IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `SMC' NEW DELHI
BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER
ITA No. 6959/Del/2018
Assessment Year: 2008-09
Bishan Bansal vs DCIT
C/o M/s RRA Tax India, D-28, Central Circle-II
South Extension, Part-1, New Delhi. Gurgaon.
PAN No. AEZPS1452H
APPELLANT RESPONDENT
Assessee by Shri Somil Aggarwal, Adv.
Shri Deapesh Garg, Adv.
Revenue by Shri S.L. Anuragi, Sr. DR
Date of Hearing 09.04.2019
Date of Pronouncement 10.04.2019
ORDER
This is an appeal filed by the assessee against the order of
Ld. CIT(Appeals)-III, Gurgaon dated 02.08.2018.
2. The sole issue involved in this appeal is that the CIT(A) erred
in confirming the levy of penalty of Rs. 30,900/- by the Assessing
Officer u/s 271(1)(c) of the Act.
3. The brief facts of the case are that the Assessing Officer
completed the assessment for the assessment year under
consideration at an income of Rs. 8,72,270/- by making addition
of Rs. 1,00,000/- as income from undisclosed sources in place of
the returned income of the assessee at Rs. 7,72,270/-.
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4. Thereafter, the AO levied penalty of Rs. 30,900/- being 100%
of the amount of tax sought to be evaded by the assessee u/s
271(1)(c) of the Act for concealment of income.
5. On appeal, Ld. CIT(A) confirmed the action of the Assessing
Officer.
6. At the outset, ld Authorised Representative of the assessee
filed before us copy of notice issued u/s.271(1)(c) of the Act dated
27.02.2018, copy of which is placed on record and pointed out
there from that in the said notice, the Assessing Officer has stated
as under:
"Where in the course of proceedings before me for the
assessment year 2009-10, it appears to me that you:-
................
have concealed the particulars of your income or.......
furnished inaccurate particulars of such income."
7. He submitted that it is not clear from the said notice issued
u/s.271(1)(c) of the Act by the Assessing Officer whether the show
cause is issued to the assessee for concealment of particulars of
income or for furnishing inaccurate particulars of income.
8. He submitted that the Hon'ble Supreme Court in the case
of CIT vs. SSA's. Emarld Meadows dated 11th January, 2017
passed in Special Leave to Appeal (CC No.11485/2016)/73
taxmann.com 248 (SC) has held that Omission by the AO to
explicitly specify in the penalty notice as to whether penalty
proceedings are being initiated for furnishing of inaccurate
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particulars or for concealment of income makes the penalty order
liable for cancellation. Hence, he submitted that penalty of Rs.
30,900/- imposed by the Assessing Officer u/s.271(1)(c) is,
therefore, liable to be cancelled.
9. The Departmental Representative relied on the decision
reported in K.P.Madhusudhanan vs. CIT[2001] 118 Taxman 324
(SC)/[2001] 251 ITR 99 (SC)/ [2001] 169 CTR 489 (SC); Union of
India vs Dharamendra Textile Processors /2007) 295 ITR 244; CIT
vs Zoom Communication P.Ltd. (191 Taxman 179 [Delhi])/[2010]
327 ITR 510 (Delhi)/ [2010)233 CTR 465; MAKData P.Ltd. vs
CIT[38 taxmann.com 448 (SC)/ [2013] 358 ITR 593 (SC)/(2013)
263 CTR 1]; B.A. Balasubramaniam & Bros. Co vs CIT [116
taxman 842, 236 ITR 977, 157 CTR 556]; and CIT vs Escorts
Finance Ltd. [183 Taxman 453 (Del), 920100 328 ITR 44 (Delhi)/
(2009) 226 CTR 105], whenever the claim made in the return of
income was found to be ex-facie bogus, such a case would be
treated as concealment or furnishing of inaccurate particulars and
the penalty proceedings are justified.
10. We have heard the rival submissions perused the orders of
lower authorities and materials available on record. We find that
the facts in the present appeal are not in dispute and the
Assessing Officer in the order passed u/s.271(1)(c) dated
27.02.2018 levied penalty of Rs. 30,900/-.
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11. Hon'ble Apex Court vide judgment in case of M/s. SSA's
Emerald Meadows, (2016) 73 taxmann.com 248(SC) dismissed the
Special Leave Petition filed by the Revenue against the judgment
rendered by Hon'ble High Court of Karnataka whereby identical
issue was decided in favour of the assessee. Operative part of the
judgment in case of M/s. SSA's Emerald Meadows (supra) decided
by Hon'ble High Court of Karnataka is reproduced below :-
"2. This appeal has been filed raising the following
substantial questions of law:
(1) Whether, omission if assessing officer to explicitly
mention that penalty proceedings are being initiated
for furnishing of inaccurate particulars or that for
concealment of income makes the penalty order liable
for cancellation even when it has been proved beyond
reasonable doubt that the assessee had concealed
income in the facts and circumstances of the case?
(2) Whether, on the facts and in the circumstances of
the case, the Tribunal was justified in law in. holding
that the penalty notice under Section 274 r.w.s.
271(1)(c) is had in law and. invalid inspite the
amendment of Section 271(1B) with retrospective effect
and by virtue of the amendment, the assessing officer
has initiated the penalty by properly recording the
satisfaction for the same?
(3) Whether on the facts and in the circumstances of
the case, the Tribunal was justified in deciding the
appeals against the Revenue on the basis of notice
issued, under Section 274 without taking into
consideration the assessment order when the
assessing officer has specified that the assessee has
concealed particulars of income?
3. The Tribunal has allowed the appeal filed by the
assessee holding the notice issued by the Assessing
Officer under Section 274 read with Section 271(1)(c) of the
Income Tax Act, 1961 (for short 'the Act') to be bad in law
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as it did not specify which limb of Section 271(1)(c) of the
Act, the penalty proceedings had been initiated i.e.,
whether for concealment of particulars of income or
furnishing of inaccurate particulars of income. .The
Tribunal, while allowing the appeal of the assessee, has
relied 01 the derision of the Division Bench of this Court
rendered In the case of COMMISSIONER or INCOME TAX -
VS- MANJUNATHA COTTON AND GINNING FACTORY
(2013) 359 ITR 565.
4. In our view, since the matter is covered by judgment of
the Division Bench of this Court, we are of the opinion, no
substantial question of law arises in this appeal for
determination by this Court, the appeal is accordingly
dismissed."
12. Bare perusal of the notice issued u/s 27I(1)(c) apparently
goes to prove that the Assessing Officer initiated the penalty
proceedings by issuing the notice u/s 274/271(1)(c) of the Act
without specifying whether the assessee has concealed
''particulars of income" or assessee has furnished "inaccurate
particulars of income", so as to provide adequate opportunity to
the assessee to explain the show cause notice. Rather notice in
this case has been issued in a stereotyped manner without
applying any mind which is bad in law, hence is not a valid notice
sufficient to impose penalty u/s 271(1)(c) of the Act.
13. The penalty provisions of section 27l(1)(c) of the Act are
attracted where the assessee has concealed the particulars of
income or furnished inaccurate particulars of such income. It is
also a well-accepted proposition that the aforesaid two limbs
of section 271(1)(c) of the Act carry different meanings. Therefore,
it was imperative for the Assessing Officer to strike- off the
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irrelevant limb so as to make the assessee aware as to what is the
charge made against him so that he can respond accordingly. The
Hon'ble Karnataka High Court in the case of Manjunatha Cotton &
Ginning Factory, 359 ITR 565 (Kar) observed that the levy of
penalty has to be clear as to the limb under which it is being
levied. As per Hon'bleHigh Court, where the Assessing Officer
proposed to invoke first limb being concealment, then the notice
has to be appropriately marked. The Hon'ble High Court held that
the standard proforma of notice under section 274 of the Act
without striking of the irrelevant clauses would lead to an
inference of non-application of mind by the Assessing Officer. The
Hon'ble Supreme Court in the case of Dilip N. Shroff vs. JCIT, 291
ITR 519(SC) has also noticed that where the Assessing Officer
issues notice under section 274 of the Act in the standard
proforma and the inappropriate words are not deleted, the same
would postulate that the Assessing Officer was not sure as to
whether he was to proceed on the basis that the assessee had
concealed the particulars of his income or furnished inaccurate
particulars of income. According to the Hon'ble Supreme Court, in
such a situation, levy of penalty suffers from non- application of
mind. In the background of the aforesaid legal position and, having
regard to the manner in which the Assessing Officer has issued
notice under section 274 r.w.s. 271(1)(c) of the Act dated
15.1.2014 without striking off the irrelevant words, the penalty
proceedings show anon-application of mind by the Assessing
Officer and is, thus, unsustainable.
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14. The facts of the present appeal are identical to the facts of the
case before the Hon'ble Supreme Court in the case of SSA's.
Emarld Meadows(supra) and, therefore, the decision of Hon'ble
Supreme Court squarely applies to the case of the assessee.
Hence, respectfully following the same, we cancel the order of the
Assessing Officer dated 27.02.2018 levying penalty of Rs. 30,900/-
and allow the ground of appeal of the assessee.
15. In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 10/04/2019
Sd/-
(N.S. SAINI)
ACCOUNTANT MEMBER
Dated: 10.04.2019
*Kavita Arora
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
TRUE COPY
ASSISTANT REGISTRAR
ITAT NEW DELHI
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Date of dictation 10/04/2019
Date on which the typed draft is placed before the dictating 10/04/19
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 10/4/19
for pronouncement
Date on which the fair order comes back to the Sr. PS/PS 10/4/19
Date on which the final order is uploaded on the website of ITAT 11/4/19
Date on which the file goes to the Bench Clerk 11/4/19
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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