Itta/254/2022 Of The Pr. Commissioner Of Income Tax-2 v. M/S. Zenotech Laboratories Limited

IN THE HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD MONDAY, THE SIXTEENTH DAY OF OCTOBERTWO THOUSAND AND TWENTY THREE PRESENT THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTYINCOME TAX TRIBUNAL APPEAL Nos: 254 and 31'l of 2022l.T.T.A.No.254 of 2022 lncome Tax Tribunal Appeal Under Section 260-4 of the lncome Tax Act,against the order of the lncome Tax Appellate Tribunal, Hyderabad Bench 'A',Hyderabad in ITA No.843/Hydl2019 dated 03-O9-2021 preferred against the Order ofHyderabad in ITA No.843/Hydl2019 dated 03-O9-2021 preferred against the Order ofthe Commissioner of lncome Tax (Appeals)-7, Hyderabad, Appeal No.00g1/CtT (A)-7/2018-19 dated 26-02-2019, preferred against the Order of the DeputyCommissioner of lncome-tax Central Circle 3(3), Hyderabad, PAN/G lR No.AAFC5661 7R d ated 31-12-2008.Between:AAFC5661 7R d ated 31-12-2008.Between: The Pr. Commissioner of lncome Tax-2, 6h Floor, Signature Towers, Kondapur,Opp. Botanical Gardens, Hyderabad. ...Appellant AND M/s. ZENOTECH LABORATORIES LIMITED, Sy No 250-252, Turkapally Village,Shameerpet Mandal, Rangareddy Dist Hyderabad -500 078 PANAAFC56617R: ...Respondent Counsel for the Appellant: SRI A. RADHA KRISHNA (Sr. SC FOR lT DEPT)Counsel for the Respondent: SRI DUNDU MANMOHAN Scctior.r 271 read [rt ]ith Sectron [27 ][l(t)(cl ]of [the ][Income ][Tax ][nct,]1961 (hercinafter [rclerrecl ][to ][as ]['the ][Act) ][cannot ][be ][rcndered ][as]in va licl 5. From the submissions [macle ][bY ][the ][learned ][counsel ][for ][the]parties and particLrlarly that ol [the ][appellant, ][it ][stands admittcd]that the noLice that [was issucd ][under ][Section ][21l(ll(cl ][of ][the ][Act,]the irrclevant portion [was not ][slruck ][down. ][It $'as ][nol ][the ][specific]case of thc respondc [n ][t ]/ [asse ][ssce ][showing as ][[o ][whether ][there ][was]concealment of facts, [particularly ][on ]the [parL ][of the ][assessee ][or]u,hether there u,a s submission of inaccurate details [by ][thc]assesscc and in thc absencc of [which, according ][to ][the ][assessee,]the penal provisron cannot be [invoked. Since ][it is a ][penal]provision, the asscssee must be specifically [informed ]as to [the]specific lapse on thcir [part ]for [ivhich the ][pcnal ][provision has ][been]initiated which in the instant case, [had ][to ][be ][either ][concealment]of facts or submission of inaccurate [details.] 6. Perusal of thc said impugned order [would go to show ][that]the Tribunal when it had considered the case of the [appellant]while hearing thc appeal, found that the [jurisdictional ]High Courtitself in a recent matter i.e. in the case of The PrinclpalComtnissioner oJ Income-tax-I, Visakhapatno,m us. Smt.\ Baisetty Reudthi which got decidcd on 13.07.2017, in its judgment held as under: 6. Perusal of thc said impugned order [would go to show ][that]the Tribunal when it had considered the case of the [appellant]while hearing thc appeal, found that the [jurisdictional ]High Courtitself in a recent matter i.e. in the case of The PrinclpalComtnissioner oJ Income-tax-I, Visakhapatno,m us. Smt.\ Baisetty Reudthi which got decidcd on 13.07.2017, in its judgment held as under: "On pincipte, tuhen penaltg proceedings are sought to beinitiated bA the reuenue under Section 271(l)(c) oy ine act o1196 1 , the speciftc ground which forms the Jound.ationtherefor has to be spelt out in clear terms. Otherutise:, aninitiated bA the reuenue under Section 271(l)(c) oy ine act o1196 1 , the speciftc ground which forms the Jound.ationtherefor has to be spelt out in clear terms. Otherutise:, anassessee utould not haue proper opportunitA to put forth hbtlefence. When the proceedings are penaL in nature,resulting in imposition of penaltg ranging from l OO% to300% of the tax liability, the charge must be unequiuocaland umambiguous_ When tLe charge is either ancialmentof parliculars of income or furnishing of inaccurateparticuLars thereoJ, the reuenue must specifg as to tDhichone of the two is sought to be pressed into sentice and.300% of the tax liability, the charge must be unequiuocaland umambiguous_ When tLe charge is either ancialmentof parliculars of income or furnishing of inaccurateparticuLars thereoJ, the reuenue must specifg as to tDhichone of the two is sought to be pressed into sentice and.cannot be pe rmitted to club both by interjectlng an [,or']between the two, as in the present co_s,e. This a^biguitg inthe shou.t cause notice is further compounded presintlg bgbetween the two, as in the present co_s,e. This a^biguitg inthe shou.t cause notice is further compounded presintlg bgthe confused ftnding of the Assessjng Officer thnt he u..tossatisrted that the as.ses.see utas gailtg of bothsatisrted that the as.ses.see utas gailtg of both We are thereJore of the opinion tLnt the ord"er underappeal does not hnue brook interkrence on ang ground.. Welind [no question ]of law, much less a substantiil one, ari-singfor [constderatton ][tuaranting ]admission of the appeal.lind [no question ]of law, much less a substantiil one, ari-singfor [constderatton ][tuaranting ]admission of the appeal.The oppeal is accordinglg djsmissed. No ord.er as tocosts".costs". 7. We further find that a similar matter came up before theHonlcle Supreme Court of India also in. the case of principatContmissioner of Income Tax, (Central) a. Gold.en peaceHotels and Resorts (P.) Ua." decided on November 20, 2O2O,wherein the Honble Supreme Court has upheld the decision ofthe Division Bench of the High Court of Bombay wherein theDivision Bench had held that recording of satisfaction by theAssessing Officer as to whether there was concealment of incomel 3 12021) 124 taxmann.com 249 (SC) ^ [-f:,AFF.E!l:] or rvhethcr there [u'its ][inacr:ttl:rte ][pi'tl't ][iculars ][lurnished ][by ][the]assessee [u ]I-iich u,as sine [rTua ][lloll Ibr ][initiation ][of ][penalty]proceedings. The High Court ol Bombay [had categorically ][in ][the]said case lteld that in the [absr:nce ][ol atry such satisfaction, ][the]order of Comtnissiorrc'r [(Appeals) ][as ][rvell ][as ][the ][Tribunal had ][been]correctly ordered to be held [bad ][and ][the penalty proceedings ][were]ordered to be droppcd. It [u,as ][thc ][Spccial ][Leavc ][Petition ][(SLP) ][of]the respondcnt against [the said ][decision ][ol ][the ][Higir ][Court ][of]I3ombay n'hir:h was dismissccl [in ][the ][said ][SLP. ][The ][High ][Court ][of]Bombay in the said [czrse ]i.e. [Pr. ] [u. Golden ][Pea.ce ][Hotels and]Resorfs (P.) Ltd.4 in paragraph [Nos.6 ][to 8 ][held ][as under:] "6. Besides, LUe note thzt the Diuision [Bench ][oJ ][this]Cc,turt in Sarn-son (supra) [as ][utell cts ][in ][Neut ][Ero ][Soua]Mhe (supra) hos held that the nottce [u.thich ][is ][issued ][to]lhe assessee must irtdicate uhether [the ][Assessing]OJfcer is satisfied that thc [case ]of [the ][ossessee ][inuotues]concealment of particulars of income [or ][urnishing [of][naccurate particulars oJ rncome or [botlt-, ][tL)ith ][cLaritA. ][If]thc notice is issued in the [pinted ]Jorm, [then, ][the]necessary portions which are not applicable [are]required to be stntck off, so as to [indicate ][tuith ][clantg]the nature of the salisfaction [recorded. ][In ][both ][Samson]Peinchery and [NeuL ][Era ][Soua ][Mine ][(supra), ][th-e notices]issued had tlot [struck ][off ][the portion ][uthich ][u.tere]inupplicabte. From [this, ][the ][Diuision ][Bench ][concluded]thot there Luas [no ]Proper [record of ][satisJaction ][or ][proper]application of mind [in ][ntatter ][of ][initiotion ][of ][penallg]proceedinqs. 7. In the present cQSe, os [welt ]if [the ][notice ][dated]30/ 09/ 16 (ot page 32) [ts ][perused-, ][it ][is ][apparent that]the itapplicabte portions [haue ][not ][been ][stntck off. ][This]coupled ulith the fact aduerted [to ][in ][paragraph ][(5) of ][this]ortler, leaues no ground Jor [interference ][with ][the]impugned order. The impugnedoder [is ][quite ][consistent] I I I tLitlt Lhe lau taid doun in the case of SamsonPennchery and New Era Soua ui"" - t'^r'4, ti'"prJ Znavtllhcreforc, Luanattrs no irtterference. 1,-T::::,ll:,on atso docs not opfcal [has.ed ]to [upon ]us in the peculiar facts [Data ][(p.) ][ttd. ][(supra)]oi thepresent case. 'lhe notice in. the piesent .is" is 'its"tydefectiue. and further, there is no jind.t"g "; iiir!"'"ii,"l::rrl"d _ [in ][rekttion ][to ]"[conceatient ][i, ]n^X-iW"""ftnaca) rete parlian lars. a. a. Similar analog, has also been recently reiterated by theHigh Court of Dclhi in the case of principal Comrnissloner ofIncome-tq.x. a. Gopa.l Kumar Gogals wherein again the DivisionBench of High Courr of Dclhi in paragraph Nos.15 to 18 held as under: "15- Hauing heard Mr Kumar and. perused. the record, inour uiew, there cannot be any dispute, that the iO tailedto cleartg rcJlect his satisfaclion tn ni pe,iatti n;i;. ""to uhich timb of thc proisio,ts rn"Act u_to s triggered uis a uis the reZpondent/ i-;";;;';;'f(liii"iTi a..;::Z; 16. As indicated aboue, tn a giuen case, both timbs mayget attracted, but euen in sich situatiin the i.O ioutaneed ,.to set fort_h his pima facie, satisjiail"" t"'tn"penaltu nolLce. The reason, perhagts, uthy lhe Legislaturehas prouided_ for tuo circumstancis'tn sJct;oiiTil lfe the..Act,. .to- our minds, emanates. from the n'eei, "ftoasttngush betLueen the grauitg and consequences uthichagainst maA. accompang concealment a case u.thich inuolieZ of partiatlari fumshing of -fii.Jrotincome, a_spartict tlars. The quantum of penaltg, tii in"'iO'rrr_g\t!y, _utoutd [depend ][on rahich-stot ]271( 1)(c) of the Act, rhe assessee,s infraAton "{atuiiiiii."ii."yati! in.- [---'] 17^. .Furthetmore,. hau,ing regard. to tLe doctrine of stareae.xs,"s - .whtch impels courls not to d.isturb settled?ro,Oosittons^oy [points ][of laut, ][tt.te ]are of the uieu, that tLLeJuagment oJ the coordinate bench of this Court rend.ered?ro,Oosittons^oy [points ][of laut, ][tt.te ]are of the uieu, that tLLeJuagment oJ the coordinate bench of this Court rend.eredi.n Saltara India wouLd. hau_e to be- fottouLed, noirunghas been brought on record. by Mr kumar, Lii"n'_""U^ has been brought on record. by Mr kumar, Lii"n'_""U^ HIGH COURT DATED:1611012023 1rE [t-O]{vc.iq.f1 t [N0'.l][ ?u]],,,:)/* Itt, t'--"COMMON.JUDGMENT lTTA.Nos.2S and 311 of 2022 THE,APPEALSAREiREJECTED .^*P$\:)$:r--{\,\8