Mrs. Pushpa D. Patil, Satara V. Income-tax Officer,

ITA 1591/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2530 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 22-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Keywords: Unexplained investment; Initiation of penalty proceedings
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . .. . / ITA NOS. 1587 TO 1592/PUN/2016 / ASSESSMENT YEARS : 1999-2000 TO 2004-05 MRS. PUSHPA D. PATIL, PRITI PRATIK AYODHYA NAGARI, DHEBIWADI ROAD, AGASHIVNAGAR, KARAD, DIST. SATARA PAN : ACLPP4779Q ....... / APPELLANT / V/S. ITO, WARD-1, SATARA / RESPONDENT ASSESSEE BY : SHRI M.K.KULKARNI REVENUE BY : SHRI SANJEEV GHEI / DATE OF HEARING : 21.08.2018 / DATE OF PRONOUNCEMENT : 24.08.2018 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE SIX APPEALS FILED BY THE ASSESSEE INVOLVING A.YR S. 1999- 2000 TO 2004-05. THESE APPEALS ARE FILED AGAINST SEPARATE ORDERS O F CIT(A)- 2, PUNE, COMMONLY DATED 15-03-2016. PENALTY LEVIED U/S.27 1(1)(C) OF THE ACT IS THE ONLY ISSUE IN ALL THESE APPEALS. GROUNDS RAISED BY THE ASSESSEE ARE ALSO IDENTICAL. 2. WE SHALL FIRST TAKE UP THE APPEAL THE ASSESSEE FOR A.Y. 1999-2000 FOR THE SAKE OF REFERENCE TO FACTS. 2 ITA NOS.1587 TO 1592/PUN/2016 MRS. PUSHPA D. PATIL ITA NO.1587/PUN/2016 A.Y. 1999-2000 3. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED HERE AS UND ER: 1. THAT THE LD. ITO HAS ERRED IN LEVYING THE PENALTY O F RS.1,35,586/- IN THE ASSESSMENT ORDER PASSED FOR A.Y. 1999-2000 IGNORING THE SUBMISSIONS MADE DURING THE COURSE OF HEARING. 2. THAT THE LD. ITO HAS ERRED IN MAKING THE ADDITION O F RS.4,03,762/- ON ACCOUNT OF LOAN TAKEN FROM SOU. LAXMI PAWAR, INCREA SE IN CAPITAL BALANCE, RECURRING DEPOSITS OWNED BY D.B. PATIL (HUF), UNEXP LAINED CREDIT IN BANK ACCOUNT, AND DRAWINGS WITHOUT ANY AUTHENTICATE/BONA FIDE GROUND. THE AO HAS NOT GIVEN SUFFICIENT TIME FOR SUBMITTING ALL THE DOCUMENTS/SUPPORTING FOR THE ASSESSMENT. THEREFORE THE ASSESSMENT ORDER PASSED BY THE CIT(A) IS NOT JUSTIFIED AND THE REFORE THE SAME IS NOT TENABLE. 3. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HUGE PENALTY OF RS.1,35,586/- LEVIED ON THE INCOME BY THE ITO MAY P LEASE BE WAIVED. 4. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, AMEND, DE LETE, MODIFY, AND RECTIFY ANY GROUNDS OF APPEAL DURING THE COURSE OF HEARING. 4. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSE E IS AN INDIVIDUAL. IN THIS CASE, INITIALLY, THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME. IN RESPONSE TO NOTICE U/S.148 OF THE ACT , THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,33,833/- AND AGRICULTURAL INCOME AT RS.23,000/-. DURING THE YEAR UNDER CONSIDERATIO N, THE ASSESSEE WAS RUNNING A STD BOOTH AND EARNING INCOME FROM THER EIN BESIDES RENTAL INCOME FROM HOUSE PROPERTY, SALARY FROM AYODHYA LEASING A ND FINANCE CO. LTD. AND INCOME FROM OTHER SOURCES. BASED ON THE INFORMA TION GATHERED BY THE ADIT (INVESTIGATION), KOLHAPUR, IT WAS NOTICED THAT ASSE SSEE MADE INVESTMENTS DURING THE PERIOD A.Y. 1998-99 TO 2003-04 T OTALLING TO RS.68,34,747/-. AN AMOUNT OF RS.17,67,470/- WAS STATED TO HAVE BEEN INVESTED OUT OF LOANS TAKEN FROM VARIOUS BANKS INCLUDING L IC. BALANCE AMOUNT OF RS.50,67,177/- WAS TREATED BY HIM AS ASSESSEE S UNEXPLAINED INVESTMENT/UNACCOUNTED INCOME. THE SAID INCOME WAS ADMIT TED BY THE 3 ITA NOS.1587 TO 1592/PUN/2016 MRS. PUSHPA D. PATIL HUSBAND OF THE ASSESSEE SHRI DAULAT B. PATIL. ASSESSEE SUBMITTED BA LANCE SHEET AND CAPITAL ACCOUNTS FOR THE BLOCK PERIOD MENTIONED ABOVE. AT THE END OF THE ASSESSMENT U/S.143(3) R.W.S. 147 OF THE ACT, AO MADE VARIOUS ADDITIONS TOTALING TO RS.4,28,182/- AND DETERMINED THE TOTA L INCOME OF THE ASSESSEE AT RS.5,65,015/-. AO ALSO INITIATED PENALTY PROCEE DINGS U/S.271(1)(C) OF THE ACT FOR FILING INACCURATE PARTICULARS OF INCOM E AND LEVIED PENALTY OF RS.1,35,586/-. IN THE FIRST APPELLATE PROCEE DINGS, THE CIT(A) CONFIRMED THE PENALTY U/S.271(1)(C) OF THE ACT TO THE EXTENT OF 100% OF TAX SOUGHT TO BE EVADED INSTEAD OF 200% PENALTY LEVIED BY THE AO. IN THE REST OF THE ASSESSMENT YEARS TOO, AO ADOPTED THE SAME MANNER IN MATTERS OF LEVYING THE PENALTIES U/S.271(1)(C) OF THE ACT. 5. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE FILED THE PRESENT APPEALS BEFORE THE TRIBUNAL WITH THE SIMILAR GROUNDS EXTRACTED ABO VE. 6. BEFORE US, AT THE OUTSET, RAISING A LEGAL ISSUE, LD. COUNSE L FOR THE ASSESSEE SUBMITTED ORALLY THAT THIS IS A CASE WHERE THE AO FAILED TO RECORD VALID SATISFACTION IN THE ASSESSMENT ORDERS DURING WHICH T HE PENALTY PROCEEDINGS WERE INITIATED. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOUS BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJ UNATHA COTTON AND GINNING FACTORY 359 ITR 565 LD. COUNSEL DEMONSTRAT ED THAT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. IN THIS RE GARD, HE BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDERS AS WE LL AS THE PENALTY ORDERS HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. FURTHER, HE SUBMITTED THAT 4 ITA NOS.1587 TO 1592/PUN/2016 MRS. PUSHPA D. PATIL IF RELIEF IS GRANTED ON THE LEGAL ISSUE, THERE IS NO NEED FOR A DJUDICATING THE GROUNDS RAISED ON THE MERITS OF THE PENALTY. 7. PER CONTRA, LD. DR FOR THE REVENUE RELIED HEAVILY ON T HE ORDER OF THE AO. 8. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS O F THE REVENUE ON THE LEGAL ISSUE RAISED ORALLY. FIRSTLY, AS ARGUED BY THE L D. COUNSEL, WE WOULD LIKE TO ADJUDICATE THE ISSUE ON THE LEGAL ISSUE, I.E. RECORDING OF PROP ER SATISFACTION BY THE AO. ON PERUSAL OF THE ASSESSMENT OR DER DATED 29-12-2006, WE FIND THE AO MADE VARIOUS ADDITIONS INVOKING THE PROVISIONS OF SECTION 68, 69 AND 69B ETC. WHILE MAKING EACH OF THESE ADDITIONS, AO INITIATED THE PENALTY PROCEEDINGS STATING THAT THIS IS A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. FURTHER, WE HAVE PERUSED THE PENALTY ORDER DATED 19-06-2007 AND FIND TH E AO LEVIED THE PENALTY FOR DEFAULT OF FURNISHING OF INACCURATE PARTICULARS AS WELL AS CONCEALMENT OF INCOME. FOR THE SAKE OF COMPLETENESS, WE P ROCEED THE EXTRACT THE CONTENTS OF PARA NO.5 AND THE SAME READS AS UNDER : 5.. ..I AM THEREFORE, SATISFIED THAT THIS IS A F IT CASE FOR IMPOSING PENALTY UNDER SEC.271(1)(C) OF THE I.T. ACT, 1961. IN THIS CASE, SINCE THE ASSESSEE HAS BEEN RELUCTANT TO MAKE ANY PROPER REPL Y AS TO WHY PENALTY UNDER SEC.271(1)(C) IN HER CASE SHOULD NOT BE IMPOS ED DUE TO CONCEALMENT OF INCOME AND ASSETS BUT ALSO NON COOPERATED WITH THE DEPART MENT BY FURNISHING PROPER EXPLANATION. RATHER, THE ASSESSE E MADE FALSE ALLEGATIONS AGAINST THE ASSESSING OFFICER AND THOUGH TRIED TO D ILUTE AND DILATE THE MAIN ISSUES RELATING TO EVASION OF TAX, THEREBY MAKING B ASELESS ALLEGATION AND RESORTING TO ILLEGAL ACTION, NOT IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT. I, ACCORDINGLY CONSIDER IT TO BE A FIT CA SE FOR IMPOSING PENALTY UNDER SEC.271(1)(C) OF THE INCOME TAX ACT, 1961, OF RS.2, 49,360/- BEING 200% OF THE TAX SOUGHT TO BE EVADED ON THE CONCEALED INCOME , CALCULATED AS UNDER . ALTHOUGH THE AO INITIATED THE PENALTY PROCEEDINGS FOR DEFA ULT OF FURNISHING OF INACCURATE PARTICULARS, EVENTUALLY IN PARA NO.5, THE AO LEVIED 5 ITA NOS.1587 TO 1592/PUN/2016 MRS. PUSHPA D. PATIL THE PENALTY FOR CONCEALMENT OF INCOME. IT IS ALSO EVIDENT T HAT AO LEVIED THE PENALTY FOR EACH OF THE ADDITION FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO MENTIONED ONE LIMB OF C LAUSE (C) OF SECTION 271(1) OF THE ACT AND DID NOT MENTION ANY LIMB WHILE LEVYING THE PENALTY. THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APPLICABILITY OF SPECIFIC LIMB. THEREFO RE, WE ARE OF THE OPINION THAT CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. AO IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. THEREFORE, WE ARE OF THE VIEW, THAT THE AS SESSEE IS ENTITLED TO RELIEF ON THE LEGAL ISSUE. ACCORDINGLY, WE HOLD THAT THE GROUNDS OF APPEAL ON THE MERITS ARE DISMISSED AS ACADEMIC. 9. THERE IS NO CHANGE IN THE MATERIAL FACTS AND THE DECI SION OF AO/CIT(A) IN THE REMAINING ASSESSMENT YEARS TOO. THEREFOR E, WITH THE SIMILAR REASONING, WE ALLOW ALL THE APPEALS OF THE ASSESSEE O N THE LEGAL ISSUE ALONE AND DISMISS THE GROUNDS ON MERITS. 10. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOW ED. ORDER PRONOUNCED ON 24 TH DAY OF AUGUST, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / // / JUDICIAL MEMBER / // / ACCOUNTANT MEMBER / PUNE; / DATED : 24 TH AUGUST, 2018. SATISH 6 ITA NOS.1587 TO 1592/PUN/2016 MRS. PUSHPA D. PATIL ! # ! # ! # ! # / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-2, PUNE. 4. THE PR. CIT, CENTRAL-1, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. ' / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.