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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
Before: SHRI H.S. SIDHU
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.
Brief facts of the case are that in this case return of 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.
At the time of hearing, Ld. Counsel of the Assessee has 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.
On the contrary, Ld. DR relied upon the orders of the authorities below and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference.
I have heard both the parties and perused the relevant 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 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.”
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.” iv) ITAT, ‘D’ Bench, New Delhi decision dated 26.5.2017 in the case of Rajender Jain vs. ACIT passed in 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.”
8. Keeping in view of the aforesaid finding of the 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.”
Keeping in view of the aforesaid discussions and 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.
In the result, the appeal filed by the Assessee stands allowed.
Order pronounced on 09-04-2019.