KAPIL SHARMA , NEW DELHI V. ITO WARD-3(4), MATHURA

ITA 97/AGR/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3061 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 25-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SITA SRIVASTAVA
• Assessee Lawyers: R M MEHTA
• Keywords: Principle of natural justice; Difference of opinion; Set aside
• Section: 271(1)(c); 6

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI LALIET KUMAR, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER ITA NO.97/AGR/2019 ASSESSMENT YEARS 2008-09 SHRI KAPIL SHARMA, EXECUTOR OF THE ESTATE OF LATE SHRI SWAMI RAM SWAROOP SHARMA C/O. R.M. MEHTA, S-125, PANSHEEL PARK, IST FLOOR NEW DELHI PAN : ACBPY3196J (APPELLANT) V.S. I.T.O. WARD 3(4) MATHURA (U.P.) (RESPONDENT) APPELLANT BY SH. R.M. MEHTA, C.A. RESPONDENT BY SMT. SITA SRIVASTAVA, SR. DR ORDER PER LALIET KUMAR, J.M. THE PRESENT APPEAL WAS FILED BY THE ASSESSEE FEELING AGGRIEVED BY THE ORDER PASSED BY THE FOR THE ASSESSMENT YEAR 2008-09, CONFIRMING THE PENALTY IMPOSED BY THE ASSESSING OFFICER ON THE FOLLOWING GROUNDS:- DATE OF HEARING 04.06.2021 DATE OF PRONOUNCEMENT 07.06.2021 ITA 97/AGR/2019 2 1) THAT THE LEARNED CIT(A) ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE PENALTY U / S 271 (1) ( C) OF THE INCOME TAX ACT 1961 ('THE ACT') ON THE INTEREST FROM FDR WITH THE BANK AMOUNTING TO RS.60,218/- AND THE INCOME FROM RASLEELA IN A SUM OF RS.1,75,204/-. 2) WITHOUT PREJUDICE TO GR (1) THE ORDER PASSED BY THE AO IS WITHOUT JURISDICTION AND HENCE VOID AB INITIO BAD IN LAW, SINCE THE REQUISITE SATISFACTION HAS NOT BEEN RECORDED. 3) THAT THE ORDER IS FURTHER WITHOUT JURISDICTION AND BAD IN LAW SINCE THE PENALTY NOTICE DOES NOT INDICATE THE SPECIFIC DEFAULT (BOTH PORTIONS ARE TICKED) AND THE ORDER OF PENALTY IS ALSO SILENT AS TO UNDER WHICH DEFAULT I.E. WHETHER FOR CONCEALING THE PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME IS THE ASSESSEE BEING PENALIZED. 4) THAT THE LEARNED AO ERRED BOTH ON FACTS AND IN LAW IN IMPOSING A PENALTY OF RS.2,66,220 / - ON THE ASSESSEE U/S 271( 1 )(C) OF THE INCOME TAX ACT 1961 (THE 'ACT ). 5) THAT THE LEARNED AO FAILED TO APPRECIATE THAT THE NONCOMPLIANCE WITH THE SHOW CAUSE NOTICE DID NOT MEAN AN AUTOMATIC INVOCATION OF THE EXPLANATION TO SECTION 271(1)(C) OF THE ACT AND THE QUESTION OF PENALTY WAS REQUIRED TO BE DECIDED WITH REFERENCE TO THE MATERIAL ON RECORD AND THE EXPLANATIONS TENDERED DURING THE COURSE OF THE QUANTUM PROCEEDINGS AND DULY ADVERTED TO IN THE ORDER PASSED BY THE LEARNED CIT(A ). 6) THAT TH E LEARNED AO HAS FAILED TO APPRECIATE THAT THE AD D ITIONS SUSTAINED BY THE CIT(A) IN THE QUANTUM P ROCEE D INGS ARISE OUT OF A DIFFERENCE OF OPINION BETWEEN THE A S SESSEE AND THE DEPARTMENT ON THE QUESTION OF TAXABILITY OF THE INTEREST INCOME FROM THE FDR WITH THE CANARA BANK AND THE TAXABIL I TY OF THE RECEIPTS FROM RASLEELA ON ESTIMATED BA S IS. THE LEARNED CIT (A) HAS ITA 97/AGR/2019 3 INFACT RECORDED A FINDING TO THE EFFECT THAT THE INCOME FROM RASLEELA CANNOT BE CO N SID E RED AS BOGUS INCOM E. BRIEF FACTS 1) THE APPELLANT FILED RETURN ON 30.0 6 .2008 SH O WING AN INCOME OF RS.3,22,770 / - UNDER THE HEADS, SALARY, HOUSE PROPER TY , BUSINESS & PROFESSION AND OTHER SOURCE S . A REVISED COMPUTATION OF INCOME WAS FILED B Y THE COUNSEL OF THE ASSESSEE B Y MEANS OF A LETTER DATED 2 9 .11.2010 WHERE B Y THE TOTAL INCOME REMAINED THE SAME I. E . RS.3,2 2 ,770 / - BU T WITH A FE W VARIATIONS IN THE INCOMES UNDER SOME HEADS THE MAIN BEING THE 'INCOME FROM RASLEELA' SHOWN AT A NET OF RS.42 , 708 / - (RECEIPTS RS.15,0 9 ,020/- LESS EXP. RS.1 4 ,6 6 ,312/-). 2) THE AO COMPLETED THE ASSESSMENT ON 03.12.2010 AT AN INCOME OF RS.19,99,500/- B Y MAKING THE FOLL O WING ADDITIONS: 1. INTEREST FROM FDR RS.6 0 ,218/ 2. INCOME FROM RASLEELA- RS.16,0 0 ,408 / 3. INCOME FROM GENERATO R - RS.16,110 / 3) BEING AGGRIEVE D , THE ASSESSEE FILED AN APPEAL TO THE CIT(A) WHO B Y MEANS OF AN ORDER DATED 1 8 . 0 1.2013 SUSTAINED THE ADDITION OF RS.6 0 ,218 /- WHILE ALLOWING PARTIAL RELIEF IN RESPECT OF INCOME FROM RASLEELA & GENERATOR B Y REDUCING THE ADDITIONS TO R S . 8 ,00,000/- AND R S . 4 ,454/- RESPECTIVE L Y. 4) IN RESPECT OF THE ADDITIONS SUSTAINED B Y THE CIT(A), THE AO B Y MEANS OF AN ORD E R DATED 21.03.2014 L E VIED A PENAL T Y OF R S . 2 ,6 6 ,220/- UNDER ITA 97/AGR/2019 4 SECTION 27L(L)(C) OF THE L T . A CT , 196 1 WHICH IS N O W CHALLENGED IN APPE AL. 5) THE LD.AR FOR THE ASSESSEE HAD SUBMITTED THAT THE ORDER PASSED BY THE COMMISSIONER APPEAL IS REQUIRED TO BE SET ASIDE AS THE ASSESSING OFFICER HAD NOT COMPLIED THE PROVISION OF LAW IN SO MUCH SO HERES NOT SPECIFICALLY MENTION WHICH PROVISION OF 271 ( 1) (C) FOR WHICH THE ASSESSING OFFICER WISHES TO IMPOSE THE PENALTY. HE HAD FURTHER PERMITTED THAT THE ORDER PASSED BY THE LOWER AUTHORITIES HAVE BEEN MODIFIED IN THE QUANTUM PROCEEDINGS BY THE TRIBUNAL AND AS SUCH THE PENALTY ORDER IS ALSO REQUIRED TO BE SET ASIDE. 6) ON THE OTHER HAND THE LD. DR FOR THE REVENUE HAD AT RELIED UPON THE ORDER PASSED BY THE LOWER AUTHORITIES. IT WAS HER CONTENTION THAT THOUGH THE ORDER OF THE ASSESSING OFFICER/COMMISSIONER APPEAL WAS MODIFIED BY THE TRIBUNAL, HOWEVER ONLY PART OF THE CONDITIONS WERE DELETED AND THE REMAINING AMOUNT HAD BEEN PERFORMED BY THE TRIBUNAL AS IS CLEAR FROM THE ORDER PASSED BY IT. IT WAS SUBMITTED BY THE DR THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER, WHICH WAS SOUGHT TO BE CANVASED AS BAD IN LAW, WAS NOT A STATUTORY NOTICE AND THEREFORE MERE NON-SCORING OF ONE LIMB, WILL NOT VITIATE THE NOTICE. 7) WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD, INCLUDING THE JUDGMENTS CITED AT BAR DURING THE COURSE OF HEARING BY BOTH THE PARTIES 8) IT IS A MATTER OF FACT THAT THE ASSESSING OFFICER HAD ISSUED THE NOTICE, WITHOUT ITA 97/AGR/2019 5 SPECIFICALLY MENTIONING THE PROVISION IN WHICH THE PENALTY WAS SOUGHT TO BE IMPOSED BY THE ASSESSING OFFICER. THOUGH RECENTLY WE HAVE PASSED THE DECISION IN THE MATTER OF FAIRYLAND V/S DCIT , WHEREIN WE HAD HELD THAT IT IS THE DUTY OF THE ASSESSEE TO DEMONSTRATE WHAT PREJUDICE HAS BEEN CAUSED BY NON-SPECIFIC SHOW CAUSE NOTICE AND HAD CONFIRMED THE PENALTY . HOWEVER RECENTLY THE HONBLE FULL BENCH OF BOMBAY HIGH COURT IN THE MATTER OF MOHD. FARHAN A. SHAIKH [2021] 125 TAXMANN.COM 253 (BOMBAY) VIDE ITS DECISION DATED MARCH 11, 2021 , AFTER PASSING OF OUR ORDER IN FAIRYLAND HAD EXAMINED THE ALMOST ALL JUDGEMENTS ON THE ISSUE OF NON-SPECIFIC NOTICE AND ALSO CONCEPT OF PREJUDICE AND THEREAFTER HELD AS UNDER:- QUESTION NO. 3: WHAT IS THE EFFECT OF THE SUPREME COURT'S DECISION IN DILIP N. SHROFF ON THE ISSUE OF NON-APPLICATION OF MIND WHEN THE IRRELEVANT PORTIONS OF THE PRINTED NOTICES ARE NOT STRUCK OFF ? 187 IN DILIP N. SHROFF, FOR THE SUPREME COURT, IT IS OF 'SOME SIGNIFICANCE THAT IN THE STANDARD PRO-FORMA USED BY THE ASSESSING OFFICER IN ISSUING A NOTICE DESPITE THE FACT THAT THE SAME POSTULATES THAT INAPPROPRIATE WORDS AND PARAGRAPHS WERE TO BE DELETED, BUT THE SAME HAD NOT BEEN DONE'. THEN, DILIP N. SHROFF, ON FACTS, HAS FELT THAT THE ASSESSING OFFICER HIMSELF WAS NOT SURE WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS. 188. WE MAY, IN THIS CONTEXT, RESPECTFULLY OBSERVE THAT A CONTRAVENTION OF A MANDATORY CONDITION OR REQUIREMENT FOR A COMMUNICATION TO BE VALID COMMUNICATION IS FATAL, WITH NO FURTHER PROOF. THAT SAID, EVEN IF THE NOTICE CONTAINS NO CAVEAT THAT THE INAPPLICABLE PORTION BE DELETED, IT IS IN THE INTEREST OF FAIRNESS AND JUSTICE THAT THE NOTICE MUST BE PRECISE. IT SHOULD GIVE NO ROOM FOR AMBIGUITY. THEREFORE, DILIP N. SHROFF DISAPPROVES OF THE ROUTINE, RITUALISTIC PRACTICE OF ISSUING OMNIBUS SHOW-CAUSE NOTICES. THAT PRACTICE CERTAINLY BETRAYS NON- APPLICATION OF MIND. AND, THEREFORE, THE INFRACTION OF A MANDATORY PROCEDURE LEADING TO PENAL CONSEQUENCES ASSUMES OR IMPLIES PREJUDICE. ITA 97/AGR/2019 6 189. IN SUDHIR KUMAR SINGH, THE SUPREME COURT HAS ENCAPSULATED THE PRINCIPLES OF PREJUDICE. ONE OF THE PRINCIPLES IS THAT 'WHERE PROCEDURAL AND/OR SUBSTANTIVE PROVISIONS OF LAW EMBODY THE PRINCIPLES OF NATURAL JUSTICE, THEIR INFRACTION PER SE DOES NOT LEAD TO INVALIDITY OF THE ORDERS PASSED. HERE AGAIN, PREJUDICE MUST BE CAUSED TO THE LITIGANT, 'EXCEPT IN THE CASE OF A MANDATORY PROVISION OF LAW WHICH IS CONCEIVED NOT ONLY IN INDIVIDUAL INTEREST BUT ALSO IN THE PUBLIC INTEREST'. 190. HERE, SECTION 271(1)(C) IS ONE SUCH PROVISION. WITH CALAMITOUS, ALBEIT COMMERCIAL, CONSEQUENCES, THE PROVISION IS MANDATORY AND BROOKS NO TRIFLING WITH OR DILUTION. FOR A FURTHER PRECEDENTIAL PROP, WE MAY REFER TO RAJESH KUMAR V. CIT [(2007) 2 SCC 181], IN WHICH THE APEX COURT HAS QUOTED WITH APPROVAL ITS EARLIER JUDGMENT IN STATE OF ORISSA V. DR. BINAPANI DEI [AIR 1967 SC 1269]. ACCORDING TO IT, WHEN BY REASON OF ACTION ON THE PART OF A STATUTORY AUTHORITY, CIVIL OR EVIL CONSEQUENCES ENSUE, PRINCIPLES OF NATURAL JUSTICE MUST BE FOLLOWED. IN SUCH AN EVENT, ALTHOUGH NO EXPRESS PROVISION IS LAID DOWN ON THIS BEHALF, COMPLIANCE WITH PRINCIPLES OF NATURAL JUSTICE WOULD BE IMPLICIT. IF A STATUE CONTRAVENES THE PRINCIPLES OF NATURAL JUSTICE, IT MAY ALSO BE HELD ULTRA VIRES ARTICLE 14 OF THE CONSTITUTION. 191. AS A RESULT, WE HOLD THAT DILIP N. SHROFF TREATS OMNIBUS SHOW-CAUSE NOTICES AS BETRAYING NON-APPLICATION OF MIND AND DISAPPROVES OF THE PRACTICE, TO BE PARTICULAR, OF ISSUING NOTICES IN PRINTED FORM WITHOUT DELETING OR STRIKING OFF THE INAPPLICABLE PARTS OF THAT GENERIC NOTICE. 9) IT IS ABUNDANTLY CLEAR FROM THE READING OF THE DECISION OF THE FULL BENCH IN THE MATTER OF FARHAN(SUPRA) , THAT IN CASE OF NON-SPECIFIC NOTICES ISSUED BY THE ASSESSING OFFICER, IT WILL BE VIOLATION OF THE MANDATORY REQUIREMENT OF LAW AND THE DOCTRINE OF PREJUDICE CANNOT BE INVOKED,, HENCE THE PENALTY ORDER WHICH PROVIDED ON NON-SPECIFIC NOTICE IS REQUIRED TO BE STRUCK DOWN. 10) RESPECTFULLY FOLLOWING THE DECISION OF FULL BENCH OF BOMBAY HIGH COURT, IN THE CASE OF FARHAN (SUPRA) , WE DELETE THE PENALTY IMPOSED BY THE ASSESSING OFFICER ITA 97/AGR/2019 7 AS THE PENALTY NOTICE WAS NON SPECIFIC. THUS THE GROUND NO. 3, RAISED BY THE ASSESSEE IS ALLOWED. 11) AS WE HAVE STRUCK DOWN THE PENALTY NOTICE AND THE PROCEEDINGS BASED ON THAT NOTICE, THEREFORE WE DO NOT DEEM IT APPROPRIATE TO DECIDE OTHER GROUNDS RAISED BY THE ASSESSEE , IN THE PRESENT APPEAL.. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. SD/- SD/- (DR. MITHA LAL MEENA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07/06/2021 COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA ITA 97/AGR/2019 8 DATE 1. DRAFT DICTATED / (DNS) PS 2. DRAFT PLACED BEFORE AUTHOR PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.