Dharmesh Dhulabhai Prajapati, Mehsana V. The ITO, Mehsana Ward-5, Mehsana

ITA 1570/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5550 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 23-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIREN V SHAH
• Section: 271(1)(c); 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 1570/AHD/2017 (ASSESSMENT YEAR : 2011-12) DHARMESH DHULABHAI PRAJAPATI, 45, BHAGYALAXMI SOCIETY, NR. S. V. CAMPUS, AT: KADI, DIST: MEHSANA 382 715. VS. INCOME TAX OFFICER, MEHSANA WARD 5, KADI. [PAN NO. AUKPP 7427 J] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI BIREN V. SHAH, A.R. RESPONDENT BY : SHRI JAYA CHAUDHARY, SR. D.R. DATE OF HEARING 11.12.2018 DATE OF PRONOUNCEMENT 31.01.2019 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS AGAINS T THE ORDER DATED 12.06.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - GANDHINAGAR ARISING OUT OF THE ORDER DATED 21.03.2016 PASSED BY THE INCOME TAX OFF ICER, MEHSANA WARD 5, KADI UNDER SECTION 271(1)(C) OF THE ACT, 1961 (HEREINAFT ER REFERRED AS TO THE ACT) FOR THE ASSESSMENT YEAR 2011-12. 2. THE BRIEF FACTS LEADING TO THE CASE IS THIS THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 27.05.2011 THROUGH ELECTRONIC MEDIA DECLA RING TOTAL INCOME AT RS.1,49,571/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT. UPON SCR UTINY NOTICE U/S 143(2) DATED - 2 - ITA NO.1570/AHD/2017 DHARMESH DHULABHAI PRAJAPATI VS. ITO ASST.YEAR 2011-12 17.08.2012 WAS SERVED. THE ASSESSMENT WAS FINALIZED ON 30.12.2013 U/S 143(3) OF THE ACT DETERMINING TOTAL INCOME AT RS.8,06,200/- MAKIN G AN ADDITION OF RS.6,56,629/- TO THE TOTAL INCOME OF THE ASSESSEE ON CERTAIN COUNTS. PEN ALTY PROCEEDING U/S 271(1)(C) OF THE ACT WAS ALSO INITIATED BY A NOTICE U/S 274 DATED 17 .11.2011 DIRECTING THE ASSESSEE TO SHOW-CAUSE AS TO WHY PENALTY U/S 271(1)(C) OF THE A CT SHOULD NOT BE IMPOSED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE QUANTUM APPEAL FILED BY THE ASSESSEE MEANWHILE FAILED AND ANOTHER OPPORTUNITY WAS GIVEN TO THE ASSESSEE SINCE ORDER O F THE LEARNED AO WAS PARTLY UPHELD BY THE LEARNED CIT(A). FINALLY, FINALLY THE LEARNED AO BEING SATISFIED THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME TO THE T UNE OF RS.6,56,629/-, THE MINIMUM PENALTY I.E. 100% OF TAX EVADED ON THE CONCEALED IN COME TO THE TUNE OF RS.98,736/- IMPOSED AS PENALTY UPON THE ASSESSEE. WHILE DOING S O, LEARNED ASSESSING OFFICER OBSERVED AS FOLLOWS: 7. IN VIEW OF THE FACTS I AM SATISFIED THAT THE AS SESSEE HAS FILED INACCURATE PARTICULARS OF INCOME TO THE TUNE OF RS.6,56,629/-. THE MINIMUM PENALTY I.E. 100% OF TAX EVADED ON THE CONCEALMENT INCOME COMES TO RS .98,736/- AND THE MAXIMUM PENALTY I.E. 300% OF THE TAX EVADED OF THE CONCEALE D INCOME COMES TO RS.2,96,208/-. IN APPEAL, SAME WAS CONFIRMED BY THE LEARNED CIT(A) HENCE, THE APPEAL BEFORE US. 3. AT THE TIME OF HEARING OF THE APPEAL, THE LEARNE D COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE PENALTY DOES NOT FULFILL THE CRITERIA LAID DOWN U/S 271(1)(C) OF THE ACT. FURTHER THAT, SPECIFIC CHARGE THOUGH REQUIRED TO BE MENTIONED IN THE SHOW-CAUSE NOTICE AS TO WHETHER THE SHOW CAUSE IS F OR CONCEALMENT OF INCOME OR FOR INACCURATE PARTICULARS OF INCOME AS HELD BY DIFFERE NT HIGH COURTS HAS NOT BEEN ADHERED TO BY THE LEARNED AO WHILE ISSUING THE SHOW-CAUSE. ACC ORDING TO THE LEARNED ADVOCATE, THE SHOW-CAUSE NOTICE SUFFERS FROM VAGUENESS OR AMB IGUITY AND THE NOTICE PREJUDICED THE - 3 - ITA NO.1570/AHD/2017 DHARMESH DHULABHAI PRAJAPATI VS. ITO ASST.YEAR 2011-12 CAUSE OF THE ASSESSEE AND THEREFORE THE IMPOSITION OF PENALTY IS INVALID. THE LEARNED AO HAS NEITHER SPECIFIED THE ALLEGED GUILT COMMITTED B Y THE ASSESSEE BY FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALED INCOM E WHICH IS NOTHING BUT NON- APPLICATION OF MIND, ACCORDING TO THE LEARNED AR. O N THIS PARTICULAR ISSUE HE HAS RELIED UPON THE JUDGMENT PASSED BY THE HONBLE APEX COURT IN THE CASE OF DILIP AND SHROF-VS- JCIT (2007) 291 ITR 519 (SC) WHERE IT WAS HELD WHIL E ISSUING THE NOTICE FOR INITIATING PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT THE AO SHOULD APPLY MIND AND MAKE IT CLEAR AS TO WHETHER HE HAS PROCEEDED ON THE BASIS THAT TH E TAX PAYER HAS CONCEALED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS OF INCOM E WHICH ACCORDING TO THE LEARNED ADVOCATE HAS NOT FOLLOWED IN THE INSTANT CASE BY TH E LEARNED AO WHILE INITIATING PROCEEDING OR IN SHOW-CAUSE NOTICE DURING THE PENAL TY PROCEEDING, NEITHER WHILE IMPOSING PENALTY AGAINST THE ASSESSEE AT THE FINAL STAGE. HE FURTHER ARGUED THAT IN SPITE OF SEVERAL JUDGMENTS PLACED BY HIM DURING THE APPEAL P ROCEEDING ON THIS COUNT NO CONSIDERATION, HOWEVER, HAS BEEN GIVEN BY THE LEARN ED CIT(A) WHILE CONFIRMING THE ORDER PASSED BY THE LEARNED AO IN IMPOSING PENALTY UPON THE ASSESSEE. HE, THUS PRAYED FOR QUASHING OF PENALTY PROCEEDING INITIATED AGAINS T THE ASSESSEE. ON THE OTHER HAND, LEARNED DR RELIED UPON THE ORDER PASSED BY THE AUTH ORITIES BELOW. 4. WE HAVE HEARD THE RESPECTIVE PARTIES AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ORDER IMPOSING PENALTY DOES NOT SPECIFY THE GUILTY COMMITTED BY THE ASSESSEE FOR SUCH PENALTY. IT APPEARS FROM THE PENALTY ORDER THAT THE AO HAS N OT LEVIED THE PENALTY ON THE SPECIFIC CHARGE AS MANDATED U/S 271 (1)(C) OF THE A CT. IN SUCH FACTS AND CIRCUMSTANCE THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SN ITA TRANSPORT PVT. LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX REPORTED IN 42 TAXMANN.C OM 54 HAS HELD THAT PENALTY - 4 - ITA NO.1570/AHD/2017 DHARMESH DHULABHAI PRAJAPATI VS. ITO ASST.YEAR 2011-12 CANNOT BE IMPOSED WITHOUT MENTIONING THE SPECIFIC C HARGE. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: 9. REGARDING THE CONTENTION THAT THE ASSESSING OFFIC ER WAS AMBIVALENT REGARDING UNDER WHICH HEAD THE PENALTY WAS BEING IM POSED NAMELY FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS, WE MAY RECORD THAT THOUGH IN THE ASSESSMENT ORDER THE ASSESSING OFFICE R DID ORDER INITIATION OF PENALTY ON BOTH COUNTS, IN THE ULTIMATE ORDER OF PE NALTY THAT HE PASSED, HE CLEARLY HELD THAT LEVY OF PENALTY IS SUSTAINED IN VIEW OF T HE FACT THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME. THUS INSOFAR A S FINAL ORDER OF PENALTY WAS CONCERNED, THE ASSESSING OFFICER WAS CLEAR AND PENA LTY WAS IMPOSED FOR CONCEALING PARTICULARS OF INCOME. IN LIGHT OF THIS, WE MAY PERUSE THE DECISION OF THIS COURT IN CASE OF MANU ENGINEERING WORKS (SUPRA ). IN THE SAID DECISION, THE DIVISION BENCH CAME TO THE CONCLUSION THAT LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE FOR PENALTY, BUT IT WAS INCUMBE NT UPON THE ASSESSING AUTHORITY TO COME TO A POSITIVE FINDING AS TO WHETHER THERE W AS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THEM. IF NO SUCH CLEAR CUT FINDING IS REACHED BY THE AUTHORITY, PENALTY CANNOT BE LEVIED. IT WAS A CASE IN WHICH IN FINAL C ONCLUSION THE AUTHORITY HAD RECORDED THAT 'I AM OF THE OPINION THAT IT WILL HAV E TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED I NACCURATE PARTICULARS OF SUCH INCOME.' IT WAS IN THIS RESPECT THE BENCH OBSERVED THAT 'NOW THE LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PE NALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI-CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WHETHER THE RE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULA RS OF SUCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR CUT FINDIN G WAS REACHED BY THE IAC AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED B Y THE IAC WAS LIABLE TO BE STRUCK DOWN.' 5. THE PRINCIPLES LAID DOWN BY THE HONBLE JURISDIC TIONAL HIGH COURT IN THE ABOVE CASE ARE SQUARELY APPLICABLE TO THE FACTS OF THE CA SE ON HAND. THE AO HAS NOT MENTIONED THE SPECIFIC CHARGE IN ITS PENALTY ORDERS WHETHER I T WAS LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, IN OUR CONSIDERED VIEW, THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE LEARN ED CIT (A) IS NOT SUSTAINABLE. THE PENALTY, THEREFORE IS DELETED. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. - 5 - ITA NO.1570/AHD/2017 DHARMESH DHULABHAI PRAJAPATI VS. ITO ASST.YEAR 2011-12 AS WE HAVE DELETED THE PENALTY IMPOSED BY THE AO & CONFIRMED BY THE LD. CIT-A ON THE TECHNICAL GROUND, I.E. NO SPECIFIC CHARGE HA S BEEN INVOKED AS DISCUSSED ABOVE, WE ARE INCLINED TO REFRAIN OURSELVES FROM ADJUDICATING THE GROUNDS OF APPEAL OF ASSESSEE RAISED ON MERITS. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 31/01/2019 SD/- SD/- ( WASEEM AHMED ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31/01/2019 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-GANDHINGAR. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD. 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 31/01/2019 (DICTATION PAGES 5) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 31.01.2019 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER