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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK ‘SMC’ BENCH, CUTTACK , CUTTACK BEFORE BEFORE SHRI GEORGE MATHAN, JUDICIAL JUDICIAL MEMBER Assessment Year : 2015-16 Maruti Trading Co., Maruti Trading Co., Panisalia, Vs. ITO, Ward, Paradeep. ITO, Ward, Paradeep. Jagatsinghpur. Jagatsinghpur. PAN/GIR No. PAN/GIR No.AALFM 3677 L (Appellant (Appellant) .. ( Respondent Respondent) Assessee by : Shri P.R.Mohanty P.R.Mohanty, AR Revenue by : Shri S.C.Mohanty : Shri S.C.Mohanty, Sr DR Date of Hearing : 16/08 8/2023 Date of Pronouncement : 16/0 /08/2023 O R D E R
This is an appeal filed by the assessee against the order of the ld This is an appeal filed by the assessee against the order of the ld This is an appeal filed by the assessee against the order of the ld CIT(A), , NFAC, NFAC, Delhi Delhi dated 29.3.2023 in Appeal No. ITBA/NFAC/S/250/2022 ITBA/NFAC/S/250/2022-23/1051568864(1) for the assessment year for the assessment year 2015- 16 confirming the levy of penalty 16 confirming the levy of penalty of Rs.32,420/- under section 271(1)(c) of under section 271(1)(c) of the Act.
2. Shri P.R.Mohanty, ld AR appeared for the assessee and Shri Shri P.R.Mohanty, ld AR appeared for the assessee and Shri Shri P.R.Mohanty, ld AR appeared for the assessee and Shri S.C.Mohanty, ld Sr DR appeared for the revenue. S.C.Mohanty, ld Sr DR appeared for the revenue.
3. It was submitted by ld AR that the original assessment in the case of It was submitted by ld AR that the original assessment in the case of It was submitted by ld AR that the original assessment in the case of the assessee came to be completed under section 143(3) of the Act on came to be completed under section 143(3) of the Act on P a g e 1 | 7 13.12.2017, wherein, two additions have been made being one addition of Rs.1,04,912/- representing the amount received from Hindustan Uniliver Ltd., and second addition of Rs. 97,961/- representing the estimated disallowance of expenses in the profit and loss account. It was the submission that consequent to the said additions, penalty proceedings has been initiated and levied u/s.271(1)(c) by an order dated 22.6.2018. It was the further submission that the show cause notice did not specify whether the penalty was being levied for concealment of income or furnishing of inaccurate particulars of income. It was the further submission that the ld CIT(A) had confirmed the penalty by rejecting the claim of the assessee and the various case laws submitted by the assessee on this issue. Ld AR placed before me a copy of the reassessment order on 22.3.2022 passed in the case of the assessee for the impugned assessment year. It was the submission that the reassessment order had been quashed by the Hon’ble Jurisdictional High Court of Orissa vide an order dated 17.3.2022 in W.P(C).No.5497 of 2022, wherein notice issued u/s.148 of the Act itself had been challenged and same had been quashed. It was the submission that as the reassessment no more survive, the original assessment comes into effect and so also the penalty order u/s.271(1)(c) of the Act. It was the submission that the Assessing Officer in page 2 of his order levying the penalty u/s.271(1)(c) himself has recognized that it is not proper to impose penalty in respect of addition of Rs.97,961/- but has proceeded to levy the P a g e 2 | 7 penalty. It was the further submission that the amount of Rs.1,04,912/- received from Hindustan Unilever Ltd., had also been reflected in the profit and loss account and TDS had also been given effect in the return of income. It was the submission that just because the assessee has not filed appeal against the original assessment order, it does not mean that there is concealment of income and penalty is liable to be levied. It was the submission that the penalty as levied by the AO and confirmed by the ld CIT(A) is liable to be deleted.
In reply, ld Sr DR drew my attention to page 6 para 5.3 of the order of the ld CIT(A). It was the submission that the ld CIT(A) has taken into consideration the fact that the assessee has sold immovable property situated at Jeypore and no gains had been disclosed in the assessee’s return. It was the submission that there is clear concealment of income by the assessee and the penalty is liable to be levied and has been rightly confirmed by the ld CIT(A). It was the further submission that the reference made by the ld AO is the interpretation of the submission made by the assessee, which has been extracted by the Assessing Officer in his penalty order. It was the submission that the penalty as levied by the AO and confirmed by the ld CIT(A) is liable to be upheld.
I have considered the rival submissions. A perusal of the facts of the present case clearly shows that the penalty has been initiated and levied in respect of two issues one being the addition of Rs.1,04,912/- representing P a g e 3 | 7 the amount received from Hindustan Unilever Ltd., which as per the AO has not been included in the return of income filed by the assessee and second being admittedly is an estimated addition of Rs.97,961/-. It is an accepted fact that on an estimated addition, no penalty is leviable. It must also be mentioned here that the estimated disallowance as made by the AO is not on account of non-availability of evidences but because the expenses appear to be excessive. Clearly, the addition of Rs.97,961/- is nothing but an addition on presumption. Thus, no penalty in respect of addition of Rs.97,961/- is leviable and penalty as levied and confirmed by the ld CIT(A) in respect of above addition stands deleted.
Coming to addition of Rs.1,04,912/-, a perusal of order of the AO in the penalty proceedings shows that the assessee has categorically made the submission that this amount has been reflected in the profit and loss account and TDS has been given effect in the return of income. Admittedly, penalty proceedings are separate and independent proceedings. The Assessing Officer had a duty to examine the same. The Assessing Officer has not dislodged the submission of the assessee. This being so, on this ground itself, the penalty as levied in respect of addition of Rs.1,04,912/- is liable to be cancelled and I do so.
Further coming to the arguments of ld Sr DR that there has been concealment in respect of immovable property sold at Jeypore, it must be mentioned that there is no mention of such an addition in the assessment P a g e 4 | 7 order. Next, coming to the submission of ld AR that show cause notice it has not been struck off, the relevant portion, whether it is for concealment of income or furnishing of inaccurate particulars, the Co-ordinate Bench of this Tribunal has consistently been holding as follows:
“1. We have considered the rival submissions. A perusal of para 16 of the decision of the Hon’ble Madras High Court in the case of Sundaram Finance Ltd., cited by the ld.Sr. DR, clearly shows that the issue of striking off of the inappropriate limb in the notice u/s.274/271(1)(c) of the Act was a plea that was not taken by the assessee either before the AO or before the First Appellate Authority or before the Tribunal or before the Hon’ble High Court when the Tax Appeals were filed before the respective forums. Therefore, the Hon’ble Madras High Court had taken a view “even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued under section 274 read with section 271” of the Act. Thus, it is not the principle of striking out of the relevant clause which has been decided by the Hon’ble Madras High Court. The Hon’ble High Court in the above case has held that no prejudice has been caused to the assessee in the case of non-striking off, insofar as the assessee himself has not challenged the issue before the authorities during the appropriate time. Therefore, the decision of the Hon’ble Madras High Court in the case of Sundaram Finance Ltd. (supra) has no bearing to the facts of the present case. The issue of striking off of appropriate clause in the show cause notice issued u/s.274/271 of the Act has been held to be an absolute necessity by the Hon’ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory, reported in [2013] 35 taxmann.com 250 (Karnataka), which has been approved by the Hon’ble Supreme Court in the case of SSA’s Emerald Meadows, reported in [2016] 73 taxmann.com 243 (SC). It is also noticed that this principle had also been applied by the coordinate bench of the Tribunal in the case of Bishandayal Jewelers (supra) and in the case of S.M.Enterprises (supra). This being so, respectfully following the principle laid down by P a g e 5 | 7 the Hon’ble Supreme Court and the principle of consistency, as it is noticed that in the show cause notice the AO has not struck off the inappropriate clauses, the penalty as levied by the ld. AO u/s.271(1)(c) of the Act and as confirmed by the ld.CIT(A) in the present appeals of both the assessees stand deleted.
Similarly, the Hon’ble Jurisdictional High Court in the case of Ananta Gopal Karatkala, passed in of 2005, dated 10.04.2019 has following the decision of the Hon’ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory, referred to supra, under the similar circumstances, confirmed the cancellation of the penalty.
Respectfully following the decision of the Hon’ble Jurisdictional High Court in the case of Ananta Gopal Karatkala, referred to supra, as also the decision of the coordinate bench of the Tribunal in the cases of Indu Devi Tibarewal & Siddardhini Nanda, as the notice for initiation of penalty u/s.271(1)(c) of the Act does not show that the AO has struck off inappropriate clauses, the penalty as levied by the AO and as confirmed by the ld. CIT(A) is deleted.”
The reliance made by ld Sr DR of the decision of the Hon’ble Madras High Court in the case of Sundaram Finance Ltd., reported in [2018] 93 taxmann.com 250(Madras) has also been considered by this Bench in the above mentioned case. This being so, on this ground also, the penalty as levied by the AO and confirmed by the ld CIT(A) stands deleted.
In the result, appeal of the assessee stands allowed. Order dictated and pronounced in the open court on 16/08/2023.