Income Tax Appellate Tribunal - Amritsar
Prem Gupta, Jammu vs Assessee on 25 July, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR
BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND
SH. T.S. KAPOOR, ACCOUNTANT MEMBER
I.T.A No.575(Asr)/2014
Assessment Year: 2006-07
Sh. Prem Gupta Prop. Vs. Income Tax Officer,
M/s. Prem & Co. Ward 1(2)-Jammu.
Shivaji Market,
Railway Road, Nanak Nagar,
Jammu.
PAN:AHBPG-7383G
(Appellant) (Respondent)
Appellant by: Sh. P. N. Arora (Adv.)
Respondent by: Sh. S.S. Kanwal (DR.)
Date of hearing: 14.07.2016
Date of pronouncement: 25.07.2016
ORDER
PER T. S. KAPOOR (AM):
This is an appeal filed by assessee against the order of learned CIT(A), Jammu, dated 22.07.2014 for Asst. Year: 2006-07.
2. The assessee has taken seven grounds of appeal which read as under:
"1. That the order of the Assessing Officer, thereby levying penalty of Rs.81,280/- under section 271(l)(c ) of the Income-Tax Act, 1961, as well as the order of the Ld. CIT (Appeals) thereby confirming the same are both against the facts of the case & untenable in law.
2. That the authorities below have miserably failed to appreciate that this case does not fall within the mischief of section 271 (1)( c) of the Income-Tax Act, 1961. As such, the penalty levied by the AO should have been cancelled by the Ld. CIT (Appeals).
3. That there was no proper satisfaction and application of mind by the AO while initiating the penalty proceedings under section 271(1)( c) of the Income-Tax Act, 1961. The authorities below did not appreciate that the penalty proceedings were 2 ITA No.575 (Asr)/2014 Asst. Year: 2006-07 initiated for furnishing inaccurate particulars of income and concealing the particulars of income which is clear from the conclusion of the AO in the assessment order). Thus there was no application of mind of the Assessing Officer as no proper and specific charge was framed against the assessee while initiating the penalty proceedings. As such the order levying penalty under section 271(1)(c) of the Act, is bad in law and liable to be cancelled. Similarly the Ld. CIT (Appeals) should have cancelled the same as there was no application of mind and there was no specific charge against the assessee during the course of assessment proceedings. As such the order levying penalty under section 271(1)( c) of the Income-Tax Act, 1961, may be cancelled as the penalty order is illegal, invalid and void ab-initio and the same deserves to be cancelled.
4. That the Ld. CIT (Appeals) again miserably failed to appreciate that there was no specific & proper charge against the assessee at the time of initiation of proceedings u/s 271 (1)( c) of the Income-Tax Act, 1961. As such the assessee was deprived of a reasonable opportunity of being heard at the time of levy of penalty under section 271(1)(c) Income-Tax Act, 1961. As such the order is bad in law and the same is liable to be cancelled.
5. That the authorities below did not appreciate that even on merits no penalty was at all called for on the facts & circumstances of the case, inasmuch as, ail the material facts were duly disclosed before the authorities below . As such the penalty order is bad in law and the same may be cancelled.
6. That there was no intention to conceal the particulars of income, inasmuch, all the material facts were duly disclosed at the time of completion of the assessment. As such there was no default under section 271(1)( c) of the Income-Tax act, 1961, and the penalty order may be cancelled.
Alternatively, the penalty imposed is very high & excessive."
3. At the time of hearing the learned AR submitted that he will be arguing ground No.3. First, which was a jurisdictional ground and in this respect he invited our attention to ground No.3 and submitted that penalty proceedings in this case were initiated for furnishing inaccurate particulars of income and concealing the particulars of income. He submitted that there was no application of mind by the Assessing Officer as no specific charge was framed against the assessee while initiating the penalty proceedings. The learned AR in this respect invited our attention to the assessment order and submitted that in the last concluding para 3 ITA No.575 (Asr)/2014 Asst. Year: 2006-07 the Assessing Officer had noted down that penalty proceedings u/s 271(1)(c) for furnishing inaccurate particulars of income and concealment the particulars of income are being initiated. The learned AR, therefore, submitted that there was no specific charges framed by Assessing Officer. The learned AR also took us to (PB page-2) where a copy of show cause notice was placed and learned AR submitted that in the show cause notice also the Assessing Officer had charged the assessee regarding concealment of particulars of income and furnishing inaccurate particulars of income. He submitted that the case of the assessee was covered in his favour by various decisions of Hon'ble High Courts and Hon'ble ITAT, Amritsar Bench in the case of Tarlochan Singh & Sons (HUF) vs. ITO reported in 114 TTJ 82 and further by the order of ITAT, Amritsar Bench in the case of Sh. Jayesh R Kamani vs. ITO No.453(Asr)/2007 vide order dated 29.05.2009. The learned AR, in this respect invited our attention to (PB pages 1 to 29) where the copies of these two decisions was placed. The learned AR also took us to (PB pages 32 to 33) where a copy of decision of Hon'ble Gujrat High Court in the case of New Sorathia Engineering Co. vs. CIT reported in 282 ITR 642 was placed. Similarly we were taken to (PB page 34 to 38) where a copy of decision of Hon'ble Gujrat High Court in the case of CIT vs. Lakhdhir Lal Ji reported 85 ITR 77 was placed.
4 ITA No.575 (Asr)/2014
Asst. Year: 2006-07
4. The learned DR, heavily placed his reliance on the order of authorities below.
5. We have heard the rival parties and have gone through the material placed on record. We find that the Assessing Officer initiated penalty order by recording his satisfaction in the assessment order which read as under:
"Penalty proceedings u/s 271(1)(c) for furnishing inaccurate particulars of income and concealing the particulars of income are being initiated."
Similarly in the show cause notice placed at (PB page-2), the Assessing Officer issued show cause notice u/s 274 and charged the assessee by observing as under:
"You have concealed the particulars of your income and furnished inaccurate particulars of such income."
Therefore, from the above two facts it is observed that Assessing Officer was not sure as to whether the assessee is being charged for concealment of income or for furnishing inaccurate particulars of income. The Hon'ble Gujrat High Court in the case of New Sorathia Engineering Co. Vs. CIT reported in 282 TTR 642 under similar facts and circumstances has observed as under:
"...We find from the order of the IAC, in the penalty proceedings, that is, the final conclusion as expressed in para 4 of the order: I am of the opinion that it will have to be said that the assessee had concealed its income and/or that it had furnished inaccurate particulars of such income." Now, the language of "and/or" may be proper in issuing a notice as to penalty order of framing of charge in a criminal case or a quasi criminal case, but it was incumbent upon the IAC to come to a positive findings as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee.5 ITA No.575 (Asr)/2014
Asst. Year: 2006-07 No such clear-cut finding was reached by the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down."
The penalty order and the order of CIT(A) show that no clear-cut finding has been reached. The Tribunal has failed to appreciate this legal issue. Applying the ratio to the facts of the case it is apparent that the order of penalty cannot be sustained and the Tribunal could not have sustained the same. The Tribunal having failed to take into consideration and deal with the decision of the jurisdictional High Court it would constitute an error in law which goes to the very basis of the controversy involved and hence, the impugned order of the Tribunal cannot be upheld.
12. In the view that the Court has taken it is not necessary to reproduced and deal with other contentions raised by the learned counsel on facts and merits of the matter in the fact situation.
13. In the result, the question is answered in the negative i.e., in favour of the assessee and against the Revenue. The Tribunal was not right in upholding the penalty under s.271(1)(c) of the Act, for the reasons stated hereinbefore."
Respectfully, following the above judicial precedent relied upon by learned AR, we quash the penalty order as it is not as per the law.
6. In view of the above, the appeal filed by assessee is allowed.
Order pronounced in the open Court on 25.07.2016.
Sd/- Sd/-
(A.D. JAIN) (T. S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated:25.07.2016.
/PK/ Ps.
Copy of the order forwarded to:
(1) The Assessee:
(2) The
(3) The CIT(A),
(4) The CIT,
(5) The SR DR, I.T.A.T.,
True copy
By Order