The Pr. Commissioner of Income Tax-2 V. M/s. ZENOTECH LABORATORIES LIMITED

ITTA/254/2022

AI Insights

The case involves appeals by the Principal Commissioner of Income Tax against M/s. Zenotech Laboratories Limited concerning penalty proceedings under Section 271(1)(c) of the Income Tax Act. The core issue was the ambiguity in the notice issued for penalty proceedings, which did not clearly specify whether the penalty was for concealment of income or furnishing inaccurate particulars. The High Court referenced decisions from the Supreme Court and other High Courts emphasizing the need for clarity in such notices to ensure the assessee can adequately defend against the charges. The appeals were dismissed based on the lack of specific grounds in the penalty notice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 719848 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 16-10-2023
• Assessment Year: misc
• Other Referred Cases: The Principal Commissioner of Income-tax-I, Visakhapatnam vs. Smt. 3 I I I I L I Baisetty Reudthi, Principal Commissioner of Income Tax, (Central) vs. Golden Peace Hotels and Resorts (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: DUNDU MANMOHAN
• Assessee Lawyers: A KRISHNA
• Keywords: Concealment of facts; Inaccurate details; Income Tax; Penalty proceedings
• Section: 271(1)(c); 271; 260-4; 211(11)(c)

Judgement Text

"[ 3386 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD MONDAY, THE SIXTEENTH DAY OF OCTOBER TWO THOUSAND AND TWENTY THREE PRESENT THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY INCOME TAX TRIBUNAL APPEAL Nos: 254 and 31'l of 2022 l.T.T.A.No.254 of 2022 lncome Tax Tribunal Appeal Under Section 260-4 of the lncome Tax Act, against the order of the lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad in ITA No.843/Hydl2019 dated 03-O9-2021 preferred against the Order of the Commissioner of lncome Tax (Appeals)-7, Hyderabad, Appeal No.00g1/CtT (A)- 7/2018-19 dated 26-02-2019, preferred against the Order of the Deputy Commissioner of lncome-tax Central Circle 3(3), Hyderabad, PAN/G lR No. AAFC5661 7R d ated 31-12-2008. Between: The Pr. Commissioner of lncome Tax-2, 6h Floor, Signature Towers, Kondapur, Opp. Botanical Gardens, Hyderabad. ...Appellant AND M/s. ZENOTECH LABORATORIES LIMITED, Sy No 250-252, Turkapally Village, Shameerpet Mandal, Rangareddy Dist Hyderabad -500 078 PAN AAFC56617R: ...Respondent Counsel for the Appellant: SRI A. RADHA KRISHNA (Sr. SC FOR lT DEPT) Counsel for the Respondent: SRI DUNDU MANMOHAN ! -i. 2 Scctior.r 271 read rt ith Sectron 27 l(t)(cl of the Income Tax nct, 1961 (hercinafter rclerrecl to as 'the Act) cannot be rcndered as in va licl 5. From the submissions macle bY the learned counsel for the parties and particLrlarly that ol the appellant, it stands admittcd that the noLice that was issucd under Section 21l(ll(cl of the Act, the irrclevant portion was not slruck down. It $'as nol the specific case of thc respondc n t / asse ssce showing as [o whether there was concealment of facts, particularly on the parL of the assessee or u,hether there u,a s submission of inaccurate details by thc assesscc and in thc absencc of which, according to the assessee, the penal provisron cannot be invoked. Since it is a penal provision, the asscssee must be specifically informed as to the specific lapse on thcir part for ivhich the pcnal provision has been initiated which in the instant case, had to be either concealment of facts or submission of inaccurate details. 6. Perusal of thc said impugned order would go to show that the Tribunal when it had considered the case of the appellant while hearing thc appeal, found that the jurisdictional High Court itself in a recent matter i.e. in the case of The Princlpal Comtnissioner oJ Income-tax-I, Visakhapatno,m us. Smt. 3 I I I I L I Baisetty Reudthi which got decidcd on 13.07.2017, in its judgment held as under: \"On pincipte, tuhen penaltg proceedings are sought to be initiated bA the reuenue under Section 271(l)(c) oy ine act o1 196 1 , the speciftc ground which forms the Jound.ation therefor has to be spelt out in clear terms. Otherutise:, an assessee utould not haue proper opportunitA to put forth hb tlefence. When the proceedings are penaL in nature, resulting in imposition of penaltg ranging from l OO% to 300% of the tax liability, the charge must be unequiuocal and umambiguous_ When tLe charge is either ancialment of parliculars of income or furnishing of inaccurate particuLars thereoJ, the reuenue must specifg as to tDhich one of the two is sought to be pressed into sentice and. cannot be pe rmitted to club both by interjectlng an ,or' between the two, as in the present co_s,e. This a^biguitg in the shou.t cause notice is further compounded presintlg bg the confused ftnding of the Assessjng Officer thnt he u..tos satisrted that the as.ses.see utas gailtg of both We are thereJore of the opinion tLnt the ord\"er under appeal does not hnue brook interkrence on ang ground.. We lind no question of law, much less a substantiil one, ari-sing for constderatton tuaranting admission of the appeal. The oppeal is accordinglg djsmissed. No ord.er as to costs\". 7. We further find that a similar matter came up before the Honlcle Supreme Court of India also in. the case of principat Contmissioner of Income Tax, (Central) a. Gold.en peace Hotels and Resorts (P.) Ua.\" decided on November 20, 2O2O, wherein the Honble Supreme Court has upheld the decision of the Division Bench of the High Court of Bombay wherein the Division Bench had held that recording of satisfaction by the Assessing Officer as to whether there was concealment of income 3 12021) 124 taxmann.com 249 (SC) l ^ -f:,AFF.E!l: 4 or rvhethcr there u'its inacr:ttl:rte pi'tl't iculars lurnished by the assessee u I-iich u,as sine rTua lloll Ibr initiation of penalty proceedings. The High Court ol Bombay had categorically in the said case lteld that in the absr:nce ol atry such satisfaction, the order of Comtnissiorrc'r (Appeals) as rvell as the Tribunal had been correctly ordered to be held bad and the penalty proceedings were ordered to be droppcd. It u,as thc Spccial Leavc Petition (SLP) of the respondcnt against the said decision ol the Higir Court of I3ombay n'hir:h was dismissccl in the said SLP. The High Court of Bombay in the said czrse i.e. Pr. CIT u. Golden Pea.ce Hotels and Resorfs (P.) Ltd.4 in paragraph Nos.6 to 8 held as under: \"6. Besides, LUe note thzt the Diuision Bench oJ this Cc,turt in Sarn-son (supra) as utell cts in Neut Ero Soua Mhe (supra) hos held that the nottce u.thich is issued to lhe assessee must irtdicate uhether the Assessing OJfcer is satisfied that thc case of the ossessee inuotues concealment of particulars of income or [urnishing of [naccurate particulars oJ rncome or botlt-, tL)ith cLaritA. If thc notice is issued in the pinted Jorm, then, the necessary portions which are not applicable are required to be stntck off, so as to indicate tuith clantg the nature of the salisfaction recorded. In both Samson Peinchery and NeuL Era Soua Mine (supra), th-e notices issued had tlot struck off the portion uthich u.tere inupplicabte. From this, the Diuision Bench concluded thot there Luas no Proper record of satisJaction or proper application of mind in ntatter of initiotion of penallg proceedinqs. 7. In the present cQSe, os welt if the notice dated 30/ 09/ 16 (ot page 32) ts perused-, it is apparent that the itapplicabte portions haue not been stntck off. This coupled ulith the fact aduerted to in paragraph (5) of this ortler, leaues no ground Jor interference with the impugned order. The impugnedoder is quite consistent 1l2o2ll 124 Laxmann.com 24a (Bombay) under: tLitlt Lhe lau taid doun in the case of Samson Pennchery and New Era Soua ui\"\" ti'\"prJ Zna lhcreforc, Luanattrs no irtterference. - t'^r'4, vtl 1,-T::::,ll:,on has.ed upon MAK Data (p.) ttd. (supra) atso docs not opfcal to us in the peculiar facts oi the present case. 'lhe notice in. the piesent .is\" is 'its\"ty defectiue. and further, there is no jind.t\"g \"; iiir!\"'\"ii,\" l::rrl\"d _ in rekttion to conceatient i, n^X-iW\"\"\"f tnaca) rete parlian lars. \" 5 a. Similar analog, has also been recently reiterated by the High Court of Dclhi in the case of principal Comrnissloner of Income-tq.x. a. Gopa.l Kumar Gogals wherein again the Division Bench of High Courr of Dclhi in paragraph Nos.15 to 18 held as \"15- Hauing heard Mr Kumar and. perused. the record, in our uiew, there cannot be any dispute, that the iO tailed to cleartg rcJlect his satisfaclion tn ni pe,iatti n;i;. \"\" to uhich timb of thc proisio,ts i-;\";;;';;'f(liii\"iTi rn\" Act u_to s triggered uis a uis the reZpondent/ a..;::Z; 16. As indicated aboue, tn a giuen case, both timbs may get attracted, but euen in sich situatiin the i.O iouta need ,.to set fort_h his pima facie, satisjiail\"\" t\"'tn\" penaltu nolLce. The reason, perhagts, uthy lhe Legislature has prouided_ for tuo circumstancis'tn sJct;oiiTil lfe \"f the..Act,. .to- our minds, emanates. from the n'eei, to asttngush betLueen the grauitg and consequences uthich maA. accompang concealment of partiatlari of income, a_s against a case u.thich inuolieZ fumshing -fii.Jrot partict tlars. The quantum of penaltg, tii in\"'iO'rrr_g t!y, _utoutd depend on rahich-stot \"{atuiiiiii.\"ii.\" 271( 1)(c) of the Act, rhe assessee,s infraAton yati! in.- ---' 17^. .Furthetmore,. hau,ing regard. to tLe doctrine of stare ae.xs,\"s - .whtch impels courls not to d.isturb settled ?ro,Oosittons^oy points of laut, tt.te are of the uieu, that tLLe Juagment oJ the coordinate bench of this Court rend.ered i.n Saltara India wouLd. hau_e to be- fottouLed, ^ noirung has been brought on record. by Mr kumar, Lii\"n'_\"\"U s J20231 153 taxmann com S34 (Delhi) I I I I i , I I I i i 1 I HIGH COURT DATED:1611012023 COMMON.JUDGMENT lTTA.Nos.2S and 311 of 2022 1rE STATt-O { v c.i ,,,:)/ q .f 1 t N0'.l ?u] * Itt, t'--\" THE,APPEALS AREiREJECTED .^*P$ :) i I I I I I I I I I I I I i I i I L I I I I I I I ! I I I $:r-- { , 8 "