Income Tax Appellate Tribunal - Delhi
Jagdish Prasad Avdesh Kumar Huf, New ... vs Ito, Ward-36(4), New Delhi on 11 January, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'SMC' NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
I.T.A .No.-7091/Del/2018
(ASSESSMENT YEAR - 2014-15)
JAGDISH PRASAD AVDESH KUMAR HUF vs ITO, WARD 36(4),
C/O KAPIL GOEL, ADVOCATE, NEW DELHI
F-26/124, SECTOR-7, ROHINI,
DELHI - 110 085
(PAN: AAAHJ9657A)
(APPELLANT) (RESPONDENT)
I.T.A .No.-7092/Del/2018
(ASSESSMENT YEAR - 2014-15)
JAGDISH PRASAD BHARAT KUMAR HUF vs ITO, WARD 36(4),
C/O KAPIL GOEL, ADVOCATE, NEW DELHI
F-26/124, SECTOR-7, ROHINI,
DELHI - 110 085
(PAN: AAAHJ9657A)
(APPELLANT) (RESPONDENT)
Appellant by Shri Kapil Goel, Advocate
Respondent by Shri S.L. Anuragi, Sr. DR
ORDER
These appeals filed by the separate Assessees are directed against the respective Orders of the Ld. CIT(A)-12, New Delhi relevant to assessment year 2014-15. Since the issues involved in these appeals are common and identical, hence, the appeals were heard together and are being disposed of by this common order for the sake of convenience, by dealing with ITA No. 7091/Del/2018 (AY 2014-15) - Jagdish Prasad Avdesh Kumar- HUF and by only reproducing the grounds of this appeal. 2
2. The following grounds have been raised by the Assessee in Appeal No. 7091/Del/2018 (AY 2014-15):-
Invalid penalty orders u/s. 271(1)© : jurisdictional challenge
1. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the penalty order passed by the AO u/s.
271(1)(c) as in assessment order passed dated 26.12.2016 same is delightfully vague as to requisite satisfaction of AO to validly initiate penalty proceedings u/s. 271(1B) of the Act and said assessment order also does not disclose under which specific limb penalty charge is made by the AO, accordingly penalty order passed by AO and order of Ld. CIT(A) may please be quashed;
2. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the penalty order passed by AO u/s. 271(1)(c) as AO has levied penalty without any application of mind in routine and casual manner which is confirmed in arbitrary manner by Ld. CIT(A), accordingly penalty order passed by AO and order of Ld. CIT(A) may please be quashed; Merits of penalty order u/s 271(l)(c) Rs 433,132 3
3. That on the facts and in the circumstances of the case and in law, Ld CIT-A erred in sustaining the penalty order passed by Ld AO u/s 27l(l)(c) without appreciating assessee 's contention that:
i) Firstly addition made by Ld AO in quantum proceedings u/s 68 of the Act is itself incorrect and made in grave violation to principle of natural justice as no case specific incriminating material is brought on records at any stage so as to draw adverse inference u/s 68 in wake of inundated documentary evidence which have remained totally uncontroverted and simply on basis of innocuous surrender from assessee , addition u/s 68 was made, which can never give rise to valid penalty u/s 271(l)(c) of the Act;
ii) Secondly there is no animus and conscious concealment (intentional wrong doing) on part of assessee as evident from fact that assessee has given a bonafide explanation in support of exemption claimed u/s 10(38) on staled LTCG which is based on valid documentary evidence ,so penalty levied u/s 271(1)(c) is patently wrong;
iii) Thirdly bonafide conduct of assessee has been above board in extant case as no material fact is ever suppressed/hided or wrongly mentioned in return filed/assessment proceedings, so as to attract lethal consequences of section 271 (1) (c) of the Act;
iv) Fourthly, on merits of the claim no where it is objected by Ld AO/CIT-A that extant claim u/s 10(38) of the Act is already decided in favor of assessee by various higher court rulings so penalty u/s 271(l)(c) cannot be levied when addition itself is seriously questionable;4
v) Fifthly , penalty u/s 271(1)(c) cant be levied where facts are not validly disproved by Ld AO and case only falls in category of facts not proved, as is the case here;
vi) Lastly, on holistic consideration of entire conspectus of the case penalty u/s 271(1)(c) is wrongly levied here as no case is made out against assessee to be visited with draconian consequences of penalty u/s 271(1) (C) of the Act as law does not completely bar assessees to make and validly test a claim through return of income, which is going to be scrutinized and examined by revenue authorities;
4. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the penalty order passed by Ld AO u/s 271(l)(c) without appreciating any of the contention of assessee, ergo, penalty order passed by Ld AO and order of Ld CIT-A may please be quashed;
That the appellant craves leave to add / alter any/all grounds of appeal before or at the time of hearing of the appeal.
3. I will first take up the appeal in the case of Jagdish Prasad Avdesh Kumar HUF being ITA No. 7091/Del/2018 (AY 2014-15) and my finding given therein will apply mutatis mutandis in other appeal, since similar facts and findings are permeating in other appeal also. 5
4. The brief facts of the case are that return of income declaring total income at Rs. 4,51,430/- was filed by the assessee on 15.07.2014. The case of the assessee was processed u/s 143(1) of the I.T. Act, 1961. The assessee during the year was deriving income under the garb of Income from other sources. As per the AIR information during the year under review, it was observed by the AO that assessee has made investment in the shares and earned long term capita! gain exempted u/s 10(38) of Rs. 14,01,720/- accordingly. In order to bring in light the modus operand! of the assessee to earn the long term capital gain, the assessee was show caused vide this office letter bearing No. 727 dated 28.11.2016. In reply, the asseseee submitted vide its letter dated 05.12.2016 that its purchased the shares of M/s Kappac Pharma Ltd. and sold these shares on BSE platform but in order to avoid the litigation with the Income. Tax Department; it offered/surrendered the amount of Rs. 14,01,720/-. Keeping in view above facts, the AO disallowed the amount of 14,01,720/- claimed as capital gain exempted u/s 10(38) and treated it as income of the assessee for the A.Y. 2014-15 u/s 68 of the I.T. Act, 1961 and the same was accordingly added back to the taxable income of the assessee. Penalty proceedings u/s 271(1)(c) r.w.s. 274 of the Income Tax Act was also initiated separately as the AO was satisfied that the 6 assessee has concealed the particulars of his income or furnished inaccurate particulars of income. Accordingly, a show cause notice dated 09.05.2017 & 29.05.2017 were issued. In response thereto, AR of the assesseee appeared and filed submission through letter dated 05.06.2017 and requested to drop the penalty proceedings which has been considered by the undersigned. In the reply the assessee has mentioned that it has offered the income claimed as exempt for taxation voluntarily. AO observed that this claim of assessee is not tenable on the ground that assessee surrendered the income of Rs. 14,01,720/- claimed as exempt u/s 10(38) of the I.T. Act not voluntarily but after receipt of show cause notice dated 28.11.2016 issued at the final stage of the assessment proceedings. AO noted that assessee has failed to discharge the onus cast upon it by the explanation 1 to section 271(l)(c) of the I.T. Act, 1961 and has failed to prove that such explanation is bonafide and that all facts relating to the same and material to the computation of its total income have been disclosed by it. Therefore, AO observed that in view of the provision of section 271(1)(c) it was obligatory on the part of the asseseee to furnish true and accurate particulars of income. But in the instant case, the assesseee intentionally and knowingly has concealed particulars of income. In these circumstances, the statutory penalty amounting to Rs. 7 4,33,132/- was imposed vide order dated 28.6.2017 u/s. 271(1)© of the Act. Against the penalty order dated 28.6.2017, assessee appealed before the Ld. CTI(A), who vide his impugned order dated 13.7.2018 has dismissed the appeal of the assessee.
5. At the time of hearing, Ld. Counsel of the Assessee has stated that assessee has raised 04 grounds of appeal, but he is arguing only the ground no. 1 which is legal in nature. He stated that Ld. CIT(A) has wrongly sustained the penalty order passed by the AO u/s. 271(1)(c) as in assessment order passed dated 26.12.2016 same is delightfully vague as to requisite satisfaction of AO to validly initiate penalty proceedings u/s. 271(1B) of the Act and the said assessment order also does not disclose under which specific limb penalty charge is made by the AO, accordingly penalty order passed by AO and order of Ld. CIT(A) may please be quashed. He draw my attention towards the assessment order dated 26.12.2016 passed u/s. 143(3) of the I.T. Act, 1961 especially the last page of the assessment order and stated that the AO has initiated the penalty proceedings u/s. 271(1)(c) read with section 274 of the I.T. Act on being satisfied that assessee has concealed the particulars of her income or furnished inaccurate particulars of income, which is a fatal error and not sustainable in the eyes of law. Therefore, he requested that the penalty imposed is 8 liable to be quashed on legal ground as the issue is squarely covered by the following decisions.:
- Hon'ble Karnataka High Court decision in the case of CIT & Ors. Vs. M/s Manjunatha Cotton and Ginnig Factory & Ors. (2013) 359 ITR 565
- Apex Court decision in the case of CIT & Anr. Vs. M/s SSA's Emerald Meadows in CC No. 11485/2016 dated 05.8.2016. 5.1 On the contrary, Ld. DR relied upon the orders of the authorities below. He submitted that the question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. When the burden to offer explanation placed by the Explanation 1 to Section 271(1)© is not discharged by the Assessee supported by cogent and reliable evidence the onus does not shift on the revenue. Hence, the fact of surrender of income does not alter the position vis-à-vis the Explanation 1 to Section 271(1)© and therefore, the AO is justified in imposing the penalty of Rs. 4,00,747/-.
6. I have heard both the parties and perused the relevant records, especially the orders of the revenue authorities alongwith the provisions of law as well as the case law cited by the Ld. Counsel of the Assessee. I have also perused the 9 assessment order dated 26.12.2016 passed u/s. 143(3) of the Act. For the sake of convenience, the relevant finding of the Assessing Officer are reproduced as under:-
".....Keeping in view above facts, I disallow the amount of Rs. 12,96,916/- claimed as capital gain exempted u/s. 10(38) and treat it as income of the assessee for the AY 2014-15 u/s. 68 of the I.T. Act, 1961 and the same is accordingly added back to the taxable income of the assessee. Penalty proceedings u/s. 271(1)© r.w.s. 284 of the Income Tax Act are being initiated separately as I am that the assessee has concealed the particulars of her income or furnished inaccurate particualras of income."
6.1 After perusing the aforesaid contents of the assessment order dated 26/12/2016, I am of the view that the AO has initiated the penalty for concealment of particulars of income or furnishing of inaccurate particulars, which is contrary to the provisions of law. I am also of the view that assessment order issued by the AO is bad in law as it does not specify under which limb of section 271(1)© of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. 10 Therefore, the penalty in dispute is not sustainable in the eyes of law. My aforesaid view is supported by the following decisions:-
i) "CIT & Anr. Vs. M/s SSA's Emerald Meadows - 2015 (11) TMI 1620 -
Karnataka High Court has held that Tribunal has correctly allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under section 274 read with Section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)© of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of Commissioner of Income Tax vs. Manjunatha Cotton and Ginning Factory (2013) (7) TMI 620- Karanataka High Court. Thus since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion no substantial question of law arises - decided in favour of assessee."
ii) CIT & Anr. Vs. M/s SSA's Emerald Meadows - Hon'ble Supreme Court of India - reported in 2016 (8) TMI 1145 11
- Supreme Court. The Apex Court held that High Court order confirmed (2015) (11) TMI 1620 (Supra) - Karnataka High Court. Notice issued by AO under section 274 read with section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)© of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income - Decided in favour of assessee."
iii) ITAT, 'A' Bench, New Delhi decision dated 05.12.2017 in the case of Ashok Kumar Chordia vs. DCIT passed in ITA No. 5788 to 5790/Del/2014 wherein the Tribunal has observed as under:-
"7. We have heard both the parties and perused the orders passed by the Revenue Authorities alongwith the relevant records available with us. Firstly, we have perused the Notice dated 26.3.2013 issued by the AO for initiating the penalty and directing the assessee to appear before him at 11.30 AM on 26/04/2013 and issued a Show Cause to the assessee stating therein that ".....you have concealed the particulars of your income or furnished inaccurate 12 particulars of such income...". After perusing the notice dated 26.3.2013 issued by the AO to the assessee, we are of the view that the AO has initiated the penalty for furnishing inaccurate particulars of income or concealment of income as well as in the penalty order dated 30.9.2013 AO has stated that he is satisfied that the assessee has concealed particulars of his income, which is contrary to law. In view of above, the penalty is not sustainable in the eyes of law. Our aforesaid view is fortified by the following decisions:-
i) "CIT & Anr. Vs. M/s SSA's
Emerald Meadows - 2015
(11) TMI 1620 - Karnataka
High Court has held that
Tribunal has correctly
allowed the appeal filed by
the assessee holding the
notice issued by the
Assessing Officer under
section 274 read with
Section 271(1)(c) to be bad
in law as it did not specify
which limb of Section
271(1)© of the Act, the
penalty proceedings had
13
been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of Commissioner of Income Tax vs. Manjunatha Cotton and Ginning Factory (2013) (7) TMI 620- Karanataka High Court. Thus since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion no substantial question of law arises - decided in favour of assessee."
ii) CIT & Anr. Vs. M/s SSA's Emerald Meadows -
Hon'ble Supreme Court of India - reported in 2016 (8) TMI 1145 - Supreme Court.
The Apex Court held that High Court order confirmed (2015) (11) TMI 1620 (Supra) - Karnataka High Court. Notice issued by AO 14 under section 274 read with section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)© of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income -
Decided in favour of
assessee."
8. In the background of the
aforesaid discussions and
respectfully following the
precedents, we delete the
penalty in dispute and decide the issue in favor of the assessee and against the Revenue."
iv) ITAT, 'D' Bench, New Delhi decision dated 26.5.2017 in the case of Rajender Jain vs. ACIT passed in ITA No. 6804/Del/2013 wherein the Tribunal has observed as under:-
"7. We have heard both the parties and perused the orders passed by the Revenue Authorities alongwith the relevant records available with us. Firstly, we have perused the assessment order wherein the AO has 15 recorded his satisfaction on the page 2, 2nd para viz. "I am satisfied that it is a fit case for initiation of penalty proceedings u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income/concealment of income." We have also perused the notice dated 31.12.2007 issued by the AO for initiating the penalty and directing the assessee to appear before him at
---------AM/PM on --------200-----
- and issued a Show Cause to the assessee stating therein that why an order imposing the penalty of amount should not be made u/s. 271(1)(c) of the I.T. Act, 1961. After perusing the notice dated
31.12.2007 issued by the AO to the assessee, we are of the view that the AO has initiated the penalty for furnishing inaccurate particulars of income/concealment of income, but in the penalty order dated 06.11.2009 he has stated that he is satisfied that the assessee has furnished the inaccurate particulars of income.
167.1 However, the Ld. CIT(A) has given clear finding regarding the furnishing of inaccurate particulars. For the sake of convenience, the relevant para no. 5.3.1 of the impugned order passed by the Ld. CIT(A) is reproduced as under:-
"5.3.1 The above findings of the Ld. CIT(A) clearly establishes that the appellant has concealed the income of Rs. 26,50,500/-
and did not declare
in the return of
income inspite of
admitting a disclosure
of Rs. 40,00,000/-
during survey. Thus,
the appellant has
furnished inaccurate
particulars of his
17
income. The facts of
the case clearly reveal
that the appellant
tried to evade
payment of taxes by
furnishing inaccurate
particulars of income.
Therefore, I hold that
the AO was fully
justified in levying the
penalty u/s. 271(1)(c)
of the Act. The
penalty levied by the
AO is upheld. This
ground of appeal is
rejected."
8. Keeping in view of the
aforesaid finding of the Ld.
CIT(A), we are of the considered view that the AO has passed the assessment order wherein the AO has recorded his satisfaction on the page 2, 2nd para viz. "I am satisfied that it is a fit case for 18 initiation of penalty proceedings u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income/concealment of income." Further the AO vide his Notice dated 31.12.2007 for initiating the penalty and directed the assessee to appear before him at ---------AM/PM on --------
200------ and issued a Show Cause to the assessee stating therein that why an order imposing the penalty of amount should not be made u/s.
271(1)(c) of the I.T. Act, 1961. After perusing the notice dated 31.12.2007 issued by the AO to the assessee, we are of the view that the AO has initiated the penalty for furnishing inaccurate particulars of income/ concealment of income, but in the penalty order dated 06.11.2009 he has stated that he 19 is satisfied that the assessee has furnished the inaccurate particulars of income. In our view the penalty in dispute is not sustainable in the eyes of law, because the AO has not recorded any clear finding whether the assessee was guilty of concealment of income or furnishing of inaccurate particulars of income. Secondly, the notice u/s. 271(1)(c) has been issued to the assessee levying the penalty for furnishing of inaccurate particulars of income/concealment of income, whereas the penalty in dispute has been levied by the AO on account of furnishing of inaccurate particulars. In our view the penalty is not sustainable in the eyes of law. Our aforesaid view is fortified by the following decisions:-20
i) "CIT & Anr. Vs. M/s Emerald Meadows - 2015 (11) TMI 1620 - Karnataka High Court has held that Tribunal has correctly allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under section 274 read with Section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)© of the Act, the penalty proceedings had
been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court 21 rendered in the case of Commissioner of Income Tax vs. Manjunatha Cotton and Ginning Factory (2013) (7) TMI 620- Karanataka High Court. Thus since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion no substantial question of law arises - decided in favour of assessee."
ii) CIT & Anr. Vs. M/s SSA's Emerald Meadows -
Hon'ble Supreme Court of India - reported in 2016 (8) TMI 1145 - Supreme Court.
The Apex Court held that High Court order confirmed (2015) (11) TMI 1620 (Supra) - Karnataka High Court. Notice issued by AO under section 274 read with 22 section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)© of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income -
Decided in favour of
assessee."
8.1 In the background of the
aforesaid discussions and
respectfully following the
precedents, we delete the
penalty in dispute and decide the issue in favor of the assessee and against the Revenue."
7. Keeping in view of the aforesaid discussions and respectfully following the aforesaid precedents, I cancel the penalty in dispute by respectfully following the aforesaid 23 decisions and allow the legal ground no.1 raised by the assessee.
8. In the result, the appeal filed by the Assessee stands allowed.
9. Since in other appeal i.e. in the case of Jagdish Prasad Bharat Kumar HUF vs. ITO (AY 2014-15), similar facts are permeating, therefore, my finding given above will apply mutatis mutandis in this appeal also, because the grounds are exactly similar. Thus, this appeal is also allowed.
10. In the result, both the appeals of the assessee are allowed.
Order pronounced on 11.01.2019.
Sd/-
(H.S. SIDHU) JUDICIAL MEMBER Dated: 11/01/2019 Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI