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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The above titled four appeals have been preferred by the assessee against the order dated 31.05.2013 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment years 1990-91, 1991-92, 1992-93 & 1993-94.
The common issue raised by the assessee in all the four appeals is against the part confirmation of penalty by Ld. CIT(A) as levied by the AO under section 271(1)(c) of the Act.
We shall take up first the A.Y. 1990- 91.
2 & ors. Shri Bhupendra C. Dalal ITA No.5323/M/2013 A.Y. 1990-91 4. The assessee also raised the additional grounds of appeal challenging the jurisdictional issue on the ground that necessary condition for initiating penalty proceedings were not fulfilled and no proper charge was intimated to the assessee. The additional grounds raised by the assessee are reproduced as under: “2.1 It is submitted that in the facts and the circumstances of the case, and in law, the penalty levied is bad and illegal as the necessary conditions for initiating the penalty proceeding and the completion thereof were not fulfilled.
2.2 Without prejudice to the generality of the above ground and more specifically, it is submitted that the penalty order is bad in law, in as much as:
(i) No proper charge was considered, intimated and / or levied during the penalty proceeding; and / or (ii) The issuance of notice u/s. 271 (1) (c) of Income - tax Act, 1961 was not proper.
3. The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing.
The Ld. Counsel of the assessee, at the outset, submitted that the issue raised by the assessee in the additional grounds of appeal
are of paramount significance and are arising out of the assessment records before the authorities below and goes to the root of the matter. The ld. Counsel for the assessee submitted that issue raised in the additional ground of appeal does not require any further verification of facts and therefore, the same may kindly be admitted for adjudication as these were not raised before the Ld. CIT(A). The Ld. A.R. relied on a series of decisions which are as under:
1. National Thermal Power Corporation vs. CIT (229 ITR 386 SC) 2. Jute Corporation of India vs. CIT [187 ITR 688 (SC)] 3. Ahmedabad Electricity Co. Ltd. vs. CIT [199 ITR 351 (Bom.) (FB)]
The Ld. D.R., on the other hand, opposed the admission of additional ground on the ground that same were not raised before the Ld. CIT(A) and therefore can not be taken up at this stage.
We have heard the rival submissions of both the parties and perused the material on record. We observe that the assessee has raised legal issue in the additional grounds filed which are raising out of the facts and assessment record before the authorities below and does not require any further verification of facts. We are therefore inclined the to admit the same for adjudication by following the decision of Apex Court in the case of National Thermal Power Corporation vs. CIT (supra), Jute Corporation of India vs. CIT (supra) and also the decision of Hon’ble Bombay High Court in the case of Ahmedabad Electricity Co. Ltd. vs. CIT (supra) and CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. (supra).
The facts in brief are that the assessment was framed in this case under section 254A read with section 143(3) of the Act vide order dated 31.12.2007 wherein the penalty was initiated for concealment of income in some cases whereas in some cases no charge has been stated by the AO in the assessment order. Thereafter, the notice was issued under section 271(1)(c) of the Act dated 30.01.2012 which was served upon the assessee on 17.02.2012. The AO has not mentioned in the notice as stated above whether the penalty proceedings were initiated for concealment of income or for furnishing of inaccurate
4 & ors. Shri Bhupendra C. Dalal particulars of income and thus the notice has been issued in a very mechanical manner without any application of mind. Finally the penalty was levied for concealment of income however, in para 6, the AO has mentioned both the charges i.e. concealment of income and furnishing of inaccurate particulars of income.
The Ld. A.R. submitted that the penalty proceedings and the consequent penalty order are bad in law as the assessee was not given opportunity by confronting with the specific charge on which the penalty was proposed to be levied and therefore the penalty order has to be quashed. The learned A.R. also drew our attention to the notice issued under Section 271(1)(c) of the Act which is filed at the time of hearing which the AO has issued without stating mentioning the one of the two limbs or specify the one of the two limb on which the penalty is imposed which shows non application of mind by the AO. To defend his arguments the learned A.R. relied on series of decisions:- a)CIT Vs SSA’s Emerald Meadows(SC) (2016) 73 Taxmann.com 241 Karnataka – SLP dismissed as reported in (2016) 73 Taxmann.com 248 (SC) b) CIT vs. Manjunath Cotton and Ginning Factory (2013) 359 ITR 565 (Kar.) c) CIT vs. Shri Samson Perinchery (2017) 392 ITR 4 (Bom.) d) CIT vs. Mrs. Piedade Perinchery ITXA No.1310 of 2014 order dated 10.01.2017 (Bom. – HC)
The ld AR prayed that in view of the ratio laid down by the Hon’ble Apex Court and Hon'ble High Courts including the jurisdictional High Court the penalty may be deleted on
The learned D.R., on the other hand, relied on the order of Ld. CIT(A) by submitting that the penalty has been rightly initiated and imposed by the AO. The Ld. D.R. submitted that penalty was initiated for concealment of income though candidly admitted that in some cases no charge mentioned in the assessment order. The Ld. D.R. submitted that it is not necessary to mention the specific charge in the penalty notice as all the submissions and contentions of the assessee has been considered during the course of penalty proceedings and therefore the additional ground raised by the assessee challenging the jurisdiction of the AO to levy penalty may be dismissed.
After hearing both the parties and perusing the record, we find that in the present case the AO has issued notice without stating the specific charge on which the penalty was proposed to be levied thereby depriving the assessee to respond to the specific charge and thus the principles of natural justice are violated. In this case the assessee has not got an opportunity to reply as to on which limb the penalty is being imposed The case of the assessee is squarely covered by the decisions as referred and relied by the ld AR and as stated above. In the case of CIT Vs SSA’s Emerald Meadows(Supra) , the Honble Karnatka High Court has dismissed the appeal of the revenue on the ground that there arises no substantial question of law out of the order of tribunal wherein the coordinate bench has held that notice issued u/s 274 r.w.s. 271(1)© of the Act to be bad in law as it
6 & ors. Shri Bhupendra C. Dalal did not specify the limb of section 271(1)© of the Act on which penalty proceedings had been initiated whether for concealment of income or for furnishing inaccurate particulars of income by relying on the decision of CIT vs. Manjunath Cotton and Ginning Factory (Supra). The Jurisdictional High court in the case of CIT vs. Shri Samson Perinchery (Supra) and CIT vs. Mrs. Piedade Perinchery (Supra) has held that failure of the AO to specify in the notice whether the penalty is initiated for inaccurate particulars of income or for concealment of income is fatal and reflects non application of mind on the part of the AO and rendered the penalty proceedings and consequent order as invalid. We, therefore, of the considered view that the order of penalty is bad in law for the reasons as discussed hereinabove and accordingly direct the AO to delete same by setting aside the order of the CIT(A).
In the result, the appeal filed by the assessee is allowed.
ITA No.5324/M/2013 for A.Y. 1991-92
The issue involved in the present appeal is identical to the one as stated above in for A.Y. 1990-91. Therefore, our finding in ITA No.5323/M/2013 for A.Y. 1990-91, would, mutatis mutandis apply to this appeal as well. Accordingly this appeal of the assessee is allowed. & 5326/M/2013 for A.Y. 1992-93 & 1993-94
The facts of both these cases are similar to the one as decided by us in for A.Y. 1990-91 except that during these years the assessee had not filed any returns of 7 & ors. Shri Bhupendra C. Dalal income. So the assessee besides relying on the propositions made on non specification of charge by the AO in the penalty notice issued u/s 274 r.w.s.271(1)(c) of the Act has also relied on the decision of the jurisdictional High Court in the case of CIT vs. M/S Growmore Research and Asset Management Ltd. in ITA No.675 of 2008 wherein the Hon’ble Bombay High Court has held that no penalty is to be imposed where the assessee has not filed any return of income. The said decision of the Hon’ble Bombay High Court has been affirmed by the Hon’ble Supreme Court in SLP(CC) 2007/2010) arising out of judgment and order dated 10.02.2009 in ITA No.676 of 2008 of Hon’ble Bombay High Court filed by the Revenue.
The ratio laid down by the Hon’ble Bombay High Court and as affirmed by the Hon’ble Supreme Court is that where the assessee has not filed any return of income no penalty under section 271(1)(c) of the Act, 1961 could be levied. In and ITA No.5326/M/2013 A.Y. 1992-93 & 1993-94, the assessee has not filed the return of income and therefore even on that account the penalty is not to be levied. Accordingly we hold that the order of CIT(A) is wrong and can not be sustained for two ratios one non specification of charge in the penalty notice and second that assessee has not filed any returns of income and thus penalty can not be levied. The AO is directed accordingly to delete the penalty.
Since we have decided the issue on jurisdiction in favour of the assessee the other issue raised on merit need no adjudication.
Order pronounced in the open court on 24.05.2019.