BISHWANATH PRASAD,MUZAFFARPUR vs. AC/DCIT CENTRAL CIRCLE, MUZAFFARPUR
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Income Tax Appellate Tribunal, “DB” BENCH, PATNA
Before: SHRI RAJPAL YADAV, VP & SHRI DR. MANISH BORAD, AM
IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, PATNA (Through virtual hearing at Kolkata) BEFORE SHRI RAJPAL YADAV, VP AND SHRI DR. MANISH BORAD, AM ITA Nos. 184 & 185/PAT/2023 (Assessment Year: 2014-15,2016-17) CIT (A) Nand Kumar Prasad Sah Lok Nayak Bhawan Saraiyaganj, Bihar-842001 Vs. Muzaffarpur, Bihar, (Appellant) (Respondent) PAN No. AJNPS7052G ITA Nos. 161 & 162/PAT/2023 (Assessment Year: 2015-16,2016-17) CIT (A) Bishwanath Prasad, Lok Nayak Bhawan Muzaffarpur, Bihar-842001 Vs. Muzaffarpur, Bihar, (Appellant) (Respondent) PAN No. AJNPS7052G Assessee by : Shri SK Tulsiyan, & Ms. Puja Somani, Ars Revenue by : Shri Ashwani Kr. Singal, DR Date of hearing: 20.06.2024 Date of pronouncement: 29.08.2024
O R D E R PER BENCH:
These appeals at the instance of two different assessee(s) are directed against the orders of Commissioner of Income-tax (Appeals) [learned CIT (A)] dated 24.04.23, 22.05.2023 for A.Ys. 2014-15, 2015-16, 2016-17 arising out of the order of AC/DCIT levying penalty under section 271(1)(c) of the Income-tax Act, 1961 (the
As the common issue raised in all these appeals are against the levy of penalty under Section 271(1)(c) of the Act, we for the purpose of adjudication taken up the facts of ITA No. 184/PAT/2023, for A.Y. 2014-15 in the case of Nand Kumar Prasad Sah and our decision shall apply mutatis mutandis to all the remaining captioned appeals.
Assessee has raised following grounds of appeal: -
“1. For that the Ld. CIT(A) has erred in passing penalty order u/s 271(1)(c) and levied penalty of Rs.1093704/-.
For that the Ld. CIT(A) has only relied upon the A.O. order
For that the Ld. CIT(A) has erred in applying the Apex Court order in the case of CIT vs. Prasanna Dugar. The Apex Court order is not applicable in the present case as no disclosure statement u/s 132(4) was made during the course of search and seizure.
For that the Ld. CIT(A) has erred in passing the order without giving the opportunity of being heard which is against the principle of natural justice. The appellant has filed a time petition on 24.04.2023. The Ld. CIT(A) was in hurry to pass the order on the same date on which the time petition was filed. The order was passed on after 8.00 pm.
For that whole order is bad in fact and the law of the case and is fit to be quashed.
Aggrieved assessee filed appeal to learned CIT (A) challenging the levy of penalty but failed to get any relief.
Now the assessee is in appeal before this Tribunal.
The learned Counsel for the assessee referring to the written submissions submitted that the assessee has been subjected to levy of penalty on a wrong charge. He submitted that though the penalty has been levied for
“1. New Sorathia Engg. Co. Ltd., Vs. CIT (2005) 282 ITR 642/155 Taxmann 513(Guj.), 2. Chandra Prakash Bubna Vs. ITO (2015) 64 taxmann.com 155 (Kolkata-Trib.) 3. CIT Vs. Manjunatha Cotton & Ginning Factory (2013) 35 taxmann.com 250 (Karnataka) 4. CIT vs. SSA’s Emerald Meadows (2016) 73 taxmann.com 248 (SC).” 08. As regards to the decision of Hon'ble Calcutta High Court in case of CIT vs. Prasanna Dugar (2015) 59 taxmann.com 99 (Calcutta), relied by the Revenue authorities, he submitted the same is not applicable on the facts of the assessee as they are distinguishable and that in the case of Prasanna Dugar (supra), the voluntary disclosure was not recorded in the regular return of income filed for the year and therefore, was purely a case of concealment of particulars of income.
On the other hand, the learned Departmental Representative vehemently argued supporting the orders of the lower authorities.
We have heard the rival contentions and perused the records placed before us. The assessee is aggrieved with the levy of
The Hon'ble Gujarat High Court in case of New Sorathia Engg. Co. Ltd (supra) held as under: -
“It is incumbent upon the Assessing Officer to state whether the penalty was being levied for concealment of particulars of income by the assessee or whether any inaccurate particulars of income had been furnished by the assessee Held, that the penalty order and the order of the Commissioner (Appeals) showed that no clear-cut finding had been reached.
We also observe This Tribunal in case of Chandra Prakash Bubna (supra) held as under: -
“the word ‘conceal’ as per Websters Dictionary means ‘to hide, withdraw, or remove from observation; cover or keep from sight; to keep secret; to avoid disclosing or divulging. That means non- disclosure of particulars of income. On the other hand, where particulars are disclosed by such disclosure is not correct, true or accurate, it would amount to furnishing of inaccurate particulars of income. For example, in case of businessman, if a particular transaction of sale is not shown in the books, it would amount to concealment of particulars of income while sale is shown but at a leaser value, it would amount to furnishing of inaccurate particulars of income.”
Further, Hon'ble Karnataka High Court in case of Manjunatha Cotton & Ginning Factory (supra), held as under: -
“Penalty under section 271(1)(c) is a civil liability. Therefore, mens rea is not an essential element for imposing penalty for breach of such civil obligations or liabilities. Wilful concealment is not an essential ingredient for attracting civil liability. [para 63]
Existence of conditions stipulate din section 271(1)(c) is a sine qua non for initiation of penalty proceedings under section 271. The existence of such conditions should be discernible from the assessment order or order of the Appellate Authority or
The imposition of penalty is not automatic, i.e., imposition of penalty even if the tax liability is admitted, is not automatic. Even if the assessee has not challenged the order of assessment levying tax and interest and has paid the same, that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is account of such unearthing or enquiry concluded by authorities which has resulted in payment of such tax or such tax liability came to be admitted, and if not, it would have escaped from tax net as opined by the Assessing Officer in the assessment order. Only when no explanation is offered or the explanation offered is found to be false or when the assessee falls to prove that the explanation offered is not bona fide, an order imposing penalty can be passed. If the explanation offered, even though not substantiated by the assessee, is found to be bona fide and all facts relating to the same and material for the computation of his total income have been disclosed by him, no penalty can be imposed. [Para 63]
Notice under section 274 should specifically state the grounds mentioned in section 271(1)(c). Le., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form, where all the grounds mentioned in section 271 are mentioned, would not satisfy requirement of law. The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. [Para 63]
The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty, though emanate from proceedings of assessment, are independent and separate aspect of the proceedings. The findings recorded in the assessment proceedings in so far as 'concealment of income' and 'furnishing of incorrect particulars' would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings." [Para 63].”
“(Calcutta) wherein it was held that "Even where subsequent to search, assessee voluntarily disclosed a sum and offered said sum to tax, since said amount was not disclosed in o penalty levied under section 271(1)(e) for concealment of income was justified." 015. Now, examining the facts of the instant case, in the light of the above judgment/ decisions, we first take note of the notice issued under Section 274 read with section 271(1)(c) of the Act issued on 21st February, 2022, for A.Y. 2014-15 to the assessee. In the said notice, the charge levelled against the assessee is of concealment of particulars of income. However, considering the ratio laid down by this Tribunal in case of Chandra Prakash Bubna (supra), where it was held that charge for suppressing the sales figure is of furnishing of inaccurate particulars of income. It was also held in the case of Chandra Prakash Bubna (supra) that not showing of transactions of sale would amount to concealment of income but showing of sale at a lesser value would amount to furnishing of inaccurate particulars of income. Since, we are bound by the judicial precedents, therefore, taking note of the decision of this Tribunal in the case of Chandra Prakash Bubna (supra) and examining the facts in the light thereof, we find that in the show cause notice issued under Section 274 of the Act, the assessee should have been levelled with the charge of furnishing of
As far the decision of Hon'ble High Court of Calcutta High Court in case of Prasanna Duggar (supra). We are satisfied that the facts of the instant case, which are distinguishable with the facts in the Prasanna Duggar (supra) and therefore, judgements of Hon'ble Calcutta High Court in case of Prasanna Duggar (supra) will not be applicable on the facts of the instant case.
Under this facts and circumstances and respectfully following the ratio laid down by the Hon'ble courts in case of New Sorathia Engg. Co. Ltd. (supra), and others (supra) we hold that the penalty proceedings have been initiated against the assessee on a wrong charge and therefore, such penalty proceedings are illegal and void-ab-initio. We accordingly, set aside the findings of the learned CIT (A) and delete the impugned penalty levied under Section 271(1)(c) of the Act and allow the effective ground of appeal raised by the assessee.
In the result, all the appeals of the both the assessee in ITA No. 184, 185, 161 & 162/PAT/2023, are allowed
Order pronounced in the open court on 29.08.2024.
Sd/- Sd/- (RAJPAL YADAV) (DR. MANISH BORAD) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 29.08.2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata
