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Income Tax Appellate Tribunal, HYDERABAD BENCH ‘A, HYDERABAD
Before: SMT. P. MADHAVI DEVI & SHRI S. RIFAUR RAHMAN
PER S. RIFAUR RAHMAN, AM:
Both these appeals are filed by two assessees against separate orders of CIT(A) - 4, Hyderabad, both, dated 27/03/2015 whereby CIT(A) confirmed the penalty levied by the AO u/s 271(1)(c) of the Act.
ITA No. 824/Hyd/2015 in the case of Usha Rani K.
Briefly the facts of the case are that assessee filed her return of income for the AY 2007-08 on 28/07/2007 admitting income of Rs. 17,54,250/- including long term capital gains of
2 I.T.A. NoS. 824 & 825/Hyd/2015 Usha Rani K & K. Bala Vishnu Raju Rs. 1,86,085 and agricultural income of Rs. 4,52,000/-. The case was selected for scrutiny and the AO passed an order u/s 143(3) on 30/12/2009 denying the assessee’s claim of deduction u/s 54 of Rs. 1,96,40,000/- after examining the details of long term capital gains.
2.1 When the assessee carried the matter in appeal before the CIT(A) as well as ITAT, the appeal of the assessee was dismissed.
Thereafter, the AO initiated penalty proceedings u/s 271(1)(c) on the ground that the assessee furnished inaccurate particulars leading to concealment of taxable income and levied a penalty u/s 271(1)(c) of the Act.
The brief facts leading to levy of penalty are, during the relevant FY 2006-07, assessee sold a house property for a consideration of Rs. 2,30,00,000/-. After reducing cost of acquisition, cost of improvement and expenses in connection with transfer, capital gains worked out to Rs. 1,98,26,085/-. Out of this, an amount of Rs. 1,96,40,000 was claimed as deduction u/s 54, comprising of Rs. 90,40,000/- towards purchase of house property and Rs. 1,06,00,000/- towards cost of addition works undertaken.
4.1 To find the veracity of the claim of the assessee, the AO made field enquiries through an Inspector and found that the claim of the assessee is not proper and declined to allow the deduction u/s 54 of the Act. The action of the AO was confirmed by the CIT(A) and ITAT in the quantum proceedings. Accordingly, AO proceeded to initiate penalty proceedings u/s 271(1)(c) and levied penalty.
3 I.T.A. NoS. 824 & 825/Hyd/2015 Usha Rani K & K. Bala Vishnu Raju 5. Aggrieved by the penalty order, the assessee preferred an appeal before the CIT(A), who confirmed the penalty levied.
Aggrieved by the order of CIT(A), the assessee is in appeal before us raising regular grounds of appeal and filed a petition for admission of following additional grounds: a) While issuing the said notice, the Assessing Officer did not mention whether the notice was issued for concealment of income or for furnishing of inaccurate particulars of income.
b) The Assessing Officer initiated the penalty proceedings after completion of the assessment as can be seen from the date of order of assessment i.e., 30.12.2009 and date of show-cause notice issued u/s 274 rws 274(1)(c) of the LT. Act is 30.12.2009.”
As the said additional grounds are legal grounds, wherein, the facts are on record and facts do not require fresh investigation, following the decision of Hon’ble Supreme Court in the case of National Thermal Power Co., Limited Vs. CIT 229 ITR 383 (SC), we admit the said additional ground of assessee.
The ld. AR of the assessee submitted that the Assessing Officer initiated the penalty proceedings by issue of a notice u/s 274 r.w.s. 271(1)(c) on 30.12.2009. He submitted that while issuing the said notice, the Assessing Officer did not mention whether the notice is issued for concealment of income or for furnishing of inaccurate particulars of income. Therefore, the notice is not validly issued. Consequently, the order passed u/s 271(1)(c) also is not valid. For this proposition, he relied on the decision of the Hon’ble Supreme Court in the case of CIT Vs. SSA’s Emerald Meadows, [2016] 73 taxmann.com 248 (SC).
4 I.T.A. NoS. 824 & 825/Hyd/2015 Usha Rani K & K. Bala Vishnu Raju 9. The Learned Departmental Representative on the other hand relied on the orders of revenue authorities.
Considered the rival submissions and perused the material facts on record. The issue in dispute is squarely covered by the decision of the Hon’ble Supreme Court in the case of CIT Vs. SSA’s Emerald Meadows, [2016] 73 Taxmann.com 248 (SC) wherein the Apex Court upheld the decision of the Hon’ble High Court, in which, the Hon’ble High Court confirmed the order of the Tribunal and dismissed the appeal of the revenue, who came in appeal against the order of the Tribunal. The Tribunal relying on a decision of Karnataka High Court in case of CIT Vs. Manjunatha Cotton & Ginning Factory, [2013] 359 ITR 565/210 allowed the appeal of the assessee holding that notice issued by Assessing Officer u/s 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.
10.1 In the case under consideration, on perusal of the show cause notices issued by the Assessing Officer u/s 274 r.w.s. 271 of the IT Act, 1961, dated 30/12/2009, which is placed on record, it is seen that the Assessing Officer did not mention whether the notice is issued for concealment of income or for furnishing of inaccurate particulars of income. Therefore, as per the ratio laid down by the Hon’ble Supreme Court in the case of SSA’s Emerald Meadows, the notice issued by the Assessing Officer is not valid and consequently, the order passed u/s 271(1)(c) is also not valid. Hence, we set aside the order of the CIT(A) and quash the order passed by the
5 I.T.A. NoS. 824 & 825/Hyd/2015 Usha Rani K & K. Bala Vishnu Raju Assessing Officer u/s 271(1)(c) of the Act. Accordingly, the appeal of the assessee is allowed.
ITA No. 825/Hyd/2015 in the case of K. Bala Vishnu Raju
Assessee filed his return of income for the AY 2007-08 on 28.07.2007, admitting income of Rs. 5,41,49,287/- which included income from long term capital gains of Rs. 5,29,09,619/-. During the Course of assessment proceedings, on the basis of SRO data, a letter was issued to assessee on 07.08.2008 calling for information about transactions of properties situated at Banjara Hills, followed to questionnaire u/s 142(1) which was issued on 28.08.2008. Subsequently, assessee filed revised return on 18.11.2008 admitting sale consideration as per market value u/s 5OC. Assessee also claimed deductions u/s 54 in revised return, which was not claimed in original return. Assessment was completed u/s 143(3) on 24.12.2009, disallowing the cost of improvement of Rs. 5,10,66,500/-, deduction u/s 54 of Rs. 1,48,85,000/- unsecured cash loans of Rs. 47,00,000/ and brought forward losses of Rs. 11,34,939/-.
11.1 When the assessee carried the matter in appeal before the CIT(A) and the ITAT, the assessee’s appeal was dismissed by both the authorities.
11.2 Thereafter, the AO initiated penalty proceedings u/s 271(1)(c) and a notice was issued for furnishing inaccurate particulars of income with regard to bogus claim of improvement in house properties and incorrect claim of deduction u/s 54.
6 I.T.A. NoS. 824 & 825/Hyd/2015 Usha Rani K & K. Bala Vishnu Raju 11.3 After considering the submissions of the assessee, the AO observed that it is proved beyond doubt in the assessment order that the information submitted by the assessee is inaccurate and the assessee could not clear the inaccuracy either in the assessment or in the appellate stages. Further, he observed that it is also pertinent at this stage to point out that since the assessment order itself contains details facts, which justify inference of concealment, no further evidence or examination thereof is necessary during penalty proceedings. For this proposition, he relied on the judgment of the Hon’ble Supreme Court in the case of Raj Kumar Chaurasia Vs. CIT [2007] 288 ITR 329. He accordingly, levied a penalty u/s 271(1)(c). When the assessee preferred an appeal before the CIT(A) against the said penalty, the CIT(A) confirmed the penalty.
132 Aggrieved, the assessee is in appeal before us.
Considered the rival submissions and perused the material facts on record. Since the issue in dispute and the grounds raised are materially identical to that of ITA No. 824/Hyd/2015 (supra), following the conclusions drawn therein, we set aside the order of CIT(A) and quash the penalty order passed by the AO u/s 271(1)(c) of the Act.
In the result, both the appeals under consideration are allowed. Pronounced in the open court on 24th January, 2018.
Sd/- Sd/- (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated 24th January, 2018
7 I.T.A. NoS. 824 & 825/Hyd/2015 Usha Rani K & K. Bala Vishnu Raju
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