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TMI Blog2022 (8) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... The grounds raised by the assessee are allowed. - ITA No.3788/Del/2019 - - - Dated:- 24-8-2022 - Shri Kul Bharat, Judicial Member For the Appellant : Shri Manish Malik, Adv. For the Respondent : Shri Om Parkash, Sr.DR ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee for the assessment year 2010- 11 is directed against the order of Ld. CIT(A)-7, New Delhi dated 12.04.2019. The assessee has raised following ground of appeal:- 1. That in the facts and circumstances of the case the Ld. CIT(A) grossly erred in imposing the penalty amounting to Rs. 6,00,232/- u/s 271(l)(c) of the IT Act, 1961 by the Ld. DCIT, Circle 13(1), New Delhi. 2. That on the facts and circumstances of the case the Ld. CIT(A) grossly erred in sustaining the action of the Ld. DCIT, Circle 13(1) New Delhi in holding that the appellant has furnished inaccurate particulars of income on account of the following claim- addition u/s 68 on account of cash credit in bank account- Rs. 19,42,500/- 3. That on the facts and circumstances of the case the Ld. CIT(A) grossly erred in sustaining the action of the Ld. DCIT, Circle 13(1), New Delhi to record his satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for which willful concealment is not an essential ingredient for attracting the civil liability as is the case in the matter of proceedings under section 276C 2. R L Traders Vs ITO (2017-TIOL-2583-HC-DEL-IT) where Hon ble Delhi High Court held that citing of past instance or lack of absence of cross-examination, cannot vitiate the initiation and culmination of penalty proceedings in case of accommodation entry 3. CIT Vs Zoom Communication (P.) Ltd. [191 Taxman 179 (Delhi)/[2010] 327 ITR 510 (Delhi)/[2010] 233 CTR 4651 where Hon ble Delhi High Court held that If assessee makes a claim which is not only incorrect in law, but is also wholly without any basis and explanation furnished by him for making such a claim is not found to be bona fide, Explanation 1 to section 271(1)(c) would come into play and assessee will be liable to penalty 4. Khandelwal Steel And Tube Traders Vs ITO [2018] 95 taxmann.com 15 (Madras) where Hon ble Madras High Court held that explanation as to why there was an omission or wrong statement in original return must be due to bona fide inadvertence or bona fide mistake on part of assessee and even if assessee agreed to addition w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quasi criminal but a civil liability, albeit a strict liability. Such liability being civil in nature, mens-rea is not essential. On the issue of not marking the specific limb in the Penalty Notice: 1. ITO Vs. Rajan Kalimuthu [ITA No.2900/CHNY/2018] [TS-289-ITAT- 2019(CHNY)] ITAT: AO s failure to strike -off column in SCN, no ground for deleting penalty. Chennai ITAT sets aside CIT(A) order for AY 2014-15, rules that penalty order passed by AO could not be quashed on the ground that the relevant column of the Show Cause Notice (SCN) had not been struck off, remands back matter to CIT(A) for fresh adjudication on merits; Assessee- individual had failed to disclose long term capital gains on sale of land and building and could not substantiate his claim about purchase of another house property, and thus the AO brought to tax LTCG and also levied penalty u/s 271(1)(c) ; Notes that CIT(A) had deleted the penalty by applying the ratio laid down by Karnataka HC in Manjunatha Cotton and Ginning Factory case; Further takes note of Bangalore ITAT ruling in case of P.M.Abdulla, wherein it was clarified that the said HC decision had not considered the provisions of sec.29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at no earlier point of time raised the plea that on account of a defect in the notice, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of loss as capital loss. This ground was not accepted by the CIT (Appeals) as correct. It was held that in view of the finding of the CIT (Appeals), the foundation on which penalty was initiated has fallen down. Therefore, the penalty on that ground cannot fructify. The CIT (Appeals), however, upheld the disallowance on a totally different ground. In such a situation, the penalty could have been initiated by the CIT (Appeals) but that will not give jurisdiction to the AO to levy the penalty. 1/1/e have given serious consideration to this issue also. This decision may have some implication on the levy of penalty in respect of first addition regarding the cash shortage. At the same time, it is also true that the assessee must be appraised of the charge in the notice for which he is sought to be penalized. The whole issue has to be decided on the basis of the facts of each case. When we go through the assessment order, it is seen that the AO has examined the cash book in a great detail and various entries therein between 01.07.2004 to 31.3.2005 have been reproduced on page nos. 14 to 27. Similarly, the receipts by way of advances from Trimurti Engineering Works, having i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Factory and others (2013) 359 ITR 565 (Kar.): The Hon'ble Karnataka High Court was considering the case where there was no proof of concealment of income. It was a case where the Hon'ble High Court held that the Explanation given by the assessee was bonafide and merely because the assessee agreed to the addition and the assessment order was passed on the basis of this admission, in the absence of any material on record to show concealment of income, no penalty can be levied. The facts of the case on hand are entirely different. Our finding of fact is that the assessee has not voluntarily offered the income to tax. In fact the explanation given is in our opinion not bonafide... (ii) The Hon'ble Delhi High Court in the case of Ms.Madhushree Gupta vs. UOI and another (2009) reported in 317 ITR 107 has laid down that prima facie satisfaction of the AO that the case may be served imposition of penalty should be discernible from the order passed during the course of the proceedings. In the case on hand the prima facie satisfaction of the AO is discernible from the assessment order. At para 36, page 128 of this order the Hon'ble Court has observed as follows. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being discernible from the record, was reiterated. (iii) the irrelevance of - the Assessing Officer having to say so in so many words that I am satisfied' was highlighted. (iv) the judgment of the Division Bench in Ram Commercial was affirmed which enunciated that: Firstly satisfaction should be that of Assessing Officer. Secondly; the assessment order should reflect such satisfaction. In our opinion the impugned provision only provides that an order initiating penalty cannot be declared bad in law only because it states that penalty proceedings are initiated', if otherwise it is discernible from the record, that the Assessing Officer has arrived at prima facie satisfaction for initiation penalty proceedings. The issue is of discernibility of the satisfaction arrived at by the Assessing Officer during the course of proceeding before him. In the result, our conclusion are as follows: (i) Section 271(1B) of the Act is not violative of Article 14 of the Constitution. (ii) The position of law both pre and post amendment is similar, in as much, the Assessing Officer will have to arrive at a prima facie satisfaction during the course of proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he paper book. We find that in the first notice, the relevant clause has not been ticked off and the second notice is simply a show cause notice. However, in the quantum order Ld. AO, after due deliberations, clearly initiated the penalty proceedings for furnishing of inaccurate particulars which shows due application of mind qua penalty proceedings. The penalty was finally levied on the same ground as well. Therefore, mere marking of relevant clause, in our opinion, on the facts of the case, has not caused any prejudice to the assessee particularly when the assessee voluntarily offered certain additions in the quantum proceedings with a specific request to AO for not initiating the penalty against the same. The assessee very well knew the charges / grounds for which he was being penalized and he actively contested the penalty before the Ld. AO. At this juncture, we find that the provisions of Section 292B comes to the rescue of the revenue which cures minor defect in the various notices issued provided such notice in substance and effect was in conformity with the intent and purpose of the act. On overall facts and circumstances, we find that such condition was fulfilled in the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upport his aforesaid contentions relied on the following judicial pronouncements: (i) CIT, Central-ll v. Divine Infracon Pvt. Ltd. (ITA No. 771/Mum/20 13.08.2018, (High Court of Delhi) (ii) CIT-4 v. Jamunadas Virji Shares and Stock Brokers Pvt. Ltd. (2013) 458 (Bom.) (iii) DCIT v. Sandip M. Patel (2012) 137 ITD 104 (Ahmedabad) (iv) CIT v. Jindal Ployster Ltd. (2017) 397 ITR 282 (All.) (v) Addl. CIT v. Gurjargravures (P.) Ltd. (1978) 111 ITR 1 (SC) (vi) CIT v. EdwertKeventer (Successors) P. Ltd. (1980) 123 ITR 200 (Dr (vii) Ultratech Cement Ltd. v. AddI. CIT, Range-2(2) (2017) 298 CTR 43' (viii) Self Knitting Works v. CIT (2014) 227 taxman 253 (P H) The Id. D.R relying on the aforesaid judicial pronouncements, submitted that as per the settled position of law, the objection raised by the Id. A.R during the course of hearing of the appeal as regards the validity of the jurisdiction assumed by the A.O for imposing penalty 271(l)(c) was not admissible and thus no cognizance of the same may be drawn. Alternatively, and without prejudice to the objection raised to the admission of the challenge thrown by the Id. A.R to the validity of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to enable him to explain why it should not be levied against him. If it is taken for the sake of argument that mere mistake in the language in the notice for non-striking off of 'inaccurate particular' or marking on 'concealment of income' portion cannot by itself invalidate the notice. Entire facts and backgrounds thereof are to be kept in mind. Every concealment of fact may ultimately result in filing of or furnishing inaccurate particular. It was further argued that no statutory notice has been prescribed in this behalf in the Income tax Act. 2.17. The Hon'ble Karnataka High Court in CIT Versus Manjunatha Cotton Ginning Factory (supra) held that notice under section 274 of the act should specifically state the grounds mentioned in section 271(l)(c) that is, whether it is for concealment of income or for furnishing of inaccurate particular of income, sending printed form where all the grounds mentioned in the section 271 are mentioned would not specify the requirement of law, the assessee should know the grounds which he has to meet specifically. Otherwise, the Principles of Natural Justice are offended. On the basis of such proceedings, no penalty co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax AIR 2000 SC 1623; H. Saurashtra Oil Mills Association Gujrat vs. State of Gujrat Anr. AIR 2002 SC 1130; I. Union of India Ors vs. Jaipal Singh (2004) 1 SCC 121; and J. Y. Satyanarayan Reddy vs Mandal Revenue Officer, Andhra Pradesh (2009) 9 SCC 447. 2.19. The Hon'ble Apex Court in Kunhoyammed Ors Vs State of Kerala Anr. AIR 2000 SC 2587, considered the similar issue and some of the earlier judgments and came to the conclusion that dismissal of special leave petition in limine by a non-speaking order may not be a bar for further reconsideration of the case for the reason that the Court might not have been inclined to exercise its discretion under Article 136 of the Constitution of India. The declaration of law will be governed by Article 141 where the matter has been decided on merit by a speaking judgment as in that case doctrine of merger would come into play. This Court laid down the following principles:- (i) Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erged in the order of the Supreme Court rejecting the special leave petition or that the order of the Supreme Court is the only order binding as res-judicata in subsequent proceedings between the parties. 2.20. As there is no declaration of law which may be governed by Article 141 of the Constitution of India in the case of CIT Versus SSA'S Emerald Meadows dismissed by Hon'ble Apex Court; vide SLP (CC No. 11485/2016) on 05/08/2016. The judgment of Hon'ble Jurisdictional High Court in CIT Vs Kaushalya (supra) is still having a binding force on us. Thus, with utmost regards to the judgment of Karnataka High Court in CIT vs Manjunatha Cotton Ginning Factory (supra) we are bound to follow the judgment of jurisdictional High Court in CIT Vs Kaushalya (supra). Our view also find support from a decision of the Mumbai Bench of the Tribunal in the case of Dhawal K. Jain vs Income Tax Officer (ITA No.996/Mum/2014) order dated 30/09/2016. With these observations, the argument of Id. counsel of the assessee on the legal/technical ground is rejected. Thus, all these four appeals are, therefore, dismissed and the stand of the Ld. Commissioner of Income Tax (Appeal) is af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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