IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `G' NEW DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
&
SHRI O.P. KANT, ACCOUNTANT MEMBER
ITA No. 1834/Del/2016
Assessment Year: 2011-12
Jagdamba Prasad Gupta vs ACIT
108, Block-B, Phase-1, Vivek Vihar, Circle 35(1)
Delhi. New Delhi.
AEEPG8550R
APPELLANT RESPONDENT
Assessee by Ms. Kriti Gupta, CA
Revenue by Sh. N.K. Bansal, Sr. DR
Date of Hearing 21.01.2019
Date of Pronouncement 21.01.2019
ORDER
PER SHRI BHAVNESH SAINI, J.M.
This appeal by assessee has been directed against the order of
Ld. CIT(Appeals)-19, New Delhi dated 15/01/2016 for AY 2011-12,
challenging the levy of penalty u/s 271(1)(c ) of the I.T. Act.
2. Briefly the facts of the case are that the AIR Information in the
case of the assessee revealed that assessee had sold a house
property which was not disclosed in the return of income filed by
the assessee. The assessee explained that he has sold the house
property for Rs. 55 lakhs, however, the same was not taxable as the
capital gains had been invested in the purchase of another
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property, therefore, income was exempt u/s 54 of the Act. The AO,
however, found that property purchased was a free hold commercial
plot and not a residential house as is required to be purchased in
compliance with the provisions of Section 54 of the Act. This
amount was, therefore, added to the income. Another addition was
made in respect of amount of interest which was claimed deduction
in respect of the said property. The penalty proceedings were
initiated and in absence of any explanation from the side of the
assessee, penalty u/s 271(1)(c ) was levied. The Ld. CIT(A)
confirmed the levy of penalty.
3. Ld. Counsel for assessee submitted that the AO issued show
cause notice dated 31/12/2013 u/s 274 read with section 271(1)(c)
of the Act before levy of the penalty which is illegal and bad in law
because the show cause notice contained the following:
"have concealed the particulars of your income or furnished
inaccurate particulars of such income in terms of explanation
1,2,3,4 and 5."
4. She has submitted that since the show cause notice contained
both the limbs of section 271(1)(c) of the Act, therefore, it is void,
therefore, no penalty could be imposed. In support of her
contention, she has relied upon decision of the Karnataka High
Court in the case of CIT vs. M/s SSA's Emerald Meadows reported
in 73 taxmann.com 241 in which in the similar circumstances
penalty was held to be rightly cancelled. This judgment is
confirmed by the Supreme Court by dismissing the SLP of the
Department reported in 73 taxmann.com 248. On the other hand,
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Ld. DR relied upon orders of the authorities below and submitted
that the assessee did not raise the plea before the authorities below
that there is a defect in the notice, therefore, additional ground
cannot be raised at this stage and relied upon judgment of the
Madras High Court in the case of Sundram Finance Ltd. vs. ACIT
403 ITR 407 which is confirmed by the Supreme Court by
dismissing the SLP reported in 99 taxmann.com 152.
5. We have considered the rival submissions and perused the
material on record. It is admitted fact that the AO before levy of the
penalty u/s 271(1)(c) of the Act issued show cause notice to the
assessee dated 31/12/2013, copy of which is filed at page 1 of the
Paper Book. In the said notice the AO has mentioned "have
concealed the particulars of your income or furnished inaccurate
particulars of such income in terms of explanation 1,2,3,4 and 5". In
this notice the AO has mentioned both the limbs of section 271(1)(c)
of the Act that assessee have concealed the particulars of the
income or furnished inaccurate particulars of such income. AO has
not specified in the notice as to under which limb of section
271(1)(c) of the Act a show cause notice has been issued against the
assessee for levy of the penalty. The Hon'ble Karnataka High Court
in the case of CIT vs. M/s SSA's Emerald Meadows (supra)
confirmed the order of the Tribunal by dismissing the Departmental
appeal in which the Tribunal has allowed the appeal filed by the
assessee holding the notice issued by AO u/s 274 read with section
271(1)(c) of the Act to be bad in law as it did not specify which limb
of section 271(1)(c) of the Act, the penalty proceedings had been
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initiated i.e. whether for concealment of particulars of income or
furnishing of inaccurate particulars of income. The SLP of the
Department has also been dismissed by the Supreme Court. The
AO in the assessment order while making the addition has also
noted "penalty proceedings u/s 271(1)(c) of the Act are initiated
separately for filing inaccurate particulars/concealment of income".
AO was not sure as to under which limb of section 271(1)(c) of the
Act penalty proceedings have been initiated in the assessment
order. The assessee while challenging the penalty order before
Ld.CIT(A) has raised a specific ground that the order passed by the
AO is erroneous, illegal and against the principles of natural justice
and equity. The same ground is raised in the present appeal as
well. Thus, the assessee challenged the legality of the penalty order
before Ld. CIT(A) which includes the legality of the show cause
notice for levy of the penalty. Since the notice issued before levy of
the penalty dated 31/12/2013 is void, illegal and bad in law,
therefore, it was rightly challenged that entire penalty proceedings
are illegal and vitiated. Thus, assessee practically did not raise any
additional ground in this regard. Since the notice dated
31/12/2013 is void, bad in law and illegal, therefore, entire penalty
proceedings are vitiated and are liable to be quashed. The issue is
covered in favour of the assessee by the judgment in the case of
SSA's Emerald Meadows (supra). The decision relied upon by the
Ld. DR, thus, would not support the case of the Revenue.
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6. In view of the above discussion, we set aside the order of the
authorities below and quashed the penalty proceedings. Penalty
cancelled.
7. In the result, appeal of assessee is allowed.
Order pronounced in the open court.
Sd/- Sd/-
(O.P. KANT) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 21.01.2019
*Kavita Arora
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
TRUE COPY
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation 21/01/2019
Date on which the typed draft is placed before the dictating 21/01/2019
Member
Date on which the typed draft is placed before the Other Member
Date on which the approved draft comes to the Sr. PS/PS
Date on which the fair order is placed before the Dictating Member
for pronouncement
Date on which the fair order comes back to the Sr. PS/PS 21/01
Date on which the final order is uploaded on the website of ITAT 21/01
Date on which the file goes to the Bench Clerk 21/01
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant Registrar for
signature on the order
Date of dispatch of the Order
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