9911796707
TMI Blog2019 (3) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... ven otherwise, Ld. CIT(A)-V, Delhi while upholding the penalty on an addition of Rs. 71,59,700, failed to consider & appreciate that there was no concealment of income or furnishing of inaccurate particulars of such income by the appellant. 4. That Order dated 20.01.2016 passed by the CIT(A)-V, Delhi u/s 250(6) of the Income Tax Act, 1961 is not sustainable on facts and under the law." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : On the basis of completed assessment under section 143(3)/254 of the Income-tax Act, 1961 (for short 'the Act') at a loss of Rs. 2,73,42,735/- by making disallowance of Rs. 1,34,56,177/- claimed by the assessee under the head "professional and legal charges" by treating the same as capital expenditure, initiated the penalty proceedings by way of issuance of notice under section 274 r/w section 271 of the Act. Declining the contentions raised by the assessee that it is not a case of concealment of particulars of income or furnishing of inaccurate particulars of income attracting penalty under section 271(1)(c) of the Act, AO reached the conclusion that the assessee has furnished inaccurate particulars of income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no question of furnishing of inaccurate particulars or concealment of particulars of income, as the case may be, and relied upon the judgment of CIT vs. Reliance Petro Products Pvt. Ltd. 322 ITR 158 (S.C.). 9. In order to proceed further, we would like to peruse the notice issued by AO u/s 274 read with section 271(1)(c) of the Act to initiate the penalty proceedings which is extracted as under for ready perusal:- "NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961. Income tax Office New Delhi. Dated: 8.12.010 To, M/s Lodhi Property Co. Ltd. Formerly known as Hotel Scope Vista Ltd., Whereas in the course of proceedings before me for the assessment year 2003-04 it appears to me that you:- * Have without reasonable cause failed to comply with a notice under section 142(1)/143(2) of the Income Tax Act, 1961 dated......... * Have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1, 2,3,4 and 5. You are hereby requested to appear before me at 11.00 AM/PM on 8.2.2011 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271 (1)( c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As said provisions have to be held to be strictly construed, notice issued under Section 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee. 60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnotations. The Gujarat High Court in the case of CIT v. Manu Engg. [1980] 122 ITR 306 and the Delhi High Court in the case of CIT v. Virgo Marketing (P) Ltd. [2008] 171 Taxman 156, has held that levy of penalty has to be clear as to the 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 proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. " 12. Hon'ble Apex Court in case of CIT vs. SSA's Emerala Meadows - (2016) 73 taxmann.com 248 (SC) while dismissing the SLP filed by the Revenue quashing the penalty by the Tribunal as well as Hon'ble High Court on ground of unspecified notice has held as 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 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they were put to prejudice. All violations will not result in nullifying the orders passed by statutory authorities. If the case of the assessee is that they have been put to prejudice and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter. This was never the plea of the assessee either before the Assessing Officer or before the first Appellate Authority or before the Tribunal or before this Court when the Tax Case Appeals were filed and it was only after 10 years, when the appeals were listed for final hearing, this issue is sought to be raised. Thus on facts, we could safely conclude that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued under Section 274 r/w.Section 271 of the Act. Therefore, principles of natural justice cannot be read in abstract and the assessee, being a limited company, having wide network in various financial services, should definitely be precluded from raising such a plea at this belated stage. 17. Thus, for the above reasons, Substantial Questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reliance Petro Products Pvt. Ltd. (supra) held that merely making a claim which is not sustainable in law by itself would not amount to furnishing of inaccurate particulars by returning following findings :- "A glance at the provisions of section 271(l)(c) of the I.T. Act, 1961 suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(l)(c) would embrace the detail of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particul ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
