Per Bench : These appeals are filed by the revenue against the orders of the Commissioner of Income Tax (Appeals) [CIT(A)]-12, Hyderabad dated 20.02.2018 and cross objections filed by the assessee for the Assessment Year (A.Y.) 2009-10, 2011-12 to 2013-14. Since the facts are identical, these appeals are clubbed, heard together and a common order is being passed for the sake of convenience as under.
I.T.A. No.169-172/Viz/2018, A.Y.2009-10, 2011-12 to 2013-14
2. All the grounds of appeal are related to the levy of penalty u/s 271(1)(c) of the Act. Since the facts are identical in all the appeals, the facts are extracted from the order pertaining to A.Y.2009-10. A search u/s 132 was conducted in the case of the assessee on 07.05.2014 and the assessments were completed u/s 143(3) r.w.s. 153A on total income as under for the impugned assessment years. A.Y. Total Income 2009-10 1,92,00,000 2011-12 7,31,64,876 2012-13 2,00,64,160 2013-14 6,19,68,644
I.T.A. No. 169-172/Viz/2018 & CO Nos.76-79/Viz/2018 A.Y.2009-10, 2011-12 to.2013-2014 M/s Siddhartha Academy of General & Technical Education, Vijayawada 2.1. The Assessing Officer (AO) has initiated the penalty u/s 271(1)(c) and completed the penalty proceedings imposing the penalty for the A.Y. 2009-10 and 2011-12 to 2013-14 as under : A.Y. Penalty (Rs.) 2009-10 65,26,080 2011-12 2,26,07,947 2012-13 60,47,385 2013-14 1,89,73,210
3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and submitted that the AO had issued printed Notice without striking the irrelevant columns leading to ambiguity and confusion for which act of the assessee, the AO sought for explanation whether it is for concealment of income or for furnishing of inaccurate particulars of income. Therefore, argued that the Notice issued by the AO was defective, hence the same required to be quashed. The Ld.CIT(A) verified the facts and considered the arguments of the Ld.AR and the decisions of Honble Supreme Court in the case of SSAs Emerald Meadows (2016) 73 taxmann.co 248 (SC), Honble High Court of Karnataka in the case of Manjunatha Cotton and Ginning Factory (2013) 359 ITA 565, Honble High
I.T.A. No. 169-172/Viz/2018 & CO Nos.76-79/Viz/2018 A.Y.2009-10, 2011-12 to.2013-2014 M/s Siddhartha Academy of General & Technical Education, Vijayawada Court of Andhra Pradesh & Telangana in the case of Chennakesava Pharmaceuticals Vs. CIT (2013) 30 taxmann.com 385 (AP) and CIT Vs. Baisetty Revathy 398 ITR 88 (TS & AP) and the decisions of this Tribunal in the case of Konchada Sree Ram Vs. ITO, Wd-1(1), Visakhapatnam and Smt. Makina Annapurna Vs. ITO, Visakhapatnam in ITA Nos. 604 & 605/Viz/2014 dated 02.02.2017 and held that the penalty proceedings are not validly initiated, accordingly cancelled the penalty and allowed the appeal of the assessee.
4. Against the order of the Ld.CIT(A), the revenue filed appeal before this Tribunal.
5. We have heard both the parties and perused the material placed on record. In the instant case, the AO initiated penalty by issue of defective notice without striking irrelevant columns in the notice in the preprinted proforma thus causing ambiguity to the assessee for which act of the assessee the AO sought explanation whether it is for concealment of income or for furnishing inaccurate particulars. It is settled issue by Honble High Court of Andhra Pradesh (supra) that the penalty proceedings initiated without indicating the specific charge is invalid. The Ld.CIT(A)
I.T.A. No. 169-172/Viz/2018 & CO Nos.76-79/Viz/2018 A.Y.2009-10, 2011-12 to.2013-2014 M/s Siddhartha Academy of General & Technical Education, Vijayawada considered the decision of jurisdictional High Court and the decision of this Tribunal and held that the initiation of penalty proceedings are invalid and accordingly cancelled the penalty. For the sake of clarity and convenience, we extract relevant part of the order of the Ld.CIT(A) which reads as under : From the show cause notice reproduced above, it is evident that the Assessing Officer has initiated penalty proceedings by issuance of a notice, without striking off the inappropriate portion of the notice. The notice does not indicate whether the proceedings are for concealment of income or for furnishing inaccurate particulars, and is therefore ambiguous. There is no indication as to which limb of the section of the penalty proceedings has been initiated, since the irrelevant limb has not been striked off. In fact, the wording 'concealed the particulars of your disclosed income' makes it even more ambiguous. Therefore, it is seen from the notice that the Assessing Officer has no clarity about the charge on which he/she wants to levy the penalty. 5.3. Further, a perusal of the assessment order dated 31-05-2016 shows that the AO has not recorded his satisfaction for the initiation of penalty proceedings in the assessment order also, and has merely stated that:- "Penalty proceedings u/s 271(1)(c) are initiated separately." Here again, the Assessing Officer has not specified as to which charge he is initiating penalty for, i.e., concealment of income or furnishing inaccurate particulars of income. 5.4. It is well settled now that levy of penalty without indicating specific charge or imposing penalty on both counts is invalid. The Hon'ble Supreme Court, in the case of SSA's Emerald Meadows [2016] 73 Taxmann.com 248 (SC), affirmed, while, dismissing the SLP, the order of the Hon'ble High Court of Karnataka in the case of (Manjunatha Cotton and Ginning Factory (2013) 359 ITA 565), wherein it was held that penalty proceedings are invalid if relevant limb/charge is not striked off. The decision of Hon'ble High Court of Andhra Pradesh & Telangana in the case of Chennakesava Pharmaceuticals v. CIT [2013] 30 taxmann.com 385 (AP) was followed by Hon'ble ITAT in various cases including that of Smt P Sharada Devi Hyderabad in ITA
I.T.A. No. 169-172/Viz/2018 & CO Nos.76-79/Viz/2018 A.Y.2009-10, 2011-12 to.2013-2014 M/s Siddhartha Academy of General & Technical Education, Vijayawada No.1571/Hyd/2016 order dated 25-09-2017, wherein it is laid down that recording of satisfaction by the Assessing Officer in the order is pre-requisite for initiation of penalty proceedings and also that non-scoring out of the inapplicable portion in the show cause notice also make the initiation of penalty bad in law. The Honble High Court of Telangana and AP in the case of CIT Vs. Ms. Baisetty Revathy 398 ITR 88 (TS &AP)held that :- On principle, when penalty proceedings are sought to be initiated by the revenue under Section 271(1)(c) of the Act, 1961, the specific ground which forms the foundation thereof has to be spelt out in clear terms. Otherwise, an assessee would not have proper opportunity to put forth his defense. When the proceedings are penal in nature resulting in imposition of penalty ranging from 100% to 300% of the tax liability, the charge must be unequivocal and unambiguous. When the charge is either concealment of particulars of income or furnishing of inaccurate particulars thereof, the revenue must specify as to which one of the two is sought to be present into service and cannot be permitted to club both by interjection an or between the two, as in the present case. The ambiguity in the show cause notice is further compounded presently by the confused finding of the Assessing Officer that he was satisfied that the assessee was guilty of both. We are therefore of the opinion that the order under appeal does not brook interference on any ground. We find no question of law, much less a substantial one, arising for consideration warranting admission of this appeal The jurisdictional tribunal ITAT, Visakhapatnam, by following the decision of the jurisdictional High Court mentioned supra decided very recently the cases of Konchada Sree Ram Vs ITO, W-1(1), Visakhapatnam, Smt.Makina Annapurna Vs. ITO. Visakhapatnam in ITA Nos.604 & 605/Vizag/2014 dated 02-02-2017. These judgements are squarely applicable to the case at hand, in view of the factual position, as discussed in paras 5.2 & 5.3 above. Therefore, respectfully following the judgements of the various courts, including those of the Honble Jurisdictional High Court and Hon'ble Jurisdictional ITAT, which are discussed above, it is held that the penalty proceedings are not validly initiated. Accordingly, the penalty levied is cancelled. Hence, the appellant succeeds on this ground, and the other grounds raised by the appellant are not adjudicated separately. 5.1. There is no dispute that in the instant case, the AO had initiated the penalty without striking irrelevant columns and created ambiguity with
I.T.A. No. 169-172/Viz/2018 & CO Nos.76-79/Viz/2018 A.Y.2009-10, 2011-12 to.2013-2014 M/s Siddhartha Academy of General & Technical Education, Vijayawada regard to which act of the assessee, penalty was initiated whether for concealment of income or for furnishing inaccurate particulars. The case laws relied upon by the Ld.CIT(A) are squarely covered in favour of the assessee and against the revenue. Since the Ld.CIT(A) has cancelled the penalty following the decision of Honble jurisdictional High Court and the decision of this Tribunal, we find no reason to interfere with the order of the Ld.CIT(A). Accordingly, appeals filed by the revenue are dismissed.
6. The assessee filed cross objections supporting the order of the Ld.CIT(A). Since the appeals of the revenue are dismissed, the cross objections of the assessee becomes infructuous hence dismissed. In the result, appeals of the revenue as well as the cross objections of the assessee are dismissed.
7. In the result,
(i) Appeals of the revenue in I.T.A Nos. 169-172/Viz/2018 for the A.Ys.2009-10, 2011-12 to 2013-14 are dismissed.
(ii) Cross Objections of the assessee in CO Nos. 76-79/Viz/2018 for the A.Ys.2009-10, 2011-12 to 2013-14 are dismissed.
I.T.A. No. 169-172/Viz/2018 & CO Nos.76-79/Viz/2018 A.Y.2009-10, 2011-12 to.2013-2014 M/s Siddhartha Academy of General & Technical Education, Vijayawada Order pronounced in the open court on 17th Jul 2019. Sd/- Sd/- (.. ) (. ) (D.S. SUNDER SINGH) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER /Visakhapatnam /Dated : 17.07.2019
L.Rama, SPS /Copy of the order forwarded to:-
1. / The Assessee- M/s Siddhartha Academy of General & Technical Education, Plot No.1, Siddhartha Nagar, Vijayawada
2. /The Revenue Dy.Commissioner of Income Tax, Central Circle, Vijayawada
3. The Pr.Commissioner of Income Tax (Central), Visakhapatnam
4. The Commissioner of Income Tax (Appeals)-12, Hyderabad
5. , , /DR, ITAT, Visakhapatnam
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