Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: MS SUCHITRA KAMBLE & SHRI O. P. MEENA
This appeal is filed by the assessee against the order dated 07.02.2017 passed by Commissioner of Income Tax (Appeals) - 36, New Delhi for Assessment Year 2008-09.
The grounds of appeal are as under:-
1(i) That on facts and circumstances of the case, the Ld. CIT(A) was not justified in upholding the validity of the penalty order u/s 271(1)(c) even though the same is barred by limitation in terms of provisions of section 275 of the Income tax Act, 1961.
(ii) That the order being passed after expiry of six months from the end of the month in which the order of Appellate Tribunal is received, the same is illegal, time barred and without jurisdiction as per the provisions of section 275(1)(a) of the Act.
That issue of limitation being a legal ground, the Ld. CIT(A) should (iii) have adjudicated the same.
That on facts and circumstances of the case, the Ld. CIT(A) was not 2(i) justified in confirming penalty u/s 271(1)(c) even though there is no case of recording of proper satisfaction in terms of provisions of section 271(1)(c) of the Act and as such the penalty order is illegal and without jurisdiction.
That in absence of recording of specific satisfaction or levying of (ii) specific charge as to concealment of income or furnishing of inaccurate particulars of income, the notice u/s 274 and the consequential order is invalid and void-ab-initio.
That on the facts and circumstances of the case, the Ld. CIT(A) was 3(i) not justified confirming penalty of Rs. 19,56,977/- on the alleged ground of furnishing of inaccurate particulars in terms of provisions of sec. 271(1)(c) of the Income Tax Act, 1961.
That the issue of disallowance is still pending for adjudication (ii) before Hon’ble Delhi High Court, there could be no presumption of any concealment or furnishing of inaccurate particulars of income in terms of provisions of section 271(1)(c) of the Act.
That mere addition or disallowance in itself cannot be a ground for (iii) imposition of penalty for concealment or furnishing of inaccurate particulars in the absence of any finding or conclusion in respect of alleged concealment or furnishing of inaccurate particulars of income.
That the assessee craves leave to add, amend, alter or forgo any or all of the grounds as may be necessary and in the interest of justice
That penalty order is not justified on facts and same is bad in law.”
Assessment in the present case was completed u/s 143(3) of the Income Tax Act, 1961 on 20.12.2010 at the assessed income of Rs.15,01,53,020/- against the returned loss of Rs.32,94,440/- with the following additions: i. Addition of Rs.7,10,55,000/- on account of accommodation entries taken in the shape of Unsecured loan. ii. Addition of Rs.6,65,00,000/- on account of undisclosed cash receipts. iii. Addition of Rs.1,58,92,460/- on account of unexplained cash credits in cash Books.
Penalty proceedings u/s 271(1)(c) were initiated on the above addition vide penalty notice dated 20.12.2010. The Penalty order was passed on 30.03.2015 u/s 271(1)(c) of the Income Tax Act, 1961.
4. Being aggrieved by the penalty order, the assesee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. AR submitted that Ground No.1 is relating to limitation which is not pressed. As regards Ground No.2, the Ld. AR submitted that notice u/s 271(1) r.w.s. 271(1)(c) of the Act dated 29.12.2010 did not specify the particular charge of concealment or furnishing inaccurate particulars of such income. The Ld AR further submitted that the Hon’ble Delhi High Court in case of Pr. CIT Vs. M/s. Sahara India Life Insurance Company Ltd. (ITA No.475/2019 vide order dated 02.08.2019) held that notice issued by the Assessing Officer would be bad in law if it did not specify which limb of Section 271(1)(c) of the penalty proceedings had been initiated. The Ld. AR also relied upon the decision of the Hon’ble Apex Court in case of CIT vs. SSA’s Emerald Meadows (2016) 73 taxman.com 241 (Kar) confirming the Hon’ble Karnataka High Court’s decision in case of CIT vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Kar). Thus, the Ld. AR submitted that in absence of recording of specific satisfaction or levying of specific charges as to concealment of income or furnishing of inaccurate particulars of income, the notice u/s 274 and the penalty order is invalid and void-ab-initio. The Ld. AR further submitted that the issue of disallowance on account of unexplained cash credits in cash Books is still pending for adjudication before the Hon’ble Delhi High Court and it is debatable issue. Thus, thus, the assessee did not file any inaccurate particulars of income or concealed income, hence, the penalty order does not sustain on merit as well.
The Ld. DR submitted that the CIT(A) was right in confirming the penalty order as there is an element of concealment of income as the Tribunal has confirmed the quantum of Rs.63,33,260/- in the quantum appeal, therefore, penalty was properly imposed. The Ld. DR relied upon the decision of the Hon’ble Supreme Court in case of Sundaram Finance Ltd. vs. DCIT (2018) 99 taxmann.com 152 (SC) which confirmed the decision of the Hon’ble Madras High Court in case of Sundaram Finance Ltd. vs. ACIT 403 ITR 407. The Hon’ble High Court held that when the case against the assessee concealed particulars of income and furnished inaccurate particulars of income, the contention raised by the assessee regarding notice issued did not specify the limb of section 271(1)(c) does not sustain. The Ld. DR also relied upon the decision of the Hon’ble Delhi High Court in case of CIT vs. Zoom Communication (P.) Ltd. 327 ITR 510.
We have heard both the parties and perused all the materials available on record. From the perusal of the notice issued u/s 274 r.w.s. 271 of the Income Tax Act, 1961, it can be seen that the notice did not specify which limb of section 271(1)(c) has been taken into account while passing penalty order. In fact, the Assessing Officer proceeded on the basis of concealment of income to the extent of Rs.63,33,260/- which was confirmed by the appellate authorities i.e. by the CIT(A) as well as by the Tribunal in quantum appeal. But the overall addition of Rs.1,58,92,460/- has not been taken into account as a concealment by the Revenue authorities. The concealment cannot be in part when the addition was made in totality without any specific limb mentioned in Section 271(1)(c) which is now deleted in part by the appellate authorities. Therefore, this issue is debatable issue. Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon’ble High Court in case of M/s. Sahara India Life Insurance Company Ltd. will be applicable in the present case. The Hon’ble Delhi High Court 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 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.
On this issue again this Court is unable to find any error having been committed by the ITAT. No substantial question of law arises.”
In respect of decision of the Hon’ble Supreme Court in case of Sundaram Finance Ltd. (supra) while confirming the order of the Hon’ble Madras High Court, it is pertinent to note that in the said decision both limbs of section 271(1)(c) i.e. concealed particulars of income and furnishing inaccurate particulars of income were present and the finding of the Hon’ble High Court is clear that when the penalty order is based on both the limbs of section, the notice cannot be held as defective notice. But in the present case which limb of Section 271(1)(c) has been invoked by the revenue authorities is not clear. Therefore, the decision of Hon’ble Madras High Court in case of Sundaram Finance Ltd. (supra) will not be applicable in the present case. Thus, the appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 11th Nov, 2019.