Ambadas K. Lavhale, Pune V. Deputy Commissioner of Income-tax,

ITA 1292/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3203 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-05-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUDHANSHU SHEKHAR
• Assessee Lawyers: PAVAN CHAKRAPANI
• Keywords: Salary income; Bonafide belief; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO. 1292/PUN/2016 / ASSESSMENT YEAR : 2008-09 SHRI AMBADAS K. LAVHALE, E-203, LA VIDA LOCA, NEAR GOVIND GARDEN, PIMPLE SAUDAGAR, PUNE - 411 027 PAN : ABAPL4505C ....... / APPELLANT / V/S. DCIT, CIRCLE-7, PUNE / RESPONDENT ASSESSEE BY : SHRI PAVAN CHAKRAPANI REVENUE BY : SHRI SUDHANSHU SHEKHAR / DATE OF HEARING : 06.08.2018 / DATE OF PRONOUNCEMENT : 14.08.2018 / ORDER PER D. KARUNAKARA RAO, AM: THIS IS THE APPEAL FILED BY ASSESSEE AGAINST THE ORDER O F CIT (APPEALS)-3, PUNE, DATED 16.02.2016 FOR THE A.Y. 2008-09. 2. ASSESSEE RAISED THE FOLLOWING CORE GROUNDS ON MERIT AND THE SAME ARE EXTRACTED HERE AS UNDER : 1. THE APPELLANT WAS UNDER A BONAFIDE BELIEF THAT INVESTING THE CAPITAL GAIN INTO THE NEW HOUSE PROPERTY IS EXEMPT FROM CAP ITAL GAIN TAX. AS SUCH, THE SAID INCOME WAS NOT OFFERED TO TAX. THERE WAS NO ANY MALAFIDE INTENTION TO FURNISH ANY INACCURATE PARTICULARS OF INCOME OR HIDE SOMETHING. 2. HOWEVER, THE LD. AO, WITHOUT APPRECIATING THE FA CTS OF THE CASE, PASSED THE PENALTY ORDER U/S.271(1)(C) OF THE ITA, 1961 ON 27-06-2011, LEVYING A PENALTY OF RS.7,02,313/- FOR FURNISHING I NACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. 2 ITA NO.1292/PUN/2016 SHRI AMBADAS K. LAVHALE 2.1 ASSESSEE ALSO RAISED THE FOLLOWING ADDITIONAL GROUNDS ON LEGAL ISSUE AND THE SAME READ AS UNDER : 1. THE ORDER OF PENALTY PASSED BY THE LD. AO U/S.271(1 )(C) OF THE ACT IS WITHOUT JURISDICTION AS THE MANDATORY CONDITION S FOR INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT HAS NOT BEEN COMPLIED WITH AND THE NOTICE ISSUED U/S.274 OF THE ACT IS AN I NVALID NOTICE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER OF PENALTY PASSED BY THE LD. AO IS BAD I N LAW AS THE PENALTY WAS INITIATED UNDER ONE LIMB (I.E.) FURNISHI NG INACCURATE PARTICULARS OF INCOME AND PENALTY WAS LEVIED UNDER AN OTHER LIMB (I.E.) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSE E IS AN INDIVIDUAL AND FILED THE RETURN OF INCOME ON 31-07-2008 DECLA RING TOTAL INCOME OF RS.11,92,695/-. AS PER FORM 16, ASSESSEE DECLARE D THE INCOME FROM SALARY AT RS.13,42,695/- AFTER ALLOWING EXEMPTION U/S.10 OF THE I.T. ACT. DURING THE YEAR UNDER CONSIDERATION, AO N OTICED THAT ASSESSEE SOLD AN IMMOVABLE PROPERTY SITUATED AT GOREGAO N (W), MUMBAI AND FAILED TO SHOW CAPITAL GAINS FROM THE SAID PROPERTY. EV ENTUALLY, THE AO MADE ADDITION OF RS.23,47,700/- ON THE SAME UNDER THE HEAD SHORT TERM CAPITAL GAIN. PENALTY PROCEEDINGS WERE INITIATED FOR FUR NISHING INACCURATE PARTICULARS OF INCOME U/S.271(1)(C) OF THE ACT AND A PENALTY OF RS.7,02,313/- WAS IMPOSED ON THE ASSESSEE. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) UPHELD THE PENALTY LEVIED BY THE AO . AGGRIEVED WITH THE SAME, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, LD. COUNSEL SUBMITTED THAT THERE IS DELAY OF 2 8 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL AND REFERRED TO THE A FFIDAVIT FILED BY THE ASSESSEE. ON PERUSAL OF THE SAME, IT IS NOTICED THAT THE ASSESSEE AS WELL AS HIS BROTHER, WHO WAS LOOKING AFTER THE TAX MATTERS OF THE ASSESSEE WERE OUT OF STATION. FURTHER, THE ORDER OF CIT(A) WAS MISP LACED AND HENCE THE DELAY IN FILING THE APPEAL. 3 ITA NO.1292/PUN/2016 SHRI AMBADAS K. LAVHALE CONSIDERING THE CONTENTS OF THE ABOVE AFFIDAVIT, WE ARE OF THE OPINION THAT THE DELAY IN FILING OF THE APPEAL LATE BY 28 DAYS NEEDS TO BE CONDONED AS THERE WAS REASONABLE CAUSE FOR NOT FILING THE APPEAL WITHIN THE STIPULATED TIME. THEREFORE, THE DELAY IS CONDONED AND THE APPEAL IS TAKEN UP FOR ADJUDICATION IN THE FOLLOWING PARAGRAPHS. 5. FURTHER ALSO, AT THE OUTSET, LD. COUNSEL FOR THE ASSES SEE REFERRING TO THE ADDITIONAL GROUNDS RAISED (LEGAL IN NATURE) SUBMITTE D THAT THIS IS A CASE WHERE THE AO FAILED TO RECORD VALID SATISFACTION AT TH E TIME OF INITIATION AS WELL AS AT THE TIME OF LEVYING THE PENALTY. HIGHLIG HTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPE CIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOU S BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (20 17) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH C OURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565, LD. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTE NTION TO THE ASSESSMENT ORDER AS WELL AS THE PENALTY ORDER HIGHLIGHTIN G THE ABOVE LEGAL DEFICIENCIES. LD. COUNSEL PRAYED FOR ADMITTING THE LEGAL GROUNDS AS NO FRESH FACTS ARE REQUIRED TO BE INVESTIGATED. 6. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDER S OF AO/CIT(A). 7. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS O F THE REVENUE. ON GOING THROUGH THE FACTS OF THE CASE AND THE ARGUMEN TS OF THE LD. COUNSEL, WE ADMIT THE ADDITIONAL GROUNDS RAISED BY THE ASS ESSEE ON THE SPECIFIC LEGAL ISSUE, I.E. RECORDING OF PROPER SATISFACTION BY THE AO. WE 4 ITA NO.1292/PUN/2016 SHRI AMBADAS K. LAVHALE PERUSED THE ORDER OF THE AO AND FIND THAT THE AO INITIATE D THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS WHEREAS IN THE PENALTY ORDER IT WAS MENTIONED AS FOR CONCEALMENT AND FOR FURNISHING INACCURATE PARTICULA RS OF INCOME. THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXIST ENCE OF AMBIGUITY IN THE MIND OF THE AO WITH REFERENCE TO THE APP LICABLE LIMB OF CLAUSE (C). THEREFORE, WE ARE OF THE OPINION THAT CONSIDER ING THE ABOVE REFERRED BINDING JUDGMENTS SUCH PENALTY ORDER IS UNSUSTA INABLE IN LAW LEGALLY. AO IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW O F THE ABOVE DELIBERATION ON THIS ISSUE, WE ARE OF THE OPINION THAT THE P ENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, WE SET A SIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. ACCORDIN GLY, THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE A LLOWED ON TECHNICAL GROUND WITHOUT GOING INTO THE MERITS OF THE ISSUE. 8. CONSEQUENTLY, THE ADJUDICATION OF THE GROUNDS RAISED BY THE ASSESSEE ON MERITS BECOMES AN ACADEMIC EXERCISE. THERE FORE, THE RELEVANT GROUNDS ON MERITS ARE DISMISSED AS ACADEMIC. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 14 TH DAY OF AUGUST, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 14 TH AUGUST, 2018. SATISH 5 ITA NO.1292/PUN/2016 SHRI AMBADAS K. LAVHALE # # # # / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-3, PUNE. 4. THE PR. CIT-4, PUNE. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. ' / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.