Shri Sajiv Vohra, Gurdaspur V. The Income-tax Officer, Gurdaspur

ITA 231/ASR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95047 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-09-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 08-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TARSEM LAL
• Assessee Lawyers: P N ARORA
• Keywords: Opportunity of being heard
• Section: 147; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH ; AMRITSAR (SMC) . BEFORE SH. A.D. JAIN, JUDICIAL MEMEBR ITA NO.231(ASR)/2014 ASSESSMENT YEAR:2000-01 PAN:AAKPV9801G SH. SAJIV VOHRA, PROP. VS. INCOME TAX OFFICER, M/S. VOHRA MEDICAL STORE, GURDASPUR. GURDASPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. P.N.ARORA, ADV. RESPONDENT BY: SH. TARSEM LAL, DR DATE OF HEARING : 15/09/2015 DATE OF PRONOUNCEMENT: 13/11/2015 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2000-01 AGAINST THE CONFIRMATION OF LEVY OF CONCEALMENT PEN ALTY OF RS.96,298/-. 2. THERE IS DELAY OF ONE DAY IN FILING THE APPEAL. ON HEARING BOTH THE PARTIES, THIS DELAY IS CONDONED. 3. THE FACTS OF THE CASE, AS AVAILABLE FROM THE REC ORD, ARE THAT THE ASSESSEE HAD BEEN FILING RETURNS AND SHOWING INCO ME IN THE HANDS OF HUF. HOWEVER, THE DEPARTMENT HAD BEEN ASSESSING IN COME IN HIS HANDS IN INDIVIDUAL STATUS. PROTECTIVE ASSESSMENTS WERE B EING MADE IN THE STATUS OF HUF. THE CLAIM OF STATUS OF HUF WAS REJEC TED UPTO THE STAGE OF THE HONBLE HIGH COURT. THE INCOME ASSESSED ON PRO TECTIVE BASIS WAS ITA NO.231(ASR)/2014 2 DELETED BY THE AO. THUS, THE INCOME SHOWN IN THE CA PACITY OF HUF GOT TO BE ASSESSED AS INCOME EARNED IN THE STATUS OF INDI VIDUAL. 4. FOR THE YEAR UNDER CONSIDERATION, VIDE ORDER DAT ED 22.03.2006 PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.5,92,82 6/- IN THE STATUS OF INDIVIDUAL. THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHICH WAS LATER WITHDRAWN. 5. IN THE ASSESSMENT ORDER, THE AO OBSERVED, INTER- ALIA, AS FOLLOWS: PENALTY NOTICE U/S 271(1)(C) FOR CONCEALMENT OF INC OME HAS BEEN ISSUED SEPARATELY AS I AM SATISFIED THAT BY FAILING TO DISCLOSE THE TRUE AND CORRECT PARTICULARS OF INCOME THE ASSESSEE HAS UNDERSTATED THE INCOME TO THE TUNE OF RS.2,92,063/- AS DISCUSSE D IN THE ASSESSMENT ORDER. 6. IN THE PENALTY ORDER, THE AO OBSERVED THAT THE A SSESSEE HAD, IN THE FACTS OF THE CASE, FAILED TO FILE RETURN OF INCOME IN THE CORRECT STATUS EARLIER AND HAD NOW CONCEDED THAT THE INCOME WAS AS SESSABLE IN HIS INDIVIDUAL STATUS; THAT THEREFORE, HE WAS SATISFIED THAT THE ASSESSEE HAD NOT FURNISHED THE TRUE PARTICULARS OF HIS INCOME. IT WAS IN THIS MANER, THAT THE PENALTY IN QUESTION WAS IMPOSED ON THE ASS ESSEE. 7. THE LD. CIT(A) CONFIRMED THE LEVY OF PENALTY. 8. THE LD. COUNSEL FOR THE ASSESSEE HAS, BEFORE ME, INTER-ALIA, RAISED THE LEGAL OBJECTION THAT THE PENALTY IS NOT SUSTAIN ABLE, SINCE THE AO ISSUED NOTICE FOR CONCEALMENT OF INCOME U/S 271(1)( C) OF THE ACT, WHEREAS THE PENALTY, WAS LEVIED BY THE AO FOR NOT FURNISHI NG TRUE PARTICULARS OF INCOME; THAT WHILE INITIATING THE PENALTY, IN THE A SSESSMENT ORDER, TOO, THE AO OBSERVED THAT PENALTY NOTICE U/S 271(1)(C) F OR CONCEALMENT OF INCOME HAD BEEN ISSUED SEPARATELY. IT HAS BEEN CONT ENDED THAT THE AO HAS TO DECIDE AND TO CHOOSE WHETHER THERE IS DEFAUL T OF CONCEALMENT OF ITA NO.231(ASR)/2014 3 INCOME OR OF FURNISHING OR OF FURNISHING INACCURATE PARTICULARS OF INCOME. THIS HAS NOT BEEN DONE IN THE PRESENT CASE. 9. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE HAS SOUGHT TO PLACE RELIANCE ON THE FOLLOWING DECISIONS: I) M/S. SOMA TRG JOINT VENTURE VS. ITO WARD 1(3) , ITA NOS. 428 & 429(ASR)/2012, ORDER DATED 19.03.2013 (ITAT, AMRITSAR BENCH). II) SH. JAYESH R.KUMANI VS. ITO, ITA NO.453(ASR)/ 2004, ORDER DATED 29.05.2009 ( ITAT, AMRITSAR BENCH). III) SH. ADESH SINGH VS. ITO, ITA NO. 522(ASR)/2009 O RDER DATED 29.01.2010 (ITAT AMRITSAR BENCH). IV) M/S. TS-SA ASSOCIATES VS. DCIT, ITA NO.519(ASR)/2 013, ORDER DATED 21.11.2013 (ITAT AMRITSAR BENCH). V) SH.SAJIV VOHRA VS. ITO, ITA NOS. 229,229,230,232 & 234(ASR)/2014, ORDER DATED 30.05.2014 ( ITAT AMRITS AR BENCH). VI) NEW SORATHIA ENGINEERING CO. VS. CIT, 282 ITR 642 (GUJ.) VII) CIT VS. LAKHDHIR LALJI, 85 ITR 77 (GUJ.) VIII) CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) IX) CIT VS. BAL KISHAN DHAWAN HUF, 86 CCH 065 (P&H) X) CIT VS. THE SHAHBAD CO-OP. SUGAR MILLS LTD., 322 ITR 73 (P&H). 10. IT HAS FURTHER BEEN CONTENDED THAT IN THE CASE OF THE ASSESSEE ITSELF, THE TRIBUNAL HAS, VIDE ORDER DATED 30.05.2 014, FOR THE ASSESSMENT YEARS1997-98 TO 1999-2000 AND 2001-02 TO 2003-04, C ANCELLED THE PENALTY IN SIMILAR CIRCUMSTANCES. ITA NO.231(ASR)/2014 4 11. ON THE OTHER HAND, THE LD. DR PLACED STRONG REL IANCE ON THE ORDERS OF THE AUTHORITIES BELOW. WRITTEN SUBMISSIONS HAVE ALSO BEEN FILED. IT HAS BEEN CONTENDED THAT THE LANGUAGE USED BY THE AO SHO WS THAT THE AO WAS SATISFIED ABOUT THE ASSESSEE HAVING FURNISHED INACC URATE PARTICULARS OF INCOME; THAT WHILE RECORDING HIS SATISFACTION, THE AO OBSERVED THAT HE WAS SATISFIED THAT BY FAILING TO DISCLOSE THE TRUE AND CORRECT PARTICULARS OF INCOME, THE ASSESSEE HAD UNDERSTATED THE INCOME TO THE TUNE OF RS.2,92,063/-, AS DISCUSSED IN THE ASSESSMENT ORDER ; THAT THIS SATISFACTION IS COMPLETE AND COGENT; THAT THIS SATI SFACTION MAKES IT CRYSTAL CLEAR THAT THE PENALTY PROCEEDINGS HAD BEEN INITIAT ED ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE; THAT THE SATISFACTION OF THE AO IS PRECEDED BY A LINE. I.E., PENALTY NOTICE U/S 271(1)(C) FOR CONCEALMENT OF INCOME HAS BEEN ISSUED SEPARATELY AS, THAT THIS LINE IS CLEARLY REDUNDANT AS THE SATISFACTION PART OF THE AO FLOWS FROM I AM SATISFIED; THAT THE AOS MENTIONING AS DISCUSSED IN THE ASSESSMENT ORDER CARRIES THE WHOLE CHARGE AND THUS , FOR ALL INTENTS AND PURPOSES IT BECOMES CLEAR THAT THE WORDS PENALTY N OTICE U/S 271(1)(C) FOR CONCEALMENT OF INCOME HAS BEEN ISSUED SEPARATELY AS IS CLEARLY REDUNDANT, MEANINGLESS AND SUPERFLUOUS; THAT NONET HELESS, THIS INNOCUOUS LINE IS COVERED BY THE PROVISIONS OF SECT ION 292B OF THE ACT, AS PER WHICH NO ASSESSMENT OR PROCEEDINGS WOULD BE INV ALIDATED MERELY BY REASON OF ANY, INTER-ALIA, DEFECT IN SUCH ASSESSME NT WHERE THE ASSESSMENT OR PROCEEDINGS ARE IN SUBSTANCE AND EFF ECT IN CONFORMITY WITH OR ACCORDING TO INTENT AND PURPOSE OF THE ACT; THAT THE PENALTY HAS BEEN EXPRESSLY LEVIED FOR FURNISHING INACCURATE PA RTICULARS OF INCOME, THAT THIS SMALL DEFECT IS EFFECTIVELY COVERED BY SE CTION 292B OF THE ACT, AND THAT AS SUCH, NO DECISION RELIED ON BY THE ASSE SSEE HAS ANY BEARING ON THE FACTS OF THE CASE. 12. HAVING HEARD THE PARTIES ON THIS ISSUE, I FIND THAT UNDER SIMILAR CIRCUMSTANCES, FOR THE ASSESSMENT YEARS 1997-98 TO 1999-2000 AND ITA NO.231(ASR)/2014 5 2001-02 TO 2003-04, THE TRIBUNAL, VIDE ORDER DATED 30.05.2014 (COPY AT APB 39 TO 46) HAS CANCELLED THE LEVY OF PENALTY U/ S 271(1)(C) OF THE ACT ON THE ASSESSEE UNDER EXACTLY SIMILAR FACTS AND CIR CUMSTANCES. FOR THOSE YEARS, THE AO HAD INITIATED THE PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME U/S 271(1)(C) OF THE ACT, WHEREAS, THE PENAL TY WAS LEVIED FOR NOT FURNISHING TRUE PARTICULARS OF INCOME. THE TRIBUNAL DELETED THE PENALTY. THIS ORDER HAS NOT BEEN SHOWN TO HAVE BEEN UPSET O R STAYED ON APPEAL. BEFORE ME, THE FACTS FOR THE YEAR UNDER CONSIDERAT ION HAVE NOT BEEN SHOWN TO BE ANY DIFFERENT FROM THOSE IN THE AFORESA ID ASSESSMENT YEARS. THE TRIBUNAL HAS FOLLOWED THE DECISION OF THE HONB LE GUJRAT HIGH COURT IN THE CASE OF CIT VS. LAKHDHIR LALJI (SUPRA), WH EREIN IT HAS BEEN HELD AS FOLLOWS: THAT THE PENALTY PROCEEDINGS HAD BEEN COMMENCED AG AINST THE ASSESSEE ON A PARTICULAR FOOTING VIZ CONCEALING OF PARTICULARS OF INCOME, BUT THE FINAL CONCLUSION FOR LEVYING THE PE NALTY WAS BASED ON A DIFFERENT FOOTING ALTOGETHER VIZ. ON THE FOOTING OF FURNISHING INACCURATE PARTICULARS OF INCOME. UNDER THE CIRCUMS TANCES, IT COULD NOT BE SAID THAT THE ASSESSEE HAD BEEN GIVEN A REAS ONABLE OPPORTUNITY OF BEING HEARD BEFORE THE ORDER IMPOSING THE PENALT Y WAS PASSED. THE VERY BASIS FOR PENALTY PROCEEDINGS AGAINST THE ASSE SSEE INITIATED BY THE INCOME-TAX OFFICER, DISAPPEARED WHEN THE APPELL ATE ASSISTANT COMMISSIONER HELD THAT THERE WAS NO SUPPRESSION OF INCOME OF THE ASSESSEE. THE CONCLUSION OF THE TRIBUNAL THAT THE I NSPECTING ASSISTANT COMMISSIONER HAD NO JURISDICTION TO IMPOSE A PENALT Y U/S 271(1)(C) FOR CONCEALMENT WAS CORRECT. 13. THE OTHER CASE LAWS RELIED ON BY THE ASSESSEE A RE ALSO TO THE SAME EFFECT AND NO DECISION TO THE CONTRARY HAS BEEN PLA CED BEFORE ME. I ALSO DO NOT FIND ANY SUBSTANCE IN THE ARGUMENT RAISED BY THE DEPARTMENT TO THE EFFECT THAT A PART OF THE OBSERVATION/SATISFACT ION OF THE AO IS REDUNDANT AND THE SUCCEEDING PART THEREOF IS THE O NLY RELEVANT AND EFFECTIVE SATISFACTION OF THE AO. AS ARGUED BY THE DEPARTMENT ITSELF, THE AO HAS SPECIFICALLY STATED THAT THE PENALTY NOTICE U/S 271(1)(C) FOR ITA NO.231(ASR)/2014 6 CONCEALMENT OF INCOME HAS BEEN ISSUED SEPARATELY. I T HAS NOT BEEN DISPUTED THAT THE SAID NOTICE FOR CONCEALMENT OF I NCOME IN VIEW OF CIT VS. LAKHDHIR LALJI (SUPRA), TO REITERATE, THE AO H AS TO BE VERY CLEAR ABOUT THE CHARGE OF INITIATION OF PENALTY AND THAT OF LEV Y THEREOF. 14. FURTHER, THE LD. DR IS ALSO NOT CORRECT IN SEEK ING TO TAKE SHELTER OF THE PROVISIONS OF SEC. 292B OF THE ACT. THAT SECTIO N DEALS WITH THE VALIDITY OF THE PROCEEDINGS AND ASSESSMENT, ETC., AS DELINEA TED THEREIN DESPITE EXISTENCE OF MISTAKE, DEFECT OR OMISSION THEREIN. H OWEVER, IT CANNOT BE GAINSAID THAT THE DEFECT UNDER CONSIDERATION HEREIN IS NEITHER JUST A MISTAKE, NOR A DEFECT SIMPLICITOR, OR EVEN A MERE OMISSION. IT IS A JURISDICTIONAL DEFECT. IT IS THE SATISFACTION OF TH E AO WITH REGARD TO THE ELEMENT/ELEMENTS CONTAINED IN THE PROVISIONS OF SEC TION 271(1)(C) OF THE ACT, WHICH EMPOWERS THE AO TO INITIATE PENALTY PROC EEDINGS. THIS JURISDICTIONAL ASPECT, THEREFORE, GOES TO THE VERY ROOT OF THE LEVY OF PENALTY. THEREFORE, SUCH A DEFECT IS INCURABLE, MUC H LESS UNDER THE PROVISIONS OF SEC. 292B OF THE ACT. THE ARGUMENT OF THE DEPARTMENT IN THIS REGARD IS, THEREFORE, ALSO REJECTED. 15. IN VIEW OF THE ABOVE, THIS GRIEVANCE OF THE ASS ESSEE IS ACCEPTED AND ACCORDINGLY, THE LEVY OF PENALTY IS CANCELLED ON T HIS LONE SCORE. THAT BEING SO, NOTHING ELSE REMAINS TO BE ADJUDICATED. A CCORDINGLY, THE GRIEVANCE OF THE ASSESSEE IS ACCEPTED AND THE PENAL TY IS DELETED. 16. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13TH NO V., 2015 SD/- (A.D. JAIN) JUDICIAL MEMBER /SKR/ DATED: 13/11/2015 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SHRI SAJIV VOHRA, GURDASPUR. 2. THE ITO, GURDASPUR. ITA NO.231(ASR)/2014 7 3. THE CIT(A), AMRITSAR 4. THE CIT, AMRITSAR. 5. THE SR DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR)