Smt S B Patil, Bijapur V. Joint Commissioner of |ncome-tax, Bijapur

ITA 1053/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8625 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJASHEKAR M
• Assessee Lawyers: A ASHOK KULKARNI
• Keywords: Question of law; Initiation of penalty proceedings
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE B BENCH, BANGALORE BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI VIJAYPAL RAO, JUDICIAL MEMBER ITA NOS.1053 & 1054(BNG.)/2014 (ASSESSMENT YEARS : 2008-09) SMT. S.B.PATIL, PROP: ADARSHA DAIRY FARM, AINAPUR, DT. BIJAPUR PAN NO.ANVPP2685G APPELLANT VS THE JOINT COMMISSIONER OF INCOME-TAX, AYAKAR BHAVAN, ATHANI ROAD, BIJAPUR-586 101 R ESPONDENT ASSESSEE BY : SHRI A. ASHOK KULKARNI, ADVOC ATE REVENUE BY : SHRI RAJASHEKAR, M. ADDL.CIT DATE OF HEARING : 02-02-2016 DATE OF PRONOUNCEMENT : 10-02-2016 O R D E R PER SHRI ABRAHAM P GEORGE, AM; THESE ARE APPEALS FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDERS DATED 01-04-2014 OF CIT(A), BELGAUM. 2. THROUGH THESE APPEALS THE ASSESSEE ASSAILS LEVY OF PENALTY U/S 271E AND 271D OF THE IT ACT, 1961. IN ADDITION TO THE O RIGINAL GROUNDS FILED, THE ASSESSEE HAS ALSO FILED A SET OF ADDITIONAL GROUNDS . 3. THE LEARNED COUNSEL FOR THE ASSESSEE SEEKING ADM ISSION OF THE ADDITIONAL GROUNDS SUBMITTED THAT SUCH ADDITIONAL G ROUNDS WERE PURE QUESTION OF LAW AND DID NOT NEED ANY FRESH VERIFICATION OF R ECORDS. ACCORDING TO HIM, IT 2 ITA NOS.1053 & 1054(B)/14 WAS MANDATORY THAT THE PENALTY PROCEEDINGS U/S 271D AND 271E OF THE IT ACT, 1961 ARE INITIATED DURING THE COURSE OF ASSESSMENT. IN SUPPORT OF HIS CONTENTION, LEARNED AR RELIED ON THE JUDGMENT OF TH E HONBLE APEX COURT IN THE CASE OF CIT VS JAI LAXMI RICE MILLS 379 ITR 521(SC) . AS PER THE LEARNED AR FAILURE TO RAISE THIS GROUND ORIGINALLY WAS NEITHER WILLFUL NOR DELIBERATE. ALL THE MATERIAL THAT WERE REQUIRED FOR DECIDING THE ADDITI ONAL GROUNDS WERE, AS PER THE LEARNED AR ON RECORD. 4. PER CONTRA, LEARNED DR SUBMITTED THAT SUCH GROUN DS WERE NEVER RAISED BY THE ASSESSEE BEFORE ANY LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL CONTENTIONS. 6. THE AO HAD LEVIED PENALTY OF RS.57,77,213/- U/S 271E OF THE IT ACT, 1961 ON THE ASSESSEE WHICH WAS ON APPEAL REDUCED BY THE LEARNED CIT(A) TO RS.7,59,443/-. SIMILARLY, THE AO HAD LEVIED PENALT Y OF RS.41,35,000/- U/S 271D OF THE IT ACT, 1961 WHICH ON APPEAL WAS REDUCE D TO RS.13,50,000/- BY THE LEARNED CIT(A). THESE PENALTIES WERE LEVIED FOR V IOLATION OF SEC.269SS AND 269T OF THE IT ACT, VIZ. FOR ACCEPTING UNSECURED LOANS/H AND LOANS IN CASH AND REPAYING SUCH LOANS IN CASH. THE LOANS TAKEN BY TH E ASSESSEE WERE FROM HER HUSBAND SHRI B.R.PATIL AND THE REPAYMENT WERE ALSO TO VERY SAME PERSON. ASSESSEE WAS ENGAGED IN DAIRY FARMING BUSINESS AND HER HUSBAND WAS HELPING HER IN SUCH BUSINESS. COPY OF THE ASSESSMENT FOR T HE IMPUGNED ASSESSMENT 3 ITA NOS.1053 & 1054(B)/14 YEAR WHICH IS PLACED ON RECORD BY THE LEARNED AR DO ES NOT HAVE EVEN A WHISPER REGARDING THE ACCEPTANCE OF LOAN IN CASH OR RE-PAYM ENT OF LOANS IN CASH. THE ASSESSMENT ORDER DATED 28-09-2009 FOR THE IMPUGNED ASSESSMENT YEAR DOES NOT MENTION ANYTHING REGARDING ANY INITIATION OF PENALT Y PROCEEDINGS FOR VIOLATION OF SEC.269SS AND 269T OF THE IT ACT, 1961. IN THE CAS E OF JAI LAXMI RICE MILLS DECIDED BY THE HONBLE APEX COURT THE QUESTION WAS WHETHER A SATISFACTION HAS TO BE RECORDED IN THE ASSESSMENT ORDER FOR INITIATI ON OF PENALTY U/S 271E OF THE ACT. IN THE SAID CASE, AFTER THE LEVY OF PENALTY U/S 271E OF THE ACT, THE ORIGINAL ASSESSMENT WHEREIN SATISFACTION REGARDING INITIATIO N OF PENALTY PROCEEDINGS WAS EXPRESSED, WAS SET ASIDE ON APPEAL FILED BY THE ASS ESSEE. IN THE FRESH ASSESSMENT ORDER, THERE WAS NO EXPRESSION OF ANY SA TISFACTION REGARDING INITIATION OF PENALTY PROCEEDINGS U/S 271E OF THE I T ACT. THEIR LORDSHIP HELD AT PARAS 3-5 AS UNDER; 3. AFTER REMAND, THE AO PASSED A FRESH ASSESSMENT ORDER. IN THIS ASSESSMENT ORDER, HOWEVER, NO SATISFACTION REG ARDING INITIATION OF PENALTY PROCEEDINGS U/S 271E OF THE A CT WAS RECORDED. IT SO HAPPENED THAT ON THE BASIS OF THE ORIGINAL ASSESSMENT ORDER DATED FEBRUARY 26, 1996, SHOW CAUS E NOTICE WAS GIVEN TO THE ASSESSEE AND IT RESULTED IN PASSIN G THE PENALTY ORDER DATED SEPTEMBER 23, 1996. THUS, THIS PENALT Y ORDER WAS PASSED BEFORE THE APPEAL OF THE ASSESSEE AGAINST OR IGINAL ASSESSMENT ORDER AS HEARD AND ALLOWED THEREBY SETTI NG ASIDE THE ASSESSMENT ORDER ITSELF. IT IS IN THIS BACKDR OP, A QUESTION 4 ITA NOS.1053 & 1054(B)/14 HAS ARISEN AS TO WHETHER THE PENALTY ORDER, WHICH W AS PASSED ON THE BASIS OF THE ORIGINAL ASSESSMENT ORDER AND W HEN THAT ASSESSMENT ORDER HAD BEEN SET ASIDE, COULD STILL SU RVIVE. 4. THE TRIBUNAL AS WELL AS THE HIGH COURT HAS HELD THAT IT COULD NOT BE SO FOR THE SIMPLE REASON THAT WHEN THE ORIGI NAL ASSESSMENT ORDER ITSELF WAS SET ASIDE, THE SATISFAC TION RECORDED THEREIN FOR THE PURPOSE OF INITIATION OF THE PENALT Y PROCEEDINGS U/S 271E WOULD ALSO NOT SURVIVE. THIS, ACCORDING TO US, IS THE CORRECT PROPOSITIONS OF LAW STATED BY THE HIGH COUR T IN THE IMPUGNED ORDER. 5. AS POINTED OUT ABOVE, IN SOFARAS, THE FRESH ASSE SSMENT ORDER IS CONCERNED, THERE WAS NO SATISFACTION RECORDED RE GARDING THE PENALTY PROCEEDINGS U/S 271E OF THE ACT THOUGH IN THAT ORDER THE AO WANTED PENALTY PROCEEDING TO BE INITIATED U/ S 271(1)( C) OF THE ACT. THUS, IN SO FAR AS PENALTY U/S 271E IS CONCERNED, IT WAS WITHOUT ANY SATISFACTION AND THEREFORE, NO SUCH PENALTY COULD BE LEVIED. 7. IN OUR OPINION, THE LEGAL ISSUE RAISED BY THE A SSESSEE DO NOT REQUIRE ANY FRESH ASSIMILATION OF FACTS AND CAN THEREFORE, BE ADMITTED. A READING OF THE JUDGMENT OF THE HONBLE APEX COURT REPRODUCED ABOVE DOES SHOW THAT IT IS THUS IMPERATIVE FOR SATISFACTION TO BE RECORDED IN THE A SSESSMENT ORDER FOR INITIATION OF PENALTY U/S 271E OF THE ACT. PROCEEDINGS U/S 2 71D OF THE IT ACT, ALSO IN OUR OPINION WILL STAND ON THE VERY SAME FOOTING. IF SA TISFACTION HAS TO BE RECORDED WITH RESPECT TO PROCEEDINGS U/S 271E OF THE IT ACT, SIMILAR SATISFACTION HAS TO 5 ITA NOS.1053 & 1054(B)/14 BE RECORDED FOR THE PROCEEDINGS U/S 271D OF THE IT ACT, 1961 ALSO. THESE HAVE NOT BEEN DONE IN THE CASE BEFORE US. ACCORDINGLY, BY VIRTUE OF JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS JAI LAXMI RICE MILLS (SUPRA), WE ARE OF THE OPINION, THAT THE LEVY OF PENALTY U/S 271D & 27 1E OF THE IT ACT, 1961 CANNOT SURVIVE. SUCH ORDERS ARE SET ASIDE AND THE APPEALS OF THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH FEBRUARY, 2016. SD/- SD/- ( VIJAYPAL RAO ) ( ABRAHAM P GEORGE ) JUD I CIAL MEMER ACCOUNTANT MEMBER BANGALORE: D A T E D : 10-02-2016 AM COPY TO : APPELLANT RESPONDENT CIT(A)-IV, BANGALORE. CIT DR, ITAT, BANGALORE. GUARD FILE (1+1) ASST. REGISTRAR ITAT, BANGALORE