Popatlal Mohanlal Chordiya, V. Assistant Commissioner of Income-tax,

ITA 1817/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2158 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-11-2018
• Assessment Year: 2004-2005
• Appeal Filed On: 24-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Keywords: Unexplained expenditure; Principle of natural justice; Initiation of penalty proceedings
• Section: 69C

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 NO.1817/PUN/2016 / ASSESSMENT YEAR : 2004-05 SHRI POPATLAL MOHANLAL CHORDIYA, 10 AHINSA NAGAR, AURANGABAD 431 001 PAN : AAHPC1004H /APPELLANT VS. ACIT, CIRCLE-2, AURANGABAD . / RESPONDENT / APPELLANT BY : SHRI SUNIL GANOO / RESPONDENT BY : SHRI SANJEEV GHEI / DATE OF HEARING : 13.11.2018 / DATE OF PRONOUNCEMENT:15.11.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF C IT(A)-2, AURANGABAD, DATED 17-06-2016 FOR THE ASSESSMENT YEAR 2004 -05. 2. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED AS UNDER : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED PENALTY OF RS.6,60,000.00 AS LEVIED BY THE LD. AO A ND CONFIRMED BY THE LD.CIT(A) IS PATENTLY ILLEGAL, BAD IN LAW, ARBITRAR Y, PERVERSE AND DEVOID OF MERITS AND HENCE THE SAME MAY PLEASE BE DELETED. 2. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEN D, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF AP PEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 2.1 ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS AND THE S AME ARE EXTRACTED BELOW : ITA NO.1817/PUN/2016 SHRI POPATLAL MOHANLAL CHORDIYA 2 1. SINCE THE SHOW CAUSE NOTICE DT.31/12/2007 ISSUE D BY THE LEARNED ASSESSING OFFICER U/S 274 R.W.S. 271[1][C] OF THE I T. ACT WAS VAGUE AS IT FAILED TO CLEARLY SPELL OUT THE CHARGE FOR LEVY OF PENALTY AND DID NOT POINT OUT/INDICATE THE ALLEGED DEFAULT COMMITTED BY THE APPELLANT, THE IMPUGNED PENALTY LEVIED BY THE LEARNED ASSESSING OF FICER IS PATENTLY ILLEGAL, BAD IN LAW, ARBITRARY, PERVERSE, WITHOUT JURISDICTI ON AND BEING DEVOID OF MERITS, THE SAME MAY PLEASE BE DELETED. REGARDING ADDITION OF RS.20,00,000.00 MADE U/S 69C OF THE LT. ACT 1961, ON ACCOUNT OF ALLEGED UNACCOUNTED EXPENDITURE THE LEAR NED ASSESSING OFFICER IN PARA 3[V] ON PAGE NO.4 OF THE ASSESSMENT ORDER OBSE RVED THAT PENALTY PROCEEDINGS U/S. 271[1[C] FOR CONCEALMENT OF INCOME IS SEPARATELY INITIATED. HOWEVER FINALLY THE LEARNED ASSESSING OF FICER VIDE PARA 6 ON LAST PAGE OF PENALTY ORDER HAS LEVIED THE PENALT Y ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OF ITS INCOME AND LEVIED THE PENALTY. IN THE CIRCUMSTANCES THE NON APPLICATION OF MIND ON THE PART OF THE LEARNED ASSESSING OFFICER BEING OBV IOUS, THE IMPUGNED PENALTY IS BAD IN LAW AND WITHOUT JURISDICTION BEING VIOLAT IVE OF THE PRINCIPLES OF NATURAL JUSTICE AND HENCE THE IMPUGNED PENALTY BE D ELETED. THE APPELLANT MOST RESPECTFULLY SUBMITS THAT AT THE TIME OF FILING THE APPEAL DUE TO LACK OF PROPER LEGAL ASSISTANCE AND THROUGH INADVERTENCE AND MISTAKE THE AFORESAID GROUNDS OF APPEAL REMAINED TO BE RAIS ED FOR WHICH THE APPELLANT SUBMITS HIS SINCERE APOLOGIES. ALL THE AFORESAID GROUNDS OF APPEAL ARE PURELY LEGA L GROUNDS AND GO TO THE ROOT OF LEGALITY AND VALIDITY OF THE IMPUGNED PENAL TY ORDER AND CAN BE ADJUDICATED ON THE EVIDENCE AVAILABLE ON RECORDS. F OR ADJUDICATION OF ALL THE AFORESAID GROUNDS OF APPEAL, NO INVESTIGATION OF FR ESH FACTS WOULD BE NECESSARY. IN FACT THE ABOVE MENTIONED BOTH THE ADDITIONAL GRO UNDS OF APPEAL SOUGHT TO BE RAISED ARE COVERED IN ORIGINAL GROUND OF APPEAL NO.1 RAISED IN APPEAL MEMO. BUT THE APPELLANT DOES NOT WISH TO ENTER IN T O THE AVOIDABLE CONTROVERSY AND HENCE THIS APPLICATION AND HENCE TH IS APPLICATION. THE PRESENT APPLICATION IS FILED AT THE EARLIEST PO INT OF TIME. IF THE APPELLANT IS NOT PERMITTED TO RAISE THE AFOR ESAID ADDITIONAL GROUNDS OF APPEAL, SERIOUS PREJUDICE AND INJUSTICE SHALL BE CA USED TO HIM. IF THE APPELLANT IS PERMITTED TO RAISE THE AFORESAI D ADDITIONAL GROUNDS OF APPEAL, NO PREJUDICE OR INJUSTICE SHALL BE CAUSED T O THE RESPONDENT REVENUE. IN THE CIRCUMSTANCES, THE BALANCE OF CONVENIENCE IS IN FAVOUR OF THE APPELLANT. IT IS THEREFORE MOST RESPECTFULLY SUBMITTED THAT TH E APPELLANT MAY PLEASE BE PERMITTED TO RAISE THE AFORESAID ADDITIONAL GROUNDS OF APPEAL, FOR WHICH ACT OF KINDNESS, THE APPELLANT SHALL ALWAYS REMAIN OBLIGED . 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF ROAD CONTRACT AND HIRIN G OF MACHINERY. THERE WAS ACTION U/S.132 OF THE ACT IN THE GROUP OF P.M. CHORDIYA OF AURANGABAD. ASSESSEE WAS ALSO COVERED U/S.133A OF THE ACT. THE AO ON ITA NO.1817/PUN/2016 SHRI POPATLAL MOHANLAL CHORDIYA 3 VERIFICATION OF THE IMPOUNDED DOCUMENTS FOUND THAT MANY E NTRIES IN THE ROUGH RECORDS HAVE NOT BEEN REFLECTED IN THE BOOKS OF A CCOUNT. IN THE ASSESSMENT U/S.153A R.W.S.143(3) OF THE ACT, THE AO MADE V ARIOUS ADDITIONS, THE DETAILS OF WHICH ARE GIVEN BELOW : INCOME AS PER RETURN OF INCOME FILED RS.13,71,49 0/- ADD : ADDITION AS DISCUSSED IN PARA 3(I) ABOVE RS. 4,95,775/- ADDITION AS DISCUSSED IN PARA 3(II) ABOVE RS.7,75, 332/- ADDITION AS DISCUSSED IN PARA 3(III) ABOVE RS.1,53 ,655/- ADDITION AS DISCUSSED IN PARA 3(IV) ABOVE RS.4,00, 000/- ADDITION AS DISCUSSED IN PARA 3(VI) ABOVE RS.32,132 /- ADDITION AS DISCUSSED IN PARA 3(VII) ABOVE RS.32,13 2/- ADDITION AS DISCUSSED IN PARA 3(VIII) ABOVE RS.3,00 ,000/- ADDITION AS DISCUSSED IN PARA 3(IX) ABOVE RS.56,313 /- ----------------------------- RS.42.13.207/- TOTAL INCOME RS.55,84,697/- ----------------------- AGRICULTURAL INCOME AS PER RETURN FILED RS.2,81, 563/- LESS : DISALLOWANCE OF AGRICULTURAL INCOME AS DISCUSSED IN PARA -3(IX) RS.56,313/- --------------------- NET AGRICULTURAL INCOME RS.2,25,250/- -------------------- AO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT AND EVENTUALLY LEVIED PENALTY OF RS.6,60,000/-. IN THE FIRST APPELLATE PROC EEDINGS, THE CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO. 4. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE FILED TH E PRESENT APPEAL WITH THE GROUNDS/ADDITIONAL GROUNDS REFERRED ABOVE. 5. LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE ADDITIONAL GROUNDS RAISED BEFORE THE TRIBUNAL ARE PURELY LE GAL IN NATURE AND NO FRESH FACTS ARE REQUIRED TO BE INVESTIGATED. REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE NTPC LTD. REPORTED IN 229 ITR 383 AND IN THE CASE OF JUTE CORPORATION OF INDIA LTD. REPORTED IN 1 87 ITR 688 AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF A HMEDABAD ITA NO.1817/PUN/2016 SHRI POPATLAL MOHANLAL CHORDIYA 4 ELECTRICITY COMPANY REPORTED IN 199 ITR 351 HE SUBMITTED THAT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE SHOULD BE ADMITTED. 6. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE ADDIT IONAL GROUNDS RAISED BY THE ASSESSEE BEING PURELY LEGAL IN NATURE AND NO FRESH FACTS ARE REQUIRED TO BE INVESTIGATED, THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE ADMITTED FOR ADJUDICATION. 7. IN THE PROCEEDINGS BEFORE US, LD. COUNSEL FOR THE ASSES SEE REFERRING TO ADDITIONAL GROUNDS RELATING TO RECORDING OF SATISFACTION BY T HE AO SUBMITTED THAT THIS IS A CASE WHERE THE AO FAILED TO RECORD VALID AND LEGALLY SUSTAINABLE SATISFACTION IN THE ASSESSMENT ORDER WHILE INITIAT ING THE PENALTY PROCEEDINGS. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A S PECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) O F 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. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565, LD. COUNSEL DEMONSTRATED TH AT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER AS WELL AS THE PENALT Y ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. 8. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO/CIT(A). 9. WE HEARD BOTH THE PARTIES ON THE SAID LEGAL ISSUE AND PERUSED THE ORDERS OF THE REVENUE. WE PROCEED TO ADJUDICATE THE IS SUE RELATING TO RECORDING OF PROPER SATISFACTION BY THE AO WHICH WAS AGITA TED BY THE ASSESSEE RAISING ADDITIONAL GROUNDS. IN THIS CONNECTION, WE PERUSED THE ASSESSMENT ORDER DATED 31-12-2007 AND FIND THE SATISFAC TION RECORDED BY ITA NO.1817/PUN/2016 SHRI POPATLAL MOHANLAL CHORDIYA 5 THE AO FOR INITIATING THE PENALTY PROCEEDINGS U/S.271(1)(C) OF T HE ACT IS RELEVANT FOR EXTRACTION. THEREFORE, THE SAME IS REPRODUCED AS UNDE R : 3(V)............ .......................FOR THIS REASONS, ADDITION O F RS.20,00,000/- IS MADE TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S. 271(1)(C) FOR CONCEALMENT OF INCOME IS SEPARATELY INITIATED. 9.1 WE ALSO PERUSED THE PENALTY ORDER DATED 18-03-2013 AND FIND THE SATISFACTION RECORDED BY THE AO FOR LEVYING THE PENALTY U/ S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS UNDER: 6. IN VIEW OF THE ABOVE DISCUSSION, I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME . I, THEREFORE, LEVY A PENALTY U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961, AT RS.6,60,000/- BEING THE MINIMUM PENALTY LEVIABLE AS AGAINST THE MAXIMUM PEN ALTY OF RS.19,80,000/- .... FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO MENTIONED THE LIMB CONCEALMENT OF INCOME WHEREAS AT THE TIME OF LEVY OF PENALTY, THE AO MENTIONED T HE LIMB FURNISHED INACCURATE PARTICULARS OF INCOME . THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMBIGU ITY WITH REFERENCE TO APPLICABILITY OF SPECIFIC LIMB. THEREFORE, WE ARE OF THE OPINIO N THAT CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS SUCH PE NALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. IT IS A SETTLED LEGAL PROPOSITION THAT THE AO IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DE LIBERATION ON THIS ISSUE, WITHOUT GOING INTO THE MERITS OF THE PENALTY, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEG AL ISSUE. THUS, THE ORDER OF CIT(A) IS SET-ASIDE AND DIRECT THE AO TO DELE TE THE PENALTY ON TECHNICAL GROUNDS. ITA NO.1817/PUN/2016 SHRI POPATLAL MOHANLAL CHORDIYA 6 10. SINCE WE HAVE ALLOWED THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE, IN OUR VIEW, ADJUDICATION OF GROUNDS RAISED BY THE ASSESS EE ON MERITS BECOMES AN ACADEMIC EXERCISE. THEREFORE, THE SAID GROUNDS ARE DISMISSED AS ACADEMIC. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED ON TECHNICALITIES. ORDER PRONOUNCED ON THIS 15 TH DAY OF NOVEMBER, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 15 TH NOVEMBER, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-2, AURANGABAD 4. / THE PR.CIT-2, AURANGABAD 5. , , / DR A, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.