Goldie Jogendersingh Anand, Nashik V. Income-tax Officer,

ITA 188/PUN/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7114 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , ! ' # , $% &' #' , ' # '( BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWAS THY, JM '%. / ITA NO. 188/PUN/2016 * +* / ASSESSMENT YEAR : 2006-07 GOLDIE JOGENDERSINGH ANAND, ANAND KINECTICS, D-38, NICE AREA, MIDC, SATPUR, NASHIK-422007 PAN : AFLPA3483K ....... / APPELLANT /VS. INCOME TAX OFFICER, WARD 1(1), NASHIK / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 20-02-2017 / DATE OF PRONOUNCEMENT : 22-02-2017 , / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-1, NASHIK DATED 05-11 -2015 CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THIS APPEAL IS IN RESPECT OF PENALTY LEVIED U/S. 271(1)(C) OF TH E ACT FOR ASSESSMENT YEAR 2006-07. IN THE IMPUGNED ORDER TH E COMMISSIONER OF INCOME TAX (APPEALS) HAS MENTIONED ASSESSM ENT YEAR 2 ITA NO. 188/PUN/2016, A.Y. 2006-07 AS 2007-08. THE COMMISSIONER OF INCOME TAX (APPEALS) VID E CORRIGENDUM DATED 09-12-2015 HAS RECTIFIED THE MISTAKE. THUS, ASSESSMENT YEAR 2007-08 MENTIONED IN IMPUGNED ORDER BE READ AS ASSESSMENT YEAR 2006-07. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE OF KINETIC VEH ICLES UNDER THE NAME AND STYLE OF M/S. ANAND KINETICS. THE ASSESSE E FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 31 -10-2006 DECLARING TAXABLE INCOME OF ` 7,99,310/-. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE ADDITION OF ` 21,50,000/- U/S. 68 OF THE ACT. THE ASSESSING OFFICER INITIATE D PENALTY PROCEEDINGS U/S. 271(1)(C) R.W. EXPLANATION 1 FOR CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN RESPECT OF AFORESAID ADDITION. THE ASSESSING OFFICER VIDE ORDER DATED 2 8-03-2013 LEVIED PENALTY OF ` 7,41,237/- U/S. 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORDER LEVYING PENALTY, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CONTEN TIONS OF THE ASSESSEE AND CONFIRMED THE LEVY OF PENALTY. NOW, THE ASSE SSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE LEVY OF PENALTY. 3. SHRI PRAMOD SHINGTE APPEARING ON BEHALF OF THE ASSESSE E SUBMITTED THAT THE LEVY OF PENALTY IS LIABLE TO BE SET ASIDE ON ACCOUNT OF DEFECTIVE NOTICE. THE LD. AR SUBMITTED THAT EVEN THE SATIS FACTION RECORDED BY THE ASSESSING OFFICER FOR INITIATING PENALTY PROC EEDINGS IS NOT PROPER. WHILE RECORDING SATISFACTION THE ASSESSING OFFICE R HELD THAT THE PENALTY PROCEEDINGS ARE INITIATED FOR CONCEALMENT OF INC OME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREAFTER, W HILE 3 ITA NO. 188/PUN/2016, A.Y. 2006-07 ISSUING NOTICE DATED 26-12-2008 U/S. 274 R.W.S. 271(1)(C), TH E ASSESSING OFFICER HAS NOT STRUCK OFF THE IRRELEVANT PARTS OF THE PROFORMA NOTICE, THUS, THE NOTICE FAILS TO CLEARLY SPECIFY THE CHARGE FOR LEVY OF PENALTY. WHILE LEVYING PENALTY THE ASSESSING OFFICER HAS LEVIED PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THUS, THER E IS INCONSISTENCY IN RECORDING OF SATISFACTION, CHARGE FOR LEVYING PENALTY IN NOTICE AND THE REASON FOR LEVYING PENALTY IN THE ORDER. T HE LD. AR FURTHER SUBMITTED THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SAMSON PERINCHERY IN INCOM E TAX APPEAL NO. 1154 OF 2014 DECIDED ON 05-01-2017 HAS HELD T HAT WHERE THE NOTICE FAILS TO SPECIFY CHARGE FOR LEVY OF PENALTY, THE S AME SHALL BE INVALID AND HENCE NO PENALTY IS LEVIABLE U/S. 271(1)(C) OF THE ACT. 4. ON THE OTHER HAND SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE ORDER OF COMMISS IONER OF INCOME TAX (APPEALS) IN CONFIRMING THE LEVY OF PENALTY. THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE AND CONFIRMING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE ASSESSEE HAS ASSAILED LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT ON ACCOUNT OF DEFECTIVE NOTICE. THE LD. AR OF THE ASSESSEE HAS POINTED THAT THE NOTICE ISSUED U/S. 274 R.W.S. 271(1)(C) IS DEFECTIVE AS IRRE LEVANT PARTS OF THE PROFORMA NOTICE HAVE NOT BEEN STRUCK OFF. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOM E TAX VS. MANJUNATHA COTTON AND GINNING FACTORY REPORTED AS 359 ITR 565 HAS HELD THAT, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROP RIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTIC ULARS OF INCOME. THE 4 ITA NO. 188/PUN/2016, A.Y. 2006-07 STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT C LAUSES WILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. IN THE PRESENT CASE WE FIND THAT AT THE TIME OF INITIATING PENALTY PROCEEDINGS THE ASSESSING OFFICER WHILE RECORDING SATISFACTION HAS OBSERVED THAT, THE ASSESSEE HAS CONCEALED THE INCOME AND HAS ALSO FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN TH E MEANING OF SECTION 271(1)(C) OF THE ACT . WHILE ISSUING NOTICE THE ASSESSING OFFICER HAS NOT STRUCK OFF IRRELEVANT PART IN THE SHOW CAUSE NOTICE ISSUED U/S. 274 AND THUS, THE RELEVANT EXTRACT OF NOTICE INDICATING CHARGE FOR LEVY OF PEN ALTY READS AS UNDER : HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 6. IT IS CLEARLY EVIDENT FROM THE PERUSAL OF NOTICE THAT THE ASSESSING OFFICER IS NOT CLEAR AS TO UNDER WHAT CHARGE PENALTY HAS TO BE LEVIED U/S. 271(1)(C) OF THE ACT. THE NOTICE IS VAGUE AS IT FAILS TO CLEARLY SPELL OUT THE CHARGE FOR LEVY OF PENALTY. A FURTHER EXAMINATION OF THE RECORDS SHOW THAT THE OBSERVATIONS OF THE ASSESSING OFFICER ARE IN CONSISTENT WHILE RECORDING SATISFACTION AND AT THE TIME OF PASSING OF TH E PENALTY ORDER. THE ASSESSING OFFICER HAS LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER IS INCOHERENT IN REASONING FOR RECORDING SATISFACTION AND IN PASSING THE ORD ER LEVYING PENALTY. 7. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIO NER OF INCOME TAX VS. SAMSON PERINCHERY (SUPRA) REITERATING THE VIEW OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) H AS HELD THAT 5 ITA NO. 188/PUN/2016, A.Y. 2006-07 FAILURE BY THE ASSESSING OFFICER TO UNAMBIGUOUSLY SPECIFY IN NOTICE ISSUED U/S. 274 THE CHARGE FOR LEVY OF PENALTY I.E. WHETHER THE PENA LTY IS BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INC OME OR FOR CONCEALMENT OF INCOME IS FATAL. IT REFLECTS NON-APPLICATION O F MIND AND RENDERS THE LEVY OF PENALTY INVALID. 8. THUS, IN THE LIGHT OF ABOVE DECISIONS AND THE FACTS OF THE CASE, WE DIRECT THE ASSESSING OFFICER TO CANCEL THE PENALTY. THE IM PUGNED ORDER IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 22 ND DAY OF FEBRUARY, 2017. SD/- SD/- ( / ANIL CHATURVEDI) ( ! / VIKAS AWASTHY) ' ! / ACCOUNTANT MEMBER # ! / JUDICIAL MEMBER ' / PUNE; $% / DATED : 22 ND FEBRUARY, 2017 RK , - ./& 0&+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. & & ' () / THE CIT(A)-1, NASHIK 4. THE PR. CIT-1, NASHIK 5. *+ ,- , & ,- , . ./ , ' / DR, ITAT, B BENCH, PUNE. 6. +01 23 / GUARD FILE. // // TRUE COPY// &'4 / BY ORDER, 5 %6 / ASSISTANT REGISTRAR, & ,- , ' / ITAT, PUNE