BEKKAM CONSTRUCTIONS,HYDERABAD vs. INCOME TAX OFFICER, WARD-15(3), HYDERABAD

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ITA 134/HYD/2018Status: DisposedITAT Hyderabad24 November 2021AY 2013-145 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice issued by the Assessing Officer for penalty proceedings was invalid because it did not specify whether it was for concealment of income or furnishing inaccurate particulars. Consequently, the penalty order was also quashed.

What were the facts?

A survey operation was conducted on the assessee firm, leading to an assessment order that included an addition for estimated income on gross receipts. The Assessing Officer initiated penalty proceedings under Section 271(1)(c) for concealment or furnishing inaccurate particulars of income.

What were the issues?

The primary issue was the validity of the penalty notice issued under Section 274 r.w.s. 271(1)(c) when it failed to specify the limb of the section under which proceedings were initiated.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 133A,Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”: HYDERABAD

Before: SHRI SATBEER SINGH GODARA & SHRI LAXMI PRASAD SAHU

For Appellant: Shri K.C. Devdas
For Respondent: Shri Rohit Mujumdar
Hearing: 23/11/2021Pronounced: 24/11/2021

O R D E R PER L.P. SAHU, A.M.: This appeal filed by the Assessee is directed against CIT(A) - 7, Hyderabad’s order dated 17/11/2017 for AY 2013-14 involving proceedings u/s 271(1)(c) of the Income Tax Act, 1961 ; in short “the Act.

2.

Briefly the facts of the case are that a survey operation u/s 133A of the Act was conducted on :- 2 -: M/s Bekkam Constructions,Hyd.

15/02/2013 at the business premises of the assessee firm situated at Plot No. 33 & 34, H.No. 2-4-70/37/3/B, Road No. 3, Sai Nagar Colony, Nagole, Hyderabad. Accordingly, the case was selected for scrutiny on account of survey and assessment u/s 143(3) was completed on 28-03-2016 determining the total income at Rs.99,71,341/-. The total income consists an amount of Rs.98,81,636/- (estimated income @ 8% on the gross receipts of Rs. 12,35,20,450/-) and Interest income on FOR of Rs.89,705/-. Since the addition made in the assessment on account of estimation on gross receipts as against the income declared by the assessee was in the nature of furnishing of inaccurate particulars of income and concealment of income to that extent, which would not have been brought to tax in the absence of scrutiny proceedings, the AO initiated penalty proceedings vide notice u/s 274 rws 271(1)(c), dated 28- 03-2016, and accordingly, levied a minimum penalty of Rs.7,32,020/- vide order u/s.271(1)(c), dated 29-9-2016 .

3.

Aggrieved by the above, the appellant preferred an appeal before the CIT(A) and the CIT(A) confirmed the penalty order.

4.

Aggrieved by the order of CIT(A), the assessee is in appeal before the ITAT.

:- 3 -: M/s Bekkam Constructions,Hyd.

5.

The ld. AR of the assessee submitted that the Assessing Officer initiated the penalty proceedings by issue of a notice u/s 274 r.w.s. 271(1)(c) on 28.03.2016. He submitted that while issuing the said notice, the Assessing Officer did not mention whether the notice is issued for concealment of income or for furnishing of inaccurate particulars of income. Therefore, the notice is not validly issued. Consequently, the order passed u/s 271(1)(c) also is not valid. For this proposition, he relied on the decision of the Hon’ble Supreme Court in the case of CIT Vs. SSA’s Emerald Meadows, [2016] 73 taxmann.com 248 (SC).

6.

The Learned Departmental Representative on the other hand relied on the orders of revenue authorities.

7.

Considered the rival submissions and perused the material facts on record. The issue in dispute is squarely covered by the decision of the Hon’ble Supreme Court in the case of CIT Vs. SSA’s Emerald Meadows, [2016] 73 Taxmann.com 248 (SC) wherein the Apex Court upheld the decision of the Hon’ble High Court, in which, the Hon’ble High Court confirmed the order of the Tribunal and dismissed the appeal of the revenue, who came in appeal against the order of the Tribunal. The Tribunal relying on a decision of Karnataka High Court in case of CIT Vs. Manjunatha Cotton & Ginning Factory, [2013] 359 ITR 565/210 allowed the appeal of the assessee holding that :- 4 -: M/s Bekkam Constructions,Hyd.

notice issued by Assessing Officer u/s 274 read with section 271(1)(c) was bad in law, as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income.

7.1 In the case under consideration, on perusal of the show cause notice issued by the Assessing Officer u/s 274 r.w.s. 271 of the IT Act, 1961, dated 28/03/2016, which is placed on record, it is seen that the Assessing Officer did not mention whether the notice is issued for concealment of income or for furnishing of inaccurate particulars of income. Therefore, as per the ratio laid down by the Hon’ble Supreme Court in the case of SSA’s Emerald Meadows, the notice issued by the Assessing Officer is not valid and consequently, the order passed u/s 271(1)(c) is also not valid. Hence, we set aside the order of the CIT(A) and quash the order passed by the Assessing Officer u/s 271(1)(c) of the Act. Accordingly, the appeal of the assessee is allowed.

8.

In the result, appeal of the assessee is allowed.

Pronounced in the open court on 24th November, 2021.

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