Calcutta High Court
Principal Commissioner Of Income Tax-5 vs Virendra Kumar Surana on 6 November, 2024
Author: T.S. Sivagnanam
Bench: T.S Sivagnanam, Hiranmay Bhattacharyya
1
OD27
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION (INCOME TAX)
ORIGINAL SIDE
ITAT/144/2024
IA NO: GA/2/2024
PRINCIPAL COMMISSIONER OF INCOME TAX-5, KOLKATA
VS
VIRENDRA KUMAR SURANA , HUF
BEFORE :
THE HON'BLE THE CHIEF JUSTICE T.S SIVAGNANAM
-A N D-
HON'BLE JUSTICE HIRANMAY BHATTACHARYYA
Date : November 06, 2024.
Appearance :
Mr. Prithu Dudhoria, Adv.
...for appellant
Mr. Rajarshi Chatterjee, Adv.
Mrs. Suman Sahani, Adv.
...for respondent.
The Court :- This appeal is filed by the revenue under Section 260A of
the Income Tax Act, 1961 is directed against the order dated 21 st August, 2023
passed by the Income Tax Appellate Tribunal, "B" Bench, Kolkata in ITA
No.354/Kol/2023 for the assessment year 2012-13.
The revenue has raised the following substantial questions of law for
consideration:-
1. Whether on the facts and in the circumstances of the case, the
Hon'ble Income Tax Appellate Tribunal is justified in law in deleting
the penalty of Rs.1,27,107/- imposed under Section 271(1)(c) of the
Act on the ground that show cause notice issued under section 274
does not specify the charge for which penalty is being imposed
against the assessee without considering the fact that the assessee
failed to adduce any satisfactory explanation before the Assessing
Officer during the course of penalty proceedings to rebut the findings
furnishing in accurate particulars of income which is liable to penalty
under Section 271(1)(c) of the Act ?
2. Whether on the facts and in the circumstances of the case, the
Hon'ble Income Tax Appellate Tribunal is justified in law in deleting
the penalty imposed by the Assessing Officer and upheld by the
CIT(A) without considering the judgment reported in the cases of
Grass Field & Resorts P Ltd. vs. Deputy Commissioner of Income Tax
388 ITR 395 (Raj), Union of India vs. Dharmendra Textile Processors
(2008) 13 SCC 369 and CIT vs. Atul Mohan Bindal (2009) 9 SCC
589?
We have heard Mr. Prithu Dudhoria, learned standing counsel appearing
for the appellant and Mr. Rajarshi Chatterjee, learned counsel appearing for
the respondent.
The short issue which falls for consideration in the instant case is that
whether the learned Tribunal is right in allowing the appeal filed by the
assessee and setting aside the penalty proceedings which was initiated under
section 271(1)(c) of the Act by order dated 23 rd March, 2023. The sole ground
canvassed by the assessee before the learned Tribunal was that the notice
issued under section 274 read with section 271(1)(c) of the Act was defective
inasmuch as irrelevant portions of the notice were not struck off and as such
the assessee did not have proper opportunity to put forth their submission. In
support of their submission, several decisions have been referred to by the
assessee including decision of this Court. The learned Tribunal following the
said decision held that the issue raised before it is no longer res integra and on
facts the Assessing Officer has not specified the charge for which the assessee
has been foisted with the penalty and therefore, the show-cause notice issued
under section 274 of the Act was defective. Secondly, the penalty proceedings
were set aside.
Learned standing counsel for the appellant apart from referring to the
decision in the case of Grass Filed & Resorts P. Ltd. vs. Deputy Commissioner of
Income Tax 388 ITR 395 (Raj.) and the decision of the Hon'ble Supreme Court
in Union of India vs. Dharmendra Textile Processors (2008) 13 SCC 369 and CIT
vs. Atul Mohan Bindal (2009) 9 SCC 589, relied upon a decision of a Division
Bench of this Court in the case of Principal Commissioner of Income Tax-1,
Kolkata vs. M/s. Thakur Prosad Sao & Sons Pvt. Ltd., ITA/66/2018. So far as
the said decision is concerned, we find that the decision of this Court rendered
in Principal Commissioner of Income Tax-2 vs. Industrial Safety Products (P.)
Ltd., (2023) 154 taxmann.com 433(Calcutta) was not noticed. In the said
decision the Court has take note of various decisions including decision of
Karnataka High Court in the case of CIT vs. Majunatha Cotton And Ginning
Factory, (2013) 359 ITR 565, which decision was affirmed by the Hon'ble
Supreme Court in the case of CIT vs. SSA's Emerald Meadows (2016) 73
taxmann.com 248 (SC) .
The first issue to be considered is whether the decision in the case of
M/s. Thakur Prosad Sao & Sons Pvt. Ltd. (supra) has been pressed into service
in the instant case. We find the decision largely revolved upon the facts of the
said case where the assessee had admitted to the concealment of income and
the matter proceeded on those lines. It is no doubt true that Court also referred
to the various decisions of this Court including decision in Industrial Safety
Products Pvt. Ltd. However, we are of the view that the decision in M/s. Thakur
Prosad Sao & Sons Pvt. Ltd. is couched on a different set of facts and therefore,
cannot be pressed into service in the instant appeal to support the case of the
revenue.
Be that as it may, we have to first consider the facts of the present case.
The Assessing Officer confronted the assessee by issuing notice on the ground
that the assessee dealt with penny stocks and the claim for long-term capital
gain was not justified. The assessee initially sought to justify their share
transaction but ultimately accepted the allegations made by the Assessing
Officer in the show-cause notice which resulted in an assessment order and
the assessee had also paid tax. Subsequently, penalty proceedings were
initiated and the notice under section 274 was issued. The first notice was
issued to the assessee on 28th November, 2019 calling upon the assessee to
show cause as to why an order imposing penalty should not be made. The
assessee did not reply. Another show-cause notice was issued on 3 rd December,
2020 to the same effect and the assessee once again did not submit any reply.
Subsequently the matter was dealt with by the Faceless Assessment
Proceedings Unit and a show-cause notice was issued on 11 th May, 2021 for
which the assessee submitted a report which has been quoted by the Assessing
Officer in the order dated 25th January, 2022. On perusal of the same, we find
that the assessee has not raised any objection with regard to the form of the
notice or made any allegation that the notice issued under section 274 read
with section 271(5)(c) of the Act to be defective or inaccurate. On the other
hand, the assessee had contested the matter on merits. The assessee was
heard and thereafter the order of penalty was passed on 25 th January, 2022.
Thereafter it will be too late for the assessee to now contend that the show-
cause notice was defective, more particularly, the assessee submitted to the
jurisdiction, gave their reply on merits, without raising any objection to the
show-cause notice the manner in which the show-cause notice was issued.
Therefore, we find on facts the Tribunal ought to have considered this
aspect and not-suited the assessee rather than allowing the appeal filed by the
assessee.
Thus, for the above reasons, the appeal filed by the revenue was allowed
and the substantial questions of law are answered in favour of the revenue and
the order of penalty stands revived.
The application stands closed.
(T.S. SIVAGNANAM, CJ)
(HIRANMAY BHATTACHARYYA, J.)
pkd/GH/SN/S.Das
AR(CR)
