Pramod Koti, Pune V. Deputy Commissioner of Income-tax, Circle - 3, Pune

ITA 2222/PUN/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8164 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 22-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: V JAYARAMAN
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 143(3); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 2222 /PUN/201 7 / ASSESSMENT YEAR : 20 1 3 - 14 PRAMOD KOTI, 762, DECCAN GYMKHANA, PUNE 411004 PAN : ABFPK3558D ....... / APPELLANT / V/S. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3, PUNE / RESPONDENT ASSESSEE BY : SHRI V. JAYARAMAN REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 1 5 - 01 - 2020 / DATE OF PRONOUNCEMENT : 20 - 01 - 20 20 / ORDER PER S.S. VISWANETHRA RAVI, JM : TH IS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 29 - 05 - 2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 , PUNE [CIT(A)] FOR ASSESSMENT YEAR 201 3 - 14 WHEREIN HE CONFIRMED THE PENALTY IMPOSED BY THE AO U/S. 271(1)(C) OF THE ACT. 2 ITA NO. 2222/PUN/2017, A.Y. 2013 - 14 2. SHRI V. JAYARAMAN, THE LD. AR SUBMITTED THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN RUNNING A RESTAURANT AND BAR UNDER THE NAME AND STYLE OF HOTEL SAROVAR. THE ASSESSING OFFICER WHILE RECORDING SATISFACTION FOR INITIATING PENALTY HAS INVOKED BOTH THE LIMBS OF SECTION 271(1)(C) I.E. CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME , BUT HOWEVER, THE ASSESSING OFFICER LEVIED PENALTY FOR CONCEALED PARTICULARS OF HIS INCOME . THE ASSESSING OFFICER AT THE TIME OF RECORDING SATISFAC TION WAS NOT CLEAR ABOUT PRECISE CHARGE TO BE INVOKED FOR INITIATING PENALTY PROCEEDINGS. THE LD. AR SUBMITTED THAT IN THE LIGHT OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SAMSON PERINCHERY REPORTED AS 392 ITR 4 AND THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON & GINNING FACTORY REPORTED AS 359 ITR 565, PENALTY PROCEEDINGS ARE LIABLE TO BE QUASHED. 3. SHRI PANKAJ GARG, THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER WHILE PASSING ORDER U/S. 271(1)(C) HAS MENTIONED SPECIFIC CHARGE I.E. CONCEALED PARTICULARS OF HIS INCOME AND THE SAME CHARGE HAS ALSO BEEN MENTIONED WHILE RECORDING SATISFACTION DURING ASSESSMENT PROCEEDINGS. THUS, THERE WAS CONSISTENC Y IN THE MIND OF ASSESSING OFFICER WITH REGARD TO CHARGE FOR LEVY OF PENALTY. 4. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IN APPEAL HAS ASSAILED LEVY OF PENALTY ON LEGAL ISSUE OF DEFECT IN RECORDING SATISFACTION FOR INITIATING PENALTY PROCEEDINGS. A PERUSAL OF ASSESSMENT ORDER DATED 21 - 03 - 2016 PASSED U/S. 143(3) OF THE ACT REVEAL THAT THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) 3 ITA NO. 2222/PUN/2017, A.Y. 2013 - 14 OF THE ACT. WHILE RECORDING SATISFACTION FOR INITIATING PENAL TY, THE ASSESSING OFFICER HAS OBSERVED : HENCE, PENALTY PROCEEDINGS U/S. 271(1)(C) ARE HEREBY INITIATED FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. 5 . THEREAFTER, WHILE CONCLUDING THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS AGAIN MADE REFERENCE TO INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT READS AS UNDER : 08. HENCE, IN VIEW OF THE FACTS AND LEGAL POSITION DISCUSSED ABOVE, I AM SATISFIED THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF HI S INCOME TO THE EXTENT OF RS.1,50,00,000/ - AND THUS, IT IS A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C). THEREFORE, PENALTY OF RS.46,35,000/ - BEING 100% OF THE TAX SOUGHT TO BE EVADED IS HEREBY LEVIED U/S. 271(1)(C) OF THE I.T. ACT, 1961. 6 . A BARE PERUSAL OF SATISFACTION RECORDED BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS SHOWS THAT THE ASSESSING OFFICER WAS NOT CLEAR; WHETHER THE PENALTY PROCEEDINGS U/S. 271(1)(C) ARE TO BE INITIATED ON THE CHARGE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN PARA 4 OF THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS MENTIONED BOTH THE CHARGES . 7. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SAMSON PERINCHERY (SUPRA) HAS HELD THAT WH ERE SATISFACTION HAS BEEN RECORDED ON ONE GROUND AND PENALTY IS LEVIED ON ANOTHER, SUCH PENALTY ORDER BAD IN LAW. THE RELEVANT EXTRACT OF THE ORDER OF HONBLE HIGH COURT READS AS UNDER : 6. THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE O F THE DECISION OF THE SUPREME COURT IN ASHOK PAI V/S. CIT 292 ITR 11 [RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY (SUPRA)] WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C) OF THE ACT, CARRY DIFFERENT MEANINGS/ CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT P ENALTY BEING IMPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, 4 ITA NO. 2222/PUN/2017, A.Y. 2013 - 14 THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WH ICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE . 8 . THUS, NOT MENTIONING OF SPECIFIC CHARGE WOULD LEAD TO AMBIGUITY IN RECORDING OF SATISFACTION FOR INITIATING PENALTY PROCEEDINGS. THIS WOULD RENDER PENALTY ORDER BAD IN LAW AND AS SUCH THE SAME IS LIABLE TO BE QUASHED. WE HOLD AND DIRECT ACCORDINGLY. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2020 . SD/ - SD/ - (ANIL CHATURVEDI) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBE R / PUNE; / DATED : 20 TH JANUARY, 20 20 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 3 , PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 2 , PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. // // TRU E COPY // / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE