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Hemla Embroidery Mills Private Ltd., 14/6, Mathura Road, Faridabad. Vs. The DCIT, Circle-1, Faridabad.
October, 04th 2019

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.
                                 2
                                 ITA.No.4747/Del./2016 Hemla Embroidery
                                                  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
                                3
                                 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
                                4
                                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).
                              5
                              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,
                              6
                               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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