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Income Tax Appellate Tribunal, RANCHI ‘SMC’ BENCH, RANCHI
Before: SHRI N.S SAINI
IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI ‘SMC’ BENCH, RANCHI
BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER
ITA No.329 /Ran/2016 Assessment Year: 2004-05
Shri Niranjan Kr Agarwal, Vs. ITO, Ward –II (1), Dhanbad M/s. Allied Carriers, Chirkunda, Dhanbad. PAN/GIR No.ACHPA 0443 Q (Appellant) .. ( Respondent)
Assessee by : Shri Devesh Poddar, Adv Revenue by : Shri A.K.Mohanty, JCIT Date of Hearing : 22/11/ 2018 Date of Pronouncement : 22 /11/ 2018
O R D E R This is an appeal filed by the assessee against the order of
the CIT(A), Dhanbad dated 28.9.2016 for the assessment year
2004-05.
The sole issue involved in this appeal is that the CIT(A) erred
in sustaining the penalty of Rs.60,000/- for the assessment year
2004-05 levied u/s.271(1)(c) of the Act by the Assessing Officer.
At the outset, ld A.R. of the assessee by filing copy of notice
issued u/s.271(1)(c) of the Act by the Assessing Officer dated
11.1.2016 for Assessment year 2004-05 submitted that the
Assessing Officer in the said notice has stated as under:
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“have concealed the particulars of your income or furnished inaccurate particulars of such income.” 4. Thus, it is not clear from the said notice issued 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.
On the other hand, ld D.R relied on the orders of lower
authorities.
I have heard the rival submissions and perused the orders of
lower authorities and materials available on record. The notice
issued by the AO u/s 271(1)(c) for the assessment year 2004-05
is reproduced as under :-
“Where in the course of proceedings before me for the assessment year 2004-05 it appears to me that you: - *have without reasonable cause failed to furnish me return of income which you were required to furnish by a notice by U/s.22(l)/22(2)/B4 of the Indian Income Tax Act, 1922 or which you were required to furnish under section 139(1) or by a notice given by u/s.. 139(2) /148 of the Income Tax Act, 1961. No.___ dt.____ or have without reasonable cause failed to furnish it within the time allowed and the manner required by the said section 139(1) or by such notice. ** have without reasonable cause failed to comply with a notice u/s. 22(4)/23(2) of the Indian Tax Act, 1922 or under section 142(1) / 143(2) of the Income-tax Act, 1961. ***have concealed the particulars of your income or furnished in accurate particulars of such income. You are hereby requested to appear before me at 3.30 PM on 21.1.2016 and show cause why an order imposing a penalty on you should not be made u/s 271 of the Income-tax Act, 1961. If you do
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not wish to avail yourself of this opportunity of being heard in person or through Authorised Representative, you may show cause in writing on or before the said date which will be considered before any such order is made u/s.271. " 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 of 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? (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?
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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(1)(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(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 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 notices issued u/s 271(1)(c) apparently go
to prove that the Assessing Officer initiated the penalty proceedings
by issuing the notice u/s 274/271(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.
The penalty provisions of section 271(1)(c) of the Act are
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
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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
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
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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
11.1.2016 for the assessment years 2004-05, without striking off
the irrelevant words, the penalty proceedings show a non-
application of mind by the Assessing Officer and is, thus,
unsustainable. I hold so.
Therefore, in my considered view, the CIT(A) is not justified
in sustaining the penalty of Rs.60,000/- for the assessment year
2004-05 and, therefore, I delete the same and allow the grounds of
appeal of the assesse.
In the result, appeal of the assessee is allowed.
Order pronounced on 22 /11/2018. Sd/- (N.S Saini) ACCOUNTANT MEMBER Ranchi; Dated 22 /11/2018 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Shri Niranjan Kr Agarqwal,Prop. M/s. Allied Carriers, Chirkunda, Dhanbad Dhanbad.
The Respondent. ITO, Ward-11(1), Dhanbad 3. The CIT(A)- Dhanbad 4. Pr.CIT- Dhanbad 5. DR, ITAT, Ranchi 6. Guard file. //True Copy//
By order Sr. Pvt. Secretary ITAT, Ranchi on tour
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