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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S.SUNDER SINGH
आदेश / O R D E R
PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the Order dated 29.04.2016 of Commissioner of Income Tax (Appeals)-7, Chennai, in for the AY 2009-10.
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All the grounds of the appeal are related to the levy of penalty u/s.271(1)(c) of Income Tax Act (in short ‘the Act’). During the assessment proceedings, the Assessing Officer (in short ‘AO’) found that the assesse has sold property during the previous year relevant to the AY 2009-10 for Rs.90,04,000/- and has not admitted the capital gains in the return of income. The AO has received information from the AIR and found that the assessee was a joint owner along with three others and sold the land vide common Sale Deed No.989/2009 dated 26.03.2009 to M/s.LBK TRIPLE ‘S’ Builders Pvt. Ltd., and received his share of Rs.56,27,500/-. The AO allowed the cost of acquisition of Rs.38,15,170/- and brought to tax to the balance amount under the head short term capital gains and initiated penalty u/s.271(1)(c) of the Act. The AO has assessed the additional income of Rs.18,12,330/- under the head short term capital gains relating to sale of this property. The AO issued show cause notice for which assessee has filed explanation, not being satisfied with the Explanation, the AO levied penalty of Rs.5,62,200/- on concealment of income of Rs.18,12,330/- being 100% tax sought to be evaded u/s 271(1)(c) of Income tax act.
Aggrieved by the order of the AO, the assesse went on appeal before the Ld.CIT(A) and the Ld.CIT(A) confirmed the penalty placing reliance on the decision of Hon’ble Apex court in MAK Data Private Limited v. CIT reported on [2013] 358 ITR 593. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before us.
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Appearing for the assessee, the Ld.AR argued that the assessee has sold the property jointly along with others and was under the bona fide impression that the return has to be filed in the status of AOP jointly with other co-owners and there is no intention to evade the tax or to conceal the income. The AO raised the issue during the assessment proceedings on the basis of AIR information and the assessee has accepted the addition and paid the taxes with an intention to avoid litigation. The assesse relied on the decision in the case of the Price Water House Coopers Pvt. Ltd. v. CIT reported in [2012] 348 ITR 306 & M/s.Reliance Petro Products (P) Ltd. reported in 322 ITR 158 (SC). Further, the Ld.AR also brought to our notice that the notice issued u/s.271(1)(c) was defective in as much as non-striking of the irrelevant columns relating to the concealment of income or furnishing of inaccurate particulars. The assesse also brought to our notice that the AO was not clear in his mind whether the penalty is initiated for concealment of income or for furnishing of inaccurate particulars. In the Assessment Order also, the AO has written penalty initiated u/s.271(1)(c) of Income Tax Act but not specified whether it was for concealment of income or for furnishing of inaccurate particulars. According to the Ld.AR, non-striking of irrelevant column in the notice issued u/s.271 r.w.s. 274 and non-mentioning of the relevant offence of the assessee i.e. concealment or inaccurate particulars in the notice renders the notice issued u/s.271(1)(c) as invalid and consequent penalty proceedings required to be quashed. The Ld.AR relied on the decision in the case of Manjunatha Cotton ginning Factory 359 ITR
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565 Karnataka High Court. and the dismissal of the departmental SLP, dismissed by the Department on the similar issue.
We heard the rival submissions and perused the material placed on record.
In this case, the assesse has sold the property jointly held by the assessee along with three others. The property was sold on 26/03/2009 and the due date for filing of return even as AOP was 31/07/2009. The assessee filed his return of income on 22/12/2009 but not declared the capital gains on sale of the land. Even if the assessee presumes that the return has to be filed jointly in the capacity of AOP equal responsibility casts with the assessee to ensure declaring the capital gains correctly. The assessee has accepted the undisclosed income only after the AIR information furnished to the assessee regarding non disclosure of capital gains. Therefore, it is clear and deliberate case of the assessee to conceal the income and the case of Hon’ble Apex Court in the case of MAK Data (cited supra) is applicable. The assessee relied on Price Water House Coopers Pvt. Ltd. v. CIT reported on [2012] 348 ITR 306 & M/s.Reliance Petro Products (P) Ltd. reported in 322 ITR 158 (SC). In the case of Price Water house coopers Ltd the assessee had disclosed the disallowance in the Audit report which was furnished along with the return but omitted to disallow the same and therefore the Hon’ble Apex Court held that the mistake was bona fide. Similarly in the case of Reliance Petro
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Products, assessee had claimed the expenditure, which claim was not accepted or was not acceptable to revenue. In the instant case the assessee has neither furnished the particulars of sale transaction in the return of Income nor filed the return in the capacity of AOP. Therefore, the case Laws relied upon by the assessee have no application in the assessee’s case.
However, the assessee argued on technical grounds also for defect in the notice issued u/s.271 r.w.s.274 where in the AO has not explicitly specified in the penalty notice as to whether the penalty proceedings are being initiated for furnishing the inaccurate particulars or for concealment of income. The Hon’ble High Court of Karnataka in the case of Manjunatha Cotton ginning Factory 359 ITR 565 held that the omission of AO to explicitly mention initiation of penalty proceedings for furnishing inaccurate particulars or for concealment of income renders the notice invalid and consequent penalty liable to be quashed. On the similar facts, the Hon’ble Supreme Court dismissed the SLP filed by the Department in the case of M/s.SSA Emerald Meadows.
In the assessee’s case the AO has not struck of the relevant column relating to initiation of penalty proceedings for concealment of income or fur furnishing of inaccurate particulars. In the Assessment Order also, the AO has not mentioned whether the penalty was initiated for concealment of income or for inaccurate particulars. Therefore, the decision of the ITA No.1764/Mds/2016 :- 6 -:
Hon’ble Karnataka High Court in the case of Manjunatha Cotton Jinning Factory is squarely applicable in the assessee’s case. Accordingly, we hold that the notice issued u/s.271(1)(c) without explicitly specifying whether the penalty is initiated for inaccurate particulars or for concealment of income is bad in law and consequent levy of penalty levied by the AO is required to be cancelled. Therefore, we cancel the penalty imposed by the AO and set-aside the orders of the lower authorities.
In the result, the appeal of the assesse is allowed.
Order pronounced in the Open Court on 31st March, 2017, at Chennai.