IN THE INCOME TAX APPELLATE TRIBUNAL,
DELHI BENCH: ‘SMC-1’ NEW DELHI
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
AND
SHRI O.P. KANT, ACCOUNTANT MEMBER
[Through Video Conferencing]
ITA No.5882/Del/2019
Assessment Year: 2012-13
M/s. Garg Exports (India), Vs. ITO,
29/5, Nangia Park, Shakti Ward-35(2),
Nagar, New Delhi
New Delhi
PAN :AAAFG3071H
(Appellant) (Respondent)
Appellant by Ms. Apoorva Bhardwaj, Adv.
Respondent by Shri R.K. Gupta, Sr.DR
Date of hearing 28.06.2021
Date of pronouncement 30.06.2021
ORDER
PER O.P. KANT, AM:
This appeal has been filed by the assessee challenging the
order dated 30/04/2019 passed by the learned Commissioner of
Income Tax (Appeals)-12, New Delhi [in short ‘the Ld. CIT(A)’],
wherein penalty levied under section 271(1)(c) of the Income-tax
Act, 1961 (in short ‘the Act’) by the Assessing Officer has been
sustained.
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2. Before us, the Learned Counsel of the assessee filed
additional grounds raised by the assessee, which are reproduced
as under:
1. That the assessee respondent craves to withdraw grounds of
appeal No. 2 and 3 as preferred by the Appellant in the
memorandum of appeal:
“2. That the Ld. Commissioner of Income Tax (Appeals) -12,
New Delhi, has erred in overlooking and in summarily
rejecting the bank analysis submitted as additional evidence.”
“3. That the Ld. Commissioner of Income Tax (Appeals)-12,
New Delhi, has erred in rejecting rectification application
submitted for additional evidence.”
II. The assessee respondent craves leave to raise the following
additional grounds of appeal before Your Honour:
"1. That the Ld. CIT(A) has failed to appreciate that the
Ld. Assessing Officer has not recorded satisfaction in the
Assessment Order as warranted by section 271 of the Income
Tax Act, 1961 for initiation of penalty proceedings against the
Appellant. As such, in absence of such satisfaction, the
subsequent order levying penalty under section 271(l)(c) of the
Act is bad in law and thus, may please be quashed.
2. That the Ld. CIT(A) has failed to appreciate that the
Id. Assessing Officer had not specified in the notice under
section 271(l)(c) r.w.s. 274 of the Act, whether the penalty
proceedings were initiated for concealment of income or for
furnishing of inaccurate particulars of income. As such, the
penalty order under section 271(l)(c) of the Act is bad in law
and may please be quashed."
In this regard it is further submitted that while filling the
memorandum of appeal, the Appellant had duly requested vide
Ground of appeal no. 4 before the Hon'ble Tribunal, to add, alter,
vary or amend any of the ground of appeal and as such, in view of
Ground of appeal no. 4, additional grounds undertaken herein above
may please be permitted.
The aforesaid grounds of appeal raise legal issues, which does not
involve any fresh investigation into the facts; facts already being on
record. The assessee/ respondent relies, in this regard, on the
decision of the Gauhati High Court in the case of Assam Company
(India) Ltd.vs. CIT.: 256 ITR 423, wherein Their Lordships held that
it is permissible on the part of the Tribunal to entertain a ground
beyond those incorporated in the memorandum of appeal through
the party urging the said ground had neither appealed before it nor
had filed a cross objection in the appeal filed by the other party,
provided the relevant facts on which such ground is founded are
available on record.
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Further, in view of the decision of the Hon'ble Supreme Court in the
case of National Thermal Power Co. Ltd. v. CIT: 229 ITR 383 as also
the decision in the case of Jute Corporation of India v. CIT: 187 ITR
688, the ground of appeal calls for being admitted and adjudicated
on merits.”
3. Briefly stated facts of the case are that scrutiny assessment
of the income for the year under consideration was completed on
03/03/2015 under section 144 of the Act, in view of non-filing of
vital information called for by the Assessing Officer. The assessee
had shown gross turnover of ₹ 45,94,809/- with gross profit rate
of 23.11% in terms of section 44AD of the Act and after claiming
interest to partners of ₹ 5,53,428/- and remuneration to partners
of ₹ 3,94,800/-, declared net profit of ₹ 1,13,847/-. The Assessing
Officer examined bank statement of the assessee and noticed that
the assessee had deposited cash money of ₹ 79,36,046/- into
bank accounts maintained with Canara Bank and ICICI bank .
The Assessing Officer disallowed interest and remuneration to the
partners. The Assessing Officer estimated net business income of
the assessee at Rs.18,34,020/- and unexplained sundry creditors
of ₹ 15,833/-. The Assessing Officer also initiated penalty
proceedings under section 271(1)(c) of the Act. Against the appeal
filed in quantum proceeding, the Learned CIT(A) allowed part
relief to the assessee. In view of the decision of the Learned
CIT(A), the Assessing Officer issued notice to the assessee for levy
of penalty in respect of the addition sustained. After considering
submission of the assessee, the Assessing Officer levied penalty
vide his order dated 31/03/2018 @ 100% of the tax ought to be
evaded, which has been worked out to ₹ 1,32,246/-. On further
appeal, the Ld. CIT(A) sustained the penalty levied by the
Assessing Officer. A rectification filed before the Ld. CIT(A) was
ITA No.5882/Del/2019
also rejected by the Learned CIT(A) vide his order dated
27/06/2019.
4. Before us, the Learned Counsel of the assessee addressing
the additional ground submitted that same are legal in nature
and no investigation of the fresh facts are required and, therefore,
same might be admitted. The Learned DR opposed admission of
the additional ground and submitted that same have not been
adjudicated by the Learned CIT(A).
5. We have heard rival submission of the parties on the issue
of admissibility of the additional ground. We find that both
grounds are purely legal in nature and all the facts in relation to
the additional ground raised are already available on record and
no investigation of the fresh facts is required for adjudication of
these grounds. Accordingly, in view of the settled principal in the
case of National Thermal Power Co. Ltd. v. CIT 229 ITR 383 (SC),
the additional grounds raised by the assessee are admitted.
5.1 In support of additional ground No.1, the learned Counsel of
the assessee submitted that no satisfaction has been recorded for
initiating the penalty proceedings by the Assessing Officer and
therefore, in view of the decision CIT vs Ram Commercial
Enterprises Ltd., (2001) 246 ITR 563 (Delhi High Court), the
penalty should be deleted.
5.2 In support of ground No.2, the learned Counsel submitted
that while initiating the penalty proceeding relevant charges
either of concealment of income or furnishing of inaccurate
particulars of income was not made clear in the assessment order
as well as in the notice issued for initiating penalty proceedings.
According to her, in view of lack of clarity of charges for penal
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ITA No.5882/Del/2019
action, the penalty levied is void and not sustainable in law in
view of the decision of the Hon’ble Karnataka High Court in the
case of Commissioner of Income-tax Vs Manjunatha Cotton &
Ginning Factory [2013] 359 ITR 565, which has been further
approved by the Hon’ble Supreme Court in the case of
Commissioner of Income-tax Vs. SSA’S Emerald Meadows [2016]
73 taxmann.com 248 (SC)].
5.3 The Learned DR, on the other hand, relied on the order of
the lower authorities.
5.4 We have heard rival submission of parties on the issue in
dispute and perused the relevant material on record. We find that
while initiating the penalty preceding, the Assessing Officer in the
assessment order observed as under:
“4. Assessed u/s 144 (Ex-parte) at an income of Rs.18,49,850/-.
Charge interest rules. Penalty proceedings u/s 271(1)(b) and
271(1)(c) have been initiated separately. Issue necessary forms.”
5.5 From the above paragraph, it can be inferred that there is
no clarity of the charges for which penalty has been initiated.
There is no mention, whether the penalty has been initiated for
concealment of income or furnishing inaccurate particulars of
income. In the notice dated 03/03/2015 for initiating penalty
proceeding also the relevant part as to concealment of income or
furnishing inaccurate particulars of income has not been ticked.
In such circumstances, the assessee was not clear under which
limb of section 271C of the Act, the penalty was initiated. The
Hon’ble Karnataka High Court in the case of Manjunatha Cotton
and Ginning Factory (supra) has held that while issuing the
notice the Assessing Officer has to come to conclusion that
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whether it is a case of concealment of income or furnishing of
inaccurate particulars of income and sending printed forms where
all grounds mentioned in section 271 are mentioned, would not
satisfy requirement of law. The Hon’ble Supreme Court in the
case of SSA’S Emerald Meadows (supra), has also upheld the
finding in the case of Manjunatha Cotton and Ginning Factory
(supra)
5.6 Respectfully, following the decision of the Hon’ble Karnataka
High Court and Hon’ble Supreme Court, we are of the opinion
that penalty levied is bad in law and accordingly we cancel the
same. The additional ground No.2 of the appeal is allowed.
5.7 Since we have already allowed one of the additional grounds
and penalty has been cancelled, we are not required to adjudicate
upon the additional ground and regular ground raised by the
assessee.
6. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 30th June, 2021
Sd/- Sd/-
(KUL BHARAT) (O.P. KANT)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 30th June, 2021. Asst. Registrar, ITAT, New Delhi
RK/-(DTDS)
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
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