Jitendra Ramesh Deshmukh, Pune V. Income-tax Officer,

ITA 2150/PUN/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7444 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 05-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Unexplained investment; Initiation of penalty proceedings

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.2150/PUN/2014 / ASSESSMENT YEAR : 2008-09 JITENDRA RAMESH DESKMUKH, MSK & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, RIVERSIDE BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001 PAN :AELPD3258E . /APPELLANT VS. ITO, WARD-5(2), PUNE . / RESPONDENT / APPELLANT BY : SHRI NILESH KHANDELWAL / RESPONDENT BY : SHRI MUKESH JHA, JCIT DATE OF HEARING : 13.09.2017 / DATE OF PRONOUNCEMENT: 13.09.2017 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-III, PUNE DATED 02-09-2014 FOR THE ASSESSMENT YEAR 2008-09 IN CONNECTION WITH THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT. 2. BRIEFLY STATED RELEVANT FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL AND DOCTOR BY PROFESSION CARRYING OUT HIS PROFESSION THROUGH A P ROPRIETARY CONCERN NAMED M/S.VAIBHAVI HOSPITAL LOCATED AT HADAPSAR, PUNE. A SSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.8,08,720/-. A O NOTICED THAT THE ASSESSEE SPENT AN AMOUNT OF RS.42,07,517. DURING THE ASSESS MENT PROCEEDINGS, ASSESSEE ITA NO.2150/PUN/2014 JITENDRA R. DESHMUKH 2 COULD ONLY EXPLAIN THE SAID INVESTMENTS ONLY TO THE EXTENT OF RS.5,23,827/-. REGARDING THE BALANCE INVESTMENT/EXPENDITURE OF RS .36,83,690/-, THE AO HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE THAT HE HA D RECEIVED ADVANCES FROM VARIOUS PARTIES FOR PURCHASE OF LAND AND SINCE THE DEAL COULD NOT BE MATERIALIZED, THE ASSESSEE RETURNED THE CASH BACK TO THOSE PARTIE S. THEREFORE, THE AO ADDED THE SAME AS UNEXPLAINED INVESTMENT/EXPENDITURE TO THE T OTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WERE I NITIATED AGAINST THE ASSESSEE FOR CONCEALING THE PARTICULARS OF INCOME AND ACCORDINGL Y LEVIED PENALTY OF RS.12,71,823/-. 3. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE AS SESSEE BRINGING OUR ATTENTION TO THE LEGAL GROUND RAISED IN GROUND NO.2 SUBMITTED THAT THE AOS SATISFACTION AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS SUFFE RS FROM AMBIGUITY/LACK OF CLARITY IN HIS MIND. TO SUBSTANTIATE THE SAME, LD. COUNSEL FO R THE ASSESSEE BROUGHT OUR ATTENTION TO PARA NO.3 OF THE ASSESSMENT AND READ O UT THE CONTENTS OF LAST SUB-PARA WHICH READS AS UNDER : PENALTY PROCEEDINGS ARE INITIATED FOR CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS AS IT IS CLEAR THAT THE ASSE SSEE HAS MADE INVESTMENT/EXPENDITURE OF AN AMOUNT OF RS.36,83,690 /-. 4. FURTHER, BRINGING OUR ATTENTION TO THE NOTICE IS SUED U/S.274 OF THE ACT, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE SAID NOTICE (PAGE 4 OF THE PAPER BOOK) IN PARA 2 THE AO WROTE THE FOLLOWING LINES : 2. . . . . . YOU ARE HEREBY ALLOWED A FURTHER OPPO RTUNITY UPTO 20/06/2011 TO EXPLAIN AS TO WHY PENALTY U/S.271(1)(C) OF THE ACT SHOULD NOT BE LEVIED AGAINST YOU FOR CONCEALMENT/FURNISHING INACCURATE P ARTICULARS OF INCOME. 5. FURTHER, THE LD. COUNSEL FOR THE ASSESSEE BROUGH T OUR NOTICE TO THE PENALTY ORDER DATED 30-06-2011 AND READ OUT THE FOLLOWING L INES FROM PARA NO.4 OF THE PENALTY ORDER WHICH READS AS UNDER : ITA NO.2150/PUN/2014 JITENDRA R. DESHMUKH 3 4.. . . . . . . . IT IS THEREFORE, HELD THAT THE A SSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME . . . . . . . I AM THEREFORE, SATISFIED THAT THIS IS A F IT CASE FOR LEVY OF PENALTY AS PER EXPLANATION 1 TO SEC.271(1)(C) OF THE I.T ACT. 6. ELABORATING HIS ARGUMENTS ON THE ABOVE EXTRACTS, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BY NOT STRIKING THE RELEVAN T LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT, THE AO FAILED TO EXERCISE HIS CL ARITY REGARDING THE SATISFACTION FOR WHICH THE PENALTY IS LEVIABLE. FURTHER, IN THE PEN ALTY ORDER, THE AO LEVIED THE PENALTY BOTH FOR CONCEALING THE PARTICULARS OF INCO ME AND ALSO FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE ALSO RECORDED THE SATISFACTION THAT IT IS A FIT CASE FOR LEVY OF PENALTY AS PER EXPLANATION 1 TO SE CTION 271(1)(C) OF THE I.T. ACT. THUS, THE AMBIGUITY BEING OBVIOUS ON THE FACE OF IT , LD. COUNSEL FOR THE ASSESSEE PRAYED FOR QUASHING THE PENALTY ORDER RELYING ON TH E JUDGMENT OF HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN INC OME TAX APPEAL NO.1154 OF 2014 WITH OTHER INCOME TAX APPEAL NOS. 953 OF 2014, 1097 OF 2014 AND 1226 OF 2014 JUDGMENT DATED 05-01-2017. LD. COUNSEL FOR THE ASSESSEE MENTIONED THAT THE AOS ORDER SUFFERS FROM AMBIGUITY AS TO WHICH LIMB OF THE SAID CLAUSE U/S. 271 (1) IS RIGHTLY INVOKABLE WHEN THE INCOME U/S.10(20) OF THE ACT WAS WRONGLY CLAIMED BY THE ASSESSEE WHEN HE IS NOT ELIGIBLE FOR SUCH CLAIM . HE ALSO RELIED ON THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (359 ITR 565) WHERE THE HONBLE HI GH COURT HELD THAT THE PENALTY IS NOT SUSTAINABLE WHEN THERE IS NO CLEAR SATISFACT ION RECORDED BY THE AO AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS. 7. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE CASE LAWS FILED BEFORE US. AFTER EXAMINING THE ABOVE EXTRACTS ON WHICH THE LD. COUNSEL FOR THE ASSESSEE EMPHASIZED HEAVILY, WE ARE OF THE VIEW THAT, MERELY WRITING PENALTY PROCEEDINGS ARE INITIATED FOR CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS AS IT IS CLEAR THAT THE ASSESSEE ITA NO.2150/PUN/2014 JITENDRA R. DESHMUKH 4 HAS MADE INVESTMENT/EXPENDITURE OF AN AMOUNT OF RS. 36,83,690/- DOES NOT AMOUNT TO SPECIFYING THE RELEVANT LIMB OF SAID CLAU SE (C) OF SECTION 271(1) MANDATORY FOR IMPOSING PENALTY. IN OUR VIEW, SUCH EXPRESSIONS CERTAINLY FALLS SHORT OF THE REQUISITE SATISFACTION. THEREFORE, ON THIS LEGAL ISSUE, AND FOR THE SAID REASONS, WE ARE OF THE VIEW THAT LEGAL GROUND NO.2 RAISED BY THE ASSESSEE SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUND NO.2 BY THE ASSESSEE IS ALLOWED. 8. LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUN D NO.1 AND THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. CONSIDERING TH E RELIEF GRANTED BY US ON THE LEGAL GROUND, WE ARE OF THE OPINION THAT ADJUDICATI ON OF OTHER GROUNDS RAISED BY THE ASSESSEE RELATING TO MERITS BECOME AN ACADEMIC EXER CISE, THEREFORE, THE SAME ARE DISMISSED AS ACADEMIC. ACCORDINGLY, GROUND NOS. 1, 3 AND 4 ARE DISMISSED AS NOT PRESSED/PREMATURE OR GENERAL, AS THE CASE MAY BE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF SEPTEMBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 13 TH SEPTEMBER, 2017. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A) - III, PUNE CIT - III, PUNE , , A BENCH PUNE; / GUARD FILE.