Assistant Commissioner of Income-tax, Circle - 3, Aurangabad V. Vithalrao Rangnathrao Ambarwadikar, Aurangabad

ITA 1547/PUN/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5980 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-04-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 19-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IS DIRECTED AGAINS T PASSED
• Section: 271(1)(c); 143(3); 201; 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE VIRTUAL COURT BEFORE SH RI R.S. SYAL, VICE PRESIDENT AND SH RI S.S. VISWANETHRA RAVI , J UDICIAL MEMBER I TA NO. 1547 /PUN/2017 / ASSESSMENT YEAR : 201 3 - 1 4 ACIT, CIRCLE - 3, AURANGABA D . VS. SHRI VITHALRAO RANGNATHRAO AMBARWADIKAR PLOT NO.196, SAMARTH NAGAR, AURANGABAD PAN : A ELPA0579F APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 2, AURANGABAD ON 1 3 - 0 4 - 2017 DELETING PENALTY OF RS.2,26,23,440 IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT, 1 961 (HEREINAFTER ALSO CALLED `THE ACT) IN RELATION TO THE ASSESSMENT YEAR 201 3 - 1 4 . A SSESSEE BY SHRI M.K. KULKARNI RE VENUE BY SHRI DEEPAK GARG DATE OF HEARING 2 6 - 0 4 - 202 1 DATE OF PRONOUNCEMENT 26 - 0 4 - 202 1 ITA NO . 1547 /PUN/ 2017 VITHALRAO R. AMBARWADIKAR 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF PETROL PUMP. A R ETURN WAS FILED DECLARING CERTAIN INCOME. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE EARNED REMUNERATION OF RS.4 LAKH FROM A FIRM , M/S. AMBARWADIKAR AND CO., WHICH WAS CREDITED TO THE CAPITAL BUT NOT OFFERED FOR TAXATION. ON BEING CALLED UPON T O EXPLAIN THE REASONS FOR SUCH NON - DISCLOSURE OF I NCOME IN THE RETURN, THE ASSESSEE OF FERED THE SAID AMOUNT FOR TAXATION. IN THE SAME MANNER, THE ASSESSEE EARNED CAPITAL GAIN OF RS.9,92,38,664 ON THE TRANSFER OF CERTAIN LANDS TO THE DEOGIRI NAGARI SAHAKAR I BANK LTD., BUT DID NOT OFFER ANY CAPITAL GAIN IN THE RETURN OF INCOME . WHEN THE ASSESSEES ATTENTION WAS DRAWN TO THIS FACT, H E AGAIN AGREED FOR THE ADDITION. THUS, THE AO MADE ADDITION S , INTER ALIA, FOR THE ABOVE AMOUNTS ON THE BASIS OF ADMISSION BY THE ASSESSEE. SUBSEQUENTLY, PENALTY WAS IMPOSED U/S 271(1)(C) OF THE ACT AFTER ISSUING N OTICE U/S 274 OF THE ACT. THE L D. CIT(A) OBSERVED THAT THE NOTICE ISSUED BY THE AO U/S 274 CONTAINED BOTH THE LIMBS VIZ. , CONCEALMENT OF INCOME AND FURNISHING OF INAC CURATE PARTICULARS OF INCOME AND NONE OF THE TWO WAS STRUCK OFF , AS AGAINST THE PENALTY ORDER HAVING BEEN PASSED ONLY FOR CONCEAL MENT OF IN C O ME . RELYING ON CERTAIN DECISIONS, HE ITA NO . 1547 /PUN/ 2017 VITHALRAO R. AMBARWADIKAR 3 DELETED THE PENALTY OF RS.2.26 CRORE IMPOSED BY THE AO, AGAINST WHICH, THE RE VENUE HAS APPROACHED THE TRIBUNAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH VIRTUAL COURT AND SCANNED THROUGH THE RELEVANT MATERIAL ON RECORD. A COPY OF THE NOTICE ISSUED U/S 274 OF THE ACT HAS BEEN PLACED IN THE A PPEAL FOLDER, FROM WHICH IT IS DISC ERNIBLE THAT THE AO DID NOT STR I K E OFF EITHER OF THE TWO LIMBS VIZ. , CONCEALMENT OF THE PARTICULARS OF INCOME ; AND FURNISH ING OF INACCURATE PARTICULARS. HOWEVER, THE PENALTY ORDER CAME TO BE PASSED BY HOLDING THAT THE ASSESSEE CONCEALED HIS INCOME. RECENT LY, A F ULL BENCH OF HONBLE BOMBAY HIGH COURT IN MOHD. FARHAN A. SHAIKH VS. DY.CIT (2021) 125 T AXMANN.COM 253 (BOM) CONSIDERED TH IS V E RY ISSUE . ANSWERING THE QUESTION IN AFFIRMATIVE , THE FULL BENCH HELD THAT A DEFECT IN NOTICE OF NOT STRIKING THE RELEVANT WORDS VITIATE S TH E PENALTY EVEN THOUGH THE AO HAD PROPERLY RECORDED THE SATISFACTION FOR IMPOSITION OF PENALTY IN THE ORDER U/S 143(3) OF THE ACT. IN ANOTHER JUDGMENT, THE HONBLE BOMBAY HIGH COURT IN PR.CIT VS. GOLDEN PEACE HOTELS AND RESORTS (P.) LTD. ( 2021) 124 TAXMANN.COM 248 (BOM) A LSO T OOK SIMILAR VIEW THAT WHERE INAPPLICABLE PORTIONS WERE NOT STRUCK OFF IN THE PENALTY NOTICE, THE PENALTY WAS VITIATED. SLP OF THE DEPARTMENT AGAINST T HIS JUDGMENT HAS BEEN RECENTLY DISMISSED BY ITA NO . 1547 /PUN/ 2017 VITHALRAO R. AMBARWADIKAR 4 THE HON'BLE SUPREME COU RT IN PR.CIT VS. GOLDEN PEACE HOTELS AND RESORTS (P.) LTD. (2021) 124 TAXMANN.COM 249 (SC). IN VIEW OF THE OVERWHELMING POSITION, IT IS CLEAR THAT WHERE THE CHARGE IS NOT PROPERLY SET OUT IN THE NOTICE U/S 274 VIZ. , BOTH THE LIMBS STAND THEREIN WITHO UT ST RIKING OFF OF THE INAPPLICABLE LIMB , BUT THE PENALTY HAS BEEN , IN FACT, LEVIED FOR ONE OF THE TWO, SUCH A PENALTY ORDER GETS VITIATED. 4. TURNING TO THE FACTS OF EX TANT CASE , WE FIND FROM THE NOTICE U/S 274 THAT THE AO DID NOT STRIKE OUT ONE OF THE T WO LIMBS THOUGH THE PENALTY WAS IMPOSED WITH REFERENCE TO THE FIRST ONE ONLY , NAMELY , CONCEALMENT OF PARTICULARS OF INCOME. IN SUCH A PANORAMA , THE PENALTY ORDER IS BAD IN LAW. WE, THEREFORE, COUNTENANCE THE VIEW TAKEN BY THE LD. CIT(A) IN DELETING THE P ENALTY. 5 . IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH APRIL, 2021 . SD/ - SD/ - ( S.S. VISWANETHRA RAVI ) ( R.S.SYAL ) JUDICIAL MEMBER VICE PRESIDENT PUNE ; DATED : 26 TH APRIL, 2021 GCVSR ITA NO . 1547 /PUN/ 2017 VITHALRAO R. AMBARWADIKAR 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A) - 2 , AURANGABAD 4 . 5. THE PR. CIT - 2, AURANGABAD DR A , ITAT, PUNE 6 . / GUARD FILE / BY ORDER, / / TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 2 6 - 0 4 - 202 1 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 2 6 - 0 4 - 202 1 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT F OR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *