Agricultural Produce Market Committee, Ahmednagar V. Assistant Commissioner of Income-tax,

ITA 1040/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7749 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 21-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Initiation of penalty proceedings; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NO.1040/PUN/2015 / ASSESSMENT YEAR : 2008-09 AGRICULTURAL PRODUCE MARKET COMMITTEE, KISAN KRANTI BUILDING, MARKET YARD, STATION ROAD, AHMEDNAGAR, PAN : AAALA0304R . APPELLANT VS. ASST. COMMISSIONER OF INCOME-TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR . RESPONDENT / APPELLANT BY : SHRI KISHOR PHADKE / RESPONDENT BY : SHRI ACHAL SHARMA, ADDL.CIT DATE OF HEARING : 03.08.2017 / DATE OF PRONOUNCEMENT: 09.08.2017 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-2, PUNE DATED 27-02-2015 FOR THE ASSESSMENT YEAR 2008-09 IN CONNECTION WITH THE PENALTY U/S.271(1)(C) OF THE ACT. 2. ASSESSEE RAISED 7 GROUNDS AND GROUND NO.1 CONST ITUTES A LEGAL GROUND WHICH RELATES TO THE ISSUE OF SATISFACTION AT THE T IME OF INITIATION OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. IT IS THE CL AIM OF THE ASSESSEE THAT THE INCOME-TAX AUTHORITIES ERRED IN CAUSING MIS-MATCH O F THE REASONS-FURNISHING OF INACCURATE PARTICULARS VS. CONCEALMENT OF PARTICULA RS OF INCOME. ITA NO.1040/PUN/2015 AGRICULTURAL PRODUCE MARKET COMMITTEE 2 3. BEFORE US, WITHOUT GOING TO THE MERITS OF THE PE NALTY, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ASSESSMENT AN D READ OUT THE REASONS FOR WHICH PENALTY WAS INITIATED U/S.271(1)(C). HE BROU GHT OUR ATTENTION TO THE CONTENTS OF OPERATING LINES FROM PARAGRAPH NO.5.4 OF THE ASS ESSMENT ORDER AND SUBMITTED THAT THE AO FAILED TO GIVE REASONS FOR INITIATING P ENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. REFERRING TO THE VARIOUS PARAGRAPHS, LD. COUNSEL FOR THE ASSESSEE MENTIONED THAT THE AO SIMPLY WRITTEN THE FOLLOWING LINES WHEREVER IT IS APPLICABLE WHILE MAKING ADDITIONS. THE SAID LINES READ AS UND ER : 5.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PENALTY PROCEED INGS UNDER SECTION 271(1)(C) FOR MAKING THE CLAIM FOR EXEMPTION ARE SEPARATELY INITIATED. 4. BRINGING OUR ATTENTION TO THE NOTICE ISSUED U/S. 274 DATED 29-10-2010, THE FACT OF TICKING () BOTH THE LIMBS OF CLAUSE (C) OF SECTION 271(1) WAS ALSO DEMONSTRATED. 5. FURTHER, REFERRING TO THE PENALTY ORDER DATED 28 -03-2013, LD. COUNSEL READ OUT THE LAST SENTENCE OF PARA 6 WHICH READS AS FOLL OWS : 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I AM THEREF ORE CONVINCED THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS AND FALLS WITH THE MEANING O F SECTION 271(1)(C) OF THE I.T. ACT. THE AMBIGUITY WAS ALSO DEMONSTRATED BY READING THE CONTENTS OF PARA NO.7 WHEREIN IT IS MENTIONED THAT I AM THEREFORE CONVINCED THAT THE ASSESSEE HAS DEFA ULTED ON ALL THE THREE ISSUES DISCUSSED ABOVE WITHIN THE MEA NING OF SECTION 271(1)(C) R.W. EXPLANATION 1 OF THE I. T. ACT, 1961 WITHOUT ANY REASONABLE CAUSE. 6. READING THE ABOVE EXTRACTS BEFORE US, LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE AO DOES NOT HAVE ANY CLARITY IN HIS MIND AS TO WHICH LIMB OF THE ACT, THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE A CT ARE INITIATED. RELYING ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN CIT VS. SH RI SAMSON PERINCHERY IN ITA NO.1040/PUN/2015 AGRICULTURAL PRODUCE MARKET COMMITTEE 3 INCOME TAX APPEAL NO.1154 OF 2014 WITH OTHER INCOME TAX APPEAL NOS. 953 OF 2014, 1097 OF 2014 AND 1226 OF 2014 JUDGMENT DATED 05-01-2017, LD. COUNSEL FOR THE ASSESSEE MENTIONED THAT THE AOS ORDER SUFFERS FROM AMBIGUITY AS TO WHICH LIMB OF THE SAID CLAUSE U/S. 271 (1) IS RIGHTLY INVOKABL E WHEN THE INCOME U/S.10(20) OF THE ACT WAS WRONGLY CLAIMED BY THE ASSESSEE WHEN HE IS NOT ELIGIBLE FOR SUCH CLAIM. IT IS ALSO DECIDED LEGALLY VIDE KARNATAKA HIGH COURT J UDGMENT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (359 ITR 565) THAT THE PENALTY IS NOT SUSTAINABLE WHEN THERE IS NO CLEAR SATISFACTION REC ORDED BY THE AO AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS. 7. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE VI EW THAT, MERELY WRITING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) FOR MAK ING THE CLAIM FOR EXEMPTION ARE SEPARATELY INITIATED. OR WITHIN THE MEANING O F SECTION 271(1)(C) OF THE ACT ETC. DO NOT AMOUNT TO SPECIFYING THE OFFENCE COMMITTED B Y THE ASSESSEE. IN OUR VIEW, SUCH EXPRESSION CERTAINLY FALLS SHORT OF SUCH SATISFACTION. THEREFORE, ON TH IS LEGAL ISSUE, AND FOR THE SAID REASONS, WE ARE OF TH E VIEW THAT LEGAL GROUND NO.1 RAISED BY THE ASSESSEE SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUND NO.1 BY THE ASSESSEE IS ALLOWED. 8. CONSIDERING OUR FAVOURABLE DECISION IN GROUND NO .1, WE ARE OF THE VIEW THAT ADJUDICATION OF OTHER GROUNDS RELATING TO MERITS BE COME AN ACADEMIC EXERCISE, THEREFORE, THE SAME ARE DISMISSED AS ACADEMIC. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON THIS 09 TH DAY OF AUGUST, 2017. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 09 TH AUGUST, 2017. SATISH ITA NO.1040/PUN/2015 AGRICULTURAL PRODUCE MARKET COMMITTEE 4 / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; ( ) THE CIT(A)-2, PUNE / THE CIT - 2 , PUNE , , / DR A, ITAT, PUNE; / GUARD FILE. / BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, ITAT, PUNE BENCHES, PUNE