SAROJ GUPTA,UJJAIN vs. ITO NFAC, LOCAL JURISDICTIONAL OFFICE UJJAIN
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 30.11.2023 passed by learned Commissioner of Income-tax (Appeals)-NFAC, Delhi [“CIT(A)”], which in turn arises out of penalty-order dated 05.01.2022 passed by learned NFAC, Delhi [“AO”] u/s 271(1)(c) of the Income-tax Act, 1961 [“the Act”] for assessment- year [“AY”] 2014-15, the assessee has filed this appeal.
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Saroj Gupta ITA No. 61/Ind/2024 – AY 2014-15
The background facts leading to this appeal are such that the AO,
based on an information received from ITO-2, Dewas that the assessee had
sold an immovable property during AY 2011-12, deposited money in Capital
Gain Deposit Scheme and claimed exemption, initiated proceedings of
section 147 through notice u/s 148. In response to notice u/s 148, the
assessee filed return declaring a total income of Rs. 56,55,810/- on
06.12.2019, copy of acknowledgement of return at Page 13 of Paper-Book.
The AO also issued notice u/s 142(1) in response to which the assessee filed
certain documents in the form of acknowledgment of return field in response
to notice u/s 148, computation of total income, sale-deed of property, etc.
After considering submission of assessee, the AO assessed total income at
Rs. 56,55,810/- declared by assessee in the return u/s 148 vide Para 3 of
assessment-order dated 22.12.2019. The AO also noted, in the very same
para, that the assessee had not filed (original) return for AY 2014-15. The
AO also initiated penalty proceeding u/s 271(1)(c) for concealment of
income. Simultaneously, the AO also issued notice dated 22.12.2019 u/s
274 r.w.s. 271(1)(c) followed by another notice dated 17.08.2021. Ultimately,
the AO imposed penalty of Rs. 11,33,000/- qua the income of Rs.
56,55,810/- vide penalty-order dated 05.01.2022. Aggrieved by penalty-
order, the assessee filed first-appeal to CIT(A) but did not get any success.
Now, the assessee has come in next appeal before us.
Ld. AR for assessee raised two-fold contentions to assail the penalty-
order passed by AO:
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(i) Firstly, our attention is drawn to the show-notice dated 22.12.2019
issued by AO u/s 274 read with section 271(1)(c), placed at Page 4 of Paper-
Book. Referring to same, Ld. AR showed that the AO has mentioned as
under:
“Whereas in the course of proceedings before me for the assessment-year 2014-15, it appear to me that you have concealed the particulars of income or furnished inaccurate particulars of such income.” Ld. AR submitted that the notice u/s 274 sets in motion the penalty-
proceeding. According to Ld. AR, the notice issued by AO is very much vague
in as much it contains stereotype language of section 271(1)(c). The Ld. AR
contended that by mentioning that the assessee has “concealed the
particulars of income or furnished inaccurate particulars of such income” and
without striking the inapplicable part, the AO is himself not sure about the
default committed by the assessee. According to Ld. AR, there are
innumerable decisions of the Hon’ble Courts and ITAT where it has been
loudly held that if the show-cause notice does not spell out the specific
charge of default committed by assessee, the notice and subsequent
proceeding founded thereon are invalid. In support of his contention, Ld. AR
placed a strong reliance on the decision of Hon’ble Jurisdictional High Court
of M.P. in the case of Pr.CIT-I, vs. Kulwant Singh Bhatia, ITA No. 9 to 14
of 208, order dated 9th May 2018, wherein it was held as under:
“8. In the case of CIT V/s. Manjunatha Cotton Ginning Factory (supra), it was observed by the Karnataka High Court in para 59 that the practice of the Department sending a printed form where all the ground mentioned in Section
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271 are mentioned would not satisfy the requirement of law when the consequences of the assessee not rebutting the initiated presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the provisions have to be held to be strictly construed, notices issued under Section 274 should satisfy the grounds, which he has to meet specifically. Otherwise, principle of natural justice is offended if the show cause notice is vague. Even in the matter of search case where penalty is levied under Explanation 5A to Section 271(1)(c), it was held by the Karnataka High Court that the show-cause notice under Section 274 was defective as it does not spell out the ground on which the penalty is sought to be imposed and consequently penalty imposed was cancelled. The decision of CIT V/s. Manjunatha Cotton Ginning Factory (supra) was further followed by the Karnataka High Court in the case of CIT V/s. SSA'S Emerald Meadows, (2016) 73 taxman.com 248 (SC) / dated 23.11.2015 (ITA 380/2015), the High Court has dismissed the appeal of the revenue by observing that the Tribunal has allowed the appeal of the assessee holding that the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Act of 1961 was bad-in-law as it did not specify which limb of Section 271(1)(c) of the Act of 1961, the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars. The Tribunal while allowing the appeal of the assessee, had relied on the decision of the Division Bench of Karnataka High Court decision in the case of CIT V/s. Manjunatha Cotton Ginning Factory (supra). It is further pointed out that the SLP filed by the Deptt. before the Apex Court on 5.8.2016 in the matter of CIT V/s. SSA'S Emerald Meadows (supra) was dismissed. In the case of CIT V/s. Suresh Chandra Mittal, (2000) 251 ITR 9 (SC), the Apex Court has upheld the decision of M.P. High Court wherein, in similar circumstances, it was held that the initial burden lies on the revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. In the present case, in show-cause notice the Assessing Officer has not specified specifically charges, there was no such mention.
On due consideration of the arguments of the learned counsel for the appellant, so also considering the fact that the ground mentioned in show-
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cause notice would not satisfy the requirement of law, as notice was not specific, we are of the view that the learned Tribunal has rightly relying on the decision of CIT V/s. Manjunatha Cotton Ginning Factory (supra) and CIT V/s. SSA'S Emerald Meadows (supra) rightly allowed the appeal of the assessee and set aside the order of penalty imposed by the authorities. No substantial question of law is arising in these appeals. ITA.No(s). 9/2018, 10/2018, 11/2018, 12/2018, 13/2018 and 14/2018, filed by the appellant have no merit and are hereby dismissed.”
Ld. AR submitted that the present case of assessee stands fully covered by
this binding decision of Hon’ble jurisdictional High Court and in view of the
same, the penalty notice issued and consequently the penalty order passed
by AO is invalid and deserves to be quashed.
(ii) Secondly, it is submitted that the AO has made a wrong recording in
Para 3 of assessment-order as well as unnumbered Para No. 2 of penalty-
order that the (original) return of AY 2014-15 was not filed. Further, the
CIT(A) has also accepted this very noting of AO in Para 4.1 of order of first-
appeal that the (original) return was not filed. But the correct fact is that the
assessee did file original return u/s 139(4) on 27.03.2015 vide e-filing
acknowledgement No. 532463770270315 declaring a total income of Rs.
14,38,430/-. The return filed by assessee was processed by CPC u/s 143(1)
vide intimation DIN No. CPC/1415/A2/1504151365 dated 13.05.2015
accepting all figures of income, taxes and tax payments declared in return.
The documents in this regard have been partly filed in the Paper-Book and
partly filed to ITAT’s office via email dated 19.09.2024 and by way of
physical submission through Inward Entry No. 604 dated 20.09.2024 after
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conclusion of hearing in terms of direction given by Bench during hearing.
Thereafter, the assessee filed a newer return in response to the notice u/s
148 disclosing a total income of Rs. 56,55,810/- inclusive of earlier income
of Rs. 14,38,430/-. Carrying this point further, Ld. AR submitted that the
AO accepted the total income of Rs. 56,55,810/- declared by assessee in
return without any deviation and at the same time also computed/imposed
penalty on full amount of total income of Rs. 56,55,810/- without taking
cognizance of the total income of Rs. 14,38,430/- already assessed by
department as per original return filed by assessee u/s 139(4). Thus, the AO
has imposed penalty for deemed concealment of income in terms of
Explanation 3 to section 271(1)(c) on wrong assumption of fact that the
assessee did not file any return of relevant assessment-year. Ld. AR
submitted that the penalty-order passed by AO is therefore apparently
wrong and not sustainable.
(iii) Lastly, Ld. AR submitted that the AO has, in the assessment-order
passed u/s 147, assessed the total income of Rs. 56,55,810/- as declared by
assessee in the return filed in response to notice u/s 148 without any
variation in the quantum of income or any element of income. When it is so,
there is no concealment of income or furnishing of inaccurate particulars of
income. In support of this proposition, Ld. AR relied upon Ashvin Narayan
Bajoria (HUF) ITA No. 369/SRT/2022 order dated 07.03.2023 (ITAT,
Surat Bench); Haresh Ghanshyamdas Makhija Vs. ITO ITA No. 2904 &
2906/Mum/2023 order dated 23.02.2024 (ITAT, Mumbai); Association
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of Oral Maxill of Acial Surgeons of India Vs. ITO (Exemption) ITA No.
274/Pun/2023 order dated 14.08.2023. Accordingly, Ld. AR contended
that the penalty imposed by AO in present case u/s 271(1)(c) while
accepting the income declared by assessee in return without any variation is
clearly not sustainable as per these decisions.
Per contra, Ld. DR for revenue relied heavily upon the AO’s order. He
submitted that the assessee has declared additional income only in response
to the proceeding undertaken by AO u/s 147 / 148. Had the AO not taken
proceeding against assessee, the additional income would have remained
concealed without taxation. Therefore, declaration of additional income by
assessee in the return filed in response to the notice u/s 148 cannot help
assessee.
We have considered rival submissions of both sides and perused the
case-records including the show-cause notice and order of penalty made by
AO in the light of decision of Hon’ble Jurisdictional High Court. On perusal
of the show-cause notice issued by AO, we observe that the notice contains
both of the charges viz. “concealed the particulars of income” or “furnished
inaccurate particulars of income” and the AO has not stricken-off any one.
Therefore, the whole proceeding of penalty conducted by the AO is illegal
and unsustainable as per binding decision of Hon’ble jurisdictional High
Court in Kulwant Singh Bhatia (supra). The Ld. DR could not controvert
the facts of the case or applicability of this judgement. Therefore, we are
satisfied that the penalty imposed by AO is not valid on this very reasoning.
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Accordingly, without going into merits of penalty, we quash the penalty-
proceeding at the very threshold on this legality aspect itself as claimed by assessee. Since we have quashed penalty-order, there is no necessity to go into other pleadings made by Ld. AR
Resultantly, this appeal of assessee is allowed.
Order pronounced in open court on 19.09.2024.
Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 19.09.2024 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore
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