POOJA UPADHYAY,JAIPUR vs. ITO WARD 5(1), JAIPUR, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 258/JP/2022 fu/kZkj.k o"kZ@Assessment Years : 2012-13 cuke Pooja Upadhyay ITO Vs. B-177, Bapu Nagar, Ward 5(1), Mangal Marg, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AARPU 6953 F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Devang Gargieya (Adv.) jktLo dh vksj ls@ Revenue by : Smt Chanchal Meena (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 28/03/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 17/04/2023 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM

This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 06.05.2022 [here in after ld. NFAC/CIT(A) ] for assessment year 2012-13 which in turn arise from the order dated 21.01.2020 passed under section 271(1)(c) of the Income Tax Act, 1961 [ here in after to as Act ] by the National Faceless Assessment Centre.

“1. The impugned penalty order u/s 271(1) (c) dated 21.01.2020 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be quashed.

2. Rs.2,40,795/-: The ld. CIT(A) erred in law as well as on the facts of the case confirming the penalty imposed u/s 271 (1) (c) of the Act. The penalty so imposed by the AO and confirmed by the ld. CIT(A), being totally contrary to the provisions of law and facts kindly be deleted in full.

3. That the show cause notice (SCN) issued u/s 274 and the consequent impugned penalty order dated 21.01.2020, is quite vague and does not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated and/or imposed i.e., whether for concealment particulars of income or furnishing of inaccurate particulars of income. The impugned penalty order being contrary to the judicial principle laid down kindly be quashed.

4. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.”

3. Succinctly, the fact as culled out from the records is that the assessee is an elderly widow woman. In this case a notice u/s 148 issued on 30.03.2019. In response to which the assessee filed ROI on 29.04.2019 declaring total income at Rs. 12,95,940/-, which was accepted and assessed by the AO vide order dated 24.07.2019 u/s 147/143(3) of the Act.

3.1 While completing the assessments u/s 147/143(3) and with respect to the income so offered in the ROI and accepted by the AO, the AO initiated the penalty proceedings u/s 271(1)(c) and show cause notice u/s 274 dated 21.01.2020 was issued in response to which the assessee filed detailed The AO however felt dissatisfied and held that the assessee has concealed his particulars of income and concealed his taxable income. Finally, imposed the penalty of Rs. 2,40,795/- u/s 271(1)(c) of the Act.

4. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A)/NFAC. The ld. CIT(A)/NFAC vide para 5 to 6.7 stated that :-

“5. I have duly considered the facts of the case, the order of AO and the submissions uploaded by the appellant. The grounds of appeal raised by the appellant are adjudicated in the subsequent paras.

6. Ground of Appeal No. 1 relates to levy of penalty u/s 271(1)(c) of Rs. 2,40,795/- @100% of the tax sought to be evaded in respect of concealment of income of Rs. 12,95,940/-. 6.1 As observed earlier, the assessee is an individual and had invested in FDRs of Rs. 90,00,000/- with "The Urban Co-operative Bank Ltd” and had earned interest income thereon of Rs. 12,95,940/- during FY 2011-12. However, no return of income was filed for the relevant year u/s 139(1) of the I.T Act. Therefore, the case was re- opened u/s 148 of the I.T Act, 1961, after recording reasons and obtaining approval from the Pr. CIT-2, Jaipur. Notice u/s 148 of the I.T Act was issued and duly served upon the assessee. In response to notice u/s 148, the assessee filed her return of income on 29.04.2019 of Rs. 12,95,940/- Notices u/s 143(2) and 142(1) were issued on 29.05.2019. In response to these notices, the assessee filed requisite documents. The AO completed assessment u/s 143(3)/147 on 24.07.2019 determining total income of Rs. 12,95,940/-. The AO also initiated penalty proceedings u/s 271(1)(c) for concealment of income by issuing notice u/s 271(1)(c) dated 24.07.2019 fixing the date of hearing on 26.08.2019. In response to this notice, the assessee sought adjournment. Thereafter, final opportunity was given to the assessee by issuing show-cause notice u/s 274 on 06.09.2019 fixing the date of hearing for 12.09.2019. In response to the show-cause notice, the assessee submitted her written submissions on 12.09.2019 but the same was not found acceptable to the AO. After due consideration of the facts of the case, the AO levied penalty u/s 271(1)(c) of Rs. 2,40,795/- in respect of concealment of income of Rs. 12,95.940/- @ 100% of tax sought to be evaded.

4 Pooja Upadhyay vs. ITO, Ward 5(1), Jaipur 6.2 In course of the appellate proceedings, the appellant submitted that her return filed in response to notice u/s 148 was accepted without making any further additions and therefore it cannot be said that she had concealed her income. Further the appellant contended that the tax on the income disclosed in the return filed in response to notice u/s 148 was duly paid even before issue of the said notice u/s 148 and therefore penalty is not leviable as per the decision of Hon'ble ITAT Mumbai in the case of M/s Balaji Telefilms Ltd (supra). The appellant further contended that the AO in the notice issued u/s 148 had not specifically mentioned as to whether the default is for furnishing of inaccurate particulars of income of for concealment of particulars of income and therefore as per the decision in the case of Samson Perinchery (supra), the penalty notice itself is invalid. 6.3 The contentions of the appellant have been duly considered. The assessee contends that the AO has not informed the assessee about the specific charge in the show cause notice issued u/s 274 of the Act i.e., whether he was initiating penalty for "concealment of particulars of income or for "furnishing inaccurate particulars of income", considering that he had not struck off the redudant words, therefore as per the decision in the case of Samson Perinchery (supra), the penalty u/s 271(1)(c) gets vitiated and accordingly, the penalty levied by the AO u/s 271(1)(c) should be cancelled. On this contention of the appellant, it is noted that the Hon'ble Bombay High Court in case of Smt. Kaushalya Devi and Others (216 ITR 0660) has held that if the specific charge is mentioned in the assessment order while initiating the penalty then mere non striking of the redundant portion of the notice u/s 274 would not vitiate the penalty proceedings. The relevant portion of the decision of the Hon'ble Bombay High Court is reproduced as under. "10. We will first take up the show-cause notice dt. 29th March, 1972, pertaining to the asst. yrs. 1968-69 and 1969-70. The assessment orders were already made and the reasons for issuing the notice under s. 274 r/w s. 271(1) (c) were recorded by the ITO. The assessee fully knew in detail the exact charge of the Department against him. In this background, it could not be said that either there was non-application of mind by the ITO or the so-called ambiguous wording in the notice impaired or prejudiced the right of the assessee to reasonable opportunity of being heard. After all, s. 274 or any other provision in the Act or the Rules, does not either mandate the giving of notice or its issuance in a particular form. Penalty proceedings are quasi- criminal in nature. Sec. 274 contains the principle of natural justice of the assessee being heard before levying penalty. Rules of natural justice cannot be impris straight-jacket formula. For sustaining a complaint of failure of the Principles of natural justice on the ground of absence of opportunity, it has to be established that prejudice is caused to the concerned person by the procedure followed. The issuance of 5 Pooja Upadhyay vs. ITO, Ward 5(1), Jaipur notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The entire factual background would fall for consideration in the matter and no one aspect would be decisive. In this context, useful reference may be made to the following observation in the case of CIT vs. Mithila Motor's (P) Ltd. (1984) 149 ITR 751 (Patna)" (emphasis supplied) 6.4 On careful examination of the aforesaid decision of the Hon'ble Bombay High Court and also the other relevant decisions of the other Hon'ble Courts especially Hon'ble Karnataka High Court, on this issue, it is observed that in certain cases non- striking of the redundant words will vitiate the penalty proceedings, however, if the specific charge is duly mentioned in the assessment order while initiating the penalty, then mere non-striking of the redundant portion in the notice u/s 274 would not vitiate the penalty proceedings. The principles which emerge from the various decisions of the Hon'ble High Courts are that non-striking of the redundant portion of the notice will not vitiate the penalty proceedings if (). the AO has duly applied his mind at the time of initiation of penalty proceedings in the assessment order by specifically giving a finding on whether the default of the assessee is of "furnishing of inaccurate particulars of income" or of "concealment of particulars of income or both and (ii) the AO has also levied penalty uls 271(1)(c) for the same charge(s) for which penalty has been initiated in the assessment order. In such a situation, from the assessment order,it will be clear to the assessee as to what is/are the charge(s) that are being levied by the AO and therefore the assessee will not be put to a disadvantageous position or will impair or prejudice assessee's right of reasonable opportunity of being heard. 6.5 To examine whether the aforesaid conditions have been satisfied or not in the penalty levied u/s 271(1)(c) in the instant case, the assessment order wherein the said penalty was initiated and the penalty order were examined. From the assessment order, it is observed that the AO has initiated penalty proceedings for "concealment of particulars of income" after due application of mind. Further, the ultimate penalty order is also on the charge of concealment of particulars of income. Therefore, the penalty initiated and levied on the assessee u/s 271(1)(c) is held to have not been vitiated due to non-striking of the redundant portion in the notice issued u/s 274. 6.6 The appellant also contends that her return filed in response to notice u/s 148 has been accepted without making any further additions and that she had paid the due taxes prior to issue of the said notice-u/s-148, therefore there is no case for levy of penalty for concealment of income. It is noted that the appellant had not filed her return of income, though her income from interest on FDRS of Rs. 90,00,000/- for the relevant year was way above the maximum amount which is not subject to tax. It is only

6 Pooja Upadhyay vs. ITO, Ward 5(1), Jaipur pursuant to notice u/s 133(6) issued by the AO that the appellant paid the due taxes and thereafter in response to notice u/s 148 filed her return of income disclosing the said interest income on FDRS. If not for the enquiry conducted by the Department, this interest income would have escaped assessment. Therefore the reliance placed by the appellant on the decision of the Hon’ble ITAT Mumbai in the case of M/s Balaji Telefilms Ltd. (supra), is misplaced. 6.7 In view of the above discussion, no infirmity is found in the action of the AO in levying penalty u/s 271(1)(c) for concealment of particulars of income. Accordingly, the Ground of appeal No. 1 raised by the appellant is dismissed.”

5. As the assessee did not find any favour from the appeal so filed before the ld. CIT(A), assessee moved this appeal before this tribunal. To support the various grounds so raised the ld. AR appearing on behalf of the assessee argued in detailed based on the written submission so made by him. The written submission so filed is reiterated here in below;

“Facts: The assessee is an elderly windowed individual woman. In this case a notice u/s 148 issued on 30.03.2019. In response to which the assessee filed ROI on 29.04.2019 declaring total income at Rs. 12,95,940/-, which was accepted and assessed by the AO vide order dated 24.07.2019 u/s 147/143(3) of the Act. While completing the assessments u/s 147/143(3) and with respect to the income so offered in the ROI and accepted by the AO, the AO initiated the penalty proceedings u/s 271(1)(c) and show cause notice u/s 274 dated 21.01.2020 was issued in response to which the assessee filed detailed reply on dated 12.09.2019 reproduced at Pg. 2 & 3 of the penalty order. The AO however felt dissatisfied and held that the assessee has concealed his particulars of income and concealed his taxable income. Finally, imposed the penalty of Rs. 2,40,795/- u/s 271(1)(c). Hence this ground. Submissions: 1. Assessment and penalty - separate proceedings: It is pertinent to note that the AO has levied the penalty for concealment of income only & only on the basis of findings recorded by the AO in the assessment order. It is settled that assessment and penalty proceedings are separate and distinct from each other.

7 Pooja Upadhyay vs. ITO, Ward 5(1), Jaipur Kindly refer Durga Kamal Rice Mills v/s CIT (2004) 265 ITR 25 (Cal.), CIT & Anr. v/s Anwar Ali (1970) 76 ITR 696 (SC), CIT v/s Ishtiaq Hussain (1998) 232 ITR 673 (All). The AO merely alleged but failed to bring any material whatsoever by making independent inquires to support the finding of concealment of income & furnishing of inaccurate particulars.

“6. In our considered view, the CIT (Appeals) and so also the Income Tax Appellate Authority both have considered the matter, in detail, and finally arrived at a conclusion that the income declared by the assessee from the long term capital gain by selling agricultural land, disclosed by the assessee in his revised return of Income was accepted by the Assessing Authority and there was no material available on record by which there could be an inference drawn by the authority that it was a deliberate concealment on the part of the assessee and it could not be considered

9 Pooja Upadhyay vs. ITO, Ward 5(1), Jaipur that there was an inaccurate particulars of income that was made the basis for inflicting penalty upon the assessee in exercise of powers conferred u/S.271(1)(c) of the Act.

7. We do not find any substance in the submissions made by counsel for appellant and apart from that even if there appears some substance, this court has a limited scope in the instant appeal u/S.260A of the Act, to examine if a substantial question of law arises for consideration.

8. Taking note of the submissions and the order passed by the CIT (Appeals) and the Income Tax Appellate Tribunal, in our considered view, no substantial question of law arises in the instant appeal which may require consideration.

9. Consequently, the appeal is wholly devoid of merits and accordingly dismissed.”

4.2 On this aspect kindly refer ITO vs Tolaram 38 taxworld 121 (JP) (DPB?) holding that: “Section 271(1)(c) of IT Act – In this case return was filed on 29.8.1996 – Later on a survey was conducted u/s 133A on 6.2.1997 in the case of a third person Vasumal where an agreement was found disclosing purchase of plot by assessee through Vasumal for a consideration of Rs.13.51 lakh out of which Rs.11 Lakh was paid upto the date of agreement i.e. 18-1- 1996 – In view of this information, notice u/s 148 was issued in response to which assessee revised the return on 28.3.1997 surrendering an amount of Rs. 8 Lakh out of total payment of Rs. 11 lakh – AO however completed the assessment after making an addition of the balance amount of Rs. 3 lakh which stood confirmed by the Tribunal to the extent of Rs.2,75,000/- - Penalty proceedings u/s 271(1)(c) were also initiated simultaneously – Ultimately AO levied penalty u/s 271(1)(c) for Rs.10,75,000/- for concealment – CIT(A) deleted this penalty - Now Tribunal have upheld the deletion of penalty and have dismissed the departmental appeal after observing that assessment has been completed on the basis of revised return and hence there was no concealment on the part of assessee – Whether concealment of income has to be seen with reference to the return of income on the basis of which assessment has been made ? – Held Yes

Further held that assessment in this case has been completed on the basis of revised return filed, there was no concealment and hence penalty u/s 271(1)(c) for concealment cannot be imposed”

4.3 In CIT vs Suresh Chand Mittal (2001) 170 CTR 182, 281 ITR 0009 (SC)

5.1 In Pr. CIT vs. Neeraj Jindal 2017) 393 ITR 0001 (Delhi), it was held that:

“Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee under Section 153A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A. In fact, the second proviso to Section 153A(1) provides that “assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub- section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate.” What is clear from this is that Section 153A is in the nature of a second chance given to the assessee, which incidentally gives him an opportunity to make good omission, if any, in the original return. Once the A.O. accepts the revised return filed under Section 153A, the original return under Section 139 abates and becomes non-est. Now, it is trite to say that the “concealment” has to be seen with reference to the return that it is filed by the assessee. Thus, for the purpose of levying penalty under Section 271(1)(c), what has to be seen is whether there is any concealment in the return filed by the assessee under Section 153A, and not vis-a vis the original return under Section 139”…

Finally, the Hon`ble Court confirmed the deletion of penalty.

5.2 Prem Arora vs. DCIT (2012) 78 DTR 91 (Delhi) (Tribunal) (DPB?) wherein, it was held as under: “Section 271(1)(c), read with section 153A, of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 2004-05 - Whether for purpose of imposition of penalty under section 271(1)(c) resulting as a result of search assessments made under section 153A, original return of income filed under section 139 cannot be considered - Held, yes - Whether concealment of income has to be seen with reference to additional income brought to tax over and above income returned by assessee in response to notice issued under section 153A and, therefore, once returned income under section 153A is accepted by Assessing Officer, it can neither be a case of concealment of income nor furnishing of inaccurate particulars of such income - Held, yes - Search was conducted on 22-11-2006 and cash was found from possession of assessee - Assessee had drawn cash flow statement for entire period of six years in order to determine undisclosed income based on seized material for each of six assessment years - Whether penalty under section 271(1)(c) cannot be imposed by invoking Explanation 5 in assessment year 2004-05 in 11 Pooja Upadhyay vs. ITO, Ward 5(1), Jaipur respect of cash found in previous year relevant to assessment year 2007- 08, merely on presumption that assessee might have been in possession of cash throughout period covered by search assessments - Held, yes [In favour of assessee] “

5.3 PCIT vs. Trisha Krishnan [2019] 111 taxmann.com 97 (SC) “Section 4, read with section 271(1)(c), of the Income-tax Act, 1961 - Income - Chargeable as (Advances) - Assessment year 2010-11 - Assessee was a Cine artist - For relevant year, assessee filed her return declaring certain taxable income - Subsequently, assessee filed a revised return admitting additional income - Difference between income originally declared and total income admitted in revised return represented advance received by assessee in said assessment year from various cinema producers towards work to be done by her - In course of assessment, Assessing Officer opined that assessee filed revised returns only after revenue issued notice under section 143 and, therefore, it should be construed that assessee was guilty of deliberate concealment of income - Assessing Officer further noted that assessee had made payments of audit fee, professional charges and commission etc. on which tax was deducted at source but no proof of remittance of same into Government account was produced - He, thus, disallowed said payments - Assessing Officer also passed penalty order under section 271(1)(c) in respect of aforesaid two issues - As regards amount received by assessee as advance, Tribunal found that since said amount had been shown in balance sheet annexed to original return, there was no intention on part of assessee to conceal - With regard to disallowance qua TDS on account of non-deposit of same with Government, Tribunal opined that it was an inadvertent error on part of accountant - Tribunal, thus, set aside impugned penalty order - High Court by impugned order held that, on facts, no substantial question of law arose from Tribunal's order and, thus, same deserved to be upheld - Whether Special leave petition filed against impugned order was to be dismissed - Held, yes [Paras 3 and 4] [In favour of assessee].”

“6. In our considered view, the CIT (Appeals) and so also the Income Tax Appellate Authority both have considered the matter, in detail, and finally arrived at a conclusion that the income declared by the assessee from the long term capital gain by selling agricultural land, disclosed by the assessee in his revised return of Income was accepted by the Assessing Authority and there was no material 13 Pooja Upadhyay vs. ITO, Ward 5(1), Jaipur available on record by which there could be an inference drawn by the authority that it was a deliberate concealment on the part of the assessee and it could not be considered that there was an inaccurate particulars of income that was made the basis for inflicting penalty upon the assessee in exercise of powers conferred u/S.271(1)(c) of the Act.

Since, the fact of the above case and facts of the case on hand being similar and the ld. DR did not controvert the basic facts placed on record, we are of the considered view that the decision of the jurisdictional high court on the fact is binding on this tribunal. On being consistent we are of the view that the considering the peculiar fact of the case that the assessee participated in the assessment proceeding, has paid the tax, and filed the computation of income before issue of notice u/s. 148 of the Act. Based on these set of facts we are of the considered view that levy of penalty of Rs. 2,40,795/- is not sustainable and therefore the same is quashed.

In the result, appeal of the assessee is allowed.

14 Pooja Upadhyay vs. ITO, Ward 5(1), Jaipur Order pronounced in the open court on 17/04/2023. Sd/- Sd/- ¼ lanhi xkslkbZ ½ ¼ jkBkSM deys’k t;arHkkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 17/04/2023 *Ganesh Kumar आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Pooja Upadhyay, Jaipur izR;FkhZ@ The Respondent- ITO, Ward 5(1), Jaipur 2. 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत xkMZ QkbZy@ Guard File (ITA No. 258/JP/2022) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत