Income Tax Appellate Tribunal - Delhi
M/S. Rsg Packaging Pvt. Ltd., New Delhi vs Acit, New Delhi on 5 April, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "F": NEW DELHI
BEFORE
SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No.368/Del/2014
(ASSESSMENT YEAR-2008-09)
RSG Packaging Pvt. Ltd. Vs ACIT
D-483-A, Oberoi Compound, Circle-15(1)
G.T. Road, Dilshad Garden New Delhi.
New Delhi - 110 095
PAN AAACR1210N
(Appellant) (Respondent)
Appellant By Sh. Sunil Arora, CA
Respondent by Shri Ravi Kant Gupta, Sr. DR
Date of Hearing 09.01.2018
Date of Pronouncement 05.04.2018
ORDER
PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
This appeal has been preferred by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-18 {CIT (A)}, New Delhi for assessment year 2008-09 wherein vide the impugned order dated 20.12.2013, the Ld. CIT (A) has upheld the imposition of penalty of I TA N o. 368/D el/ 2 01 4 Rs. 32,25,040/- imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter called 'the Act').
2. Brief facts of the case are that the assessee had filed the return of income for the assessment year 2008-09 i.e. the year under consideration claiming deduction of Rs. 94,88,204/- u/s 80IC of the Act. This deduction was duly allowed by the Assessing Officer (AO) vide assessment order dated 7.12.2010 passed u/s 143(3) of the Act. However, in the return of income, while computing the book profits u/s 115JB of the Act, the assessee deducted this amount of Rs. 94,88,204/- but on having realized the mistake, the assessee vide a letter addressed to the A.O., filed a revised computation of book profits rectifying this mistake. The A.O. accepted the revised computation of the book profits by the assessee. The penalty proceedings were initiated against the assessee in the assessment order itself alleging that the assessee had concealed its income. Thereafter, the A.O. proceeded to impose penalty of Rs. 32,25,040/- for furnishing inaccurate particulars of income for claiming deduction u/s 80IC while computing book profits u/s 115JB of the Act. Aggrieved, the assessee approached the first appellate authority who upheld the imposition of penalty and dismissed the appeal of the assessee. Now, the assessee has Page | 2 I TA N o. 368/D el/ 2 01 4 approached the Income Tax Appellate Tribunal (ITAT) and has challenged the confirmation of penalty by the Ld. CIT (A).
3. The Ld. Authorised Representative (AR) submitted that the notice u/s 274 dated 7.12.2010 issued by the A.O. did not specify as to under which limb of section 271(1)(c) of the Act, the penalty proceedings were being initiated. The Ld. AR drew our attention to the copy of the said notice appearing on page No. 22A of the paper book filed by the assessee. He also drew our attention to the assessment order dated 7.12.2010 wherein it was mentioned that since the assessee had concealed its income, penalty proceedings u/s 271(1)(c) of the Act were being initiated separately. He also drew our attention to the penalty order dated 22.6.2011 wherein it has been specified that the penalty was being imposed for furnishing inaccurate particulars of income. The Ld. AR sought to highlight the fact that in the assessment order the satisfaction of the A.O. for initiating the penalty proceedings was recorded for concealment of income whereas in the penalty order the penalty had been imposed for furnishing inaccurate particulars of income and, thus, there was a contradiction in approach of the department and as such the penalty was not sustainable. The Ld. AR also reiterated the fact that in the statutory Page | 3 I TA N o. 368/D el/ 2 01 4 notice issued u/s 274 of the Act, the charge for which the penalty proceedings were being initiated was not specified. The Ld. AR further submitted that since in the notice, both the charges were mentioned and the irrelevant portions were not crossed out, the notice was not as per the requirements of the Act. He relied upon the decisions of various Hon'ble Courts especially on the Hon'ble High Court of Karnataka in the case of CIT vs. Manjunatha Cotton & Ginning Factory reported in (2013) 359 ITR 565 (Kar) which was followed by the Hon'ble Karnataka High Court in the case of CIT vs. SSA's Emerald Meadows reported in (2016) 73 taxmann.com 241 (Kar) where the SLP filed by the Revenue has been dismissed by the Hon'ble Supreme Court.
4. In response, the learned Departmental Representative (DR) appearing on behalf of the Revenue argued that penalty proceedings have been validly initiated in the notice u/s 274 r.w.s. 271 of the Act.
5. We have heard the rival contentions and perused the material on record. It is evident from the notice u/s 274 r.w.s. 271 of the Act dated 7.12.2010 for the impugned year that the Page | 4 I TA N o. 368/D el/ 2 01 4 Assessing Officer has not specifically specified as to under which limb of Section 271(l)(c) of the Act, the penalty proceedings had been initiated by him, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Hon'ble High Court of Karnataka in the case of CIT vs. Manjunatha Cotton & Ginning Factory, reported in 359 ITR 565 (Kar)has held as under:
"(p) Notice under section 274 of the Act should specifically state the grounds mentioned in Section 271(l)(c), i.e., whether it is for concealment of income or for furnishing of inaccurate particulars of income.
(q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law."
5.1 The above-said judgment of Hon'ble High Court of Karnataka in the case of C IT vs. Manjunatha Cotton & Ginning Factor, reported in 359 ITR 565 (Kar) has been followed by the Hon'ble High Court of Karnataka in the case of Commissioner of Income Tax vs SSA's Emerald Meadows, reported in (2016) 73 taxmann.com 241 (Kar) and the relevant observations of the Hon'ble Karnataka High Court are as under-
Page | 5 I TA N o. 368/D el/ 2 01 4 "2. This appeal has been filed raising the following substantial questions of law, Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case?
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty notice under Section 274 r.w.s. 271(i)(c) is bad in law and invalid despite the amendment of Section 271 (1B) with retrospective effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same ?
(3) Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued under Section 274 without taking into consideration the assessment order when the assessing officer has specified that the 'assessee has concealed particulars of income?'
3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(l)(c) of the Income Tax Act. 1961 for short 'the Act') to be bad in law as it did not specify which limb of Section 271 (l)(c) 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 CIT v. Manjunatha Cotton & Ginning Factory [2013] 359ITR 565/218 Taxman 423/35 taxmann.com 250 (Kar.).
4. In our view, 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 in this appeal for Page | 6 I TA N o. 368/D el/ 2 01 4 determination by this Court. The appeal is accordingly dismissed.
5.2 Further, the SLP filed by the Revenue against the judgment of the Karnataka High Court in the case of Commissioner of Income Tax vs SSA's Emerald Meadows (supra) was dismissed by the Hon'ble Supreme Court of India. Therefore, respectfully following the judgment of the Hon'ble Karnataka High Court as above-mentioned we are of the considered view that the Assessing Officer is required to specify which limb of Section 271 (1)(c) of the Act, the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. From the perusal of the notice u/s.274 r.w.s. 271 of the Act in the present appeal, it is very much obvious that the Assessing Officer has not specified the same. The notice in fact is in standard pro forma without the irrelevant clauses therein being struck off. This indicates non application of mind on the part of the Assessing Officer while issuing the penalty notice. In the circumstances and facts of the case, the penalty proceedings initiated by the Page | 7 I TA N o. 368/D el/ 2 01 4 Assessing Officer are bad in law and accordingly the penalty so imposed is directed to be deleted and the order of the learned CIT (A) is set aside.
6. In the final result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 05/04/2018.
sd/- sd/-
(PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 05/04/2018
Veena
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR
Assistant Registrar
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