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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: HON’BLE SHRI MAHAVIR SINGH, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R
Per Manoj Kumar Aggarwal (Accountant Member) 1.1 Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2010-11 contest the order of Ld. Commissioner of Income-Tax (Appeals)-28, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-28/IT-222/ACIT -17(1)/2013-14 dated 13/06/2017 by raising following ground of appeal: -
Chitralekha Assessment Year :2010-11 “On the facts and circumstances of the case and in law, it is humbly prayed that it should be held that the penalty levied vide Order dated 12th September, 2013 u/s. 271(l)(c) of the Act in relation to disallowance of Rs.23,97,944/- representing part of interest expenditure considered as attributable on the outstanding balance due from Chitralekha Printers and Publishers Pvt. Ltd., in assessment of the income vide Order passed U/s. 143(3) of the Act dated 11th March, 2013 is to be deleted.”
1.2 However, the assessee has raised additional grounds of appeal on 13/03/2019 which contest the imposition of penalty on legal grounds in the following manner: - on the facts and circumstances of the case and in law, it is humbly prayed that it should be held that the notice u/s 274 r.w.s 271 Muncy of the Act as well as the consequential order passed under section 271(1)(c) is illegal, bad-in-law and without jurisdiction and accordingly, the AO be directed to delete the penalty levied u/s 271(1)(c) of the act on account of following: (a) The penalty proceedings initiated by issuance of notice u/s 274 r.w.s 271 (1)(c) of the act is without any specific charge; or (b) the charge for levy of penalty is different than the charge stated to be in the assessment order for initiation of penalty proceeding; or (c) On similar facts no penalty was initiated for Assessment Years 2004- 2005 to 2007-2008 and though penalty proceedings were initiated for Assessment Years 2008-2009 and 2009-2010 but no penalty was levied; or (d) proper disclosure was made in the computation of total income for the legal claim.
1.3 The Ld. Authorized Representative for assessee [AR] pleaded for admission of additional grounds by placing reliance on the decision of Hon’ble Apex Court rendered in National Thermal Power Co. Ltd. Vs. CIT [229 ITR 383] & Jute Corporation of India Ltd Vs CIT [187 ITR 688]. Although Ld. Departmental Representative for assessee agitated the admission of additional grounds, however, we find the additional grounds to be purely legal in nature which do not require appreciation of new facts and therefore, inclined to admit the same in terms of the cited judicial pronouncements.
Chitralekha Assessment Year :2010-11 1.4 Since the legal issues being raised by the assessee contest the validity of order passed by Ld. AO and goes to the root of the matter, we take up the same first. 2.1 Facts leading to the imposition of the impugned penalty are that the assessee being resident firm engaged in the business of publishing magazines was assessed u/s 143(3) on 11/03/2013 wherein the assessee was saddled with interest disallowance u/s 36(1)(iii) for Rs.23.97 Lacs. Accordingly, penalty proceedings were initiated u/s 271(1)(c) against the assessee in the quantum assessment order and the assessee was saddled with impugned penalty of Rs.7.40 Lacs vide order dated 12/09/2013. 2.2 Aggrieved, the assessee agitated the same on legal grounds as well as on merits, however, without any success before first appellate authority vide impugned order dated 13/06/2017 wherein the penalty got confirmed, against which the assessee is in further appeal before us.
The Ld. AR, drawing our attention to the quantum assessment order, show-cause notice issued u/s 274 read with section 271(1)(c), submitted that Ld. AO failed to frame a specific charge against the assessee and therefore the penalty proceedings stood vitiated on legal grounds. Reliance has been placed on the following judicial pronouncements for these submissions: - No. Title Rendered by Citation 1. Shri Samson Perincherry Hon’ble Bombay High Court of 2014 dated 05/01/2017 2. Manjunath Cotton & Ginning Hon’ble Karnataka High 359 ITR 565 (SLP dismissed on factory court 05/08/2016) 3. SSA’s Emerald Meadows Hon’ble Karnataka High ITA No. 380 of 2015 court 4. Global Proserv Ltd. Vs ACIT Mumbai Tribunal ITA No. 7332/Mum/2014 dated 14/03/2017 5. New Sorathia Engg. Co. Hon’ble Gujarat High Court 282 ITR 642
Chitralekha Assessment Year :2010-11 Per Contra, Ld. Departmental Representative [DR] submitted that no prejudice was caused to the assessee during penalty proceedings and the assessee was well aware of the charges for which the penalty was being initiated and therefore, there was no substance in the submissions. Reliance has been placed on the decision of Hon’ble Apex Court rendered in Jain Brothers Vs. Union of India [1970 77 ITR 107]. 4.1 We have carefully heard the rival submissions and perused relevant material on record. The undisputed position that emerges is that the penalty was initiated by Ld. AO against quantum addition in the quantum assessment order, vide para 5.4, by observing as under: - Penalty proceedings u/s. 271(1)(c) initiated separately for furnishing inaccurate particulars of income. The perusal of show-cause notice u/s 274 read with Section 271 of the Act dated 11/03/2013, as placed on page nos. 17-18 of the paper-book, reveal that the Ld. AO has failed to mark the appropriate charge as well as appropriate limb for which the penalty was being initiated. Finally, the penalty has been imposed on the assessee by Ld. AO vide order dated 12/09/2013, wherein the penalty has been levied by making following observations: - I am satisfied that the assessee has concealed the particulars of income for the year. The aforesaid three events, put together, reveal that although the penalty was initiated for furnishing of inaccurate particulars of income whereas the penalty has finally been levied for concealment of income. Even, in the show-cause notice, Ld. AO has failed to mention the specific charge against the assessee. These two expressions i.e. furnishing of Chitralekha Assessment Year :2010-11 inaccurate particulars and concealment of income, as per judicial pronouncements of higher judicial authorities, carry different connotations and non-framing of specific charge against the assessee vitiates the penalty proceedings. 4.2 Proceeding further, we find that the facts of the present case are squarely covered by the observation of Hon’ble Bombay High Court made in CIT Vs. Samson Perinchery [2017 88 taxmann.com 413] wherein it has been held as under: - 3. The impugned order of the Tribunal deleted the penalty imposed upon the Respondent-Assessee. This by holding that the initiation of penalty under Section 271 (1)(c) of the Act by Assessing Officer was for furnishing inaccurate particulars of income while the order imposing penalty is for concealment of income. The impugned order holds that the concealment of income and furnishing inaccurate particulars of income carry different connotations. Therefore, the Assessing Officer should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. Further, the Tribunal also noted that notice issued under Section 274 of the Act is in a standard proforma, without having striked out irrelevant clauses therein. This indicates non-application of mind on the part of the Assessing Officer while issuing the penalty notice.
The impugned order relied upon the following extract of Karnataka High Court's decision in CIT v. Manjunatha Cotton & Ginning Factory[2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250 to delete the penalty:— "The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus, the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it as case of furnishing of inaccurate particulars. The apex court in the case of Ashok Pai[2007] 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of Manu Engineering reported in 122 ITR 306 and the Delhi High Court in the case of Virgo Marketing P. Ltd., reported in 171 Taxman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma Chitralekha Assessment Year :2010-11 without striking of the relevant clauses will lead to an inference as to non-application of mind."
5. The grievance of the Revenue before us is that there is no difference between furnishing of inaccurate particulars of income and concealment of income. Thus, distinction drawn by the impugned order is between Tweedledum and Tweedledee. In the above view, the deletion of the penalty, is unjustified.
The above submission on the part of the Revenue is in the face of the decision of the Supreme Court in T. Ashok Pai v. CIT[2007] 292 ITR 11/161 Taxman 340 [relied upon in Manjunath Cotton & Ginning Factory (supra)] - wherein it is observed that concealment of income and furnishing of inaccurate particulars of income in Section 271(1)(c) of the Act, carry different meanings/connotations. Therefore, the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned under Section 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the Assessee has no notice.
Therefore, the issue herein stands concluded in favour of the Respondent- Assessee by the decision of the Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (supra). Nothing has been shown to us in the present facts which would warrant our taking a view different from the Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra).
In view of the above, the question as framed do not give rise to any substantial question of law. Thus, not entertained.
Accordingly, all these Appeals are dismissed. No order as to costs.
Similar is the ratio of other decisions as tabulated in para 3.
4.3 So far as the reliance of the revenue on the decision of Hon’ble Apex Court rendered in Jain Brothers Vs. Union of India [1970 77 ITR 107] is concerned, we find the same to be contextually different which is quite evident from perusal of the head-notes of the said case law: - Section 271(1)(a), read with section 297(2)(g), of the Income-tax Act, 1961 - Penalty - For late filing of return - Assessment year 1960-61 - Whether crucial date for purposes of penalty is date of completion of assessment - Held, yes - Whether applying penalty provisions contained in Act of 1961 to cases of persons whose assessments are completed after 1-4-1962, it cannot be said that any class has been singled out for special treatment and, hence, section 297(2)(g) cannot be struck down as discriminatory under article 14 of Constitution - Held, yes - Whether, therefore, assessee would be liable to a penalty as provided by section 271(1) for default mentioned in section 28(1) of Act of 1922, if his case falls within terms of section 297(2)(g) - Held, yes - Whether provisions of section 271 of Act of 1961 will Chitralekha Assessment Year :2010-11 apply mutatis mutandis to proceedings relating to penalty initiated in accordance with section 297(2)(g) of that Act - Held, yes Section 271(2) of the Income-tax Act, 1961 - Penalty - Registered Firm - Whether it is open to legislature to give benefit of a reduced rate to a registered firm for purpose of tax but withhold same when it committed a default and became liable to imposition of penalty and, thus, provisions of section 271(2) do not contravene article 14 of Constitution - Held, yes 4.4 Finally, respectfully following the binding judicial precedent in the shape of cited decision of Hon’ble Bombay High Court, we delete the impugned penalty on legal grounds which makes our indulgence in examining the impugned penalty on merits merely academic in nature and therefore, not dealt with.
The appeal stands allowed in terms of our above order.
Order pronounced in the open court on 19th March, 2019.
Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 19/03/2019 Sr.PS, Jaisy Varghese आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड�फाईल / Guard File 6.