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Income Tax Appellate Tribunal, “A” BENCH : KOLKATA
Before: Hon’ble Shri A.T. Varkey, JM & Shri M.Balaganesh, AM ]
This is an appeal filed by the revenue against the order of Ld CIT(A) , Central III, Kolkata in Appeal No. 45/CC-XXX/CIT(A)C-III/10-11/Kol. Dated 30.11.2012 for Asst Year 2008-09 deleting the penalty of Rs 3,37,96,795/- u/s 271(1)(c ) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).
The revenue has raised the following grounds before us :-
1. That on the facts and circumstances of the case Ld. CIT(A) erred in granting relief to the assessee without considering the fact that the income is unearthed only after the search operation, conducted by the Department.
2. That on the facts and circumstances of the case Ld. CIT(A) erred in granting relief to the assessee ignoring the fact that the income offered for taxation is not in the normal course of filing return of income.
3. The Ld. CIT(A) has erred in granting relief to the assessee without considering the fact that out of total income on which penalty was imposed, there is some income which was offered for taxation only after the examination by the A.O. and which can be considered as “concealment”.
4. That on the facts and circumstances of the case Ld. CIT(A) erred in allowing appellant’s appeal without considering invocation of provisions of Section 292B
5. That the Department craves leave to alter, amend and/or modify any or all grounds of appeal.
3. At the outset , we find that the ld DR had come prepared with the assessment folder and from the perusal of the show cause notice issued by the ld Assessing Officer ( in short the ld AO) u/s 274 r.w.s 271 of the Act dated 31.12.2009 served on the assessee, we note that the ld AO had not struck down the limb of charge / default for which the penalty is being initiated against the assessee. We find that the notice has been issued for having concealed the particulars of income or furnished inaccurate particulars of such income . We note that in a similar case, the Hon’ble Karnataka High Court in the case of CIT vs Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565 (Kar) has cancelled the penalty taking note of the fact that the penalty notice did not spell out clearly as to whether the assessee has concealed the particulars of income or has furnished inaccurate particulars of income. We also find that Hon’ble Karnataka High Court in the cae of CIT vs SSA’s Emerald Meadows, reported in (2016) 73 taxmann.com 241 (Kar) endorsed the same view in Manjunatha Cotton and Ginning Factory (supra) and held as under:- “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(1(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(1)(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 vs Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565 / 218 Taxman 423 / 35 taxmann.com 250 (Kar).
4. In our view, since the matter is covered by judgement 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.”
3 M/s Maheshwary Ispat Ltd. A.Yr.2008-09 We also find that the aforesaid order of the Hon’ble High Court was challenged by the department before the Hon’ble Supreme Court by preferring a Special Leave Petition (SLP) which has been dismissed which fact has been reported in (2016) 73 taxmann.com 248 (SC).
We note that since the penalty notice issued to the assessee dated 31.12.2009 did not spell out as to which default the assessee has committed for which penalty u/s 271(1)(c ) of the Act has been initiated, therefore, respectfully following the Hon’ble Karnataka High Court’s order in Manjunatha Cotton and Ginning Factory (supra) and SSA’s Emerald Meadows (supra) , we cancel the penalty imposed by the ld AO which has been rightly deleted by the ld CITA.
We find that the ld CITA had deleted the penalty on the ground that the penalty should have been initiated u/s 271AAA of the Act instead of section 271(1)(c ) of the Act as admittedly there was a search and seizure operation conducted in the premises of the assessee on 14.2.2008 wherein certain incomes for the Asst Year 2008-09 were detected and offered by the assessee in the return of income filed pursuant to the search. The ld AO initiated and levied the penalty proceedings by applying the provisions contained in Explanation 5A to section 271(1)( c) of the Act for the Asst Year 2008-09 (being the year of search). The ld CITA observed that the Explanation 5A to section 271(1)(c ) of the Act could be applied only for the years that had ended before the date of search , where due date of filing the return had expired but assessee had not filed the return. It cannot be made applicable for the year of search , for which separate penal provisions are contained in section 271AAA of the Act, as admittedly the due date of filing the return for Asst Year 2008-09 was 31.10.2008 and the date of search was on 14.2.2008. The search happened on the date for which the relevant previous year did not end and due date of filing the return had not expired. Moreover, the provisions of section 271AAA(3) of the Act specifically precludes application of provisions of 3
4 M/s Maheshwary Ispat Ltd. A.Yr.2008-09 section 271(1)(c ) of the Act to the cases where section 271AAA(1) of the Act is applicable. The facts as stated in the impugned penalty order is that the assessee had admitted concealed additional income of Rs 10,24,14,534/- u/s 132(4) of the Act during the course of search and had offered the same for taxation in the return of income filed for the specified year, which was filed within the due date that fell after the date of search and had paid the taxes in respect of such additional income. Therefore, if at all any penalty for concealment is leviable in this case, that would be u/s 271AAA and not u/s 271(1)(c ) of the Act. We find that the provisions of section 271(1)(c ) and 271AAA of the Act are independent and operate on different footing. Hence we hold that the ld CITA had rightly deleted the penalty in the instant case. Accordingly, the grounds raised by the revenue are dismissed.
In the result, the appeal of the revenue is dismissed.
Order pronounced in the Court on 11.08.2017