M/s. Kalpana Glass Fibre Pvt. Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 1403/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5362 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-06-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 28-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Initiation of penalty proceedings

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.1403/PUN/2016 $ $ / ASSESSMENT YEAR : 2010-11 M/S. KALPANA GLASS FIBRE PVT. LTD., GAT NO.77/81, AT POST SASEWASDI, MUMBAI-BANGALORE HIGHWAY, TAL BHOR, DISTRICT PUNE, PUNE -412205 PAN : AAACK6847L ....... / APPELLANT / V/S. DCIT, CIRCLE-11(1), PUNE / RESPONDENT ASSESSEE BY : NONE (WRITTEN SUBMISSION) REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 21.06.2018 / DATE OF PRONOUNCEMENT : 18.07.2018 / ORDER PER D. KARUNAKARA RAO, AM: THIS IS THE APPEAL FILED BY ASSESSEE AGAINST THE ORDER O F CIT(A)-7, PUNE, DATED 01-04-2016 FOR THE A.Y. 2010-11. 2. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED HERE AS UNDER : 1. THE LD. AO ERRED IN LEVYING PENALTY OF RS.99,16 4/- AND THE LD. CIT(A) ERRED IN APPROVING THE SAME. 2. THE LD. AO ERRED IN HOLDING THAT THE ASSESSEE HA S CONCEALED HIS INCOME BY PROVIDING INACCURATE PARTICULARS OF INCOM E, AND THE LD.CIT(A) ERRED IN CONFIRMING THE SAME. 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF FIBRE GLASS MOU LDINGS, SUPPLY, FABRICATION, ERECTION OF SIGNAGES, TRADING IN POLYCRET E PRODUCTS 2 ITA NO.1403/PUN/2016 M/S. KALPANA GLASS FIBRE PVT. LTD., AND PLASTIC MOLDERS. ASSESSEE FILED THE RETURN OF INCOME ON 13-10-2010 DECLARING LOSS OF RS.68,82,473/-. BASED ON THE INFORMATION FRO M THE O/O. THE DG INVESTIGATION, PUNE, AO NOTICED THAT THE ASSE SSEE MADE PURCHASES FROM COUPLE OF FIRMS, NAMELY GURURAJ ENTERPRISES RS.1,39,277/- AND MERCURY ENTERPRISES RS.1,94,757/- TOTA LING TO RS.3,33,757/-. AS PER THE INFORMATION FROM SALES TAX DEPAR TMENT OF MAHARASHTRA GOVT, THE NAMES OF THESE SUPPLIERS ARE IN TH E LIST OF HAWALA BILL ENTRIES/PARTIES. A NOTICE U/S.148 OF THE ACT WAS ISSUED AND IN RESPONSE, THE ASSESSEE SUBMITTED THE REPLY AND FILED THE REVISED RETUR OS INCOME. AO ACCEPTED THE SAME. HOWEVER, SINCE THE ASSES SEE REVISED THE RETURN ONLY AFTER RECEIVING THE NOTICE U/S.148 OF THE ACT , AO OPINED THAT THE ASSESSEE CONCEALED INCOME AND FURNISHED INACCURATE P ARTICULARS OF HIS INCOME. EVENTUALLY, THE AO ASSESSED THE LOSS AT RS.6 6,16,020/-. PENALTY PROCEEDINGS U/S.271(1)(C) WAS INITIATED AND LEVIED PENA LTY OF RS.99,165/-. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) UPHELD THE PENALTY LEVIED BY THE AO. 4. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE IS IN AP PEAL BEFORE THE TRIBUNAL WITH THE GROUNDS EXTRACTED ABOVE. 5. BEFORE US, THERE IS NONE TO REPRESENT THE CASE OF THE ASSESSEE DESPITE SERVICE OF NOTICE. ACKNOWLEDGEMENT IS PLACED ON RE CORD. HOWEVER, THE ASSESSEE FILED WRITTEN SUBMISSIONS VIDE LETTER DATED 18-06- 2018. ON GOING THROUGH THE WRITTEN SUBMISSIONS, FACTS OF T HE CASE AND THE AVAILABILITY OF ASSISTANCE OF LD. DR FOR THE REVENUE, WE A RE OF THE OPINION THAT THE APPEAL CAN BE TAKEN UP FOR ADJUDICATION. 6. IN THE WRITTEN SUBMISSIONS, THE ASSESSEE RAISED THE FOLLO WING ADDITIONAL GROUND (LEGAL NATURE) AND THE SAME READS AS UNDER : 3 ITA NO.1403/PUN/2016 M/S. KALPANA GLASS FIBRE PVT. LTD., 3. THE PENALTY PROCEEDINGS HAVE BEEN INITIATED ON THE BASIS OF INCURABLY DEFECTIVE NOTICE, WHICH DID NOT SPECIFY W HETHER THE PENALTY PROCEEDINGS WERE INITIATED FOR FILING OF IN ACCURATE PARTICULARS OF INCOME OR FOR CONCEALMENT OF INCOME. AS SUCH THE ENTIRE PROCEEDINGS ARE VOID AB-INITIO AND PENALTY O RDER ACCORDINGLY NEEDS TO BE SET-ASIDE. YOUR APPELLANT PRAYS THAT NON-MENTIONING OF THIS GR OUND WAS NEITHER WILLFUL NOR WRONGFUL AND PRAYS BEFORE YOUR HONOUR T O INCLUDE THIS GROUND AS IF FILED WITH THE ORIGINAL APPEAL MEMO; A FAVOUR FOR WHICH WE SHALL BE EVER OBLIGED. IN SUPPORT OF HIS CASE, THE ASSESSEE RELIED ON THE FOLLOWING JUDGMENTS : 1. CIT VS. M/S. SSES EMERALD MEADOWS SLP C.C.NO.114 85/2016, DATED 05-08-2016 2. CIT VS. M/S. SSAS EMERALD MEADOWS ITA NO.380/201 5, DATED 23- 11-2015. 3. SWATI PEARLS & JEWELLERS VS. DCIT ITA NO.1401/HYD /2014, DATED 04-12-2015. 7. CONSIDERING THE FACT THAT THE ADDITIONAL GROUND RAISED B Y THE ASSESSEE BEING PURELY A LEGAL ONE AND ALL FACTS ARE ALREAD Y BEFORE THE LOWER AUTHORITIES, THEREFORE, THE SAME IS ADMITTED FOR ADJUD ICATION IN THE LIGHT OF VARIOUS BINDING JUDGMENTS ON THE SAME. 8. LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO/CIT(A). 9. WE HAVE HEARD THE LD. DR FOR THE REVENUE AND PERUS ED THE ORDERS OF THE REVENUE AUTHORITIES AND THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE. ON GOING THROUGH THE FACTS OF THE CASE, WE PR OCEED TO ADJUDICATE THE PRELIMINARY ISSUE, I.E. RECORDING OF SATISFACTION QUA THE LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT BY THE AO. THE SATISFACTION RECORDED BY THE AO FOR INITIATING THE PENALTY P ROCEEDINGS U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THEREFOR E, THE SAME IS REPRODUCED AS UNDER : 4 ITA NO.1403/PUN/2016 M/S. KALPANA GLASS FIBRE PVT. LTD., 3.2 ASSESSEES SUBMISSION IS ACCEPTED. HOWEVER, T HE ASSESSEE HAS REVISED THE RETURN ONLY AFTER RECEIVING THE NOTICE U/S.148 OF THE ACT, MEANING THEREBY, CONSEQUENT UPON DETECTION OF UNDIS CLOSED INCOME BY THE DEPARTMENT. THEREFORE, I AM CONVINCED THAT THE ASSESSEE HAS CONCEALED AND FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND I AM SATISFIED THAT THERE HAS BEEN DEFAULT WITHIN THE ME ANING OF SECTION 271(1)(C) OF THE ACT. PENALTY PROCEEDINGS U/S.271( 1)(C) HAS, THEREFORE, BEEN INITIATED SEPARATELY. 9.1 WE ALSO PERUSED THE PENALTY ORDER DATED 28-03-2014 AND FIND THE SATISFACTION RECORDED BY THE AO FOR LEVYING THE PENALTY U/ S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS UN DER : 6. ASSESSEES SUBMISSION AS ABOVE IS DULY CONSIDER ED HOWEVER, THE SAME CANNOT BE ACCEPTED ON MERIT. SINCE THE ASSESS EE HAS REVISED THE RETURN ONLY AFTER RECEIVING THE NOTICE U/S.148 OF T HE ACT, MEANING THEREBY, CONSEQUENT UPON DETECTION OF UNDISCLOSED INCOME BY THE DEPARTMENT. I AM CONVINCED THAT THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OF RS.3,20,920/- BY FURNISHING INACCURATE PARTICULARS AND MADE ITSELF LIABLE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. I, T HEREFORE, DIRECT THE ASSESSEE TO PAY A SUM OF RS.99,165/- (NINETY THOUSAND ONE HU NDRED AND SIXTY FIVE ONLY) BY WAY OF PENALTY U/S.271(1)(C) OF THE A CT, WHICH IS EQUAL TO 100% OF TAX SOUGHT TO BE EVADED, THE WORKING OF WHI CH IS AS UNDER .. FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO DID NOT SPECIFY ANY LIM B OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. THIS MANNER OF RECORDING OF SA TISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APP LICABILITY OF SPECIFIC LIMB. THERE IS NO HARMONY BETWEEN THE INITIATION OF P ENALTY PROCEEDINGS AND AT THE TIME OF LEVYING THE PENALTY. THERE FORE, WE ARE OF THE OPINION THAT CONSIDERING THE BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) AS WELL AS T HE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. M ANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565, SUCH PENALTY OR DER IS UNSUSTAINABLE IN LAW LEGALLY. AO IS UNDER OBLIGATION TO SPECIF Y THE CORRECT LIMB AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. M/S. SSAS EMERALD MEADOWS (SUPRA) RELIED ON BY TH E ASSESSEE 5 ITA NO.1403/PUN/2016 M/S. KALPANA GLASS FIBRE PVT. LTD., ALSO SUPPORTS HIS CASE. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO B E QUASHED ON THIS LEGAL ISSUE. THUS, THE ORDER OF CIT(A) IS SET-ASIDE A ND DIRECT THE AO TO DELETE THE PENALTY. ACCORDINGLY, THE GROUNDS/ADDITION AL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 18 TH DAY OF JULY, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER / PUNE; / DATED : 18 TH JULY, 2018. SATISH ' ) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-7, PUNE 4. THE PR. CIT-6, PUNE , , # , / DR, ITAT, B BENCH, PUNE. 6. & / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.