KAILASH KATARIA,GURGAON vs. ITO, WARD- 2(2), GURGAON

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ITA 3090/DEL/2018Status: DisposedITAT Delhi02 September 2019AY 2009-106 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice issued by the AO was bad in law because it did not specify whether the proceedings were for concealment of income or furnishing inaccurate particulars. Therefore, the penalty was not leviable.

What were the facts?

The Assessing Officer (AO) made an addition to the assessee's income related to a claimed gift. Subsequently, the AO initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961, for concealment or furnishing inaccurate particulars of income. The penalty was confirmed by the CIT(A).

What were the issues?

Whether a penalty under Section 271(1)(c) is valid when the notice issued by the AO fails to specify which limb of the section the proceedings are initiated under.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, DELHI BENCHES “SMC”: DELHI

Before: SHRI BHAVNESH SAINI

Hearing: 27.08.2019Pronounced: 02.09.2019

This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-2, Gurgaon, Dated 23.03.2018, for the A.Y. 2009-2010, challenging the levy of penalty under section 271(1)(c) of the I.T. Act, 1961.

2.

In this case the A.O. passed the assessment order Dated 31.12.2011. The assessee claimed gift of Rs.65 lakhs.

The A.O. ultimately made addition of Rs.30,90,000/-. The 2 ITA.No.3090/Del./2018 Mrs. Kailash Kataria, Gurgaon.

A.O. initiated penalty proceedings for concealment of particulars of income. The A.O. vide separate Order levied penalty under section 271(1)(c) of the I.T. Act, 1961, which is confirmed by the Ld. CIT(A).

3.

Learned Counsel for the Assessee at the outset submitted that the A.O. issued notice under section 271(1)(c) of the I.T. Act Dated 31.12.2011 in which the A.O. has mentioned as follows :

“Have concealed the particulars of your income or ................Furnished inaccurate particulars of such income.”

3.1. He has, therefore, submitted that the issue is covered by the Judgment of the Hon’ble Delhi High court in the case of Pr. CIT vs. M/s. Sahara India Life Insurance Company Ltd., 2019(8) TMI 409 (Del.) vide Judgment Dated 02.08.2019 in paras 21 and 22 held as under :

“21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1) (c) of the Act, which was accepted by the ITAT. It followed the decision

3 ITA.No.3090/Del./2018 Mrs. Kailash Kataria, Gurgaon. of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High

Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA’s Emerald Meadows (2016) 73 Taxman.com 241 (Kar), the appeal against which was dismissed by the Supreme Court of India in SLP No.11485 of 2016 by order dated 5th August, 2016.

22.

On this issue again this Court is unable to find

any error having been committed by the ITAT. No substantial question of law arises.”

3.1. He has, therefore, submitted that penalty is not leviable in the matter.

4 ITA.No.3090/Del./2018 Mrs. Kailash Kataria, Gurgaon.

4.

The Ld. D.R. on the other hand relied upon the Orders of the authorities below and submitted that appeal of assessee has been dismissed for default on quantum vide separate Order Dated 25.10.2016.

5.

After considering the rival submissions, I am of the view that penalty is not leviable in the matter. In this case, the A.O. issued show cause notice for levy of penalty under section 271(1)(c) of the Act which is bad in law as it did not specify in 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 inaccurate particulars of income. The entire penalty proceedings are, therefore, vitiated and no penalty is leviable. On this score itself similar view is taken by Hon’ble Karnataka High Court in the case of CIT vs. M/s. SSAs Emerald Meadows 73 taxmann.com 241. This decision is confirmed by the Hon’ble Supreme Court reported in 73 taxmann.com 248. Further, the Hon’ble Delhi High court recently vide Order dated 02.08.2019 in the case of Pr. CIT vs. M/s. Sahara India Life Insurance Company Ltd., (supra)

5 ITA.No.3090/Del./2018 Mrs. Kailash Kataria, Gurgaon. following the decision of Hon’ble Supreme Court in the case of M/s. SSAs Emerald Meadows (supra) confirmed cancellation of the penalty. I, therefore, following the aforecited decision of the Hon’ble Delhi High Court in the case of Pr. CIT vs. M/s. Sahara India Life Insurance Company Ltd., (supra) set aside the Orders of the authorities below and cancel the penalty.

6.

In the result, appeal of assessee allowed.

Order pronounced in the open Court.

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