VANDANA MEHTA, MUMBAI V. ITO 25(3)(4), MUMBAI

ITA 1661/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8548 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 22-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHAM

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT & SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.1661/MUM/2016 ASSESSMENT YEAR : 2006-07 MRS VANDANA MEHTA, S-1303 UDYOG NAGAR, KAMLA VIHAR, MAHAVIR NAGAR, KANDIVALI (W), MUMBAI 400 067 PAN AADPM2504J VS. ITO 25(3)(4) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI M C OMI NINGSHAM DATE OF HEARING : 14. 11 .2017 DATE OF PRONOUNCEMENT : 17 . 11 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-45, MUMBAI, DATED 25.01.2016, FOR A.Y. 2006- 07, CONFIRMING THE PENALTY AMOUNTING TO ` 1,87,340/- LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN THO UGH NOTICE WAS DULY SENT. WE, THEREFORE, PROCEED TO DISPOSE OF THE APP EAL AFTER HEARING THE LEARNED DR AND ON THE BASIS OF THE MATERIAL AVAILAB LE ON RECORD. ITA NO.1661/MUM/2016 MRS VANDANA MEHTA 2 3. AFTER HEARING THE LEARNED DR AND GOING THROUGH T HE ORDERS OF THE TAX AUTHORITIES BELOW, WE NOTED THAT IN THIS CASE THE O NLY ADDITION MADE BY THE ASSESSING OFFICER WAS IN RESPECT OF LONG TERM CAPIT AL GAINS OF ` 6,23,418/- SHOWN BY THE ASSESSEE ON ACCOUNT OF PURCHASE AND SA LE OF MINOLTA FINANCE LTD., WHICH WAS TREATED AS BOGUS AS THE SCRIP WAS R ECOGNIZED AS A PENNY SCRIP. THEREAFTER, PENALTY PROCEEDINGS WERE INITIA TED ON THE SAID ADDITION AND NOTICE WAS ISSUED U/S. 274 R.W.S. 271(1)(C) OF THE I.T.ACT, 1961. ULTIMATELY, THE ASSESSING OFFICER LEVIED PENALTY BY OBSERVING A S UNDER: 6.1 IN VIEW OF ALL THE ABOVE FACTS AND CIRCUMSTAN CES INVOLVED IN THE CASE OF THE ASSESSEE, I AM SATISFIED THAT ASSES SEE HAD COMMITTED DEFAULT AND HAS THUS BECOME LIABLE TO BE PENALIZED AS PER THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT. THE INCOME CONCEALED BY THE ASSESSEE ON WHICH TAX SOUGHT TO BE EVADED IS DETERMINED AT ` .6,42,873/-. 6.2 MINIMUM PENALTY LEVIABLE IN THIS CASE WORKS OUT TO ` 1,87,335/- BEING 100% OF TAX SOUGHT TO BE EVADED AN D MAXIMUM PENALTY WORKS OUT TO ` 5,62,005/- BEING 300% OF TAX SOUGHT TO BE EVADED. FROM THE ASSESSMENT ORDER, WE NOTED THAT THE ASSESS ING OFFICER HAS NOT INITIATED PENALTY FOR ANY SPECIFIC DEFAULT I.E. WHE THER FOR CONCEALMENT OF INCOME OR FOR FILING INACCURATE PARTICULARS OF INCO ME. PENALTY WAS ALSO LEVIED ON THE REASONING THE ASSESSEE HAS COMMITTED DEFAULT AND THUS BECOMES LIABLE TO PENALIZE U/S. 271(1)(C) OF THE I.T. ACT. THE ISSUE, IN OUR OPINION, IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY THE ITA NO.1661/MUM/2016 MRS VANDANA MEHTA 3 DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF C IT VS. SAMSON PERINCHERY 392 ITR 4 (BOM), WHEREIN HONBLE HIGH COURT HAS HEL D AS UNDER:-- 3 THE IMPUGNED ORDER OF THE TRIBUNAL DELETED THE P ENALTY IMPOSED UPON THE RESPONDENT ASSESSEE. THIS BY HOLDI NG THAT THE INITIATION OF PENALTY UNDER SECTION 271 (1)(C) OF T HE ACT BY ASSESSING OFFICER WAS FOR FURNISHING INACCURATE PAR TICULARS OF INCOME WHILE THE ORDER IMPOSING PENALTY IS FOR CONCEALMENT OF INCOME. THE IMPUGNED ORDER HOLDS THAT THE CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY D IFFERENT CONNOTATIONS. THEREFORE, THE ASSESSING OFFICER SHOU LD BE CLEAR AS TO WHICH OF THE TWO LIMBS UNDER WHICH PENALTY IS IMPOS ABLE, HAS BEEN CONTRAVENED OR INDICATE THAT BOTH HAVE BEEN CONTRAV ENED WHILE INITIATING PENALTY PROCEEDINGS. IT CANNOT BE THAT T HE INITIATION WOULD BE ONLY ON ONE LIMB I.E. FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHILE IMPOSITION OF PENALTY ON THE OTHER LIM B I.E. CONCEALMENT OF INCOME. FURTHER, THE TRIBUNAL ALSO N OTED THAT NOTICE ISSUED UNDER SECTION 274 OF THE ACT IS IN A STANDAR D PROFORMA, WITHOUT HAVING STRIKED OUT IRRELEVANT CLAUSES THERE IN. THIS INDICATES NON-APPLICATION OF MIND ON THE PART OF THE ASSESSIN G OFFICER WHILE ISSUING THE PENALTY NOTICE. 4 THE IMPUGNED ORDER RELIED UPON THE FOLLOWING EXTR ACT OF KARNATAKA HIGH COURT'S DECISION IN CIT V/S. MANJUNA TH COTTON AND GINNING FACTORY 359 ITR 565 TO DELETE THE PENALTY: THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT T O INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED I N THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS, THE ASSESSING OFFICER WHILE ISSUIN G NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER I S IT A CASE OF CONCEALMENT OF INCOME OR IS IT AS CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COUR T IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CAR RY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN T HE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 ITA NO.1661/MUM/2016 MRS VANDANA MEHTA 4 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING P. LTD., REPORTED IN 171 TAXMN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLE AR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON APPLICA TION OF MIND. 5. THE GRIEVANCE OF THE REVENUE BEFORE US IS THAT T HERE IS NO DIFFERENCE BETWEEN FURNISHING OF INACCURATE PARTICU LARS OF INCOME AND CONCEALMENT OF INCOME. THUS, DISTINCTION DRAWN BY THE IMPUGNED ORDER IS BETWEEN TWEEDLEDUM AND TWEEDLEDE E. IN THE ABOVE VIEW, THE DELETION OF THE PENALTY, IS UNJUSTI FIED. 6. THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN ASHOK PAI V/S. CIT 292 ITR 11 [RELIED UPON IN MANJUNATH COTTON & GINNING F ACTORY (SUPRA)] WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271( 1)(C) OF THE ACT, CARRY DIFFERENT MEANINGS/ CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR I NITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT PENAL TY BEING IMPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS A N ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HA S BEEN INITIATED/NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANN OT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 7 THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN F AVOUR OF THE RESPONDENT ASSESSEE BY THE DECISION OF THE KARNATAK A HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). NOTHING HAS BEEN SHOWN TO US IN THE PRESENT FACTS W HICH WOULD WARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNAT AKA HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). ITA NO.1661/MUM/2016 MRS VANDANA MEHTA 5 FOLLOWING THE SAID DECISION OF THE BOMBAY HIGH COUR T, WE DELETE THE PENALTY ALLOW THE APPEAL OF THE ASSESSEE. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DAY OF NOVEMBER, 2017. SD/- SD/- (AMARJIT SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 17 TH NOVEMBER, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, H BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI