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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH
आदेश /O R D E R
PER D.S. SUNDER SINGH, Accountant Member:
This appeal is filed by the revenue against the order of the Commissioner of Income Tax (Appeals) [(CIT(A)]-9, Hyderabad vide Appeal No.10236/ACIT-1, Kakinada/2017-18 dated 29.03.2018 and Cross Objection filed by the assessee for the assessment year 2014-15.
All the grounds of appeal are related to the penalty levied by the Assessing Officer (AO) u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter called as ‘Act’). The assessee filed the return of income declaring total income of Rs.1,91,23,140/- for the Assessment Year (A.Y.) 2014-15 on 24.11.2014. The assessment was completed u/s 143(3) on total income of Rs.2,42,18,600/- and the AO has initiated penalty u/s 271(1)(c) and levied the penalty of Rs.35,04,060/- u/s 271(1)(c) of the Act.
Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and argued that the AO did not mention specific limb of impugned penalty notice issued u/s 274 r.w.s. 271(1)(c) for which the penalty proceedings were initiated, whether it was for inaccurate
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particulars or for concealment of income causing ambiguity. The AO did not struck off irrelevant column in the printed notice and the notice reads that the penalty was initiated for concealment of income or for furnishing the inaccurate particulars. Therefore, the Ld.AR argued before the Ld.CIT(A) that the notice is defective in as much as it did not specify the charge for which the penalty is initiated, hence, the notice is invalid and consequent levy of penalty is unsustainable. The Ld.AR relied on the decision of Hon’ble Karnataka High Court decision in the case of Commissioner of Income Tax Vs. Manjunatha Cotton and Ginning Factory (2013) [359 ITR 565] and the decision of Hon’ble Supreme Court in the case of SSA’s Emerald Meadows (CC No.11485/2016) order dated 05.08.2016. The Ld.CIT(A) considered the argument of the assessee and relied on the decision of this Tribunal in the case of Konchada Sreeram Vs. ITO, Wd.-1(1), Visakhapatnam in ITA No.388/Viz/2015 for the A.Y. 2007-08 dated 06.10.2017 and deleted the penalty.
We have heard both the parties and perused the material placed on record. On identical facts, this Tribunal has deleted the penalty in the order relied upon by the assessee and the Ld.CIT(A). For ready reference, we extract relevant part of the order of this Tribunal which reads as under :
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“6.1. From the notice issued by the AO, it is observed that the assessing officer had issued the notice for concealment of income or for furnishing of inaccurate particulars. As per the notice, the assessing officer was not sure of which limb of the offence he sought the explanation from the assessee, whether it was for the concealment of income or for furnishing of inaccurate particulars. As per the decision of the Hon'ble Jurisdictional High Court cited, for starting the penalty proceedings, the condition precedent is that the assessing officer must be satisfied that a person has either concealed the particulars of his income or furnished inaccurate particulars of such income. The person who is accused of the conditions mentioned in Section 271 should be made aware of the grounds on which imposition of penalty is proposed as he has a right to contest such proceedings and should have the fun opportunity to meet the case of the revenue so as to show that the conditions stipulated in Section 271(I)(c) do not exist and that he is not liable to pay the penalty. The Hon'ble High Court of Karnataka in the case law cited held that the practice of the revenue in sending the printed form where all the grounds mentioned in 271 (1)(c) are mentioned would not satisfy the requirement of law when the consequence of the assessee not rebuffing the initial presumption is serious in nature and has to pay the penalty ranging from 100% to 300% of the tax liability. As the provisions of section 271(1 )(c) have, to be strictly construed, the Hon'ble High court of Karnataka mandated that the notice issued should be set out the grounds which the assessee has to meet specifically, otherwise the principles of natural justice would be offended as the show cause notice would be vague. On the similar facts, Hon'ble Supreme Court dismissed the SLP in the case of SSA 's Emerald Meadows (2016) 73 Taxman. corn 248(SC). Ld.DR's argument that the case is distinguishable on facts is not acceptable since the Ld.DR relied on the passing observation of the Hon'ble High Court of AR In the assessee's case, the issue is the defective notice u/s 271(1)(c) but not the penalty order. Unless the notice issued u/s 271(1 )(c) is valid the penalty order cannot be held to be valid. The assessing officer did not strike off the irrelevant column in the notice and made known the assessee whether the penalty was initiated for the concealment of income or for furnishing the inaccurate particulars. In the assessment order also the AO simply recorded that the penalty proceedings u/s 271 (1)(c) are initiated separately. Neither in the assessment order nor in the penalty notice, the assessing officer has put the assessee on notice for which offence, the penalty u/s 271 was initiated Therefore, the case is squarely covered by the decision of the Hon'ble Jurisdictional High Court of cited (supra) wherein the Hon'ble high court held as under "On principle, when penalty proceedings are sought to be initiated by the revenue under Section 271 (1)(c) of the Act of 1961, the specific ground which forms the foundation therefore has to be spelt out in clear terms Otherwise, on assessee would not have proper opportunity to put forth his defence. When the proceedings are penal in nature resulting in imposition ofpenalty ranging from 100% to 300% of the tax liability, the charge most be unequivocal and unambiguous. When the charge is either concealment of particulars of income or furnishing of inaccurate particulars thereof; the revenue must specify as to
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which one of the two is sought to be pressed into service and cannot be permitted to club both by interjecting an or between the two, as in the present case. This ambiguity in the show-cause notice is further compounded presently by the confused finding of the Assessing Officer that he was satisfied that the assessee was guilty of both. We are therefore of the opinion that the order under appeal does not brook interference on any ground. We find no question of law, much less a substantial one, arising for consideration warranting admission of this appeal." 6.2. on the similar facts, the Coordinate Bench of ITAT, Visakhapatnam in ITA No.229/ Viz/2015 in the case of Narayana Reddy Enterprises, following the order of the Coordinate Bench in the case of Smt Makina Annapurna Vs. JTO, Visakhapatnam in ITA Nos. 604 & 605/Vizag/201 4 dated 22.2017 held that non-striking of the irrelevant column renders the notice issued u/s 271 as invalid. Respectfully, following the decision of the Hon'ble /P High Court cited supra and the decision of this Tribunal cited (supra), we hold that the notice issued u/s 271 is invalid and consequent penalty imposed by the AO is cancelled.” Hon’ble High Court of Andhra Pradesh also in the case of Pr.CIT Vs. Baisetty Revathi in ITTA 684/2016 in 30.07.2017 held that not specifying the specific charge in the notice u/s 271(1)(c) renders the notice invalid. Respectfully following the view taken by the coordinate bench and the decision of Hon’ble High Court of Andhra Pradesh, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. In the result, the appeal of the revenue is dismissed.
The assessee raised three grounds in cross objections. Ground No.1 is supportive to the order of the Ld.CIT(A) order , therefore cross objection of the assessee is allowed.
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Ground No.2 is related to the merits of the case. Since we have we have upheld the order of the Ld.CIT(A) and dismissed the appeal of the revenue on technical grounds, we consider it is not necessary to adjudicate this ground.
Ground No.3 is general in nature which does not require specific adjudication.
In the result, appeal of the revenue is dismissed and cross objection of the assessee is partly allowed.
Order pronounced in the open court on 28th November, 2018.
Sd/- Sd/- (िी.दुगाा राि) (धड.एस. सुन्दर ससह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER धिशाखापटणम /Visakhapatnam ददिांक /Dated : 28.11.2018 L.Rama, SPS
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आदेश की प्रधिधलधप अग्रेधर्ि/Copy of the order forwarded to:- 1. राजस्व / The Revenue– Asst.Commissioner of Income Tax, Cicle-1, Kakinada 2. निर्ााररती / The Assessee – M/s Shree Gowthamee Rice Industries (P) Ltd. S.No.721 and 722, Main Road, Rayavaram Mandalam, Chelluru 3. The Pr.Commissioner of Income Tax-2, Visakhapatnam 4. The Commissioner of Income Tax-(Appeals)-9,Hyderabad 5. धिभागीय प्रधिधिधि, आयकर अपीलीय अधिकरण, धिशाखापटणम /DR, ITAT, Visakhapatnam 6. गाडा फ़ाईल / Guard file
आदेशािुसार / BY ORDER // True Copy //
Sr. Private Secretary ITAT, VISAKHAPATNAM