Sadanand P. Zerwar, Nandurbar V. Deputy Commissioner of Income-tax,

ITA 1692/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1632 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 05-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1692 /P U N/20 16 / ASSESSMENT YEAR : 20 12 - 13 SHRI SADANAND P ZERWAR, TRIMURTI TRADERS, 37/38, 1 ST FLOOR, MEENA COMMERCIAL COMPLEX, NANDURBAR 425412 . / APPELLANT PAN: AA B PZ3365L VS. THE DY . COMMISSIONER OF INCOME TAX, CIRCLE, DHULE . / RESPONDENT A PPELLANT BY : S HRI NIKHIL PATHAK RE SPONDENT BY : SHRI M.K. VERMA / DATE OF HEARING : 2 9 . 0 8 .201 8 / DATE OF PRONOUNCEMENT: 30 . 0 8 .201 8 / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF CIT(A) - 1 , NASHIK , DATED 25 .0 5 .20 16 RELATING TO ASSESSMENT YEAR 20 12 - 13 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 2 . THE ASSESSEE HAS RAISED ADDITIONAL GROUND S OF APPEAL , WHICH READ AS UNDER : - 2 ITA NO. 1692 /PUN/20 16 SADANAND P ZERWAR 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. 3. THE LEARNED AUTHORIZED REPRESENTATIVE F OR THE ASSESSEE POINTED OUT THAT ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE GOES TO THE ROOT OF THE ISSUE AND MERITS TO BE ADJUDICATED AS IT AFFECTS THE JURISDICTION OF ASSESSING OFFICER TO PASS PENALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT. 4 . THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ADMITTED AND WE PROCEED TO FIRST TAKE UP THE ADDITIONAL GROUNDS OF APPEAL. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF 15,96,78 0/ - AND AGRICULTURAL INCOME OF 2,42,750/ - . THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF UNSECURED LOANS AT 14 LAKHS VIDE PARA 3 OF ASSESSMENT ORDER. AFTER MAKING ADDITION, THE ASSESSING OFFICER RECORDED SATISFACTION FOR INITIATION OF PENALTY PR OCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, WHICH WAS INITIATED FOR CONCEALMENT AND FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER WHILE LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT ALSO HELD THE ASSESSEE TO HAVE CONCEALED AND FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF INCOME ADDED OF 14 LAKHS. 6. THE CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 3 ITA NO. 1692 /PUN/20 16 SADANAND P ZERWAR 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE BEFORE US HAS POINTED OUT THAT BOTH SATISFACTION RECORDED FOR INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND FOR LEVYING PENALTY FOR CONCEALMENT ARE WITHOUT PROPER APPLICATION OF MIND AND HENCE, THE ORDER PASSED IS BAD IN LAW AND PENALTY LEVIED BE DELETED. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE HAVE ALREADY DECIDED SIMILAR ISSUE IN SERIES OF CASES, WHEREIN IT HAS BEEN HELD THAT WHILE LEVYING PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER MUST RECORD SATISFACTION AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY ISSUE SHOW CAUSE NOTICE TO THE ASSESSEE. THEREAFTER, IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO LEVY PENALTY ON THE LIMB, OF WHICH SHOW CAUSE NOTICE HAS BEEN ISSUED. IT IS ALSO INCUMBENT UPON THE ASSESSING OFFICER TO RECORD SATISFACT ION AND LEVY PENALTY ON ONE OF THE LIMBS OF SECTION 271(1)(C) OF THE ACT AND THE PENALTY PROCEEDINGS COULD NOT BE INITIATED AND COMPLETED ON BOTH THE LIMBS ESPECIALLY IN THE CASE WHERE ONLY ONE ADDITION HAS BEEN MADE IN THE HANDS OF ASSESSEE. 11. THE HON BLE BOMBAY 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. 4 ITA NO. 1692 /PUN/20 16 SADANAND P ZERWAR 12. IN THE PRESENT CASE, WHERE THE ASSESSING OFFICER HAS RECORDED SATISFACTION ON BOTH THE LIMBS, THEN SUCH RECORDING OF SATISFACTION IS NOT COR RECT. FURTHER, EVEN THE PENALTY FOR CONCEALMENT HAS BEEN LEVIED FOR ONE ADDITION OF 14 LAKHS ON BOTH THE LIMBS, WHICH IS ALSO AGAINST PROVISIONS OF THE ACT AND HENCE, THE ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT IS BOTH INVALID AND BAD IN LAW. T HUS, THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. SINCE THE PENALTY ORDER IS HELD TO BE INVALID, WE ARE NOT ADDRESSING THE ISSUE RAISED ON MERITS. 1 3 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 3 0 T H DAY OF AUGUST , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 3 0 T H AUGUST , 201 8 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 1 , NASHIK ; 4. THE PR. CIT - 1 , NASHIK ; , 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE