ACIT, Bhubaneswar V. Subash Agarwal, Bhubaneswar

ITSSA 6/CTK/2012

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7538 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 02-04-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 06-01-2012
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: P
• Keywords: Sale consideration of property below Jantri Value; Search and seizure; Opportunity of being heard; Assessment record
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM, AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 6/CTK/2012 (ASSESSMENT YEAR 2003 - 04) ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), BHUBANESWAR. VERSUS SUBASH AG ARWAL, N - 1/ 93, NAYAPALLY, BHUBANESWAR PAN: AATPA 3716 A (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SMT. PARAMITA TRIPATHY, CIT - DR FOR THE RESPONDENT SHRI P.S .PANDA/K.AGARWAL, ARS DATE OF HEARING : 14.03.2012 DATE OF PRONOUNCEMENT : 02.04.2012 ORDER S HRI K.S.S.PRASAD RAO, JM : THIS APPEAL IS FILED BY THE DEPARTMENT HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.3.10.2011 FOR THE ASSESSMENT YEAR 2003 - 04 IN THE CASE OF THE ASSESSEE. 2. THE DEPARTMENT HAS RAISED THE FOLL OWING TWO ISSUES IN THEIR GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE ACT, WHEN THE QUANTUM ADDITION HAS BEEN CO NFIRMED BY HIM. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER ON TECHNICAL GROUND ONLY WITHOUT CONSIDERING THE PROVISIONS OF SECTION 292B AND 292BB OF THE I.T.ACT,1961 . 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED IN THE APPEALS AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BO TH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE DERIVES INCOME FROM PROPRIETARY CONCERN M/S.HINDUSTAN CONSTRUCTION AND ALSO ITA NO.6/CTK/2012 2 INTEREST ON CAPITAL AS A PARTNER IN M/S.ANIL AGARWAL WHICH IS A FAMILY CONCERN DEALING IN EXECUTIO N OF CIVIL WORKS AND TRANSPORT. THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED ON 26.9.2003 AND ON SUBSEQUENT DATES. IN THE COURSE OF SEARCH DOCUMENTS RELATING TO THE ASSESSEE WERE FOUND AND SEIZED. NOTICE U/S.153A OF THE I.T.ACT,1961 WAS SERVED ON TH E ASSESSEE TO FURNISH RETURN OF INCOME. ACCORDINGLY SCRUTINY ASSESSMENT WAS COMPLETED U/S.153A R.W.S. 143(3) ON 27.3.2006. ADDITION OF 16,01,007 WAS MADE IN THE HANDS OF THE ASSESSEE AS UNDISCLOSED LONG TERM CAPITAL GAINS ON THE SALE OF LAND. SIMULTANEOUS LY PENALTY PROCEEDINGS WAS INITIATED BY ISSUING NOTICE U/S.274 AND SERVED ON THE ASSESSEE. AS THE ASSESSEE IS NOT ABLE TO GIVE REPLY TO THE SAID NOTICE, THE LEARNED ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT THE ORDER IS BEING PASSED ON THE BASIS OF THE FINDINGS DURING THE ASSESSMENT/APPELLATE PROCEEDINGS AND INFORMATION AVAILABLE ON RECORDSD. THEREAFTER, THE ASSESSING OFFICER NOTICED THAT THERE IS A PAPER FOUND AT PAGES 60 - 69 FOR VALUATION BY ONE SRI PUNA CH.RATH AND K.RAMNATH RAO WHO HAD VALUED THE LAND IN QUESTION FOR 28.66 LAKHS CREATING A MORTAGAGE ON THIS LAND ON 23.8.1999 IN FAVOUR OF CBI, CHANDRASEKHARPUR, WHEREIN IT IS MENTIONED THAT DUE TO HIGHER REGISTRATION FEE, THE DEED WAS DONE AT LESSER COST. IT IS ON THIS INFORMATION, THE ASSESSING O FFICER APPLIED SECTION 50C OF THE I.T.ACT AND LONG TERM CAPITAL GAINS WAS CALCULATED AT 16,01,007 AND THIS AMOUNT WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. IN APPELLATE PROCEEDINGS AGAINST THAT ASSESSMENT ORDER, THE LEARNED CIT(A) HAS REMANDED THE MATTER TO THE ASSESSING OFFICER FOR NECESSARY EXAMINATION. THE HIGHLIGHTS OF THE REMAND REPORT OF THE ASSESSING OFFICER WAS CONSIDERED BY THE LEARNED CIT(A) AND CONFIRMED THE ADDITION OF 16,01,007 MADE BY THE ASSESSING OF FICER AS UNDISCLOSED LONG TERM CAPITAL GAINS BY PASSING THE ORDER DT.12.4.2007. THEREFORE, THE ITA NO.6/CTK/2012 3 ASSESSING OFFICER IN THE PENALTY PROCEEDINGS HAS COME TO THE CONCLUSION THAT IT IS A FIT CASE TO IMPOSE PENALTY U/S.271(1)(C) OF THE I.T.ACT ESPECIALLY IN THE LI GHT OF EXPLANATION 1 OF THAT SECTION. THUS OBSERVING THE ASSESSING OFFICER HAS IMPOSED THE PENALTY OF 5,04,317 AGAINST THE ASSESSEE BY PASSING THE ORDER DT.31.3.2009. 5. AGGRIEVED BY THIS ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE LEARNED CIT(A) AFTER HEARING THE ASSESSEE AND CONSIDERING THE MATERIAL MADE AVAILABLE IN THE PENALTY PROCEEDIN GS AS WELL AS THE ASSESSMENT RECORD AND TAKING INTO CONSIDERATION THE VIEWS OF THE ASSESSING OFFICER AND CONSIDERING THE PRIMARY OBJECTION RAISED BY THE ASSESSEE TO THE EFFECT THAT THE IMPUGNED PENALTY WAS LEVIED WITHOUT GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THE LEARNED CIT(A) ASKED FOR A REPORT FROM THE ASSESSING OFFICER WITH REGARD TO PROOF/EVIDENCE OF THE SERVICE OF THE NOTICE DT.13.3.2009 AND THE ASSESSING OFFICER SUBMITTED THE REMAND REPORT WHICH IS SILENT REGARDING SERVICE THEREOF ON TH E ASSESSEE EVEN THOUGH SPECIFICALLY ASKED BY THE LEARNED CIT(A). ON FURTHER VERIFICATION FROM THE ASSESSING OFFICER, IT IS FOUND BY THE LEARNED CIT(A) THAT THE ASSESSING OFFICER HAS CLEARLY INFORMED ON 3.10.2011 THAT THERE IS NO EVIDENCE OF SERVICE OF NOTI CE AVAILABLE EITHER IN THE FILE OR IN HIS OFFICE AND THE ASSESSING OFFICER HAS FURTHER ADDED THAT THE PENALTY ORDER WAS SERVED ON 17.3.2009. FROM THIS, THE LEARNED CIT(A) INFERRED THAT THE NOTICE U/S.274 R.W.S. 271(1)(C) DT.28.3.2009 WAS NEVER SERVED ON TH E ASSESSEE. THEREAFTER THE LEARNED CIT(A) HAS CONSIDERED N DETAIL THE PROVISIONS OF SECTION 274 AS WELL AS SECTION 271(1)(C) AND CAME TO THE CONCLUSION THAT THERE IS NO SERVICE OF NOTICE ISSUED ON 13.3.2009 TO THE ASSESSEE. ACCORDING TO THE PROVISIONS OF S ECTION 274(1) OF THE I.T.ACT, NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHALL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD, OR HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. SINCE THERE IS NO ITA NO.6/CTK/2012 4 EVIDENCE OF SERVICE OF PENALTY NOTICE TO THE ASSESSE E, THE LEARNED CIT(A) HAS FOUND THAT THERE IS NO COMPLIANCE TO THIS PROVISION OF GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREAFTER CONSIDERING THE DECISION OF HONBLE ALLAHABAD HIGH COURT RENDERED I N THE CASE OF RAJEEV KUMAR GUPTA V. CIT (123 ITR 907) , WHEREIN IT WAS HELD THAT REASONABLE OPPORTUNITY POSTULATES THAT THE FACTS, ON THE BASIS OF WHICH THE PENALTY IS PROPOSED TO BE IMPOSED, SHOULD BE INTIMATED TO THE ASSESSEE, SO THAT THE ASSESSEE MAY HAVE A CHANCE OF SHOWING CAUSE AGAINST THE PROPOSED PENALTY. A NOTICE WHICH DOES NOT INTIMATE THE ASSESSEE OF THE PARTICULAR FACTS ON THE BASIS OF WHICH THE ORDER IS PROPOSED TO BE PASSED WOULD NOT COMPLY WITH THE REQUIREMENT OF SECTION 274 OF THE I.T.ACT,1961. FOLLOWING THE SAID DECISION OF ALLAHABAD HIGH COURT, THE LEARNED CIT(A) HAS COME TO THE CONCLUSION THAT THE PENALTY ORDER N QUESTION WAS PASSED BY THE ASSESSING OFFICER IN CONTRAVENTION OF THE PROVISIONS CONTAINED IN SECTION 274(1) WHICH REQUIRES GIVING A REASONABLE OPPORTUNITY OF HEAR ING TO THE ASSESSEE. HENCE, HE FOUND THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER IS VOID AB INITIO AND CONSEQUENTLY ALLOWED THE APPEAL BY DELETING THE PENALTY IMPOSED AGAINST THE ASSESSEE. 6. AGGRIEVED BY THIS ORDER OF THE LEARNED CIT(A) THE DEPARTM ENT HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL, BUT DURING THE COURSE OF HEARING THE DEPARTMENT IS NOT ABLE TO SHOW ANY IOTA OF EVIDENCE THAT SERVICE OF NOTICE DT.13.3.2009 WAS MADE ON THE ASSESSEE AND THE ASSESSEE WAS GIVEN REASONABLE OPPORTUNITY OF BEING HEARD BY THE ASSESSING OFFICER WHILE ADJUDICATING THE PENALTY PROCEEDINGS. IN THIS VIEW OF THE MATER, WE ARE OF THE CONSIDERED VIEW THAT THE CONCLUSION REACHED BY THE LEARNED CIT(A) IS VERY MUCH JUSTIFIED MORE SO IN THE LIGHT OF THE DECISION OF HON BLE ALLAHABAD HIGH COURT IN THE CASE OF RAJEEV KUMAR GUPTA V. CIT (123 ITR 907) REGARDING ITA NO.6/CTK/2012 5 VIOLATION OF THE PROVISIONS OF SECTION 274(1) OF THE I.T.ACT, 1961 WHICH MANDATORILY REQUIRES THAT THE ASSESSEE MAY BE GIV EN A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE PASSING THE PENALTY ORDER. SINCE IN THE PRESENT CASE, THERE IS NO EVIDENCE OF SERVICE OF NOTICE OR SHOW - CAUSE NOTICE REQUIRING THE ASSESSEE TO ANSWER THE PENALTY PROPOSED AGAINST HIM, THE ORDER PASSED BY TH E ASSESSING OFFICER IMPOSING PENALTY U/S.271(1)(C) OF THE I.T.ACT, HAS RIGHTLY BEEN HELD BY THE LEARNED CIT(A) AS VOID AB INITIO AND HENCE, WE FIND THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) REQUIRING INTERFERENCE. HENCE, THE SAME IS UPH ELD AND THE APPEAL OF THE DEPARTMENT IS DISMISSED FI NDING THE ISSUE RAISED BY THEM A S DEVOID OF MERITS. 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 02.04.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), BHUBANESWAR. 2. THE RESPONDENT: SUBASH AGARWAL, N - 1/93, N AYAPALLY, BHUBANESWAR 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.