BAHRTI MALPANI,JAIPUR vs. ITO, JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : JAIPUR [Before Hon’ble Sri Vijay Pal Rao, JM & Dr. Arjun Lal Saini, AM] I.T.A No. 316/JP/2016 Assessment Year : 2008-09

Bahrti Malpani -vs.- ITO, Ward 1(2), Jaipur Jaipur Jaipur [PAN : ADGPM6495G) (Appellant) (Respondent) I.T.A No. 317/JP/2016 Assessment Year : 2009-10

Bahrti Malpani -vs.- ITO Ward 1(2), Jaipur Jaipur Jaipur [PAN : ADGPM6495G) (Respondent) (Appellant)

For the Appellant : Shri Vimal Chopra (CA) For the Respondent : Shri P.P.Meena (JCIT) Date of Hearing : 08.11.2017. Date of Pronouncement : 10 .11.2017.

ORDER Per Dr.Arjun Lal Saini, AM

The captioned two appeals filed by the assessee pertinent to AY 2008-09 and 2009-10, are directed against the orders passed by CIT(A)-1, Jaipur in ITA No. 400/13- 14 which in term arise out of penalty orders passed by the Assessing Officer u/s 271 (1)(c) read with section 274 of I.T.Act, 1961 (hereinafter referred to as the ‘Act’). 2. Since these two appeals relate to the same assessee, different years, identical issues involved. Therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.

2 ITA No.316 & 317/JP/2016 M/s Bahrti Malpani, Jaipur A.Y 2008-09 & 2009-10 3. Grounds of appeal raised by the assessee in ITA No. 316/JP/2016, AY 2008-09 reads as under:- “1. That the ld. CIT(Appeals) has erred in law and facts in confirming the penalty u/s 271(1)(c) without appreciating that income was estimated. 2. That the Ld. CIT(Appeals) has erred in law and facts in confirming the penalty though initiation of penalty in the assessment order do not indicate as to whether penalty was for concealment of income or filing of inaccurate particulars. 3. That the ld. CIT(Appeals) has erred in law and facts in confirming the penalty in absence of positive evidence collected by AO and explanation 1 is not relevant for the charge of filing in accurate particulars. 4. That the appellant reserves the right to add, alter, amend, delete any grounds of appeal before or during the course of appeal.” 4. Grounds of appeal raised by the assessee in ITA No. 317/JP/2016, AY 2009-10 reads as under:- “1. That the ld. CIT (Appeals) has erred in law and facts in confirming the penalty u/s 271(1)(c) without appreciating that income was estimated. 2. That the ld. CIT(Appeals) has erred in law and facts in confirming the penalty though initiation of penalty in the assessment order do not indicate as to whether penalty was for concealment of income or filing of inaccurate particulars. 3. That the ld. CIT(Appeals) has erred in law and facts in confirming the penalty in absence of positive evidence collected by AO and explanation 1 is not relevant for the charge of filing in accurate particulars. 4. That the appellant reserves the right to add, alter, amend, delete any grounds of appeal before or during the course of appeal.” 5. Although, in this appeal, the assessee has raised a multiple grounds of appeal, for both the assessment years, but during the course of hearing the main grievance of the 2

3 ITA No.316 & 317/JP/2016 M/s Bahrti Malpani, Jaipur A.Y 2008-09 & 2009-10 assessee has been confined to the issue that initiation of the penalty in the assessment order do not indicate as to whether penalty for concealment of the income or furnishing of inaccurate particular income, that is, the Assessing Officer has issued defective notice u/s 271 (1)(c) read with section 274 of the Act. 6. The assessee’s appeal in ITA No. 316/JP/2016 for AY 2008-09 is taken as the lead case. 7. The brief facts qua the issue are that assessee was engaged in manufacturing and export of gem stones and studded jewellery. During the year under consideration it was noticed that assessee had shown purchases from certain tainted parties which were found ingenuine bogus by the investigation wing, during the course of survey by the BCTT branch of the wing. During survey, it was found that these parties were only paper concerns and issued only bills against certain commission without delivery of any goods. Since the assessee failed to prove the genuineness and creditworthiness of these parties as well as purchases from them, therefore, Assessing Officer rejected the books of accounts u/s 145(3) and made addition based on the gross profit rate of 16% as trading additions of Rs. 16,08,982/-. Consequently, the penalty proceedings u/s 271(1)(c) was initiated by the Assessing Officer and he imposed the penalty at Rs. 176600/-. 8. Aggrieved by the penalty order u/s 277(1)(c), the assessee filed an appeal before the CIT(A) who has confirmed the penalty u/s 271(1)(c). Not being certified with the order of the CIT(A). The assessee is in further appeal before us. At the time of hearing, the Ld. Counsel for the assessee drew our attention to the notices u/s. 274 of the Act r.w.s. 271 of the Act dated 14.10.2010 and served on the assessee wherein we note that the AO has not struck down the limb of charge/default for which the penalty is being initiated against the assessee. We find that the notice has been issued for having concealed the particulars of income or furnished inaccurate particulars of such income. We note that in a similar case the Hon’ble High court of Karnataka in the case of CIT vs Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565 (Kar) has 3

4 ITA No.316 & 317/JP/2016 M/s Bahrti Malpani, Jaipur A.Y 2008-09 & 2009-10 cancelled the penalty taking note of the fact that the penalty notice did not spell out clearly as to whether the assessee has concealed the particulars of income or has furnished inaccurate particulars of Income. We also find that Hon’ble Karnataka High Court in the case of CIT Vs. SSA’s Emerald Meadows, reported in (2016) 73 taxmann.com 241 (Kar) endorsed the same view in Manjunatha Cotton and Ginning Factory (supra) and held as under: “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(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 on the decision of the Division Bench of this Court rendered in the case of CIT Vs. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565/218 Taxman 423/35 taxmann.com 250(Kar). 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.”

We also find that the aforesaid order of the Hon’ble High Court was challenged by the department before the Hon’ble Supreme Court by preferring an SLP which has been dismissed which fact has been reported in CIT Vs. SSA’s Emerald Meadows (2016) 73 taxmann.com 248 (SC).

In the result, the appeal of assessee (ITA No. 316 & 317/JP/2016) are allowed.

5 ITA No.316 & 317/JP/2016 M/s Bahrti Malpani, Jaipur A.Y 2008-09 & 2009-10

Order pronounced in the open court on 10/11/2017.

Sd/- Sd/- [Vijay Pal Rao] [ Dr Arjun Lal Saini] Judicial Member Accountant Member

Dated : 10 .11.2017. [Ganesh Kr. PS] Copy of the order forwarded to: 1. Bahrti Malpani, Jaipur 2. ITO Ward 1(2), Jaipur 3. CIT(A)-Jaipur 4. CIT-IV, Jaipur 5. CIT(DR), Jaipur Bench, Jaipur.