Ranjan Kumar Sahu v. ITO, Dhenkanal Ward, Dhenkanal
[Citation -2019-LL-0913-105]

Citation 2019-LL-0913-105
Appellant Name Ranjan Kumar Sahu
Respondent Name ITO, Dhenkanal Ward, Dhenkanal
Court ITAT-Cuttak
Relevant Act Income-tax
Date of Order 13/09/2019
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags non-application of mind • concealment of income • levy of penalty • furnished inaccurate particulars of income • adequate opportunity of being heard • issuance of notice
Bot Summary: At the outset, ld Authorised Representative of the assessee filed before us original copy of notice issued u/s.274 r.w.s.271(1)(c) of the 2 ITA No.252/CTK/2018 Act dated 28.02.2014, and pointed out therefrom that in the said notice, the Assessing Officer has stated as under: Whereas in the course of proceedings before me for the assessment year 2011-12, it appears to me that you:- ................ have concealed the particulars of your income or....... furnished inaccurate particulars of such income. Invalid in spite the amendment of Section 271(1 B) with retrospective effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same 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 274without 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(1)(c) of the Income Tax Act, 1961 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. Bare perusal of the notice issued u/s 274 r.w.s.271(1)(c) of the Act apparently goes to prove that the Assessing Officer initiated the penalty proceedings by issuing the notice u/s 274/271(1)(c) of the Act without specifying the assessee has concealed ''particulars of income or assessee has furnished inaccurate particulars of income, so as to provide adequate opportunity to the assessee to explain the show cause notice. The penalty provisions of section 271(1)(c) of the Act are attracted where the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. The Hon'ble Supreme Court in the case of Dilip N. Shroff vs. JCIT, 291 ITR 519(SC) has also noticed that where the Assessing Officer issues notice under section 274 of the Act in the standard proforma and the inappropriate words are not deleted, the same would postulate that the Assessing Officer was not sure as to whether he was to proceed on the basis that the assessee had concealed the particulars of his income or furnished inaccurate particulars of income. In the background of the aforesaid legal position and, having regard to the manner in which the Assessing Officer has issued notice under section 274 r.w.s. 271(1)(c) of the Act dated 28.02.2014 without striking off the irrelevant words, the penalty proceedings show a non- application of mind by the Assessing Officer and is, thus, unsustainable.


IN INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK, BEFORE SHRI CHANDRA MOHAN GARG, JM AND SHRI L.P. SAHU, AM ./ITA No.252/CTK/2018 (Assessment Year 2011-2012) Shri Ranjan Kumar Sahu, Vs. ITO, Dhenkanal Ward, Hata Road, Mandapsahi, Dhenkanal Dhenkanal, Odisha-759001. PAN No. AHWPS 4507 K (Appellant) (Respondent) Assessee by Shri C.Parida, AR /Revenue by Shri Subhendu Dutta, DR / Date of Hearing 12/09/2019 /Date of Pronouncement 13/09/2019 O R D E R Per L.P.Sahu, AM This appeal has been filed by assessee against order of Commissioner of Income Tax (Appeals)-2, Bhubaneswar, dated 25.04.2018 for assessment year 2011-2012. 2. sole issue involved in this appeal is that CIT(A) erred in confirming action of Assessing Officer in levying penalty u/s.271(1)(c) of Act of Rs.1,27,406/-. 3. At outset, ld Authorised Representative of assessee filed before us original copy of notice issued u/s.274 r.w.s.271(1)(c) of 2 ITA No.252/CTK/2018 Act dated 28.02.2014, and pointed out therefrom that in said notice, Assessing Officer has stated as under: "Whereas in course of proceedings before me for assessment year 2011-12, it appears to me that you:- ................ *have concealed particulars of your income or....... furnished inaccurate particulars of such income." 4. He submitted that it is not clear from said notice issued u/s.274 r.w.s.271(1)(c) of Act by Assessing Officer whether show cause is issued to assessee for concealment of particulars of income or for furnishing inaccurate particulars of income. 5. He submitted that Hon'ble Supreme Court in case of CIT vs. SSA's. Emarld Meadows dated 11th January, 2017 passed in Special Leave to Appeal (CC No.11485/2016)/73 taxmann.com 248 (SC) has held that Omission by AO to explicitly specify in penalty notice as to whether penalty proceedings are being initiated for furnishing of inaccurate particulars or for concealment of income makes penalty order liable for cancellation. Hence, he submitted that penalty of Rs.1,27,406/- imposed by Assessing Officer u/s.271(1)(c) is, therefore, liable to be cancelled. 6. Departmental Representative could not controvert above submission of ld Authorised Representative of assessee. 7. After hearing both parties and perusing orders of lower authorities and materials available on record of Tribunal, we find 3 ITA No.252/CTK/2018 that facts in present appeal are not in dispute and Assessing Officer in order passed u/s.271(1)(c) of Act dated 20.06.2017 levied penalty of Rs. Rs.1,27,406/-. 8. Hon'ble Apex Court vide judgment in case of M/s. SSA's Emerald Meadows, (2016) 73 taxmann.com 248(SC) dismissed Special Leave Petition filed by Revenue against judgment rendered by Hon'ble High Court of Karnataka whereby identical issue was decided in favour of assessee. Operative part of judgment in case of M/s. SSA's Emerald Meadows (supra) decided by Hon'ble High Court of Karnataka is reproduced below :- "2. This appeal has been filed raising following substantial questions of law: (1) 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 penalty order liable for cancellation even when it has been proved beyond reasonable doubt that assessee had concealed income in facts and circumstances of case? (2 Whether, on facts and in circumstances of case, Tribunal was justified in law in. holding that penalty notice under Section 274 r.w.s. 271(l)(c) is had in law and. invalid in spite amendment of Section 271(1 B) with retrospective effect and by virtue of amendment, assessing officer has initiated penalty by properly recording satisfaction for same? (3) Whether on facts and in circumstances of case, Tribunal was justified in deciding appeals against Revenue on basis of notice issued, under Section 274without taking into consideration assessment order when assessing officer has specified that assessee has concealed particulars of income? 3. Tribunal has allowed appeal filed by assessee holding notice issued by Assessing Officer under Section 274 read with Section 271(1)(c) of Income Tax Act, 1961 (for short 'the 4 ITA No.252/CTK/2018 Act') to be bad in law as it did not specify which limb of Section 271(l)(c) of Act, 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 appeal of assessee, has relied 01 derision of Division Bench of this Court rendered In case of COMMISSIONER or INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. In our view, since matter is covered by judgment of Division Bench of this Court, we are of opinion, no substantial question of law arises in this appeal for determination by this Court, appeal is accordingly dismissed." 9. Bare perusal of notice issued u/s 274 r.w.s.271(1)(c) of Act apparently goes to prove that Assessing Officer initiated penalty proceedings by issuing notice u/s 274/271(1)(c) of Act without specifying assessee has concealed ''particulars of income" or assessee has furnished "inaccurate particulars of income", so as to provide adequate opportunity to assessee to explain show cause notice. Rather notice in this case has been issued in stereotyped manner without applying any mind which is bad in law, hence is not valid notice sufficient to impose penalty u/s 271(1)(c) of Act. 10. penalty provisions of section 271(1)(c) of Act are attracted where assessee has concealed particulars of income or furnished inaccurate particulars of such income. It is also well- accepted proposition that aforesaid two limbs of section 271(1)(c) of Act carry different meanings. Therefore, it was imperative for Assessing Officer to strike- off irrelevant limb so as to make assessee aware as to what is charge made against 5 ITA No.252/CTK/2018 him so that he can respond accordingly. Hon'ble Karnataka High Court in case of Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Kar) observed that levy of penalty has to be clear as to limb under which it is being levied. As per Hon'ble High Court, where Assessing Officer proposed to invoke first limb being concealment, then notice has to be appropriately marked. Hon'ble High Court held that standard proforma of notice under section 274 of Act without striking of irrelevant clauses would lead to inference of non-application of mind by Assessing Officer. Hon'ble Supreme Court in case of Dilip N. Shroff vs. JCIT, 291 ITR 519(SC) has also noticed that where Assessing Officer issues notice under section 274 of Act in standard proforma and inappropriate words are not deleted, same would postulate that Assessing Officer was not sure as to whether he was to proceed on basis that assessee had concealed particulars of his income or furnished inaccurate particulars of income. According to Hon'ble Supreme Court, in such situation, levy of penalty suffers from non- application of mind. In background of aforesaid legal position and, having regard to manner in which Assessing Officer has issued notice under section 274 r.w.s. 271(1)(c) of Act dated 28.02.2014 without striking off irrelevant words, penalty proceedings show non- application of mind by Assessing Officer and is, thus, unsustainable. 6 ITA No.252/CTK/2018 11. facts of present appeal are identical to facts of case before Hon'ble Supreme Court in case of SSA's. Emarld Meadows(supra) and, therefore, decision of Hon'ble Supreme Court squarely applies to case of assessee. Hence, respectfully following same, we set aside order passed by CIT(A) dated 25.04.2018 and cancel order of Assessing Officer dated 20.06.2017 levying penalty of Rs.1,27,406/- and allow grounds of appeal of assessee. 12. In result, appeal of assessee is allowed. Order pronounced in open court on 13/09/2019. Sd/- Sd/- (C.M.GARG) (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER Cuttack; Dated 13/09/2019 Prakash Kumar Mishra, Sr.P.S. /Copy of Order forwarded to 1. Appellant- . Shri Ranjan Kumar Sahu, Hata Road, Mandapsahi, Dhenkanal, Odisha-759001 2. Respondent- ITO, Dhenkanal Ward,Dhenkanal 3. CIT(A), 4. CIT 5. DR, ITAT, Cuttack 6. Guard file. True Copy BY ORDER, (Senior Private Secretary), ITAT, Cuttack Ranjan Kumar Sahu v. ITO, Dhenkanal Ward, Dhenkanal
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