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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ : NEW DELHI
Before: SHRI N.K.BILLAIYA & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, Miss Katyayani Dalmia (hereinafter referred to as ‘the assessee’), by filing the present appeal sought to set aside the impugned order dated 02.11.2016 passed by the Commissioner of Income-tax (Appeals)-18, New Delhi , affirming the penalty order dated 31.07.2015 passed u/s 271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’), qua the assessment year 2012-13 on the grounds inter alia that :-
That having regard to the facts and circumstances of 1. the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in imposing penalty of Rs. 4,14,470/- and that too without assuming jurisdiction as per law and without considering the facts and circumstances of the case.
That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in imposing penalty of Rs. 4,14,470/- u/s 271(1)(c) is bad in law and against the facts and circumstances of the case and without observing the principles of natural justice.
3. That the assessee craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other.”
2. Briefly stated that facts necessary for adjudication of the controversy at hand are : on the basis of statement order framed u/s 143(3) of the Income Tax Act, 1961 (for short “Act”) at an income of Rs. 3,63,250/-, the penalty proceeding were initiated u/s 271(1)(c) of the Act for furnishing inaccurate particulars of loss.
Declining the contention raised by the assessee, Assessing Officer levied the penalty of Rs. 4,14,470/- at the 100% of the tax sought to be evaded.
Assessee carried the matter by way of filing the appeal before the ld. CIT (A) who has confirmed the penalty by dismissing the same. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Undisputedly assessee has accepted the assessment framed u/s 143(3) of the Act by not challenging the assessment order before higher authority. It is also not in dispute that AO has recorded his satisfaction and initiated the penalty proceedings for furnishing inaccurate particulars of income / loss.
In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower authorities and arguments addressed by the authorized representatives of both the parties, the sole question arises for determination in this case is:-
"as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings ? " Ld. AR for the assessee contended that in order to initiate the 7. penalty proceedings, the AO has failed to specify in the show-cause notice issued u/s 271(1)(c)/274 of the Act if the assessee has concealed the particulars of income or has furnished inaccurate particulars of income and relied upon the decisions of Hon'ble Kerala High Court in the case of CIT vs. SSA's Emerala Meadows -73 taxmann.com 241 (Kar.) (Revenue's SLP dismissed in 242 taxman 180) and Hon'ble High Court of Delhi in Pr. CIT vs. Sahara India Life Insurance Company Ltd. in ITA 475/2019 order dated 02.08.2019.
In order to proceed further, we would like to peruse the 8. notice issued by AO u/s 274 read with section 271(1)(c) of the Act to initiate the penalty proceedings which is extracted as under for ready perusal:-
NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(c) OF THE INCOME TAX ACT, 1961 To, Dated : 05.01.2015 Ms. Katayani Dalmia, 27, Akbar Road, New Delhi-110011 PAN : AIUPD4826F Whereas in the course of proceedings before me for the assessment year 2012-13 it appears to me that you :- • have concealed the particulars of your income against assessment year 2012-13 and furnished inaccurate particulars of such income. You are hereby requested to appear before me at 12.30 P.M. on 27.01.2015 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income- tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorized representative, you may show cause in writing on or before the said date which will be considered before any such order is made under section 271 of the Income-tax Act, 1961.
Bare perusal of the notice issued u/s 274 read with section 271(1)(c) of the Act, extracted above, in order to initiate the penalty proceedings against the assessee goes to prove that the AO himself was not aware / sure as to whether he is issuing notice to initiate the penalty proceedings either for "concealment of particulars of income" or for "furnishing of inaccurate particulars of such income" by the assessee rather issued vague and ambiguous notice by incorporating both the limbs of section 271(1)(c). When the charge is to be framed against any person so as to move the penal provisions against him/her, he/she is required to be specifically made aware of the charges to be leveled against him/her.
Hon'ble Apex Court in case of CIT vs. SSA's Emerala Meadows - (2016) 73 taxmann.com 248 (SC) while dismissing the SLP filed by the Revenue quashing the penalty by the Tribunal as well as Hon'ble High Court on ground of unspecified notice has held as under:-
"Section 274, read with section 271(1)(c), of the Income- tax Act, 1961 - Penalty - Procedure for imposition of (Conditions precedent) - Assessment year 2009-10 - Tribunal, relying on decision of Division Bench of Karnataka High Court rendered in case of CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 1TR 565/218 Taxman 423/35 taxmann.com 250, allowed appeal of assessee holding that notice issued by Assessing Officer under section 274 read with section 271 (1 )(c) was bad in law, as it did not specify under which limb of section 271 (1 )(c) penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income - High Court held that matter was covered by aforesaid decision of Division Bench and, therefore, there was no substantial question of law arising for determination - Whether since there was no merit in SLP filed by revenue, same was liable to be dismissed - Held, yes [Para 2] [In favour of assessee]" 12. Hon'ble Delhi High Court in case of Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra) 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 income 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."
Following the decisions rendered in the cases of CIT vs. SSA’s Emerala Meadows and Pr. CIT vs. Sahara India Life Insurance Company Ltd. (supra), we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous one having not specified under which limb of section 271(1)(c) of the Act,the penalty proceedings are initiated u/s 271(1)(c) are not sustainable. Not only this even at the time of passing penalty order under challenge Assessing Officer levied the penalty by observing as under :-
“In view of the facts and circumstances of the case, I levy a penalty of Rs. 4,14,470/- being 100% of the tax sought to be evaded on concealment/inaccurate particulars of Rs. 20,11,991/- u/s 271(1)(c) r.w. Explanation 1 of the Income-tax Act, 1561 in the case of the assessee for the AY 2012-13.” 14. So even at the time of passing penalty order, AO was not aware enough as to whether he is levying the penalty for concealment of particulars of income or for furnishing inaccurate particulars of income. So initiating penalty proceedings on the basis of vague and ambiguous notice issued u/s 274 read with section 271(1)(c) of the Act is not sustainable in the eye of law, hence, order to be deleted. Consequently, appeal filed by the assessee is hereby allowed. Order pronounced in open court on 13th day of January, 2021 Sd/- Sd/- (N.K.BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 13/01/ 2021 BR Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-18, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT
NEW DELHI.