Sh. Janak Raj, Muktsar V. The Income Tax Officer, Muktsar

ITA 146/ASR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9662 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 08-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Keywords: Initiation of penalty proceedings
• Section: 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (SMC). BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.146(ASR)/2016 ASSESSMENT YEAR:2006-07 PAN: AAMPR5675A SH. JANAK RAJ PROP. VS. INCOME TAX OFFICER, M/S. MURARI LAL JANAK RAJ, WARD 2(2), MUKTSAR. HAKIMAN WALI GALI, MUKTSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. ASHWANI KALIA, CA RESPONDENT BY: SH. S.S. KANWAL, DR DATE OF HEARING: 14/07/2016 DATE OF PRONOUNCEMENT: 01/08/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2006-07 AGAINST THE ACTION THE LD. CIT(A), BATHINDA, CONF IRMING THE PENALTY OF RS.1,40,375/- IMPOSED BY THE AO U/S 271(1)(C) OF TH E I.T. ACT, 1961. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSMENT IN THIS CASE WAS FRAMED AT A TOTAL INCOME OF RS.6,25,462/- AGAINST T HE RETURNED INCOME OF RS.89,711/-. THE AO MADE THE ADDITION OF RS.5,35,69 7/- FOR THE ON MONEY ALLEGED TO HAVE BEEN PAID BY THE ASSESSEE FOR THE PURCHASE OF 33 MARLAS OF LAND. A SEARCH UNDER SECTION 132 OF THE A CT WAS CARRIED OUT AT THE BUSINESS AND RESIDENTIAL PREMISES OF ONE SH. RA JAN SETIA AND DURING THE SEARCH, SOME DOCUMENTS WERE FOUND, WHICH INDICA TED THE DETAIL OF PURCHASE AND SALE OF 18 ACRE OF LAND, SITUATED AT V ILLAGE CHAK SARKAR, ITA NO.146(ASR)/2016 ASSESSMENT YEAR: 2006-07 2 BETWEEN YADWINDER SINGH BAWA AND GURCHARAN SINGH, S URJIT SINGH AND THEIR FAMILY MEMBERS. SH. RAJAN SETIA, IN HIS STATE MENT, STATED THAT HE SETTLED THE DISPUTE BETWEEN THE ABOVE NAMED BUYERS AND SELLERS IN RESPECT OF THE LAND DEAL. THE STATEMENT OF THE BUYE R, SH. YADWINDER SINGH, WAS ALSO RECORDED AND HE STATED THAT HE AND HIS FAMILY MEMBERS ACQUIRED ONLY 8.5. ACRES OF LAND AND HE HAD NO KNOW LEDGE ABOUT THE BALANCE LAND. SUBSEQUENTLY, HE FILED AN APPLICATION BEFORE THE SETTLEMENT COMMISSION STATING THAT HE AND HIS FAMILY MEMBERS H AD PURCHASED ONLY 44 KANALS 11 MARLAS OF AGRICULTURE LAND FROM SH.SUR JIT SNGH AND HIS FAMILY MEMBERS AND I KANAL AND 1 MARLA FROM SATNAM SINGH. HE FURTHER STATED THAT 9 KANALS OF LAND WAS GOT EXCHANGED WITH DALEEP SINGH AND SURJIT KAUR, WITH LAND MEASURING 22 KANAL. SH. YADW INDER SINGH BAWA ADMITTED IN THE SETTLEMENT APPLICATION THAT SALE DE ED WAS EXECUTED FOR RS.93,22,500/- FOR 45 KANALS 12 MARLAS AGAINST THE ACTUAL PAYMENT OF RS.1,76,75,212/- @ RS.19837.50 PER MARLA MADE BY HI M TO THE SELLERS OF LAND. LATER ON, THE DEPARTMENT COLLECTED INFORMATIO N REGARDING THE BALANCE LAND, SOLD BY SH. DALIP SINGH AND HIS BROTH ER SH. SURJIT SINGH AND GURCHARAN SINGH AND THEIR FAMILY MEMBERS. IN TH E COURSE OF INVESTIGATION, IT EMERGED THAT THE ASSESSEE HAD PUR CHASED LAND MEASURING 33.3 MARLA ON 07.09.2005 FROM SH. DALIP S INGH. 3. ON THE BASIS OF THE ABOVE FACTS, THE CASE OF THE ASSESSEE WAS REOPENED AND HE WAS ASKED TO SHOW CAUSE WHY THE PU RCHASE PRICE OF THE LAND MAY NOT BE TAKEN AT RS.19837/- PER MARLA, AS IT WAS A PART OF THE ITA NO.146(ASR)/2016 ASSESSMENT YEAR: 2006-07 3 18 ACRES OF LAND SOLD BY GURCHARAN SINGH, ETC. THE AO, ACCORDINGLY, CALCULATED THE PURCHASE PRICE OF THE LAND AT RS.198 37.50 PER MARLA AND MADE THE ADDITION OF RS.5,35,697/-. 4. THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)( C) READ WITH SECTION 274, VIDE NOTICE DATED 22.12.2011. THE REAS ONS STATED BY THE AO FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) ARE AS FOLLOWS: HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNIS HED INACCURATE PARTICULARS OF INCOME. 5. THE A.O. LEVIED PENALTY OF RS.1,40,375/- UNDER SECTION 271(1)(C) OF THE ACT. 6. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE CIT(A). THE SUBMISSIONS MADE BEFORE THE AO WERE REITERATED. THE LD. CIT(A) UPHELD THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) OF THE ACT, OBSERVING AS UNDER: THE SUBMISSIONS OF THE APPELLANT HAVE BEEN CONSIDER ED, IT IS AN ADMITTED FACT THAT THE APPELLANT LOST HIS CASE BEFO RE THE TWO APPELLATE AUTHORITIES. THE FACTUM OF THE APPELLANT HAVING PAID ON MONEY IN THE PURCHASE TRANSACTION COULD NOT BE DISP ROVED BY THE APPELLANT. EVEN IN THE CASE OF THE SELLER, NAMELY, SH. DALIP SINGH, THE HONBLE HIGH COURT OF PUNJAB & HARYANA DID NOT RULE OUT THE RECEIPT OF ON MONEY ON THE SALE TRANSACTION OF THE AGRICULTURAL LANDS IN QUESTION. WHAT HAS BEEN REMANDED TO THE AO IN TH E SAID CASE IS JUST THE ASCERTAINMENT OF THE RATE AT WHICH THE SEL LER COULD HAVE SOLD HIS LANDS. THIS, IN FACT, CONFIRMS THAT THERE WAS A CTUALLY A CASE OF TRANSACTION WITH THE AID OF ON MONEY. BESIDES, THE APPELLANT UNLIKE SHRI DALIP SINGH WAS THE PURCHASER OF AGRICULTURE L AND IN THIS TRANSACTION AND, THEREFORE, THE DECISION OF THE HON BLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF SH. DALIP SINGH DOE S NOT ACCORD WITH THE CASE OF THE APPELLANT. THE ASSESSEE IS NOW IN APPEAL BEFORE THIS BENCH. ITA NO.146(ASR)/2016 ASSESSMENT YEAR: 2006-07 4 7. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTY PROCEEDINGS WERE INITIATED BY THE AO WITHOU T APPLICATION OF MIND, THERE BEING NO SPECIFIC CHARGE AGAINST THE ASSESSEE AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME, WHICH IS EVIDENT FROM NOTICE U/S 271(1)(C) READ WITH SECTION 274, WHICH HAS BEEN PLA CED ON RECORD AND THE RELEVANT PORTION WHEREOF IS AS UNDER: HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNIS HED INACCURATE PARTICULARS OF INCOME. 7.1. THE LD. COUNSEL FURTHER SUBMITTED THAT WHILE L EVYING THE PENALTY, THE AO HAS NOT SPECIFIED AS TO WHETHER THE PENALTY IS BEING LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME, WHICH IS EVIDENT FROM THE PARA 5 OF THE PE NALTY ORDER AS UNDER: KEEPING IN VIEW THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THAT IT IS A FIT CASE FOR LEVY OF PENALTY ACCORDINGLY I IMPOSED PENALTY OF RS.1,40,375/- WHIC H IS WORKED OUT AS UNDER 7.2. IN VIEW OF THE ABOVE SUBMISSIONS, THE LD. COUN SEL SUBMITTED THAT THE PENALTY PROCEEDINGS ARE VOID ABINITIO, AS THE P ENALTY NOTICE DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE; THAT SIMIL ARLY, THE PENALTY ORDER IS ALSO VAGUE AS IT DOES NOT SPECIFY AS TO FOR WHAT REASON THE PENALTY IS BEING LEVIED, WHETHER FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, OR FOR CONCEALMENT OF INCOME; AND THAT AS SUCH, THE RE WAS NO APPLICATION OF MIND BY THE AO. ITA NO.146(ASR)/2016 ASSESSMENT YEAR: 2006-07 5 7.3. IN SUPPORT OF HIS CASE, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS OF THE ITAT, AMRITSAR BENCH, WHERE PENALTY U/S 271 (1)(C) ON THE SAME GROUND HAS BEEN QUASHED: I) SH. RAJ PARTAP SINGH BAJWA VS. DY. CIT, ITA NO . 274/ASR/2016, ORDER DATED 09.06.2016 II) TARLOCHAN SINGH & SONS (HUF) VS. ITO, 114 TTJ (ASR)/82 7.4. THE LD. COUNSEL FOR THE ASSESSEE FURTHER PLACE D RELIANCE ON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT, IN TH E CASE OF PRI CIT VS. SHUBH MINES PVT. LTD., APPEAL NO.96/15, DATED 3.5. 2016, WHEREIN, IT HAS BEEN HELD THAT IN THE ABSENCE OF ANY COGENT EVI DENCE ON RECORD ESTABLISHING THE MONEY SHOWN TO HAVE BEEN RECEIVED AS SHARE APPLICATION, WAS, AS A MATTER OF FACT, UNACCOUNTED MONEY BELONGING TO THE ASSESSEE, THE FINDING ARRIVED AT BY THE AO, WHI CH WAS BASED ON SUSPICION, ON THE BASIS OF STATEMENT OF A THIRD PAR TY, WAS RIGHTLY DELETED BY THE ITAT. 7.5. FURTHER, RELIANCE HAS BEEN PLACED ON THE DECIS ION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BHARAT HOT ELS LTD., 309 ITR 134 (DEL), WHEREIN, IT HAS BEEN HELD THAT WHERE THE AO DISALLOWED CERTAIN CLAIMS AND AT THE FOOT OF THE ASSESSMENT ORDER, OBS ERVED THAT PENALTY PROCEEDINGS HAD BEEN INITIATED SEPARATELY, IT WOULD NOT SATISFY THE REQUIREMENT OF SECTION 271(1)(C), SINCE THE ASSESSM ENT ORDER DID NOT REFLECT THE SATISFACTION OF THE AO. ITA NO.146(ASR)/2016 ASSESSMENT YEAR: 2006-07 6 7.6. THE LD. COUNSEL ALSO REFERRED TO THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MUNISH IRON ST ORE, 263 ITR 484 (P&H). 8. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 9. I HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PER USED THE MATERIAL AVAILABLE ON RECORD. I FIND THAT THE PENALTY LEVI ED AND CONFIRMED ON A GROUND EXACTLY SIMILAR TO THE ONE INVOLVED HEREIN, HAS BEEN DELETED BY THIS BENCH, VIDE ORDER DATED 13.06.2016, IN THE CAS E OF SH. RAJ PARTAP SINGH BAJWA VS. DY. COMMR. OF INCOME TAX, CIRCLE-3, AMRITSAR, IN ITA NO.274/ASR/2016, FOR THE A.Y. 2008-09. THE RELEVANT FINDINGS GIVEN IN THE AFORESAID ORDER ARE REPRODUCED AS UNDER: HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD, WE FIND THE GRIEVANCE OF THE ASSE SSEE TO BE CORRECT. THE REQUIREMENT OF SECTION 271(1)(C) OF TH E ACT IS THE SATISFACTION OF THE AO SPECIFICALLY WITH REGARD TO CONCEALMENT OF PARTICULARS OF INCOME OR SPECIFICALLY WITH REGAR D TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE OF SUCH SPECIFIC SATISFACTION, THE LEVY OF PENALTY IS BAD. THE CASE OF TARLOCHAN SINGH HUF (SUPRA) APB 8-10, IS EXACTLY SIMILAR TO THAT OF THE PRESENT CASE, IN AS MUCH AS THEREIN, ALSO LIKE IN THE PRESENT CASE, IN THE PENALTY ORDER, THE AO HAD STATED THAT HE WAS SATISFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND HAVING THEREBY FURNISHED INACCURATE PARTICULARS OF INCOME. IN THE ASSESSMENT ORDER OF T ARLOCHAN SINGH & SONS (HUF) (SUPRA) (APB 4-7), A NOTING OF T HE AO WAS CONCEALMENT/FURNISHING INACCURATE PARTICULARS OF I NCOME. IN THE CASE OF THE ASSESSEE, IN THE ASSESSMENT ORDER, THE NOTING WAS REGARDING CONCEALMENT OF INCOME. 7. THE TRIBUNAL, IN THE CASE OF TARLOCHAN SINGH (SU PRA) (APB 11-22) REPORTED AT 114 TTJ 82 (ASR), DELETED THE PENALTY UNDER SIMILAR CIRCUMSTANCES. ITA NO.146(ASR)/2016 ASSESSMENT YEAR: 2006-07 7 8. IN SUVAPRASANNA BHATACHARYA (SUPRA) (APB 23-42 ) ALSO, A SIMILAR PENALTY WAS DELETED. 9. IN CIT VS. MUNISH IRON STORE, 263 ITR 484 (P&H ), IT HAS BEEN HELD THAT THE JURISDICTION TO IMPOSE PENALTY FLOWS FROM RECORDING OF SATISFACTION OF THE AO REGARDING CONCE ALMENT OF INCOME AND THAT IN CASE THERE IS DEFECT IN THE ASSU MPTION OF JURISDICTION, THE SAME CANNOT BE CURED. THEIR LORDS HIPS RELIED ON JAIN BROTHERS VS. UNION OF INDIA, 77 ITR 107 ( SC) AND D.M.MANASVI VS. CIT, 86 ITR 557(SC). MUNISH IRO N STORE (SUPRA), WAS FOLLOWED IN TARLOCHAN SINGH (HUF) (SU PRA). 10. IN VIEW OF THE ABOVE, THE GRIEVANCE OF THE ASSE SSEE IN THIS REGARD IS FOUND TO BE JUSTIFIED AND IS ACCEPTE D AS SUCH. 10. THEREFORE, FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL, IN THE CASE SH. RAJ PARTAP SINGH BAJWA VS. DY. COMMR. OF INCOME TAX, CIRCLE- 3, AMRITSAR, PASSED IN ITA NO.274/ASR/2016 FOR THE A.Y. 2008-09 (SMC), VIDE ORDER DATED 13.06.2016, WHICH IS SQUARELY APPL ICABLE TO THE FACTS OF THE PRESENT CASE, THE PENALTY IN QUESTION IS CANCE LLED. 11. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/08/ 2016. SD/- (A.D. JAIN) JUDICIAL MEMBER /SKR/ DATED: 01/08/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SH. JANAK RAJ PROP. JANAK RAJ MURARI LAL, MUKTSAR. 2. THE ITO WARD 2(2), MUKTSAR. 3. THE CIT(A), BATHINDA 4. THE CITM BATHINDA. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER ITA NO.146(ASR)/2016 ASSESSMENT YEAR: 2006-07 8 INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.