M. CHANDRA SEKHAR GOUD,HYDERABAD vs. INCOME TAX OFFICER, WARD-7(2), HYDERABAD

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ITA 1640/HYD/2017Status: HeardITAT Hyderabad11 March 2022AY 2007-084 pages
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What did the Tribunal hold?

The Tribunal held that the reassessment was valid as Section 154 is for apparent mistakes and no return was filed after the Section 148 notice. However, the penalty was deleted because the show cause notice did not specify whether the concealment was of particulars or furnishing inaccurate particulars.

What were the facts?

The assessee's appeals for AY 2007-08 challenged the addition of license fee as unexplained income and a penalty imposed under Section 271(1)(c). The assessee argued that the reassessment was invalid due to prior Section 154 proceedings and lack of a Section 143(2) notice.

What were the issues?

Whether the reassessment proceedings were validly initiated and whether the penalty notice under Section 271(1)(c) was specific enough to sustain the penalty.

Which sections of the Income-tax Act were involved?

Section 144,Section 147,Section 271(1)(c),Section 143(2),Section 148,Section 154

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Income Tax Appellate Tribunal, HYDERABAD BENCHES “SMC”, HYDERABAD

Before: SHRI S.S.GODARA

This assessee’s two appeals for AY.2007-08 arise against the CIT(A)-3, Hyderabad’s common order dated 26-08-2016 passed in case No.0557 / 14-15 & 0245 / 15-16 / CIT(A)-3, involving proceedings u/s.144 r.w.s.147 & u/s.271(1)(c) of the Income Tax Act, 1961 [in short, ‘the Act’]; respectively. Heard both the parties. Case files perused.

2.

Coming to the assessee’s sole substantive ground challenging correctness of both the lower authorities’ action adding license fee amount of Rs.16,13,400/- as “unexplained” forming subject matter of quantum appeal learned counsel has raised twin folded arguments inter alia pleading that the Assessing Officer had indeed initiated Section 154 proceedings qua the same on 13- 08-2010 rendering the impugned re-assessment as “invalid”

:- 2 -: & 1640/Hyd/2017 and he had later on framed the re-assessment in issue without issuing Section 143(2) notice.

3.

I find no merit in either of the assessee’s foregoing twin arguments. This is for the reason that even if it is presumed that the Assessing Officer ought to have proceeded with Section 154 action only there is hardly any dispute in light of hon'ble apex court’s decision in T.S.Balaram, ITO Vs. M/s.Volkart Brothers [82 ITR 50] (SC) provides that such a rectification is meant for apparent mistake(s) than those requiring detailed roving enquiries. It is made clear that the Assessing Officer had indeed issued Section 148 notice resulting in the impugned addition on account of assessee’s failure only to explain the source of the foregoing license fee amount of Rs.16,13,400/-. His latter argument in light of the ACIT Vs. Hotel Blue Moon (2010) 321 ITR 362 (SC) also stands rejected as it has come on record that no return had been filed in furtherance to Section 148 notice. This quantum appeal is declined therefore.

4.

I next advert to assessee’s consequential penalty appeal Assessing Officer’s penalty show cause notice dt.01-12-2012 nowhere specifying as to whether the taxpayer had concealed particulars of his taxable income or furnished inaccurate particulars of such an income as contemplated u/s. 271(1)(c) of the Act. Hon'ble jurisdictional high court’s decision Pr.CIT Vs. Baisetty Revathi [398 ITR 88] (Telangana & AP) holds that - such a failure renders penal action as not sustainable in law. The very legal preposition also stands reiterated in Mohd.Farhan A.Shaikh

:- 3 -: & 1640/Hyd/2017 Vs. DCIT (2021) [125 taxmann.com 253] (Bom) (FB) as well. The impugned penalty is deleted therefore. This latter appeal is accepted. Ordered accordingly. No other argument has been raised before me.

5.

To sum up, assessee’s quantum appeal is dismissed and the penalty appeal is allowed. A copy of this common order be placed in the respective case files.

Order pronounced in the open court on 11th March, 2022

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