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Income Tax Appellate Tribunal, “B”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
आयकर अपीलीय अिधकरण “बी” �ायपीठ पुणेम�। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकरअपीलसं. / ITA No.1284/PUN/2019 िनधा�रणवष� / Assessment Year : 2006-07 Warana Industries Limited, The ACIT, Circle-1, GAT No.795, Tatyasaheb Kore Vs Kolhapur. Nager, Chikurde Road, A/P: Warnanagar, Tal.Panhala, Kolhapur – 416113. PAN: AAACW 1694 H Appellant/ Assessee Respondent / Revenue Assessee by Shri S.N.Puranikh – AR Revenue by Shri M.G.Jasnani – DR Date of hearing 20/07/2022 Date of pronouncement 30/09/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)-1, Kolhapur for the A.Y. 2006-07 dated 16.07.2019, emanating out of order under section 271(1)(c) of the Income Tax Act, 1961 dated 23.05.2014. The assessee has raised the following grounds of appeal:
“1. CIT(A) has erred in facts and circumstances of the case in confirming Penalty levied by Assessing Officer When in Law the Penalty imposed is illegal and unsustainable. Appellant prays to cancel the 2. CIT(A) has erred in not appreciate The Submission that Penalty notice issued u/s.274 r.w.s 271(1)(c) is without specifying the Limb and Assessing Officer him Self is not clear as to the Charge.
ITA No.1284/PUN/2019 for A.Y. 2006-07 Warana Industries Limited [A]
CIT(A) failed to appreciate that Notice u/s.274 r.w.s 271(1)(c) is Notice giving opportunity to Assessee and getting Jurisdiction by Assessing Officer and same as not with specific charge adjudicating Penalty, Appellant prays to cancelled the Penalty. 4. CIT(A) has erred not being just and equitable in cancelling the Penalty, considering the fact that Assessing Officer has even taxed the same income for Assessment Year 2010-11 also.” 2. Brief facts of the case are that assessee had filed original return on 11.12.2006 declaring taxable income at Rs.Nil for A.Y.2006-07. Thereafter, assessee filed a revised return of income on 31.01.2013 declaring taxable income of Rs.29,22,518/-. The Assessing Officer(AO) issued notice under section 148 dated 19.02.2013 after recording reasons. In the original return, assessee has not disclosed Long Term Capital Gain arising on sale of land which was disclosed in revised return. In the proceedings u/s.143(3) r.w.s. 147, the AO accepted the Long Term Capital Gain declared by the assessee. During the assessment proceedings, the AO noted that assessee has debited certain expenditures as revenue expenditure under the Head- Purchase of dairy machinery and spare parts. For the reasons discussed, the AO treated Rs.79,26,31/8/- as capital expenditure and disallowed it. The AO initiated penalty proceedings under section 271(1)(c) of the Act vide order dated 23.05.2014.
ITA No.1284/PUN/2019 for A.Y. 2006-07 Warana Industries Limited [A]
Aggrieved by the penalty order, the assessee filed appeal before the ld.CIT(A). The assessee raised a legal ground before the ld.CIT(A) that the notice under section 274 r.w.s 271(1)(c) dated 06.03.2014 is bad in law as the AO has not struck-off the in applicable words. The ld.CIT(A) rejected the legal ground for the reasons discussed in the order and also upheld the penalty.
Aggrieved by the same, the assessee filed appeal before the ITAT.
The ld.Authorised Representative(ld.AR) for the assessee filed a paper book. The ld.AR invited our attention to the copy of the notice under section 271(1)(c) enclosed in the paper book, to explain that the AO has not struck-off the non-applicable words “have concealed the particulars of your income/furnished inaccurate particulars of such income”. The ld.AR relied on the Hon’ble Bombay High Court full bench decision in the case of Mohd. Farhan A. Shaikh 125 Taxmann.com 253 and ITAT orders.
The ld.Departmental Representative(ld.DR) for the Revenue relied on the order of the ld.CIT(A) and AO.
We have heard both the parties and perused the records. We have studied the penalty notice under section 274 r.w.s 271(1)(c) of the Act dated 06.04.2014 and observed that the AO has not struck-off
ITA No.1284/PUN/2019 for A.Y. 2006-07 Warana Industries Limited [A]
non-applicable words from “have concealed the particulars of income/furnished inaccurate particulars of such income”.
8.1 The Hon’ble Bombay High Court has held in the case of Ganga Iron & Steel Trading Co. v/s Commissioner of Income Tax. [2022] 135 taxmann.com 244 (Bombay) order dated December, 22, 2021 as under :- Quote, “10. We find that the law as laid down by the Full Bench applies on all fours to the facts of the present case as in the show cause notice dated 12-2-2008, the Assistant Commissioner of Income-tax is not clear as to whether there was concealment of particulars of income or that the Assessee had furnished inaccurate particulars of income. We therefore find that issuance of such show cause notice without specifying as to whether the Assessee had concealed particulars of his income or had furnished inaccurate particulars of the same has resulted in vitiating the show cause notice. Heavy reliance was placed by the learned counsel for the Revenue on the decision in Mak Data (P.) Ltd. (supra) to urge that the penalty contemplated by section 271 (1) (c) of the said Act was in the nature of civil liability and mens rea was not essential therein. The decision in Dilip N. Shroff (supra) having been held as not laying down good law in Dharmendra Textile Processors Ltd. (supra), it was submitted that the show cause notice issued in the present proceedings was liable to be upheld. It may be noted that all the decisions relied upon by the learned counsel for the Revenue were considered by the Full Bench while answering the issues referred to it on reference. The Full Bench having considered these decisions and having answered the question as regards defect in the notice under section 271(1)(c) of the said Act resulting in vitiating the penalty proceedings, we find ourselves bound by the answers given by the Full Bench. It would not be permissible for us to disregard this aspect and take a different view of the matter. Accordingly substantial question of law no. III is answered by holding that since the show cause notice dated 12-2-2008 does not indicate whether there was concealment of particulars of income or furnishing of incorrect particulars of such income, the same would vitiate the penalty proceedings. ” Unquote.
ITA No.1284/PUN/2019 for A.Y. 2006-07 Warana Industries Limited [A]
8.2 In the case under consideration the AO has not struck the appropriate in applicable words in the penalty notice. This issue goes to the root of initiation of penalty. Therefore, respectfully following the Hon’ble jurisdictional High Court, it is held that the penalty u/s 271(1)(c) is not maintainable. Hence, the Assessing Officer is directed to delete the penalty u/s 271(1)(c). Since we have decided the legal ground in favour of the assessee, we have not adjudicated the other grounds on merit.
In the result, appeal of the Assessee is Partly Allowed.
Order pronounced in the open Court on 30th September, 2022.
Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 30th Sep, 2022/ SGR* आदेशक��ितिलिपअ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. िवभागीय�ितिनिध, आयकर अपीलीय अिधकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड�फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.