Referred Sections: Section 271(1)(c) of the I.T. Act, 1961.
Referred Cases / Judgments: Pr. CIT vs. M/s. Sahara India Life Insurance Company Ltd., 2019 (8) TMI 409 (Del.) Sundaram Finance Ltd., vs. CIT [2018] 93 taxmann.com 250 CIT vs. M/s. SSAs Emerald Meadows 73 taxmann.com 241 (Kar.)
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "C": DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA.No.4747/Del./2016
Assessment Year 2009-2010
Hemla Embroidery Mills The DCIT,
Private Ltd., 14/6, vs., Circle-1,
Mathura Road, Faridabad.
PAN AAACH4302B Faridabad.
(Appellant) (Respondent)
For Assessee : Shri M.P. Rastogi, Advocate.
For Revenue : Shri S.S. Rana, CIT-D.R.
Date of Hearing : 03.10.2019
Date of Pronouncement : 04.10.2019
ORDER
PER BHAVNESH SAINI, J.M.
This appeal by Assessee has been directed against
the Order of the Ld. CIT(A), Faridabad, Dated 01.07.2016 for
the A.Y. 2009-2010, challenging the levy of penalty under
section 271(1)(c) of the I.T. Act, 1961.
2. We have heard the Learned Representatives of
both the parties.
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Mills P. Ltd., Faridabad.
3. The assessee has challenged the levy of penalty in
this case as well as raised additional ground of appeal
stating therein that notice issued before levy of the penalty
is bad in law and is vague and did not provide as to under
which limb of Section 271(1)(c) of the I.T. Act, penalty
proceedings have been initiated. Therefore, the entire
penalty order is illegal and void in law. Since it is a legal
issue, therefore, same is admitted for disposal of the appeal.
4. Learned Counsel for the Assessee referred to
show cause notice Dated 30.12.2011 issued before levy of
the penalty in which the A.O. has mentioned as under :
"Have concealed the particulars of your income or
furnished inaccurate particulars of such income."
4.1. He has, also referred to show cause notice Dated
13.02.2015 before levy of the penalty in which A.O. has
mentioned as under :
"In this regard it may be noted that hearing with respect
to imposition of penalty u/s 271(l)(c) in your case for the
assessment year 2009-10 is fixed for 23.02.2015 at
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ITA.No.4747/Del./2016 Hemla Embroidery
Mills P. Ltd., Faridabad.
11:30 A.M. It is requested that you may either attend or
submit a written reply to this office by the said date,
failing which it shall be presumed that you have nothing
to say in this matter and your case shall be decided on
merits. If you have already filed any reply, please file a
copy of the same."
4.2. He has, therefore, submitted that penalty is
illegal and bad in law and submitted that the issue is
covered by the Judgment of the Hon'ble Delhi High court in
the case of Pr. CIT vs. M/s. Sahara India Life Insurance
Company Ltd., 2019 (8) TMI 409 (Del.) vide Judgment Dated
02.08.2019 in paras 21 and 22 held as under :
"21. The Respondent had challenged the upholding of
the penalty imposed under Section 271(1) (c) of the Act,
which was accepted by the ITAT. It followed the decision
of the Karnataka High Court in CIT v. Manjunatha Cotton
& Ginning Factory 359 ITR 565 (Kar) and observed that
the notice issued by the AO would be bad in law if it did
not specify which limb of Section 271(1) (c) the penalty
proceedings had been initiated under i.e. whether for
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ITA.No.4747/Del./2016 Hemla Embroidery
Mills P. Ltd., Faridabad.
concealment of particulars of income or for furnishing of
inaccurate particulars of income. The Karnataka High
Court had followed the above judgment in the subsequent
order in Commissioner of Income Tax v. SSA's Emerald
Meadows (2016) 73 Taxman.com 241 (Kar), the appeal
against which was dismissed by the Supreme Court of
India in SLP No.11485 of 2016 by order dated 5th
August, 2016.
22. On this issue again this Court is unable to find
any error having been committed by the ITAT. No
substantial question of law arises."
5. The Ld. D.R. on the other hand, relied upon the
Orders of the authorities below and relied upon Judgment of
Hon'ble Madras High Court in the case of Sundaram
Finance Ltd., vs. CIT [2018] 93 taxmann.com 250 (Mad.)
and Judgment of Hon'ble Supreme Court in the case of
Sundaram Finance Ltd., vs. CIT [2018] 99 taxmann.com
152 (SC).
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ITA.No.4747/Del./2016 Hemla Embroidery
Mills P. Ltd., Faridabad.
6. We have considered the rival submissions. In this
case, the A.O. issued show cause notice for levy of penalty
in which A.O. has mentioned both the limbs of section
271(1)(c) of the Act that assessee has concealed the
particulars of income or furnished inaccurate particulars of
such income. The issue of the notice is bad in law as it did
not specify under which limb of Section 271(1)(c) of the I.T.
Act, penalty proceedings have been initiated whether for
concealment of particulars of income or furnishing of
inaccurate particulars of income. The issue is, therefore,
covered by Judgment of Hon'ble Karnataka High Court in
the case of CIT vs. M/s. SSAs Emerald Meadows 73
taxmann.com 241 (Kar.) and confirmed by the Hon'ble
Supreme Court reported in 73 taxmann.com 248 (SC).
Further, the Hon'ble Delhi High court in the case of Pr. CIT
vs. M/s. Sahara India Life Insurance Company Ltd., (supra)
decided the same issue in favour of the assessee. Following
the same, we are of the view that since notice is bad in law,
therefore, the entire penalty proceedings are vitiated and as
such no penalty is leviable against the assessee. We,
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ITA.No.4747/Del./2016 Hemla Embroidery
Mills P. Ltd., Faridabad.
accordingly, set aside the Orders of the authorities below
and cancel the penalty.
7. In the result, appeal of assessee allowed.
Order pronounced in the open Court.
Sd/- Sd/-
(PRASHANT MAHARISHI) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated 04th October, 2019
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT "C" Bench
6. Guard File
// BY Order //
Asst. Registrar : ITAT Delhi Benches :
Delhi.
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