 054 APPEARANCES BY: SHRI ANIKESH BANERJEE, A.R., FOR THE ASSESSEE SHRI SNEHANSHU BISWAS, JCIT, D.R., FOR THE DEPARTME NT DATE OF CONCLUDING THE HEARING : FEBRUARY 06, 2017 DATE OF PRONOUNCING THE ORDER : FEBRUARY 08, 2017 O R D E R PER SHRI J. SUDHAKAR REDDY, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXXII, KOLKATA DATED 08.11.2013 FOR THE ASSESSMENT YEAR 2009-10, WHERE THE FIRST AP PELLATE AUTHORITY HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 271(1)(C) OF THE ACT. THE GROUNDS OF APPEAL READ AS FOLLOWS:- (1) FOR THAT THE PENALTY ORDERS U/S 271(1)(C) OF THE I. T. ACT, 1961 IS VOID-AB-INITIO. THE LD. AO HAD NOT RECORDED THE REASONS SPECIFICALLY WHILE INITIATING IT IN ASSESSM ENT ORDER. THEREFORE, THE PENALTY IS LIABLE TO BE DELET ED. (2) FOR THAT THE ASSESSEE DURING ASSESSMENT PROCEEDING ACCEPTED THE ADDITION MADE AND AS PER THE ORDER U/S 143(3) OF THE ACT AGREED TO PAY THE ASSESSED TAX OF RS.19,35,458/-. THE LEVY OF THE PENALTY U/S 271(1)( C) OF I.T.A. NO. 72/KOL./2014 ASSESSMENT YEAR: 2009-2010 PAGE 2 OF 5 THE ACT IS UNJUSTIFIED AND AGAINST THE DIRECTION OF THE HONBLE SUPREME COURT AS IN SRI SHADILAL SUGAR & GE NERAL MILLS LTD. VS.- CIT 168 ITR 705. (3) FOR THAT THE PENALTY ON AGREED ADDITION IS ILLEGAL, SO THE PENALTY U/S 271(1)(C) OF THE ACT OF RS.14,40,594/- IS ILLEGAL AND VOID. (4) FOR THAT AFTER THE SURVEY PROCEEDINGS DATED 06.03.2 009 THE ASSESSING AUTHORITY DID NOT SUPPLY THE BOOKS OF ACCOUNT BEFORE FILING OF RETURN U/S 139(1) OF THE A CT FOR AY 2009-10 AND FOR THAT REASON THE ASSESSEE DID NOT ABLE TO CALCULATE HIS CONCEALMENT. THE IMPOUNDED DOCUME NTS WERE HANDED OVER DURING THE TIME OF ASSESSMENT PROCEEDING. THEN THE ASSESSEE WAS ABLE TO CALCULATE AND SURRENDER THE AMOUNT AND HE PAID THE TAX ACCORDINGL Y. THIS FACT WAS EXPLAINED IN ALL THE FORUMS. HENCE, T HE PENALTY CANNOT BE LEVIED AS THE ASSESSEE DISCHARGED THE PRIMARY BURDEN BY COGENT EXPLANATION AND THE LD. AO WAS UNABLE TO REVERT THE SAME. (5) FOR THAT THE PENALTY U/S 271(1)(C) OF THE ACT OF RS.14,40,594/- IS BAD IN LAW. 2. AFTER HEARING THE RIVAL CONTENTIONS, WE FIND THA T THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ON DATED 30.09.2011. THE ASSES SEE HAS PLACED THE COPY OF NOTICE UNDER SECTION 274 READ WITH SECTION 271 AT PAGE 11 OF THE PAPER BOOK. A PERUSAL OF THE NOTICE DEMONSTRATED TH AT THE ASSESSING OFFICER HAS NOT SPECIFIED AS TO WHICH LIMB OF SECTI ON 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E., W HETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. THE ASSESSEE RELIED ON THE ORDER OF THE B BENCH, KOLKATA OF THIS TRIBUNAL IN THE CASE OF SUVAPRASANNA BHATTACHARYA VS.- ACIT , CIRCLE-55, KOLKATA IN ITA NO. 1303/KOL/2010 ORDER DATED 06.11.2015, WHERE THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS.- MANJUNATHA COTTON & GINNING FACTORY (2013) 218 TAXMAN 423 (KAR .) WAS FOLLOWED. IN I.T.A. NO. 72/KOL./2014 ASSESSMENT YEAR: 2009-2010 PAGE 3 OF 5 THIS JUDGMENT AT PARA 63, THE HONBLE KARNATAKA HIG H COURT HAS HELD AS FOLLOWS:- (A) PENALTY UNDER SECTION 271(L)(C) IS A CIVIL LIA BILITY. (B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. (C) WILFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIE NT FOR ATTRACTING CIVIL LIABILITY. (D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 2 71(L)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271 . (E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERN IBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REVISIONA L AUTHORITY. (F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING T HE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(L)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BECAUSE OF DEEMING PROVISION . (G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASS ESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 2 71(L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BE CAUSE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). (H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE T O THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMISSIONER. (I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. (J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. (K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORDER O F ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TAX AND INTEREST THAT BY I TSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEE DINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED AN D IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. (L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPLAN ATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPL ANATION OFFERED IS NOT BONAFIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED . (M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUBSTA NTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO I.T.A. NO. 72/KOL./2014 ASSESSMENT YEAR: 2009-2010 PAGE 4 OF 5 THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOS ED BY HIM, NO PENALTY COULD BE IMPOSED. (N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO S ECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. (O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SAT ISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS, IN A PPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PROC EEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSING AUTHOR ITY. (P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIF ICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(L)(C), I.E., WHETHER IT IS F OR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME (Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTION ED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. (R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED . ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSE SSEE. (S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AN D FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. (T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASS ESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT O F THE PROCEEDINGS. (U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDIN GS INSOFAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORRECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVI ED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REA SSESSMENT CANNOT BE DECLARED AS INVALID IN THE PENALTY PROCEEDINGS. (E MPHASIS OURS). 3. THE HONBLE SUPREME COURT HAS DISMISSED THE SLP FILED BY THE REVENUE AGAINST THIS DECISION. THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX & ANR. VS.- M/S. SSAS EMERALD MEADOWS, BANGALORE NORTH TALUK IN ITA NO. 380 OF 2015 DATED 23.11.2015 HAS HELD AS FOLLOWS:- 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF TH E INCOME I.T.A. NO. 72/KOL./2014 ASSESSMENT YEAR: 2009-2010 PAGE 5 OF 5 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., WHETH ER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHI LE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDER ED IN THE CASE OF COMMISSIONER OF INCOME TAX VS.- MANJUNAHA 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 OPINION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL F OR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDIN GLY DISMISSED. 4. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONB LE SUPREME COURT, WE QUASH THE PENALTY LEVIED IN THIS CASE AND ALLOW THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 08, 2017. SD/- SD/- (S.S. VISWANETHRA RAVI) (J. SUDHAKAR REDDY) JUDICIAL MEMBER AC COUNTANT MEMBER KOLKATA, THE 8 TH DAY OF FEBRUARY, 2017 COPIES TO : (1) MIHIR CHANDRA DUTTA, LEGAL HEIR SHYAMAL KUMAR DUTTA, J-7, ANANDAPURI, NONA CHANDANPUKUAR, BARRACKPORE, KOLKATA-700 122, (2) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-51, KOLKATA, BLOCK-DS-2 & 3, MANIKTALA CIVIC CENTRE, UTTARAPAN, KOLKATA-700 054 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-XXXII, K OLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.