THE COMMISSIONER OF INCOME-TAX vs. M/S ITTINA PROPERTIES PVT. LTD.

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ITA/214/2015HC KarnatakaKAHC01030963201522 September 2015Bench: B.MANOHAR,VINEET SARAN6 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal's dismissal of the Revenue's appeal was upheld. The Court found the notice for penalty proceedings invalid due to ambiguity and affirmed that there was no concealment of income or furnishing of inaccurate particulars by the assessee.

What were the facts?

The Assessing Officer initiated penalty proceedings under Section 271(1)(c) after re-determining the assessee's loss due to an unaccepted accounting method. The assessee's appeal to the Commissioner (Appeals) was allowed, and the Revenue's subsequent appeal to the Tribunal was also dismissed.

What were the issues?

Whether the penalty notice under Section 271(1)(c) was valid, and whether the assessee had concealed income or furnished inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 22ND DAY OF SEPTEMBER, 2015

PRESENT

THE HON'BLE MR. JUSTICE VINEET SARAN

AND

THE HON’BLE MR. JUSTICE B.MANOHAR

ITA NO.214/2015

BETWEEN

1.

THE COMMISSIONER OF INCOME TAX

C R BUILDING, QUEENS ROAD

BANGALORE.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(4) RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BANGALORE-560 001.

... APPELLANTS

(BY SRI. K.V.ARAVIND A/W E.I.SANMATHI, ADVs.)

AND

M/S. ITTINA PROPERTIES PVT. LTD., NO.380, OPP. CPWD QUARTERS, III BLOCK, KORAMANGALA, BANGALORE-560 034 PAN:AAACI 3805Q

...RESPONDENT

THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 21.11.2014 PASSED IN ITA NO.36/BANG/2014, FOR THE ASSESSMENT YEAR 2009-2010 PRAYING TO ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE, CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(4), BANGALORE.

THIS ITA COMING ON FOR ADMISSION THIS DAY, VINEET SARAN J. DELIVERED THE FOLLOWING:

JUDGMENT

The Revenue is in appeal against the order of the Tribunal dated 21.11.2014 whereby the appeal filed by the Revenue has been dismissed and the penalty order passed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’) has been held to be not leviable, as had been so held by the Appellate Commissioner also.

2.

Briefly stated the facts of this case are that in the original assessment proceedings passed under Section 143(3) of the Act, the method of accounting as maintained by the assessee was not accepted and thus the loss as declared

by the assessee was re-determined by the Assessing Officer, which order of the Assessing Officer became final, as the same was not challenged by the assessee. Thereafter, the Assessing Officer initiated penalty proceedings against the assessee under Section 271(1)(c) of the Act and levied the penalty at 100% of the tax, which was found to have been evaded. Challenging the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), which was allowed on merits on the ground that there was no concealment of the particulars of its income or false deduction or exemption claimed by the assesse in its return. Revenue filed an appeal before the Tribunal, which has been dismissed. Aggrieved by the said order, this further appeal has been filed by the Revenue.

3.

We have heard Sri K.V.Aravind, learned counsel for the appellants at length and perused the record.

4.

The Tribunal by its order dated 21.11.2014 has dismissed the appeal, not only on the merits but also on the ground that the notice dated 28.12.2011 issued to the

assessee under Section 271(1)(c) of the Act was not a valid notice, in as much as in the printed notice, the inappropriate words were not struck of so as to specify the default for which proceedings were being initiated against the assessee.

5.

We have perused the notice, a copy of which is filed at Annexure-B to the appeal, and we are of the opinion that the finding recorded by the Tribunal in this regard is perfectly justified. While dismissing the appeal, the Tribunal has relied on the judgment of this Court rendered on 13.12.2012 in the case of Commissioner of Income Tax –vs- Manjunatha Cotton and Ginning Factory [(2013) 359 ITR 565 (Karn)].

6.

Having perused the notice, we find that the dismissal of the appeal on the ground that it did not specify the default for which the proceedings were being initiated against the assessee is perfectly justified. An assessee has a right to know as to for which default he is being put to notice, so that he may give an appropriate reply to the show cause notice. In case of ambiguity in the notice or specific

default is not informed to the assessee by way of notice, the assessee would be handicapped in filing its response and as such, on this ground, the notice would be invalid and has rightly been held to be so, in the facts of the present case.

7.

On merits of the case also the Tribunal has affirmed the finding of the Appellate Commissioner wherein it has been held that there was no concealment of income or furnishing of inaccurate particulars of income by the assessee.

8.

Having gone through the order of Assessing Officer as well as the Appellate Commissioner and the Tribunal, we are also of the opinion that there was no concealment of income or furnishing of inaccurate particulars of income by the assessee. From the record, it is clear, that the assessee had furnished all the particulars, but merely because the accounting method adopted by the assessee was not accepted, because of which certain tax had been levied, would not mean that the assessee had furnished wrong information or concealed any income while filing its

return. As such, on merits as well as on the question of validity of the notice, we do not find any infirmity with the order of the Tribunal.

We are thus of the opinion that no question of law arises for determination by this Court. The appeal is accordingly dismissed.

Sd/-

JUDGE

Sd/-

JUDGE TL

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