Kalwan Merchants Co-op Bank Ltd, Nashik V. Assistant Commissioner of Income tax, Nashik

ITA 1352/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0448 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 274

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1352/PUN/2017 / ASSESSMENT YEAR : 2010-11 KALWAN MERCHANTS CO - OP BANK LTD., 1, SAPTASHRUNGI MAIN ROAD, AT POST KALWAN, TALUKA KALWAN, DIST. NASHIK. PAN : AAAAT4727G. . / APPELLANT V/S THE ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 1, NASHIK. . / RESPONDENT ASSESSEE BY : SHRI SANKET JOSHI REVENUE BY : SHRI PANKAJ GARG. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF TH E ORDER OF COMMISSIONER OF INCOME TAX (A) 1, NASHIK DATED 16.03.20 17 FOR THE ASSESSMENT YEAR 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A CO-OPERATIVE BANK WHO FILED ITS RETURN OF IN COME FOR A.Y. 2010-11 ON 04.10.2010 DECLARING TOTAL INCOME AT RS.1,06,24,630/-. THE CASE WAS SELECTED FOR SCRUTINY AND T HEREAFTER / DATE OF HEARING : 25.07.2019 / DATE OF PRONOUNCEMENT: 12.09.2019 2 ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.07.03.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,36,74,270/- INTER-ALIA BY MAKING ADDITIONS OF RS.8,57,368/- ON ACCOUNT OF EXCESS CLAIM OF DEDUCTION U/S 36(I)(VIIA) AND RS.4,42,168/- ON ACCOUNT OF INTEREST ON BUILDING FUND, RESER VE FUND AND DEPOSITS ETC. ON THE AFORESAID ADDITIONS, AO VIDE OR DER DT. 22.01.2016 PASSED U/S 271(1)(C) OF THE ACT LEVIED PENALTY OF RS.4,01,556/- U/S 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORD ER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORD ER DT.16.03.2017 (IN APPEAL NO.NSK/CIT(A)-1/1691/2015-16) DISM ISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF L D.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE V ARIOUS GROUNDS. THE GROUNDS BEING ARGUMENTATIVE IN NATURE ARE NOT RE- PRODUCED BUT THE SOLE CONTROVERSY OF THE ASSESSEE IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 3. ON MERITS OF LEVY OF PENALTY, LD.A.R. SUBMITTED THAT WHILE PASSING THE ASSESSMENT ORDER AND WHILE RECORDING SATISFA CTION, AO WAS NOT CLEAR AS TO WHETHER THE ASSESSEE HAD FURNISHE D INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME, MORE SO AS HE HAS RECORDED SATISFACTION FOR CONCEALMENT OF INCOME AS WELL AS FO R FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IN SUPPOR T OF HIS CONTENTION, HE POINTED TO PARA 5.4 OF THE ASSESSMEN T ORDER. THEREAFTER, HE SUBMITTED THAT IN THE PENALTY ORDER ALSO, AO HAS NOT SPECIFIED WHETHER THE PENALTY IS FOR CONCEALMENT OF INCOME O R FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND HAD LEVIED PENALTY ON BOTH THE LIMBS. HE THEREFORE, RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHE RY 3 REPORTED IN (2017) 392 ITR 4 (BOM) SUBMITTED THAT IN THE A BSENCE OF PROPER SHOW CAUSE NOTICE TO ASSESSEE, PENALTY U/S 271(1 )(C) CANNOT BE LEVIED AND THEREFORE URGED THAT PENALTY LEVIED BY AO BE DELETED. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPEC T TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. BEFORE US, LD.A.R. SUBMITTED THAT WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT, AO HAD MADE ADDITIONS OF RS.8,57,368/- ON ACCOUNT OF EXCESS CLAIM OF DED UCTION U/S 36(I)(VIIA) OF THE ACT AND RS.4,42,168/- ON ACCOUNT OF INT EREST ON BUILDING FUND, RESERVE FUND AND DEPOSITS ETC. THE PERUSAL O F ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT REVEALS THAT IN THE ASSESSMENT ORDER AO HAD NOT RECORDED CLEAR SATISFACTION AS TO WHETHER ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED PARTICULARS OF INCOME, MORE SO HE HAS RE CORDED SATISFACTION FOR CONCEALMENT OF INCOME AS WELL AS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREAFTER, IN THE PENALT Y ORDER PASSED U/S 271(1)(C) OF THE ACT, AO HAD LEVIED PENALTY FOR CONCEALMENT OF INCOME AS WELL AS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IT IS A SETTLED LAW THAT WHILE LEVYING PENALTY, THE AO HAS TO RECORD CLEAR SATISFACTION AND THEREAFTER COME TO A FINDING IN RESPE CT OF ONE OF THE LIMBS, WHICH IS SPECIFIED UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SATISFACTION WHILE COMPLETING THE ASS ESSMENT AS TO WHETHER THE ASSESSEE HAD FURNISHED INACCURATE PART ICULARS OF INCOME OR CONCEALED HIS INCOME. THEREAFTER, NOTICE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO THE ASSESS EE. THE ASSESSING OFFICER THEREAFTER HAS TO LEVY PENALTY UNDER SEC TION 4 271(1)(C) OF THE ACT FOR NON-SATISFACTION OF EITHER OF THE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAS TO CO ME TO A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED HIS IN COME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE HONBLE BOMB AY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY (SUPRA) HELD THAT WHERE INITIATION OF PENALTY IS ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 5. CONSIDERING THE FACTS OF THE PRESENT CASE IN THE LIGHT O F THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSO N PERINCHERY (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE, THE BASIC CONDITION FOR LEVY OF PENALTY HAS NOT BEEN FULFILLED AND THAT THE PENALTY ORDER SUFFERS FROM NON-EXERCISING OF JURISDICTION PO WER AND THEREFORE PENALTY ORDER CANNOT BE UPHELD. WE ACCORDINGLY SET ASIDE THE PENALTY ORDER PASSED BY AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 12 TH DAY OF SEPTEMBER, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 12 TH SEPTEMBER, 2019. YAMINI 5 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, NASHIK. PR.CIT-1, NASHIK. '#$ %%&',) &', / DR, ITAT, A PUNE; $,-./ GUARD FILE. / BY ORDER // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.