Omprakash B. Tiwadi, Solapur V. Assistant Commissioner of Income-tax, Circle -1, Solapur

ITA 1733/PUN/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6067 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 05-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Section: 271(1)(c); 143(3); 143(1); 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1733/PUN/2018 / ASSESSMENT YEAR : 2000-01 OMPRAKASH B. TIWADI, 7/8 BUDHWAR PETH SOLAPUR. PAN : AAJPT6339E. . / APPELLANT. V/S THE ASST.COMMISSIONER OF INCOME TAX , CIRCLE 1, SOLAPUR. . / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI. REVENUE BY : SHRI M.K. VERMA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 9, PUNE DATED 30.07.2018 FOR THE ASSESSMENT YEAR 2000-01. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM SHARE PROFIT, HOU SE PROPERTY AND INTEREST INCOME. ASSESSEE FILED HIS RETURN O F INCOME FOR A.Y. 2000-01 DECLARING LOSS OF RS.1,18,512/-. THE RETURN WAS IN ITIALLY PROCESSED U/S 143(1) OF THE ACT ON 25.02.2002. SUBSEQ UENTLY, THE CASE / DATE OF HEARING : 15.07.2019 / DATE OF PRONOUNCEMENT: 01.08.2019 2 WAS RE-OPENED BY ISSUING NOTICE U/S 148 OF THE ACT AN D THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE ACT V IDE ORDER DT.23.09.2004 AND THE TOTAL INCOME WAS DETERMINED AT RS.3 ,37,540/-. AO NOTED THAT ASSESSEE HAD CLAIMED INTEREST EXPENSES OF RS .33,232/- IN THE REVISED INCOME AS AGAINST RS.5,04,425/- AS CLAIMED IN THE O RIGINAL RETURN OF INCOME. AO NOTED THAT THE CLAIM OF INTEREST OF RS.33,232 /- PAYABLE TO M/S. S.B. TIWADI SEEMS TO BE ALLOWABLE AS AGAINST RS.5,04,42 5/- WHICH WAS CLAIMED WITH THE ORIGINAL RETURN. HE THEREFORE CONCLUDE D THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME IN THE ORIGINAL RETURN OF INCOME TO THE EXTENT OF RS.4,71,203/- (RS.5,04,435 /- - RS.33,232/-) OF THE AFORESAID AMOUNT AND ACCORDINGLY VIDE ORDER DT.18.07.2007 PASSED U/S 271(1)(C) OF THE ACT LEVIED PENALTY O F RS.1,26,900/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CAR RIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER 30.07.2018 (IN APPEAL NO.PN/CI T(A)- 7/490/2014-15) UPHELD THE ORDER OF AO. AGGRIEVED BY T HE ORDER OF LD.CIT(A), ASSESSEE IS NOW BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW AND AS A RESULT OF HON'BLE TRIBUNAL ORDER IN ITA/604-A/ PN/2006 IN QUANTUM APPEAL DT. 31-10-2006 THE CAUSE FOR LEVY OF PENALTY UNDER S. 271(1)(C) OF THE ACT WAS REMOVED. THE PENA LTY LEVIED BY A. O. AND CONFIRMED BY LD. CIT(A) IS NOT SUSTAIN ABLE. THE SAME BE QUASHED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE INCOME FINALITY ASSESSED AFTER GIVING EFFECT TO THE HON'BLE TRIBUNAL ORDER IN SUSTAIN APPEAL WAS RS. 1,16,010/- THEN BY NO STRETCH OF IMAGINATION THE PENALTY OF RS. 1,26,896/ - CANNOT BE LEVIED BY THE A. O . WHICH ITSELF IS IN EXCESS OF THE ASSESSEE INCOME. NO PROPER APPLICATION OF MIND IS VISIBLE OF THE A. O. THE PENALTY LEVIED BE QUASHED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW AND PERUSAL OF SHOW-CAUSE NOTICE DT. 24-09-2004 ISSUED U/S 274 OF THE ACT ITSELF REVEALS THAT THERE IS NOT SPECIFIC C HARGE OF EITHER 'CONCEALMENT' OR 'FURNISHING OF INACCURATE PARTICUL ARS OF INCOME'. ON ASSESSMENT ORDER ALSO THE PENALTY PROCEEDINGS HA VE NOT BEEN INITIATED FOR ANY 'SPECIFIC CHARGE' WHICH SHOWS 'PE NAL PROCEEDINGS U/S 274 R.W.S. 271(1)(C) ARE INITIATED SEPARATELY' AND AT THE END IT SAYS 'ISSUE NOTICE FOR FURNISHING INACCURATE PAR TICULARS OF INCOME'. THIS IS CONTRARY TO SETTLED LAW. THE PENAL TY LEVIED BE QUASHED. 3 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE PENALTY PROCEEDINGS COMPLETED VIDE ORDER DT. 18-07- 2007 ARE BARRED BY LIMITATION. THE PENALTY LEVIED IS NOT SUSTAINABLE. IT BE QUASHED. 3. BEFORE US, LD.A.R. SUBMITTED THAT THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS BUT ALL THE GROUNDS ARE INTER-CONNECTE D AND THE SOLE CONTROVERSY IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 4. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT IN THE ORIGINAL RETURN OF INCOME THAT WAS FILED ASSESSEE HAD CLAIMED INTEREST EXPENSES OF RS.4,04,4 35/- BUT SUBSEQUENTLY IN THE RETURN OF INCOME FILED IN RESPONSE T O NOTICE U/S 148 OF THE ACT, ASSESSEE HAD CLAIMED INTEREST OF RS.33,232/-. H E FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEED INGS ALL THE INFORMATION AND EXPLANATIONS WHICH WAS CALLED FOR BY THE AO WERE SUBMITTED. HE FURTHER SUBMITTED THAT THERE IS NO MATERIAL ON RECORD WHICH COULD DEMONSTRATE THAT THE EXPLANATION GIVEN BY THE ASS ESSEE WAS FALSE OR THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOM E. HE FURTHER SUBMITTED THAT MERE MAKING OF THE CLAIM WHICH IS NOT SUSTA INABLE IN LAW AND WOULD NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME AND SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURA TE PARTICULARS. HE THEREFORE SUBMITTED THAT THE PENALTY BE DELETED. LD.DR , ON THE OTHER HAND, SUPPORTED THE ORDERS OF AO AND LD.CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 6. THE NECESSARY INGREDIENTS FOR ATTRACTING EXPLANATION-1 TO SECTION 271(1)(C) ARE THAT: (I) THE PERSON FAILS TO OFFER THE EXPLANATION , OR (II) HE 4 OFFERS THE EXPLANATION WHICH IS FOUND BY THE AO OR THE LD .CIT(A) OR THE LD.CIT TO BE FALSE, OR (III) THE PERSON OFFERS EXPLANATION WHICH H E IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOS ED BY HIM. IF THE CASE OF ANY ASSESSEE FALLS IN ANY OF THESE THREE CATEGORIE S, THEN ACCORDING TO THE DEEMING PROVISION PROVIDED IN EXPLANATION-1 TO SEC TION 271(1)(C) THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME S HALL BE CONSIDERED AS THE INCOME IN RESPECT OF WHICH PARTICULARS H AVE BEEN CONCEALED, FOR THE PURPOSES OF CLAUSE (C) OF SECTION 271(1), AND THE PENALTY FOLLOWS. ON THE OTHER HAND, IF THE ASSESSEE IS ABLE TO OFFER A N EXPLANATION, WHICH IS NOT FOUND BY THE AUTHORITIES TO BE FALSE, AND ASS ESSEE HAS BEEN ABLE TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM, THEN IN T HAT CASE PENALTY SHALL NOT BE IMPOSED. 7. A CASE FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOME HAS TO BE EVALUATED IN TERMS OF PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C), AS PER WHICH IF IN RELATION TO ANY ADDITION IN THE ASSESSMENT, T HE ASSESSEE OFFERS NO EXPLANATION OR OFFERS EXPLANATION WHICH IS FOUND TO BE FALSE OR IS NOT ABLE TO SUBSTITUTE THE EXPLANATION AND IS ALSO NOT ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE, THE ADDITION MADE WOULD AMOUNT TO CONCEALMENT OF PARTICULARS, OF INCOME. IT IS WELL SETTLED THAT THE PARAMET ERS OF JUDGING THE JUSTIFICATION FOR ADDITION MADE IN THE ASSESSMENT CASE OF THE ASSESSEE IS DIFFERENT FROM THE PENALTY IMPOSED ON ACCOUNT OF CONCEALM ENT OF INCOME OR FILING INACCURATE PARTICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE/ADDITION COULD LEGALLY BE MADE IN THE ASSESSMEN T PROCEEDINGS ON THE PREPONDERANCE OF PROBABILITIES BUT NO PENALTY COULD BE IMPOSED U/S. 271(1)(C) OF THE ACT ON THE PREPONDERANCE OF P ROBABILITIES 5 AND REVENUE HAS TO PROVE THAT THE CLAIM OF EXPENSES B Y THE ASSESSEE WAS NOT GENUINE OR WAS INFLATED TO REDUCE ITS TAX LIABILITY. FURTH ER MERELY BECAUSE ADDITIONS HAVE CONFIRMED IN APPEAL OR NO APPEAL HA S BEEN FILED BY ASSESSEE AGAINST ADDITIONS MADE, IT CANNOT BE THE SOLE G ROUND FOR COMING TO THE CONCLUSION THAT ASSESSEE HAS CONCEALED ANY INCOM E. BEFORE US, LD.A.R. HAS GIVEN THE REASONS AND SUBMISSIONS HAVE NOT B EEN CONTROVERTED BY THE REVENUE. FURTHER, THERE IS NOTHING ON RECORD TO DEMONSTRATE THAT ASSESSEE HAD FILED INACCURATE PARTICULAR S OF INCOME OR HAD CONCEALED THE PARTICULARS OF INCOME. WE FURTHER FIND THA T HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PROD UCTS PVT. LTD. REPORTED AT (2010) 322 ITR 158 (SC) HELD THAT A MERE MA KING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FUR NISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESS EE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 8. CONSIDERING THE AFORESAID FACTS AND RELYING ON THE FOR ESAID JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESEN T CASE NO CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT HAS BEEN MADE OUT. WE THUS DIRECT THE DELETION OF PENALTY U/S. 271(1)(C) OF THE ACT. THUS, THE GR OUNDS OF ASSESSEE ARE ALLOWED. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 1 ST DAY OF AUGUST, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 1 ST AUGUST, 2019. YAMINI 6 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-9, PUNE. PR. CIT-5, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.