Mohan Pralhad Patil, Jalgaon V. Deputy Commissioner of Income-tax,

ITA 202/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7000 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 26-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM / ITA NO.202/PUN/2015 / ASSESSMENT YEAR : 2005-06 MOHAN PRALHAD PATIL, HOUSE NO.1931, PATILPURA AT POST SAVDA, TALUKA RAVER, DISTRICT JALGAON 425502, MAHARASHTRA. PAN NO.AVIPP4106B. . / APPELLANT V/S DY. COMMISSIONER OF INCOME TAX , CIRCLE 2, JALGAON. . / RESPONDENT / APPELLANT BY : SHRI SUNIL GANOO / RESPONDENT BY : SHRI RAVI PRAKASH / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL OF THE ASSESSEE IS EMANATING OUT OF THE ORDE R OF COMMISSIONER OF INCOME TAX (A) 2, NASHIK DATED 18.04.2012 FOR THE ASSESSMENT YEAR 2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- 2.1 FOR THE YEAR UNDER CONSIDERATION, ASSESSEE HAD NOT FILED ORIGINAL RETURN OF INCOME FOR A.Y. 2005-06. IN THE PRESENT CASE, N OTICE U/S 148 / DATE OF HEARING : 02.03.2017 / DATE OF PRONOUNCEMENT: 09.03.2017 2 ITA NO.202/PUN/2015 AY.NO.2005-06 WAS ISSUED ON 03.04.2007 AND IN RESPONSE TO WHICH ASSESS EE FILED HIS RETURN OF INCOME FOR A.Y. 2005-06 ON 31.03.2008 DECLARING T OTAL INCOME OF RS.15,11,040/- UNDER THE HEAD CAPITAL GAINS. T HE CASE WAS TAKEN UP FOR SCRUTINY AND THEREAFTER ASSESSMENT WA S FRAMED U/S 143(3) R.W.S 147 OF THE ACT VIDE ORDER DT.17.12.2008 AND THE TOTAL LONG TERM CAPITAL GAINS WAS DETERMINED AT RS.45,31,040/-. ON TH E LONG TERM CAPITAL GAINS THAT WAS DETERMINED BY AO, AO VIDE ORD ER DT.22.03.2012 THAT WAS PASSED U/S 271(1)(C) OF THE ACT HELD THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AN D THEREBY CONCEALED HIS INCOME AND ACCORDINGLY ASSESSEE WAS LIABLE F OR PENALTY. HE THEREFORE LEVIED PENALTY OF RS.33,570/- U/S 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD. CIT(A), WHO VIDE ORDER DT.18.04.2012 (IN APPEAL NO.NSK/CIT(A)- 2/17/12-13) CONFIRMED THE LEVY OF PENALTY BY HOLDING AS UNDER : 5.2 THE MAIN CONTENTION OF THE APPELLANT IS THAT T HE APPELLANT HAD PAID COMPENSATION OF RS.21,00,000/- TO THE PROT ECTED TENANT SHRI TIKARAM S WAGHULDE UNDER AGREEMENT TO SALE THE SAID LAND IN QUESTION. BUT THE APPELLANT COULD NOT SUBSTANTI ATE HIS CLAIM. THE APPELLANT HAD NOT PRODUCED ANY SUPPORTING EVIDE NCE TO PROVE THAT HE HAD PAID RS.21,00,000/- AS COMPENSATION TO THE PROTECTED TENANT. IN THE WRITTEN SUBMISSION DATED 08/12/2008 , SHRI TIKARAM S WAGHULDE DENIED HAVING RECEIVED ANY MONEY/COMPENSATION FROM THE APPELLANT ON ACCOUNT OF SALE OF THE PROPERTY IN QUESTION. THE APPELLANT HAD NARRATED T HE SEQUENCE OF EVENTS LEADING TO THE FINAL SALE OF THE SAID LAND T O CLAIM THAT HE HAD PAID COMPENSATION TO SHRI TIKARAM S WAGHULDE FO R THE SURRENDER OF HIS TENANCY RIGHTS WITHOUT PRODUCING A NY CONCRETE EVIDENCE. THE APPELLANT HAD ALSO CLAIMED TO HAVE P AID RS.3 LAKHS TO SHRI SHEKHAR INGALE (A PROSPECTIVE BUYER) AS COMMISSION / BROKERAGE. BUT THE APPELLANT DID NOT PRODUCE ANY EVIDENCE OF PAYMENT OF RS.3 LAKHS TO SHRI SHEKHAR INGALE WHO DE NIED HAVING RECEIVED THE SAID AMOUNT IN CASH IN HIS STATEMENT G IVEN TO THE A.O. IT IS NOT DISPUTED THAT HE HAD SOLD THE SAID LAND FOR RS.42 LAKHS TO FIVE PERSONS. ANY CLAIM WITHOUT SUPPORTIN G EVIDENCE CAN NOT BE ADMITTED. NOW THE APPELLANTS A. R. HAS INF ORMED THAT SHRI TIKARAM S WAGHULDE IS NO MORE. IT APPEARS THAT WHA T HE HAD STATED IN HIS WRITTEN SUBMISSION TO THE A.O. HAS BE COME FINAL. ON THE OTHER HAND, THE A.O. HAD MADE ALL NECESSARY ENQ UIRES TO FIND OUT THE TRUTH AND HAD ESTABLISHED THAT THE SALE CON SIDERATION OF RS.42 LAKHS WAS RECEIVED BY HIM AND NO PAYMENTS WER E MADE TO LATE SHRI TIKARAM S WAGHULDE BY WAY OF COMPENSATION FOR SURRENDERING THE TENANCY RIGHTS. 3 ITA NO.202/PUN/2015 AY.NO.2005-06 5.3 IN VIEW OF THE ABOVE DISCUSSIONS, I AM OF THE C ONSIDERED VIEW THAT THE PENALTY IMPOSED BY THE A.O. U/S 271(1 )(C) OF THE I.T. ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME IS JUSTIFIED AND THE SAME IS UPHELD. IN THIS CASE, THE A.O. HAD PAS SED AN ORDER DATED 30/10/2010 TO GIVE EFFECT TO THE ORDER OF THE CIT(A) DATED 18/11/2010 WHEREIN THE REVISED LONG TERM CAPITAL GA IN HAD BEEN TAKEN AT RS.40,02,040/-. THE A.O. IS DIRECTED TO T AKE THE REVISED INCOME AND RE-WORK THE PENALTY ACCORDINGLY. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN A PPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND : IN THE FACTS CIRCUMSTANCES AND POSITION OF LAW LEA RNED COMMISSIONER OF INCOME TAX APPELLATE-II, NASHIK ERRE D IN CONFIRMING THE PENALTY LEVIED BY DY.COMMISSIONER OF INCOME TAX CIRCLE-2, JALGAON U/S.271(1)(C) AT RS.5,38,570/- 3. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFOR E LOWER AUTHORITIES AND FURTHER SUBMITTED THAT THE PENALTY WAS IM POSED ON INCOMPLETE INQUIRY CONDUCTED BY AO. HE FURTHER SUBMITTED THAT MERELY BECAUSE THE ADDITIONS HAVE BEEN CONFIRMED, CANNOT LEAD TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT BECAUSE PENALTY AND A SSESSMENT PROCEEDINGS ARE DISTINCT AND DIFFERENT FROM ASSESSMENT PRO CEEDINGS. LD.A.R. FURTHER SUBMITTED THAT THE PENALTY ORDER LEVIED BY AO IS BAD- IN-LAW, AS THERE WAS AMBIGUITY AND NON-APPLICATION OF MIND B Y THE AO IN INITIATION AND COMPLETION OF PENALTY PROCEEDINGS. HE SUBMIT TED THAT IN THE ASSESSMENT ORDER, AO HAD RECORDED THE SATISFACTIO N TO THE EFFECT THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCO ME AND THEREBY CONCEALED THE INCOME. LD.A.R. REFERRING TO THE NO TICE U/S 274 R.W.S 271(1)(C) SUBMITTED THAT WHILE ISSUING THE NOTICE DT.17. 12.2008, THE AO HAS FAILED TO GIVE SATISFACTION AS TO WHICH LIMB OF SE CTION HAS NOT BEEN COMPLIED WITH BY THE ASSESSEE AS THE RELEVANT PART OF THE PROFORMA NOTICE HAS NOT BEEN STRUCK OFF. HE POINTED TO THE RELEVANT PORTION OF THE NOTICE, WHICH IS PLACED AT PAPER BOOK. HE T HEREFORE 4 ITA NO.202/PUN/2015 AY.NO.2005-06 SUBMITTED THAT SINCE THE AO HAS FAILED TO GIVE SATISFACTION AS TO WHICH LIMB OF SEC.271(1)(C) HAS NOT BEEN COMPLIED WITH BY THE ASSES SEE, THE PROCEEDINGS INITIATED IN THE CASE BY ISSUE OF NOTICE AND IN WHICH APPROPRIATE PORTION HAS NOT BEEN STRUCK OFF ARE VITIATED AND THEREFORE THE PENALTY ORDER PASSED IS INVALID AND FOR THIS PROPOSITION , HE RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY IN ITA NO.1154/2014 DT.05.01.2017 AND T HE DECISIONS OF PUNE TRIBUNAL IN THE CASE OF KANHAIYALAL JAIN V S. ACIT IN ITA NO.1201 TO 1205/PN/2014 ORDER DT.30.11.2016 AND IN THE CASE OF NANDKISHORE TULASIDAS KATORE VS. ACIT IN ITA NO.2174 TO 2180/PN/2014 DT.14.12.2016. HE FURTHER SUBMITTED THAT TH E HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNADH A COTTON AND GINNING FACTORY REPORTED IN 359 ITR 565 HAS HELD THAT WHEN THE AO PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN T HE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HE SUBMITTED THAT THE HIGH COURT HAS FURTHER HELD THAT THE STANDARD PROFORMA WITHOUT STR IKING OF THE RELEVANT CLAUSES WILL LEAD TO INFERENCE FOR NON-APPLICATION OF MIND BY THE AO. HE THEREFORE SUBMITTED THAT THE PENALTY PROCE EDINGS ARE INITIATED WITHOUT APPLICATION OF MIND BY AO AND THEREFORE TH E PENALTY ORDER LEVIED BY THE AO IS BAD AND THEREFORE THE PENALTY LEVIED BE DELETED. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF AO AND LD. CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO THE LEVYING OF PENALTY U/S 271(1)(C) OF THE ACT. 5 ITA NO.202/PUN/2015 AY.NO.2005-06 5. IT IS AN UNDISPUTED FACT THAT WHILE PASSING THE ASSES SMENT ORDER U/S 143(3) R.W.S. 147 OF THE ACT, AO HAS RECORDED THE FIN DING THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AN D THEREBY CONCEALED THE INCOME. IN THE NOTICE DT.17.12.2008 ISSUED U/S 274 OF THE ACT, AO HAS NOT STRUCK OFF THE INAPPLICABLE PORTION I.E., AS TO WHETHER IT WAS THE CASE OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THUS FROM TH E PERUSAL OF NOTICE ISSUED U/S 274 R.W.S 271(1)(C) IT IS SEEN THAT AO IS NOT CLEAR AS TO UNDER WHAT CHARGE PENALTY HAS TO BE LEVIED U/S 2 71(1)(C) OF THE ACT AS THE NOTICE IS VAGUE AS IT FAILS TO CLEARLY SPELL OUT THE CHARGE OF LEVY OF PENALTY. WE FIND THAT ON IDENTICAL FACTS IN THE CASE OF GOLDIE JOGENDERSINGH ANAND IN ITA NO.188/PUN/2016 (ORDER DT.22.0 2.2017) THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DELETED THE PE NALTY BY HOLDING AS UNDER : 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPR ESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE A UTHORITIES 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 IRRELEVANT PARTS OF THE PROFORMA NOTIC E HAVE NOT BEEN STRUCK OFF. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY REPORTED AS 359 ITR 565 HAS HELD THAT, WHE N THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATEL Y MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTIC ULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEV ANT CLAUSES 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 S ATISFACTION HAS OBSERVED THAT, THE ASSESSEE HAS CONCEALED THE INCO ME AND HAS ALSO FURNISHED INACCURATE PARTICULARS OF INCOME WIT HIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. WHILE ISS UING NOTICE THE ASSESSING OFFICER HAS NOT STRUCK OFF IRRELEVANT PAR T IN THE SHOW CAUSE NOTICE ISSUED U/S. 274 AND THUS, THE RELEVANT EXTRACT OF NOTICE INDICATING CHARGE FOR LEVY OF PENALTY READS AS UNDER : HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISH ED 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 CHA RGE PENALTY HAS TO BE LEVIED U/S. 271(1)(C) OF THE ACT. THE NOT ICE IS VAGUE AS IT FAILS TO CLEARLY SPELL OUT THE CHARGE FOR LEVY OF P ENALTY. A FURTHER EXAMINATION OF THE RECORDS SHOW THAT THE OBSERVATIO NS OF THE 6 ITA NO.202/PUN/2015 AY.NO.2005-06 ASSESSING OFFICER ARE INCONSISTENT WHILE RECORDING SATISFACTION AND AT THE TIME OF PASSING OF THE PENALTY ORDER. TH E ASSESSING OFFICER HAS LEVIED PENALTY FOR FURNISHING INACCURAT E PARTICULARS OF INCOME. THE ASSESSING OFFICER IS INCOHERENT IN REAS ONING FOR RECORDING SATISFACTION AND IN PASSING THE ORDER LEV YING PENALTY. 7. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COM MISSIONER OF INCOME TAX VS. SAMSON PERINCHERY (SUPRA) REITERATIN G THE VIEW OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISS IONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTOR Y (SUPRA) HAS HELD THAT ITA NO. 188/PUN/2016, A.Y. 2006-07 F AILURE BY THE ASSESSING OFFICER TO UNAMBIGUOUSLY SPECIFY IN N OTICE ISSUED U/S. 274 THE CHARGE FOR LEVY OF PENALTY I.E. WHETHE R THE PENALTY IS BEING INITIATED FOR FURNISHING OF INACCURATE PARTIC ULARS OF INCOME OR FOR CONCEALMENT OF INCOME IS FATAL. IT REFLECTS NON -APPLICATION OF MIND AND RENDERS THE LEVY OF PENALTY INVALID. 8. THUS, IN THE LIGHT OF ABOVE DECISIONS AND THE FA CTS OF THE CASE, WE DIRECT THE ASSESSING OFFICER TO CANCEL THE PENAL TY. THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF THE A SSESSEE IS ALLOWED. 6 . WE THEREFORE FIND THAT THE FACTS IN THE PRESENT CASE AR E IDENTICAL TO THAT OF IN THE CASE OF GOLDIE JOGENDERSINGH ANAND (SU PRA). IN VIEW OF THE AFORESAID FACTS AND IN THE ABSENCE OF ANY CONTRARY BINDING DECISION POINTED OUT BY REVENUE IN ITS SUPPORT, WE ARE OF THE VIEW THAT SINCE THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT IS INVALID AND THEREFORE THE PROCEEDINGS ARISING HEREFROM ARE VITIAT ED AND THEREFORE CANNOT BE UPHELD AND THE PENALTY ORDER NEEDS TO BE SET ASIDE. WE ACCORDINGLY, SET ASIDE THE PENALTY ORDER PASSED AND ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON THE 9 TH DAY OF MARCH, 2017. SD/- SD/- ( VIKAS AWASTHY ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; ! DATED : 09 TH MARCH, 2017. YAMINI 7 ITA NO.202/PUN/2015 AY.NO.2005-06 '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5 6. CIT(CENTRAL), PUNE. CIT(A)-12, PUNE. #$% &&'(, * '(, / DR, ITAT, B PUNE; %+, - / GUARD FILE. / BY ORDER, // TRUE COPY // . /012 / ASSISTANT REGISTRAR, * '( , / ITAT, PUNE.