BRIGHT VIEW BUILDCON LLP (FORMERLY KNOWN AS BRIGHT VIEW BUILDCON P.LTD),NEW DELHI vs. ITO, WARD-5(2), NEW DELHI

This appeal filed by the Assessee is directed against the

Order dated 01.03.2018 of the Ld. CIT(A)-13, New Delhi relevant

to assessment year 2013-14.

income was filed on 30.10.2013 declaring an income of Rs.

1,37,130/-. The assessment u/s. 143(3) of the Income Tax Act,

1961 (in short “Act”) was completed vide order dated

28.3.2016 at an income of Rs. 45,84,206/- by making the

addition on account of income in reset of TDS amount claimed

less already declared in ITR Rs. 12,66,547/-; income in respect

of other credit entries in bank Rs. 28,93,417/- and income from

other sources Rs. 2,87,112/- thus totaling to Rs. 44,47,076/-

Further, penalty proceedings were initiated by the AO with

regard to the above additions and accordingly a show cause

notice dated 2.8.2016 was issued to the assessee. In response

to the same, the assessee filed its reply dated 26.9.2016.

However, the assessee has not preferred an appeal before the

Ld. CIT(A) against the quantum addition. The AO in the penalty

proceedings has observed that the assessee has not in any way

substantiated the explanation furnished by it and assessee had

no valid reason. Rather, the quantum and / or nature of the

additions made suggest that it was certainly a case of gross

and willful neglect on the part of the assessee. AO further

observed that all the facts relating to the alleged additions

made in question and thus material to the computation were

not suomotu disclosed. Hence, he imposed the penalty of

Rs.13,74,146/- u/s. 271(1)(c) vide order dated 29.9.2016.

Against the penalty order, the assessee preferred an appeal

before the Ld. CIT(A), who vide his impugned order dated

01.3.2018 has dismissed the appeal of the assessee. Aggrieved

with the impugned order of the Ld. CIT(A), assessee is in

appeal before the Tribunal.

argued that no specific show cause notice has been issued to

the Assessee by the Assessing Officer and therefore, the

penalty levied is without jurisdiction. In this regard he draw

my attention towards PB page no. 24 which is a show cause

notice 28.03.2016. He stated that from this Notice, it is clear

that no satisfaction has been recorded by the AO that under

which charge the penalty is leviable i.e. on account of

concealment of income or furnishing of inaccurate particulars.

Hence, he stated that the penalty imposed is liable to be

quashed on legal ground as the issue is squarely covered by

the following decisions.:

- Hon’ble Karnataka High Court decision

in the case of CIT & Ors. Vs. M/s

Manjunatha Cotton and Ginnig Factory

& Ors. (2013) 359 ITR 565

- Apex Court decision in the case of CIT &

Anr. Vs. M/s SSA’s Emerald Meadows in

CC No. 11485/2016 dated 05.8.2016.

3.1 He further submitted that Ld. CIT(A) has dismissed this

legal ground which is not in accordance with the aforesaid

decisions of the Hon’ble Supreme Court and Hon’ble High

Court.

authorities below and stated that Ld. CIT(A) has passed a well

reasoned order which does not need any interference.

records, especially the orders of the revenue authorities

alongwith the provisions of law as well as the case laws cited

by the Ld. Counsel for the Assessee. After perusing the PB page

no. 24 which is a copy of show cause notice dated 28.3.2016, I

note that no specific show cause notice have been issued for

levying the penalty in dispute. For the sake of convenience, I

am reproducing herewith the contents of the show cause

notice dated 28.03.2016 as under:-

5.1 After perusing the aforesaid penalty notice dated

28.3.2016, in my considered opinion, the AO is not clear under

which charge the penalty is leviable i.e. whether it is on

account of concealment of income or furnishing of inaccurate

particulars. Hence, I am of the view that the AO has initiated

the penalty for concealment of particulars of income or

furnishing of inaccurate particulars, which is contrary to the

provisions of law and against the spirit of the various decisions

of the Hon’ble Supreme Court and Hon’ble High Court.

Therefore, the penalty in dispute is not sustainable in the eyes

of law. My aforesaid view is fortified by the following

decisions:-

i) “CIT & Anr. Vs. M/s SSA’s Emerald Meadows

– 2015 (11) TMI 1620 – Karnataka High Court has

held that Tribunal has correctly allowed the

appeal filed by the assessee holding the notice

issued by the Assessing Officer under section 274

read with Section 271(1)(c) to be bad in law as it

did not specify which limb of Section 271(1)© 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

Commissioner of Income Tax vs. Manjunatha

Cotton and Ginning Factory (2013) (7) TMI 620-

Karanataka High Court. Thus 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 – decided in favour of

assessee.”

ii) CIT & Anr. Vs. M/s SSA’s Emerald Meadows –

Hon’ble Supreme Court of India – reported in 2016

(8) TMI 1145 – Supreme Court. The Apex Court

held that High Court order confirmed (2015) (11)

TMI 1620 (Supra) – Karnataka High Court. Notice

issued by AO under section 274 read with section

271(1)(c) to be bad in law as it did not specify

which limb of Section 271(1)© 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 –

Decided in favour of assessee.”

iii) ITAT, ‘A’ Bench, New Delhi decision dated

05.12.2017 in the case of Ashok Kumar Chordia

vs. DCIT passed in ITA No. 5788 to 5790/Del/2014

wherein the Tribunal has observed as under:-

“7. We have heard both the parties and perused

the orders passed by the Revenue Authorities

alongwith the relevant records available with us.

Firstly, we have perused the Notice dated

26.3.2013 issued by the AO for initiating the

penalty and directing the assessee to appear

before him at 11.30 AM on 26/04/2013 and issued

a Show Cause to the assessee stating therein that

“…..you have concealed the particulars of

your income or furnished inaccurate

particulars of such income…”. After perusing

the notice dated 26.3.2013 issued by the AO to the

assessee, we are of the view that the AO has

initiated the penalty for furnishing inaccurate

particulars of income or concealment of income as

well as in the penalty order dated 30.9.2013 AO

has stated that he is satisfied that the assessee

has concealed particulars of his income, which is

contrary to law. In view of above, the penalty is

not sustainable in the eyes of law. Our aforesaid

view is fortified by the following decisions:-

i) “CIT & Anr. Vs. M/s SSA’s Emerald Meadows

– 2015 (11) TMI 1620 – Karnataka High Court has

held that Tribunal has correctly allowed the

appeal filed by the assessee holding the notice

issued by the Assessing Officer under section 274

read with Section 271(1)(c) to be bad in law as it

did not specify which limb of Section 271(1)© 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

Commissioner of Income Tax vs. Manjunatha

Cotton and Ginning Factory (2013) (7) TMI 620-

Karanataka High Court. Thus 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 – decided in favour of

assessee.”

ii) CIT & Anr. Vs. M/s SSA’s Emerald Meadows –

Hon’ble Supreme Court of India – reported in 2016

(8) TMI 1145 – Supreme Court. The Apex Court

held that High Court order confirmed (2015) (11)

TMI 1620 (Supra) – Karnataka High Court. Notice

issued by AO under section 274 read with section

271(1)(c) to be bad in law as it did not specify

which limb of Section 271(1)© 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 –

Decided in favour of assessee.”

discussions and respectfully following the

precedents, we delete the penalty in dispute and

decide the issue in favor of the assessee and

against the Revenue.”

iv) ITAT, ‘D’ Bench, New Delhi decision dated

26.5.2017 in the case of Rajender Jain vs. ACIT

passed in ITA No. 6804/Del/2013 wherein the

Tribunal has observed as under:-

“7. We have heard both the parties and perused

the orders passed by the Revenue Authorities

alongwith the relevant records available with us.

Firstly, we have perused the assessment order

wherein the AO has recorded his satisfaction on the page 2, 2nd para viz. “I am satisfied that it is a

fit case for initiation of penalty proceedings u/s.

271(1)(c) of the Act for furnishing inaccurate

particulars of income/concealment of income.” We

have also perused the notice dated 31.12.2007

issued by the AO for initiating the penalty and

directing the assessee to appear before him at ----

-----AM/PM on --------200------ and issued a Show

Cause to the assessee stating therein that why an

order imposing the penalty of amount should not

be made u/s. 271(1)(c) of the I.T. Act, 1961.

After perusing the notice dated 31.12.2007 issued

by the AO to the assessee, we are of the view that

the AO has initiated the penalty for furnishing

inaccurate particulars of income/concealment of

income, but in the penalty order dated

06.11.2009 he has stated that he is satisfied that

the assessee has furnished the inaccurate

particulars of income.

7.1 However, the Ld. CIT(A) has given clear

finding regarding the furnishing of inaccurate

particulars. For the sake of convenience, the

relevant para no. 5.3.1 of the impugned order

passed by the Ld. CIT(A) is reproduced as under:-

“5.3.1 The above findings of the Ld. CIT(A)

clearly establishes that the appellant has concealed

the income of Rs. 26,50,500/- and did not

declare in the return of income inspite of admitting

a disclosure of Rs. 40,00,000/- during survey.

Thus, the appellant has furnished inaccurate

particulars of his income. The facts of the case

clearly reveal that the appellant tried to evade

payment of taxes by furnishing inaccurate

particulars of income. Therefore, I hold that the AO

was fully justified in levying the penalty u/s.

271(1)(c) of the Act. The penalty levied by the AO

is upheld. This ground of appeal is rejected.”

Ld. CIT(A), we are of the considered view that the

AO has passed the assessment order wherein the AO has recorded his satisfaction on the page 2, 2nd

para viz. “I am satisfied that it is a fit case for

initiation of penalty proceedings u/s. 271(1)(c) of

the Act for furnishing inaccurate particulars of

income/concealment of income.” Further the AO

vide his Notice dated 31.12.2007 for initiating the

penalty and directed the assessee to appear before

him at ---------AM/PM on --------200------ and

issued a Show Cause to the assessee stating

therein that why an order imposing the penalty of

amount should not be made u/s. 271(1)(c) of the

I.T. Act, 1961. After perusing the notice dated

31.12.2007 issued by the AO to the assessee, we

are of the view that the AO has initiated the

penalty for furnishing inaccurate particulars of

income/ concealment of income, but in the

penalty order dated 06.11.2009 he has stated

that he is satisfied that the assessee has furnished

the inaccurate particulars of income. In our view

the penalty in dispute is not sustainable in the

eyes of law, because the AO has not recorded any

clear finding whether the assessee was guilty of

concealment of income or furnishing of inaccurate

particulars of income. Secondly, the notice u/s.

271(1)(c) has been issued to the assessee levying

the penalty for furnishing of inaccurate particulars

of income/concealment of income, whereas the

penalty in dispute has been levied by the AO on

account of furnishing of inaccurate particulars. In

our view the penalty is not sustainable in the eyes

of law. Our aforesaid view is fortified by the

following decisions:-

i) “CIT & Anr. Vs. M/s Emerald Meadows –

2015 (11) TMI 1620 – Karnataka High Court has

held that Tribunal has correctly allowed the

appeal filed by the assessee holding the notice

issued by the Assessing Officer under section 274

read with Section 271(1)(c) to be bad in law as it

did not specify which limb of Section 271(1)© 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

Commissioner of Income Tax vs. Manjunatha

Cotton and Ginning Factory (2013) (7) TMI 620-

Karanataka High Court. Thus 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 – decided in favour of

assessee.”

ii) CIT & Anr. Vs. M/s SSA’s Emerald Meadows –

Hon’ble Supreme Court of India – reported in 2016

(8) TMI 1145 – Supreme Court. The Apex Court

held that High Court order confirmed (2015) (11)

TMI 1620 (Supra) – Karnataka High Court. Notice

issued by AO under section 274 read with section

271(1)(c) to be bad in law as it did not specify

which limb of Section 271(1)© 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 –

Decided in favour of assessee.”

8.1 In the background of the aforesaid

discussions and respectfully following the

precedents, we delete the penalty in dispute and

decide the issue in favor of the assessee and

against the Revenue.”

respectfully following the aforesaid precedents, I set aside the

orders of the revenue authorities by cancelling the penalty in

dispute and accordingly allow the appeal of the assessee.

allowed.

Order pronounced on 09-04-2019.

Sd/- (H.S. SIDHU) JUDICIAL MEMBER Dated: 09/04/2019