Case Law Details
Alcatel-Lucent India Ltd. v. ACIT ( ITAT Delhi)
Notice issued by the assessing officer under section 271(1)(c) read with section 274 of the Act is bad in law as it does not specify which limb of section 271(1)© of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. Therefore, the penalty in dispute is not sustainable in the eyes of law.
FULL TEXT OF THE ITAT JUDGMENT
This appeal by the Assessee is directed against the Order of the learned Commissioner (Appeals)-IV, New Delhi dated 15-5-2014 pertaining to assessment year 2003-04.
2. The assessee has raised so many grounds, but the only effective ground is sustaining the order imposing penalty under section 271(1)© of the Act amounting to Rs. 1,22,00,000. However, the assessee has filed an Application dated 24-4-2018 seeking permission to raise 03 additional grounds, in view of the judgment of the Hon’ble Supreme Court of India in the case of NTPC v. CIT (1998) 229 ITR 383 (SC) and the decision in the case of M/s Jute Corporation of India Ltd. v. CIT (1991) 187 ITR 688 (SC). But learned Counsel of the assessee has only argued the following legal additional ground :–
“That the penalty has been initiated vide notice under section 271(1)©/274 of the Act without any specific charge, hence, the said notice and the order passed under section 271(1)© of the Act are illegal, bad in law and without jurisdiction.”
3. On the contrary, learned. DR relied upon the orders of the authorities below and has tried to justify the action of the assessing officer in imposing the penalty in dispute. However, he opposed to admit the additional ground.
4. We have heard both the parties and perused the records. On the admission of additional ground, we find that the additional ground raised by the assessee is legal in nature and is squarely covered by the various decisions of the Coordinate Benches of the ITAT as well as decision of the Hon’ble Delhi High Court, hence, we are of the considered view that on the anvil of the decision of the Hon’ble Supreme Court of India in the case of NTPC Ltd. (1998) 229 ITR 383 (SC) (Supra), the additional ground raised by the assessee is purely legal ground and do not require fresh facts which is to be investigated and goes to the root of the matter. In the interest of justice, we admit the aforesaid additional ground raised by the assessee, in view of the case law of NTPC Limited (Supra) and proceed to decide the legal additional ground.
5. Facts narrated by the revenue authorities are not disputed by both the parties, hence, the same are not repeated here for the sake of brevity.
6. At the time of hearing, learned Counsel of the assessee has stated that no specific allegation as to the concealment of particulars of income or furnishing of inaccurate particulars has been levied by the assessing officer in the notice dated 23-3-2006 issued by him under section 271(1)© of the Act has been filed during the hearing which clearly shows that the same is the standard format of the notice and assessing officer has just ticked on the option of concealment of income or furnishing inaccurate particulars of such income. He further stated that the penalty imposed is liable to be quashed on legal ground as the issue is squarely covered by the following decisions :–
– ITAT, Delhi decision in the case of ABR Auto (P) Ltd. v. ACIT [ITA No. 6236/Del/2015, dt. 4-12-2017].
– ITAT, ‘A’ Bench, New Delhi decision dated 5-12-2017 in the case of Ashok Kumar Chordia v. DCIT passed in ITA No. 5788 to 5790/Del/2014.
– Hon’ble Karnataka High Court decision in the case of CIT & Ors. v. Manjunatha Cotton and Ginnig Factory & Ors. (2013) 359 ITR 565.
– Apex Court decision in the case of CIT & Anr. v. M/s SSA’s Emerald Meadows in CC No. 11485/2016, dt. 5-8-2016].
7. On the contrary, learned. DR relied upon the orders of the authorities below.
8. We have heard both the parties and perused the relevant records, especially the orders of the revenue authorities alongwith the provisions of law as well as the case law cited by the learned Counsel of the assessee. We have also perused the Notice dated 22-3-2006 issued by the assessing officer for initiation of penalty and directing the assessee to appear before him. For the sake of convenience, some of the contents of the penalty Notice dated 22-3-2006 are reproduced as under :–
“…..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.
You are hereby required to appear before me at 10.30 AM/PM on 27-4-2006 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity to being heard in person or through authorized representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271.”
8.1 After perusing the aforesaid contents of the Notice dated 22-3-2006, we are of the view that the assessing officer has initiated the penalty for concealment of particulars of income or furnishing of inaccurate particulars, which is contrary to the provisions of law. We are of the view that notice issued by the assessing officer under section 271(1)© read with section 274 of the Act is bad in law as it does not specify which limb of section 271(1)© of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. Therefore, the penalty in dispute is not sustainable in the eyes of law. Our aforesaid view is supported by the following decisions :–
(i) “CIT & Anr. v. M/s SSA’s Emerald Meadows [I.T.A. No. 380 of 2015, dt. 23-11-2015] has held that Tribunal has correctly allowed the appeal filed by the assessee holding the notice issued by the assessing officer under section 274 read with section 271(1)(c) to be bad in law as it did not specify which limb of section 271(1)© 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 Commissioner of Income Tax v. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565. Thus 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 – decided in favour of assessee.”
(ii) CIT & Anr. v. M/s SSA’s Emerald Meadows [Special Leave to Appeal (C)……/2016 (CC No.11485/2016), dt. 5-8-2016]. The Apex Court held that High Court order confirmed [I.T.A. No. 380 of 2015, dt. 23-11-2015](Supra) – Karnataka High Court. Notice issued by assessing officer under section 274 read with section 271(1)(c) to be bad in law as it did not specify which limb of section 271(1)© 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 – Decided in favour of assessee.”
(iii) ITAT, ‘A’ Bench, New Delhi decision dated 5-12-2017 in the case of Ashok Kumar Chordia v. DCIT in ITA No. 5788 to 5790/Del/2014 wherein the Tribunal has observed as under :–
“7. We have heard both the parties and perused the orders passed by the Revenue Authorities alongwith the relevant records available with us. Firstly, we have perused the Notice dated 26-3-2013 issued by the assessing officer for initiating the penalty and directing the assessee to appear before him at 11.30 AM on 26-4-2013 and issued a Show Cause to the assessee stating therein that “…..you have concealed the particulars of your income or furnished inaccurate particulars of such income…”. After perusing the notice dated 26-3-2013 issued by the assessing officer to the assessee, we are of the view that the assessing officer has initiated the penalty for furnishing inaccurate particulars of income or concealment of income as well as in the penalty order dated 30-9-2013 assessing officer has stated that he is satisfied that the assessee has concealed particulars of his income, which is contrary to law. In view of above, the penalty is not sustainable in the eyes of law. Our aforesaid view is fortified by the following decisions :–
(i) “CIT & Anr. v. M/s SSA’s Emerald Meadows [I.T.A. No. 380 of 2015, dt. 23-11-2015] has held that Tribunal has correctly allowed the appeal filed by the assessee holding the notice issued by the assessing officer under section 274 read with section 271(1)(c) to be bad in law as it did not specify which limb of section 271(1)© 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 Commissioner of Income Tax v. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565. Thus 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 – decided in favour of assessee.”
(ii) CIT & Anr. v. M/s SSA’s Emerald Meadows [Special Leave to Appeal (C)……/2016 (CC No.11485/2016), dt. 5-8-2016]. The Apex Court held that High Court order confirmed [I.T.A. No. 380 of 2015, dt. 23-11-2015] (Supra) – Karnataka High Court. Notice issued by assessing officer under section 274 read with section 271(1)(c) to be bad in law as it did not specify which limb of section 271(1)© 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 – Decided in favour of assessee.”
8. In the background of the aforesaid discussions and respectfully following the precedents, we delete the penalty in dispute and decide the issue in favor of the assessee and against the Revenue.”
(iv) ITAT, ‘D’ Bench, New Delhi decision dated 26-5-2017 in the case of Rajender Jain v. ACIT passed in ITA No. 6804/Del/2013wherein the Tribunal has observed as under :–
“7. We have heard both the parties and perused the orders passed by the Revenue Authorities alongwith the relevant records available with us. Firstly, we have perused the assessment order wherein the assessing officer has recorded his satisfaction on the page 2, 2nd para viz. “I am satisfied that it is a fit case for initiation of penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income/concealment of income.” We have also perused the notice dated 31-12-2007 issued by the assessing officer for initiating the penalty and directing the assessee to appear before him at ———AM/PM on ——–200—— and issued a Show Cause to the assessee stating therein that why an order imposing the penalty of amount should not be made under section 271(1)(c) of the Income Tax Act, 1961. After perusing the notice dated 31-12-2007 issued by the assessing officer to the assessee, we are of the view that the assessing officer has initiated the penalty for furnishing inaccurate particulars of income/concealment of income, but in the penalty order dated 6-11-2009 he has stated that he is satisfied that the assessee has furnished the inaccurate particulars of income.
7.1 However, the learned Commissioner (Appeals) has given clear finding regarding the furnishing of inaccurate particulars. For the sake of convenience, the relevant Para No. 5.3.1 of the impugned order passed by the learned Commissioner (Appeals) is reproduced as under :–
“5.3.1 The above findings of the learned Commissioner (Appeals) clearly establishes that the appellant has concealed the income of Rs. 26,50,500 and did not declare in the return of income inspite of admitting a disclosure of Rs. 40,00,000 during survey. Thus, the appellant has furnished inaccurate particulars of his income. The facts of the case clearly reveal that the appellant tried to evade payment of taxes by furnishing inaccurate particulars of income. Therefore, I hold that the assessing officer was fully justified in levying the penalty under section 271(1)(c) of the Act. The penalty levied by the assessing officer is upheld. This ground of appeal is rejected.”
8. Keeping in view of the aforesaid finding of the learned Commissioner (Appeals), we are of the considered view that the assessing officer has passed the assessment order wherein the assessing officer has recorded his satisfaction on the page 2, 2nd para viz. “I am satisfied that it is a fit case for initiation of penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income/concealment of income.” Further the assessing officer vide his Notice dated 31-12-2007 for initiating the penalty and directed the assessee to appear before him at ———AM/PM on —- —-200—— and issued a Show Cause to the assessee stating therein that why an order imposing the penalty of amount should not be made under section 271(1)(c) of the Income Tax Act, 1961. After perusing the notice dated 31-12-2007 issued by the assessing officer to the assessee, we are of the view that the assessing officer has initiated the penalty for furnishing inaccurate particulars of income/concealment of income, but in the penalty order dated 6-11-2009 he has stated that he is satisfied that the assessee has furnished the inaccurate particulars of income. In our view the penalty in dispute is not sustainable in the eyes of law, because the assessing officer has not recorded any clear finding whether the assessee was guilty of concealment of income or furnishing of inaccurate particulars of income. Secondly, the notice under section 271(1)(c) has been issued to the assessee levying the penalty for furnishing of inaccurate particulars of income/concealment of income, whereas the penalty in dispute has been levied by the assessing officer on account of furnishing of inaccurate particulars. In our view the penalty is not sustainable in the eyes of law. Our aforesaid view is fortified by the following decisions :–
8.1 In the background of the aforesaid discussions and respectfully following the precedents, we delete the penalty in dispute and decide the issue in favor of the assessee and against the Revenue.”
9. Keeping in view of the aforesaid discussions and respectfully following the aforesaid precedents, we cancel the penalty in dispute by respectfully following the aforesaid decisions and allow the additional ground raised by the assessee. Since the penalty has been cancelled, the other grounds have become academic and need not be adjudicated.
10. In the result, the appeal filed by the assessee stands allowed.
