TaxTMI 
TaxTMI 
2019 (8) TMI 989
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....1,474/- u/s. 94(7) of the I.T. Act though the computation of income has promptly been revised during assessment proceedings before any detection of the same by the AO. iii) That the appellant craves the right to add or amend or withdraw any ground of appeal at or before the time of hearing of appeal. 3. Assessee has also filed the additional ground of appeal under Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 in the present appeal and raised the ground no. 4 as additional ground of appeal and stated that the issue raised by the assessee in the said additional ground of appeal involved the question of law and hence, the same may be admitted in view of the judgment of the Hon'ble Supreme Court of India in the case of NTPC Ltd. 229 ITR 383 (SC). For the sake of convenience, the legal ground raised by the assessee as ground no. 4 is reproduced as under:- "Ground No. 4 That the Ld. CIT(A) ought to have held that the Notice, Proceedings and Order imposing penalty u/s. 271(1)(c) are bad in law being contrary to facts, principles of natural justice, provisions of law and judgments of courts in India." 4. The brief facts relating to the issue in....
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.... the assesee was issued notice u/s. 142(1) of the Act on 7.12.2017 to furnish the details of all dividend/ bonus earned by the assessee in a specified format which the AO has reproduced in the assessment order at page no. 2. 4.3 In response to the notice dated 7.12.2017 the AR of the assessee appeared and furnished all the details as filed in the original return of income and claimed Long Term Capital Gain. Again the AO asked to furnish the detail of dividend /bonus in the requisite format and in response to the same the AR of the assessee attended the hearing on 15.12.2017 and furnished the details vide letter dated 15.12.2017 which the AO has reproduced in para no. 4.2 at page no. 2 & 3 of the assessment order. On examination of the details filed by the assessee in the prescribed format given by the AO with the notice u/s. 142(1) of the Act dated 7.12.2017, the AO was of the view that the share were accrued within the period of three months prior to record date and sold the securities within 3 months of the record date. Thus the loss of Rs. 1,98,51,874/- is liable to be ignored according to the provisions of section 94(7) of the I.T. Act. However, the AR of the assessee in ....
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....een "concealed". He draw our attention towards Circular No. 204 dated 24.07.1976 para 61.8 which provides that "New Explanation 1 which provides that where in respect of any facts material the computation of his total income, an assessee fails to offer an explanation or is unable to substantiate an explanation offered by him or offers an explanation which is found to be false, the amount added or disallowed in computing the total income of such person as a result thereof will be treated as his concealed income". He further stated that Circular No. 204 dated 24.6.1976 is legally binding on the revenue and this legal binding character attaches to the circular even if they are found not accordance with the correct interpretation of the section. In support of this contention he cited the decision in the case of UCO Bank 104 Taxmann 547 (SC). He further stated that in view of the judgment of the Hon'ble Supreme Court of India in the case of T Ashok Pai 292 ITR 11 (SC) it has been observed that "concealment of income and furnishing inaccurate particulars of income carry different connotation". He further stated that as per the ratio of Nepa Limited 58 Taxmann.com 137 (Indore) it has been....
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....ome earned by the assessee in a specified format. In compliance of the same on 13.12.2017 Ld. Counsel for the assessee appeared and took adjournment for 15.12.2017 and examined all details of dividend / bonus income and found that there is an inadvertent clerical error committed by the Chartered Accountant and on the advice of Senior Chartered Accountant, the assessee filed voluntary revised computation of income wherein a Long Term Capital Gain (LTCG) of Rs. 14353921 has been increased to Rs. 34205795 due to the disallowance of Rs. 19851974 u/s. 94(7) of the Act at the first opportunity as soon as it came to the notice of the assesee. Assessee has committed this mistake of furnishing of inaccurate particulars in the return due to the inadvertent bonafide offer cited in the claim due to the one entry by the accounts staff posted at wrong date due to huge voluminous transactions and dividend coupons for dividend from same security punched at one voucher i.e. entry of two dividend received on same security (Rs. 1,98,51,874/- received on 28.1.2015 and Rs. 3,38,62,717/- received on 25.3.2015 made cumulatively on 26.3.2015 i.e. date of sale of investments (26.3.2015) and receipt date of....
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.... 2. Sundaram Finance Ltd. Vs CIT [2018] 93 taxmann.com 250 (Madras)/[2018] 403 ITR 407 (Madras) Where Hon'ble Madras High Court held that where notice did not show nature of default, it was a question of fact. The assessee had understood purport and import of notice, and hence, no prejudice was caused to the assessee. It considered decision of Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250 (Kar.). Relevant part of the order is reproduced below: "15. Before us, the assessee seeks to contend that the notices issued under Section 274 r/w. Section 271 of the Act are vitiated since it did not specifically state the grounds mentioned in Section 271(l)(c) of the Act. 16. We have perused the notices and we find that the relevant columns have been marked, more particularly, when the case against the assessee is that they have concealed particulars of income and furnished inaccurate particulars of income. Therefore, the contention raised by the assessee is liable to be rejected on facts. That apart, this issue can never be a question of law in the assessee's case, as it i....
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....ices were ambiguous and defeated very purpose of giving reasonable opportunity of hearing as contemplated under section 274 and two orders of ITO were without jurisdiction. It was held that mere mistake in language used or mere non-striking off of inaccurate portion cannot by itself invalidate notice under section 274. Penalty orders passed by ITO for assessment years 1968-69 to 1969-70 were perfectly valid and there was no justification for quashing same on ground of absence of jurisdiction. 4. Trimurti Engineering Works Vs ITO [2012] 25 taxmann.com 363 (Delhi)/[2012] 138 ITD 189 (Delhi)/[2012] 150 TTJ 195 (Delhi) where Hon'ble IT AT Delhi held that it was apparent from combined reading of notice and assessment order that impugned notice had been issued in respect of concealment of particulars of income. Relevant part of the order is reproduced below: "5.2 It is also submitted that the notice is vague. We have already seen that in the notice one of the alternatives, i.e., concealment of particulars of income or furnishing of inaccurate particulars of income has not struck off. In the case af Gujarat Credit Corpn. Ltd. v. Asstt. CIT [2008J 11....
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....osed sources. All these observations made by the AO show that it was his case that particulars of income have been concealed. It is not a case * where any disallowance has been made but a case where the assessee was found in possession of certain unaccounted money which was utilized in the course of business without paying tax thereon. Therefore, when we see the notice and the contents of assessment order, it is clear that the notice was issued for concealing particulars of income. The notice is not a stand alone document. It is based on the assessment order. Without finding regarding one or the other charge, the notice cannot be issued. However, if two are read together, it is clear that the notice has been issued in respect of concealment of particulars of income. In view of these observations, it is held that the notice is not vague." 5. Hybrid Rice International Pvt.Ltd. Vs elT (ITA no. 285/De1/2007) where Hon'ble ITAT Delhi held that it was apparent from combined reading of notice and assessment order that impugned notice had been issued in respect of concealment of particulars of income. Relevant part of the order is reproduced below: 6....
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....the proceedings pending before the Assessing Officer. (iv) The order imposing penalty can be passed only after assessment proceedings are completed. The time frame for passing the order is contained in Section 275 of the Act. To summarize: the Supreme Court held that the satisfaction which the Assessing Officer was required to arrive at during the course of assessment proceedings for initiation of penalty proceedings was prima facie in nature as against a final conclusion that the assessee had committed an act of omission or commission which would bring him within the ambit of the provisions of clause (c) of subsection (1) of Section 271. The notice under Section 274 was to follow. What was important was that satisfaction had to be arrived at during the course of assessment proceedings and not issuance of notice under Section 274 of the Act. (See D.M. Manasvi (1972) 86 ITR 557 and and S. V. AngidiChettiar (1962) 44 ITR 739. A bare reading of the aforesaid extract from Rampur Engineering (supra) would show that the Full Bench: (i) applied the law, as it ought to, as declared in D.M. Manasvi (supra) and S. V. AngidiChettiar (supra)WP(C) No. 5059-20....
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....s v. Union of India (1970) 77 ITR 107(SC)] (vi) Due compliance would be required to be made in respect of the provisions of Section 274 and 275 of the Act. (vii) the proceedings for initiation of penalty proceeding cannot be set aside only on the ground that the assessment order states penalty proceedings are initiated separately' if otherwise, it conforms to the parameters set out hereinabove are met." 6.8. Applying the propositions laid down to the facts of the case, we are of the considered opinion that the penalty proceedings were rightly initiated in this case and that the penalty was rightly confirmed by the Ld.ClT(A). 6. Earthmoving Equipment Service Corporation Vs DCIT [2017] 84 taxmann.com 51 (Mumbai- Trib.)/[2017] 166 ITD 113 (Mumbai - Trib.)/[2017] 187 TT J 233 (Mumbai - Trib.) where Hon'ble ITAT Mumbai held as follows: "6. We have heard the rival contentions and perused the relevant material on record including cited case laws. So far as the legal grounds are concerned, a perusal of quantum order reveals that the penalty was initiated for furnishing of inaccurate particulars and finally the same was levied on the same....
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....re Hon'ble ITAT Mumbai held as follows: 13. The Id. A.R further to support his contention that because of the failure on the part of the A.O to strike off the irrelevant default in the body of the 'SCN', the assessee had remained divested of any opportunity of putting forth its case before the A.O that no penalty under the aforesaid statutory provision was liable to be imposed in his hands, relied upon the following judicial pronouncements:- (I) CIT v. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Kar.) (ii) Dilip N. Shroffv. JCIT (2007) 291 ITR 519 (SC) (iil) Commissioner of Income-tax v. Samson Pernchery (2017) 98 CCH 0039 (Bom.). (iv) CIT v. SSA's Emerald Meadows 73 Taxman.com 241 (Kar.) (v) SSA's Emerald Meadows v. CIT 242 Taxman 180 (SC) Per contra, the Id. D.R submitted that the contentions advanced by the Id. A.R as regards the validity of the penalty proceedings not being maintainable, thus may not be admitted. The Id. D.R submitted that though the assessee was at a liberty to raise an objection, but however, the same had to be strictly confined as per Rule 27 of the Appellate Tribu....
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....ackdrop of the aforesaid judgment of the Hon'ble High Court of Jurisdiction, allowing the assessee respondent to proceed with his objection which was for the very first time orally raised during the course of hearing of the appeal before us, undoubtedly would be nothing short of proceeding with the hearing of the appeal, without affording an opportunity of being heard to the appellant revenue in context of the issue under consideration. 8. Dhanraj Mills Pvt. ltd. Vs ACIT ITA NOs.3830 & 3833/Mum/2009 Where Hon'ble ITAT held as follows: "2.16. We have considered the rival contention and gone through the various decisions relied by them. We have also gone through the order of penalty passed by Assessing Officer and the order passed by Ld. Commissioner of Income Tax (Appeal). We are conscious that any of the party may raise legal issue at this stage, if the same can be emanated from the record of the case. The Hon'ble jurisdictional High Court in ClT Vs Smt. Kaushalya (supra) while dealing with the similar ground about the limb of charge, whether mere mistake in language used or mere not striking off of inaccurate portion cannot by itself invalida....
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....fore the Hon'ble Apex Court and the same was dismissed vide SLP (CC No. 11485/2016) on 05/08/2016. There is no dispute to the settled proposition of law that dismissal of the Special Leave Petition in limineby Hon'ble Apex Court does not mean that the reasoning of the judgment of the High Court against which the Special Leave Petition has been filed before this Court stands affirmed or the judgment and order impugned merges with such order of this Court on dismissal of the petition. It simply means that Apex Court did not consider the case for worth examining for the reason, which may be other than merit of the case. Nor such an order of Apex Court operates as res-judicata. An order rejecting the Special Leave Petition at the threshold without detailed reasons therefore does not constitute any declaration of law or a binding precedent. And the similar view was expressed in various judgments, viz, A. The Workmen of Cochin Port Trust Vs The Board of Trustees of the Cochiti Port Trust &Anr AIR 1978 SC 1283; B. Ahmedabad Manufacturing & Calico Printing Co Ltd Vs The Workmen &Anr AIR 1981 SC 960; C. Indian Oil Corporation Ltd. Vs. State of Bihar &Ors. ....
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....e capable of reversing, modifying or affirming the order put in issue before it. Under Article 136 of the Constitution the Supreme Court may reverse, modify or affirm the judgment-decree or order appealed against while exercising its appellate jurisdiction and not while exercising the discretionary jurisdiction disposing of petition for special leave to appeal. The doctrine of merger can therefore be applied to the former and not to the latter. (iv) An order refusing special leave to appeal may be a nonspeaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed. (v) If the order refusing leave to appeal is a speaking order, i.e., gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of....
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....illful concealment is not an essential ingredient for attracting the civil liability as is the case in the matter of proceedings under section 276C 2. CIT Vs Zoom Communication (P.) Ltd. [191 Taxman 179 (Delhi)/[2010] 327 ITR 510 (Delhi)/[2010] 233 CTR 465] 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 3. MAK Data P. Ltd vs. cn [38 taxmann.com 448 (SC)/[2013] 358 ITR 593 (SC)/[2013] 263 CTR 1] Where Hon'ble Supreme Court held that Under Explanation 1 to s. 271 (1 )(c), voluntary disclosure of concealed income does not absolve assessee of s. 271 (1 )(c) penalty if the assessee fails to offer an explanation which is bona fide and proves that all the material facts have been disclosed "9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AD i....
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.... ITR 467] CIT vs India Seafood [105 ITR 708] where Hon'ble Kerala High Court held that Claiming excessive deduction also amounts to concealment of income. 7. Steel Ingots Ltd vs. CIT [296 ITR 228] /. where Hon'ble Madhya Pradesh High Court held that in case of concealment of true income chargeable to tax by making bogus claim, levy of penalty u/s 271 (1)(c) read with Explanation 1 is justified. 8. CIT Vs Escorts Finance Ltd [183 Taxman 453 (Delhi)/[2010] 328 ITR 44 (Delhi)/[2009] 226 CTR 105] where Hon'ble Delhi High Court held that if claim made in return of income appears to be ex facie bogus, it would be treated as a case of concealment or furnishing of inaccurate particulars and penalty proceeding would be justified. 9. CIT Vs R.M.P. Plasto (P.) Ltd [184 Taxman 372 (SC)/[2009] 313 ITR 397 (SC)/[2009] 227 CTR 635] where Hon'ble Supreme Court held that Confirmed penalty upon assessee for concealment of income under section 271 (1 )(c) because positive income of assessee was reduced to nil after allowing set-off of carried forward losses of earlier years. 10. K.P. Madhusudhanan VsCIT [[2001] 118 Taxman ....
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....lly asked 10 furnish the details of dividend/bonus in the required format. Had the case not been selected for scrutiny, the assessee would have gotten away with this wrongful claim and tax would have been evaded. Therefore, having regard to the nature of disallowance as discussed above, I am satisfied that the assessee has furnished inaccurate particulars of such income, and hence, rendering itself liable for initiation of penal proceedings under section 271(1)(c), read with section 274 o[the IT Act, 1961.The same is being initiated separately. " (Emphasis supplied) The penalty has been imposed subsequently by the AO also "(or furnishing of inaccurate particulars ofincome within the meaning o[the provisions of clause (c) of sub-section (1) of section 271 of the Act." (emphasis supplied) The assessee has now taken an additional ground of appeal before the Hori'ble ITAT which had not been taken by it at any time either before the AO during the penalty proceedings, nor before the Ld. CIT(A) during the first appellate proceedings and was also not part of the grounds of appeal before the Hon'ble ITAT. The said ground reads as follows: ....
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....proceedings. The said issue did not even remotely emanate from the assessment proceedings or the penalty proceedings as there was not a single mention by the assessee of the said issue or any facet of it before the Assessing Officer. Under these circumstances, the ground itself does not deserve to be admitted and adjudicated upon by the Hon'ble Bench. 3.) Even otherwise, this is a general ground and does not in any terms whatsoever specify the particular relief that the assessee is asking for. It would only be presumptious to assume that anyone reading the said ground could reasonable infer with any degree of certainty as to what is being asked of the Hon 'ble Bench. Coming to the merits of the matter, the following submissions may kindly be considered by the Hon'ble Bench: In the relevant case law submission being made alongside to the Hon'ble Bench. A perusal of these case laws and several others on the issue of correct limb, etc, there is one fundamental issue that determines the validity of the penalty proceedings - the fundamental issue is that whether the assessee has understood the charge against it so as to properly defend itself f....
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....entioned (I)(B) of the section, which if the entire notice is perused in its totality, does not at all take away from the fact that the penalty was being sought to be imposed for furnishing inaccurate particulars of income. This is clear from the contents of the notice wherein the AO says" ...the undersigned gives fresh opportunity to the assessee to show cause as to why penalty uls 271(1)(c) of the IT Act, 1961 may not be imposed upon the assessee for furnishing inaccurate particulars of income." A bare perusal of the above shows that it is not possible at all that any assessee could have been left in any doubt as regards the nature of the charge upon a reading of the assessment order and the penalty notice together, both of have been available with the assessee at all stages of the proceedings before the AO as well as the CIT(A). How unwarranted and baseless is the claim of the assessee as regards this additional ground is proven beyond doubt on a bare perusal of the reply dated 31.01.2018 of the assessee itself [Page 38 of PB filed by the assessee]which was filed in response to the penalty notice in which the assessee is attempting to create holes in. ....
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....lore Bench ofITAT in the case of P.M. Abdulla vs ITO (in ITA Nos. 1223 & 1224/Bangalore/2012 dated 17.10.2016) had held that this cannot be a valid reason for deleting the penalty u/s271 (I )(c). The above submissions, along with submission of applicable case laws on both validity of notice as well as merits of the case may kindly be considered and made part of the order so that the facts and law points find complete expression in the matter." 7. We have heard both the counsel and perused the relevant records especially the orders passed by the Revenue authorities as well as the Paper Books filed by both the parties and the case laws relied by them therein. On the merits of the case, we find that assessee filed its return Income of Rs. 35,29,470/- with income from investments i.e. dividends, capital gains and interest and AO taken the return for scrutiny u/s. 143(2) of the Act under CASS and no income escaping based on the information on section 94(7) of the Act disallowance on information based on AIR. We further note that AO has issued various notices u/s 143(2)/142(1) of the Act, but has not made any enquiry for the disallowance in the case of the assessee u/s. 94(7)....
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....cuments submitted by the assessee were neither rejected by the AO as false or incorrect facts nor AO had clinched any further evidence for furnishing of inaccurate particulars of income. We also find that section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. On the facts and circumstances of this case the assessee's conduct cannot be said to be contumacious so as to warrant levy of penalty. 7.2 In this regard, we find that assessee's counsel reliance from the Hon'ble Apex Court decision in the case of CIT vs. Reliance Petro Products Ltd. in Civil Appeal No. 2463 of 2010 is squarely applicable in the present case of the assessee. In this case vide order dated 17.3.2010 it has been held that the law laid down in the Dilip Sheroff case 291 ITR 519 (SC) as to the meaning of word 'concealment' and 'inaccurate' continues to be a good law because what was overruled in the Dharmender Textile case was only that part in Dilip Sheroff case where it was held that mensrea was a essential requirement of penalty u/s 271(1)(c). The Hon'ble Apex Court also observed that if the contention of the revenue is accepted then in case of e....