Machindra Tukaram Pagire, Ahmednagar V. Assistant Commissioner of Income-tax, Circle Ahmednagar, , Ahmednagar

ITA 1925/PUN/2017

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 2189 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 11-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: RAVINDRA PAREKAR
• Keywords: Principle of natural justice; Initiation of penalty proceedings; Set aside
• Section: 271(1)(c); 201; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO S . 1925 & 1926 /PUN/20 17 / ASSESSMENT YEARS : 2012 - 13 & 2013 - 14 MACHINDRA TUKARAM PAGIRE, 20, BHAGYODAY HOUSING SOCIETY, SAVEDI, AHMEDNAGAR, PAN : ACHPP7742D ....... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - AHMEDNAGAR , AHMEDNAGAR. / RESPONDENT A SSESSEE BY : S/ SHRI PRASAD BHANDARI & RAVINDRA PAREKAR REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 15 .11 .2019 / DATE OF PRONOUNCEMENT : 18 . 11 .2019 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THESE TWO APPEALS PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDERS OF THE LD. CIT(APPEALS) - 2, PUNE DATED 27.04.2017 FOR THE ASSESSMENT YEARS 2012 - 13 & 2013 - 14 RESPECTIVELY AS PER THE GROUNDS OF APPEAL ON RECORD. 2 ITA NO S . 1925 & 1926 /PUN/20 17 A.Y S . 2012 - 13 & 2013 - 14 2. THESE CASES WERE HEARD TOGETHER. SINCE ISSUES COMMON AND FACTS ARE SIMILAR, THESE CASES ARE BEING DISPOSED OF VIDE THIS CONSOLIDATED ORDER . FOR THE SAKE OF CONVENIENCE, WE WOULD FIRST TAKE ITA NO.1925/PUN/2017 FOR THE ASSESSMENT YEAR 2012 - 13 FOR ADJUDICATION. 3. THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IN THESE APPEALS IS AGAINST THE IMPOSITION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) IN RESPECT OF INCOME DECLARED DURING THE COURSE OF SURVEY. ITA NO. 1925/PUN/2017 A.Y.2012 - 13 4. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND INVOLVED IN THE BUSINE SS OF CIVIL CONTRACTOR. THE ASSESSEE HAS E - FILED RETURN SHOWING TOTAL INCOME OF RS.1,27,62,150/ - . SUBSEQUENTLY A SURVEY ACTION U/S.133A OF THE ACT WAS CONDUCTED ON 29.01.2015. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY MAKING VARIOUS ADDITIONS. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT AND LEVIED PENALTY OF RS.8,35,000 / - U/S. 271(1)(C) OF THE ACT MENTIONING THAT PARTICULARS HAVE BEEN CONCEALED . IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) CONFIRMED THE PENALTY IMPOSED OF RS. 8,35,000/ - U/S. 271(1)(C) OF THE ACT. 5. BEING FURTHER AGGRIEVED, ASSESSEE PREFERRED THIS APPEAL BEFORE U S. THE LD.AR FOR THE ASSESSEE AT THE TIME OF HEARING BASED HIS ARGUMENT REFERRING TO GROUNDS SUBMITTED THAT THIS IS A CASE WHERE THE A SSES SING O FFICER FAILED TO RECORD VALID SATISFACTION IN THE ASSESSMENT ORDER DURING WHICH THE PENALTY PROCEEDINGS WERE INITIATED. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A 3 ITA NO S . 1925 & 1926 /PUN/20 17 A.Y S . 2012 - 13 & 2013 - 14 SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF 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 DEMONS TRATED THAT THE PENALTY LEVIED BY THE A SSESSING O FFICER IS UNSUSTAINABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER AS WELL AS THE PENALTY ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. 6 . PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF A SSESSING O FFICER /CIT(A). 7 . WE HEARD BOTH THE PARTIES ON THIS SPECIFIC LEGAL ISSUE, I.E. RECORDING OF PROPER SATISFACTION BY THE A SSESSING O FFICER . WE HAVE PERUSED THE ORDER OF THE A SSESSING O FFICER AND FIND THE SATISFACTION RECORDED BY THE A SSESSING O FFICER VIDE PARA - 10 OF THE ASSESSMENT ORDER FOR INITIATING THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THEREFORE, THE SAME IS REPRODUCED AS UNDER : 10 ISSUED PENA LTY NOTICE U/S.274 R.W.S U/S.271(1) (C) R.W. EXPLANATION 1 FOR FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALING PARTICULARS OF INCOME 8 . WE HAVE ALSO PERUSED THE PENALTY ORDER DATED 28.09.2016 AND FIND THE SATISFACTION RECORDED BY THE A SSESSING O FFICER VIDE PARA - 11 IN THE PENALTY ORDER FOR LEVYING THE PENALTY U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS UNDER: 11. IN VIEW OF THE DISCUSSION MADE IN THE PRECEDING PARAGRAPHS, IT IS HELD THAT THE INCOME OF RS.27,01,875/ - REPRESENTS THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED AS PROVIDED IN EXPLANATION 4 ITA NO S . 1925 & 1926 /PUN/20 17 A.Y S . 2012 - 13 & 2013 - 14 BELOW SECTION 271(1)(C) OF THE ACT AND HENCE, IT IS LIABLE FOR PENALTY U/S.271(1)(C) OF THE ACT. I AM THEREFORE SATISFIED THAT THIS IS A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT FROM THE ABOVE, IT IS EVIDENT THAT SO FAR AS ASSESSMENT ORDER IS CONCERNED, THE ASSESSING OFFICER HAS INITIA TED PENALTY PROCEEDINGS MENTIONING BOTH LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT I.E. FURNISHING OF INACCURATE PARTICULARS OF INCOME/CONCEALING PARTICULARS OF INCOME. HOWEVER, AT THE TIME OF LEVYING PENALTY IN THE ASSESSMENT, A SSESSING O FFICER HA S NOT MENTIONED ANY LIMB OF SECTION 271(1)(C) OF THE ACT . THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APPLICABILITY OF SPECIFIC LIMB. THEREFORE, WE ARE OF THE OPINION THAT CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. THE ASSESSING O FFICER IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. THAT TAKING GUIDANCE FROM THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (SUPRA.) WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS CONSIDERED THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATH COTTON AND GINNING FACTORY (SUPRA.), THE LEGA L PROPOSITION THAT COMES OUT AND WHICH IS BINDING IN NATURE IS THAT THE ASSESSING OFFICER SHOULD BE CLEAR AS TO WHICH OF THE TWO LIMBS UNDER WHICH PENALTY IS IMPOSABLE, HAS BEEN CONTRAVENED OR INDICATE THAT BOTH HAVE BEEN CONTRAVENED WHILE INITIATING PENA LTY PROCEEDINGS. IT CANNOT BE THAT THE INITIATION OF PENALTY PROCEEDINGS WOULD BE ON BOTH THE LIMB S I.E. FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME OR WITHOUT ANY LIMBS OF SECTION 271(1)(C) OF THE ACT . THE ASSESSING OFFICER HAS TO MENTION SPECIFIC LIMBS WHILE IMPOSING PENALTY U/S.271(1)(C) OF THE ACT. 5 ITA NO S . 1925 & 1926 /PUN/20 17 A.Y S . 2012 - 13 & 2013 - 14 9 . THE SANCTITY IN TERMS OF NATURAL JUSTICE WITH REGARD TO THIS PROPOSITION IS THAT THE ASSESSEE UNDER THE SCHEME OF WELFARE LEGISLATION WHICH IS EMBEDDE D IN THE INCOME TAX ACT, 1961 SHOULD GET AN OPPORTUNITY TO PREPARE HIMSELF FOR THE DEFENSE AS REGARDS TO THE EXACT CHARGE ON WHICH PENALTY IS IMPOSED UPON HIM U/S. 271(1)(C) OF THE ACT. IN THE INSTANT CASE, THE CHARGE IS VAGUE AND THEREFORE, LEVY OF PENALT Y IS NOT WARRANTED. TAKING TOTALITY OF FACTS AND LEGAL SCENARIO INTO CONSIDERATION, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY FROM THE HANDS OF THE ASSESSEE. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.1925/PUN/2017 IS ALLOWED. ITA NO.1926/PUN/2017 A.Y.2013 - 14 11. BOTH THE PARTIES HEREIN ARE UNANIMOUS IN STATING THAT EXCEPT THE FIGURE, FACTS AND CIRCUMSTANCES IN THIS CASE AND SUBMISSIONS OF BOTH THE PARTIES ARE IDENTICAL TO ITA NO.1925/PUN/2017. IN THIS CASE ALSO, THE ASSESSING OFFICER WHILE INITIATING PENALTY PROCEEDI NGS VIDE PARA - 8 OF THE ASSESSMENT ORDER, MENTIONED BOTH THE LIMBS OF SECTION 271(1)(C) OF THE ACT I.E. FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALING PARTIC ULARS OF INCOME. BUT HOWEVER, AT THE TIME OF IMPOSING PENALTY VIDE PARA - 12 OF THE PENALTY ORDER , THE ASSESSING OFFICER HAS NOT MENTIONED ANY LIMB OF SECTION 271(1)(C) OF THE ACT. THEREFORE, OUR DECISION RENDERED IN ITA NO.1925/PUN/2017 FOR THE ASSESSMENT YEAR 2012 - 13 SHALL APPLY MUTATIS - MUTANDIS IN ITA NO.1926/PUN/2017 FOR THE ASSESSMENT YEAR 2013 - 14. THUS, IN THIS CASE ALSO, 6 ITA NO S . 1925 & 1926 /PUN/20 17 A.Y S . 2012 - 13 & 2013 - 14 WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY FROM THE HANDS OF THE ASSESSE E. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.1926/PUN/2017 IS ALLOWED. 13. IN THE COMBINED RESULT, BOTH APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2012 - 13 AND 2013 - 14 ARE ALLOWED. ORDER PRO NOUNCED ON 18 TH DAY OF NOVEMBER , 201 9 . SD/ - SD/ - D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 18 TH NOVEMBER , 2019 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 2, PUNE. 4. THE PR. CIT - 1, PUNE. 5 . , , , / DR, ITAT, B BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 7 ITA NO S . 1925 & 1926 /PUN/20 17 A.Y S . 2012 - 13 & 2013 - 14 DATE 1 DRAFT DICTATED ON 15 .11 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 18 .11 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER