SRI SAURABH TIWARY,JAMSHEDPUR vs. ACIT CIR-3, JAMSHEDPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.284 /Ran/2016 Assessment Year: 2013-14

Sri Saurabh Tiwary, Vs. ACIT, Circle-3, Jamshedpur Bunglow No.9999/287, Vijaya Garden, 5th Phase, Baridih, Jamshedpur PAN/GIR No.AGFPT 6115 J (Appellant) .. ( Respondent)

Assessee by : Shri Devasis Sanigrahi, CA Revenue by : Shri A.K.Mohanty, JCIT

Date of Hearing : 27/11/ 2018 Date of Pronouncement : 28/11/ 2018

O R D E R Per N.S.Saini, AM

This is an appeal filed by the assessee against the order of

the CIT(A)-Jamshedpur dated 14.8.2017 for the assessment year

2013-14.

erred in confirming the penalty of ₹2,25,165/- levied

u/s.271(1)(c) of the Act by the Assessing Officer.

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the CIT(A)’s order and submitted that since the assessee failed

comply with the notice dated 29.1.2016 issued u/s.271(1)(c) of

the Act before the Assessing Officer, the Assessing Officer levied

penalty under section 271(1)(c) of the Act. He also referred to

the content of the penalty notice and submitted that the

Assessing Officer in the said notice has stated as under:

“ it appears that you have concealed the particulars of your income or furnished inaccurate particulars of such income.”

u/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.

authorities.

of lower authorities and materials available on record. The

contents of the notice issued by the AO u/s 271(1)(c) for the

assessment year 2013-14 is as under :-

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“.. It appears that you have concealed the particulars of your income or furnished in accurate particulars of such income. You are hereby requested to appear before me on 4.3.2016 at 11.30 AM on and show cause why an order imposing a penalty on you should not be made u/s 271(1)(c) of the Income-tax Act, 1961. If no one attends this office on the said date of hearing the case shall be decided on the basis of material available on records.”" 7. Hon'ble Apex Court vide judgment in case of M/s. SSA's

Emerald 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 oj 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 inspite 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?

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(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 274 without 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(l)(c) of the Income Tax Act, 1961 (for short 'the 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." 8. Bare perusal of the notice issued u/s 271(1)(c) apparently go

to prove that the Assessing Officer initiated the penalty

proceedings by issuing the notice u/s 271 r.w.s 271(1)(c) of the

Act without specifying whether 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.

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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 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

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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

29.1.2016 for the assessment year 2013-14, without striking off

the irrelevant words, the penalty proceedings show a non-

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

unsustainable. We hold so.

in confirming the penalty of Rs.2,25,165/- for the assessment

year 2013-14 and, therefore, we delete the same and allow the

grounds of appeal of the assesse.

Order pronounced on 28/11/2018

Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Ranchi; Dated 28 /11/2018 B.K.Parida, SPS

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Copy of the Order forwarded to : 1. The Appellant : Sri Saurabh Tiwary, Bunglow No.9999/287, Vijaya Garden, 5th Phase, Baridih, Jamshedpur

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