SHRI RANJAN KUMAR SAHU,DHENKANAL vs. ITO, DHENKANAL WARD, DHENKANAL

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK श्री चन्द्र मोहन गगग, न्द्याययक सदस्य एवं श्री एऱ.ऩी.साहु, ऱेखा सदस्य के समऺ । BEFORE SHRI CHANDRA MOHAN GARG, JM AND SHRI L.P. SAHU, AM आयकर अऩीऱ सं./ITA No.252/CTK/2018 (नििाारण वषा / Assessment Year :2011-2012) Shri Ranjan Kumar Sahu, Vs. ITO, Dhenkanal Ward, Hata Road, Mandapsahi, Dhenkanal Dhenkanal, Odisha-759001 स्थायी ऱेखा सं./ PAN No. : AHWPS 4507 K (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) ..

यनधागररती की ओर से /Assessee by : Shri C.Parida, AR राजस्व की ओर से /Revenue by : Shri Subhendu Dutta, DR सुनवाई की तारीख / Date of Hearing : 12/09/2019 घोषणा की तारीख/Date of Pronouncement : 13/09/2019 आदेश / O R D E R Per L.P.Sahu, AM: This appeal has been filed by the assessee against the order of Commissioner of Income Tax (Appeals)-2, Bhubaneswar, dated 25.04.2018 for the assessment year 2011-2012. 2. The sole issue involved in this appeal is that the CIT(A) erred in confirming the action of the Assessing Officer in levying penalty u/s.271(1)(c) of the Act of Rs.1,27,406/-. 3. At the outset, ld Authorised Representative of the assessee filed before us original copy of notice issued u/s.274 r.w.s.271(1)(c) of the

2 ITA No.252/CTK/2018 Act dated 28.02.2014, and pointed out therefrom that in the said notice,

the Assessing Officer has stated as under:

"Whereas in the course of proceedings before me for the assessment year 2011-12, it appears to me that you:- ................ *have concealed the particulars of your income or....... furnished inaccurate particulars of such income." 4. He submitted that it is not clear from the said notice issued

u/s.274 r.w.s.271(1)(c) of the Act by the Assessing Officer whether the

show cause is issued to the assessee for concealment of particulars of

income or for furnishing inaccurate particulars of income.

vs. SSA's. Emarld Meadows dated 11th January, 2017 passed in Special

Leave to Appeal (CC No.11485/2016)/73 taxmann.com 248 (SC) has

held that Omission by the AO to explicitly specify in the penalty notice

as to whether penalty proceedings are being initiated for furnishing of

inaccurate particulars or for concealment of income makes the penalty

order liable for cancellation. Hence, he submitted that penalty of

Rs.1,27,406/- imposed by the Assessing Officer u/s.271(1)(c) is,

therefore, liable to be cancelled.

submission of ld Authorised Representative of the assessee.

authorities and materials available on record of the Tribunal, we find

3 ITA No.252/CTK/2018 that the facts in the present appeal are not in dispute and the Assessing

Officer in the order passed u/s.271(1)(c) of the Act dated 20.06.2017

levied penalty of Rs. Rs.1,27,406/-.

Meadows, (2016) 73 taxmann.com 248(SC) dismissed the Special

Leave Petition filed by the Revenue against the judgment rendered by

Hon'ble High Court of Karnataka whereby identical issue was decided

in favour of the assessee. Operative part of the judgment in case of M/s.

SSA's Emerald Meadows (supra) decided by Hon'ble High Court of

Karnataka is reproduced below :-

"2. This appeal has been filed raising the following substantial questions of law: (1) Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case? (2 Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in. holding that the penalty notice under Section 274 r.w.s. 271(l)(c) is had in law and. invalid in spite the amendment of Section 271(1 B) with retrospective effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same? (3) Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued, under Section 274without taking into consideration the assessment order when the assessing officer has specified that the assessee has concealed particulars of income? 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the

4 ITA No.252/CTK/2018 Act') to be bad in law as it did not specify which limb of Section 271(l)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. .The Tribunal, while allowing the appeal of the assessee, has relied 01 the derision of the Division Bench of this Court rendered In the case of COMMISSIONER or INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court, the appeal is accordingly dismissed." 9. Bare perusal of the notice issued u/s 274 r.w.s.271(1)(c) of the

Act apparently goes to prove that the Assessing Officer initiated the

penalty proceedings by issuing the notice u/s 274/271(1)(c) of the Act

without specifying the assessee has concealed ''particulars of income"

or assessee has furnished "inaccurate particulars of income", so as to

provide adequate opportunity to the assessee to explain the show

cause notice. Rather notice in this case has been issued in a stereotyped

manner without applying any mind which is bad in law, hence is not a

valid notice sufficient to impose penalty u/s 271(1)(c) of the Act.

attracted where the assessee has concealed the particulars of income

or furnished inaccurate particulars of such income. It is also a well-

accepted proposition that the aforesaid two limbs of section

271(1)(c) of the Act carry different meanings. Therefore, it was

imperative for the Assessing Officer to strike- off the irrelevant limb so

as to make the assessee aware as to what is the charge made against

5 ITA No.252/CTK/2018 him so that he can respond accordingly. The Hon'ble Karnataka High

Court in the case of Manjunatha Cotton & Ginning Factory, 359 ITR 565

(Kar) observed that the levy of penalty has to be clear as to the limb

under which it is being levied. As per Hon'ble High Court, where the

Assessing Officer proposed to invoke first limb being concealment, then

the notice has to be appropriately marked. The Hon'ble High Court held

that the standard proforma of notice under section 274 of the Act

without striking of the irrelevant clauses would lead to an inference of

non-application of mind by the Assessing Officer. The Hon'ble Supreme

Court in the case of Dilip N. Shroff vs. JCIT, 291 ITR 519(SC) has also

noticed that where the Assessing Officer issues notice under section

274 of the Act in the standard proforma and the inappropriate words

are not deleted, the same would postulate that the Assessing Officer

was not sure as to whether he was to proceed on the basis that the

assessee had concealed the particulars of his income or furnished

inaccurate particulars of income. According to the Hon'ble Supreme

Court, in such a situation, levy of penalty suffers from non- application

of mind. In the background of the aforesaid legal position and, having

regard to the manner in which the Assessing Officer has issued notice

under section 274 r.w.s. 271(1)(c) of the Act dated 28.02.2014 without

striking off the irrelevant words, the penalty proceedings show a non-

application of mind by the Assessing Officer and is, thus, unsustainable.

6 ITA No.252/CTK/2018 11. The facts of the present appeal are identical to the facts of the case before the Hon'ble Supreme Court in the case of SSA's. Emarld Meadows(supra) and, therefore, the decision of Hon'ble Supreme Court squarely applies to the case of the assessee. Hence, respectfully following the same, we set aside the order passed by the CIT(A) dated 25.04.2018 and cancel the order of the Assessing Officer dated 20.06.2017 levying penalty of Rs.1,27,406/- and allow the grounds of appeal of the assessee. 12. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 13/09/2019. Sd/- Sd/- (C.M.GARG) (L.P.SAHU) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनांक Dated 13/09/2019 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीऱाथी / The Appellant- . 1. Shri Ranjan Kumar Sahu, Hata Road, Mandapsahi, Dhenkanal, Odisha-759001 प्रत्यथी / The Respondent- 2. ITO, Dhenkanal Ward,Dhenkanal आयकर आयुक्त(अऩीऱ) / The CIT(A), 3. आयकर आयुक्त / CIT 4. ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 5. गार्ग पाईऱ / Guard file. 6. सत्यावऩत प्रयत //True Copy// आदेशािुसार/ BY ORDER,

(Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack