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Income Tax Appellate Tribunal, JAIPUR BENCHES “B”, JAIPUR
Before: SHRI RAMESH C SHARMA, AM & SHRI SANDEEP GOSAIN, JM vk;dj vihy la-@ITA No. 1294, 1295 & 1296/JP/2019
Tejpal Singh Nunia, cuke D.C.I.T., Vs. Through Legal Heir Smt. Indra Devi., Central Circle-2, 1G 13, NITS Computer Education Jaipur. Housing Board, Jhunjhunu. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABVPN 9766 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Binod Kr. Gupta & Shri Deepak Sharma (CA) jktLo dh vksj ls@ Revenue by : Smt. Runi Paul (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 10/09/2020 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 11/09/2020 vkns'k@ ORDER PER: R.C. SHARMA, A.M. These are the appeals filed by the assessee against the composite order of ld. CIT(A)-4, Jaipur dated 19/08/2019 for the A.Y. 2006-07 to 2008-09 in the matter of imposition of penalty U/s 271(1)(c) of the Income Tax Act, 1961 (in short, the Act).
The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic.
2 ITA 1294 to 1296/JP/2019_ Tejpal Singh Nunia Vs DCIT 3. In all these three appeals of the assessee, common issue is involved, therefore, for the sake of convenience, a common order is being passed.
Rival contentions have been heard and record perused. Facts in brief are that asessee is an individual. A search and seizure operation was conducted on assessee group on 17.11.2009 and notice u/s 153A of the Act was issued to assessee. After making addition, penalty proceedings were initiated by the AO vide Notice u/s 274 dated 27.12.2011 and penalty of Rs.1,26,100/-(AY 2006-07), Rs.3,73,000/- (AY 2007-08), Rs.1,93,000/- (AY 2008-09) was imposed u/s 271(1)(c) on account of concealment of particulars of income, vide orders dated 18.02.2016.
The assessee preferred an appeal against imposition of said penalty, however, the action of the AO was sustained by Ld. CIT(A)-4, Jaipur vide a combined order dated 19.08.2019. In this case, the penalty proceedings were initiate vide notice u/s 274 read with section 271 of the Act dated 27.12.2011. The relevant portion of the said notice is reproduced hereunder:
3 ITA 1294 to 1296/JP/2019_ Tejpal Singh Nunia Vs DCIT "Whereas in the course of proceedings before me for the assessment year 2006-07 it appears to me that:-- Have concealed the particulars of your income or furnished inaccurate particulars of such income."
The law is well settled that penalty u/s 271(1)(c) can be imposed for concealing particulars of income or furnishing inaccurate particulars of income which are two limbs of the section 271(1) (c) but the penalty can be imposed only when the authority is satisfied that either of the two events of limbs exists in a particulars case and this perquisite should invariably be evident from the notice issued u/s 274 r.w.s 271 of the Act, which is a statutory jurisdictional notice. The intent and purpose of this notice is to inform the assessee as to for which specific charge he has been show caused.
In the present case, from the notice u/s 274 dated 27.12.2011, neither the assessee nor anyone else could make out as to 'for what precise charge, the assessee was asked to show cause viz. whether the charge is for furnishing inaccurate particulars of income or concealment of particulars of such income. It is further important to note that, in notice, under the point which is intended towards proposed penalty u/s 271(1)(c), the word
4 ITA 1294 to 1296/JP/2019_ Tejpal Singh Nunia Vs DCIT OR has been used between the charge of concealment of income and furnishing inaccurate particulars of income. These facts and circumstances make it abundantly clear that in the case of assessee, penalty notice is completely vague and ambiguous. The AO simply issued a preprinted notice without striking off the unnecessary charge and not mentioning the precise charge. The above act of the AO clearly shows that the entire exercise of initiation of penalty proceedings has been done without application of mind which resulted into issuing a completely vague jurisdictional notice u/s 274 and the jurisdictional notice being vague, the consequent levy of penalty is illegal and deserves to be deleted in full.
In view of above facts and circumstances, the initiation of penalty proceeding is void ab initio. For this purpose, reliance may be placed on the decision of Jaipur Bench of ITAT in the case of Shri Subhash Sharma Vs DCIT in vide order dated 21.07.2020, wherein it was held as under:
“5………………..the notice issued by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 is bad in law in as much as it did not specify in which limb of section 271(1)(c) of the Income Tax Act, 1961 the penalty proceedings has been initiated, i.e. whether
5 ITA 1294 to 1296/JP/2019_ Tejpal Singh Nunia Vs DCIT for concealment of income or furnishing of inaccurate particulars of income.
5.1. It is pertinent to note that in the notice, AO has not clearly mentioned the limb, on the basis of which, penalty was proposed to be imposed. The AO in assessment order or penalty notices did not specify the limb under which the penalty was initiated and simply issued a pre-printed notice without striking off the unnecessary portions of the notice. If the AC) was of the view that the assessee has concealed the income or furnishing inaccurate particulars of income then he should have deleted or not mentioned the other limb for imposition of penalty i.e. concealing the particulars of income. The above act of the AO clearly shows that the entire exercise of initiation of penalty proceedings has been done without application of mind. "
We also observe that during the course of penalty proceedings, the strong reliance has been put by the AO on the decision of Hon'ble Apex Court the case of UOI Vs Dharmendra Textiles 293 ITR 581 (SC). In this regard we observe that the issue has been dealt by Hon'ble Bench at length in the case of Shri Rajendra Kumar Khandelwal Vs DCIT in vide order dated 03.01.2020 (DPB 922) by holding as under:
"19. The Hon’ble Supreme Court in Dilip N. Shroff s JCI'I', [20071291 ITR 519 (SC), has observed that while issuing the notice under section 274 r/ w section 271, in the standard format, the Assessing Officer should delete the inappropriate words or 6 ITA 1294 to 1296/JP/2019_ Tejpal Singh Nunia Vs DCIT paragraphs, otherwise, it may indicate that the Assessing Officer himself' was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or had furnished inaccurate particulars of income. This, according to the Hon'ble Supreme Court, deprives the assessee of a fair opportunity to explain its stand, thereby, violates the principles of natural justice. As held by the Hon'ble Supreme Court in CIT V/ s Reliance Petroproducts Pvt. Ltd. 1201 01 322 1TR 158 (SC), the aforesaid principle laid in Dilip N. Shroff (supra) still holds good in. spite of the decision of the Hon'ble Supreme Court in (101 u/ s Dharmendra Textile Processors (2008) 306 1TR 277 (SC). The Hon'ble Jurisdictional High Court in CIT v/ s Srnt. Kaushalya & Ors., [1995] 216 ITR 660 (Born), observed that notice issued under section 274 must reveal application of mind by the Assessing Officer and the assessee must be made aware of the exact charge on which he had to file his explanation. The Court observed, vagueness and ambiguity in the notice deprives the assessee of reasonable opportunity as he is unaware of the exact charge he has to face………”
During the course of appellate proceedings, the action of imposition of penalty by the AO was upheld by Ld.CIT(A) placing reliance upon the decision of Hon'ble Apex Court in the case of Sundaram Finance Limited Vs DCIT (2018) 99 taxmann.com 152 (SC) vide order dated 26.10.2018. The decision of Hon'ble SC, is distinguishable on the facts as well as law on the following grounds:
7 ITA 1294 to 1296/JP/2019_ Tejpal Singh Nunia Vs DCIT (i) In the case of Sundarma Finance, the decision was passed against the assessee on the ground that defect in the notice was never pointed out at any stage of proceedings, whereas in the case of assessee the same has been challenged before appellate authority.
(ii) The case of Sundaram Finance Ltd recorded a very favorable finding and upheld the principle of natural justice by holding that "If the case of the assessee is that they have been put to prejudice and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter". This finding by Hon'ble Court strengthen the contention of the assessee that vague and ambiguous notice results in violation of principle of natural justice.
The Coordinate Bench of Cochin Bench of ITAT in the case of ITO Vs A Shihabudeen (2020) 116 taxmann.com 495 vide order dated 10.02.2020 after discussing the case of Sundararn Finance Ltd (supra), answered the issue in favour of assessee.
In support of our contention we rely upon the following case laws.
* CIT Vs M/s SSA Emerald Meadows (2015) 11 TMI 1620 (Karnataka HC) (Para-3)
8 ITA 1294 to 1296/JP/2019_ Tejpal Singh Nunia Vs DCIT * Manjunatha Cotton 86 Ginning Factory (2013) 359 ITR 565 (Karnataka HC) * M/s Jyoti Ltd. Vs CIT (2013) taxmann.com 65 (Guj HC)
* Shevata Construction Co. Pvt Ltd Vs CIT in (Raj HC) * Rajkumar Sodhani Vs DCIT in ITA No.424 to 426/JP/2016 vide order dated 15.07.2019 * Prathvi Pal Dhabhai Vs ITO in ITA No.789/JP/2015 vide order dated 07.08.2018. * Ratan Kumar Sharma Vs ITO in ITA No.176/JP/2018 vide order dated 08.03.2019 * Neha Sharma Vs ITO in ITA No.781/JP/2017 vide order dated 08.03.2019 * NN Jewellers Vs ITO in ITA No.63 to 68/JP/2019 vide order dated 26.03.2019 * Lal Chand Mittal Vs DCIT in ITA No.772/JP/2016 vide order dated 29.12.2011
* Murari Lal Mittal in vide order dated 09.11.2016. 13. In view of the above discussion and considering various judicial pronouncements and applying the ratio laid down
9 ITA 1294 to 1296/JP/2019_ Tejpal Singh Nunia Vs DCIT therein to the facts of the instant case, we do not find any merit in the penalty so imposed U/s 271(1)(c) of the Act. Accordingly, the A.O. is directed to delete the penalty imposed in all these three years under consideration.
In the result, all these three appeals pertaining to the A.Y. 2006-07, 2007-08 and 2008-09 are allowed. Order pronounced in the open court on 11th September, 2020.
Sd/- Sd/- ¼lanhi x®lkÃa½ ¼jes'k lh 'kekZ½ (SANDEEP GOSAIN) (RAMESH C SHARMA) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 11/09/2020 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Tejpal Singh Nunia, Jhunjhunu. 1. izR;FkhZ@ The Respondent- The D.C.I.T., Central Circle-2, Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 1294, 1295 & 1296/JP/2019) 6. vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत