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

ITA 232/ASR/2014

• Counselvise Citation: 23220914 RSA 2014
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2001-2002
• Appeal Filed On: 08-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Opportunity of being heard; Principle of natural justice; Bonafide belief; Initiation of penalty proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (SMC) BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER SL.NO. ITA NO. ASSESSMENT YEAR 1. 228(ASR)/2014 1997-98 2. 229(ASR)/2014 1998-99 3. 230(ASR)/2014 1999-2000 4. 232(ASR)/2014 2001-02 5. 233(ASR)/2014 2002-03 6. 234(ASR)/2014 2003-04 SH.SAJIV VOHRA, PROP. VS. INCOME TAX OFFICER, M/S. VOHRA MEDICAL STORE, GURDASPUR. BATALA ROAD, GURDASPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.P.N.ARORA, ADVOCATE RESPONDENT BY:SH.TARSEM LAL, DR DATE OF HEARING: 28/05/2014 DATE OF PRONOUNCEMENT:30/05/2014 ORDER THE ASSESSEE HAS FILED THE PRESENT SIX APPEALS AG AINST THE COMMON ORDER OF CIT(A), AMRITSAR, DATED 04.10.2013 FOR TH E ASSESSMENT YEARS 1997- 98 TO 2003-04. AS THE ISSUE INVOLVED IN ALL THE APP EALS IS IDENTICAL, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS. 228 TO 230 & 232 TO 234 (ASR)/2014 2 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.2 28(ASR)/2014 ARE AS UNDER, WHICH ARE SIMILAR IN OTHER APPEALS OF THE AS SESSEE, EXCEPT VARIATION IN AMOUNTS: 1. THAT THE ORDER PASSED BY THE ASSESSING OFFICER THEREBY LEVYING A PENALTY OF RS.94,840/- UNDER SECTION 271(1)(C) OF THE INCOME- TAX ACT, 1961, AS WELL AS THE ORDER OF THE LD. CIT( APPEALS), THEREBY CONFIRMING THE PENALTY ARE BOTH AGAINST THE FACTS OF THE CASE AND UNTENABLE IN LAW. 2. THAT THE ASSESSING OFFICER AS WELL AS THE LD. CI T(APPEALS) DID NOT APPRECIATE THAT ALL THE MATERIAL FACTS WERE DIS CLOSED AT THE TIME OF FILING THE RETURN. SIMILARLY, THE LD. CIT(A ) HAS GROSSLY ERRED IN CONFIRMING THE ORDER OF THE A.O. 3. THAT THE LD. CIT(A) DID NOT APPRECIATE THAT THER E WAS NO DEFAULT UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 . THAT THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT THE INC OME BELONGS TO THE HUF STATES OF THE ASSESSEE AND THE ASSESSEE CONTESTED THIS POINT BEFORE THE APPELLATE AUTHORITIES INCLUDI NG PUNJAB & HARYANA HIGH COURT. HOWEVER, THE PUNJAB & HARYANA H IGH COURT DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AS THE APPEALS WERE FILED BY THE ASSESSEE IN HIS HUF STATU S BEFORE THE HIGH COURT. 4. THAT THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT TOTAL INCOMES WAS DISCLOSED THOUGH THERE WAS DIFFERENCE O F OPINION ABOUT THE STATUS OF THE ASSESSEE. THUS, THE PENALTY ORDER IS BAD IN LAW AND THE PENALTY LEVIED BY THE AO AND CONFIRM ED BY THE LD. CIT(A) MAY BE CANCELLED AS THE INCOME WAS DULY DISCLOSED. 5. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THIS CASE DOES NOT FALL WITHIN THE MISCHIEF OF SECTION 271(1)(C) O F THE INCOME- TAX ACT, 1961 AND THE PENALTY ORDER IS BAD IN LAW A ND THE SAME MAY BE CANCELLED. 6. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THE ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS ARE QUITE ITA NOS. 228 TO 230 & 232 TO 234 (ASR)/2014 3 SEPARATE AND DISTINCT AND THE PENALTY PROCEEDINGS A RE NOT AUTOMATIC. THUS, THE PENALTY ORDER IS BAD IN LAW AN D SIMILARLY, THE LD. CI(A) HAS FAILED TO APPRECIATE THAT ALL THE MATERIAL FACTS WERE DISCLOSED DURING THE COURSE OF ASSESSMENT PROC EEDINGS AND AS SUCH THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRM ING THE PENALTY ORDER. 7. THAT EVEN OTHERWISE, THIS CASE DOES NOT FALL WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT IN ASMUCH AS, ALL THE POINTS WERE DULY DISCLOSED BEFORE THE AO AND THERE WAS D IFFERENCE OF OPINION. ABOUT THE ASSESSABILITY OF THE INCOME, WHE THER IT IS ASSESSABLE IN THE STATUS OF INDIVIDUAL STATUS OR IN THE HUF STATUS, OTHERWISE THERE IS NO CONCEALMENT AT ALL AN D THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ORDER OF THE AO AND THE SAME IS LIABLE TO BE CANCELLED. 8. THAT THERE WAS NO APPLICATION OF MIND WHILE LEVYING THE PENALTY, IN ASMUCH AS, THE PENALTY PROCEEDINGS ARE INITIATED FOR THE CONCEALMENT OF INCOME WHEREAS THE PENALTY WAS L EVIED FOR NOT FURNISHING TRUE PARTICULARS OF INCOME. MOREOVER , NO PROPER OPPORTUNITY OF BEING HEARD WAS ALLOWED AND THE BASI S FOR INITIATION OF PENALTY PROCEEDINGS AND FOR LEVYING T HE PENALTY IS QUITE SEPARATE AND DISTINCT. AS SUCH, THE PENALTY ORDER IS BAD IN LAW AND THE SAME MAY BE CANCELLED. THUS, IT CLEARLY PROVES THAT THERE WAS NO APPLICATION OF MIND WHILE LEVYING THE PENALTY. AS SUCH, THE PENALTY ORDER IS BAD IN LAW AND THE SAME MAY BE CANCELLED. 9. ANY OTHER GROUND OF APPEAL THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL 2. THE FACTS OF THE CASE AS NARRATED BY THE REVENUE AUTHORITIES ARE NOT DISPUTED BY BOTH THE PARTIES, THEREFORE, THERE IS N O NEED TO REPEAT THE SAME FOR THE SAKE OF CONVENIENCE. 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N.ARORA, ADVOCATE SUBMITTED THAT THE A.O. INITIATED PROCEEDI NGS FOR CONCEALMENT OF ITA NOS. 228 TO 230 & 232 TO 234 (ASR)/2014 4 INCOME U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961, WHEREAS THE PENALTY WAS LEVIED BY THE A.O. FOR NOT FURNISHING THE TRUE PART ICULARS OF INCOME. THUS, THE AO HAS VIOLATED THE PRINCIPLES OF NATURAL JUSTI CE AND HAS NEVER ALLOWED ANY REASONABLE AND PROPER OPPORTUNITY OF BEING HEAR D BEFORE LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. HE FURTHER SUBMIT TED THAT IT IS A SETTLED LAW THAT UNDER SIMILAR CIRCUMSTANCES, NO PENALTY CAN BE LEVIED WHEN A NOTICE HAS BEEN ISSUED FOR CONCEALING THE PARTICULARS OF INCOM E WHEREAS THE PENALTY HAS BEEN LEVIED FOR NOT FURNISHING THE TRUE PARTICULARS OF INCOME. IN SUPPORT OF HIS SUBMISSIONS, HE PLACED RELIANCE ON THE FOLLOWIN G DECISIONS: I) M/S. SOMA TRG JOINT VENTURE VS. ITO, WARD 1(3), JAMMU IN ITA NO.428 & 429(ASR)/2012 DATED 19.03.2013 ( ITAT , AMRITSAR). II) SH. JAYESH R.KUMANI VS. ITO IN ITA NO.453(ASR)/ 2004 ORDER DATED 29.05.2009 (ITAT, AMRITSAR BENCH) III) SH.ADESH SINGH VS. ITO IN ITA NO.522(ASR)/2009 DATE D 29.01.2010 (ITAT, AMRITSAR BENCH) IV) M/S. TS-SA ASSOCIATES VS. DCIT IN ITA NO.519(ASR)/2 013 DATED 21.11.2013 (ITAT, AMRITSAR BENCH) 3.1. HE FURTHER PLACED RELIANCE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. V S. CIT REPORTED IN (2006) 282 ITR 642 WHEREIN IT HAS BEEN HELD AS FOLL OWS: PENALTY CONCEALMENT OF INCOME ORDER OF PENALTY MUST CLEARLY STATE WHETHER IT IS FOR CONCEALMENT OR FOR FURNISHI NG INACCURATE PARTICULARS ORDER STATING PENALTY WAS FOR ONE OF THE OFFENCES NOT VALID INCOME TAX ACT, 1961. ITA NOS. 228 TO 230 & 232 TO 234 (ASR)/2014 5 HE FURTHER STATED THAT THIS VIEW FURTHER FINDS SUPP ORT FROM THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. L AKHDHIR LALJI REPORTED IN 85 ITR 77, WHEREIN IT WAS 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. 3.2. THE LD. COUNSEL, MR. P.N.ARORA, SUBMITTED THA T IN VIEW OF THE ABOVE SUBMISSIONS AND DECISIONS OF HONBLE GUJARAT HIGH C OURT (SUPRA), THE PENALTY LEVIED BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) MAY BE CANCELLED. 4. THE LD. DR, MR. TARSEM LAL, ON THE OTHER HAND, R ELIED UPON THE ORDERS PASSED BY THE AUTHORITIES BELOW. 5. I HAVE HEARD SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE RELEVANT RECORD AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW ALONGWITH THE PAPER BOOK FILED BY THE ASSESSEE CON TAINING PAGES 1 TO 38 IN WHICH HE HAS ATTACHED COPIES OF ORDERS OF ITAT, AMR ITSAR BENCH IN THE CASE ITA NOS. 228 TO 230 & 232 TO 234 (ASR)/2014 6 OF M/S. SOMA TRG JOINT VENTURE VS. ITO, WARD 1(3), JAMMU IN ITA NO.428 & 429(ASR)/2012 DATED 19.03.2013, IN THE CASE OF S H. JAYESH R.KUMANI VS. ITO IN ITA NO.453(ASR)/2004 ORDER DATED 29.05.2009, IN THE CASE OF SH.ADESH SINGH VS. ITO IN ITA NO.522(ASR)/2009 DATE D 29.01.2010 AND IN THE CASE OF M/S. TS-SA ASSOCIATES VS. DCIT IN ITA N O.519(ASR)/2013 DATED 21.11.2013. FROM THE PERUSAL OF THE ORDER OF THE A .O. IT IS OBVIOUS THAT THE A.O. HAS INITIATED PROCEEDINGS UNDER SECTION 271(1 )C) OF THE ACT FOR LEVYING PENALTY ON ACCOUNT OF CONCEALMENT OF INCOME BUT HE FINALLY LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME, WHICH IS BAD IN LAW, SINCE THE ASSESSEE HAS NOT BEEN GIVEN REASONABLE OPPORTUN ITY OF BEING HEARD FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THUS, THE AO HAS VIOLATED ALL THE PRINCIPLES OF NATURAL JUSTICE AND LEVY OF PENAL TY IS ILLEGAL. THE LD. COUNSEL FOR THE ASSESSEE HAS RIGHTLY ARGUED THAT CONCEALING THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULAR S OF INCOME ARE TWO LIMBS OF SECTION 271(1)(C) OF THE ACT FOR IMPOSING PENALTY. RELIANCE PLACED BY THE ASSESSEE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. LAKHDHIR LALJI REPORTED IN 85 ITR 77 FULLY SUPPORTS THE CASE OF THE ASSESSEE, WHERE IT HAS BEEN HELD AS UNDER: 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 ITA NOS. 228 TO 230 & 232 TO 234 (ASR)/2014 7 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. 6. KEEPING IN VIEW FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE AFORESAID JUDGMENTS OF HONBLE GUJARAT HIGH COURT R ELIED UPON BY THE ASSESSEES COUNSEL, I AM OF THE CONSIDERED VIEW T HAT THE PENALTY IN DISPUTE IMPOSED BY THE AO CANNOT BE UPHELD BY THE LD. CIT(A ) AND THE SAME DESERVES TO BE CANCELLED. ACCORDINGLY, I CANCEL THE PENALTY IN DISPUTE BY CANCELING THE ORDER OF THE LD. FIRST APPELLATE AUTH ORITY DATED 04.10.2013 AND ALLOW THE APPEAL OF THE ASSESSEE. 7. NOW, WE TAKE UP OTHER APPEALS OF THE ASSESSEE I N ITA NOS.229,230, 232, 233 & 234(ASR)/2014 FOR THE ASSESSMENT YEARS 1 998-99 TO 2003-04. SINCE THE FACTS IN THE PRESENT APPEALS ARE IDENTICA L TO THE FACTS DECIDED BY US HEREINABOVE IN ITA NO.228(ASR)/2014 FOR THE ASSESSM ENT YEAR 1997-98, THEREFORE, THE FACTS IN THE CASE DECIDED BY US IN I TA NO.228(ASR)/2014 FOR THE A.Y. 1997-98 SHALL BE IDENTICALLY APPLICABLE TO ALL THE APPEALS OF THE ASSESSEE IN ITA NOS. 229, 230,232, 233 & 234(ASR)/2 014 FOR THE ASSESSMENT ITA NOS. 228 TO 230 & 232 TO 234 (ASR)/2014 8 YEARS 1998-99 TO 2003-04. ACCORDINGLY, ALL THE FIVE APPEALS OF THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, ALL THE SIX APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH MAY, 2014. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 30TH MAY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. SAJIV VOHRA PROP. M/S. VOHRA MEDIC AL STORE, GURDSASPUR. 2. THE ITO, GURDASPUR 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR