Shri Rustom Sorab Medora, Ahmedabad V. The Income tax Officer,(Intl.Taxn.)-1, Ahmedabad

ITA 2283/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76874 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 10-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A TIRKEY
• Keywords: Initiation of penalty proceedings
• Section: 143(3); 234B

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , ! ' #$ #$ #$ #$ %, ' BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER $./ I.T.A. NO.2283/AHD/2012 ( ( )( ( )( ( )( ( )( / / / / ASSESSMENT YEAR : 2008-09) SHRI RUSTOM SORAB MEDORA 167, SUNRISE PARK THALTEJ ROAD AHMEDABAD / VS. THE INCOME TAX OFFICER (INTL.TAXN)-I AHMEDABAD '* ! $./+, $./ PAN/GIR NO. : AAYPM 2470 J ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) *- 0 / APPELLANT BY : SHRI S.N.SOPARKAR WITH MS.URVASHI SHODHAN, AR ./*- 1 0 / RESPONDENT BY : SHRI A.TIRKEY, SR.DR 2 1 ! / / / / DATE OF HEARING 27/06/2014 34) 1 ! / DATE OF PRONOUNCEMENT 11/07/2014 5 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-GANDHINAGAR (CIT(A) IN SHORT) DATED 27/08/2012 PERTAINING TO ASSESSMENT Y EAR (AY) 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- I. ON LEGALITY : 1. THE LD.CIT(A) HAS ERRED BOTH IN LAW AND IN FAC T IN CONFIRMING THE APPLICABILITY OF SEC.271(1)(C) OF THE ACT ON THE FA CTS OF THE CASE AND THEREBY CONFIRMING ORDER OF ITO LEVYING PENALTY OF RS.12,32,407/-. ITA NO.2283/AHD /2012 SHRI RUSTOM SORAB MEDORA VS. ITO(INTL.TAXN) ASST.YEAR 2008-09 - 2 - 2. YOUR APPELLANT SUBMITS THAT THE ITO HAS NOT SATISFI ED HIMSELF AND HAS NOT RECORDED ANY SATISFACTION OF CONCEALMENT PR IOR TO INITIATION OF PENALTY PROCEEDINGS AND THEREBY HE HAS VIOLATED THE VARY PRINCIPLE OF APPLICABILITY OF SEC.271(1)(C) AND THE REFORE THE LEVY OF PENALTY BE CANCELLED. 3. YOUR APPELLANT FURTHER SUBMITS THAT NEITHER THE OR DER OF ITO LEVYING PENALTY U/S.271(1)(C) NOR THE SHOW CAUSE NO TICE ARE CLEAR AS TO WHETHER YOUR APPELLANT HAS COMMITTED OFFENCE OF CONCEALING INCOME OR FURNISHING INACCURATE PARTICULARS OF SUC H INCOME. IT IS FURTHER SUBMITTED THAT THE VERY SHOW CAUSE NO TICE AND PENALTY ORDER IS VAGUE UNCERTAIN AND CAPABLE OF TWO VIEWS A ND THEREFORE IN VIEW OF BINDING JUDGEMENT OF HON.GUJARAT HIGH COURT IN THE CASE OF NEW SARATHIA ENG.CO. VS. CIT, 282 ITR PAGE 642 YOUR APPELLANT SUBMITS THAT THE LEVY OF PENALTY IS BAD IN LAW AND VOID AND THEREFORE REQUIRES TO BE DELETED. II. ON MERITS : 1. IT IS SUBMITTED BY YOUR APPELLANT THAT EVEN ON MERITS PENALTY U/S.271(1)(C) IS NOT LEVIABLE SINCE ALL NECESSARY D ETAILS AND INFORMATION TO WORK OUT THE TOTAL INCOME AND COMPUTING CAPITAL GAINS/SHORT TERM AND OR LONG TERM WAS VOLUNTARILY SUBMITTED BY THE A PPELLANT IN RETURN OF INCOME AND THEREFORE SEC.271(1)(C) DOES NOT APPL Y. 2. YOUR APPELLANT FURTHER SUBMITS THAT IN RESPONSE TO THE SHOW CAUSE NOTICE OF PENALTY YOUR APPELLANT HAD SUBMITTED EXPL ANATION BASED ON FACTS OF THE CASE RECORD AND IS NOT ITO NOT ACCEPTI NG THE EXPLANATION DOES NOT ENTITLED HIM TO LEVYING PENALTY AS HELD BY VARIOUS AUTHORITIES AND THEREFORE ALSO KINDLY LEVIED U/S.271(1)(C) BE C ANCELLED. IT IS THEREFORE SUBMITTED THAT RELIEFS CLAIMED ABOV E BE ALLOWED AND THE ORDER OF THE ASSESSING OFFICER BE MODIFIED ACCORDIN GLY. YOUR APPELLANT RESERVES RIGHT TO ADD, ALTER OR AMEN D ANY OR ALL GROUNDS OF APPEAL. 2. THE FACTS AS NARRATED IN THE ORDER OF THE LD.CIT (A) ARE AS UNDER:- 3. IN THIS CASE THE ASSESSMENT WAS FINALIZED U/S. 143(3)ON 23/11/2010ON A TOTAL INCOME OF ` 1,13,58,240/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASS ESSEE CLAIMED LONG ITA NO.2283/AHD /2012 SHRI RUSTOM SORAB MEDORA VS. ITO(INTL.TAXN) ASST.YEAR 2008-09 - 3 - TERM CAPITAL GAIN OF RS.28487270/- AS EXEMPT U/S.10 (38) OF THE IT ACT. ON FURTHER VERIFICATION OF DETAILS OF LTCG, THE AO FOUND INCREASE IN SHARES OF M/S.L&T. THE INCREASE IN SHARES OF M/S.L &T WAS BONUS SHARES ALLOTTED BYM/S.L&T WHICH WAS SOLD BY THE ASS ESSEE WITHIN ONE YEAR OF THEIR ALLOTMENT. ON VERIFICATION OF ALL THE DOCUMENT FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CONCLU DED THAT THE BONUS SHARES OF M/S.L&T SOLD BY THE ASSESSEE WITHIN ONE Y EAR WAS SHORT TEM CAPITAL GAIN AND MADE ADDITION OF ` 1,08,77,381/- TO THE TOTAL INCOME DECLARED BY THE ASSESSEE. THE ASSESSEE HAD NOT FILE D APPEAL AGAINST THE ASSESSMENT ORDER. SIMULTANEOUSLY, PENALTY PROCEEDIN GS U/S.271(1)(C) OF THE ACT WERE ALSO INITIATED FOR CONCEALMENT OF INCO ME AND THE SHOW CAUSE NOTICE UNDER SECTION 274 RWS 271(1)(C) OF TH E ACT DATED 23/11/2010 WAS ISSUED AND SERVED UPON THE ASSESSEE. THEREAFTER, DURING THE PENALTY PROCEEDINGS, DETAILED SUBMISSION S WERE MADE BY THE APPELLANT, WHICH WERE CONSIDERED AND REJECTED BY T HE AO. PENALTY @ 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED HAS T HEREAFTER BEEN IMPOSED BY THE AO. 2.1. THE ASSESSEE FILED AN APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER (AO IN SHORT) AGAINST THE IMPOSITION OF PEN ALTY U/S.271(1)(C) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT). THE LD.CIT(A) REJECTED THE SUBMISSION OF THE ASSESSEE A ND DISALLOWED THE APPEAL. AGAINST THE ORDER OF THE LD.CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US. 3. THE LD.SR.COUNSEL FOR THE ASSESSEE SHRI S.N.SOP ARKAR SUBMITTED THAT THE IMPOSITION OF PENALTY IS NOT JUSTIFIED AS THE ASSESSEE HAS DISCLOSED THE MATERIAL INFORMATION BY FILING THE REVISED COMP UTATION OF CAPITAL GAIN. THE ASSESSEE PAID ALL TAXES. HE SUBMITTED THAT THI S IS NOT THE CASE WHERE THE ASSESSEE HAS SUPPRESSED AND CONCEALED ANY INFOR MATION. IN FACT, ALL MATERIAL WERE AVAILABLE WITH THE AO. HE HAS SUBMIT TED THAT THE ASSESSEE HAS ALSO TAKEN AN OBJECTION WITH REGARD TO THE INIT IATION OF PENALTY PROCEEDINGS. IN SUPPORT OF THIS CONTENTION, HE D REW OUR ATTENTION ITA NO.2283/AHD /2012 SHRI RUSTOM SORAB MEDORA VS. ITO(INTL.TAXN) ASST.YEAR 2008-09 - 4 - TOWARDS PARA-6 OF THE ASSESSMENT ORDER. HE PLACED RELIANCE ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. WHITEFORD INDIA LTD. REPORTED AT (2013) 38 TAXMANN. COM 15 (GUJ.). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENT RELIED UPON BY THE LD.SR.C OUNSEL FOR THE ASSESSEE. WE FIND THAT DURING THE COURSE OF PENALTY PROCEEDIN GS U/S.271(1)(C) OF THE ACT, THE AO VIDE PARA-6 OF HIS ORDER HAS DIRECT ED AS UNDER:- 6. ASSESSED UNDER SECTION 143(3) OF THE I.T. ACT . ISSUE DEMAND NOTICE AND CHALLAN ACCORDINGLY. CHARGE INTEREST U/S.234A , 234B & 234C OF THE ACT AS APPLICABLE, AS PER LAW. ISSUE PENALTY N OTICE U/S.274 R.W.S.271(1)(C) OF THE ACT FOR FURNISHING OF INACCU RATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME AS DISCUSSED ABOVE. I SSUE DEMAND NOTICE AND CHALLAN ACCORDINGLY. 4.1. THE HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS. WHITEFORD INDIA LTD.(SUPRA) HAS OBSERVED AS UNDER:- 4. HAVING HEARD SHRI VARUN PATEL, LEARNED ADVOCATE APPEARING ON BEHALF OF THE APPELLANT AND CONSIDERING THE OBSERVA TIONS MADE BY THE ASSESSING OFFICER, WHILE PASSING THE ORDER OF PENAL TY, IT IS NOT IN DISPUTE AND/OR CANNOT BE DISPUTED THAT THERE WAS NO CLEAR F INDING BY THE ASSESSING OFFICER WHETHER THE ASSESSEE WAS GUILTY O F CONCEALING THE INCOME OR FURNISHING INACCURATE PARTICULARS OF THE INCOME. WHILE CONSIDERING THE SIMILAR SITUATION, THE DIVISION BEN CH IN THE CASE OF MANU ENGG. WORKS (SUPRA) HAS OBSERVED AND HELD AS U NDER; 'WE FIND FROM THE ORDER OF THE INSPECTING ASSISTANT COMMISSIONER, IN THE PENALTY PROCEEDINGS, THAT IS, THE FINAL CONCLUS ION AS EXPRESSED IN PARA. 4 OF THE ORDER; I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR T HAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME'. NOW, THE LA NGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORD ER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI-CRIMINAL CASE, BUT IT WAS ITA NO.2283/AHD /2012 SHRI RUSTOM SORAB MEDORA VS. ITO(INTL.TAXN) ASST.YEAR 2008-09 - 5 - INCUMBENT UPON THE INSPECTING ASSISTANT COMMISSIONE R TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMEN T OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF S UCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR-CUT F INDING WAS REACHED BY THE INSPECTING ASSISTANT COMMISSIONER AND, ON TH AT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE INSPECTING ASSIS TANT COMMISSIONER WAS LIABLE TO BE STRUCK DOWN.' 4.1 SIMILAR VIEW HAS BEEN SUBSEQUENTLY EXPRESSED BY ANOTHER DIVISION BENCH IN THE CASE OF NEW SORATHIA ENGINEERING CO. ( SUPRA). CONSIDERING THE RATIO LAID DOWN BY THIS COURT IN TH E AFORESAID TWO DECISIONS AND THE FACTS OF THE CASE ON HAND, MORE P ARTICULARLY, WHEN IT IS OBSERVED THAT THERE WAS NO CLEAR FINDING BY THE ASS ESSING OFFICER WHETHER THE ASSESSEE IS GUILTY OF CONCEALING THE IN COME AND/OR FURNISHING INACCURATE PARTICULARS OF THE INCOME AND THE LEARNED INCOME TAX APPELLATE TRIBUNAL HAS SET ASIDE THE ORDER PASS ED BY THE CIT(A) CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICE R IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, IT CANNOT BE SA ID THAT THE INCOME TAX APPELLATE TRIBUNAL HAS COMMITTED ANY ERROR. 4.2 RELIANCE PLACED UPON SECTION 271 (1)(B), WHICH HAS BEEN INSERTED BY THE FINDING OF THE FINANCE ACT, 2005 WITH EFFECT FR OM 01/04/2006 IS NEITHER HERE NOR THERE. STILL THE REQUIREMENT WHILE IMPOSING THE PENALTY UNDER SECTION 271(1)(C) ARE REQUIRED TO BE COMPLIED WITH. IT CANNOT BE DISPUTED THAT WHILE IMPOSING THE PENALTY UNDER SECT ION 271(1)(C) OF THE ACT, TWO CONDITIONS ARE REQUIRED TO BE SATISFIED I. E. (I) THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME (II) THE AS SESSEE HAS FURNISHED INCORRECT PARTICULARS OF SUCH INCOME. AS HELD BY TH E DIVISION BENCH IN THE CASE OF MANU ENGINEERING WORKS (SUPRA) THE ASSE SSING OFFICER IS REQUIRED TO GIVE CLEAR FINDING WHETHER THE ASSESSEE IS GUILTY OF CONCEALING THE INCOME AND/OR FURNISHING INCORRECT P ARTICULARS OF INCOME. 4.2. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. WHITEFORD INDIA LTD.(SUPRA) AND THE COUPLED WITH FACT THAT THE ASSESSEE HAS OFFERED GAIN ARISING OU T OF BONUS SHARES AS CAPITAL GAIN AND PAID TAX ON THE SAME, WE FIND F ORCE IN THE CONTENTION OF THE LD.SR.COUNSEL FOR THE ASSESSEE THAT HAD THE ASS ESSEE WAITED FOR MORE ITA NO.2283/AHD /2012 SHRI RUSTOM SORAB MEDORA VS. ITO(INTL.TAXN) ASST.YEAR 2008-09 - 6 - TIME TO TRANSFER THE BONUS SHARES THERE WOULD HAVE BEEN A LONG TERM CAPITAL GAIN WHICH WAS EXEMPT AT THAT POINT OF TIME . THEREFORE, THERE WAS NO REASON FOR THE ASSESSEE TO EVADE TAX. UNDER THE SE FACTS, WE ARE OF THE OPINION THAT THE AUTHORITIES BELOW WERE NOT JUSTIFI ED IN IMPOSING THE PENALTY AND CONFIRMING THE SAME. MOREOVER, THE PEN ALTY NOTICE WAS ISSUED BY THE AO IS ALSO DEFECTIVE IN VIEW OF THE R ATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. WHITEFORD INDIA LTD.(SUPRA). THEREFORE, GROUNDS RAISED BY THE ASSE SSEE ARE ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( ) ( %) ! ' ' ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11/ 07 /2014 8.., .../ T.C. NAIR, SR. PS 5 1 .9 : 9) 5 1 .9 : 9) 5 1 .9 : 9) 5 1 .9 : 9)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. $$ ; / CONCERNED CIT 4. ;() / THE CIT(A)-GANDHINAGAR 5. 9%< . , , / DR, ITAT, AHMEDABAD 6. <=( >2 / GUARD FILE. 5 5 5 5 / BY ORDER, /9 . //TRUE COPY// ? ?? ?/ // / $+ $+ $+ $+ ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD