Income Tax Appellate Tribunal - Lucknow
Taneja Rice & Dall Mills, Kanpur vs Asst. Commissioner Of Income Tax-Ii, ... on 18 January, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH "A", LUCKNOW
BEFORE SHRI A.D JAIN, VICE PRESIDENT AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
ITA No.548/LKW/2017
A.Ys. 2003-04
Taneja Rice & Dall Mills, Vs. ACIT-II,
123/356, Fazalganj, Kanpur
Kanpur 208012
PAN AAAFT5136E
(Appellant) (Respondent)
Appellant by Shri P.K. Kapoor, CA
Respondent by Shri C.K. Singh, DR
Date of hearing 11/01/2019
Date of pronouncement 18/01/2019
ORDER
PER: A.D. JAIN, VICE PRESIDENT:
This is assessee's appeal for Assessment Year 2003-04, against the order of the ld. CIT(A), Kanpur dated 08.06.2017, taking the following ground:
"1. BECAUSE levy of penalty under section 271(l)(c), as has been upheld by the CIT(A), is wholly illegal as requisite satisfaction had not been recorded, while issuing notice under section 271(1)(c).
2. BECAUSE in any case, there being no specific "charge" against the appellant, either recorded in the assessment order dated 31.12.2007 or in the notice under section 274 (accompanying the assessment order), penalty under section 271(1)(c) could not have been levied, much less upheld by the "CIT(A)".
WITHOUT PREJUDICE TO THE AFORESAID
3. BECAUSE "CIT(A)" has erred in law and on facts in holding that "all facts were detected during the proceedings u/s 143 by AO during assessment and they were not disclosed by the assessee" and in 2 ITA No. 548/Lkw/2017 upholding the levy of penalty of Rs.2,92,000/- that had been imposed by the Asstt. ClT-ll, Kanpur, by virtue of order dated 29.03.2016 passed under section 271(1)(c) of the Act.
4. BECAUSE on a due consideration of chronology of relevant dates and events, as culled out from the orders passed by the authorities below, and given hereinafter:
SI. Date Events No. (i) 17.02.2006 A query was raised by "ITO-2(4), Kanpur, a different
Income-tax Authority than the Assessing Officer having jurisdiction in the case of the appellant in the assessment of Sri Sanjay Kumar Taneja, partner of the appellant firm" as to whether the firm (Taneja Rice & Dall Mills, appellant here) had paid capital gain on sale of land.
(ii) 02.03.2006 The appellant (namely, Taneja Rice & Dall Mills, partnership firm) had filed "return" showing income of Rs.13,77,020/- (besides nil income from business) as capital gain arising on sale of land.
(iii) 24.12.2006 Notice under section 148 was issued by Asstt. CIT-II, Kanpur, a different Income-tax Authority having jurisdiction in the case of the appellant, calling upon it to file "return" for the assessment year 2003-04.
(iv) ---- In compliance with the said notice under section 148 dated 24.12.2006 it was stated that "return" filed by the appellant on 02.03.2006 at its own, listed at sl. no.(ii) above be treated as "return" filed by the appellant (the Assessing Officer in the case of the appellant, acted on the basis of 'return' filed by the appellant in this manner).
(v) 18.06.2007 Information was passed on by "ITO-2(4), Kanpur having;
jurisdiction in the case of Sri Sanjay Kumar Taneja (partner of the appellant firm) to the Asstt.. CIT-I1, Kanpur Living jurisdiction in the case of the appellant firm.
(vi) 31.12.2007 Assessment order captioned as order u/s 147/143(3) was made at an income of Rs. 13,79,520/-; the variation of Rs.2,500/- being on account of disallowance of claim of expenditure (as had been made by the appellant in the "return" filed on 02.03.2006, where capital gain was shown at Rs.13,77,020/-).
it deserves to be held that the appellant could not have been visited with the "charge" of concealment of income and levy of penalty on that "charge", as has been upheld by the "CIT(A)" also, was wholly illegal.
3 ITA No. 548/Lkw/20175. BECAUSE otherwise also and in any case, it deserves to be held by the "authorities" below that, after the appellant had been served with a notice under section 148, it had filed the "return" giving full particulars of 'surplus' earned on sale of land and keeping in view the principle laid down by the Hon'ble Apex Court in the case of CIT Vs. Suresh Chandra Mittal reported in (2001) 251 ITR 9 and the latest decision in the case of Price Waterhouse Coopers Pvt. Ltd. vs. CIT reported in (2012) 348 ITR 306, no penalty was leviable/maintainable."
2 The grievance of the assessee is against imposition of penalty under section 271(1)(c) of the I.T. Act, which has been confirmed by the learned CIT(A).
3. At the time of hearing before us, the ld. A.R. of the assessee invited our attention to the show cause notice for penalty under section 271(1)(c) of the Act. It was submitted that from a perusal of this notice, it is crystal clear that the charge, for which the penalty is proposed to be levied under section 271(1)(c) of the Act, is not specific, as to whether it is for concealment of income or for furnishing of inaccurate particulars of income. The ld. A.R. of the assessee vehemently argued that it is a settled position of law that if the notice under section 274 is not specific about the charge or limb under which penalty is being levied under section 271(1)(c) of the Act, any penalty levied on the basis of such a notice is bad in law and it is liable to be cancelled.
4. The ld. D.R., on the other hand, relied on the orders of the authorities below.
4 ITA No. 548/Lkw/20175. Heard. The show-cause notice in question is as follows:
From a perusal of this notice, it is crystal clear that the charge for which penalty is proposed to be levied under section 271(1)(c) of the Act, whether 5 ITA No. 548/Lkw/2017 for concealment of income, or for furnishing of inaccurate particulars of income, is not specific. The law mandates that the authority who is proposing to impose penalty shall be certain as to the basis on which the penalty is being levied and the notice must reflect that specific reason, so that the assessee, to whom such notice is given, can prepare himself regarding the defence which he would like to take to support his case. This is even enshrined in the principles of natural justice and as has been upheld by Hon'ble Apex Court and other High Courts. We place reliance on the following cases:-
1. 'CIT vs. SSA's Emerald Meadows', [2016] 73 Taxmann.com 248 (SC). In this case the Hon'ble Apex Court looked into the facts before them that Tribunal relying on the decision of Division Bench of Hon'ble Karnataka High Court in the case of CIT and Another vs. Manjunath Cotton & Ginning Factory (supra) allowed the appeal of the assessee holding that notice issued by the Assessing Officer under section 274 read with section 271(1)(c) of the Act was bad in law as it did not specify under which limb of 271(1)(c) penalty proceedings has been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. When the matter travelled upto the High Court, it supported the judgment of Hon'ble Karnataka High Court in the case of CIT and Another vs. Manjunath Cotton & Ginning Factory (supra) and decided that there was therefore no substantial question of law to be decided. Thereafter an SLP was filed before the Hon'ble Apex Court and the Apex Court dismissed the SLP of the Revenue finding no merit therein and confirming the issue in favour of the assessee.
2. 'CIT and Another vs. Manjunath Cotton & Ginning Factory', [2013] 359 ITR 565 (Karn.). In this case, it 6 ITA No. 548/Lkw/2017 has been held by the Hon'ble High Court that notice under section 274 read with section 271(1)(c) of the Act should specifically state the grounds mentioned in 271(1)(c) i.e. whether it is for concealment of income or for furnishing of inaccurate particulars of income.
Sending printed form where all the grounds mentioned would not satisfy the requirement of law. Assessee should know the grounds which he has to meet specifically. Otherwise, the principles of natural justice is offended. On the basis of such proceedings no penalty could be imposed to the assessee. Penalty proceedings are distinct from assessment proceedings though it emanates from the assessment proceedings still it is separate and independent proceedings all together.
3. 'Meherjee Cassinath Holdings Pvt. Ltd vs. ACIT (ITAT Mumbai)', ITA NO. 2555/MUM/2012, order dated 28/04/2017 wherein the observation of the Bench was that penalty proceedings under section 271(1)(c) of the Act are "quasi-criminal" proceedings and ought to comply with the principles of natural justice. The non- striking of the irrelevant portion in the show-cause notice means that the Assessing Officer is not firm about the charge against the assessee and the assessee is not made aware as to which of the two limbs of s. 271(1)(c) he has to respond.
4. 'Chandra Prakash Bubna vs. Income Tax Officer, Ward 27(3), Kolkata', (ITAT Kolkata Bench) [2015] 64 taxmann.com 155 wherein it was held that when the Assessing Officer levied penalty without bringing out any specific charge for which penalty had been imposed, penalty was liable to be deleted.
5. 'Sachin Arora vs. ITO' and other cases, order dated 19.12.2017 passed by the Agra Bench of the Tribunal in ITA No.118/Agra/2015 etc.
6. The settled legal position on the issue, as enshrined in the aforesaid cases, is apparent and we arrive at the considered view that the show cause 7 ITA No. 548/Lkw/2017 notice, which has not specified the charge and limb under which the penalty is proposed to be levied, is void ab initio and the consequent penalty imposed on the basis of such notice is, therefore, illegal and bad in law and liable to be deleted. We, therefore, direct deletion of the penalty.
7. In the result, the appeal is allowed.
(Order pronounced in the open court on 18/01/2019) Sd/- Sd/-
(T.S. Kapoor) (A.D. Jain)
Accountant Member Vice President
Aks -
Dtd. 18/01/2019
Copy of order forwarded to:
(1) The appellant (2) The respondent
(3) Commissioner (4) CIT(A)
(5) Departmental Representative (6) Guard File
By order
Assistant Registrar
8
ITA No. 548/Lkw/2017
1. DATE OF DICTATION 11.01.2019
2. DATE ON WHICH TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.01.2019
2.A DATE ON WHICH TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER.....................
3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE PS/SR.P.S.....................
4. DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT........................
5. DATE ON WHICH THE ORDER COMES BACK TO PS/SR.P.S...............
6. DATE OF UPLOADING THE ORDER ON WEBSITE......................................
7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO.....................
8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK.........................
9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT................
10. DATE ON WHICH THE FILE GOES TO THE O.S. ...........................
11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER....................................
12. THE DATE ON WHICH THE FILE GOES TO DESPATCH SECTION FOR DESPATCH OF THE TRIBUNAL ORDER....................................
13. DATE OF DESPATCH OF ORDER........................