JAMMU & KASHMIR STATE AGRO INDUSTRIES DEVELOPMENT CORPORATION LIMITED,SRINAGAR vs. INCOME TAX OFFICER WARD-II, SRINAGAR

ORDER Per:Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. Commissioner of Income Tax (Appeals), NFAC, Delhi,[in brevity the ‘CIT (A)’], order passed u/s 250 of the Income Tax Act 1961, [in brevity ‘the Act’] for A.Y. 2012-13. The impugned order was emanated from the order of the ld.

ACIT, Circle-3, Srinagar, [in brevity ‘the AO’] order passed u/s 271(1) (c) of the Act.

1. The penalty order is bad in law, as the Ld. AO has not specified whether the penalty is imposed for furnishing of inaccurate particulars of income or concealment of income.

2. The penalty order is bad in law, as the Ld. AO is himself not clear whether the penalty is levied for furnishing inaccurate particulars of income or for concealment of income.

3. The penalty order is bad in law, as the basis of initiation of penalty proceedings u/s 271(1) ( c) of the Income Tax Act 1961 & imposition of penalty are in-consistent.

4. The Ld. AO has erred in both facts & laws by imposing penalty u/s 271 (1)( c) of the Income Tax Act 1961, by treating sundry creditors of Rs.331,90,534.00 as unexplained investment when the same represents assessee's liability.

5. The Ld. AO has erred in both facts & laws by imposing penalty u/s 271(1)( c) of the Income Tax Act 1961, by treating sundry creditors of Rs.331,90,534.00 as unexplained investment when the same represents creditors in ordinary course of business.

6. The Ld. AO has erred in both facts & laws by imposing penalty u/s 271 (1)(c) of the Income Tax Act 1961, of Rs 1,04,55,018.00 as 100% of tax sort to be evaded when the assessee was not required to pay any taxes even after additions.

7. That the assessment is based on mere presumptions and conjectures.

at the time of hearing.”

3. Brief fact of the case is that the assessment was completed u/s 143(3) of the Act. The demand was fixed total amount of Rs.1,37,39,110/-. The penalty was initiated u/s 274/271(1)(c) of the Act and the total concealment of assessee for Rs.3,31,90,534/-. The tax was calculated total amount of Rs.1,04,55,018/- on undeclared income. The ld. AO levied penalty of 100%. So, the penalty u/s 271(1)(c) was levied Rs.1,04,55,018/-. Aggrieved assessee filed an appeal before the ld. CIT(A). The assessee has taken both legal and factual ground before the ld. CIT(A). After considering the submission of the assessee, the ld. CIT(A) dismissed the appeal of the assessee and upheld the penalty order. Being aggrieved assessee filed an appeal before us.

4.1 The ld. AR further mentioned that the assessee’s issue is squarely covered by the ITAT Amritsar Bench in the case of M/s J & K State Power Development Corporation Ltd. vs. ACIT, Srinagar in date of order 27.07.2019. The relevant paragraphs of said order are reproduced as below:

“ 8 -In our considered view, the Apex Court in Income Tax, Bangalore Versus M/s. SSA's Emerald Meadows (supra), the Hon'ble High Court of Karnataka in case of M/s. SSA’s Emerald 11 (A.Y.2011-12) J &K Slate Power Dev. Corp. Ltd. Sri vs. ACIT Meadows (supra) and in Manjunatha Cotton and Ginning Factory’ (supra) and co- ordinate bench in Third Member's case i.e. HPCL Mittal Energy Ltd Vs Addl CIT’ & ‘HPCL Mittal Pipeline Ltd., Vs Addl CIT (supra) dealt with identical issue as involved in this case and therefore we while respectfully following the dictum of Apex Court laid down in S.I. Rooplal and Anr Vs Lt. Governor through Chief Secretary Delhi & Ors.(supra) qua following the principles of judicial discipline, rules of precedents and to maintain consistency in the decisions, are inclined to follow the aforesaid decisions.

9- Coming to the instant case, bare perusal of the assessment order dated 28-03-2014, whereby the penalty proceedings have been imitated and notice dated 28-03-2014 issued u/s 274 of the Act, apparently goes to prove that the Assessing Officer initiated the penalty proceedings in the assessment order and issued the notice u/s 274/271(l)(c) of the Act without specifying whether the assessee has concealed " the particulars of income" or the assessee has furnished " the inaccurate particulars of income", so as to provide adequate opportunity to the assessee to explain the show cause notice. Rather notice in this case has been issued in a stereotyped manner without applying any mind which is bad in law, hence is not a valid notice sufficient to impose penalty u/s 271(l)(c) of the Act. Further the assessing officer while imposing the penalty also, used both the limbs by mentioning oblique such as " concealment of particulars of income/furnishing the particular of income", therefore it goes to prove that even the mind of the AO, while recording the satisfaction in Assessment Order, issuing the notice dated 28- 03-2014 u/s 274 of the Act and while imposing the penalty as well, was indecisive and unclear under which limb, the penalty proceedings have to be initiated and under which limb the assessee had to reply in order to defend its case and under which limb the penalty warranted and supposed to be levied, therefore we are of the view that under these facts and circumstance, the penalty is not leviable as held by the various Courts including the Apex Court, hence, we have no hesitation to delete the penalty levied by the AO and affirmed by the Ld. CIT (A). The I.d. CIT (A) in the instant case, has relied on ITAT Hyderabad judgement, which is applicable to non-filer and not applicable to appellate.”

In the result, the appeal of the assessee 7. allowed.