Kalavati Hanumandas Agrawal, Dhule V. Assistant Commissioner of Income tax, Dhule

ITA 1323/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5496 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 24-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS SHABANA PARVEEN
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1323/PUN/2017 / ASSESSMENT YEAR : 2013-14 KALAVATI HANUMANDAS AGRAWAL, 3218, AGRA ROAD, OPP. SHERE PUNJAB LODGE, DHULE-424001. PAN : ACNPA1427E ....... / APPELLANT / V/S. ACIT, CIRCLE DHULE. / RESPONDENT ASSESSEE BY : NONE REVENUE BY : MRS. SHABANA PARVEEN / DATE OF HEARING : 29.08.2019 / DATE OF PRONOUNCEMENT : 29.08.2019 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-1, NASHIK DATED 13.04.2017 FOR THE ASSESSMENT YEAR 2013-14. 2. THE EFFECTIVE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AS UNDER :- THE PENALTY LEVIED U/S 271(1)(C) SHOULD BE CANCELLED. 3. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF SEMI WHOLESALER AS COMMISSION AGENT IN 2 ITA NO.1323/PUN/2017 KEROSENE DISTRIBUTION, FDR AND INTEREST INCOME. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.15,16,234/-. AT THE END OF THE ASSESSMENT, THE ASSESSING OFFICER ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.16,66,720/- AFTER MAKING CERTAIN ADDITIONS. FURTHER, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDING IN RESPECT OF AN ADDITION OF RS.74,486/- U/S 14A OF THE ACT STATING THAT .. IT IS A CASE OF CONCEALED INCOME/UNEXPLAINED PARTICULARS OF EXPENDITURE .. (BOTH THE LIMBS MENTIONED AND SPECIFIC LIMB NOT TICKED) . (PARA 5 OF THE ASSESSMENT ORDER). 4. IN THE PENALTY ORDER, THE ASSESSING OFFICER WITHOUT MENTIONING ANY LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT LEVIED THE PENALTY OF RS.23,016/- U/S 271(1)(C) OF THE ACT IN THE HANDS OF THE ASSESSEE. 5. THE CIT(A), RELYING ON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF M/S. MAK DATA PVT. LTD. VS. CIT, 38 TAXMANN.COM 448 (SC) AND VARIOUS OTHER JUDICIAL PRECEDENTS ON THIS ISSUE, CONFIRMED THE PENALTY AS LEVIED BY THE ASSESSING OFFICER. THE CONTENTS OF PARA 6 ONWARDS OF THE APPELLATE ORDER ARE RELEVANT IN THIS REGARD. 6. AGGRIEVED WITH THE SAID DECISION OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE ABOVE EXTRACTED GROUND. 7. BEFORE US, THERE IS NONE TO REPRESENT THE CASE FROM ASSESSEES SIDE. HOWEVER, LD. DR FAIRLY SUBMITTED THAT THE LEGAL ISSUE RELATING TO THE LIMB 3 ITA NO.1323/PUN/2017 OF CLAUSE (C) OF SECTION 271(1) OF THE ACT IS INVOLVED. HOWEVER, THE LD. DR FOR THE REVENUE HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 8. CONSIDERING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THIS IS A CASE WHERE THE ASSESSING OFFICER FAILED TO RECORD PROPER AND SUSTAINABLE SATISFACTION WHILE INITIATING AND LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. IN THIS REGARD, WE PURSED THE ORDERS OF THE REVENUE AUTHORITIES. 9. ON PERUSAL OF PARA 5 OF THE ASSESSMENT ORDER , WE FIND THE FOLLOWING IS THE REASONS FOR INITIATION OF PENALTY PROCEEDINGS :- 7. .. IT IS A CASE OF CONCEALED INCOME/UNEXPLAINED PARTICULARS OF EXPENDITURE .. 10. FURTHER, WE ALSO PERUSED THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER ON 28.07.2016. ON PERUSAL OF THE PENALTY ORDER, WE FIND THE ASSESSING OFFICER WITHOUT MENTIONING ANY LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT, LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT. 11. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSING OFFICER SUFFERS FROM AMBIGUITY IN HIS MIND WHILE RECORDING THE SATISFACTION AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 4 ITA NO.1323/PUN/2017 12. FROM THE MATERIAL AVAILABLE ON RECORD, IT IS SEEN THAT THE ORDER OF THE CIT(A) SHALL HAVE TO BE SET-ASIDE ON THE LEGAL ISSUE RELATING TO THE AMBIGUITY IN THE MIND OF THE ASSESSING OFFICER WHILE DEALING WITH THE INITIATION AND LEVY OF PENALTY. IN VIEW OF THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOUS BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565, WE ARE OF THE OPINION, THE PENALTY LEVIED BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW AND THE SAME IS WRONGLY UPHELD BY THE CIT(A). 13. THEREFORE, CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS, WE ARE OF THE VIEW THAT SUCH PENALTY IS UNSUSTAINABLE IN LAW LEGALLY. IT IS A SETTLED LEGAL PROPOSITION THAT THE ASSESSING OFFICER IS UNDER OBLIGATION TO SPECIFY THE APPROPRIATE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WITHOUT GOING INTO THE MERITS OF THE CASE AND WITHOUT WAITING FOR THE AR FOR THE ASSESSEE, WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ENTIRE PENALTY IMPOSED BY HIM. ACCORDINGLY, THE LEGAL GROUND RAISED BY THE ASSESSEE IS ALLOWED. 5 ITA NO.1323/PUN/2017 14. CONSIDERING THE RELIEF, THE ADJUDICATION OF OTHER GROUNDS ON MERITS OF PENALTY BECOMES AN ACADEMIC EXERCISE ONLY. ACCORDINGLY, THE OTHER GROUNDS ARE DISMISSED AS ACADEMIC. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF AUGUST, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 29 TH AUGUST, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-1, NASHIK. 4. THE CCIT, NASHIK. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.