SHRI KRISHAN KUMAR SHARMA , FAZILKA V. INCOME TAX OFFICER, WARD 2(4), ABOHAR

MA 23/ASR/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4635 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER M. A. No. 23/Asr/2019 (Arising out of ITA No. 14/Asr/2018) Assessment Year: 2009-10 Krishan Kumar Sharma, Street No. 3, Basti Hazoor Singh, Fazilka [PAN: AZGPK 3429G] Vs. I.T.O., Ward2(4) Abohar (Appellant) (Respondent) Appellant by : Sh. J. K. Gupta, Adv. Respondent by: Sh. S. M. Surendranath, Sr. DR Date of Hearing: 22.04.2022 Date of Pronouncement: 26.04.2022 ORDER Per Anikesh Banerjee, JM: This miscellaneous application is preferred by assessee for recalling the order of the Income Tax Appellate Tribunal, Amritsar Bench, bearing ITA No. 23/Asr/2019 order pronounced on dated 30/04/2019. The petition was filed on dated 21/06/2019. 2. Fact of the case is that the order was passed without taking cognizance of one of the document which was filed by the assessee in his Paper Book, filed 0n 18/03/2019, in point no -4. The assessee had enclosed the notice U/s 271(1)(c) of MA No. 23/Asr/2019 Krishan Kumar Sharma v. ITO 2 the Income Tax Act,1961. The copy of the index of paper book is reproduced as under: “In the ITAT, Amritsar Bench, Amritsar Krishan Kumar Sharma, Vs. ITO, Ward 2(4) Street No. 3, Basti Hazoor Singh, Abohar Fazilka (Appellant) (Respondent) ITA No. 14/ASR/2018 PAN AZGPK 3429G Asstt. Year 2009-10 Fixed for hearing on 27.03.2019 INDEX OF PAPER BOOK Sr. No. 1 Content of Paper 2 Page No. 3 Filed Before 4 1. Photocopy of Iqrarnama Dated 14.06.2008 entered by Balish Chander with Krishan Kumar Sharma assessee. 1-3 AO 2. Photocopy of affidavit of Sh. Krishan Kumar Sharma assessee 4-5 AO 3. Photocopy of affidavit of Kikar Singh S/o Gurbaksh Singh V. Jand Wala Meer Sagla (Teh. Fazilka) 6 AO 4. Photocopy of notice issued u/s 274 read with section 271 by the AO. 7 AO It is submitted that the documents at Serial No. 1-4 were filed before the AO.” 3. In the order of Tribunal dated 30/04/2019 the honourable bench mentioned the fact but unable to adjudicate the issue due to absence of notice under section MA No. 23/Asr/2019 Krishan Kumar Sharma v. ITO 3 271(1)(c) of the Act, dated 18/02/2016 duly issued by the Ld Assessing Officer. The bench related the issue in following manner. Here para 3.2 is reproduced as under. “3.2. Before the tribunal, the assessee has also raised a ground (Gd. 2) that the penalty is not maintainable as one of the limbs of section 271(1)(c) has not been struck off in the notice u/s. 274 show causing the assessee qua the same. The said notice is not on record for the assessee to have raised this claim; there being no adjudication by the Revenue authorities on this aspect. The penalty as levied is for furnishing inaccurate particulars of income. The said ground is thus not maintainable. There are in fact a number of decisions by the Hon’ble higher courts of law rejecting this plea, as in CIT v. Manu Engineering Works [1980] 122 ITR 306 (Guj); CIT vs. Mithila Motors (P.) Ltd. [1984] 149 ITR 751 (Pat); CIT v. Chandulal [1985] 152 ITR 238 (AP); CIT vs. Smt. Kaushalya & Ors. [1994] 216 ITR 660 (Bom), and recently again by the Hon’ble Bombay High Court in Maharaj Garage & Co. v. CIT [2018] 400 ITR 292 (Bom). The decision in CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565 (Kar), relied upon by the assessee, is, firstly, without reference to the judicial precedents and, further, as explained by the tribunal in many a case, as in Earthmoving Equipment Service Corporation vs. Dy. CIT (in ITA No. 617/Mum/ 2014, dated 02/5/2017), rendered considering multiple factors, and not solely on the basis of a defect in the notice u/s. 274. As explained in Maharaj Garage & Co. (supra), the requirement of section 274 of granting reasonable opportunity of being heard in the matter could not be stretched to the extent of framing a specific charge. As explained earlier in Manu Engineering Works (supra), which is in fact one of the first decisions in the matter, the use of the words ‘and/or’, i.e., between the two charges, being ‘concealment of particulars of income’ and ‘furnishing inaccurate particulars of income’, may be proper while issuing the notice for penalty in-as-much as the said satisfaction is only prima facie or tentative. It is only subsequently, while imposing the penalty, that this charge has to be specific, i.e., after hearing the assessee in the matter, concluding that the penalty is, in the facts of the case, imposable. In fact, the two limbs, which signify omission and commission respectively, may in the facts of the case, or considering explanation furnished, be very thin or even overlap (refer: A.M. Shah v. CIT [1999] 238 ITR 415 (Guj)), so that nothing in fact turns thereon, and it all depends on the facts and circumstances of the case, i.e., if any prejudice stands caused to the assessee. Adverting to the facts of the case, it was observed in Maharaj Garage & Co. (supra), that the assessee was supplied with the findings recorded in the order of reassessment, which was passed on the same date on which the notice u/s. 271(1)(c) r/w s. 274 was issued for initiating the proceedings for imposing the penalty. The asssessee thus had sufficient notice of the action of imposing penalty. There was therefore no MA No. 23/Asr/2019 Krishan Kumar Sharma v. ITO 4 jurisdictional error or unjust exercise of power by the authority. That is, it is these two elements only that are relevant and are therefore to be examined. In the facts of the instant case as well, the facts as well as the assessee’s case, including the evidences furnished, i.e., qua the impugned addition of Rs. 3 lacs on which penalty stands levied, stand discussed in the assessment order dated 17/2/2016. No prejudice has in fact been contended as caused and, in fact, at any stage of the proceedings. A defect in the notice, it is even otherwise well-settled, only amounts to an irregularity, and is not a jurisdictional defect. As explained in Mithila Motors Pvt. Ltd. (supra), with reference to the decision in Kantamani Vankata Narayana & Sons vs. First Addl. ITO [1967] 63 ITR 638 (SC), a mistake in the notice does not invalidate penalty proceedings (at pg. 757). The former decision is, in turn, relied upon in Smt. Kaushalya and Ors. (supra). Each of the decisions cited supra, relied upon, merit a close reading, being based on first legal principles, including the purport of a notice u/s. 274, explained to be not a statutory notice but only an administrative device for extending an opportunity of hearing to the assessee. That is, requiring him to furnish an explanation in respect of facts material to the computation to his total income under the Act for the relevant year, substantiating the same, or, else, penalty u/s. 271(1)(c) would stand to be levied. The said notice, which is rather for penalty under any of the provisions under Chapter XXI of the Act, only aims at providing reasonable opportunity to the assessee to state his case. This is precisely what stands held in Maharaj Garage & Co. (supra), rendered, in fact, without noticing the precedents in the matter, though, as shall be noted, founded on and consistent with the settled legal principles. The whole purport of a notice, i.e., generally speaking, as explained per its’ several decision by the Hon’ble Apex Court, to some of which reference is being made here (CST v. Subhash & Co., in C.A. No. 1374 of 2003, dated 17/2/2003); CIT v. Jai Prakash Singh [1996] 219 ITR 737 (SC); Estate of Late Rangalal Jajodia v. CIT [1971] 79 ITR 505 (SC)), is to put the assessee (noticee) to notice about the contemplated proceedings; in the present case seeking explanation as to why, in view of being unable to explain the source of investment, i.e., to the extent of Rs.3 lacs, and the concomitant deeming thereof as his income by way of unexplained investment (u/s. 69), being not returned, penalty u/s. 271(1)(c) be not levied qua the same. Even as penalty stands levied only qua a single sum (addition) in the instant case, how, pray, where the same is on different sums, on the basis of separate satisfactions by the authority imposing the penalty, i.e., either for concealment of particulars of income or for furnishing inaccurate particulars of income, could the same possibly be so specified, as contended, in the notice u/s. 274, which is to be, and is, one, single notice qua all such sums in relation to assessment of income for a particular year. Continuing further, on facts, not only, therefore, the import of the notice u/s. 274 is well understood, the assessee has furnished an explanation on merits, which has been found not satisfactory; rather, stood disproved. How could, then, it to be said that the terms of the notice are defective or not clear and MA No. 23/Asr/2019 Krishan Kumar Sharma v. ITO 5 the assessee has, thus, suffered a prejudice. Even if one indeed is, i.e., assuming so, in the facts of a particular case, the same would only amount to an irregularity, requiring the proceedings to be restored to the stage at which the irregularity had occurred, i.e., to remove the said prejudice, enabling the assessee (noticee) the opportunity to state its case; the jurisdiction of levy penalty having been already assumed. Reference in this regard may be made to the decisions, inter alia, in Supdt., Central Excise v. Pratap Rai [1978] 114 ITR 231 (SC) and Guduthur Bros. v. ITO [1960] 40 ITR 298 (SC), both by the larger benches of the Apex Court. The jurisdiction to impose penalty u/s. 271(1)(c), it is again well-settled, is on the basis of a satisfaction, prima facie, of the assessing (or other authority imposing penalty), that the assessee does not have a proper, duly substantiated, explanation with regard to the facts material to the computation of his total income under the Act (refer: D.M. Manasvi v. CIT [1972] 86 ITR 557 (SC); CIT v. S.V. Angidi Chettiar [1962] 44 ITR 739 (SC)), which (satisfaction) may not even be reduced in writing, though ought to be discernible from the record in any proceedings under the Act (refer: Mak Data Pvt. Ltd. v. CIT [2015] 358 ITR 593 (SC); CIT v. Atul Mohan Bindal [2009] 317 ITR 1 (SC)). There is no issue as regards the said jurisdiction in the instant case. In fact, a prejudice would not normally arise in-as-much as the assessee has already furnished an explanation during the assessment or other proceedings, i.e., qua any adjustment to his returned income, and the explanation in the penalty proceedings is sought qua the same, primarily with a view to examine if the terms of Explanation 1 thereto, which is to be read as part of the section, are satisfied, or not. For example, in the instant case the explanation is toward non-proving the genuineness of the source of the credit ascribed to Kikkar Singh or, why, the genuineness being not proved, should not the same be regarded as case of furnishing inaccurate particulars of income or, as the case may be, concealment of particulars of income; in either case, the assessee being required to substantiate his explanation as to the source of the monies available with him for investment. The penalty levied in the instant case, and not incorrectly, is for furnishing inaccurate particulars of income, qua which no dispute stands raised by the assessee. This brings us to Explanation 1 section 271(1)(c), which deems a person to have concealed the particulars of his income where he is unable to furnish an explanation, or substantiate that furnished, with all the facts relevant and material to the computation of his income, or the explanation furnished is found false, as indeed is in the instant case. The said Explanation 1 is, as would be apparent from the bare reading of the provision, applicable to both the limbs of the penalty u/s. 271(1)(c) inasmuch as the explanation to be furnished, the onus of which is on the assessee, is, in either case qua facts material to the computation of his total income under the Act. That is, whether the facts material to the computation of income, qua which therefore explanation is sought in penalty proceedings, pertain to a case of omission or commission, i.e., concealment of particulars of income or furnishing inaccurate particulars of income. Reference for this MA No. 23/Asr/2019 Krishan Kumar Sharma v. ITO 6 may be made to the decision in Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519 (SC), holding that to have always been the position. How does, then, one may ask, this distinction in the penalty notice is of any significance, i.e., in the final analysis, much less lead to any prejudice. It needs to be appreciated, and is to be borne in mind, that the primary and relevant facts are only in the special knowledge of the assessee. This, in fact, is the premise of the said Explanation, inferring ‘deliberateness’ where therefore these facts are not forthcoming, or an explanation in their respect, or that furnished found false or otherwise unsubstantiated. The decision in Manjunatha Cotton & Ginning Factory (supra), as explained by the tribunal in several decisions (viz. R. Vasuki v. Dy. CIT [2017] 51 CCH 298 (Chenn); ITO v. S. Anandalakshmi (in ITA No. 1948/Mds/2016, dtd. 17.10.2017)), is premised on a prejudice having been caused, found absent in the instant case. The said decision, discussed in detail in these orders by the tribunal; in fact, even reproducing therefrom, is thus not applicable on facts. We have already clarified that the said decision is without reference to the judicial precedents and, further, based on other considerations as well. Again, even where a prejudice survives, as explained with reference to the decisions by the larger benches of the Apex Court, the same would warrant a restoration back to the stage at which the same had occurred, with a view to cause its removal. The said decision must thus be regarded as rendered in the facts of its’ case. True, SLP stands dismissed by the Apex Court in CIT v. SSA’s Emerald Meadows (SPL (cc) No.11485/2016), rendered following the decision in Manjunatha’s case. However, the Apex Court, while dismissing the assessee’s SLP has clearly stated that the final findings of the Hon’ble High Court, which stand challenged before it, do not raise any substantial question of law for its’ determination. The Apex Court has thus not laid down any law, and no ratio decidendi, which is to be followed, thus arises from the dismissal of the said SLP. Reliance thereon, thus, would not be of much assistance to the assessee. Finally, it may be clarified as to why, when this tribunal had found the assessee’s claim as not admissible, should a decision on merits follow, which has been, without though discussing the decisions relied upon in greater detail; the matter being well- settled on the basis of first legal principles. The reason is two-fold. One, though not raised per a ground of appeal before the ld. CIT(A), the same forms part of the assessee’s written submissions before him, reproduced at pgs. 2-4 of the impugned order, referring to a photocopy of the said notice u/s. 274. There is no finding though as to the said notice or its’ copy, also not placed on record. Though, therefore, the relevant notice (or a copy thereof) is not on record, for the claim to be admitted, in fairness, this question needs to be restored to the file of the first appellate authority for being answered, including the question of the admission of additional evidence. It is for this reason that the same, raising a legal plea, i.e., assuming admissibility on facts, was deemed fit for being answered. Two, the assessee has relied on several decisions by the tribunal. There is reference to the decisions by the tribunal taking a different view in this order as well. In MA No. 23/Asr/2019 Krishan Kumar Sharma v. ITO 7 fact, the decisions by the tribunal relied upon by the assessee are further based on the decision in Manjunatha Cotton & Ginning Factory (supra), which has been discussed hereinabove. 4. Afore said matter of the assessee is brought in our knowledge that the particular issue was adjudicated without considering the documents which was placed during the appeal hearing before the Tribunal. The learned counsel of the assessee pointed out that the notice issued under section 271(1)(c) of the Act by the learned Assessing Officer is itself defective notice. The learned Assessing Officer did not specify the nature, concealment or furnish accurate particular of income. The issue was already dealt by the coordinate benches. Accordingly, prayer was made for recalling the order for further adjudication. 5. Considering the submission of assessee and available records, we find that the mistake of the bench is apparent from record. The order was passed without adjudicating the documents which was available during the time of hearing. Accordingly we are accepting the miscellaneous petition filed by the assessee and the order, ITA No. 14/Asr/2018 pronounced on dated 30/04/2019 will be rectified accordingly. 6. Accordingly the miscellaneous petition of the assessee is allowed. Order pronounced in the open court on 26.04.2022 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member Date: 26.04.2022 *GP/Sr. PS* MA No. 23/Asr/2019 Krishan Kumar Sharma v. ITO 8 Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order