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Income Tax Appellate Tribunal, DELHI BENCH ‘F’ NEW DELHI
Before: SHRI N.K. BILLAIYA & SHRI SUDHANSHU SRIVASTAVA
This appeal has been filed by the assessee against order dated 30th October, 2015 passed by the Ld. Commissioner of Income Tax (Appeals) – I, Noida for assessment year 2010 – 11 wherein vide the impugned order and Ld. CIT (A) has upheld the imposition of penalty of Rs. 8,21,000/- imposed under section 271 (1) (c) of the Income Tax Act, 1961 (hereinafter called “the Act”).
Assessment year 2010-11 2. The brief facts of the case are that the assessee had filed his original return of income showing income of Rs. 1,86,039/-. The assessee is a salaried employee of the Noida authority and besides the salary income he had shown income from house property and income from other sources in his return of income. The assessee filed the revised return declaring income of Rs. 39,84,410/-. The case was subsequently selected for scrutiny and the assessment was completed under section 143 (3) of the Act at an income of Rs. 67,81,910/- after making additions in respect of capital gains and unexplained cash deposits. The assessee did not prefer any appeal before the first appellate authority against the quantum additions. Subsequently, the impugned penalty was imposed by the Assessing Officer on the quantum additions which was upheld by the Ld. first appellate authority and now the assessee has approached the Income Tax Appellate Tribunal and has challenged the action of the Ld. CIT (A) in upholding this penalty.
The Ld. authorised representative appearing on behalf of the assessee filed written submissions and submitted that the appeal may be decided on the basis of written submissions and that he did not want any opportunity to make oral arguments before the Bench.
Assessment year 2010-11 4. The Ld. senior departmental representative appearing on behalf of the revenue placed reliance on the findings of the lower authorities and submitted that since the assessee had not filed any appeal against the quantum additions, it was apparent that the assessee had accepted that there was concealment of income/furnishing of inaccurate particulars of income on his part. The Ld. senior departmental representative also submitted that the plea of the assessee that the charge of penalty was not specified was a mere technical error and it did not take away the fact that the assessee had concealed its income/furnished inaccurate particulars of income.
We have carefully considered the written submissions filed on behalf of the assessee, heard the Ld. senior departmental representative and have also perused the material on record. In the written submissions, the assessee has raised a legal ground that the notice issued under section 274 of the Act by which the penalty proceedings were initiated did not specify the charge or the limb under which the penalty proceedings under section 271 (1) (c) of the Act were being initiated. It has been pleaded in the written submission that failure to specify the limb under which the penalty proceedings have been initiated resulted in the penalty proceedings being invalid and bad in law because the specification of the limb is mandatory. In Assessment year 2010-11 the written submissions the assessee has relied on a number of case laws in support of this contention. Written submissions in respect of the merits of the penalty have also been filed. However, as the assessee has raised a legal ground challenging the initiation of penalty proceedings itself, we take up the legal ground of the assessee first.
5.1 We have perused the penalty notice dated 22/03/2013 issued under section 274 read with section 271 of the Act and find that the assessee’s contention regarding non-specification of the charge under which the penalty proceedings were being initiated is correct. It is evident from the notice u/s 274 r.w.s. 271 of the Act dated 22.03.2013 for the impugned year that the Assessing Officer has not specifically stated as to under which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated by him, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income.
The Hon’ble High Court of Karnataka in the case of CIT vs. Manjunatha Cotton & Ginning Factory, reported in 359 ITR 565 (Kar)has held as under:
"(p) Notice under section 274 of the Act should specifically state the grounds mentioned in Section 271(l)(c), i.e., whether it is for concealment of income or for furnishing of inaccurate particulars of income.
Assessment year 2010-11 (q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law."
5.2 The above-said judgment of Hon’ble High Court of Karnataka in the case of CIT vs. Manjunatha Cotton & Ginning Factor, reported in 359 ITR 565 (Kar) has been followed by the Hon’ble High Court of Karnataka in the case of Commissioner of Income Tax vs. SSA’s Emerald Meadows, reported in (2016) 73 taxmann.com 241 (Kar) and the relevant observations of the Hon’ble Karnataka High Court are as under-
"2. This appeal has been filed raising the following substantial questions of law, Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case? Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty notice under Section 274 r.w.s. 271(i)(c) is bad in law and invalid despite the amendment of Section 271 (1B) with retrospective effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same ?
Assessment year 2010-11 (3) Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued under Section 274 without taking into consideration the assessment order when the assessing officer has specified that the 'assessee has concealed particulars of income?’ 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(l)(c) of the Income Tax Act. 1961 for short 'the Act') to be bad in law as it did not specify which limb of Section 271 (l)(c) 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 CIT v. Manjunatha Cotton & Ginning Factory [2013] 359ITR 565/218 Taxman 423/35 taxmann.com 250 (Kar.).
In our view, 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 in this appeal for determination by this Court. The appeal is accordingly dismissed.
5.3 Further, the SLP filed by the Revenue against the judgment of the Karnataka High Court in the case of Commissioner of Income Tax vs. SSA’s Emerald Meadows (supra) was dismissed by the Hon’ble Supreme Court of India.
Therefore, respectfully following the judgment of the Hon’ble Karnataka High Court as above-mentioned we are of the considered view that the Assessing Officer is required to Assessment year 2010-11 specify which limb of Section 271 (1)(c) of the Act, the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. From the perusal of the notice u/s.274 r.w.s. 271 of the Act in the present appeal, it is very much obvious that the Assessing Officer has not specified the same. The notice in fact is in standard pro forma without the irrelevant clauses therein being struck off.
This indicates non application of mind on the part of the Assessing Officer while issuing the penalty notice. In the circumstances and facts of the case, the penalty proceedings initiated by the Assessing Officer are bad in law and accordingly the penalty so initiated is directed to be deleted and the order of the learned CIT (A) is set aside.
In the final result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 3rd MAY, 2018.