Assistant Commissioner of Income-tax, V. Shri Yogesh Nathu Murkute, Pune

ITA 1151/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9121 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 11-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Assessee Lawyers: ARUN A SANGHVI
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURV EDI, AM . / ITA NO.1151/PUN/2015 / ASSESSMENT YEAR : 2010-11 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2,IST FLOOR, B-WING, PMT BUILDING, SHANKARSHETH ROAD, PUNE - 37 . / APPELLANT VS. SHRI YOGESH NATHU MURKUTE, AT & POST. SAMBHAVE, TALUKA MULSHI, DIST. PUNE . RESPONDENT PAN : ABHPM7301G / APPELLANT BY : SHRI MUKESH JHA, JCIT / RESPONDENT BY : SHRI ARUN A. SANGHVI DATE OF HEARING : 31.07.2017 / DATE OF PRONOUNCEMENT: 31.07.2017 / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-3, PUNE, DATED 23.03.2015 RELATING TO ASSESSMENT YEAR 2010-11 AGAINST ORDER PASSED UNDER SECTION 271(1)(C) OF THE INCOME-TAX AC T, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1.ON THE FA CTS AN D C IRCUMST AN C E S O F TH E CASE & I N LAW , THE ID. CIT(A) ERRED I N D E LETING THE P E NALTY LEVIED BY THE ASSESSING OFFICER OF RS.19,81,614/- U/S . 271(1)(C) OF THE I.T. ACT , 196 1 . ITA NO.1151/PUN/2015 SHRI YOGESH N. MURKUTE 2 2(A) THE LD . CIT(A) ERRED IN ACCEPTING THE ARGUMEN T OF THE ASSESSEE THAT THE F A ILURE TO DISCLOSE THE CORRECT INCOME IN THE ORIGIN AL R E TURN FILED ON 15/11/2010 WAS DUE TO OMISSION ON THE PART OF THE A CCOUNTANT , AS THE SAID ARGUMENT WAS NOT BACKED BY ANY EVIDENCE. 2(B) THE LD . CIT(A) FAILED TO APPRECIATE THAT THE REVISED RETURN WAS FILED BY THE ASSESSEE MUCH AFTER THE ISSU A NCE OF THE NOTICE U/S.143(2) BY THE ASSESSING OFFICER AND ONLY ON RE A LIZING THE REASONS FOR WHICH THE CASE WAS SELECTED FOR SCRUTINY AND THEREFORE, SUCH DISCLOSUR E, AFTER DETECTION BY THE DEPARTMENT, CANNOT BE CONSIDERED TO BE VOLUNTARY . HE ALSO FAILED TO APPRECIATE THAT HAD THE CASE NOT BEEN SELECTED FOR SCRUTINY, THE INCOME EARNED BY THE ASSESSEE FROM SALE OF LAND COULD NOT HAVE BEEN BROUGHT TO TAX AS THE REVISED RETURN FILED BY THE ASSESSEE WAS INV ALID. 2(C) THE ID . CIT(A) FAILED TO APPRECIATE T HAT THE INFORMATION REGARDING EARNING OF INCOME BY THE ASSESS EE FROM TR A NS A CTIONS IN L AND WAS ALREADY IN POSSESSION OF THE ASSESSING OFFIC E R IN THE F ORM OF AIR INFORMATION AND THEREFORE, IT CANNOT BE SAID THAT TH E INCOM E BROUGHT TO T A X IN THE ASSESSMENT ORDER WAS BASED ON THE INV A LID REVISED RETU R N FILED BY THE ASSESSEE . 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD . CIT(A) BE HELD TO BE BAD IN LAW AND QUASHED AND THAT OF THE ASSESSING OFFICE R BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALT E R, A MEND OR OMIT ANY OF THE ABOVE GROUNDS OF APPEAL DURING TH E COURSE OF TH E APPELLATE PROCEEDINGS. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE DELETION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS.1 9,81,614/-. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,64,260/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO F URNISH THE DETAILS IN RESPECT OF HIS DISCLOSED INCOME OF MEDICAL SHOP. T HE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAD PURCHASED LANDS AND AFT ER DEVELOPING THE SAME HAD SOLD WITHIN A SHORT SPAN OF TIME AND HAD EARNED SHORT TERM CAPITAL GAINS. THE ASSESSEE HAD CLAIMED VARIOUS EXPENSES IN THIS REGARD, I.E. DEVELOPMENT CHARGES, COMMISSION AND DAILY WAGES TO BIGARI. THE ASSESSING OFFICER MADE INVESTIGATION AND FOUND THAT THE PAYMENTS WERE MADE IN CASH AND CHEQUE. THE ASSESSEE WAS UNABLE SUBSTANTIATE THE CLAIM OF V ARIOUS EXPENSES MADE IN CASH. ACCORDINGLY, THE ASSESSING OFFICER HELD THAT THERE WAS NO JUSTIFICATION FOR EXPENSES MADE IN CASH TOTALLING RS.5,39,000/-. FOR THIS REGARD, THE ITA NO.1151/PUN/2015 SHRI YOGESH N. MURKUTE 3 PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED FOR CONCEALING THE PARTICULARS OF INCOME. FURTHER, THE ASSESSEE HAD FURNISHED REVISED RETURN OF INCOME. SINCE THE ASSESSEE HAD F ILED REVISED RETURN INCOME ONLY AFTER ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT, PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALING THE INCOM E. THE ASSESSING OFFICER WHILE LEVYING THE PENALTY UNDER SECTION 271(1)(C) O F THE ACT HAS ELABORATELY DISCUSSED THE ISSUE OF FURNISHING OF REVISED RETURN OF INCOME BY THE ASSESSEE DISCLOSING THE ENHANCED INCOME. THE CASE OF THE ASS ESSEE BEFORE THE ASSESSING OFFICER, DURING PENALTY PROCEEDINGS, WAS THAT HE HAD OFFERED THE INCOME VOLUNTARILY SUO MOTO; BUT THE ASSESSING OFFI CER HELD THAT AIR AND CIB INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER. HE ASKED THE ASSESSEE TO FURNISH THE DETAILS OF SALE AND PURCHASE OF PLOTS A S APPEARING IN ITS DATA AND NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSES SEE. THEREAFTER, THE ASSESSEE FILED THE REVISED RETURN OF THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT WHERE THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY BASED ON THE ITS DATA AND IN CASE IT WAS NOT SO PI CKED UP, THEN ASSESSEE WOULD NOT HAVE FELT THE NEED TO REVISE THE RETURN. IN THIS REGARD, THE ASSESSING OFFICER VIDE PARA NO.7 OF THE ORDER PASSE D UNDER SECTION 271(1)(C) OF THE ACT AND HELD THAT IT IS THEREFORE CRYSTAL CLEAR THAT THE ASSESSEE HA S FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND CONCEALED HIS INCOME AND THUS COMMITTED DEFAULT WITHIN THE MEANING OF SECTIO N 271(1)(C) OF THE ACT. WITH REGARD TO THE CLAIM OF EXPENSES THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. 5. THE CIT(A) DELETED THE PENALTY LEVIED UNDER SECT ION 271(1)(C) OF THE ACT ON THE GROUND THAT THOUGH THE REVISED RETURN OF INC OME WAS FILED AFTER THE ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT, HO WEVER, THE ASSESSMENT OF ITA NO.1151/PUN/2015 SHRI YOGESH N. MURKUTE 4 THE ASSESSING OFFICER THAT THE ASSESSEE WOULD NOT H AVE FELT THE NEED TO REVISE THE RETURN BUT FOR THE ISSUE OF THE SAID NOTICE, WA S PRIMA-FACIE NOT TRUE AS THE MATERIAL ON RECORD INDICATES THE ASSESSEE TO HAVE T AKEN CORRECTIVE STEPS TOWARDS INCLUSION OF THE INCOME NOT INCLUDED EARLIE R IN THE ORIGINAL RETURN OF INCOME AND TILL SUCH TIME NO SPECIFIC QUERIES WERE RAISED BY THE ASSESSING OFFICER. THE CIT(A) RELIED ON VARIOUS CASE LAWS TO DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 6. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE ON THE OTHER HAND STRONGLY STRESSED THAT IT IS A CASE WHERE THE ASSESSEE HAD NOT INCLUDED INCOME IN THE ORIGINAL RETURN OF INCOME, AND ONLY P URSUANT TO NOTICE ISSUED UNDER SECTION 143(2) OF THE ACT, HAD FURNISHED THE REVISED RETURN AND HENCE IT IS A CASE OF CONCEALMENT OF INCOME AND MERITS LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 7. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESS EE ON THE OTHER HAND PLACED RELIANCE ON THE ORDER OF THE CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST THE PENALTY LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD FURNISHED THE ORIGINAL RETURN OF INCOME DECLARI NG TOTAL INCOME OF RS.1,64,260/-. THEREAFTER, THE REVISED RETURN OF I NCOME WAS FILED DECLARING INCOME OF RS.61,93,990/-. THE CASE OF THE ASSESSIN G OFFICER WAS THAT IT HAD RECEIVED THE INFORMATION THROUGH CASS AND AIR THAT THE ASSESSEE HAD MADE SALE AND PURCHASE OF PLOTS WHICH WAS NOT DECLARED B Y THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME AND THE CASE OF THE ASSES SEE WAS PICKED UP FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED. THE ASSESSEE ITA NO.1151/PUN/2015 SHRI YOGESH N. MURKUTE 5 FURNISHED REVISED RETURN OF INCOME THEREAFTER. THE ASSESSING OFFICER WAS OF THE VIEW THAT IN SUCH CIRCUMSTANCES WHERE THE RETUR N OF INCOME HAS BEEN FILED PURSUANT TO THE ISSUE OF NOTICE UNDER SECTION 143(2 ) OF THE ACT THEN THE ASSESSEE HAS CONCEALED ITS INCOME IN NOT DECLARING THE ADDITIONAL INCOME IN THE ORIGINAL RETURN OF INCOME WHICH EVENTUALLY WAS DECLARED IN THE REVISED RETURN OF INCOME. 9. ANOTHER POINT OF PENALTY IS THE DISALLOWANCE OF EXPENSES FOR WHICH THE PENALTY WAS INITIATED FOR FURNISHING INACCURATE PAR TICULARS OF INCOME. IN RESPECT OF THE INCOME DECLARED IN THE REVISED RETURN OF INC OME THE PENALTY WAS INITIATED FOR CONCEALING ITS INCOME. THE ASSESSING OFFICER WHILE LEVYING THE PENALTY IN RESPECT OF THE ISSUE OF ADDITIONAL INCOM E DECLARED IN THE REVISED RETURN OF INCOME, CAME TO A CONCLUSION THAT THE ASS ESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND CONCEALED HIS INCOME AND THUS COMMITTED THE DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. 10. PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS L EVIABLE ON CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. WHILE LEVYING PENALTY FOR CONCEALMENT THE ASSESSING OFFICER HAS T O RECORD SATISFACTION AND THEREAFTER COME TO A FINDING IN RESPECT OF ONE OF T HE LIMBS, WHICH IS SPECIFIED UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SATISFACTION WHILE COMPLETING THE ASSESSMENT AS TO WHETHER THE ASSESSE E HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. THEREAFTER, NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER THEREAFTER HAS TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR NON-SATISFACTION OF EITHER OF THE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HA D COME TO A FINDING AS TO THE ASSESSEE HAVING CONCEALED ITS INCOME WITH REGAR D TO THE ENHANCED ITA NO.1151/PUN/2015 SHRI YOGESH N. MURKUTE 6 INCOME SHOWN IN THE REVISED RETURN OF INCOME. HOWE VER, WHILE LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE ASS ESSING OFFICER HELD THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS O F INCOME AND CONCEALED HIS INCOME UNDER SECTION 271(1)(C) OF THE ACT. THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE AC T SUFFERS FROM INFIRMITIES WHERE AGAINST THE ADDITIONAL INCOME OFFERED IN THE RETURN OF INCOME THE ASSESSEE HAS BEEN HELD TO HAVE CONCEALED ITS INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. 11. THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI S AMSON PERINCHERY IN INCOME TAX APPEAL NO.1154 OF 2014 WITH OTHER INCOME TAX APPEAL NOS. 953 OF 2014, 1097 OF 2014 AND 1226 OF 2014 JUDGMENT DAT ED 05-01-2017 HELD THAT WHERE INITIATION OF PENALTY IS ON ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTI CE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 12. APPLYING THE SAID RATIO TO THE FACTS OF THE PRE SENT CASE, WE HOLD THAT WHERE THE ASSESSING OFFICER HAS FAILED TO GIVE A FI NDING THAT AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INAC CURATE PARTICULARS OF INCOME OR HAD LEVIED ON BOTH THE COUNTS, WHICH HAS BEEN CONFIRMED BY THE CIT(A) ON BOTH THE COUNTS, THE ORDER PASSED BY THE ASSESSING OFFICER SUFFERS FROM INFIRMITIES FOR NOT CONCLUDING AS TO WHICH LIM B OF SECTION 271(1)(C) OF THE ACT HAS NOT BEEN SATISFIED BY THE ASSESSEE. ACCORD INGLY, WE HOLD SO. IN SUCH CIRCUMSTANCES, WE DIRECT THE ASSESSING OFFICER TO D ELETE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AT RS.19,81,614/-. 13. THE SECOND ISSUE ON WHICH PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN LEVIED IS FOR DISALLOWANCE OF EXPENSES. M ERELY BECAUSE THE ITA NO.1151/PUN/2015 SHRI YOGESH N. MURKUTE 7 ASSESSEE WAS UNABLE TO PRODUCE SUFFICIENT EVIDENCE TO ESTABLISH ITS CLAIM OF EXPENSES AND THE SAID EXPENSES WERE DISALLOWED IN T HE HANDS OF THE ASSESSEE DOES NOT JUSTIFY THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, THIS ISSUE IS DECIDED ON MERITS IN FAVOUR OF THE ASSESSEE. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF JULY, 2017. SD/- SD/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; DATED : 31 ST JULY, 2017. SATISH / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; ( ) THE CIT(A)-3, PUNE / THE CIT - 3, PUNE , , / DR A, ITAT, PUNE; / GUARD FILE. / BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, ITAT, PUNE BENCHES, PUNE