Income Tax Appellate Tribunal - Indore
Shri Sandeep Mehta, Bhopal vs The Acit 3(1), Bhopal on 15 May, 2017
Smt. Seema Mehta and Others/ I.T.A. No. 905 to907, 909 to910 and 913 to 915/Ind/2016/AY.:04-05 to 04-07 Page 1 of 10 आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE च मोहन गग , या यक सद य तथा "ी ओ.पी.मीना, लेखा सद य के सम( BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER I.T.A. No. 905&906/Ind/2016 Assessment Year: 2005-06 & 2006-07 Smt. Seema Mehta ACIT 3(1) Bhopal E-3 Arera Colony Bhopal v.
PAN: ABFPM 9681H
अपीलाथ) /Appellant +,यथ) /Respondent
I.T.A. No. 907/Ind/2016
Assessment year 2005-06
Shri Surendra Mehta ACIT 3(1) Bhopal
E-3 Arera Colony Bhopal v.
PAN: AFSPM 8170Q
अपीलाथ) /Appellant +,यथ) /Respondent
I.T.A. No. 909 & 910/Ind/2016
Assessment year 2004-05 & 2007-08
Shri Sanjay Mehta ACIT 3(1) Bhopal
E-3 Arera Colony Bhopal v.
PAN: ABFPM 9882E
अपीलाथ) /Appellant +,यथ) /Respondent
I.T.A. No. 913,914 & 915/Ind/2016:
Assessment year: 2004-05, 2005-06, 2006-07 Shri Sandeep Mehta ACIT 3(1) Bhopal E-3 Arera Colony Bhopal v.
PAN: ABFPM 9683F
अपीलाथ) /Appellant +,यथ) /Respondent
अपीलाथ) क- ओर से/Appellant by Shri Yashwant Sharma,
Smt. Seema Mehta and Others/ I.T.A. No. 905 to907, 909 to910 and 913 to 915/Ind/2016/AY.:04-05 to 04-07 Page 2 of 10
CA
+,यथ) क- ओर से/Respondent by Shri Mohd. Javed, Sr.
D.R.
सुनवाई क- तार ख/Date of hearing 05-05-2017
उ2घोषणा क- तार ख/Date of pronouncement 15-05-2017
आदे श /O R D E R
PER BENCH.
1. The appeals by four assessees are directed against the different orders of Commissioner of Income tax (Appeals)[ in short CIT(A)] dated 10-06-2016 and 01-07-2016 for the 8 assessment year as mentioned above whereby challenging the confirmation of penalty u/s. 271(1)(c)imposed by the ACIT 3(1) Bhopal. These appeals are belongs to same group, facts of which are identical, and same were bunched and heard together and being disposed of by this common order for the sake of brevity and convenience.
2. Additional ground of appeal : During the currency of appeal, the assessees have also filed an additional ground of appeal against the penalty order for all the 8 assessment years which read as under :-
"That, without prejudice to above, and on the facts and in the circumstances of the case and in law, since the notice issued u/s. 271(1)(c) did not specify specific charge against the assessee as to whether it was issued for concealment Smt. Seema Mehta and Others/ I.T.A. No. 905 to907, 909 to910 and 913 to 915/Ind/2016/AY.:04-05 to 04-07 Page 3 of 10 of particulars of income or for furnishing inaccurate particulars of income, it was without jurisdiction, unlawful and ab-initio void".
3. The Ld. A.R. submitted that the above legal ground be admitted as it is being purely a legal issue, goes to the root of the matter and no further inquiry is required for deciding the same as all facts are already on record and issue arise out of impugned order. We have considered the facts and material on record. The additional ground being legal one, hence, admitted. Reliance is placed on the decision of Apex Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383(SC) wherein it was held that the additional ground of appeal can be admitted where the issue involved is pure question of law not involving any investigation of facts. Now we will deal with the additional ground on law and merit.
4. Facts in the brief emanating from the assessment orders/penalty order in the case of Smt. Seema Mehta for the assessment year 2004-05 are being discussed as same are identical in the case of other assessees. A search under section 132 of the Act was conducted on 30-05 2008 in the case of assessee group covering the residential as well as business premises. Ex-consequenti, notice under section 153A was issued, in response to which return of income was filed and Smt. Seema Mehta and Others/ I.T.A. No. 905 to907, 909 to910 and 913 to 915/Ind/2016/AY.:04-05 to 04-07 Page 4 of 10 assessment was made under section 153A read with section 143 (3) by making addition on various issues like income from other sources, contract receipts, bank deposits etc. During the course of assessment proceedings, the assessee has offered profit @ 8% on gross contract receipts, on presumptive basis. However, the AO added that Gross amount of contract receipts as income of the assessee for all the years. The said addition was come to be confirmed by the CIT (A) as well as by the Tribunal. Therefore, the AO levied a penalty on this issue under section 271(1)(c) of the Act.
5. The learned AR for the assessee drew our attention to page number 26 of the assessment order and submitted that no satisfaction recorded on the impugned issue although itemized satisfaction recorded for other issues of addition. The learned AR pointed out by referring Page No 4 of paper book that even in the show cause notice dated 31-12-2010, issued by the AO, no charge at all was levied, what to talk of the specific charge as to under which limb of section 271(1)(c), penalty proceedings had been initiated i.e. whether for concealment of particulars of income, or for furnishing inaccurate particulars of income. Thus the AO had not recorded satisfaction on the impugned issues on which penalty has been levied. Although, initiation of penalty proceedings under section 271(1)(c) is mentioned on Smt. Seema Mehta and Others/ I.T.A. No. 905 to907, 909 to910 and 913 to 915/Ind/2016/AY.:04-05 to 04-07 Page 5 of 10 other issues which are not subject matter of penalty. Hence, the general mention in the order, to levy penalty under section 271(1)(c) would not come in aid to the AO as enumerated in section 271(1B) of the Act. Therefore, the learned AR by placing reliance in the case of ACIT v. M.P. State Tourism Development Corporation & others [2015] 26 ITJ 225 (Indore), DCIT v. Nepa Ltd. [2015] 58 taxmann.com 137 (Indore), CIT v. SSA`s Emerald Meadows [2016] 73 taxmann.com 248 (SC), CIT v. Manjunath Cotton Ginning Factory [2013] 359 ITR 565 (Karnataka) and CIT v. Samson Perichery [ I.T.A. No. 1154 of 2014 dated 5th January 2017] of Hon`ble Bombay High Court contended that penalty levied is unlawful on this ground alone and void-ab- initio, therefore, it may be cancelled. Even otherwise, on merit the income of offered by the assessee on presumptive basis at the rate of 8% of the gross contract receipts, which was not accepted by the AO and the completely gross receipts were considered as income of the assessee on which no penalty proceedings initiated. Therefore, in the facts and circumstances of the case, no penalty is leviable as there is no concealment of income or furnishing inaccurate particulars of income.
6. On the other hand, the learned Sr. D.R. relied on the orders of lower authorities.
Smt. Seema Mehta and Others/ I.T.A. No. 905 to907, 909 to910 and 913 to 915/Ind/2016/AY.:04-05 to 04-07 Page 6 of 10
7. We have heard the rival submissions of both the parties and have perused the material available on record. It is settled principal of law that the provisions of section 271(1)(c) on their plain reading would require proper application of mind and recording at least bare minimum opinion on the part of the AO that a case for initiation of penalty proceedings was made out as there was concealment of income, or the incorrect particulars of income had been furnished by the assessee, with intention to avoid payment of tax. In the instant case, We find from the perusal of the assessment order that the AO has recorded satisfaction with regard to other sum or issues of addition for initiation of penalty proceedings under section 271(1)(c) of the Act but on the very issue on which impugned penalty us 271(1)(c) is imposed , there is no indication as could be seen from page No 26 of assessment order in the case of Smt. Seema Mehta. Thus, no specific charge has been mentioned in the initiation of penalty proceedings in the assessment order. We also find that the show cause notice issued for levy of penalty, placed at Paper Book page No 4, that there is no mention on what account the penalty proceeding are being initiated. This indicates that there is no application of mind on the part of the AO while issuing penalty notice. Therefore, we are of the considered opinion that the AO has not Smt. Seema Mehta and Others/ I.T.A. No. 905 to907, 909 to910 and 913 to 915/Ind/2016/AY.:04-05 to 04-07 Page 7 of 10 made out a case for levy of penalty us 271(1)(c) of the Act , hence, the same are not sustainable in law. This view is also support by the decision of Hon`ble Karnataka High Court in the case of CIT v. Manjunath Cotton Ginning Fcatory [2013] 359 ITR 565 (Karn) wherein it was held as under:
"61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The apex court in the case of T. Ashok Pai v. CIT reported in [2007] 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of CIT v. Manu Engineering Works reported in [1980] 122 ITR 306 (Guj) and the Delhi High Court in the case of CIT v. Virgo Marketing reported in [2008] 171 Taxman 156, has held that levy of penalty has to be clear as to the Smt. Seema Mehta and Others/ I.T.A. No. 905 to907, 909 to910 and 913 to 915/Ind/2016/AY.:04-05 to 04-07 Page 8 of 10 limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard pro forma without striking of the relevant clauses will lead to an inference as to non-application of mind."
8. The Ld. A.R. relied in the case of CIT v. SSA`S Emerald Meadows [2016] 73 taxmann.com 248 (SC) wherein it was held that no penalty without specifying which limb of section 2771 would be applicable, SLP was dismissed the head note of which reads as us under:-
Section 274, read with section 271(1)(c), of the Income-tax Act, 1961 - Penalty - Procedure for imposition of (Conditions precedent) - Assessment year 2009-10 - Tribunal, relying on decision of Division Bench of Karnataka High Court rendered in case of CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250, allowed appeal of assessee holding that notice issued by Assessing Officer under section 274 read with section 271(1)(c) was bad in law, as Smt. Seema Mehta and Others/ I.T.A. No. 905 to907, 909 to910 and 913 to 915/Ind/2016/AY.:04-05 to 04-07 Page 9 of 10 it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income - High Court held that matter was covered by aforesaid decision of Division Bench and, therefore, there was no substantial question of law arising for determination - Whether since there was no merit in SLP filed by revenue, same was liable to be dismissed - Held, yes [Para 2] [In favour of assessee]
9. Similar view were also expressed by Hon`ble Bombay High Court in the case of CIT v. Shri Samson Perinchery I.T.A. No. 1154 of 2014 dated 5th January 2017.
10. In the light of above we find that the AO has not specify the specific charge on which penalty has been initiated in the assessment order nor in penalty show cause notice and therefore, it is not clear as to the limb for which it is levied and the position being unclear here the penalty is not sustainable. Therefore, considering the consistent view expressed by the Hon`ble High Courts and affirmed by Hon`ble Supreme Court , we hold that additional ground raised is allowed on technical ground for the impugned penalty levied in all the eight assessment years under consideration in respect of four Smt. Seema Mehta and Others/ I.T.A. No. 905 to907, 909 to910 and 913 to 915/Ind/2016/AY.:04-05 to 04-07 Page 10 of 10 assessee-applicant and penalty u/s. 271(1)(c)is not sustainable. Hence, we do not find it necessary to address the issues urged on merits. Accordingly we set aside the orders of the Ld. CIT (A) and direct the AO to delete the penalty levied under section 271 (1)(c) of the Act for all the 8 assessment years under consideration in all the appeals of four assessee`s under consideration.
11. In the result, all the four appeals of the assessee for eight-assessment years as mention in above format stand allowed.
12. The order pronounced in the open Court on 15.5.2017 Sd/- Sd/-
(C. M. GARG) (O.P.MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 15th May, 2017
OPM