RISHI KUMAR AGARWAL,SIKKIM vs. DCIT, CC-XXII, KOLKATA, KOLKATA

None appeared on behalf of the revenue nor was any application filed seeking adjournment. The Ld.AR submits that the issue before the Bench is squarely covered by the decision of Hon’ble Supreme Court. The Ld.AR submits that a paper book containing pages 1 to 44 was filed on 29- 03-2017 and referred to page no-7 where a copy of the decision of Hon’ble Supreme Court was placed and urged the bench to allow the appeal in terms of this decision. We find that the issue before us is covered by the decision of Hon’ble Supreme Court in the case of SSA’S Emerald Meadows supra and we proceed to hear the case and dispose of the same by perusing the material on record. 1 ITA Nos.1988 & 1989/K/14 Rishi Kumar Agarwal

The only issue is to be decided as to whether the CIT-A justified in confirming the impugned penalties imposed by the AO u/s. 271(1) (c) of the Act in the facts and circumstances of the case.

The brief facts of the issue are that a search & seizure operation was conducted at different residential and business premises of “Begraj Group” on 22-03-2010. During the search a Panchanama was drawn up in the name of the assessee who is an individual. Accordingly, a notice u/s. 153A of the Act was issued to assessee to file the return. In response to which, the assessee filed its return of income on 23-12-2011 declaring total income of Rs.26,85,160/- stating that he derived his income from salary, house property and business. In response to notices issued u/s. 143(2) and 142(1) of the Act, the assessee filed all the details as required by the AO. The AO accepted the said return as filed in response to notice issued u/s. 153A of the Act and treated the same as undisclosed income as the assessee failed to file the return u/s. 139 of the Act within due date.

Thereafter, the AO initiated the penalty proceedings for both the A.Ys under consideration by issuing notices u/s. 274 r.w.s 271(1)(c) of the Act. In the penalty proceedings the AR of the assessee contended that the assessee was born in Sikkim on 26-04-1975 and since then he has been residing in Sikkim. The AR of the assessee also contended that non Sikkimese individuals are enjoying the exemption u/s. 10(26AAA) of the Act till A.Y 2007-08 and a Writ Petition has been filed by the Old Settlers of Sikkim before the Hon’ble High Court of Sikkim questioning the non availability of tax exemption granted initially. The AO not satisfied with the submissions imposed penalties of Rs.8,54,903/- and Rs.7,46,067/- u/s. 271(1)(c) of the Act by separate orders dt. 31-05-2012 for the A.Ys 2008-09 & 2009-10 respectively.

In the first appellate authority, the CIT-A confirmed the penalties as imposed by the AO. Relevant portion of finding of the CIT-A is reproduced herein below:- “4. Discussion, and, Appellate Decision: The same discussion and reasons in my appellate order in the case of the appellant’s brother-Mr. Sanjay Kumar Agarwal [ supra]- is applied here too. The Sikkim issue is just for mere argument sake-as vide CBDT Circular no. 8 of 2008 it was crystal clear that the appellant being a non-Sikkimese was liable under the Income Tax Act. Further here too, the appellant only towards the fag-end of the limitation period for completing the assessment, only on 23.12.2011 did he furnish the returns of income called for by notices issued u/s. 153A. Most relevantly and importantly, this case is squarely covered by the deeming penal explanation in Explanation 5A(ii) read with clause (b0 thereto to the section 271(1)(c ), which is – notwithstanding that such income is declared by the assessee in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of penalty under clause ( c) of sub-section (1), be deemed to have concealed the particulars of his income.”

The ld AR of the assessee apart from reiterating the facts also brought to the notice of the Bench that no specific charge was mentioned in the notice issued u/s 274 read with section 271(1)(c) of the Act i.e, whether assessee concealed the particulars of income or had furnished inaccurate particulars of income. The ld. AR argued that the show cause notice issued for penalty proceedings was defective and hence, the penalty levied is bad in law and in support of this, he placed reliance on the decision of the Hon’ble Karnataka High Court in the case of CIT vs SSA’S Emerald Meadows in ITA No. 380 of 2015 dated 23.11.2015 which was later approved by the Hon’ble Supreme Court by dismissal of Special Leave Petition (SLP) filed by the Revenue in CC No. 11485/2016 dated 5.8.2016.

We have heard the ld.AR and perused the material available on record. We find that the penalty notice dt.30-12-2012 u/s 274 r.w.s 271(1)(c) of the Act at page no-1 does not specify the charge of offence committed by the assessee i.e whether the assessee had concealed the particulars of income or it had furnished inaccurate particulars of income. Even the column “have without reasonable cause failed to comply with the notice u/s. 142(1)/143(2) of Income-tax Act, 1961 is also not struck off.

We find that the Revenue had preferred a SLP before the Hon’ble Supreme Court against this judgment which was dismissed in CC No. 11485/2016 dated 5.8.2016 by observing as under:- UPON hearing the counsel, the Court made the following ORDER Delay condoned. We do not find any merit in this petition. The special leave petition is , accordingly dismissed. Pending application, if any, stands disposed of.

Respectfully following the aforesaid judicial precedents, we cancel the penalties of Rs.8,54,903/- and Rs.7,46,067/- imposed by the AO u/s. 271(1)(c) of the Act by order dt. 30-12-2012 for the A.Ys 2008-09 & 2009-10 respectively and confirmed by the CIT-A. Accordingly the grounds raised by the assessee are allowed.

In the result, the appeals of the assessee are allowed. Order pronounced in the open court on 31-05-2017