PRATHVIPAL DHABAHAI, KISHANGARH V. INCOME TAX OFFICER, KISHANGARH

ITA 789/JPR/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4578 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 10-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUNAM RAI
• Assessee Lawyers: SATISH KUMAR GUPTA
• Keywords: Principle of natural justice
• Section: 143(3); 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 789/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2008-09 SHRI PRATHVI PAL DHABHAI 1/50, NEW EXTENSION, HOUSING BOARD, MADANGANJ KISHANGARH. CUKE VS. THE ITO, KISHANGARH. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AFOPD 2634 J VIHYKFKHZ@ APPELL ANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI SATISH KUMAR GUPTA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. PUNAM RAI (DCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 14/06/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 07/08/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), AJMER DATED 25.08.2015 FOR THE ASSESSMENT Y EAR 2008-09 WHEREIN THE ASSESSEE HAS CHALLENGED THE CONFIRMATIO N OF PENALTY AMOUNTING TO RS. 1,78,265/- U/S 271(1)(C) OF THE AC T. 2. AT THE OUTSET, THE LD. AR REQUESTED FOR PERMISSI ON TO RAISE ADDITIONAL GROUND OF APPEAL AS UNDER:- ON THE FACTS & CIRCUMSTANCES OF THE CASE AND ON TH E BASIS OF LAW LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF E MERALD ITA NO. 789/JP/2015 SHRI PRATHVI PAL DHABHAI VS. ITO 2 MEADOWS 242 TAXMANN 180 (SC) AND HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON GINNING FACT ORY 359 ITR 0565 (KARNATAKA), LD. A.O. GROSSLY ERRED IN INITIAT ING OF PROCEEDINGS U/S 271(1)(C) OF THE ACT AS LD. A.O. DI D NOT STRIKE OFF THE INAPPROPRIATE PORTION OF THE NOTICE ISSUED U/S 274 OF THE ACT AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 2 71(1) OF THE ACT PENALTY PROCEEDINGS HAVE BEEN INITIATED I.E. EI THER FOR CONCEALMENT OF PARTICULAR OF INCOME OR FOR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME. MORE OVER THE SAI D NOTICE IS IN PRINTED FORM WHERE ALL THE GROUNDS MENTIONED IN SEC TION 271 ARE MENTIONED IS ALSO UNLAWFUL IN THE LIGHT OF ABOVE RE FERRED DECISIONS. 3. THE LD. AR HAS SUBMITTED THAT THE ADDITIONAL GRO UND IS PURELY A LEGAL GROUND AND IT GOES TO THE ROOT OF THE MATTER, THE SAME SHOULD BE ADMITTED IN THE INTEREST OF JUSTICE. IN SUPPORT, RE LIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF NA TIONAL THERMAL POWER CORPORATION LTD. VS. CIT 229 ITR 383. AFTER H EARING BOTH THE PARTIES, THE ADDITIONAL GROUND BEING A PURELY LEGAL GROUND, THE SAME IS BEING ADMITTED FOR ADJUDICATION. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSMENT WAS COMPETED U/S 143(3) OF THE ACT WHEREIN THE AO MADE ADDITION U/S 68 ON ACCOUNT OF SUNDRY DEPOSITS AMOUNTING TO RS. 8,96 ,547/-. THE PENALTY PROCEEDINGS WERE SEPARATELY INITIATED BY ISSUANCE O F NOTICE U/S 274 R.W.S. 271(1)(C) OF THE IT ACT DATED 23.12.2010 FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE ASSESSEE HAS CHALLENGED THE SAID ADDITION BEFORE THE LD. CIT (A) AND THE SAME HAS BEEN CONFIRMED HENCE, IN THE QUANTUM PROCEEDINGS, T HE MATTER HAS ATTAINED FINALITY. THEREAFTER THE AO PASSED THE PEN ALTY ORDER DATED ITA NO. 789/JP/2015 SHRI PRATHVI PAL DHABHAI VS. ITO 3 28.03.2013 WHERE PENALTY ON ADDITION SO SUSTAINED H AS BEEN IMPOSED FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. 5. DURING THE COURSE OF HEARING, THE LD. AR HAS SUB MITTED THAT THE AO IN THE BODY OF THE ASSESSMENT ORDER HAS MENTIONE D THAT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE BEING INIT IATED SEPARATELY AS ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME. FURTHER, IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C), PENALTY PRO CEEDINGS U/S 271(1)(C) IS INITIATED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT WAS SUBMITTED THAT IN THE ABSENCE OF ANY SPECIFIC CHARGE AGAINST THE ASSESSEE IN THE PENALTY NOTICE, CONSEQUENT PENALTY IMPOSED BY THE AO IS ILLEGAL AND BAD IN LAW. IN SUPPORT, RELIANCE WAS PLACED ON THE DECISION OF HON BLE SUPREME COURT IN CASE OF CIT VS. SSAS EMERALD MEADOWS (2016) 242 TAXMAN 180 AND HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. M/S MANJUNATHA COTTON & GINNING FACTORY & ORS. 359 ITR 565. IT WAS FURTHE R SUBMITTED THAT A SIMILAR VIEW ISSUE HAS BEEN DEALT WITH BY THE COORD INATE BENCH OF THIS TRIBUNAL IN CASE OF SHRI CHANDMAL KUMAWAT VS. ITO (ITA NO. 441/JP/2017 ORDER DATED 21.12.2017) WHEREIN THE BENCH HAS HELD IN PARAS 15 TO 18 AS UNDER:- 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, REGARDING THE PRELIM INARY PLEA OF THE LD AR THAT IN ABSENCE OF A SPECIFIC CHARGE AGAINST THE AS SESSEE IN THE PENALTY NOTICE, CONSEQUENT LEVY OF PENALTY BY THE AO IS ILL EGAL AND BAD IN LAW, WE REFER TO THE PENALTY NOTICE DATED 18.03.2013 WHI CH TALKS ABOUT ASSESSEE CONCEALING THE PARTICULARS OF INCOME OR FU RNISHING INACCURATE PARTICULARS OF INCOME. THE NOTICE DOESNT SPECIFY T HE EXACT CHARGE ITA NO. 789/JP/2015 SHRI PRATHVI PAL DHABHAI VS. ITO 4 AGAINST THE ASSESSEE AS TO WHETHER IT RELATES TO CO NCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. THE SUBSEQUENT NOTICE DATED 17.08.2015 IS AGAINST S ILENT ON THE EXACT CHARGE AGAINST THE ASSESSEE. IT IS A SETTLED POSIT ION IN LAW THAT THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) IS IN VITED WHEN THE CONDITIONS SPECIFIED THEREIN ARE SATISFIED AND FURT HER, THE TWO EXPRESSIONS CONCEALING THE PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME DENOTE DIFFERENT CONNOTATIONS. IT IS THEREFORE IMPERATIVE THAT THE ASSESSEE BE MADE AWAR E AS TO WHICH OF THE TWO CHARGES, HE IS REQUIRED TO SUBMIT HIS DEFEN CE AND SUPPORTIVE ARGUMENTS. IN THE INSTANT CASE, AS WE HAVE NOTED A BOVE, THE NOTICE TALKS ABOUT BOTH THE CHARGES AND IT DOESNT CONVEY TO THE ASSESSEE AS TO WHICH CHARGE HE HAS TO RESPOND. THE NOTICE THUS DEM ONSTRATE NON- APPLICATION OF MIND ON THE PART OF THE AO. FURTHER , WE REFER TO THE ASSESSMENT ORDER WHERE, AFTER DISCUSSING THE ISSUE RELATING TO COMPUTATION OF CAPITAL GAINS, THE AO HELD THAT BY S HOWING LESS CAPITAL GAINS, THE ASSESSEE HAS FURNISHED INACCURATE PARTIC ULARS OF INCOME AND PENALTY PROCEEDINGS ARE BEING INITIATED SEPARATELY AND THEREAFTER, TOWARDS THE END OF THE ASSESSMENT ORDER, THE AO STA TES THAT PENALTY PROCEEDINGS U/S 271(1)(C) READ WITH SECTION 274 HAV E BEEN INITIATED SEPARATELY FOR CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS THUS SHOWS THAT THE AO HIMSELF IS UNSURE ABOUT THE CHARGE AGAINST THE ASSESSEE DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. CONSIDERING THE OBSERVATIONS OF THE A O IN THE ASSESSMENT ORDER ALONGSIDE HIS ACTION OF NON-STRIKING OFF THE IRRELEVANT CLAUSE IN THE PENALTY NOTICE SHOWS THAT THE CHARGE BEING MADE AGA INST THE ASSESSEE QUA 271(1)(C) IS NOT FIRM, SHOWS NON-APPLICATION OF MIND ON THE PART OF THE AO, AND THE VAGUENESS AND AMBIGUITY IN THE NOTI CE HAS THUS PREJUDICED THE RIGHT OF REASONABLE OPPORTUNITY TO T HE ASSESSEE IN AS MUCH AS THE ASSESSEE IS NOT MADE AWARE AS TO WHICH OF THE TWO CHARGES, HE HAS TO SUBMIT HIS DEFENCE. 16. HERE, WE REFER TO THE DECISION OF HONBLE SUPRE ME COURT IN CASE OF DILIP N SHROFF REPORTED IN 161 TAXMAN 218 WHERE IT WAS HELD AS UNDER: ITA NO. 789/JP/2015 SHRI PRATHVI PAL DHABHAI VS. ITO 5 83. IT IS OF SOME SIGNIFICANCE THAT IN THE STANDAR D PROFORMA USED BY THE ASSESSING OFFICER IN ISSUING A NOTICE DESPIT E THE FACT THAT THE SAME POSTULATES THAT INAPPROPRIATE WORDS AND PA RAGRAPHS WERE TO BE DELETED, BUT THE SAME HAD NOT BEEN DONE. THUS, THE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHETHE R HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEA LED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS. EVEN BEFORE US, THE LEARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING THE ORDER OF ASSESSMENT LAID EMPHASIS THAT HE HAD DEALT WITH BOTH THE SITUATIONS. 84. THE IMPUGNED ORDER, THEREFORE, SUFFERS FROM NON -APPLICATION OF MIND. IT WAS ALSO BOUND TO COMPLY WITH THE PRINC IPLES OF NATURAL JUSTICE. [SEE MALABAR INDUSTRIAL CO. LTD. V . CIT [2000] 2 SCC 718]. 17. WE FIND THAT SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN CASE OF MANJUNATHA COTTON A ND GINNING FACTORY (SUPRA) WHICH HAS BEEN FOLLOWED IN CASE OF SSA EMER ALD MEADOWS (SUPRA) AND THE SLP AGAINST THE LATTER DECISION HAS SINCE BEEN DISMISSED BY THE HONBLE SUPREME COURT. FURTHER, WE NOTE THA T THE HONBLE BOMBAY HIGH COURT IN CASE OF SHRI SAMSON PERINCHERY (IN ITA NO. 1154 AND OTHERS DATED 5.01.2017) AND KARNATAKA HIGH COUR T IN ITS LATEST DECISION IN CASE OF S. CHANDRASHEKHAR (SUPRA) HAS R EAFFIRMED THE SAID LEGAL PROPOSITION. 18. IN LIGHT OF ABOVE LEGAL AUTHORITIES WHERE THE F ACTUM OF NON-STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE HAS BEEN HELD AS REFLECTIVE OF NON-APPLICATION OF MIND BY THE AO AND IN LIGHT OF F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ABOVE DIS CUSSIONS, THE PENALTY IMPOSED UNDER SECTION 271(1)(C) IS LIABLE T O BE DELETED. 6. IN THE FACTS OF THE PRESENT CASE, UNDISPUTEDLY, THE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) DOESN T SPECIFY THE EXACT CHARGE AGAINST THE ASSESSEE AS TO WHETHER IT RELATE S TO CONCEALING THE ITA NO. 789/JP/2015 SHRI PRATHVI PAL DHABHAI VS. ITO 6 PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. RESPECTFULLY FOLLOWING THE DECISIONS REFERRED SUPRA , THE FACTUM OF NON- STRIKING OFF OF THE IRRELEVANT CLAUSE IN THE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) IS HEREBY HELD AS R EFLECTIVE OF NON- APPLICATION OF MIND BY THE AO, THE PENALTY IMPOSED U/S 271(1)(C) IS DELETED. 7. REGARDING OTHER CONTENTIONS RAISED BY THE LD AR ON THE MERITS OF THE CASE SINCE THE ADDITIONAL GROUND HAS BEEN ALLOW ED AND THE PENALTY HAS BEEN DELETED ON THIS COUNT ITSELF, WE DONT THI NK IT WOULD BE RELEVANT TO EXAMINE SAID CONTENTIONS SO RAISED BY THE LD AR AND HENCE, THE SAME ARE NOT BEING DEALT WITH. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/08/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07/08/2018. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI PRATHVI PAL DHABHAI, KISHANGARH . 2. IZR;FKHZ@ THE RESPONDENT- ITO, KISHANGARH. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) ITA NO. 789/JP/2015 SHRI PRATHVI PAL DHABHAI VS. ITO 7 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 789/JP/2015} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR