Pravinchandra P. Chokshi, Nashik V. Assistant Commissioner of Income-tax,

ITA 2084/PUN/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5522 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 09-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAWLI
• Section: 271(1)(c); 207

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RA O , AM . / ITA NO. 2078 /P U N/201 6 / ASSESSMENT YEAR : 1998 - 99 NAVINCHANDRA P. CHOKSI, PREMPRABHA, LANE NO.3, OPP. YOG VIDYA DHAM, COLLEGE ROAD, NASHIK. PAN : ACTPC1972C . / APPELLANT VS. ACIT , CENTRAL CIRCLE - 1, NASH IK. . / RESPONDENT . / ITA NO. 207 9 /PUN/201 6 / ASSESSMENT YEAR : 2003 - 04 PRAKASH P. CHOKSI, OPP. YOG VIDYA DHAM, COLLEGE ROAD, NASHIK. PAN : ACTPC1962F . / APPELLANT VS. ACIT, CENTRAL CIRCLE - 1, NASHIK. . / RESPONDENT . / ITA NO S . 2080 TO 2084 /PUN/201 6 / ASSESSMENT YEAR S : 2000 - 01 TO 2004 - 05 PRAVINCHANDRA P. CHOKSHI, 653, ABHONKAR LANE, RAVIVAR PETH, NASHIK. PAN : ACTPC1963F . / A PPELLANT VS. ACIT, CENTRAL CIRCLE - 1, NASHIK. . / RESPONDENT ITA NO S . 2078 TO 2084 /PUN /2016 2 / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : SHRI RAJESH GAWLI / DATE OF HEARING : 23 . 10 .2018 / DATE OF PRONOUNCEMENT: 02 . 1 1 .201 8 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE BUNCH OF THREE ASSESSEES UNDER CONSIDERATION INVOLVING SEVEN APPEALS BY THE RESPECTIVE ASSESSEES. THESE 7 APPEALS RELATES TO THE ASSESSMENT YEARS 1998 - 99 IN THE CASE OF NAVINCHANDRA P. CHOKSI, ASSESSMENT YEAR 2003 - 04 IN THE CASE OF PRAKASH P. CHOKSI AND ASSESSMENT YEARS 2000 - 01 TO 2004 - 05 IN THE CASE OF PRAVINCHANDRA P. CHOKSHI. CONSIDERING THE COMMONALITY OF THE ISSUES, THE FACTS, THE ARGUMENTS OF THE AR/DR, ETC, WE PROCEED TO ADJUDICATE ALL THESE 7 APPEALS IN THIS COMPOSITE ORDER. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COMMON ISSUE OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. AS PER LD. AR, THE PENALTY PROCEEDINGS , INITIATED BY THE ASSESSING OFFICER IN ALL THESE APPEALS , SUFFER FROM AMBIGUITY IN THE MIND OF THE ASSESSING OFFICER WHILE RECORDING THE SATISFACTION AT THE TIME OF INITIATING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. WE SHALL TAKE UP ASSESSEE - WIS E APPALS IN THE FOLLOWING PARAGRAPHS. ITA NO .2080 /PUN/2016 (A.Y. 2000 - 01) (PRAVINCHANDRA P. CHOKSHI) 2 . FIRST, WE SHALL TAKE UP THE BUNCH OF FIVE APPEAL S. THE LEAD APPEAL ITA NO.2080/PUN/2016 IN THE CASE OF PRAVINCHANDRA P. CHOKSHI RELATES TO THE ITA NO S . 2078 TO 2084 /PUN /2016 3 ASSE SSMENT YEAR 2000 - 01. THE FINDING ON THIS APPEAL HAS BEARING ON THE REST OF THE FOUR APPEALS . 3 . ACCORDING TO THE LD. AR, THE APPEAL SHALL HAVE TO BE ALLOWED IN FAVOUR OF ASSESSEE ON THE LEGAL ISSUE. DEVIATING FROM THE GROUNDS ON THE MERITS OF PENALTY AND REFERRING TO THE ASSESSMENT ORDER, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 5.8 AND SUBMITTED THAT BOTH THE LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT WERE REFERRED TO WHILE INITIATING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. FURTHER, REFERRING TO PENALTY ORDER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO REFERENCE IS MADE IN LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT WHILE LEVYING THE PENALTY. HE BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 7 OF THE PENALTY ORDER. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A 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 RELYING ON VARIOUS BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (B OM.) 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 DEMONSTRATED THAT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. 4 . ON THE OTHER HAND, LD. DR FOR T HE REVENUE HEAVILY RELIED ON THE ORDER S OF THE ASSESSING OFFICER AND THE CIT(A). 5 . WITHOUT GOING TO THE MERIT, WE FOCUS OUR ATTENTION ON THE SAID SATISFACTION RECORDED FOR INITIATING THE PENALTY PROCEEDINGS BY THE ASSESSING OFFICER AND FIND RELEVANT TO E XTRACT P ARA 5.8 OF THE ASSESSMENT ORDER AND P ARA 7 OF THE PENALTY ORDER IN THE FOLLOWING PARAGRAPHS : - ASSESSMENT ORDER : 5.8 .......... FOR CONCEALING THE INCOME AND FURNISHING THE INACCURATE PARTICULARS OF INCOME THE PENALTY PROCEEDINGS US 271(1)(C) AR E SEPARATELY INITIATED. ITA NO S . 2078 TO 2084 /PUN /2016 4 PENALTY ORDER : 7. ......... I AM SATISFIED THAT THIS IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 6. THE LEGAL REQUIREMENT OF MAKING A CLEAR CUT REFERENCE TO THE APPLICABLE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT IS NOT MET BY THE ASSESSING OFFICER. CONSIDERING THE ABOVE FACTS, WE ARE OF THE OPINION THAT THIS IS A CASE WHERE THE AO INVOKED BOTH THE LIMBS AT THE TIME OF INITIATION AND NONE IS CITED WHILE LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT . THU S, THE SATISFACTION SUFFERS FROM AMBIGUITY IN THE MIND OF THE AO. THEREFORE, WE ARE OF THE OPINION THAT , CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS , SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. IT IS A SETTLED LEGAL PROPOSITION THAT THE AO I S UNDER OBLIGATION TO SPECIFY THE APPROPRIATE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WITHOUT GOING INTO THE MERITS OF THE PENALT Y, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, THE ORDER OF CIT(A) IS SET - ASIDE AND DIRECT THE AO TO DELETE THE PENALTY ON TECHNICAL GROUNDS. 7 . SINCE WE HAVE ALLOWED THE ORAL GROUND RAISED BY THE ASSE SSEE, IN OUR VIEW, ADJUDICATION OF GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL ON MERITS BECOMES AN ACADEMIC EXERCISE. THEREFORE, THE SAID GROUND IS DISMISSED AS ACADEMIC. ITA NOS.2081 TO 2084/PUN/2016 ( FOUR APPEALS : A.YS. 2001 - 02 TO 2004 - 05) (PRAVINC HANDRA P. CHOKSHI) 8 . REGARDING THE OTHER FOUR APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS (A.Y. 2001 - 02 TO 2004 - 05) , WE ARE OF THE OPINION THAT THE ASSESSEE ITA NO S . 2078 TO 2084 /PUN /2016 5 VALIDLY MADE SIMILAR AMBIGUITY - LINKED ALLEGATION QUA THE SATISFACTION RECORDED BY THE ASSES SING OFFICER IN THE ASSESSMENT ORDER S /PENALTY ORDER S . THUS, W E ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLE D TO RELIEF ON THE TECHNICAL GROUNDS . ACCORDINGLY, ON TECHNICAL ISSUE THE GROUNDS RAISED BY THE ASSESSEE IN ALL THE FOUR APPEALS OF THE ASSESSEE ARE DISMISSED. 9 . CONSIDERING THE RELIEF GRANTED BY US ON THE TECHNICAL GROUND, WE ARE OF THE OPINION THAT THE GROUNDS RAISED ON MERITS OF THE LEVY OF PENALTY NEED TO BE DISMISSED AS ACADEMIC. HENCE, THEY ARE DISMISSED AS ACADEMIC IN ALL THE FOUR YEARS. 10 . IN THE RESULT, THE ALL THE FIVE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ITA NO.20 79 /PUN/2016 (A.Y. 2003 - 04) (PRAKASH P. CHOKSI) 1 1 . SR I PRAKASH P. CHOKSI FILED A SOLITARY APPEAL FOR THE A.Y. 2003 - 04 ON THE ISSUE OF LEVY OF PENALTY U/S 271(1)(C ) OF THE A CT. REFERRING TO THE ASSESSMENT ORDER, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 7.1 AND SUBMITTED THAT NO LIMB WAS REFERRED TO IN THE ASSESSMENT ORDER WHILE INITIATING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. FURTHER, REFERRING TO PENALTY ORDER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO REFERENCE IS MADE AT ALL TO ANY LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT WHILE LEVYING THE PENALTY. HE BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 4 OF THE PENALTY ORDER. 12 . WITHOUT GOING TO THE MERIT ON HEARING BOTH COUNSELS, WE FOCUS ED OUR ATTENTION ON THE SAID SATISFACTION RECORDED BY THE ASSESSING OFFICER AND FIND RELEVANT TO EXTRACT PARA 7.1 OF THE ASSESSMENT ORDER AND PARA 7 OF THE PENALTY ORDER IN IN THE FOLLOWING PARAGRAPHS : - ITA NO S . 2078 TO 2084 /PUN /2016 6 ASSESSMENT ORDER : 7 . 1 .......... SINCE THE ASSESSEE HAS NOT SHOWN THE INTEREST INCOME OF RS.46,233/ - FOR TAXATION IN THE RETURN OF INCOME, THE PENALTY PROCEEDINGS U/S 271(1)(C) IS BEING INITIATED SEPARATELY. PENALT Y ORDER : 7. ......... I AM SATISFIED THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C). 13 . FROM THE ABOVE, ITS OBVIOUS THAT THE REQUIREMENT OF MAKING SPECIFIC REFERENCE TO SPECIFIC LIMB WAS NOT MET BY THE ASSESSING OFFICER IN THIS CASE. CONSID ERING THE ABOVE FACTS, WE ARE OF THE OPINION THAT THIS IS A CASE WHERE THE AO INVOKED BOTH THE LIMBS AT THE TIME OF INITIATION AS WELL AS LEVYING THE PENALTY. THUS, THE SATISFACTION SUFFERS FROM AMBIGUITY IN THE MIND OF THE AO. HIGHLIGHTING THE LEGAL RE QUIREMENT OF MAKING A 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 KARNATAK A HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565 , L D. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. THEREFORE, WE ARE OF THE OPINION THAT , CONSIDERING THE ABOVE REFERRED BINDING JUDGME NTS , SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. IT IS A SETTLED LEGAL PROPOSITION THAT THE AO IS UNDER OBLIGATION TO SPECIFY THE APPROPRIATE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WITHOUT GOING INTO THE MERITS OF THE PENALTY, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEGAL ITA NO S . 2078 TO 2084 /PUN /2016 7 ISSUE. THUS, THE ORDER OF CIT(A) IS SET - ASIDE AND DIRECT THE AO TO DELETE THE PENALTY ON TECHNICAL GROUNDS. 14 . SINCE WE HAVE ALLOWED THE ORAL GROUND RAISED BY THE ASSESSEE, IN OUR VIEW, ADJUDICATION OF GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL ON MERITS BECOMES AN ACADEMIC EXERCISE. THEREFORE, THE SAID GROUND IS DISMISSED AS ACADEMIC. 15 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.2078/PUN/2016 (A.Y. 1998 - 99) (NAVINCHANDRA P. CHOKSI) 1 6. SRI NAVINCHANDRA P. CHOKSI FILED A SOLITARY APPEAL FOR THE A.Y. 1998 - 99 ON THE ISSUE OF LEVY OF PE NALTY U/S 271(1)(C) OF THE ACT. REFERRING TO THE ASSESSMENT ORDER, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 5.12 & 6 AND SUBMITTED THAT NO LIMB WAS REFERRED TO TO THE CONTENTS OF PARA 5.12 & 6 AND SUBMITTED THAT NO LIMB WAS REFERRED TO IN THE ASSESSMENT ORDER WHILE INITIATING THE PENALTY PROCEE DINGS U/S 271(1)(C) OF THE ACT. FURTHER, REFERRING TO PENALTY ORDER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO REFERENCE IS MADE AT ALL TO ANY LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT WHILE LEVYING THE PENALTY. HE BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 5 OF THE PENALTY ORDER. 1 7 . WITHOUT GOING TO THE MERIT ON HEARING BOTH COUNSELS, WE FOCUS ED OUR ATTENTION ON THE SAID SATISFACTION RECORDED BY THE ASSESSING OFFICER AND FIND RELEVANT TO EXTRACT PARA 5.12 & 6 OF THE ASSESSMENT ORDER AND PARA 5 OF THE PENALTY ORDER IN THE FOLLOWING PARAGRAPHS : - ASSESSMENT ORDER : 5 . 12 .......... FOR CONCEALING THE INCOME AND FURNISHING THE INACCURATE PARTICULARS OF INCOME THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) IS BEING INITIATED SEPARATELY. 6. ......... FOR CONCEALING THE INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME PENALTY PROCEEDINGS U/S 271(1)(C) IS BEING INITIATED SEPARATELY. ITA NO S . 2078 TO 2084 /PUN /2016 8 PENALTY ORDER : 5. ......... ......... ON CAREFULLY CONSIDERING THE ABOVE FACTS AND THE DETAILS A VAILABLE ON RECORD, I AM SATISFIED THAT THIS IS FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 1 8 . FROM THE ABOVE, ITS OBVIOUS THAT THE REQUIREMENT OF MAKING SPECIFIC REFERENCE TO SPECIFIC LIMB WAS NOT MET BY THE ASSESSING OFFICER IN THIS CASE. CONSIDERING THE ABOVE FACTS, WE ARE OF THE OPINION THAT THIS IS A CASE WHERE THE AO INVOKED BOTH THE LIMBS AT THE TIME OF INITIATION AS WELL AS LEVYING THE PENALTY. THUS, THE SATISFACTION SUFFERS FROM AMBIGUITY IN THE MIND OF THE AO. HIGHLIGHTING THE L EGAL REQUIREMENT OF MAKING A 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 K ARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565 , L D. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. THEREFORE, WE ARE OF THE OPINION THAT , CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS , SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. IT IS A SETTLED LEGAL PROPOSITION THAT THE AO IS UNDER OBLIGATION TO SPECIFY THE APPROPRIATE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AT THE TIME OF INITIATION AS WELL AS AT THE TIME O F LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WITHOUT GOING INTO THE MERITS OF THE PENALTY, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, THE ORDER OF CIT(A) IS SET - ASIDE AND DIRECT THE AO TO DELETE THE PENALTY ON TECHNICAL GROUNDS. ITA NO S . 2078 TO 2084 /PUN /2016 9 19 . SINCE WE HAVE ALLOWED THE ORAL GROUND RAISED BY THE ASSESSEE, IN OUR VIEW, ADJUDICATION O F GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL ON MERITS BECOMES AN ACADEMIC EXERCISE. THEREFORE, THE SAID GROUND IS DISMISSED AS ACADEMIC. 2 0 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 2 1 . RESULTANTLY, ALL THE APPEALS FILED BY THE RES PECTIVE ASSESSEES ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 02 ND D AY OF NOVEMBER , 2018 . SD/ - SD/ - (SUSHMA CHOWLA) ( D.KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE ; DATED : 02 ND NOVEMBER , 2018 . SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 12 , PUNE; 4. / THE PR. CIT, CENTRAL, NAGPUR 5. , , A / DR A , ITAT, PUNE; 6. / GUARD FILE . // TRUE COPY / / / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE