Income Tax Appellate Tribunal - Hyderabad
P. Sharada Devi, Hyderabad, Hyderabad vs Ito, Ward-8(2), Hyderabad, Hyderabad on 21 September, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "A-SMC", HYDERABAD
BEFORE SHRI D. MANMOHAN, VICE PRESIDENT
ITA No. 1571/Hyd/2016
Assessment Year: 2008-09
Smt P. Sharada Devi, vs. ITO, Ward 8(2),
Hyderabad. Hyderabad.
PAN - AKBPP8269K
(Appellant) (Respondent)
Assessee by : Shri K.C. Devadas
Revenue by : Shri K.J. Rao
Date of hearing : 21-09-2017
Date of pronouncement : 21-09-2017
ORDER
PER D. MANMOHAN, VICE PRESIDENT:
This appeal by assessee is directed against order passed by CIT(A)-2, Hyderabad and it pertains to A.Y. 2008-09. Following grounds were urged before the Tribunal.
" 1. The order of the Hon'ble CIT(A) is erroneous in law as well as f acts of the case.
2. The Hon'ble CIT(A) without allowing proper opportunity proceeded to decide appeal on merits.
3. The Hon'ble CIT (A) proceeded with the appeal proceedings without taking the f act that the quantum appeal was pending before him in respect of which order of penalty u/s.271(1)(C) of the IT Act was passed and subject matter of appeal.
4. The Hon'ble CIT(A) erred in sustaining the penalty of Rs.3,30,000/- and therefore, the same is liable to be deleted.
5. Any other ground will be raised at the time of hearing."
2. Subsequently, in the light of decision of Hon'ble High Court for the state of Telangana and the state of Andhra Pradesh (The Pr.CIT Vs. Smt Baisetty Revathi dated 13.07.2017 in I.T.T.A No. 684 of 2016), assessee filed an additional ground of appeal, wherein it was contended that 2 ITA No. 1571/HYD/2016 Smt. P Sharada Devi, Hyd .
the notice issued u/s 274 r.w.s 271(1)(c) of the IT Act is invalid. The additional ground reads as under:
"1. The notice issued u/s. 274 r.w.s 271(1)(c) of the IT Act 1961 dated: 31/12/2010 not having specif ied the def ault under any specif ic section whether it is f or:-
i. Failure to f urnish Return of income;
ii. Def ault u/s 142(1)148; iii. Non-compliance of 143(2); iv. Concealment of Income; v. Furnishing inaccurate particulars;
And therefore the entire notice issued is invalid, without jurisdiction, bad in law and theref ore the penalty levied u/s 271(1)(c) at Rs. 3,30,000 is unsustainable in law and must be cancelled."
3. Ld. Counsel adverted our retention to page No.2 of paper book to highlight that the notice issued by A.O is very vague; In fact it does not specify as to whether the notice issued was for concealment of particulars of income or for furnishing of inaccurate particulars of income. The standardized notice without filling the blanks and without even marking the required portion, was sent to the assessee and on identical circumstances jurisdictional High Court observed that any proceedings initiated by A.O should not be ambiguous and a notice is the foundation for such proceedings and specific ground has to be spelt out in clear terms. Otherwise assessee would not have proper opportunity to put forth his defence more particularly when the proceedings are penal in nature, concerning levy of penalty u/s 271(1)(c) of the Act. In the aforementioned case it was contended that the charge should be either concealment of particulars of income or furnishing of inaccurate particulars and the revenue must specify as to which one of the two is sought to be pressed into service as otherwise the ambiguity in show cause notice would render the proceedings invalid. Ld. Counsel also relied upon several other decisions wherein the courts observed that recording of satisfaction is pre-requisite for initiating proceedings u/s 271 (1)(c) of the IT Act in the absence of which penalty proceedings cannot be initiated. In addition 3 ITA No. 1571/HYD/2016 Smt. P Sharada Devi, Hyd .
thereto assessee's Counsel contended that clearly, on merits, it is not a fit case for levy of penalty since the addition is made on estimate basis by estimating the cost of construction shown by the assessee. The very fact that the cost of construction was estimated to make an addition proves that there is neither concealment of income nor furnishing of inaccurate particulars of income. Ld. Counsel also referred to page No. 54 of the paper book to highlight that the addition is purely based on estimate and there is no finding that the assessee concealed particulars of income in which event penalty ought not have been levied.
4. On the other hand, Ld. DR submitted that assessee having been given an opportunity during the penalty proceedings, the mistake in not specifying the ground upon which the penalty proceedings were initiated should only be treated as technical in nature and provisions of Sec. 292B of the IT Act comes into play under such circumstances. He thus relied upon the orders passed by the tax authorities.
5. Joining the issue Ld. Counsel submitted that the provisions of Sec. 292B of the IT Act is only with regard to furnishing of income etc., and it does not apply to penal proceedings. He also submitted that the notice was issued in a routine fashion without even recording any finding either in assessment proceedings or in the notice, highlighting the reason for which notices were issued, and thus strongly relied upon the decision of jurisdictional High Court.
6. I have carefully considered the rival contentions and perused the record. Since the additional ground urged by the assessee goes to the root of matter and since it does not require verification of new facts, in the interest of substantial justice the additional ground is admitted. The notice issued by A.O does not indicate the reason for which the proceedings were sought to be initiated 4 ITA No. 1571/HYD/2016 Smt. P Sharada Devi, Hyd .
. Even recording of satisfaction could not be placed before the Bench. Under these circumstances, in the light of decision of jurisdictional High Court (supra), I am of the opinion that the proceedings initiated by A.O u/s 271(1)(c) of the Act are invalid and accordingly the order passed by A.O is hereby quashed.
7. In the result the appeal filed by the assessee is allowed.
Pronounced in the open court on 21st September, 2017.
Sd/-
(D. MANMOHAN) VICE PRESIDENT Hyderabad, Dated: 21-09-2017.
KRK 1 Smt. P Sharada Devi C/o B. Narsing Rao & Co, CAs, Plot No. 554, Road No. 92, Jubilee Hills, Hyderabad. 2 ITO, Ward 8(2), Hyderabad.
3 CIT(A)-2, Hyderabad.
4 The Pr. CIT-2, Hyderabad.
5 The DR, ITAT Hyderabad 6 Guard file