Income Tax Appellate Tribunal - Hyderabad
Yeturu Ramachandra Reddy, Hyd, ... vs Dcit, Circle-3(3), Hyd, Hyderabad on 10 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B" : HYDERABAD
BEFORE SHRI D. MANMOHAN, VICE PRESIDENT
AND
SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
ITA.No.821/Hyd/2016
Block Period 1987-88 to 1997-98
Sri Yeturu Ramachandra vs. Dy. CIT,
Reddy, Circle - 3(3), (Presently ITO,
Hyderabad. Ward 17(4), Hyderabad.
PAN: AAEPY9574F
(Appellant) (Respondent)
For Assessee: Smt. Neelima Devi
For Revenue : Smt. N. Swapna, DR
Date of Hearing : 10.08.2017
Date of Pronouncement : 10.08.2017
ORDER
PER D. MANMOHAN, VP.
This appeal by the assessee is directed against the order passed by the Ld. CIT(A)-5, Hyderabad and it pertains to the Block Period 1987-88 to 1997-98. The following grounds were urged before us.
"1. The order of the Ld. CIT(A) confirming the penalty of Rs. 1,32,000/- is erroneous both on facts and in law in so far as it is prejudicial to the assessee.
2. The Ld. CIT(A) erred in holding that there is no response to the notice issued though letters were filed seeking time and thereby erred in deciding the appeal exparte.
3. The Ld. CIT(A) failed to appreciate that the order is ab initio void as the same is passed without providing opportunity to the assessee and further failed to appreciate that the order should have been passed u/s 158BFA(2) and not u/s 271(1)(c)j and erred in not deciding that ground.
4. The Ld. CIT(A) failed to appreciate that the order passed is beyond limitation period and is therefore ab initio void.
5. The Ld. CIT(A) erred in holding that there is concealment of income without appreciating that the additions are made due to difference of opinion and not because of concealment as all the material were before the A.O."2
2. Facts in brief are that consequent to the search and seizure operation, notice was issued u/s 158BC of the Act in response to which the assessee declared NIL income whereas assessment was completed on a total income of Rs. 5.37 Crs. Later, the ITAT deleted some of the additions and remanded the matter to the A.O. with regard to two additions and accordingly assessment was completed u/s 143(3) r.w.s 158BC r.w.s 254 of the Act wherein addition of Rs. 2,20,000/- was confirmed. Since the assessee could not account for the above two payments, the same were considered as 'concealment of particulars of income' and levied penalty u/s 271(1)(c) of the Act. In other words, penalty of Rs. 1,32,000/- was levied u/s 271(1)(c) of the Act. The assessee challenged the order of the A.O. by contending that the penalty was levied without affording any opportunity to explain the case and even the order was not served on the assessee. It was also contended that penalty is not leviable u/s 271(1)(c) since the assessment was completed u/s 158BC of the Act. Therefore the order passed is void ab initio since A.O. did not invoke the provisions of section 158BFA(2) of the Act. Ld. CIT(A) however confirmed the penalty levied by the A.O. without meeting the issue as to whether section 271(1)(c) proceedings can be initiated in respect of an assessment made u/s 158BC of the Act. Therefore the assessee is in appeal before the Tribunal.
3. We have heard the Ld Counsel for the assessee as well as the Ld DR. The case of the Ld Counsel for the assessee is that the penalty proceedings are quasi criminal in nature and they have to be initiated as mandated by the provisions of the Act whereas in the instant case penalty was said to be imposed by issuing a notice u/s 271(1)(c) of the Act and in fact the order was also passed u/s 271(1)(c) of the Act which is void ab initio since the law permits the Assessing Officer to initiate 3 proceedings, if any, only u/s 158BFA of the Act. On the other hand, Ld DR submitted that mere invocation of wrong provision should not be a criteria to decide the matter so long as the object of the Assessing Officer is to prove as there is concealment of particulars of income. In other words, mentioning of section 271(1)(c) is only a technical error.
4. We have carefully considered the rival submissions and perused the record. It is well settled that a specific provision under the Act overrides a general provision prescribed for the regular assessments. The procedure for block assessments for search cases were prescribed under Chapter-14B of the Act which also refers to levy of interest and penalty in certain cases and in the process section 158BFA(2) refers to levy of penalty in respect of the undisclosed income determined by the A.O. u/s 158BC of the Act. Since the Assessing Officer neither initiated the penalty proceedings under the aforementioned section nor completed the process under the said section it cannot be treated as a valid initiation / completion of proceedings. In fact, Ld Counsel for the assessee raised plea that the assessee was not given opportunity of being heard. At any rate, since the initiation of proceedings is in law, the order passed by the A.O. deserves to be quashed and we set aside the order of the Ld. CIT(A) and cancel the penalty levied u/s 271(1)(c) of the Act.
5. In the result, as pronounced in the open court, the appeal filed by the assessee is allowed.
Sd/- Sd/-
(CHANDRA POOJARI) (D. MANMOHAN)
ACCOUNTANT MEMBER VICE PRESIDENT
Hyderabad, Dated: 10th August, 2017
4
OKK, Sr.PS
Copy to
1. K. Vasant Kumar, A.V. Raghu Ram Advocates, Flat No.610, 6th Floor, Babukhan Estate, Basheerbagh, Hyderabad-500001.
2. DCIT, Circle 3(3), Presently ITO Ward 17(4), Hyderabad.
3. CIT (A)-5, Hyderabad.
4. Pr. CIT-5, Hyderabad.
5. D.R. ITAT "B" Bench, Hyderabad.
6. Guard File