Naresh J. Karda, Nashik V. Income-tax Officer,

ITA 1525/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4219 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 11-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Keywords: Search and seizure; Document seized; Initiation of penalty proceedings; Documents seized
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1 525 /P U N/201 6 / ASSESSMENT YEAR : 2 0 0 3 - 0 4 SHRI NARESH J. KARDA PROP. M/S. KARDA CONSTRUWELL, 8, SAIKRUPA COMPLEX, BEHIND JAIRAM HOSPITAL, NASHIK ROAD, NASHIK 422101 . / APPELLANT PAN: A BBPK8084A VS. T HE INCOME TAX OFFICER (CENTRAL) - 2 , NASHIK . / RESPONDENT / APPELLANT BY : S HRI SANKET JOSHI / RESPONDENT BY : SHRI SANJEEV GHEI / DATE OF HEARING : 3 1 . 1 0 .201 8 / DATE OF PRONOUNCEMENT: 3 1 . 1 0 .201 8 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - 12 , PUNE, DATED 1 7 .0 3 .201 6 RELATING TO ASSESSMENT YEAR 20 0 3 - 0 4 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 1525 /P U N/20 1 6 NARESH J KARDA 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER ON FACTS AND IN LAW, 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF PENAL TY U/S 271( 1 )(C) OF RS.3,29,740/ - . 2] THE ASSESSEE SUBMITS THAT IN THE NOTICE ISSUED U/S 271( 1 )(C) R.W.S. 274, THE LEARNED A.O. HAS NOT RECORDED PROPER SATISFACTION AS TO WHETHER THE PENALTY PROCEEDINGS ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR CONCEALING INCOME AND HENCE, THE SAID NOTICE IS BAD IN LAW AND THEREFORE, THE LEVY OF PENALTY U/S 271( 1 )(C) IS NOT JUSTIFIED. WITHOUT PREJUDICE TO THE ABOVE GROUND, IT IS SUBMITTED AS UNDER 3] THE LEARNED CIT(A) ERRED IN CONFIRMING THE PENALTY U/S 271( 1 )(C) IN RESPECT OF THE ADDITION OF RS.10,21,708/ - MADE ON ACCOUNT OF ON MONEY RECEIVED ON PROPOSED SALE OF PLOT. 4] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE SAID ON MONEY WAS TAXABLE IN THE SUBSEQUENT YEAR IN WHICH THE SAID PLOT WAS SOLD AND THE SAME WAS NOT TAXABLE IN A.Y.2003 - 04 WHEN THE SAID AMOUNT WAS RECEIVED AS ADVANCE AND THEREFORE, THE LEVY OF PENALTY U/S 271( 1 )(C) IN A.Y.2003 - 04 IS NOT JUSTIFIED IN LAW. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, CONSEQUENT TO SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) OF THE ACT ON THE PREMISES OF ASSESSEE, ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 153A OF THE ACT. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS WERE FOUND AND ON THE BASIS OF SEIZED DOCUMENTS, THE ASSESSEE HAD OFFERED CERTAIN ADDITIONAL INCOME. HOWEVER, THE ASSESSING OFFICER WORKED OUT THE ADDITIONAL INCOME AT 2,08,165/ - . PENALTY PROCEEDINGS UNDER EXPLANATION 5A OF SECTION 271(1)(C) OF THE ACT WERE SEPARATELY INITIATED FOR CONCEALMENT OF THIS INCOME. THE ASSESSING OFFICER ALSO MADE ANOTHER ITA NO. 1525 /P U N/20 1 6 NARESH J KARDA 3 ADDITION OF 10,21,708/ - , WHICH WAS ADDED TO THE INCOME OF ASSESSEE AND PENALTY PROCEEDINGS UNDER EXPLANATIO N 5A OF SECTION 271(1)(C) OF THE ACT WERE INITIATED. THE THIRD ADDITION MADE IN THE HANDS OF ASSESSEE WAS OF 25,100/ - FOR WHICH PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOME. THE ASSESSING OFFICER WHILE LEVYING PENALTY UNDER SECTION 271( 1)(C) OF THE ACT, TOOK THE BASIS FOR LEVYING PENALTY FOR CONCEALMENT ON THE ADDITIONS OF 10,21,708/ - AND 25,100/ - . THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE CONCEALED ITS INCOME WITH REGARD TO 10,21,708/ - AND 25,100/ - AND LEVIED PENALTY OF 3,29,740/ - . 5. THE CIT(A) CONFIRMED THE SAID LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND THE ASSESSEE IS IN APPEAL AGAINST THE SAME. 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT HE DOES NOT WISH TO PRESS THE GRO UND OF APPEAL RELATING TO LEVY OF PENALTY ON ADDITION OF 25,100/ - . HOWEVER, IN RESPECT OF SECOND ADDITION OF 10,21,708/ - , THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT ASSESSING OFFICER WHILE RECORDING SATISFACTION FOR INITIATIN G PENALTY HAS NOT COME TO A FINDING AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT HAS NOT BEEN FULFILLED , THOUGH EXPLANATION 5A OF SECTION 271(1)(C) OF THE ACT WAS HELD TO HAVE ATTRACTED . HE FURTHER POINTED OUT THAT PENALTY WAS LEVIED FOR CONCEALMENT O F INCOME BY ASSESSING OFFICER WHILE PASSING THE ORDER UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, SINCE, WHILE INITIATING PENALTY PROCEEDINGS, PROPER SATISFACTION HAS NOT BEEN RECORDED, HENCE ORDER SUFFERS FROM INFIRMITY. IN THIS REGARD, HE PLACED RELIA NCE ON THE DECISION OF PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT (2017) 185 TTJ (PUNE) 553. ITA NO. 1525 /P U N/20 1 6 NARESH J KARDA 4 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE PRESENT APPEAL HAS BEEN FILED AFTER THE DELAY OF 26 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT IN THIS REGARD. ON PERUSAL OF CONTENTS OF SAID AFFIDAVIT, WE FIND MERIT IN THE PLEA OF ASSESSEE AND DELAY OF 26 DAYS IS CONDONED. 9. NOW, COMING TO THE MERITS OF CASE, WHERE THE ASSESSEE HAS FILED AN APPEAL AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE FIND THAT THE ASSESSING OFFICER WHILE RECORDING SATISFACTION FOR INITIATING PE NALTY PROCEEDINGS HAS NOT COME TO A FINDING AS TO WHICH LIMB OF SAID SECTION HAS NOT BEEN FULFILLED BY ASSESSEE. PENALTY PROCEEDINGS HAVE BEEN INITIATED UNDER EXPLANATION 5A OF SECTION 271(1)(C) OF THE ACT . HOWEVER, THE PERUSAL OF EXPLANATION 5A OF SAID SECTION CLEARLY REFLECTS THAT PENALTY CAN BE LEVIED EITHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. WHERE THE ASSESSING OFFICER HAS FAILED TO RECORD SUCH SATISFACTION AND SHOW CAUSE THE ASSESSEE, ACCORDINGLY, WE FIND T HAT INITIATION OF PENALTY PROCEEDINGS STANDS VITIATED. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA). NO DOUBT, PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF INCOME I.E. ONE OF THE LIMBS OF SECTION 271(1)(C) OF THE ACT BUT SINCE FOR INITIATION, SATISFACTION HAS NOT BEEN CORRECTLY RECORDED IN RESPECT OF ONE OF THE LIMBS OF SECTION 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER, ORDER PASSED BY HIM SUFFERS FROM INFIRMITY. HENCE THE SA ME ITA NO. 1525 /P U N/20 1 6 NARESH J KARDA 5 IS QUASHED. PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS THUS, DELETED. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, PARTLY ALLOWED. 1 0 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 3 1 ST DAY OF OCTOB ER , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 31 ST OCTOB ER , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 12 , PUNE ; 4. THE PR.CIT (CENTRAL), N AGPUR ; 5. 6. , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE