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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA. No. 789/JP/2015
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA. No. 789/JP/2015 fu/kZkj.k o"kZ@Assessment Years : 2008-09 cuke Shri Prathvi Pal Dhabhai The ITO, Vs. 1/50, New Extension, Housing Board, Kishangarh. Madanganj Kishangarh. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AFOPD 2634 J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Satish Kumar Gupta (Adv.) jktLo dh vksj ls@ Revenue by : Smt. Punam Rai (DCIT) lquokbZ dh rkjh[k@ Date of Hearing : 14/06/2018 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 07/08/2018 vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A), Ajmer dated 25.08.2015 for the Assessment Year 2008-09 wherein the assessee has challenged the confirmation of penalty amounting to Rs. 1,78,265/- U/s 271(1)(c) of the Act.
At the outset, the ld. AR requested for permission to raise additional ground of appeal as under:- “on the facts & circumstances of the case and on the basis of law laid down by Hon’ble Supreme Court in the case of Emerald
2 ITA No. 789/JP/2015 Shri Prathvi Pal Dhabhai vs. ITO
Meadows 242 Taxmann 180 (SC) and Hon’ble Karnataka High Court in the case of Manjunatha Cotton Ginning Factory 359 ITR 0565 (Karnataka), Ld. A.O. grossly erred in initiating of proceedings U/s 271(1)(c) of the Act as Ld. A.O. did not strike off the inappropriate portion of the notice issued U/s 274 of the Act as it did not specify under which limb of section 271(1)© of the Act penalty proceedings have been initiated i.e. either for concealment of particular of income or for furnishing of inaccurate particulars of income. More over the said notice is in printed form where all the grounds mentioned in section 271 are mentioned is also unlawful in the light of above referred decisions.”
The ld. AR has submitted that the additional ground is purely a legal ground and it goes to the root of the matter, the same should be admitted in the interest of justice. In support, reliance was placed on the decision of Hon’ble Supreme Court in case of National Thermal Power Corporation Ltd. Vs. CIT 229 ITR 383. After hearing both the parties, the additional ground being a purely legal ground, the same is being admitted for adjudication.
Briefly the facts of the case are that the assessment was competed U/s 143(3) of the Act wherein the AO made addition U/s 68 on account of sundry deposits amounting to Rs. 8,96,547/-. The penalty proceedings were separately initiated by issuance of notice U/s 274 r.w.s. 271(1)(c) of the IT Act dated 23.12.2010 for concealment of income or furnishing of inaccurate particulars of income. The assessee has challenged the said addition before the ld. CIT(A) and the same has been confirmed hence, in the quantum proceedings, the matter has attained finality. Thereafter the AO passed the penalty order dated
3 ITA No. 789/JP/2015 Shri Prathvi Pal Dhabhai vs. ITO
28.03.2013 where penalty on addition so sustained has been imposed for concealment of income and furnishing inaccurate particulars of income.
During the course of hearing, the ld. AR has submitted that the AO in the body of the assessment order has mentioned that penalty proceedings U/s 271(1)(c) of the Act are being initiated separately as assessee has furnished inaccurate particulars of income. Further, in the notice issued U/s 274 r.w.s. 271(1)(c), penalty proceedings U/s 271(1)(c) is initiated for concealment of income or furnishing of inaccurate particulars of income. It was submitted that in the absence of any specific charge against the assessee in the penalty notice, consequent penalty imposed by the AO is illegal and bad in law. In support, reliance was placed on the decision of Hon’ble Supreme Court in case of CIT vs. SSA’s Emerald Meadows (2016) 242 Taxman 180 and Hon’ble Karnataka High Court in case of CIT vs. M/s Manjunatha Cotton & ginning Factory & Ors. 359 ITR 565. It was further submitted that a similar view issue has been dealt with by the Coordinate Bench of this Tribunal in case of Shri Chandmal Kumawat vs. ITO (ITA No. 441/JP/2017 order dated 21.12.2017) wherein the Bench has held in paras 15 to 18 as under:-
“15. We have heard the rival contentions and perused the material available on record. Firstly, regarding the preliminary plea of the ld AR that in absence of a specific charge against the assessee in the penalty notice, consequent levy of penalty by the AO is illegal and bad in law, we refer to the penalty notice dated 18.03.2013 which talks about assessee concealing the particulars of income or furnishing inaccurate particulars of income. The notice doesn’t specify the exact charge
4 ITA No. 789/JP/2015 Shri Prathvi Pal Dhabhai vs. ITO
against the assessee as to whether it relates to concealing the particulars of income or furnishing inaccurate particulars of income. The subsequent notice dated 17.08.2015 is against silent on the exact charge against the assessee. It is a settled position in law that the imposition of penalty under section 271(1)(c) is invited when the conditions specified therein are satisfied and further, the two expressions “concealing the particulars of income” and “furnishing inaccurate particulars of income” denote different connotations. It is therefore imperative that the assessee be made aware as to which of the two charges, he is required to submit his defence and supportive arguments. In the instant case, as we have noted above, the notice talks about both the charges and it doesn’t convey to the assessee as to which charge he has to respond. The notice thus demonstrate non- application of mind on the part of the AO. Further, we refer to the assessment order where, after discussing the issue relating to computation of capital gains, the AO held that by showing less capital gains, the assessee has furnished inaccurate particulars of income and penalty proceedings are being initiated separately and thereafter, towards the end of the assessment order, the AO states that penalty proceedings u/s 271(1)(c) read with section 274 have been initiated separately for concealment of income/furnishing of inaccurate particulars of income. This thus shows that the AO himself is unsure about the charge against the assessee during the course of assessment proceedings. Considering the observations of the AO in the assessment order alongside his action of non-striking off the irrelevant clause in the penalty notice shows that the charge being made against the assessee qua 271(1)(c) is not firm, shows non-application of mind on the part of the AO, and the vagueness and ambiguity in the notice has thus prejudiced the right of reasonable opportunity to the assessee in as much as the assessee is not made aware as to which of the two charges, he has to submit his defence. 16. Here, we refer to the decision of Hon’ble Supreme Court in case of Dilip N Shroff reported in 161 Taxman 218 where it was held as under:
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“83. It is of some significance that in the standard proforma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done. Thus, the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. Even before us, the learned Additional Solicitor General while placing the order of assessment laid emphasis that he had dealt with both the situations. 84. The impugned order, therefore, suffers from non-application of mind. It was also bound to comply with the principles of natural justice. [See Malabar Industrial Co. Ltd. v. CIT [2000] 2 SCC 718].”
We find that similar proposition has been laid down by the Hon’ble Karnataka High Court in case of Manjunatha Cotton and Ginning Factory (supra) which has been followed in case of SSA Emerald Meadows (supra) and the SLP against the latter decision has since been dismissed by the Hon’ble Supreme Court. Further, we note that the Hon’ble Bombay High Court in case of Shri Samson Perinchery (in ITA No. 1154 and others dated 5.01.2017) and Karnataka High Court in its latest decision in case of S. Chandrashekhar (Supra) has reaffirmed the said legal proposition.
In light of above legal authorities where the factum of non-striking off of the irrelevant clause in the notice has been held as reflective of non-application of mind by the AO and in light of facts and circumstances of the present case and the above discussions, the penalty imposed under section 271(1)(c) is liable to be deleted.”
In the facts of the present case, undisputedly, the notice issued under section 274 read with section 271(1)(c) doesn’t specify the exact charge against the assessee as to whether it relates to concealing the
6 ITA No. 789/JP/2015 Shri Prathvi Pal Dhabhai vs. ITO particulars of income or furnishing inaccurate particulars of income. Respectfully following the decisions referred supra, the factum of non- striking off of the irrelevant clause in the notice issued under section 274 read with section 271(1)(c) is hereby held as reflective of non- application of mind by the AO, the penalty imposed U/s 271(1)(c) is deleted.
Regarding other contentions raised by the ld AR on the merits of
the case since the additional ground has been allowed and the penalty
has been deleted on this count itself, we don’t think it would be relevant
to examine said contentions so raised by the ld AR and hence, the same
are not being dealt with.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 07/08/2018.
Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vijay Pal Rao) (Vikram Singh Yadav) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 07/08/2018. *Santosh आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Shri Prathvi Pal Dhabhai, Kishangarh. 2. izR;FkhZ@ The Respondent- ITO, Kishangarh. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A)
7 ITA No. 789/JP/2015 Shri Prathvi Pal Dhabhai vs. ITO 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File { ITA No. 789/JP/2015} vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेज. त्महपेजतंत