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TMI Blog2023 (7) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... remises of the petitioner U/s 132 of IT Act and notice was issued on 30.08.2018 U/s 153A of the IT Act calling for its return from income. (c) During search operation, the Managing Director of petitioner, on verification of Audit and Balance Sheet of the petitioner company noticed an inadvertent error in the books of accounts in the Financial Year ending 31.03.2009 wherein a Foreign Investment was capitalized against Plant and Machinery, though the same did not materialize for various reasons. Since mistake was occurred in the Financial Year ending 31.03.2009, it was continued unnoticed and same was corrected in the Financial Year ending 31.03.2015 for the Assessment Year 2015-16. (d) Pursuant to the notice U/s 153A, the petitioner on 23.09.2018 filed return declaring therein a loss of Rs. 5,50,06,514/- and the same was assessed U/s 143(3) r/w Section 153A of the IT Act by the order dated 30.12.2019 accepting the income in the return filed in the assessment order. The AO through recorded his satisfaction, however initiated penalty proceedings U/s 271(1)(c) r/w explanation 5A for furnishing inaccurate particulars of income by placing the reliance on original return of income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-16 Rs. 5,50,06,514/- NIL Rs. 58,72,241/- Rs. 1,80,99,062/- 5. 11923/ 2022 2016-17 Rs. 2,19,34,189/- NIL Rs. 5,213/- Rs. 16,871/- 4. Respondents filed counters and opposed the writ petition inter alia contending thus: (a) As against the impugned order passed under Section 271(1)(c) of the IT Act, the petitioner has got an effective alternative remedy of appeal to the Commissioner of Income Tax (Appeals), hence the writ petition is not maintainable. (b) During the search operations conducted U/s 132 of the IT Act on 20.09.2017, the Assessee admitted that for Assessment Year 2015-16 while filing return of income they claimed bogus depreciation of Rs. 1,80,99,062/-. In response to the notice U/s 153A of the IT Act, the assessee had withdrawn the excess depreciation and filed revised return of income and the assessment was completed by accepting the income returned. However, since the assessee has furnished inaccurate particulars of income, the AO has initiated penalty proceedings U/s 271(1)(c) of the IT Act vide notice dated 03.01.2020 but in the said notice it was inadvertently mentioned as "for concealment of particulars of income". Having noticed the mistake, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cealment of particulars of the income or wilful furnishing of inaccurate particulars which is not the case in the present instance. Learned counsel would formidably argue that when once the previous mistaken return was permitted to be substituted with revised return and same was accepted, the department cannot impose penalty basing on the earlier return. Learned Senior Counsel would thus reemphasize that when the revised return was filed pursuant to the notice U/s 153A of the IT Act and the said revised return was accepted, the earlier return filed U/s 139 of the Act pales into insignificance, which cannot be made as a basis to take up penalty proceedings U/s 271(1)(c) of the IT Act. To buttress his argument learned Senior Counsel relied upon Judgment dated 09.02.2017 of a Division bench of High Court of Delhi in ITA No. 463/2016 & CM No. 26604/2016 and batch. (a) Learned Senior Counsel further argued that in the instant case explanation 5A to Section 271 has no application for the reason that as per Clause 1 of explanation 5A, during the course of a search initiated U/s 132, if any money, bullion, jewellery or other valuable article or things were found to be acquired by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Plant and Machinery which was admitted only during the search and seizure operations conducted subsequently. In that view, the penalty was rightly imposed and that has nothing to do with the acceptance of the revised returns. Nextly learned Standing Counsel argued that impugned penalty orders were passed only on thorough consideration of the replies dated 26.05.2021 and 31.05.2021 and therefore the petitioner cannot claim that principles of natural justice were violated. Learned Standing Counsel thus prayed to dismiss the writ petition. 8. The point for consideration is whether there are merits in the writ petition to allow? 9. POINT: We deeply cogitated on the respective arguments of both the learned counsel. As can be seen, precisely the contention of the petitioner is that since the revised return was submitted pursuant to the proceedings U/s 153A of the IT Act and the same was accepted, the penalty proceedings U/s 271(1)(c) basing on the previous return filed U/s 139 of the IT Act are not maintainable and the proceedings under explanation 5A of Section 271 are also not maintainable since none of the grounds mentioned therein is attracted in the instant case. That apart, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Act was the only relevant return of income for the purpose of assessment U/s 153. As such, since the AO has accepted the revised return filed U/s 153A, there can be no occasion to refer to the previous return filed U/s 139 of the IT Act for any purpose including levying of penalty U/s 271(1)(c) of the IT Act. The petitioner referred to the judgment of High Court of Delhi (supra 1) in this context. Finally, the petitioner submitted as follows: "In view of all the above relevant submissions, judicial precedents and pronouncements along with all the facts and merits of the case, we submit that the penalty proceedings be dropped. Should there be an occasion for your good selves for any further information and justification that may be required from our end we would be obliged if a personal hearing is accorded." 12. Thus, we are convinced that indeed the petitioner has taken the two contentious pleas in his reply notice dated 31.05.2021. Then a perusal of counter filed by the respondents in the writ petition would show that they admitted to have received the reply notices dated 26.05.2021 and 31.05.2021. Of course, they contended that one of the pleas taken in the reply notice da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the respondents if they needed further information from the petitioner or justification of his contentions. So petitioner's request is also somewhat obscure without making a clear prayer for according personal hearing. 15. Thus on a conspectus of facts, circumstances, law and conduct of both parties, we, in the interest of justice, are of considered view, the impugned orders can be set aside and the respondents can be directed to accord personal hearing to the petitioner in respect of the contentions raised and pass fresh orders on suitable terms. 16. We also considered the argument of learned Standing Counsel regarding the availability of efficacious alternative remedy in the form of appeal and non-maintainability of the writ petition on that count. We are unable to countenance the said argument in view of the fact that though alternative remedy of appeal is available, still in the instant case we have noticed partial violation of principles of natural justice by the respondent authorities by depriving the petitioner of personal hearing. It is needless to emphasize, in the cases where the principles of natural justice are on casualty, the constitutional Courts can entertain th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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