SHRI BRAHMA PRAKASH SINGH,LUCKNOW vs. DEPUTY COMMISSIONER OF INCOME TAX, RANGE- 5, LUCKNOW

PDF · subscribers
ITA 502/LKW/2018Status: DisposedITAT Lucknow08 March 2019AY 2007-086 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a show cause notice for penalty under Section 271(1)(c) must be specific regarding whether it is for concealment of income or furnishing inaccurate particulars. A non-specific notice is void ab initio, rendering the subsequent penalty illegal.

What were the facts?

The assessee's appeals were against the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961, which was confirmed by the CIT(A). The assessee argued that the penalty proceedings were initiated based on a non-specific show cause notice.

What were the issues?

Whether a penalty under Section 271(1)(c) is valid if the show cause notice does not 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

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW

Before: SHRI A.D JAIN & SHRI T.S. KAPOOR

For Appellant: Shri Dharmendra Kumar, CA
For Respondent: Shri C.K. Singh, DR
Hearing: 28/02/2019

PER: A.D. JAIN, VICE PRESIDENT:

These appeals are filed by the assessee for Assessment Years 2007-08 to 2010-11, involving common issues. As such, they are being disposed of by this composite order. Details, for convenience, are being taken from ITA No.502/Lkw/2018 in the case of Brahma Prakash Singh. The following grounds have been raised in ITA No.502/Lkw/2018:

“1. That Lower Authority erred to uphold penalty imposed under section 271(l)(c) of Income Tax Act, 1961. 2. That appellant accepted the additions in total income in assessment for the reasons that appellant was under prison and son of appellant, who looked after the income-tax proceedings was unaware of details of banking transactions made by appellant, hence, to buy peace of mind and to avoid litigation, family of appellant, which was under heavy stress accepted the addition in assessment, which was incorrect and against the facts.

2 ITA No. 502 to 505/Lkw/2018

3.

That appellant never concealed particulars of his income and never furnished inaccurate particulars of his income. 4. That AO could not point out single concealment of facts of furnishing of inaccurate of particulars of income, whefeas, she imposed penalty under section 271(l)(c) of the Act from the facts and records produced by appellant himself. 5. That the penalty order is void-ab-initio and bad in law as much as the notice issued under section 274 read with section 271 of the Income Tax Act, 1961 is not discernible as to whether the penalty proceedings are initiated for concealment of income or for furnishing of inaccurate particulars of income and neither the order passed under section 271(l)(c) is clear as to this aspect and, therefore, impugned order passed deserves to be cancelled.” 2. The grievance of the assessees is against imposition of penalty under

section 271(1)(c) of the I.T. Act, which has been confirmed by the learned

CIT(A).

3.

At the time of hearing before us, the ld. A.R. of the assessee invited our

attention to the show cause notice for penalty under section 271(1)(c) of the Act.

It was submitted that from a perusal of this notice, it is crystal clear that the

charge for which the penalty is proposed to be levied under section 271(1)(c) of

the Act is not specific, as to whether it is for concealment of income or for

furnishing of inaccurate particulars of income. The ld. A.R. of the assessee

vehemently argued that it is a settled position of law that if the notice under

section 274 is not specific about the charge or limb under which penalty is being

levied under section 271(1)(c) of the Act, any penalty levied on the basis of such

a notice is bad in law and it is liable to be cancelled.

4.

The ld. D.R., on the other hand, relied on the orders of the authorities below.

3 ITA No. 502 to 505/Lkw/2018

5.

Heard. The show cause notice in question is as follows:

4 ITA No. 502 to 505/Lkw/2018

From a perusal of this notice, it is crystal clear that the charge for which

penalty is proposed to be levied under section 271(1)(c) of the Act, whether

for concealment of income, or for furnishing of inaccurate particulars of

income, is not specific. The law mandates that the authority who is

proposing to impose penalty shall be certain as to the basis on which the

penalty is being levied and the notice must reflect that specific reason, so

that the assessee, to whom such notice is given, can prepare himself

regarding the defence which he would like to take to support his case. This

is even enshrined in the principles of natural justice and as has been upheld

by Hon'ble Apex Court and other High Courts. We place reliance on the

following cases:-

‘CIT vs. SSA’s Emerald Meadows’, [2016] 73 1. Taxmann.com 248 (SC). In this case the Hon'ble Apex Court looked into the facts before them that Tribunal relying on the decision of Division Bench of Hon'ble Karnataka High Court in the case of CIT and Another vs. Manjunath Cotton & Ginning Factory (supra) allowed the appeal of the assessee holding that notice issued by the Assessing Officer under section 274 read with section 271(1)(c) of the Act was bad in law as it did not specify under which limb of 271(1)(c) penalty proceedings has been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. When the matter travelled upto the High Court, it supported the judgment of Hon'ble Karnataka High Court in the case of CIT and Another vs. Manjunath Cotton & Ginning Factory (supra) and decided that there was therefore no substantial question of law to be decided. Thereafter an SLP was filed before the

5 ITA No. 502 to 505/Lkw/2018

Hon'ble Apex Court and the Apex Court dismissed the SLP of the Revenue finding no merit therein and confirming the issue in favour of the assessee. ‘CIT and Another vs. Manjunath Cotton & Ginning 2. Factory’, [2013] 359 ITR 565 (Karn.). In this case, it has been held by the Hon'ble High Court that notice under section 274 read with section 271(1)(c) of the Act should specifically state the grounds mentioned in 271(1)(c) i.e. whether it is for concealment of income or for furnishing of inaccurate particulars of income. Sending printed form where all the grounds mentioned would not satisfy the requirement of law. Assessee should know the grounds which he has to meet specifically. Otherwise, the principles of natural justice is offended. On the basis of such proceedings no penalty could be imposed to the assessee. Penalty proceedings are distinct from assessment proceedings though it emanates from the assessment proceedings still it is separate and independent proceedings all together. ‘Meherjee Cassinath Holdings Pvt. Ltd vs. ACIT (ITAT 3. Mumbai)’, ITA NO. 2555/MUM/2012, order dated 28/04/2017 wherein the observation of the Bench was that penalty proceedings under section 271(1)(c) of the Act are "quasi-criminal" proceedings and ought to comply with the principles of natural justice. The non-striking of the irrelevant portion in the show- cause notice means that the Assessing Officer is not firm about the charge against the assessee and the assessee is not made aware as to which of the two limbs of s. 271(1)(c) he has to respond. ‘Chandra Prakash Bubna vs. Income Tax Officer, 4. Ward 27(3), Kolkata’, (ITAT Kolkata Bench) [2015] 64 taxmann.com 155 wherein it was held that when the Assessing Officer levied penalty without bringing out any specific charge for which penalty had been imposed, penalty was liable to be deleted. ‘Sachin Arora vs. ITO’ and other cases, order dated 5. 19.12.2017 passed by the Agra Bench of the Tribunal in ITA No.118/Agra/2015 etc.

6 ITA No. 502 to 505/Lkw/2018

6.

The settled legal position on the issue, as enshrined in the aforesaid

cases, is apparent and we arrive at the considered view that the show

cause notice, which has not specified the charge and limb under which the

penalty is proposed to be levied, is void ab initio and the consequent

penalty imposed on the basis of such notice is, therefore, illegal and bad in

law and liable to be deleted. We, therefore, direct deletion of the penalty.

7.

Facts being similar in the other appeals, i.e., ITA No.503 to

505/Lkw/2018, these appeals are also allowed, with the same observations

as given in ITA No.502/Lkw/2018

8.

In the result, all the appeals are allowed.

(Order pronounced in the open court on 08/03/2019)

Sd/- Sd/- T.S. Kapoor (A.D. Jain) Accountant Member Vice President

Aks – Dtd. 08/03/2018 Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File

By order Assistant Registrar

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →