MRIDU HARI DALMIA,NEW DELHI vs. DCIT (INTERNATIONAL TAXATION), NEW DELHI

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ITA 1133/DEL/2017Status: DisposedITAT Delhi13 December 2021AY 2011-129 pages
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What did the Tribunal hold?

The Tribunal held that the notice issued under Section 274 read with Section 271(1)(c) was bad in law as it did not specify which limb of Section 271(1)(c) the penalty proceedings were initiated under. The penalty was deleted based on the jurisdictional High Court's decision.

What were the facts?

The assessee's returned income was increased by the Assessing Officer (AO) due to non-inclusion of certain income. Subsequently, penalty proceedings were initiated under Section 271(1)(c) for concealment or furnishing inaccurate particulars of income.

What were the issues?

Whether a penalty notice under Section 271(1)(c) is invalid if it fails to specify whether it is for concealment of income or furnishing inaccurate particulars of income.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

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Income Tax Appellate Tribunal, DELHI ‘D’ BENCH,

Before: SHRI N.K. BILLAIYA, & SHRI CHALLA NAGENDRA PRASAD

For Appellant: Shri Dharan Gandhi, Adv
For Respondent: Ms. Radha Katyal Narang, Sr. DR
Hearing: 13.12.2021Pronounced: 13.12.2021

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-

1.

This appeal by the assessee is preferred against the order of the CIT[A]- 42, New Delhi dated 20.12.2016 pertaining to Assessment Year 2011-12.

2.

The assessee has raised the following grounds of appeal:

1. On the facts and in the circumstances of the case and in law, the notice issued u/s 274 r.w.s 271(1)(c) dated 31.03.2015 ios bad in law and consequently, the penalty levied in pursuance of the said notice should be deleted.

2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming the action of the Assessing Officer in levying penalty u/s 271(1)(c) of the Act. Of Rs. 6,96,223/-

3.

The above grounds of appeal are without prejudice to one another.”

3. The roots for levy of penalty lie in the assessment order framed u/s 143(3) of the Act by which the retuned income of Rs. 87,53,200/- was assessed at Rs. 1,04,66,910/- after making addition of Rs. 17,13,707/-.

The said addition was on account of non-inclusion of income of Rs. 17,13,707/-. Penalty proceedings were separately initiated for concealment of particulars of income and for furnishing of inaccurate particulars thereof.

4.

Penalty was subsequently levied @ 100% of the taxes sought to be evaded at an amount of Rs. 6,96,223/-. While levying penalty, the Assessing Officer, at para 7 of his order, observed that the present case would fall under concealment of income and furnishing of inaccurate particulars of income.

5.

The representatives of both the sides were heard at length, the case records carefully perused.

6.

Notice u/s 274 r.w.s 271(1)(c) of the Act read s under:

7.

A perusal of the above shows that the Assessing Officer was not certain whether penalty was leviable for concealment of income or for furnishing of inaccurate particulars of income.

8.

We have given thoughtful consideration to the orders of the authorities below. The Hon’ble Delhi High Court in case of Pr. CIT vs. Sahara India Life Insurance Company Ltd. ITA 475 of 2019, while deciding the identical issue held as under:

“21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of inc me or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016.”

9.

Similar view was taken by the Hon’ble High Court of Karnataka in the case of SSA Emerald Meadows of 2015. The relevant findings of the judgement read as under:

“Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act to be bad in law as it did not specify which limb of section 271(1)(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 issue was decided in favour of the assessee.”

10.

A SLP of the revenue against this judgement of the Hon’ble High Court of Karnataka was dismissed by the Hon’ble Supreme Court in 73 taxmann.com 248.

11.

Respectfully following the binding decision of the Hon’ble Jurisdictional High Court of Delhi, we direct the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act.

12.

Before parting, the assessee has raised an additional ground which reads as under:

“The ld. CIT(A) erred in stating that Rs. 35,89,225/- has remained unexplained whereas the assessee has only offered to tax Rs. 22,53,148/-. The ld. CIT(A) also erred in stating that he is separately informing the Assessing Officer about the said difference and such statement of the ld. CIT(A) is erroneous, contrary to record irrelevant and without putting to the assessee.”

13.

In support of his contention, the ld. AR relied upon several judicial decisions.

14.

We have carefully considered the judicial decisions relied upon by the assessee. In our considered opinion, all the judicial decisions are misplaced and not relevant to the facts of the case in as much as the ld. CIT(A) has not given direction to the Assessing Officer to make further addition but has simply informed about the difference in amount offered for taxation vis a vis unexplained foreign receipts.

15.

A perusal of the findings of the ld. CIT(A) clearly show that he has not transgressed his powers nor he has issued any unwarranted direction to the Assessing Officer. The additional ground raised is accordingly dismissed.

16.

In the result, the appeal of the assessee in is partly allowed.

The order is pronounced in the open court on 13.12.2021 in the presence of both the representatives.

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