Vastu Estate, Pune V. Income-tax Officer, Ward - 7(1), Pune

ITA 1967/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4353 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-10-2020
• Assessment Year: 2005-2006
• Appeal Filed On: 18-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRATHAMESH J LAWAND
• Keywords: Wrong claim; Competent authority; TDS
• Section: 40(a)(ia); 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S.SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI , J UDICIAL M EMBER . / I TA NO S . 1966, 1967 & 1968 /PUN/20 17 / ASSESSMENT YEAR S : 2004 - 05, 2005 - 06 & 2007 - 08 VASTU ESTATE, 82 - A, EAST STREET GALLERIA, CAMP, PUNE - 411 001 PAN : AAEFV5918N ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 7(1), PUNE. / RESPONDENT A SSESSEE BY : NONE REVENUE BY : SHRI PRATHAMESH J. LAWAND / DATE OF HEARING : 23 . 10 .2020 / DATE OF PRONOUNCEMENT : 26 .10 .2020 / ORDER PER S.S. VISWANETHRA RAVI , JM : ALL THESE THREE APPEALS BY THE ASSESSEE AGAINST THE COMMON ORDER DATED 12.05.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), PUNE - 5 [CIT(A)] FOR THE ASSESSMENT YEARS 2004 - 05, 2005 - 06 & 2007 - 08 RESPECTIVELY 2 ITA NO S . 1966, 1967 & 1968 /PUN/20 17 A.Y S . 2004 - 05, 2005 - 06 & 2007 - 08 WHEREIN HE CONFIRMED THE PENALTY IMPOSE D BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. WE FIND NO REPRESENTATION ON BEHALF OF THE ASSESSEE NOR DID FILE ANY APPLICATION SEEKING ADJOURNMENT. THE ASSESSEE CALL ED ABSENT AND SET EX - PARTE. THEREFORE, WE PROCEED TO HEAR LD. DR AND PASS O RDER ON CONSIDERING MATERIAL EVIDENCE AVAILABLE ON RECORD. 3. WE FIND THE ISSUES RAISED IN THESE THREE APPEALS ABOVE ARE SIMILAR BASING ON T HE IDENTICAL FACTS. THEREFORE, WITH THE CO NSENT OF THE LD. DR WE PROCEED TO HEAR THE APPEAL TOGETHER AND PASS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. LET US FIRST TAKE UP THE APPEAL IN ITA NO.1966/PUN/2017 FOR THE ASSESSMENT YEAR 2004 - 05. ITA NO.1966/PUN/2017 A.Y.2004 - 05 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF PROMOTERS AND BUILDERS. SEARCH ACTION WAS CONDUCTED IN THE CASE OF BHARAT JAIN GROUP OF CASES ON 10.08.2006 DURING WHICH 8 LOOSE PAPER BUNDLES INCLUDING 7 DIARIES WERE SEIZED FROM THE RESIDENT OF BHARAT BABULAL JAIN. THE SAID BHARAT JAIN ADMITTED THAT THESE DIARIES WERE WRITTEN IN HIS OWN HAND WRITING AND CONTAIN THE DE TAILS OF TRANSACTIONS OF UNACCOUNTED TRANSACTIONS OF VARIOUS BUSINESS CONCERNS INCLUDING THE ASSESSEES CONCERN IN HIS INDIVIDUAL CAPACITY AND AS A PARTNER IN VARIOUS FIR M INCLUDING THE ASSESSEE FIRM. THE ASSESSING OFFICER ON THE RECOMMENDATION OF THE COMPETENT AUTHORITY A SPECIAL AUDIT U/S.142(1) OF THE ACT WAS ORDERED IN 3 ITA NO S . 1966, 1967 & 1968 /PUN/20 17 A.Y S . 2004 - 05, 2005 - 06 & 2007 - 08 THE CASE OF THE ASS ESSEE. BASED ON THE REPORT OF SPECIAL AUDITOR S , NOTICE U/S.148 OF THE ACT WAS ISSUED AND IN RESPONSE THERETO, THE ASSESSEE REQUESTED THE ASSESSING OFFICER TO TREAT THE ORIGINAL RETURNS OF INCOM E FILED IN RESPONSE TO NOTICE U/S.148 OF THE ACT. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE VARIOUS DISALLOWANCES, BUT HOWEVER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT ON DISALLOWANCES MADE U/S.40A(3), 69C, 68 AND 40(A)(IA) OF THE ACT. 5. THE ADDITIONS MADE BY THE ASSESSING OFFICE R WERE CONFIRMED IN THE FIRST APPELLATE QUANTUM PROCEEDINGS. TAKING INTO CONSIDERATION THE FACT THAT THE ASSESSEE ACCEPTED THE ADDITIONS CONFIRMED IN THE QUANTUM PROCEEDINGS, THE CIT(A) IN PENALTY PROCEEDINGS CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE ACT. 6. BEFORE US, THE ASSESSEE RAISED 4 GROUNDS CHALLENGING THE ACTION OF CIT(A) IN CONFIRMING THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT. GROUND NO.1 RAISED FOR CONFIRMING PENALTY U/S.271(1)(C) ON ACCOUNT OF DISALLOWANCE MADE U/S.40A(3) OF THE ACT. 7. WE NOTE THAT THERE WAS NO TRANSACTION REGARDING THE ADDITION MADE U/S.40A(3) OF THE ACT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. BUT HOWEVER, THE CONTENTION WAS RAISED BEFORE THE CIT(A) IN THE PENALTY PROCEEDINGS TH AT THERE WAS NO DISPUTE WITH RESPECT TO THE GENUINENESS OF THE EXPENSES FOUND IN THE DIARIES AND COULD NOT BE SAID THAT THE EXPENSES WERE FALSE OR NON GENUINE. FURTHER, IT WAS CONTENDED THAT ALL THE ENTRIES IN THE DIARIES HAD BEEN VERIFIED BY THE SPECIAL A UDITORS AND ASSESSING OFFICER. MERE DISALLOWANCE U/S.40(A) OF THE ACT DOES NOT ATTRACT THE PENALTY U/S.271(1)(C) OF THE ACT. FOR THE PROPOSITION MADE ABOVE, THE ASSESSEE PLACED RELIANCE ON 4 ITA NO S . 1966, 1967 & 1968 /PUN/20 17 A.Y S . 2004 - 05, 2005 - 06 & 2007 - 08 VARIOUS CASE LAWS BEFORE THE LD. CIT(APPEALS) IN THE PENALTY PROCEE DINGS BUT HOWEVER, NO SUCH CONSIDERATION WAS GIVEN TO THE SAID PROPOSITION BY THE CIT(A). WE NOTE THAT THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS FOR FILING INACCURATE PARTICULARS OF INCOME WHEREIN AS DISCUSSED ABOVE, THE DETAILS REGARDING THE IMPUGNED DISALLOWANCE U/S.40A(3) OF THE ACT WERE PLACED BEFORE THE ASSESSING OFFICER AND ON EXAMINATION OF SUCH DETAILS, THE ASSESSING OFFICER MADE SAID DISALLOWANCE. THIS CLEARLY SHOWS THE ASSESSEE FILED PARTICULARS INVOLVING CLAIM U/S.40A(3) OF THE ACT, BUT HOWEVER, THE ASSESSING OFFICER COULD NOT FIND THE SAME AS ACCEPTABLE AND PROCEEDED TO MAKE DISALLOWANCE U/S.40A(3) OF THE ACT. IN OUR OPINION, THE PENALTY COULD NOT BE LEVIED ON SUCH DISALLOWANCE MADE U/S.40A(3) OF THE ACT ONLY ON THE BASIS THAT THE AS SESSEE MADE WRONG CLAIM. THEREFORE, THE PENALTY CONFIRMED BY THE CIT(A) IS NOT JUSTIFIED AND THE SAME IS DELETED. THUS, GROUND NO.1 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. 8. GROUND NO.2 RAISED CHALLENGING THE CONFIRMATION OF PENALTY IMPOSED ON ACC OUNT OF ADDITION MADE U/S.69C OF THE ACT. 9. THE LD. DR BROUGHT OUR NOTICE BY REFERRING PARA 6.3.1 OF THE IMPUGNED ORDER AND SUBMITTED THAT THE ADDITION MADE U/S.69C OF THE ACT WAS CONFIRMED IN THE QUANTUM PROCEEDINGS AND THE ASSESSEE ACCEPTED THE SAME. 10. WE FIND NOTHING ON RECORD SHOWING THAT THE ASSESSEE CHALLENGED THE SAME BEFORE THE APPELLATE FORUM AND THEREFORE, TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE LD. DR, WE UPHOLD THE ORDER OF THE LD. CIT(APPEALS) IN CONFIRMING THE PENALTY LEVIED U/S .271(1)(C) OF THE ACT ON ACCOUNT OF DISALLOWANCE MADE U/S.69C OF THE ACT. THEREFORE, WE COMPLETELY AGREE WITH THE 5 ITA NO S . 1966, 1967 & 1968 /PUN/20 17 A.Y S . 2004 - 05, 2005 - 06 & 2007 - 08 REASONS RECORDED BY THE LD. CIT(APPEALS) IN HIS ORDER. THUS, GROUND NO.2 RAISED IN APPEAL BY THE ASSESSEE IS DISMISSED. 11 . GROUND NO.3 RAISE D IN QUESTION IS WITH REGARD TO THE CONFIRMATION OF PENALTY LEVIED U/S.271(1)(C) OF THE ACT IN RESPECT OF DISALLOWANCE MADE U/S.68 OF THE ACT. 12. WE NOTE THAT THE ASSESSING OFFICER IN HIS ORDER PREPARED A CHART OF REFERENCE WHEREIN HE HELD UNEXPLAINED CA SH CREDITS WERE ADDED U/S.68 OF THE ACT. IT WAS CONTENDED BEFORE THE CIT(A) IN PENALTY PROCEEDINGS, THESE ENTRIES ARE OUTSIDE THE BOOKS OF ACCOUNTS WHICH HAD BEEN VERIFIED BY THE SPECIAL AUDITORS. THE SPECIAL AUDITORS CONFIRMED THE ENTRIES ARE OUTSIDE THE BOOKS OF ACCOUNTS AND NO PENALTY U/S.271(1)(C) OF THE ACT IS LEVIABLE ON DISALLOWANCE MADE U/S.68 OF THE ACT. THE LD. DR , SHRI PRATHAMESH J. LAWAND VEHEMENTLY OPPOSED THE CONTENTION RAISED BY THE ASSESSEE BEFORE THE CITA(A) IN THE PENALTY PROCEEDINGS AND SUBMITTED THAT NO EVIDENCE WAS FILED IN SU PPORT OF SUCH SUBMISSIONS IN CLUDI NG THIS TRIBUNAL . THE CIT(A) DID NOT GIVE CREDENCE TO THE SUBMISSIONS MADE BY THE ASSESSEE. HAVING NO BASE FOR SUCH SUBMISSIONS AND RELEVANT EVIDENCES , THE CIT(A) CONFIRMED TH E PENALTY ON THE THE DISALLOWANCE U/S.68 OF THE ACT. W E FIND NO COGENT EVIDENCES BEFORE US AS RIGHTLY P OINTED B Y THE LD. DR SUPPORTING THE CONTENTIONS OF ASSESSEE AND SHOWING THE ADDITION HAS BEEN DELETED IN THE QUANTUM PROCEEDINGS. THEREFORE, WE FIND NO I NFIRMITY WITH THE FINDINGS OF THE CIT(A) IN CONFIRMING THE PENALTY IMPOSED U/S.271(1)(C) OF THE ACT INVOLVING THE DISALLOWANCE MADE U/S.68 OF THE ACT. THUS, GROUND NO.3 RAISED IN APPEAL BY THE ASSESSEE IS DISMISSED. 13. GROUND NO.4 IS AGAINST THE CONFIRM ATION OF PENALTY INVOLVING THE DISALLOWANCE MADE U/S.40(A)(IA) OF THE ACT. 6 ITA NO S . 1966, 1967 & 1968 /PUN/20 17 A.Y S . 2004 - 05, 2005 - 06 & 2007 - 08 14. THE ASSESSING OFFICER MADE DISALLOWANCE U/S.40(A)(IA) OF THE ACT FOR VIOLATION OF DEDUCTION OF TDS ON THE PAYMENT MADE ON ACCOUNT OF TDR/LAND COST. IT WAS CONTENDED BY THE ASSE SSEE BEFORE THE CIT(A) IN PENALTY APPELLATE PROCEEDINGS, MERE DISALLOWANCE FOR FAILURE TO DEDUCT TDS ON PAYMENT DOES NOT ATTRACT PENALTY AND PENALTY IMPOSED BY THE ASSESSING OFFICER IS BAD IN LAW. 15. WE NOTE THAT THE ASSESSEE PLACED RELIANCE ON VARIOUS C ASE LAWS INCLUDING DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN 322 ITR 158. WE NOTE THAT THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS FOR FAILURE TO DEDUCT TDS WHICH ITSELF CLEARLY SHOWS THAT THE THERE W ERE DETAILS REGARDING THE PAYMENT INVOLVING TD R /LAND COST IN THE ASSESSMENT PROCEEDINGS WHICH DOES NOT ANY WAY CONSTITUTE FURNISHING OF INACCURATE PARTICULARS NOR CONCEALMENT OF INCOME. A MERE DISALLOWANCE AS RIGHTLY CONTENDED BY THE ASSESSEE BEFORE THE CIT(A) DOES NO T ATTRACT IMPOSITION OF PENALTY. THEREFORE, THE ORDER OF THE CIT(A) IN CONFIRMING THE PENALTY IMPOSED AGAINST DISALLOWANCE U/S.40(A)(IA) OF THE ACT IS DELETED. THUS, GROUND NO.4 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.1966/PUN/2017 IS PARTLY ALLOWED. ITA NO. 1967/PUN/2017 A.Y.2005 - 06 17. IN THIS APPEAL, THE ASSESSEE HAS RAISED THREE GROUNDS. WE FIND FACTS AND CIRCUMSTANCES INVOLVED IN THESE GROUNDS ARE SIMILAR AND IDENTICAL TO THE GROUNDS RAISED IN ITA NO.1966/PUN/2017 FOR ASSESSMENT YEAR 2004 - 05. GROUND NO.1 RAISED IN THIS APPEAL IS IDENT ICAL TO GROUND NO.2 RAISED IN ITA NO.1966/PUN/2017 FOR THE ASSESSMENT YEAR 2004 - 05. SINCE WE HAVE TAKEN A 7 ITA NO S . 1966, 1967 & 1968 /PUN/20 17 A.Y S . 2004 - 05, 2005 - 06 & 2007 - 08 DECISION IN UPHOLDING THE ORDER OF THE CIT(A) ON THE ISSUE, THE SAME DECISION IS EQUALLY APPLICABLE TO GROUND NO.1 IN THIS APPEAL. THUS, GROUND NO.1 R AISED IN APPEAL BY THE ASSESSEE IS DISMISSED. 18. GROUND NO.2 RAISED IN THIS APPEAL IS IDENTICAL AND SIMILAR TO GROUND NO.3 OF ITA NO.1966/PUN/2017. THEREFORE, OUR DECISION RENDERED IN ITA NO.1966/PUN/2017 ON THIS ISSUE SHALL APPLY MUTATIS - MUTANDIS IN THIS GROUND ALSO. HENCE, GROUND NO.2 RAISED IN THIS AP PEAL BY THE ASSESSEE IS DISMISSED. 19. GROUND NO.3 RAISED IN THIS APPEAL IS IDENTICAL AND SIMILAR TO GROUND NO.4 OF ITA NO.1966/PUN/2017. SINCE WE HAVE TAKEN A DECISION IN ALLOWING THIS GROUND IN ITA NO.1966/PUN/2017, THE SAME DECISION IS EQUALLY APPLICAB LE TO GROUND NO.3 IN THIS APPEAL. THUS, GROUND NO. 3 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.1967/PUN/2017 IS PARTLY ALLOWED. ITA NO. 1968/PUN/2017 A.Y.2007 - 08 21. GROUND NO.1 RAISED IN THIS APPEAL IS SIMILAR AND IDENTICAL TO GROUND NO.1 RAISED IN ITA NO.1966/PUN/2017. SINCE WE HAVE TAKEN A DECISION IN ALLOWING THIS GROUND IN ITA NO.1966/PUN/2017, THE SAME DECISION IS EQUALLY APPLICABLE TO GROUND NO.1 IN THIS APPEAL. THUS, GROUND NO. 1 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. 8 ITA NO S . 1966, 1967 & 1968 /PUN/20 17 A.Y S . 2004 - 05, 2005 - 06 & 2007 - 08 22. GROUND NO.2 RAISED IN THIS APPEAL IS IDENTICAL AND SIMILAR TO GROUND NO.4 OF ITA NO.1966/PUN/2017. SINCE WE HAVE TAKEN A DECISION IN ALLOWING THIS GROUND IN ITA NO.1966/PUN/2017, THE SAME DECISION IS EQUALLY APPLI CABLE TO GROUND NO.2 IN THIS APPEAL. THUS, GROUND NO. 2 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. 23 . IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.1968/PUN/2017 IS ALLOWED. 24 . TO SUM UP, THE APPEALS OF THE ASSESSEE IN ITA NO.1966 & 1967/PUN/2017 ARE PARTLY ALLOWED AND APPEAL OF THE ASSESSEE IN ITA NO.1968/PUN/2017 IS ALLOWED. ORDER PRO NOUNCED ON 26 TH DAY OF OCTOB ER, 20 20 . SD/ - SD/ - R.S.SYAL S.S. VISWANETHRA RAVI VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 26 TH OCTOBER , 2020. SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS), PUNE - 5, PUNE. 4. THE PR. CIT, PUNE - 4, PUNE. 5 . , , , / DR, ITAT, B BENCH, PUNE. 6 . / GUARD FILE. / BY ORDER, // TRUE COPY // / PRIVATE SECRETARY , / ITAT, PUNE . 9 ITA NO S . 1966, 1967 & 1968 /PUN/20 17 A.Y S . 2004 - 05, 2005 - 06 & 2007 - 08 DATE 1 DRAFT DICTATED ON 23 .10 .2020 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 23 .10 .2020 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