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Income Tax Appellate Tribunal, HYDERABAD BENCH ‘B, HYDERABAD
Before: SHRI SATBEER SINGH GODARA & SHRI LAXMI PRASAD SAHU
O R D E R
PER L.P. Sahu, AM:
This appeal filed by the assessee for AY 2008-09 is directed against the CIT(A) - 3, Hyderabad’s order, dated 20/01/2017 involving proceedings u/s 271(1)(c) of the Income Tax Act, 1961 ; in short “the Act”.
Briefly the facts of the case are that assessee filed its return of income for the AY 2008-09 on 26/04/2008 declaring a total income of Rs. 3,57,283/-. The AO completed the assessment determining the income at Rs. 1,28,50,165/- by making the following additions: 1. Addition of Rs. 65,32,700/- towards peak credits.
Peeshona Marketing Pvt. Ltd., Hyd. 2. Addition of Rs. 59,85,713/- towards unexplained expenditure. 3. When the assessee preferred an appeal before the CIT(A), the CIT(A) as regards peak credits, held that the assessee has not challenged this issue before him. As regards the addition on account of unexplained expenditure, he restricted to Rs. 23,84,072/- being 40% of expenditure of 59,85,713/-.
When the matter travelled to ITAT, the ITAT sustained the addition on account of peak credits, and upheld the decision of CIT(A) on account of unexplained expenditure.
Thereafter, the AO initiated penalty proceedings u/s 271(1)(c) on the ground that the assessee has consciously and deliberately concealed the income by not disclosing the bank account and its source of deposits and by not providing supporting evidences in support of expenditure claimed. Since the assessee has not complied to the penalty notice, the AO levied a minimum penalty of Rs. 30,30,811/- being 100% of the tax sought to be evaded u/s 271(1)(c) of the Act.
When the assessee preferred an appeal before the CIT(A), the CIT(A) confirmed the penalty levied by the AO.
Peeshona Marketing Pvt. Ltd., Hyd. 7. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising regular grounds of appeal and filed a petition for admission of following additional ground:
1. The learned CIT(A) ought to have considered the fact that the notice issued u/s 274 rws 271(10(c) is not valid and consequently the penalty levied needs to be cancelled as the inappropriate portion was not struck off.”
8. As the said additional ground is a legal ground, wherein, the facts are on record and facts do not require fresh investigation, following the decision of Hon’ble Supreme Court in the case of National Thermal Power Co., Limited Vs. CIT 229 ITR 383 (SC), we admit the said additional ground of assessee.
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 29/12/2010. 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).
Peeshona Marketing Pvt. Ltd., Hyd. 10. The Learned Departmental Representative on the other hand relied on the orders of revenue authorities.
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 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.
11.1 In the case under consideration, on perusal of the show cause notices issued by the Assessing Officer u/s 274 r.w.s. 271 of the IT Act, 1961, dated 29/12/2010, which is placed on record vide page 1 of paper book filed by the Revenue, it is seen that the Assessing Officer did not mention whether the notice is issued for Peeshona Marketing Pvt. Ltd., Hyd. 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.
In the result, appeal of the assessee is allowed.
Pronounced in the open court on 29th April, 2021.