Kothari Rajendra Bansilal, Ahmednagar V. Income-tax Officer,

ITA 2187/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4837 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHAI
• Keywords: Unexplained cash credit; Condonation of delay
• Section: 68

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. 2187/PUN/2016 '% & '& / ASSESSMENT YEAR : 2007-08 KOTHARI RAJENDRA BANSILAL, PROP. OF R.K. ENGINEERS, L-219, MIDC, NAGAR, AHMEDNAGAR-414001 PAN : AFAPK1833Q ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD-1, AHMEDNAGAR. / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI SANJEEV GHAI / DATE OF HEARING : 18.10.2018 / DATE OF PRONOUNCEMENT : 24.10.2018 ( / ORDER PER D. KARUNAKARA RAO, AM : THIS IS THE APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF CIT(APPEALS)-2, PUNE DATED 09.05.2016 FOR THE A.Y.2007-08. 2. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED HERE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DISMISS ING THE APPEAL FOR 2 ITA NO.2187/PUN/2016 A.Y.2007-08 THE REASON OF NON-ATTENDANCE WITHOUT REALIZING THE FACT THAT ASSESSEE HAS NOT RECEIVED THE NOTICES OF THE HEARING, THE OR DER MAY KINDLY BE RESTORED TO FILE OF CIT(A) FOR RE-CONSIDERATION OF APPEAL ON MERIT. WITHOUT PREJUDICE TO ABOVE GROUND FOLLOWINGS GROUND S ARE TAKEN ON MERIT: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LOWER AUTHORITIES HAVE ERRED IN LEVYING THE PENALTY OF RS.2,91,805/- BY INVOKING PROVISIONS OF SECTION 271(1)(C) OF THE INC OME TAX ACT, 1961 BY REJECTING APPELLANTS CONTENTION IN THIS REGARD. 3. CONDONATION OF DELAY : THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS DELAY OF 2 DAYS IN FILING THIS APPEAL. THE DELAY IS OCCURRE D DUE TO SOME UNAVOIDABLE CIRCUMSTANCES AND THEREFORE, THE INSTAN T APPEAL COULD NOT BE FILED WITH THE PRESCRIBED TIME LIMIT OF 60 DAYS. THEREFORE, T HE LD. COUNSEL OF ASSESSEE PRAYED FOR ADMITTING THE APPEAL FOR ADJUDICATIO N CONDONING THE DELAY IN FILING THE APPEAL. 4. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE SHOR T SPAN OF DELAY OF 2 DAYS, WE ARE OF THE OPINION THAT THE DELAY OF 2 DAYS IN FILING APPEAL IS REQUIRED TO BE CONDONED AND TAKEN UP THE APPEAL FOR ADJUDICATION. 5. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CI AND MS COMPONENTS. THE AS SESSEE FILED RETURN OF INCOME ON 29.10.2007 DECLARING TOTAL INCOME OF RS. 9,35,732/-. DURING THE ASSESSMENT PROCEEDINGS U/S.143(3) OF THE ACT, T HE ASSESSING OFFICER ASSESSED THE TOTAL INCOME OF ASSESSEE AT RS.17,32 ,730/- BY MAKING ADDITION OF RS.7,97,500/- U/S.68 OF THE ACT ON ACCOUNT OF UN EXPLAINED CASH CREDITS THE BANK ACCOUNT. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT FOR CONCEALING PARTICULARS WERE SEPARATELY INITIATED. THE ASSE SSING OFFICER LEVIED PENALTY OF RS.2,91,805/- U/S. 271(1)(C) OF THE ACT FOR FURNISHING IN ACCURATE 3 ITA NO.2187/PUN/2016 A.Y.2007-08 PARTICULARS OF INCOME. IN THE FIRST APPELLATE PROCEEDINGS, T HE CIT(A) CONFIRMED THE PENALTY IMPOSED OF RS.2,91,805/-U/S. 271(1)(C) OF THE ACT. 6. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL WITH THE GROUNDS EXTRACTED ABOVE. 7. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REFERRING TO GROUNDS SUBMITTED THAT THIS IS A CASE WHERE THE AO FAILED TO RECORD A LEGALLY SUSTAINABLE SATISFACTION IN THE ASSESSMENT ORDER WHERE TH E PENALTY PROCEEDINGS WERE INITIATED. 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 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 LD. COUNSEL DEMONSTRATED TH AT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER AS WELL AS THE PENALT Y ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. 8. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO/CIT(A). BEFORE THE TRIBUNAL 9. WE HEARD BOTH THE PARTIES ON THIS SPECIFIC LEGAL ISSUE, I.E. RECORDING OF PROPER SATISFACTION BY THE AO. WE PERUSED THE ORDER OF THE AO AND FIND THE SATISFACTION RECORDED BY THE AO FOR INITIATING THE PENALTY P ROCEEDINGS U/S.271(1)(C) OF THE ACT AS WELL AS FOR LEVY OF PENALTY ARE RELE VANT FOR EXTRACTION. THEREFORE, THE SAME IS REPRODUCED AS UNDER: 4 ITA NO.2187/PUN/2016 A.Y.2007-08 EXTRACTION FROM PARA 6 OF THE ASSESSMENT ORDER : 6. IN RESPECT OF THE 42 CREDITS, AGGREGATING TO RS.6,85,000/-, THE ASSESSEE HAS FAILED TO PROVE THAT THE CASH CREDITOR S HAD CAPACITY TO ADVANCE MONIES. IN THE CIRCUMSTANCES, ENTIRE AMOUNT OF RS.7 ,97,000/- IS TREATED AS UNEXPLAINED CASH CREDITS AND TAXED UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) F OR CONCEALING PARTICULARS IN RESPECT OF THIS AMOUNT ARE SEPARATELY INITIATED. 10. FURTHER, WE ALSO PERUSED THE PENALTY ORDER DATED 29 .06.2012 AND FIND THE SATISFACTION RECORDED BY THE AO FOR LEVYING THE PENALT Y U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS U NDER: EXTRACTION FROM THE PENALTY ORDER : 6. IN VIEW OF THE ABOVE, I AM SATISFIED THAT THE AS SESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREBY, CONCEALED HIS INCOME TO THE EXTENT OF RS.7,97,700/-. I , THEREFORE, LEVY A MINIMUM PENALTY WHICH IS 100% OF THE TAX SOUGHT TO BE EVADED UNDER SECTION 271(1)(C) OF THE INCOME TAX AC T, 1961 AMOUNTING TO RS.2,91,805/-. 11. FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INIT IATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO MENTIONED ONE LIMB OF CLA USE (C) OF SECTION 271(1) OF THE ACT I.E. CONCEALMENT OF INCOME. BUT IN THE PENALTY ORDE R, ASSESSING OFFICER LEVIED PENALTY U/S.271(1)(C) OF THE ACT BY MEN TIONING ANOTHER LIMB OF SECTION 271(1)(C) I.E. FURNISHING INACCURATE PAR TICULARS OF INCOME. THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APPLICABILITY OF SPECIFIC LIMB. THEREFORE, WE ARE OF THE OPINION THAT CONSIDERING THE ABOVE REFERRED BINDING JU DGMENTS SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. AO IS UNDER O BLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATION AS WELL A S AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, 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 T O DELETE THE PENALTY. 5 ITA NO.2187/PUN/2016 A.Y.2007-08 ACCORDINGLY, THE LEGAL GROUNDS OF APPEAL RAISED BY THE ASS ESSEE ARE ALLOWED ON TECHNICALITIES . IN VIEW OF THE SAME, WE FIND, ADJUDICATION OF THE MERITS OF PENALTY, BECOME AN ACADEMIC EXERCISE. HENCE, MERITS-LINKED G ROUNDS ARE DISMISSED AS SUCH. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 24 TH DAY OF OCTOBER, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . ! /D. KARUNAKARA RAO) '# $/ JUDICIAL MEMBER % $/ ACCOUNTANT MEMBER % / PUNE; &$ ' / DATED : 24 TH OCTOBER, 2018. SB ( ) *'+, - '+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-2, PUNE. 4. THE PR. CIT-1, PUNE. 5. *+ ## ,- , . ,- , /0 , % / DR, ITAT, A BENCH, PUNE. 6. + 1 23 / GUARD FILE. // TRUE COPY // .$%4 / BY ORDER, # 5 ,0 /PRIVATE SECRETARY . ,- , % / ITAT, PUNE.