Nilesh Subhash Chopda, Ahmednagar V. Deputy Commissioner of Income-tax,

ITA 2087/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5207 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 09-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAWLI
• Keywords: Unexplained expenditure; Initiation of penalty proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , , ! BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO.2087/PUN/2016 / ASSESSMENT YEAR : 2009-10 SHRI NILESH SUBHASH CHOPDA, L-35, MIDC, AHMEDNAGAR 414 111 PAN : AARPC7558C /APPELLANT VS. DCIT, AHMEDNAGAR CIRCLE, AHMEDNAGAR . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI RAJESH GAWLI / DATE OF HEARING : 11.10.2018 / DATE OF PRONOUNCEMENT: 12.10.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF C IT(A)-2, PUNE, DATED 04-05-2016 FOR THE ASSESSMENT YEAR 2009-10. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : THE APPELLANT MOST RESPECTFULLY STATES THAT EACH GROUND O F APPEAL HEREIN BELOW IS WITHOUT PREJUDICE TO EACH OTHER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ORDER LEVYING PENALTY U/S.271 (1)( C) AS CONFIRMED BY TH E LEARNED CIT(A), IS BAD IN LAW AS THE SHOW CAUSE NOTICE ISSUED U/S. 274 OF THE ACT IS DEFECTIVE, INVALID, AND BAD IN LAW FOR IT DOES NOT SPECIFY AS TO WHETHER PENALTY PROCEEDING IS BEING INITIATED FOR C ONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY ORD ER PASSED BY THE LEARNED AO WITHOUT RECORDING THE REQUISITE SATISFACTIO N REGARDING ITA NO.2087/PUN/2016 NILESH SUBHASH CHOPDA 2 CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING O F INACCURATE PARTICULARS AS REQUIRED BY THE PROVISIONS OF SECTION 271(1)( C) AND THEREFORE THE LEVY OF PENALTY IS NOT JUSTIFIED/NOT TENABLE . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT (A) ERRED IN CONFORMING THE PENALTY ORDE R PASSED BY THE AO, WITHOUT APPRECIATING THAT THE LEARNED AO HAS PASSED THE ASSESSMENT ORDER ON THE BASIS OF HIS OWN JUDGEMENT AND THAT ADDITIONS UNDER SEC.69 ARE NOT SUSTAINABLE IN CASE OF ASSESSMENT BEING BEST JUDGEMENT ASSESSMENT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN CONFORMING THE PENALTY ORDER PASSED BY THE AO, WITHOUT APPRECIATING THAT: [A] THE APPELLANT HAS VOLUNTARILY COME FORWARD AND ACCE PTED ADDITION SUBJECT TO NON LEVY OF PENALTY U/S. 271(1)(C) SO AS TO PURCHASE PEACE OF MIND AND AVOID PROTRACTED LITIGATION. (B) THE LEARNED AO HAS PASSED ORDER LEVYING PENALTY WIT HOUT APPRECIATING THE SUBMISSIONS OF THE APPELLANT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, VARY AND /OR WITHDRAW ANY OR ALL THE ABOVE GROUNDS OF APPEAL AND/OR TO ADDUCE AND RELY UPON SUCH FURTHER EVIDENCE/ADDITIONAL EVIDENC E AND/OR DOCUMENTS AS MAY BE REQUIRED AT ANY TIME DURING THE APPEAL PROCEEDINGS. PRAYER: THE APPELLANT MOST RESPECTFULLY PRAYS AS UNDER: 1. THE IMPUGNED ORDER MAY KINDLY BE QUASHED AND SET ASIDE. 2. THE PENALTY LEVIED U/S.271(1)(C) MAY KINDLY BE DELETED. 3. ANY FURTHER ORDER IN THE INTEREST OF JUSTICE AND EQ UITY MAY KINDLY BE PASSED. 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED THE BUSINESS OF MANUFACTURING OF WOODEN BO XES. ASSESSEE FILED THE RETURN OF INCOME ON 30-09-2009 DECLARING TOTAL INC OME OF RS.17,79,568/-. IN THE ASSESSMENT, THE ISSUE RELATING TO PURCHASE O F PLOT OF LAND SITUATED AT SY.NO.265/2, AHMEDNAGAR FOR A CONSIDERATIO N OF RS.12 LAKHS WAS UNDER SCRUTINY. THE ASSESSEES SHARE IS 50% IN THE SAID PROPERTY. THE SAID TRANSACTION IS NOT ENTERED IN THE BO OKS OF ACCOUNT. THE EXPENDITURE INCURRED THEREOF IN RESPECT OF STAMP DUTY AN D REGISTRATION CHARGES ARE ALSO NOT RECORDED IN THE BOOKS OF ACCOUNTS . AO PROCEEDED TO ITA NO.2087/PUN/2016 NILESH SUBHASH CHOPDA 3 ADD RS.6 LAKHS AS UNEXPLAINED INCOME U/S.69 OF THE ACT AND UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT AMOUNTING TO RS. 1,38,485/- . AO ALSO MADE OTHER ADDITION OF RS.2 LAKHS ON ACCOUNT OF EXCESS CO NSUMPTION OF RAW MATERIAL AND RS.2 LAKHS ON ACCOUNT OF COMMISSION PAID TO MR S. PRIYA PUNAMCHAND MUNOT/MRS. RAJESHRI JITENDRA MUNOT. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT WERE INITIATED FOR FURNISHING INAC CURATE PARTICULARS OF INCOME. EVENTUALLY, THE AO LEVIED PENALTY OF RS.2,51,011/- . 4. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) RELYING O N THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF DURGA TIMBER WOR KS VS. CIT 79 ITR 63 AND JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN TH E CASE OF BANARAS CHEMICAL FACTORY VS. CIT 108 ITR 96 CONFIRMED TH E LEVY OF PENALTY. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE AFORESAID GROUNDS. 5. LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORDERS O F AO AND THE CIT(A) AND PRAYED FOR CONFIRMING THE SAME. 6. ASSESSEE FILED AN ADJOURNMENT APPLICATION DATED 05-10- 2018 STATING THAT THE TAX CONSULTANT WHO IS LOOKING AFTER THE TAX MA TTERS OF THE ASSESSEE WAS NOT COMING TO DUTY ON ACCOUNT OF DEMISE OF HIS YOUNG ER BROTHER. HOWEVER, ON GOING THROUGH THE FACTS OF THE CASE, WE FIND T HE PRESENT APPEAL CAN BE DISPOSED ON TECHNICAL GROUNDS. AO DID NOT MENTION THE SATISFACTION VALIDLY QUA THE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. WE FIND IDENTICAL CASES WERE HEARD AND ALLOWED BY US IN MANY CASE S. THEREFORE, WE PROCEED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVA ILABLE ON RECORD AFTER HEARING THE LD. DR FOR THE REVENUE. 7. HEARD THE LD. DR FOR THE REVENUE AND PERUSED THE O RDERS OF THE REVENUE. ASSESSEE RAISED THE GROUNDS RELATING TO RECORDING OF PROPER ITA NO.2087/PUN/2016 NILESH SUBHASH CHOPDA 4 SATISFACTION BY THE AO. IN THIS CONNECTION, WE PERUSED THE ASSESSME NT ORDER DATED 20-12-2011 AND FIND THE SATISFACTION RECORDE D BY THE AO FOR INITIATING THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THEREFORE, THE SAME IS REPRODUCED AS UNDER : 7. ASSESSED U/S.143(3). ISSUE DN/CHALLAN ACCORDIN GLY. ISSUE NOTICE U/S.271(1)(C) FOR FURNISHING INACCURATE PARTICULAR OF INCOME . 7.1 WE ALSO PERUSED THE PENALTY ORDER DATED 08-06-2012 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 UNDER: ................... ........................... THUS THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF T HE I.T. ACT, 1961 . FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO MENTIONED THE LIMB FURNISHING INACCURATE PARTICULARS OF INCOME WHEREAS WHILE LEVYING THE PENALTY, AO MENTIONED BOTH LIMBS CONCEALED THE PARTICULARS OF INCOME. THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APPLICABILITY OF SPECIFIC LIMB. IT IS A SETTLED LEGAL PROPOSITION THAT THE AO IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIM B 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 T HE PENALTY, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASHED ON TH IS LEGAL ISSUE. OUR DECISION IS FORTIFIED BY THE 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. A CCORDINGLY, ITA NO.2087/PUN/2016 NILESH SUBHASH CHOPDA 5 RELEVANT GROUNDS ON THE ISSUE OF SATISFACTION ARE ALLOWED IN FAVOUR OF THE ASSESSEE. 8. SINCE WE HAVE ALLOWED THE LEGAL GROUNDS NO.1 AND 2 RAISE D BY THE ASSESSEE IN THE APPEAL, IN OUR VIEW, THE ADJUDICATION OF OT HER GROUNDS RAISED BY THE ASSESSEE ON MERITS IN THE APPEAL, BECOMES AN ACADEMIC EXERCISE. THEREFORE, THE SAID GROUNDS ARE DISMISSED AS ACADEMIC. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED ON TECHNICALITIES. ORDER PRONOUNCED ON THIS 12 TH DAY OF OCTOBER, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 12 TH OCTOBER, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-2, PUNE. 4. / THE PR.CIT-1, PUNE. 5. , , / DR A, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.