K Ramaswamy , Mysore V. The Assistant Commissioner of Income Tax Circle-1(1), Mysore

ITA 955/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7690 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR
• Keywords: Principle of natural justice; Reasonable cause
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 955 / BANG/201 8 ASSESSMENT YEAR : 20 07 - 08 SHRI K. RAMASWAMY, #567, ASHWINI, 1 ST CROSS, MARUTHI TEMPLE ROAD, KUMVEMPUNAGARA, MYSURU 570 023. PAN: ADGPRS5117A VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1 (1), MYSURU. APPELLANT RESPONDENT APPELLANT BY : SHRI TATA KRISHNA, ADVOCATE RESPONDENT BY : SHRI P. DHIVAHAR, ADDL. CIT (DR) DATE OF HEARING : 10 .0 7 .2018 DATE OF PRONOUNCEMENT : 13 .0 7 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT(A), MYSORE DATED 28.09.2017 FOR ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED BY THE ASSESSEEARE AS UNDER. 1. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) DATED 28.09.2017 BEING SERVED TO THE APPELLANT ON 31.01.2 018 I.E. AFTER 122 DAYS OF PASSING ORDER IS ILLEGAL BEING PRE-DATED, T IME BARRED AND CONTRARY TO THE BOARD INSTRUCTION NO. 20 OF 2013 DA TED 23.01.2013 R.W. LETTER DATED 08.03.2018. 3. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIF IED IN DISMISSING THE APPEAL FOR STATISTICAL PURPOSE AS SUCH PROCEDUR E IS NOT LEGALLY RECOGNISED. 4. WITHOUT PREJUDICE TO THE ABOVE, THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) OF DISMISSING THE APPEAL FOR STATISTICAL ITA NO. 955/BANG/2018 PAGE 2 OF 6 PURPOSE IS BY IMPLICATION ALLOWING THE APPEAL ON ME RITS. 5. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIF IED IN NOT ADJUDICATING THE FOLLOWING THE GROUNDS RAISED BY TH E APPELLANT: (A) NOTICE BEING VAGUE FOR NON-SPECIFYING THE EXACT OFFENCE COMMITTED UNDER SECTION 271(1)(C); (B) THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, WHEN THE ASSESSING OFFICER A DOPTS THE RETURNED INCOME AS THE ASSESSED INCOME; (C) THE APPELLANT HAD FILED RETURN OF INCOME DECLAR ING INCOME OF RS. 17,69,450/- EVEN BEFORE ISSUE OF NOTICE UNDER SECTI ON 148, THEREFORE, THE ALLEGATION OF CONCEALMENT DOES NOT ARISE; (D) PENALTY CANNOT BE LEVIED WHEN THE CONDUCT OF AP PELLANT IS NOT FOUND GUILTY OR DISHONEST. 6. THE PENALTY ORDER BEING PASSED WITHOUT OBTAINING THE PRIOR APPROVAL OF THE LEARNED JOINT COMMISSIONER IS NOT V ALID. 7. THE IMPUGNED PENALTY ORDER IS BAD BEING BASED ON NOTICE ISSUED UNDER SECTION 274 R.W. 271(1)(C) WHICH IS VAGUE WIT HOUT SPECIFYING THE NATURE OF OFFENCE COMMITTED BY THE APPELLANT UNDER SECTION 271(1)(C) IN AS MUCH AS, IT DOES NOT SPECIFY THAT WHETHER THE APPELLANT HAS 'CONCEALED PARTICULARS OF INCOME' OR HAS 'FURNISHED INACCURATE PARTICULARS OF INCOME'. 8. AS REGARDS THE LEARNED ASSESSING OFFICER HAVING NOT RECORDED SATISFACTION BEFORE INITIATING PENALTY PROCEEDINGS: 8.1 THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN LEVYING PENALTY WITHOUT RECORDING HIS SATISFACTION IN THE RE-ASSESS MENT ORDER BEFORE INITIATING PENALTY PROCEEDINGS. 8.2 THE LEARNED ASSESSING OFFICER HAS FAILED TO APP RECIATE THAT THE PROVISIONS OF SECTION 271(1B) DO NOT APPLY AS THERE IS NO ADDITION/DISALLOWANCE TO THE TOTAL INCOME DECLARED BY THE APPELLANT. 8.3 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED ASS ESSING OFFICER HAS FAILED TO APPRECIATE THAT THE PROVISIONS OF SECTION 271(1B) DO NOT APPLY FOR THE REASON THAT THE RE-ASSESSMENT ORDER D OES TY NOT CONTAIN ANY DIRECTION FOR INITIATION OF PENAL PROCEEDINGS. 8.4 THE LEARNED ASSESSING OFFICER HAS FAILED TO APP RECIATE THAT THE EXPRESSION 'PENALTY U/ S 271(1)(C) INITIATED FOR CO NCEALMENT OF INCOME OF RS. 19,48,210' STATED IN THE RE-ASSESSMENT ORDER , CANNOT BE REGARDED AS 'DIRECTION FOR INITIATION OF PENALTY PR OCEEDINGS'. 9. THE IMPUGNED PENALTY ORDER IS BAD AS IT FAILS TO SPECIFY THE NATURE ITA NO. 955/BANG/2018 PAGE 3 OF 6 OF OFFENCE COMMITTED BY THE APPELLANT UNDER SECTION 271(1)(C) IN AS MUCH AS, IT DOES NOT SPECIFY THAT WHETHER THE APPEL LANT HAS 'CONCEALED PARTICULARS OF INCOME' OR HAS 'FURNISHED INACCURATE PARTICULARS OF INCOME'. 10. AS REGARDS LEVY OF PENALTY UNDER SECTION 271(1) (C): 10.1 THE LEARNED COMMISSIONER (APPEALS) IS NOT JUST IFIED IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFIC ER IN LEVYING PENALTY, IN THE ABSENCE OF ANY ADDITIONS/DISALLOWAN CE MADE IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147. 10.2 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIAT E THAT WHEN THE RETURN OF INCOME FILED BY THE APPELLANT WAS COMPLET ELY ACCEPTED, THE QUESTION OF 'CONCEALMENT OF PARTICULARS OF INCOME/F URNISHING INACCURATE PARTICULARS OF INCOME' DOES NOT ARISE. 10.3 WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUTH ORITIES HAVE FAILED TO APPRECIATE THAT FAILURE TO FILE THE RETURN OF IN COME DUE TO REASONABLE CAUSE BEYOND THE CONTROL OF THE APPELLAN T DOES NOT AMOUNT TO 'CONCEALMENT OF PARTICULARS OF INCOME' EVEN AS P ER EXPLANATION 3 TO SECTION 271(1). 10.4 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIAT E THAT THE APPELLANT WAS PREVENTED BY REASONABLE CAUSE FROM FILING THE R ETURN OF INCOME WITHIN THE ORIGINAL DUE DATE. 10.5 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIAT E THAT EXPLANATION 3 DOES NOT APPLY AS THE APPELLANT HAD ORIGINALLY FI LED A RETURN OF INCOME ON 28.08.2013 I.E. BEFORE THE ISSUE OF NOTIC E UNDER SECTION 148 ON 23.09.2013. 10.6 WITHOUT PREJUDICE TO THE ABOVE, EVEN IF EXPLAN ATION 3 WERE TO APPLY, THERE IS NO TAX SOUGHT TO BE EVADED AS PER C LAUSE (C) TO EXPLANATION 4. 10.7. WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUT HORITIES HAVE FAILED TO APPRECIATE THAT PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED FOR FAILING TO FILE THE RETURN OF INCOME WITHIN DUE DAT E WHEN A PENALTY UNDER SECTION 271F FOR THE SAME CAUSE WAS ALREADY L EVIED. 10.8. WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUT HORITIES HAVE FAILED TO APPRECIATE THAT UNLESS ANY PARTICULARS OF INCOME ARE CONCEALED/INACCURATELY FURNISHED 'IN THE COURSE OF ANY PROCEEDINGS... BEFORE THE ASSESSING OFFICER', PENALTY CANNOT BE LE VIED UNDER SECTION 271(1)(C). 10.9. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIA TE THAT THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT OUT ANYTHING ON R ECORD TO ESTABLISH THAT DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS BEFORE THE ITA NO. 955/BANG/2018 PAGE 4 OF 6 LEARNED ASSESSING OFFICER, THE APPELLANT CONCEALED ANY PARTICULARS OF INCOME/FURNISHED INACCURATE PARTICULARS OF INCOME. 10.10. WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AU THORITIES HAVE FAILED TO APPRECIATE THAT THE EXPRESSION 'IN THE CO URSE OF ANY PROCEEDINGS...BEFORE THE ASSESSING OFFICER', DOES N OT INCLUDE SURVEY PROCEEDINGS CONDUCTED BY SURVEY TEAM AND NOT BY THE ASSESSING OFFICER.. 10.11. THE LEARNED COMMISSIONER (APPEALS) IS NOT JU STIFIED IN PERVERSELY HOLDING THAT THE APPELLANT ADMITTED TO T HE CONCEALMENT OF INCOME. 10.12. WITHOUT PREJUDICE, THE LOWER AUTHORITIES HAV E ERRED IN WRONGLY DETERMINING THE RANGE OF PENALTIES AND THEREBY INCO RRECTLY DECIDING THE QUANTUM OF PENALTY. 11. AS REGARDS SURVEY UNDER SECTION 133A: 11.1. THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN HO LDING THAT APPELLANT HAS DISCLOSED THE INCOME ONLY AS A CONSEQUENCE OF S URVEY CONDUCTED UNDER SECTION 133A. 11.2. THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN PE RVERSELY HOLDING THAT THE FAILURE TO FILE THE RETURN OF INCOME WITHIN DUE DATE IS WILFUL AS THE SAME WAS FILED AS A CONSEQUENCE OF SURVEY CONDUCTED UNDER SECTION 133A, WHEN THE APPELLANT HAS PAID ADVANCE TAX AND S ELF-ASSESSMENT TAX, WHICH SHOWS THE BONAFIDE INTENTION OF THE APPE LLANT TO COMPLY WITH THE PROVISIONS OF THE ACT. 11.3. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIA TE THAT EVEN BEFORE THE CONDUCT OF SURVEY, THE APPELLANT WAS IN THE PRO CESS OF GETTING THE ACCOUNTS AUDITED UNDER SECTION 44AB, WHICH SHOWS TH AT THE APPELLANT WAS WILLING TO FILE THE RETURN OF INCOME EVEN IF TH E SURVEY HAD NOT TAKEN PLACE UNDER SECTION 133A. 11.4. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIA TE THAT EVEN BEFORE THE CONDUCT OF SURVEY, THE APPELLANT TRIED TO FILE THE RETURN, HOWEVER THE SAME WAS NOT ACCEPTED AT THE COUNTER AS IT WAS FILED BEYOND THE STIPULATED TIME UNDER SECTION 139, THEREFORE, THE A PPELLANT FILED THE RETURN ALONG WITH TAX AUDIT REPORT IN PURSUANCE TO THE NOTICE ISSUED UNDER SECTION 148. FOR THE ABOVE GROUNDS AND FOR SUCH OTHER GROUNDS WH ICH MAY BE ALLOWED BY THE HONOURABLE MEMBERS TO BE URGED AT TH E TIME OF HEARING, IT IS PRAYED THAT THE AFORESAID APPEAL BE ALLOWED. 3. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR O F ASSESSEE THAT IF THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 7 IS DECIDED I N FAVOUR OF THE ASSESSEE THEN THE OTHER GROUNDS RAISED BY THE ASSESSEE WILL BECOME INFRUCTUOUS. HE ITA NO. 955/BANG/2018 PAGE 5 OF 6 SUBMITTED A COPY OF THE NOTICE ISSUED BY THE AO U/S . 274 R.W.S. 271(1)(C) OF IT ACT AND HE POINTED OUT THAT AS PER THIS NOTICE, THE ALLEGATION OF THE AO IS NOT CLEAR AS TO WHETHER THE ALLEGATION IS REGARDING CON CEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE PLACED RELIANCE ON THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED I N THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY AS REPORTED I N (2013) 359 ITR 565 AND SUBMITTED THAT IN THE FACTS OF PRESENT CASE AND AS PER THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, THE PENALTY ORDER PASSED BY T HE AO IS BAD IN LAW AND CANNOT BE SUSTAINED. THE LD. DR OF REVENUE SUPPORT ED THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND FORCE IN THE SUBMISSIONS OF LD. AR OF ASSESSEE BECAUSE WE FIND THAT IN FACT, AS PER THE NOTICE ISSUED BY THE AO U/S. 274 R.W.S. 271(1)(C) OF IT ACT, THE ALL EGATION OF THE AO IS NOT CLEAR AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTIC ULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND UNDE R THESE FACTS, IT WAS HELD BY HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) THAT NOTICE UNDER SECTION 2 74 OF IT ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCO RRECT PARTICULARS OF INCOME BECAUSE THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. IT IS ALSO HELD THAT OTHERWISE, THE PRINCIPLE OF NATURAL JUSTICE IS OFFENDED. IT IS ALSO HELD THAT ON THE BASIS OF SUC H PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. RESPECTFULLY FOLLOWING THIS JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT, WE SET ASIDE THE PENALTY ORDE R AS BAD IN LAW. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DA TE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (N.V. VASUDEVAN) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 13 TH JULY, 2018. /MS/ ITA NO. 955/BANG/2018 PAGE 6 OF 6 COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.