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Income Tax Appellate Tribunal, DELHI BENCHES “D” : DELHI
Before: SHRI BHAVNESH SAINI & SHRI T.S. KAPOOR
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “D” : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA.No.2238/Del./2013 Assessment Year 1994-1995 Shri Vinod Chugh, The Income Tax Officer, Prop. Dyal Furnishing, Ward -1, vs. G.T. Road, Panipat. Panipat. PAN AANPC9210D (Appellant) (Respondent) Shri Salil Aggarwal, Advocate And For Assessee : Shri Shailesh Gupta, C.A. For Revenue : Smt. Naina Soin Kapil, Sr. DR Date of Hearing : 06.08.2019 Date of Pronouncement : 08.08.2019 ORDER PER BHAVNESH SAINI, J.M.
This appeal by Assessee has been directed against the Order of the Ld. CIT(A), Karnal, Dated 16.01.2013 for the A.Y. 1994-1995 challenging the levy of penalty under section 271(1)(c) of the I.T. Act, 1961.
Briefly the facts of the case are that the A.O. passed the assessment order under section 143(3) of the I.T.
2 ITA.No.2238/Del./2013 Shri Vinod Chugh, Panipat, Act and made the addition of Rs.9 lakhs on account of unexplained gifts and amount paid as premium to procure gift. The A.O. in the assessment order initiated the penalty proceedings under section 271(1)(c) of the I.T. Act. The A.O. in the penalty order has mentioned that the Ld. CIT(A) has deleted the aforesaid addition and Tribunal dismissed the departmental appeal. It is also noted that subsequently Revenue filed appeal before Hon’ble Punjab & Haryana High Court and the Hon’ble High Court allowed the appeal of the Revenue. Therefore, fresh notice was also issued on 02.05.2011 for levy of the penalty. The A.O. vide separate Order levied the penalty on account of unexplained gifts. The Ld. CIT(A) dismissed the appeal of assessee.
The Learned Counsel for the Assessee contended that the A.O. passed the assessment order on 23.03.2001 under section 143(3) but has not pointed out as to under which limb of Section 271(1)(c) of the I.T. Act penalty proceedings have been initiated. On the same day of the assessment order Dated 23.03.2001, the A.O. issued show
3 ITA.No.2238/Del./2013 Shri Vinod Chugh, Panipat, cause notice under section 271(1)(c) of the I.T. Act, Dated 23.03.2001 in which A.O. has mentioned as under :
“have concealed the particulars of your income or furnished inaccurate particulars of such income.”
3.1. He has further submitted that after passing of the Order by the Hon’ble Punjab & Haryana High Court sustaining the addition on account of unexplained gift on merit, the A.O. further issued notice Dated 02.05.2011 before levy of the penalty which reads as under :
“In connection with the above penalty proceedings, you are allowed a fresh opportunity of being heard. You are, therefore, requested to please attend my office at Panipat on 18.05.2011 at 11.00 A.M. in person or through an Authorized Representative or send your written reply on the above said date failing which, it will be presumed that you have nothing to say in the matter and the penalty proceedings shall be finalized on merits.”
4 ITA.No.2238/Del./2013 Shri Vinod Chugh, Panipat, 3.2. He has, therefore, submitted that A.O. has not pointed-out as to under which limb of section 271(1)(c) of the I.T. Act penalty proceedings have been initiated, whether for concealment of particulars of income or furnishing inaccurate particulars of income. Therefore, penalty is not leviable in the matter. He has submitted that the issue is covered by the Order of ITAT, Delhi G-Bench in the case of Jagdamba Prasad Gupta, Delhi vs. ACIT, Circle 35(1), New Delhi in ITA.No.1834/Del./2016, Dated 21.01.2019. Copy of the Order is placed on record.
On the other hand Ld. D.R. relied upon the Orders of the authorities below and submitted that assessee has not raised this issue before the authorities below and that assessee was aware of the fact that he has received bogus gift, therefore, assessee was aware of the fact that assessee has furnished inaccurate particulars of income and as such liable for penalty. Therefore, merely because such facts are not mentioned in the show cause notice before levy of the penalty would not be fatal to the case of Revenue. The Ld. D.R. relied upon Judgment of the Hon’ble
5 ITA.No.2238/Del./2013 Shri Vinod Chugh, Panipat, Madras High Court in the case of Sundaram Finance Ltd., vs. CIT [2018] 403 ITR 407 (Mad.) in which it was held that “the assessee had understood purport and import of notice, and hence, no prejudice was caused to the assessee. This Judgment of the Hon’ble Madras High Court is confirmed by the Hon’ble Supreme Court in the case of Sundaram Finance Ltd., vs. CIT [2018] 99 taxmann.com 152 (SC). The Ld. D.R. also filed written submissions highlighting the same facts and other decisions of the Tribunal that penalty in such circumstances is wholly justified.
We have considered the rival submissions and perused the material on record. The A.O. in the assessment order has mentioned at the time of initiation of penalty proceedings that penalty proceedings under section 271(1)(c) of the I.T. Act have been initiated for furnishing inaccurate particulars of income. However, on the same day of passing of the assessment order on 23.03.2001, the A.O. issued show cause notice before levy of the penalty in which A.O. has mentioned that assessee has concealed the particulars of income or furnished inaccurate particulars of 6 ITA.No.2238/Del./2013 Shri Vinod Chugh, Panipat, such income, as per the notice reproduced above. After passing of the Judgment by the Hon’ble jurisdictional High Court restoring the addition, A.O. further issued notice Dated 02.05.2011 in which A.O. did not mention any such fact in the notice which is reproduced above. Thus, A.O. has not clarified in the notice as to for which limb of Section 271(1)(c) of the I.T. Act, penalty proceedings have been initiated against the assessee, whether for concealment of the particulars of income or furnishing inaccurate particulars of such income. The issue is, therefore, covered by the Order of ITAT, Delhi G-Bench in the case of Jagdamba Prasad Gupta, Delhi vs. ACIT, New Delhi (supra) in which in paras 5 to 7 the Tribunal held as under :
“5. We have considered the rival submissions and perused the material on record. It is admitted fact that the AO before levy of the penalty u/s 271(1)(c) of the Act issued show cause notice to the assessee dated 31/12/2013, copy of which is filed at page 1 of the Paper Book. In the said notice the AO has mentioned "have concealed the particulars of your income or 7 ITA.No.2238/Del./2013 Shri Vinod Chugh, Panipat, furnished inaccurate particulars of such income in terms of explanation 1,2,3,4 and 5". In this notice the AO has mentioned both the limbs of section 271(1)(c) of the Act that assessee have concealed the particulars of the income or furnished inaccurate particulars of such income. AO has not specified in the notice as to under which limb of section 271(1)(c) of the Act a show cause notice has been issued against the assessee for levy of the penalty. The Hon'ble Karnataka High Court in the case of CIT vs. M/s SSA's Emerald Meadows (supra) confirmed the order of the Tribunal by dismissing the Departmental appeal in which the Tribunal has allowed the appeal filed by the assessee holding the notice issued by AO u/s 274 read with section 271(1)(c) of 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 ITA.No.1834/Del/2006 initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The SLP of the Department has also been dismissed by the Supreme
8 ITA.No.2238/Del./2013 Shri Vinod Chugh, Panipat, Court. The AO in the assessment order while making the addition has also noted "penalty proceedings u/s 271(1)(c) of the Act are initiated separately for filing inaccurate particulars/concealment of income". AO was not sure as to under which limb of section 271(1)(c) of the Act penalty proceedings have been initiated in the assessment order. The assessee while challenging the penalty order before Ld.CIT(A) has raised a specific ground that the order passed by the AO is erroneous, illegal and against the principles of natural justice and equity. The same ground is raised in the present appeal as well. Thus, the assessee challenged the legality of the penalty order before Ld. CIT(A) which includes the legality of the show cause notice for levy of the penalty. Since the notice issued before levy of the penalty dated 31/12/2013 is void, illegal and bad in law, therefore, it was rightly challenged that entire penalty proceedings are illegal and vitiated. Thus, assessee practically did not raise any additional ground in this regard. Since the notice dated 31/12/2013 is void, bad in law and illegal,
9 ITA.No.2238/Del./2013 Shri Vinod Chugh, Panipat, therefore, entire penalty proceedings are vitiated and are liable to be quashed. The issue is covered in favour of the assessee by the judgment in the case of SSA's Emerald Meadows (supra). The decision relied upon by the Ld. DR, thus, would not support the case of Revenue.
ITA.No.1834/Del./2016 :
6. In view of the above discussion, we set aside the order of the authorities below and quashed the penalty proceedings. Penalty cancelled.
In the result, appeal of assessee is allowed.”
5.1. In this case the Tribunal has followed the Judgment of Hon’ble Karnataka High Court in the case of M/s. SSA’s Emerald Meadows reported in 73 taxmann.com 241 (Kar.) which is confirmed by the Hon’ble Supreme Court by dismissing the SLP of the Department reported in 73 taxmann.com 248 (SC). Therefore, taking a consistent view in the matter, we are of the view that penalty is not leviable
10 ITA.No.2238/Del./2013 Shri Vinod Chugh, Panipat, in the matter. We, accordingly, set aside the Orders of the authorities below and cancel the penalty.
In the result, appeal of Assessee allowed.
Order pronounced in the open Court.