AALAP CONSTRUCTION P.LTD, MUMBAI V. ASST CIT CEN CIR 9, MUMBAI

ITA 1286/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7868 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 23-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Initiation of penalty proceedings
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1286 /MUM/2017 ASSESSMENT YEAR: 2010 - 11 M/S AALAP CONSTRUCTION PVT. LTD. ACME GHAR, 19 K.D. ROAD, BEHIND RASRAJ RESTAURANT, VILE PARLE (W) MUMBAI - 400056 VS. ACIT - 9 OLD CGO BUILDING, MUMBAI - 400020. PAN NO. AAACA5566E APPELLANT RESPONDENT ASSESSEE BY : MR. JITENDRA JAIN , AR REVENUE BY : MR. V. JUSTIN, DR DATE OF HEARING : 13/11/2017 DATE OF PRONOUNCEMENT : 27/12/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2010 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 52 , MUMBAI AND A RISES OUT OF THE PENALTY ORDER U/S 271(1)(C) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AGAINST THE ORDER OF THE LD. CIT(A) C ONFIRMING THE PENALTY OF RS.6,82,620/ - IMPOSED BY THE AO U/S 271(1)(C) OF THE ACT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 2010 - 11 ON 19.10.2010 DECLARING TOTAL INCOME OF RS.73,610/ - . THE ASSESSING OFFICER ( AO ) COMPLETED THE M/S AALAP CONSTRUCTION ITA NO. 1286/MUM/2017 2 ASSESSMENT U/S 143(3) ON 26.02.2013 DETERMINING THE INCOME AT RS.24,71,780/ - . WHILE COMPLETING THE ASSESSMENT, THE AO MADE INTER ALIA A DISALLOWANCE OF RS.22,09,127/ - . THE SAID DISALLOWANCE RELATES TO THE FOLLOWING SUND RY BALANCES RECEIVABLE WHICH WERE WRITTEN BACK BY THE ASSESSEE: I. M/S MURAN PROPERTY DEV. PVT. LTD. RS.8,97,127/ - II. M/S SIDDHI DWELLERS PVT. LTD. RS.3,61,000/ - III. M/S RAJPOLY PRODUCTS PVT. LTD. RS.9,51,000/ - TOTAL RS.22,09,127/ - THE AO THEN IMPOSED A PENALTY OF RS.6,82,620/ - U/S 271(1)(C) ON THE DISALLOWANCE OF THE ABOVE AMOUNT OF RS.22,09,127/ - . 4. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HELD THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.22 ,09,127/ - FOR WH ICH IT WAS CLEARLY NOT ELIGIBLE. AS PER HIM , THE EXPLANATION OFFERED BY THE ASSESSEE IN THIS REGARD WAS FOUND TO BE UNSATISFACTORY AND THEREFORE, PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C) ARE CLEARLY APPLICABLE. THUS THE LD. CIT(A) S USTAINED THE PENALTY OF RS.6,82,620/ - IMPOSED BY THE AO AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT THE CHARGE OF PENALTY IS NOT SPECIFIC AND THE AO HIMSELF IS NOT CLEAR ON THE EXACT CHARGE FO R WHICH PENALTY IS INITIATED. REFERRING TO THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PER I NCHERY (2017) 98 CCH 39, HE SUBMITS THAT THE PENALTY PROCEEDING INITIATED BY THE AO IS BAD IN LAW. 6. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). M/S AALAP CONSTRUCTION ITA NO. 1286/MUM/2017 3 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND THAT THE AO HAS INITIATED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND/OR CONCEALMENT OF INCOME IN THE ASSESSMENT ORDER DATED 26.02.2013 PASSED BY HIM WHEREAS HE HAS IMPOSED A PENALTY OF RS.6,82,620/ - ON THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. BEFORE A PENALTY IS IMPOSED, THE ASSESSEE MUST BE APPRISED OF THE PRECISE CHARGE BROUGHT AGAINST HIM. HE MUST BE TOLD DISTINCTLY WHETHER HE IS HELD GUILTY OF HAVING CONCEALED THE PARTICULARS OF HIS INCOME OR OF HAVING FURNISHED INACCURATE PARTICULARS THEREOF. SECTION 274(1) PROVIDES FOR A REASONABLE OPPORTUNITY TO BE GIVEN TO THE ASSESSEE SO THAT HE CAN UNDERSTAND THE CHARGE. THE BASIS OF THE ISSUANCE OF NOTICE SHOULD REMAIN THE SAME WHILE IMPOSING PENALTY. IF THE NOTICE IS ISSUED IN THE CONTEXT OF CONCEALMENT OF INCOME, THEN THE PENALTY CANNOT BE LEVIED BY SHIFTING THE BASIS TO INACCURACY OF PARTICULARS. THIS IS TO ENSURE THAT THE ASSESSEE GET S AN ADEQUATE OPPORTUNITY IN RESPECT OF THE DEFAULT WHICH IS DETECTED AND ALLEGED AGAINST HIM AND WHICH FORMS THE BASIS OF THE ISSUANCE OF THE NOTICE U/S 271(1)(C) AND ALSO TO ENSURE THAT HE IS NOT PUT TO PERIL OF ANSWERING AGAINST SOMETHING WHICH NEVER WA S SPECIFICALLY DETERMINED AS HIS DEFAULT. WE MAY REFER HERE TO THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN A.M. SHAH & CO. V. CIT (1999) 238 ITR 415, 433 (GUJ). THE SAME ISSUE ALSO AROSE IN SHRI SAMSON PERINCHERY (SUPRA) , BEFORE THE HONBLE BOMBAY H IGH COURT. WE EXTRACT BELOW THE DECISION DATED 05.01.2017 OF THE HONBLE HIGH COURT: 5. THE GRIEVANCE OF THE REVENUE BEFORE US IS THAT THERE IS NO DIFFERENCE BETWEEN FURNISHING OF INACCURATE PARTICULARS OF INCOME AND M/S AALAP CONSTRUCTION ITA NO. 1286/MUM/2017 4 CONCEALMENT OF INCOME. THUS, DISTINCTI ON DRAWN BY THE IMPUGNED ORDER IS BETWEEN TWEEDLEDUM AND TWEEDLEDEE. IN THE ABOVE VIEW, THE DELETION OF THE PENALTY IS UNJUSTIFIED. 6. THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN ASHOK PAI VS. CIT 292 ITR 11 [RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY (SUPRA)] WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C) OF THE ACT, CARRY DIFFERENT MEANING/CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNO T BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 7. THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FAVOUR OF THE RESPONDENT - ASSESSEE BY THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). NOTHI NG HAS BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOULD WARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). 7.1 THE ISSUE BEING SAME, WE FOLLOW THE ABOVE ORDER OF THE HONBLE BOMB AY HIGH COURT. 7.2 ALSO O N MERIT, THE ASSESSEE DESERVES RELIEF AS THE AO HAS DISALLOWED THE SUNDRY BALANCES OF RS.22,09,127/ - WRITTEN BACK BY THE ASSESSEE. IN CIT VS. RELIANCE PETROPRODUCTS (P) LTD . 322 ITR 158, IT HAS BEEN HELD BY THE HONBLE SUPREME COURT THAT MERELY BECAUSE ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR M/S AALAP CONSTRUCTION ITA NO. 1286/MUM/2017 5 WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C). 7.3 IN VIEW OF TH E ABOVE POSITION OF LAW, WE DELETE THE PENALTY OF RS.6,82,620/ - IMPOSED BY THE AO U/S 271(1)(C). 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/12/2017. SD/ - SD/ - (D.T. GARASIA) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 27/12/2017 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI