G.T. Batliwala and Company, Pune V. Income-tax Officer,

ITA 1557/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2513 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 18-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK BABU
• Assessee Lawyers: D R KAPADIA
• Keywords: Initiation of penalty proceedings
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1 557 /P U N/201 6 / ASSESSMENT YEAR : 20 08 - 09 G T BATLIWALA AND COMPANY 675, BUDHWAR PETH, OPP JOGESHWARI TEMPLE, PUNE 4110 0 2 . / APPELLANT PAN: AA BFG0781B VS. THE INCOME TAX OFFICER , WARD 5(4), PUNE . / RESPONDENT . / ITA NO. 1558 /P U N/201 6 / ASSESSMENT YEAR : 2008 - 09 NANDKUMAR BOTTLE TRADING COMPANY 6 44 , BUDHWAR PETH, OPP JOGESHWARI TEMPLE, PUNE 411002 . / APPELLANT PAN: AA AHN5623C VS. THE INCOME TAX OFFICER, WARD 5(4), PUNE . / RESPONDENT ITA NO S . 1 557 TO 1559 /P U N/20 1 6 G T BATLIWALA AND CO & ORS. 2 . / ITA NO. 1559 /P U N/201 6 / ASSESSMENT YEAR : 2008 - 09 POONA BOTTLE TRADING COMPANY 644 - A, BUDHWAR PETH, OPP JOGESHWARI TEMPLE, PUNE 411002 . / APPELLANT PAN: AABFP4663K VS. THE INCOME TAX OFFICER, WARD 5(4), PUNE . / RESPONDENT / APPELLANT BY : S /S HRI NIKHIL PATHAK AND D.R. KAPADIA / RESPONDENT BY : SHRI ASHOK BABU, JCIT / DATE OF HEARING : 0 8 . 0 8 .201 8 / DATE OF PRONOUNCEMENT: 23 . 0 8 .201 8 / ORDER PER SUSHMA CHOWLA, J M : T H IS BUNCH OF THREE APPEAL S FILED BY DIFFERENT ASSESSEE ARE AGAINST SEPARATE ORDER S OF CIT (A) - 4 , PUNE , ALL DATED 2 0 . 0 4 .20 1 6 RELATING TO ASSESSMENT YEAR 20 08 - 09 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. ALL THE THREE APPEALS RELATING TO DIFFERENT ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE ITA NO S . 1 557 TO 1559 /P U N/20 1 6 G T BATLIWALA AND CO & ORS. 3 SAKE OF CONVENIENCE. HOWEVER, IN ORDER TO ADJUDICATE THE ISSUE, WE MAKE REFERENCE TO THE FACTS IN ITA NO.1557/PUN/2016. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDE R SECTION 271(1)(C) OF THE ACT. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS RAISED ADDITIONAL GROUNDS OF APPEAL, WHICH GOES TO THE ROOT OF THE ISSUE AND HENCE, THE SAME ARE BEING TAKEN UP FIRST. THE ADDITIONAL GROUND S OF APPEAL READ AS UNDER: - 1] THE ASSESSEE SUBMITS THAT THE PENALTY ORDER PASSED BY THE LEARNED A.O. BE DECLARED NULL AND VOID SINCE IT IS PASSED WITHOUT PROPER APPLICATION OF MIND. 2] THE ASSESSEE FURTHER SUBMITS THAT NO PROPER SATISFACTION WAS RECORDED BY THE LEARNED A.O. IN THE ASST. ORDER AND EVEN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) WAS WITHOUT PROPER APPLICATION OF MIND AND HENCE, THE PENALTY ORDER PASSED U/S 271(1)(C) IS BAD IN LAW AND THE PENALTY LEVIED MAY KINDLY BE DELETED. 5. IT WAS POINTED OUT BY THE LEARN ED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT HAS FAILED TO RECORD SATISFACTION WITH REGARD TO INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ON EITHER OF THE LIMBS, BUT ONLY MENT IONED AT THE END OF ASSESSMENT ORDER THAT ISSUE NOTICE U/S. 274 R.W.S. 271(1)(C) OF THE I.T. ACT, 1961. HE FURTHER POINTED OUT THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS ALSO BEEN LEVIED WITHOUT COMING TO A FINDING AS TO WHICH LIMB OF SECTION 271 (1)(C) OF THE ACT HAS NOT BEEN FULFILLED BY THE ASSESSEE. OUR ATTENTION WAS DRAWN TO THE PENALTY ORDER, WHEREIN THE ASSESSING OFFICER HOLDS THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME AND THE ASSESSEE WAS HELD TO BE IN DEFAULT AND PENA LTY FOR CONCEALMENT WAS LEVIED. ITA NO S . 1 557 TO 1559 /P U N/20 1 6 G T BATLIWALA AND CO & ORS. 4 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS L EVIED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS INCUMBENT UPON THE ASSESSING OFFICER TO COME TO A FINDING WHILE COMPLETING ASSESSMENT AND RECORD SATISFACTION IN THIS REGARD AS TO WHETHER THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED ITS INCOME. THE PERUSAL OF ASSESSMENT ORDER REFLECTS THAT THOUGH THE ASSESSING OFFICER HAS DISCUSSED THE ISSUE AT LENGTH AND DISALLOWED EXPENDITURE UNDER SECTION 40A(3) OF THE ACT AND ALSO EXPENDITURE ON ACCOU NT OF SALARY BUT HAS FAILED TO RECORD SATISFACTION FOR INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER WHILE CLOSING THE ASSESSMENT HAS DIRECTED ISSUE NOTICE U/S. 274 R.W.S. 271(1)(C) OF THE I.T. ACT, 1961. SUCH F AILURE TO RECORD SATISFACTION FOR INITIATING PENALTY PROCEEDINGS VITIATES THE PROCEEDINGS AND THE ASSESSING OFFICER IS PRECLUDED FROM LEVYING ANY PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. IN THIS REGARD, WE FIND THAT JURISDICTIONAL HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN INCOME TAX APPEAL NO.1154 OF 2014 WITH OTHER INCOME TAX APPEALS NOS.953 OF 2014, 1097 OF 2014 AND 1226 OF 2014, JUDGMENT DATED 05.01.2017 HELD THAT WHERE THERE IS NO PROPER SATISFACTION FOR LEVY OF PENALTY AND IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. ITA NO S . 1 557 TO 1559 /P U N/20 1 6 G T BATLIWALA AND CO & ORS. 5 8. ANOTHER ASPECT OF THE ISSUE IS THAT WHILE LEVYING PENALTY, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME / CONCE ALED ITS INCOME. 9. THUS, WHILE RECORDING SATISFACTION FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ALSO WHILE LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO COME TO A FINDING AS TO WHICH OF THE LIMBS UNDER SECTION 271(1)(C) OF THE ACT HAS NOT BEEN SATISFIED BY THE ASSESSEE MAKING IT LIABLE FOR LEVY OF PENALTY FOR CONCEALMENT. WE FIND THAT THE SATISFACTION IN THE PRESENT CASE SUFFERS FROM LACUNA. FURTHER, WE ALSO FIND THAT WHILE LEVYING P ENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER HAS FAILED TO COME TO A FINDING AS TO WHICH LIMB OF SECTION HAS NOT BEEN FULFILLED BY THE ASSESSEE. AS POINTED OUT IN THE PARAS HEREINABOVE, THE ASSESSING OFFICER IN THE PRESENT CASE HAS NOT RECORDED SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS. FURTHER, PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF INCOME / FURNISHING INACCURATE PARTICULARS OF INCOME. THE SAME IS AGAINST THE DICTATE OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSO N PERINCHERY (SUPRA) AND APPLYING THE SAID RATIO, WE FIND NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND THE SAME IS DELETED. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED AND IN VIEW OF OUR DELETING PENALTY FOR CONCEALMENT ON JURISDICTIONAL ISSUE , WE DO NOT DECIDE THE ISSUE RAISED ON MERITS OF THE CASE. 10 . THE FACTS AND ISSUES IN ITA NOS.1558/PUN/2016 & 1559/PUN/2016 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.1557/PUN/2016 AND OUR DECISION IN ITA NO S . 1 557 TO 1559 /P U N/20 1 6 G T BATLIWALA AND CO & ORS. 6 ITA NO.1557/PUN/2016 SHALL APPLY MUTATIS MUTANDI S TO ITA NOS.1558/PUN/2016 & 1559/PUN/2016. 1 1 . IN THE RESULT, ALL THE APPEAL S OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 23 RD DAY OF AUGUST , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 23 RD AUGUST , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE AP PELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 4 , PUNE ; 4. THE PR. CIT - 3 , PUNE ; 5. 6. , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE