Narasimha Reddy Kotta (HUF), Hyd, Hyderabad V. ITO, Ward-8(2), Hyderabad, Hyderabad

ITA 875/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2614 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 10-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Keywords: Question of law
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 875/HYD/2016 ASSESSMENT YEAR: 2009-10 NARASIMHA REDDY KOTTA (HUF), HYDERABAD. PAN AAEHK 1377C VS. INCOME-TAX OFFICER, WARD 8(2), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.C. DEVDAS REVENUE BY : SMT. N. SWAPNA DATE OF HEARING : 24-08-2017 DATE OF PRONOUNCEMENT : 22-09-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS IS AN APPEAL OF THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (A) 2, HYD ERABAD, DATED 30/03/2016 FOR AY 2009-10. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE, HUF, HAD FILED RETURN OF INCOME FOR AY 2009-10 ON 03/02/2010 DECLARING TOTAL INCOME OF RS. 6,04,930/-, WHICH INCLUDES AGRICULTUR AL INCOME OF RS. 3,15,000/-. THIS CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 142(1) WERE ISSUED. BASED ON THE INFORMA TION FURNISHED DURING THE ASSESSMENT PROCEEDINGS, AO MADE ADDITION FOR THE CASH CREDITS FOUND IN TWO SAVING BANK ACCOUNTS OF THE AS SESSEE. THE ASSESSEE WAS ASKED TO EXPLAIN THE TRANSACTIONS AND THE PROFIT MARGIN. HOWEVER, THE ASSESSEE HAD COME FORWARD TO ADMIT AN AMOUNT OF RS. 25 LAKHS AS ADDITIONAL INCOME FOR THE TAX PURPOSE O N ESTIMATION BASIS 2 ITA NO. 875/H/16 NARASIMHA REDDY KOTTA (HUF) AND THE SAME WAS ACCEPTED AND COMPLETED THE ASSESSM ENT BY THE AO ALONG WITH BANK INTEREST RECEIPT OF RS. 4,400/-. 3. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT BASED ON THE INITIAL FINDINGS THAT THERE WERE UNEXPLAINED DEPOSITS IN THE BANK ACCOUNTS. ASSESSEE PROTESTED B EFORE THE AO THAT HE HAD ACCEPTED THE ASSESSMENT WITH THE PROMISE THA T NOT TO LEVY ANY PENALTY, THIS ADMISSION WAS MADE WITH A VIEW TO COO PERATE WITH THE DEPARTMENT. ASSESSEE HAD RELIED ON VARIOUS DECISION S TO ARGUE THAT THERE IS NO MENS-REA AS WELL AS ASSESSEE HAS COOPER ATED WITH THE DEPARTMENT. 3.1 THE AO DID NOT ACCEPT THE CONTENTION OF THE ASS ESSEE AND OPINED THAT THE ADMISSION OF THE ASSESSEE WAS NOT V OLUNTARY AND ACCEPTED FOR THE ADDITION DUE TO THE FACT THAT ASSE SSEE WAS NOT IN A POSITION TO EXPLAIN THE SOURCE OF DEPOSITS, HENCE, LEVIED MINIMUM PENALTY OF RS. 8,60,000/- U/S 271(1)(C) OF THE ACT. 4. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERR ED AN APPEAL BEFORE THE CIT(A), WHO HAD CONFIRMED THE PENALTY LE VIED BY THE AO. 5. AGGRIEVED WITH THE ORDER OF THE CIT(A), THE ASSE SSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF A PPEAL: 1. IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY U/S.271(1)(C) OF THE I.T. ACT AT RS.8,60,00 0 IS WHOLLY UNSUSTAINABLE BOTH ON FACTS AND IN LAW. 2. THE LEARNED CIT(A) FAILED TO NOTE THAT THE APPEL LANT HAD NEITHER CONCEALED THE PARTICULARS OF INCOME NOR FUR NISHED INACCURATE PARTICULARS AND THEREFORE THE ORDER OF T HE CIT(A)-2, IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER AS RIGHTLY JUSTIFIED AND CONFIRMATION OF THE PENALTY IS TOTALL Y CONTRARY TO THE FACTS AND EVIDENCE ON RECORD AND HENCE, UNSUSTAINAB LE. 3. THE LEARNED CIT(A) FAILED TO NOTE THAT THE QUANT UM OF ADDITION OF RS. 25 LAKHS WHICH FORMED THE SUBSTRATU M FOR THE LEVY OF PENALTY U/S.271(1)(C) AT RS.8,60,000 WAS ON AN ESTIMATE 3 ITA NO. 875/H/16 NARASIMHA REDDY KOTTA (HUF) OF INCOME AND THEREFORE THE CIT(A)-2, HYDERABAD OUG HT TO HAVE CANCELLED THE PENALTY. 4. THE LEARNED CIT(A) HYDERABAD HAVING FOUND AS A M ATTER OF FACT THAT THE ADDITIONS OF RS.25 LAKHS WAS ADMITTED ON ESTIMATE BASIS AS NOTED BY THE ASSESSING OFFICER AT THE LAST PARAGRAPH OF THE ASSESSMENT ORDER ERRED IN CONFIRMING THE LEVYIN G OF PENALTY. 5. THE PENALTY LEVIED AT RS.8,60,000 MUST BE CANCEL LED. 6. ANY OTHER GROUND OR GROUNDS THAT MAY ARISE AT TH E TIME OF HEARING. 5.1 ASSESSEE ALSO FILED ADDITIONAL GROUNDS OF APPEA L, WHICH ARE AS UNDER: 1) THE NOTICE ISSUED U/S. 274 READ WITH 271(1)(C) O F THE INCOME TAX ACT 1961 DATED: 31/10/2011 NOT HAVING SPECIFIED THE DEFAULT UNDER ANY SPECIFIC SECTION WHETHER IT IS FOR:- I. FAILURE TO FURNISH RETURN OF INCOME; II. DEFAULT U/S 142(1)/148; III. NON-COMPLIANCE OF 143(2); IV. CONCEALMENT OF INCOME; V. FURNISHING INACCURATE PARTICULARS; AND THEREFORE THE ENTIRE NOTICE ISSUED IS INVALID, WITHOUT JURISDICTION, BAD IN LAW AND THEREFORE THE PENALTY LEVIED U/S 271(1)(C) AT RS.8,60,000/- IS UNSUSTAINABLE IN LAW AND MUST BE CANCELLED. 6. LD. AR BESIDES PLACING RELIANCE ON THE GROUNDS R AISED BEFORE US, ALSO RELIED ON THE ORDER OF HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF PR. CIT VS. SMT. BAISETTY REVATHI, ITTA NO. 684 OF 2016, JUDGMENT DATED 13/07/2017 TO SUBMIT THAT WHEN THE P ROCEEDINGS ARE IN PENAL RESULTING IN IMPOSITION OF PENALTY OF TAX LIABILITY, THE CHARGE MUST BE UNEQUIVOCAL AND UNAMBIGUOUS. THE CHARGE MUS T BE CLEAR AND THE SAME WAS NOT COMMUNICATED TO THE ASSESSEE. HE B ROUGHT TO OUR NOTICE A COPY OF THE NOTICE ISSUED U/S 274, WHICH I S PLACED AT PAGE 3 OF THE PAPER BOOK, AS PER WHICH, IT IS NOT CLEAR FO R WHAT PURPOSE THE ABOVE NOTICE WAS ISSUED TO THE ASSESSEE. RELYING ON THE SAID 4 ITA NO. 875/H/16 NARASIMHA REDDY KOTTA (HUF) JUDGMENT, HE SUBMITTED THAT THE NOTICE IS INVALID L EADING TO LEVY OF PENALTY IS VOID AB-INITIO. 7. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. LD. AR BROUGHT TO OUR NOTICE A COPY OF T HE NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT, DAT ED 31/10/2011 TO SUBMIT THAT THE ABOVE NOTICE WAS ISSUED TO THE ASSE SSEE WITHOUT INDICATING THE PURPOSE FOR WHICH SUCH NOTICE WAS IS SUED. HE CONTENDED THAT IT IS THE DUTY OF THE AO, WHO INITIA TES PENALTY PROCEEDINGS, TO CLEARLY INDICATE THE CHARGE/PURPOSE OF INITIATING THE PROCEEDINGS WHETHER UNDER CONCEALMENT OF PARTICULAR S OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THEREOF. IN TH E GIVEN CASE, IT IS CLEAR THAT THE AO HAS NOT SPECIFIED THE CHARGE UNDE R WHICH CHARGE PENALTY PROCEEDINGS WERE INITIATED. IN THIS CONNECT ION, THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BAISETTY R EVATHI (SUPRA) HAS HELD AS UNDER: ON PRINCIPLE, WHEN PENALTY PROCEEDINGS ARE SOUGHT TO BE INITIATED BY THE REVENUE U/S 271(1)(C) OF THE ACT O F 1961, THE SPECIFIC GROUND WHICH FORMS THE FOUNDATION THEREFOR HAS TO BE SPELT OUT IN CLEAR TERMS. OTHERWISE, AN ASSESSEE WO ULD NOT HAVE PROPER OPPORTUNITY TO PUT FORTH HIS DEFENCE. WHEN T HE PROCEEDINGS ARE PENAL IN NATURE, RESULTING IN IMPOS ITION OF PENALTY RANGING FROM 100% TO 300% OF THE TAX LIABIL ITY, THE CHARGE MUST BE UNEQUIVOCAL AND UNAMBIGUOUS. WHEN TH E CHARGE IS EITHER CONCEALMENT OF PARTICULARS OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS THEREOF, THE R EVENUE MUST SPECIFY AS TO WHICH ONE OF THE TWO IS SOUGHT TO BE PRESSED INTO SERVICE AND, CANNOT BE PERMITTED TO CLUB BOTH BY IN TERJECTING AN 'OR' BETWEEN THE TWO, AS IN THE PRESENT CASE. THIS AMBIGUITY IN THE SHOW-CAUSE NOTICE IS FURTHER COMPOUNDED PRESENT LY BY THE CONFUSED FINDING OF THE ASSESSING OFFICER THAT HE W AS SATISFIED THAT THE ASSESSEE WAS GUILTY OF BOTH. WE ARE THEREFORE OF THE OPINION THAT THE ORDER UNDE R APPEAL DOES NOT BROOK INTERFERENCE ON ANY GROUND. WE FIND NO QUESTION OF LAW, MUCH LESS A SUBSTANTIAL ONE, ARISING FOR CO NSIDERATION WARRANTING ADMISSION OF THIS APPEAL. 5 ITA NO. 875/H/16 NARASIMHA REDDY KOTTA (HUF) 8.1 RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY T HE HONBLE COURT IN THE SAID CASE, WE ALLOW THE APPEAL OF THE ASSESS EE BY CANCELLING THE PENALTY LEVIED ON THE ASSESSEE U/S 271(1)(C) OF THE ACT. 8.2 MOREOVER, THE ISSUE IS ALSO SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SS AS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHEREIN THE APEX COURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN W HICH, THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE, WHO CAME IN APPEAL AGAINST T HE ORDER OF THE TRIBUNAL. THE TRIBUNAL RELYING ON A DECISION OF KA RNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACT ORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE ASSESSEE HOLD ING THAT NOTICE ISSUED BY ASSESSING OFFICER U/S 274 READ WITH SECTI ON 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. WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2017. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN ) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED: 22 ND SEPTEMBER, 2017. KV 6 ITA NO. 875/H/16 NARASIMHA REDDY KOTTA (HUF) COPY TO:- 1) NARASIMHA REDDY KOTTA (HUF), C/O SRINIVASULU RED DY, CA, PLOT NO. 404, SANDHYA ENCLAVE, DWARAKAPURI COLON Y, PUNJAGUTTA, HYDERABAD. 2) ITO, WARD 8(2), SIGNATURE TOWERS, OPP. BOTANIC AL GARDENS, SERILINGAMPALLY MANDAL, RR DIST., HYDERABAD. 3) CIT(A) - 2, HYDERABAD 4) PR. CIT - 2, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE