Jitendra Prataprao Sonar, Pune V. Deputy Commissioner of Income-tax,

ITA 1693/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9541 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-12-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 28-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Keywords: Bogus purchase; Tangible material; Revised return
• Section: 143(3); 133A; 6

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NOS.1692 TO 1694/PUN/2015 / ASSESSMENT YEARS : 2009-10 TO 2011-12 JITENDRA PRATAPRAO SONAR, PROP : M.S. PUBLISHERS AND PRINTERS, SHOP NO.30/31/32, PAN BAZAR BLDG., MARKET YARD, GULTEKDI, PUNE 411 034. PAN : AFFPS9137N. . / APPELLANT V/S DY.COMMISSIONER OF INCOME TAX, CIRCLE 2, PUNE. . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK. REVENUE BY : SHRI VIVEK AGGARWAL. / ORDER PER ANIL CHATURVEDI, AM : 1. THESE THREE APPEALS FILED BY THE ASSESSEE ARE EMANATING OUT OF A CONSOLIDATED ORDER OF COMMISSIONER OF INCOME TAX (A)-4, P UNE DT.30.10.2015 FOR THE ASSESSMENT YEARS 2009-10, 2010-11 AND 2011- 12 WHEREIN LD.CIT(A) HAS CONFIRMED THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 2. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT THOUGH THE THREE APPEALS OF THE ASSESSEE ARE FOR DIFFERENT ASSESSMENT YEARS BUT T HE ISSUE INVOLVED IN THREE APPEALS ARE COMMON NAMELY, THE LEVY OF P ENALTY U/S 271(1)(C) OF THE I.T. ACT. HE THEREFORE SUBMITTED THAT TH E SUBMISSIONS / DATE OF HEARING : 13.12.2017 / DATE OF PRONOUNCEMENT: 05.01.2018 2 MADE BY HIM WHILE ARGUING APPEAL FOR ONE YEAR WOULD BE EQU ALLY APPLICABLE TO OTHER YEARS AND THEREFORE ALL THE THREE AP PEALS CAN BE HEARD TOGETHER. LD.D.R. DID NOT OBJECT TO THE AFORESAID SUBMISSION OF LD.A.R. WE THEREFORE FOR THE SAKE OF CONVENIENCE PROCEED TO DISPOSE OF ALL THE THREE APPEALS BY A CONSOLIDATED ORDER. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- 3.1 ASSESSEE IS AN INDIVIDUAL AND STATED TO BE ENGAGED IN THE BUSINESS OF UNDERTAKING PUBLISHING AND PRINTING CONTRACTS. ASSESSEE FILED HIS ORIGINAL RETURN OF INCOME FOR A.Y. 2009-10 ON 30.09.2 009 DECLARING TOTAL INCOME AT RS.41,80,600/-. A SURVEY ACTION U /S 133A OF THE ACT WAS CARRIED OUT ON 22.10.2012 AT THE BUSINESS P REMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY ACTION, IT WAS NO TICED THAT ASSESSEE HAD MADE BOGUS PURCHASES FROM VARIOUS PARTIES WHO WERE DECLARED HAWALA DEALERS BY THE SALES TAX DEPARTMENT. TH E AGGREGATE PURCHASES MADE BY THE ASSESSEE FROM SUCH PARTIES WAS TO THE TUNE OF RS.82,23,904/-. AO NOTED THAT ON BEING CONFRONTED, ASSES SEE COULD NOT PROVIDE ALL THE SUPPORTING DOCUMENTS TO ASCERTAIN TH E VERACITY OF PURCHASES BUT HOWEVER ASSESSEE OFFERED ADDITIONAL INCOME OF RS.36,85,775/- AFTER APPLYING AN ESTIMATED GROSS PROFIT OF 2 4% ON THE TOTAL TURNOVER. ASSESSEE THEREAFTER REVISED HIS RETURN OF INCOME ON 28.03.2013 DECLARING THE TOTAL INCOME OF RS.78,66,380/- THEREAFTER, THE CASE WAS RE-OPENED AND SUBSEQUENTLY ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DT.28.03.2014 AND THE TOTAL INCOME WAS DETERMINED AT RS.78,66,380/- BEING THE SAME AS OFFERED BY 3 THE ASSESSEE IN THE REVISED RETURN OF INCOME. FOR THE OT HER ASSESSMENT YEARS THE DETAILS OF INCOME OFFERED BY THE ASSESSEE ARE AS UNDER : A.Y. INCOME OFFERED IN ORIGINAL RETURN IN RS. ADDL. INCOME DIFFERED IN RESPONSE TO NOTICE U/S 148 IN RS. TOTAL INCOME OFFERED IN RETURN IN RESPONSE TO NOTICE U/S 148 IN RS. TOTAL INCOME ASSESSED U/S 143(3) R.W.S. 147. IN RS. 2010-11 99,42,430/- 1,60,34,335/- 2,59,76,780/- 2,59,76,780/- 2011-12 1,33,93,884/- 1,66,42,104/- 3,00,35,988/- 3,00,35,988/- ON THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN THE RE VISED RETURN OF INCOME FOR THE THREE ASSESSMENT YEARS, AO VIDE ORDE R DT.26.09.2014 LEVIED PENALTY OF RS.12,16,305/- (FOR A.Y. 2009-10), RS.48,78,801 /- (FOR A.Y. 2010-11) AND RS.50,28,183/- (FOR A.Y. 2011-12) U/S 271(1 )(C) OF THE ACT ON ACCOUNT OF CONCEALING THE PARTICULARS OF INCOME AND FOR FURNISHING INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE ORDERS OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO V IDE ORDER DT.30.10.2015 DISMISSED THE APPEALS OF THE ASSESSEE. AGG RIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS IN A.Y. 2009-10 : THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE : 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) [CIT (A)] ERRED IN UPHOLDING THE LEVY OF PENALTY UNDER SECTION 271(1)( C) OF THE INCOME TAX AC T 1961 (THE 'ACT). THE CIT (A) OUGHT TO HAVE HELD TH AT NO PENALTY WAS LEVIABLE, ON THE FACTS AND IN LAW. 2. THE CIT (A) ERRED IN HOLDING THAT THE APPELLANT HAS CONCEALED THE I NCOME/FURNISHED INACCURATE PARTICULARS OF INCOME . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) FAILED TO APPRECIATE THE FACT THAT : 4 3. THE INCOME DECLARED BY THE APPELLANT WAS PURELY ON ESTIMATED BASIS AND THERE IS NO TANGIBLE MATERIAL FOUND DURING THE COURSE OF SURVEY U/S 133A OF THE ACT TO JUSTIFY THE LEVY OF PENALTY FOR CONCE ALMENT . 4 . THE ASSESSED INCOME WAS SAME AS THE RETURNED INCOME . 5. THE TAXES WERE PAID AND REVISED RETURN WAS FILED BEFORE ISSUE OF NOTICES U/S 148, U/S 143(2) AND U/S 142(1). 6 . ALLEGING THAT THE RETURN WAS REVISED DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. 7. HOLDING THAT THE ORIGINAL RETURN WAS FILED AFTER THE SALES TAX SURVEY. 8. CONCLUDING THAT DENIAL OF VAT SET OFF WAS KNOWN TO THE APPELLANT BEFORE FILING THE ORIGINAL RETURN OF INCOME AND THE REFORE, HE OUGHT TO HAVE DECLARED HIS TRUE INCOME IN ORIGINAL RETURN. 9. ALLEGING THAT THE ADDITIONAL INCOME WAS NOT VOLUNTA RILY DISCLOSED BY THE APPELLANT. 10. CONFIRMING THE LEVY OF PENALTY AS IT RESTED UPO N INVALID REASSESSMENT WHICH WAS VOID AB-INITIO. 4. SUBSEQUENTLY, THE ASSESSEE HAS RAISED THE FOLLOWING AD DITIONAL GROUNDS : 1. THE ASSESSEE SUBMITS THAT THE PENALTY ORDER PASSED U/S. 271 (1) (C) BE DECLARED NULL AND VOID SINCE THE SAID ORDER HAS BEEN PASSED WITHOUT PROPER APPLICATION OF MIND 2. THE ASSESSEE FURTHER SUBMITS THAT THE PENALTY ORDER PASSED IS INVALID IN LAW SINCE THERE IS NO PROPER SATISFACTION RECORD ED BY THE A.O. AND EVEN THE NOTICE ISSUED BY THE LD. A.O. U/S. 274 R.W .S. 271(1)(C) IS BAD IN LAW. SIMILAR GROUNDS HAVE BEEN RAISED BY ASSESSEE IN A.YS. 2010 -11 AND 2011-12 . 5. BEFORE US, LD.A.R. SUBMITTED THAT THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS BUT ALL THE GROUNDS ARE INTER-CON NECTED AND THE SOLE CONTROVERSY IS WITH RESPECT TO LEVY OF PENALTY U/S 2 71(1)(C) OF THE ACT. 5 6. BEFORE US, LD.A.R SUBMITTED THAT IN THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE, THE REVISED INCOME OFFERED BY THE AS SESSEE WERE ACCEPTED IN TOTO BY THE AO WITHOUT ANY CHANGE. HE SUB MITTED THAT ON THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE, AO LEVIED PEN ALTY U/S 271(1)(C) OF THE ACT. LD.A.R. SUBMITTED THAT WHILE PASSING THE ASSESSMENT ORDERS FOR A.Y. 2009-10 AND 2010-11, AO INITIA TED PENALTY FOR CONCEALING THE PARTICULARS OF INCOME BUT WHILE PASSING TH E ASSESSMENT ORDER FOR A.Y. 2011-12, NO SATISFACTION WAS RE CORDED BY AO. HE SUBMITTED THAT THEREAFTER THE AO WHILE PASSING TH E ORDER FOR PENALTY FOR ALL THE THREE ASSESSMENT YEARS, AO LEVIED PENA LTY FOR CONCEALING THE PARTICULARS OF INCOME AS WELL AS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HE POINTED TO THE RELEV ANT ASSESSMENT AND PENALTY ORDERS. HE THEREFORE, RELYING O N THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMS ON PERINCHERY (ITA NO.1154 OF 2014 ORDER DT.05.01.2017), SUBMITT ED THAT WHEN INITIATION OF PENALTY IS FOR FURNISHING OF INACCURATE PART ICULARS OF INCOME OR WHEN NO SATISFACTION FOR PENALTY IS RECORDED BUT WHEN PENALTY WAS LEVIED FOR CONCEALMENT OF INCOME, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO ASSESSEE, PENALTY U/S 271(1 )(C) CANNOT BE LEVIED. HE THEREFORE SUBMITTED THAT PENALTY LEVIED BY AO B E DELETED. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPEC T TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE, IT IS AN UNDISPUTED FACT THAT THE AMOUNT OF ADDITIONAL INCOME OFFERED BY THE ASSESSEE PURSUANT TO SURVEY ACTION FOR ALL THREE ASSESS MENT YEARS HAS 6 BEEN ACCEPTED BY REVENUE IN TOTO. ON THE ADDITIONAL INCO ME OFFERED AND ACCEPTED BY REVENUE, THE PENALTY U/S 271(1)(C) HAS BE EN LEVIED BY AO. THE PERUSAL OF ASSESSMENT ORDER PASSED U/S 143(3 ) R.W.S 147 OF THE ACT FOR A.Y. 2009-10 AND 2010-11 REVEALS THAT AO INIT IATED PENALTY FOR CONCEALING THE PARTICULARS OF INCOME. AS FAR AS A.Y. 201 1-12 IS CONCERNED THE PERUSAL OF ASSESSMENT ORDER REVEALS THAT AO HAD NOT RECORDED ANY SATISFACTION FOR LEVY OF PENALTY. THEREAFTER IN THE PENALTY ORDERS PASSED U/S 271(1)(C) OF THE ACT, AO HELD THAT ASSES SEE HAD CONCEALED PARTICULARS OF INCOME BY FURNISHING INACCURATE P ARTICULARS OF INCOME. IT IS A SETTLED LAW THAT WHILE LEVYING PENALTY FOR CONCEALMENT, THE AO HAS TO RECORD SATISFACTION AND THEREAFTER COME T O A FINDING IN RESPECT OF ONE OF THE LIMBS, WHICH IS SPECIFIED UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SATISFACTION WHILE CO MPLETING THE ASSESSMENT AS TO WHETHER THE ASSESSEE HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOT ICE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO TH E ASSESSEE. THE ASSESSING OFFICER THEREAFTER HAS TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR NON-SATISFACTION OF EITHER OF THE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAS TO C OME TO A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCO ME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE HONBLE BOM BAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN ITA NO.1154 OF 2014 WITH OTHER ITA NOS.953 OF 2014, 1097 OF 2014 AND 1226 OF 2014 , VIDE JUDGMENT DATED 05.01.2017 HELD THAT WHERE INITIATION OF PEN ALTY IS ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE A BSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 7 8. IN THE PRESENT CASE, AS NOTED HEREINABOVE, IT IS SEEN THAT FOR A.Y. 2011-12 THE AO HAS NOT RECORDED ANY SATISFACTION AND FU RTHER LEVIED PENALTY ON BOTH THE LIMBS I.E., FOR CONCEALMENT OF INCOME AND FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. FOR A.Y. 2009 -10 AND 2010-11, AO RECORDED THAT PENALTY IS INITIATED FOR CONCEA LING THE PARTICULARS OF INCOME BUT IN THE PENALTY ORDER PASSED LEVIE D PENALTY ON BOTH THE LIMBS I.E., FOR FURNISHING OF INACCURATE PARTICULARS OF IN COME AND CONCEALING THE INCOME. CONSIDERING THE AFORESAID FACT S IN THE LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF SAMSON PERINCHERY (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASES, THE BASIC CONDITION FOR LEVY OF PENALTY HAS NOT BEE N FULFILLED AND THAT THE PENALTY ORDER SUFFERS FROM NON-EXERCISING OF JUR ISDICTION POWER OF AO AND THEREFORE PENALTY ORDERS CANNOT BE UPH ELD. WE ACCORDINGLY SET ASIDE THE PENALTY ORDERS FOR ALL THE THRE E YEARS PASSED BY AO. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 9. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED ON 5 TH DAY OF JANUARY, 2018. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 5 TH JANUARY, 2018. YAMINI 8 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-4, PUNE. PR.CCIT, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.