Dhananjay Hari Gadgil, V. Income-tax Officer,

ITA 1963/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5343 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 01-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Search and seizure; Initiation of penalty proceedings
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , ' BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NOS.1961 TO 1965/PUN/2016 $ $ / ASSESSMENT YEARS : 2000-01 TO 2002-03 & 2004-05 TO 2005-06 DHANANJAY HARI GADGIL, 1/44, RAJWADA VASAHAT, SANGLI 416 416 PAN : ABEPG0866F ....... / APPELLANT / V/S. THE INCOME TAX OFFICER (CENTRAL), KOLHAPUR / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 28.06.2018 / DATE OF PRONOUNCEMENT : 18.07.2018 / ORDER PER D. KARUNAKARA RAO, AM: THERE ARE FIVE APPEALS FILED BY SAME ASSESSEE AGAINST THE CONSOLIDATED ORDER OF CIT(A)-11, PUNE DATED 15-06-2016 FO R THE A.YRS. 2000-01 TO 2002-03 AND 2004-05 TO 2005-06 RESPECTIVE LY. ALL THESE APPEALS RELATE TO PENALTY LEVIED U/S.271(1)(C) OF THE ACT. AS SESSEE RAISED SIMILAR GROUNDS OF APPEAL AS WELL AS AN ADDITIONAL GROUND (LEGA L IN NATURE) IN ALL THESE APPEALS. THEREFORE, FOR THE SAKE OF CO NVENIENCE, WE PROCEED TO DECIDE THE APPEALS IN THIS COMPOSITE ORDER. WE SHALL FIRST TAKE UP APPEAL ITA NO.1961/PUN/2016 FOR A.Y . 2000-01. ITA NO.1961/PUN/2016 A.Y. 2000-01 2. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED HERE AS UNDER : 2 ITA NOS.1961 TO 1965/PUN/2016 DHANANJAY HARI GADGIL 1. THE LD.CIT(APPEALS) ERRED ON FACTS AND IN LAW IN UP HOLDING PENALTY OF RS.2,60,000/- U/S.271(1)(C) OF THE ACT. HE FAIL ED TO APPRECIATE THE FACTS OF THE CASE AND THE LEGAL POSITION AS ALSO THE CONT ENTIONS AND ARGUMENTS ADVANCED BY THE ASSESSEE IN THIS REGARDS. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 2.1 ASSESSEE ALSO RAISED THE FOLLOWING ADDITIONAL GROUND (LEGA L NATURE) AND THE SAME READS AS UNDER : 1. THE ASSESSEE SUBMITS THAT NO PROPER SATISFACTIO N WAS RECORDED BY THE LD. AO IN THE ASST. ORDER AND EVEN THE NOTICE I SSUED U/S.274 R.W.S.271(1)(C) WAS WITHOUT PROPER APPLICATION OF M IND AND HENCE, THE PENALTY ORDER PASSED U/S.271(1)(C) IS BAD IN LAW AN D THE PENALTY LEVIED MAY KINDLY BE DELETED. THE ASSESSEE SUBMITS THAT THE ADDITIONAL GROUND RAI SED IS LEGAL IN NATURE AND AS ALL THE FACTS ARE ON RECORD, THE ASSESSEE RE QUESTS FOR ADMISSION OF THE ABOVE GROUND. 3. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE FACT THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BEING PURELY A LEGAL ONE AND ALL FACTS ARE ALREADY BEFORE THE LOWER AUTHORITIES, THEREFORE, T HE SAME IS ADMITTED FOR ADJUDICATION IN THE LIGHT OF VARIOUS BINDING JUD GMENTS ON THE SAME. 4. BRIEFLY STATED RELEVANT FACTS FOR A.Y. 2000-01 INCLUDE TH AT THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM HOUSE PR OPERTY AND INCOME FROM OTHER SOURCE. ASSESSEE FILED ORIGINAL RETURN O F INCOME ON 31-08-2000 DECLARING TOTAL INCOME OF RS.6,36,170/-. THERE W AS SEARCH AND SEIZURE ACTION U/S.132(1) OF THE ACT AT THE RESIDENTIAL AS WELL AS BUSINESS PREMISES OF GAGDIL GROUP IN WHICH ASSESSEE WAS ALS O COVERED. NOTICE U/S.153A(A) WAS ISSUED ON THE ASSESSEE TO WHICH HE FILED THE RETURN OF INCOME IN FORM 2D DECLARING TOTAL INCOME OF RS.17,8 9,520/-. IN THE RETURN FILED U/S.153A OF THE ACT, ASSESSEE OFFERED U NDISCLOSED INCOME OF RS.11,53,356/- ON ACCOUNT OF INVESTMENT MADE IN PURCHASE OF 3 ITA NOS.1961 TO 1965/PUN/2016 DHANANJAY HARI GADGIL SHARES OF SANGLI BANK LTD., BANK DEPOSITS, INTEREST INCOME, D IVIDEND INCOME ETC. AT THE END OF ASSESSMENT PROCEEDINGS U/S.1 43(3) R.W.S. 153A OF THE ACT, AO LEVIED PENALTY OF RS.3,81,000/- U/S.271(1)(C ) OF THE ACT. THE FIGURES VARY FOR OTHER ASSESSMENT YEARS. IN T HE FIRST APPELLATE PROCEEDINGS, THE CIT(A) UPHELD THE PENALTY LEVIED BY THE AO. 5. AGGRIEVED WITH THE ORDER OF CIT(A) THE ASSESSEE IS IN AP PEAL BEFORE THE TRIBUNAL WITH THE GROUNDS/ADDITIONAL GROUND EXTRACTED ABOV E. 6. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REFERRING TO ADDITIONAL GROUND (LEGAL IN NATURE) SUBMITTED THAT THIS IS A CASE WHERE THE AO FAILED TO RECORD PROPER SATISFACTION IN THE ASSESSM ENT ORDER DURING WHICH THE PENALTY WAS INITIATED. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LI MB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOUS BIND ING 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 T HE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565 LD. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE AO IS UNSUS TAINABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE ASSESS MENT ORDER AS WELL AS THE PENALTY ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. 7. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDE RS OF AO/CIT(A). 8. WE HEARD BOTH THE PARTIES ON THIS SPECIFIC LEGAL ISSUE, I.E. RECORDING OF PROPER SATISFACTION BY THE AO. WE PERUSED THE ORDER OF THE AO AND FIND THE SATISFACTION RECORDED BY THE AO FOR INITIATING THE P ENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THER EFORE, THE SAME IS REPRODUCED AS UNDER : 4 ITA NOS.1961 TO 1965/PUN/2016 DHANANJAY HARI GADGIL SINCE THE ASSESSEE FAILED TO DISCLOSE THE ABOVE IN COME OF RS.11,53,356/- IN THE ORIGINAL RETURN FILED ON 31-08-2010, THE PEN AL PROCEEDINGS U/S.274 R.W.S. 271(1)(C) OF THE ACT ARE SEPARATELY INITIATE D. 8.1 WE ALSO PERUSED THE PENALTY ORDER DATED 25-06-2008 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 UN DER : 5. IN VIEW OF THE ABOVE, I AM SATISFIED THAT THE A SSESSEE FAILED TO DISCLOSE THE TRUE AND CORRECT INCOME IN THE ORIGINA L RETURN. FOR THIS THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE CLEA RLY ATTRACTED. FOR THIS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE COR RECT INCOME IN THE RETURN FILED U/S.139 OF THE ACT, A PENALTY OF RS.3,81,000/ - (RUPEES THREE LAKHS EIGHTY ONE THOUSAND ONLY) AS CALCULATED BELOW IS LE VIED AFTER OBTAINING PRIOR APPROVAL OF THE ADDL.CIT, CENTRAL RANGE-1, PU NE, VIDE HIS LETTER NO.PN. ADDL.CIT/CR-1/APPR.U/S.274/2008-09, DATED 24 /06/2008. ISSUE DEMAND NOTICE AND CHALLAN ACCORDINGLY. FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER AS WELL AS AT THE TIME OF LEVYING THE PENALTY, AO DID NOT SPECIFY ANY LIMB OF CLAUSE (C) OF SECTION 2 71(1) OF THE ACT. THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APPLICABILITY OF SPECIFIC LIMB. THERE IS NO HARMONY BETWEEN THE INITIATION OF PENALTY PROCEEDINGS AND AT THE TIME OF LEVYING THE PENALTY. THEREFORE, WE ARE OF THE OPINION THAT CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS SUCH PENALTY ORDER IS U NSUSTAINABLE IN LAW LEGALLY. 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 DELIBERATION ON THIS ISSUE, WE ARE OF THE OPINION THAT THE P ENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, THE ORDE R OF CIT(A) IS SET-ASIDE AND DIRECT THE AO TO DELETE THE PENALTY. ACCO RDINGLY, THE GROUNDS/ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESS EE ARE ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 5 ITA NOS.1961 TO 1965/PUN/2016 DHANANJAY HARI GADGIL ITA NOS. 1962 TO 1965/PUN/2016 A.YRS. 2001-02 TO 2002-03 AND 2004-05 TO 2005-06 10. THE FACTS, ISSUES, DECISION OF AO/CIT(A) AND THE ARGUMEN TS OF THE PARTIES ARE COMMON. THEREFORE, OUR DECISION GIVEN IN ITA NO.1961/PUN/2016 SETTING ASIDE THE ORDER OF CIT(A) SHALL AP PLY TO THESE APPEALS TOO. ACCORDINGLY, THE GROUNDS/ADDITIONAL GROUND RAISED BY THE ASSESSEE IN THESE APPEALS ARE ALLOWED. 11. IN THE RESULT, THE ABOVE APPEALS OF THE ASSESSEE ARE ALLOWED. 12. TO SUM UP, ALL THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 18 TH DAY OF JULY, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 18 TH JULY, 2018. SATISH ' ) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-11, PUNE. 4. THE PR. CIT ( CENTRAL), PUNE. 5. , , # , / DR, ITAT, B BENCH, PUNE. 6. & / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.