ANIL VINODBHAI MEHTA, MUMBAI V. ITO 14(3)(1), MUMBAI

ITA 1324/MUM/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0252 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Opportunity of being heard
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 1324/MUM/2013 ITA NO. 1392/MUM/2015 (ASSESSMENT YEARS: 2008-09 & 2007-08) SHRI ANIL V. MEHTA 32, SHARAF MANSION PRINCESS STREET MUMBAI 400002 VS. INCOME TAX OFFICER - 14(3)(1) EARNEST HOUSE MUMBAI 400021 PAN AEWPM6108B APPELLANT RESPONDENT APPELLANT BY: SHRI SHAILESH PARMAR RESPONDENT BY: SHRI RAJESH KUMAR YADAV DATE OF HEARING: 10.01.2018 DATE OF PRONOUNCEMENT: 14.02.2018 O R D E R PER RAJESH KUMAR, AM THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAIN ST THE ORDERS OF THE CIT(A)-25, MUMBAI DATED 14.12.2012 AND 11.11.20 14 FOR ASSESSMENT YEARS 2008-09 AND 2007-08 RESPECTIVELY. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUND S OF APPEAL IS AGAINST THE CONFIRMATION OF PENALTY BY CIT(A) AS LE VIED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 2016 (HERE INAFTER THE ACT). THE ASSESSEE ALSO FILED ADDITIONAL GROUND ON TECHNICAL AND LEGAL ISSUE CHALLENGING THE VALIDITY OF THE ORDER IMPOSING PENA LTY VIDE LETTER DATED 26.09.2007 WHICH IS REPRODUCED AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW, THE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) BY THE LD. ASSESSING OFFICER IN A MECHANI CAL MANNER WITHOUT RECORDING ANY SATISFACTION IS BAD IN LAW AN D THE CONSEQUENTIAL PENALTY ORDER PASSED UNDER SECTION 27 1(1)(C) OF THE ACT IS BAD IN LAW AND NOT SUSTAINABLE IN THE EYES O F LAW. ITA NO. 1324/M/2013 & 1392/M/2015 SHRI ANIL V. MEHTA 2 3. WE SHALL FIRST DEAL WITH THE LEGAL ISSUE RAISED BY THE ASSESSEE IN THE ADDITIONAL GROUND OF APPEAL. THE LEARNED A.R. POINT ED OUT THAT THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE INVOLVES A POINT OF LAW FOR WHICH THE NECESSARY EVIDENCES ARE AVAILABLE ON RECORD AND THEREFORE THE SAME BE ADMITTED FOR ADJUDICATION AS THE SAME DO NO T REQUIRE ANY FURTHER VERIFICATION OF RECORD. 4. THE LEARNED D.R., ON THE OTHER HAND, SUBMITTED THAT THE ISSUE RAISED BY THE ASSESSEE WAS NOT RAISED BEFORE THE LOWER AUT HORITIES. 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. A PERUSAL OF THE ADDITIONAL GROUND OF APPEAL REVEAL S THAT THE ISSUE INVOLVED IS PURELY A LEGAL AND TECHNICAL ISSUE AND IT DOES NOT REQUIRE ANY FURTHER VERIFICATION OF FACTS AND THEREFORE THE SAME DESERV ES TO BE ADMITTED FOR ADJUDICATION AS THE SAME INVOLVES A POINT OF LAW. T HE CASE OF THE ASSESSEE IS DULY SUPPORTED BY THE RATIO LAID DOWN BY THE HON 'BLE SUPREME COURT IN THE CASES OF NATIONAL THERMAL POWER CORPORATION LTD . VS. CIT 229 ITR 283 AND JUTE CORPORATION OF INDIA LTD. 187 ITR 688. IT IS CLEAR THAT THE ISSUE RAISED BY THE ASSESSEE IN THE ADDITIONAL GROUND GOE S TO THE ROOT OF THE JURISDICTION OF THE AO TO IMPOSE PENALTY UNDER SECT ION 271(1)(C) OF THE ACT AND THEREFORE THE SAME IS RELEVANT FOR DETERMINING THE LIABILITY OF THE ASSESSEE TO PAY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN VIEW OF THESE FACTS THE ADDITIONAL GROUND OF THE ASSESSEE IS ADMI TTED FOR ADJUDICATION. 6. THE LEGAL ISSUE RAISED BY THE ASSESSEE IS THAT NOT ICE UNDER SECTION 274 R.W.S, 271(1)(C) OF THE ACT HAS BEEN ISSUED BY THE AO IN A MECHANICAL MANNER WITHOUT RECORDING ANY SATISFACTION AND WITHO UT STRIKING OFF ONE OF THE TWO LIMBS, I.E. CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS OF INCOME, CONSEQUENTLY THE PENALTY OR DER PASSED BY THE AO UNDER SECTION 271(1)(C) IS BAD IN LAW AND THE SAME SHOULD BE QUASHED. 7. THE LEARNED A.R. VEHEMENTLY SUBMITTED BEFORE US THA T THE NOTICE HAS BEEN ISSUED BY THE AO IN A MECHANICAL MANNER WITHOU T STRIKING OFF ONE OF THE TWO LIMBS UNDER WHICH PENALTY WAS PROPOSED TO B E LEVIED AND THEREFORE THE ASSESSEE WAS DEPRIVED OF THE OPPORTUNITY TO BE HEARD ON SPECIFIC CHARGE ITA NO. 1324/M/2013 & 1392/M/2015 SHRI ANIL V. MEHTA 3 THEREBY CAUSING MISCARRIAGE OF PRINCIPLES OF NATURA L JUSTICE AS THE ASSESSEE WAS NOT KNOWING ON WHICH LIMB THE PENALTY WAS BEING LEVIED AND THEREFORE THE PENALTY ORDER IS BAD IN LAW. HE FURTHER SUBMITT ED THAT THE ACT OF THE AO CLEARLY SHOWS NON APPLICATION OF MIND IN AS MUCH AS THE SAME HAS BEEN ISSUED IN THE STANDARD FORMAT WITHOUT STRIKING OFF THE IRRELEVANT PORTION OF THE NOTES. THE ASSESSEE RELIED ON FOLLOWING DECISIO NS WHEREIN SIMILAR ISSUE HAS BEEN RAISED AND PENALTY WAS DELETED DUE TO NON STRIKING OF IRRELEVANT PORTION IN THE NOTICE ISSUES UNDER SECTION 271(1)(C ): - I. MEHERJEE CASSINATH HOLDINGS PVT. LTD., ITA NO. 2 555/MUM/2012 DATED 28.04.2017 II. JEHANGIR HC JEHANGIR, ITA NO. 1261/MUM/2011 DAT ED 17.05.2017 III. M/S. WADHWA ESTATE & DEVELOPERS INDIA PVT. LTD ., ITA NO. 2158/MUM/2016 DATED 24.02.2017 IV. SHRI SAMSON PERINCHERY, ITA NOS. 1154 OF 2014, 953 OF 2014, 1097 OF 2014 & 1226 OF 2014 DATED 05.01.2017 (HON'BLE BOMBA Y HIGH COURT) V. M/S. SSA'S EMERALD MEADOWS, CC NO. 1 1485/2016 DATED 05.08.2016 (HON'BLE SUPREME COURT) VI. M/S. SSA'S EMERALD MEADOWS, ITA NO. 380 OF 2015 DATED 23.11.2015 (HON'BLE KARNATAKA HIGH COURT) VII. MRS. PIEDADE PERINCHERY, ITA NO. 1310 OF 2014 DATED 10.01.2017 (HON'BLE BOMBAY HIGH COURT) 8. THE LEARNED D.R., ON THE OTHER HAND, POINTED OUT TH AT THE INTENTION OF THE AO WAS ALREADY COMMUNICATED TO THE ASSESSEE IN THE ASSESSMENT ORDER WHERE THE PENALTY PROCEEDINGS HAS BEEN INITIA TED ON BOTH THE LIMBS, I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCU RATE PARTICULARS OF INCOME AND SIMILARLY THE NOTICE WAS ALSO ISSUED WIT HOUT STRIKING OFF ANY OF THE TWO LIMBS. HOWEVER, FINALLY WAS IMPOSED FOR FUR NISHING OF INACCURATE PARTICULARS OF INCOME. THE LEARNED D.R. SUBMITTED T HAT THE ASSESSEE WAS GIVEN FULL PARTICULARS BEFORE LEVYING PENALTY AND A VERY DETAILED DISCUSSION WAS MADE IN THE PENALTY ORDER AFTER CONSIDERING THE REPLY OF THE ASSESSEE. THEREFORE, NON STRIKING OF THE IRRELEVANT PORTION I N THE PENALTY NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) OF THE AC T DATED 27.12.2010 DOES NOT CREATE ANY AMBIGUITY AS THE ASSESSEE WAS AWARE THAT THE PENALTY PROCEEDINGS HAVE BEEN INITIATED FOR CONCEALMENT OF INCOME AS WELL AS ITA NO. 1324/M/2013 & 1392/M/2015 SHRI ANIL V. MEHTA 4 FURNISHING OF INACCURATE PARTICULARS OF INCOME. FUR THER THE CIT-DR RELIED ON THE DECISION IN THE CASE OF CIT VS. SMT. KAUSHAL YA & OTHERS 216 ITR 660 (BOM) AND THE DECISION OF THE ITAT DELHI BENCHE S IN THE CASE OF SHILPY SHARMA VS INCOME TAX OFFICER IN ITA NO. 3728/MUM/20 14 IN SUPPORT OF HIS ARGUMENTS AND PRAYED BEFORE THE BENCH THAT THE ORDER OF THE CIT(A) BE SUSTAINED ON THIS ISSUE CONSIDERING THE RATIO LAID DOWN IN THE AFORESAID DECISIONS. 9. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD INCLUDING THE IMPUGNED ORDER AND DECISIONS REFERRED BY BOTH THE PARTIES. THE UNDISPUTED FACTS ARE THAT THE AO, WHILE FRAMING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT INITIATED PENALTY PROCEED INGS FOR CONCEALMENT OF INCOME AND FILING OF INACCURATE PARTICULARS OF INCO ME, THUS THEREBY INITIATING PENALTY PROCEEDINGS FOR BOTH THE LIMBS. SIMILARLY, WHILE ISSUING PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE AC T DATED 27.12.2010 DID NOT STRIKE OFF ONE OF THE TWO LIMBS WHICH WAS RELEV ANT THUS THE ASSESSEE WAS NOT APPRAISED OF THE EXACT CHARGE ON WHICH PENALTY WAS PROPOSED TO BE LEVIED. THUS, WE ARE OF THE VIEW THAT IT IS MANDATO RY ON THE PART OF THE AO TO SPECIFY SPECIFICALLY THE CHARGE ON WHICH PENALTY IS PROPOSED TO BE LEVIED AND NON STRIKING OF THE RELEVANT PORTION WOULD GO TO TH E ROOT OF THE JURISDICTION OF THE AO TO PASS PENALTY ORDER. THE CASE OF THE ASSES SEE IS CLEARLY COVERED BY THE JUDGEMENTS OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASES OF MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565 A ND M/S. SSAS EMERALD MEADOWS IN ITA NO. 380 OF 2015 DATED 23.11. 2015 WHEREIN THE SLP FILED BEFORE THE HON'BLE SUPREME COURT WAS ALSO DISMISSED. IN THE CASE OF SHRI SAMSON PERINCHERY IN ITA NOS. 1154 OF 2014, 953 OF 2014, 1097 OF 2014 AND 1126 OF 2014 DATED 05.01.2017 THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT THE ORDER IMPOSING PENALTY UNDER SECT ION 271(1)(C) OF THE ACT HAS TO BE MADE ONLY ON THE GROUND ON WHICH PENALTY PROCEEDINGS HAS BEEN INITIATED. IN VIEW OF THE RATIO LAID DOWN IN THESE DECISIONS WE ARE OF THE VIEW THAT IN THE ASSESSMENT ORDER THE PENALTY WAS INITIA TED ON BOTH THE LIMBS WHEREAS IT WAS FINALLY IMPOSED OF ORDERS PASSED BY THE AO UNDER SECTION 274 R.W.S. 271(1)(C) IMPOSING PENALTY SUFFER FROM S ERIOUS JURISDICTIONAL ITA NO. 1324/M/2013 & 1392/M/2015 SHRI ANIL V. MEHTA 5 DEFECT AND THEREFORE HAS TO BE REVERSED. WE THEREFO RE SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE PENALTY. 10. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE AR E ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2018. SD/ - SD/ - (D.T. GARASIA) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14 TH FEBRUARY, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -25, MUMBAI 4. THE CIT - 14, MUMBAI 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.