Jagdish Vishwanath Kankrej, Nashik V. Assistant Commissioner of Income-tax, Circle - 1, Nashik

ITA 2387/PUN/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4686 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 12-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD
• Keywords: Invalid notice
• Section: 271(1)(c); 143(3); 274; 113

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI GEORGE MATHAN, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.2387/PUN/2017 / ASSESSMENT YEAR : 2013-14 SHRI JAGDISH VISHWANATH KANKREJ, OFFICE NO.1, PADMA DARSHAN PLACE, JEHAN CIRCLE, GANGAPUR ROAD, NASHIK 422 013. PAN : AHBPK6760D. . / APPELLANT V/S THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, NASHIK. . / RESPONDENT ASSESSEE BY : SHRI SANKET JOSHI. REVENUE BY : SHRI RAJENDRA PRASAD. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 1, NASHIK DT.14.07.2017 FOR THE ASSESSMENT YEAR 2013-14. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL AND STATED TO BE ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. ASSESSEE ELECTRONICALLY FILED HIS RE TURN OF INCOME FOR A.Y. 2013-14 ON 29.09.2013 DECLARING TOTAL INCOME AT RS.1,25 ,03,000/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMEN T WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.15.02.2016 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,75,02,336/- INTER-ALIA BY MAKING ADDITIONS OF RS.49,98,4 90/- ON ACCOUNT / DATE OF HEARING : 21.02.2020 / DATE OF PRONOUNCEMENT: 21.02.2020 2 ITA NO.2387/PUN/2017 OF ROUTING THE ENTRIES OF RECEIPTS TO THE CAPITAL ACCOUNT INSTEAD THROUGH PROFIT AND LOSS ACCOUNT AND RS.846/- ON ACCOUNT OF INTEREST ON T DS. ON THE AFORESAID ADDITIONS, AO VIDE ORDER DT. 30.08.2016 LEVIED PENALTY OF RS.15,44,530/- U/S 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESS EE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.14.07.2017 (IN APPEAL NO.N SK/CIT(A)- 1/172/2016-17) DISMISSED THE APPEAL OF THE ASSESSEE. AGG RIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISE D THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271 (1)(C) OF RS. 15,44,530/- IN RESPECT OF THE ADD ITION OR RS. 49,98,490/- MADE BY THE A.O. IN THE ASST. COMPLETED U/S 143(3) OR THE ACT. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE EXACT CHARGE ON THE BASIS OF WHICH THE PENALTY PROCEEDINGS WERE INI TIATED HAS NEITHER BEEN STATED IN THE ASSESSMENT ORDER NOR IN THE NOTICE U/S 274 R.W.S. 271 (1)(C) AND THUS, THE NOTICE ISSUED U/S 2 74 IS BAD IN LAW AND HENCE, THE PENALTY LEVIED IN PURSUANCE OF SUCH INVALID NOTICE IS NOT JUSTIFIED AND SAME OUGHT TO HAVE BEEN DELETED. 3. THE ASSESSEE FURTHER SUBMITS THAT THE SPECIFIC/ EXACT CHARGE UNDER SECTION 271 (1)(C) HAS ALSO NOT BEEN SPECIFIED BY T HE AO WHILE LEVYING PENALTY IN THE ORDER PASSED U/S 271 (1)(C) AND HENCE, THE LEVY OF PENALTY IS BAD IN LAW IN VIEW OF VARIOUS DE CISIONS OF HON'BLE ITAT, PUNE AND HENCE, THE PENALTY LEVIED IN THE INSTANT CASE MAY PLEASE BE DELETED. WITHOUT PREJUDICE TO GROUND NOS. 2& 3, IT IS SUBMIT TED AS UNDER 4. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASS ESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND CONC EALED INCOME IN RESPECT OF THE ADDITION OF RS.49,98,490/- MADE BY T HE A.O. ON THE GROUND THAT THE VALUE OF THREE FLATS [HELD AS ,STOC K IN TRADE BY THE ASSESSEE] TRANSFERRED / INTRODUCED BY THE ASSESSEE INDIVIDUAL AS HIS CAPITAL IN A PARTNERSHIP FIRM DURING THE YEAR WAS W RONGLY CREDITED BY THE ASSESSEE TO HIS 'CAPITAL A/C' INSTEAD OF CRE DITING IT TO THE P&1. A/C AND THEREBY THE PROFIT FOR THE YEAR WAS UNDERST ATED BY RS.49,98,490/- WHICH ATTRACTED LEVY OF PENALTY U/S 271 (1)(C) OR THE ACT. 5. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE SAI D INCOME OR RS.49,98,490/- WAS OFFERED BY THE ASSESSEE AS HIS I NCOME ONLY AFTER THE SAID INCOME WAS DETECTED BY THE A.O. IN THE COU RSE OF ASST. PROCEEDINGS AND THUS, THE BONAFIDES OF THE ASSESSEE WERE NOT ESTABL ISHED AND HENCE, THE PROVISIONS OF SECTION 271(1)(C) WERE ATTRACTED IN THE CASE OF THE ASSESSEE. 3 ITA NO.2387/PUN/2017 6. THE LD.CIT(A) FAILED TO APPRECIATE THAT A. THE AMOUNT OF RS.49,98,490/- REMAINED TO BE OFFERED TO TAX DUE TO AN INADVERTENT MISTAKE ON THE PART OF THE ACCOUNTANT I N PASSING AN INCORRECT ACCOUNTING ENTRY BY WRONGLY CREDITING THE CAPITAL A /C [BY THE AMOUNT OF STOCK IN TRADE - FLATS TRANSFERRED TO PARTNERSHIP FIRM] I NSTEAD OF CREDITING THE P&L A/C AND THUS, THE LEVY OF PENALTY WAS NOT JUSTIFIED ON THE FACTS OF THE CASE. B. THE FACT OF THE STOCK IN TRADE - 'FLATS' OF RS.49,9 8,490/- BEING TRANSFERRED TO THE PARTNERSHIP FIRM DURING THE YEAR WAS QUITE EVIDENT FROM THE BALANCE SHEET OF THE ASSESSEE INDI VIDUAL AND THE BALANCE SHEET OF THE SAID FIRM F LED ALONG WITH THE RETURNS OF INCOME OF THE RESPECTIVE ENTITIES AND THUS, THE ASSESSEE HAD NOT CONCEALED ANY PARTICULARS RELATING TO THE SAID INCOME AND THEREFORE, THERE WA S NO REASON TO LEVY PENALTY U/S 271 (1)(C) MERELY BECAUSE THE SAID INCOME HAD I NADVERTENTLY REMAINED TO BE OFFERED TO TAX DUE TO A BONA FIDE MISTAKE ON THE PART OF HIS ACCOUNTANT. 7. THE LD.CIT(A) FURTHER ERRED IN APPRECIATING THAT A. THE ASSESSEE HAD VOLUNTARILY NOTICED THE ABOVE MIST AKE BEFORE BEING DETECTED BY THE A.O. IN THE COURSE OF ASST. P ROCEEDINGS AND THIS FACT WAS DULY CLARIFIED BEFORE THE CIT(A) ALONG WITH THE TRAIL OF QUESTIONNAIRE ISSUED BY THE A.O. AND SUBMISSIONS FI LED BY THE ASSESSEE PRIOR TO VOLUNTARILY OFFERING THE ABOVE AMOUNT TO TAX AND THUS, THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE INCOME WAS OFFERED ON LY AFTER DETECTION BY THE A.O. WITHOUT TAKING COGNIZANCE OR CONTROVERTING THE DETAILS FILED BY THE ASSESSEE AND HENCE, THE LEVY OF PENALTY WAS NOT JUS TIFIED . B. THE ASSESSEE HAD DECLARED HUGE RETURNED INCOME OF M ORE THAN RS.1.25 CRS. AND THE BOOKS OF ACCOUNTS WERE ALSO AU DITED BY A DULY QUALIFIED CHARTERED ACCOUNTANT WHO ALSO FAILED TO NOTICE THE ABOVE MISTAKE AND IN VIEW OF THE ABOVE FACTS, THERE WAS N O REASON FOR THE ASSESSEE TO PURPOSELY CONCEAL THE AB OVE INCOME BY DISCLOSING ALL THE RELEVANT FACTS IN THE BALANCE SHEET AND THUS, THE LEVY OF PENALTY WAS NOT JUSTIFIED ON FACTS OF THE CASE. 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHE R. 4. BEFORE US, LD.A.R. SUBMITTED THAT WHILE PASSING THE ASSESSMENT ORDER AND WHILE RECORDING SATISFACTION, AO WAS NOT CLEAR AS TO WHETH ER THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME, AS HE HAS RECORDED SATISFACTION FOR CONCEALMENT OF INCOME AS WELL AS FO R FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IN SUPPORT OF HIS CON TENTION, HE POINTED TO PAGE NO.2 OF THE ASSESSMENT ORDER. THEREAFTER, HE SUBM ITTED THAT IN THE PENALTY ORDER ALSO, AO HAS NOT SPECIFIED WHETHER THE PENALTY IS FOR CONCEALMENT OF INCOME 4 ITA NO.2387/PUN/2017 OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND HAD LEVIED PENALTY ON BOTH THE LIMBS. 5. LD.A.R. FURTHER POINTING TO THE NOTICE DT.18.12.2016 ISSUED U/S 274 R.W.S. 271(1)(C) SUBMITTED THAT AO HAS NOT STRIKE DOWN THE RELE VANT PORTION OF THE PRINTED FORM TO INDICATE WHETHER THE SATISFACTION FOR PENA LTY IS FOR CONCEALMENT OF PARTICULARS OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE THEREFORE RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PCIT VS. GOA COASTAL RESORTS & RECREATION PVT. LTD., REPORTED IN (2020) 113 TAXMANN.COM 574 SUBMITTED THAT NO PENALTY IS LEVIABLE. LD.D.R. ON THE OTHER H AND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL IS WITH RESPECT TO LEVY O F PENALTY U/S 271(1)(C) OF THE ACT. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE A.O HAS INITIATED THE PENALTY PROCEEDINGS FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. EVEN IN THE PENALTY ORDER DATED 30.08.2016 AO HO LDS THAT THE CASE OF THE ASSESSEE FALLS UNDER THE AMBIT OF EXPLANATION (1) TO SEC .271(1)(C) OF THE ACT, WHERE IT IS DEEMED ABOUT THE PARTICULARS OF INCOME BEEN CONCEALED. EVEN IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C), THE AO HAS NOT STRUC K THE RELEVANT PORTION OF THE FROM TO INDICATE AS TO WHETHER THE PENALTY IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. WE THUS FIN D THAT NO CLEAR CUT SATISFACTION HAS BEEN RECORDED BY AO AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULA RS OF INCOME. WE FIND SIMILAR ISSUE AROSE BEFORE THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GOA COASTAL RESORTS & RECREATION (SUPRA) WHEREIN THE HONBLE HIGH COURT HELD THAT PENALTY IS NOT LEVIABLE. THE RELEVANT OBSERVATION OF THE HIGH COURT AR E AS UNDER : 5 ITA NO.2387/PUN/2017 5. WE H AVE CAREF ULL Y EXA MI NED TH E RECOR D AS WE LL AS D UL Y CONS I DE R ED T H E R I VA L CONTE N T I ONS. BOT H TH E COM MI SS I O N E R ( A PP EA L S) AS WE LL AS T H E I TAT H AVE CA T EGO RI CA LL Y H E LD T H A T IN T H E PRESE N T CASE, T H E R E I S N O R ECORD OF SAT I SFAC TI O N B Y TH E ASSESS IN G OFFICER T H A T TH ERE WAS A N Y CO N CEA L ME N T OF I NCO M E OR TH A T A N Y IN ACC U RATE P AR TI C UL A R S WE R E F U R N IS H E D BY TH E ASSESSEE. THI S B E IN G A S IN E QU A N O N FOR INI TIAT I O N OF PENA L TY P ROCEE D INGS, IN THE A B SE N CE O F S U C H P E TITI O N , T H E TWO A U T H OR I TIES H AVE QUIT E C ORR E CT L Y O RD E R E D T H E DRO P P IN G OF P E N A L TY P R OCEEDI N GS AGA IN S T T H E P E TITI O N ER . 6. BES ID ES , WE N O T E T H A T TH E D I V I SIO N BE N C H OF THI S CO URT IN SA M SON PEREINC H E RY (SUPRA) AS WE L L AS IN N E W ERA SOVA MIN E ( SUPRA ) H AS H E LD T H A T T H E N O TI CE W HI C H I S I SS U E D TO TH E ASSESSEE MU ST INDI CA T E W H E TH E R TH E ASSESS IN G OFFICE R I S SAT I S FI E D TH AT TH E CASE OF T H E ASSESSEE IN VO L VES C O N CEA LM E NT O F P AR TICUL A R S OF IN CO M E O R F URNI S H ING OF IN ACC UR ATE P AR TI C UL ARS OF IN CO M E O R B OT H , W ITH C L A RIT Y. IF TH E N O TI CE I S ISS U E D I N T H E P R INT E D FOR M , T H E N , T H E N ECESSA R Y P O R T I O N S W HI C H A R E N OT A PPLI CA BL E A R E R E QUIR E D TO B E ST RU C K OFF, S O AS TO IN DICA T E WI TH CL AR IT Y TH E N AT U RE OF THE SA TI SFAC TI O N R EC ORD E D . I N B O T H SAM S O N PER IN C H E RY A ND NEW ERA SOVA MIN E (SUPRA), T H E N O TI CES I SSUED H AD NO T STR UC K O F TH E P O RTION W HI C H WERE IN A PPLI CA BL E . FR O M THI S , TH E D I V I S I O N BE N C H C ON C LU DE D T H AT T H ERE WAS NO P R OPE R R E C O RD OF SA TI SFACT ION O R PR O P ER AP PLI CAT I O N O F MIND IN M A T TER OF INIT IAT I O N OF PE N A LT Y PROCEE DIN GS . 7. IN TH E PR ESE NT CASE , AS WE LL I F T H E N OT I CE D A T ED 3 0 / 0 9 1 1 6 (A T PAGE 33) I S PE RU SED, IT I S A PP A R E N T T H A T TH E R E L EVANT P OR TI O N S H AVE NOT B EE N S T R U CK OFF. THIS COUPL E D WIT H T H E FAC T ADVE R TE D TO IN P ARAG R A PH (5) OF T HI S O R DE R , L EAVES N O GRO UND FOR INT ER F ERE N CE W ITH T H E IM P U G N E D ORDER. T H E IM P U G N E D O R DE R ARE Q U ITE CO N S I STE NT B Y T H E L AW L A ID DOWN I N T H E CASE O F SA M SO N PE RIN C H E R Y A N D NEW ERA SO V A M I N E ( SUP R A ) A ND TH E R EFORE , WARRAN T N O IN TERFERE N CE . 8. T H E C O NT E NTION B ASE D U P O N MAK DATA (P) L TD . ( S UPRA) A L SO DO ES N O T AP P EA L TO U S I N T H E P EC ULI AR FACTS OF THE P R ESE NT CASE. TH E NO T I CE I N TH E P R E SE NT CASE I S IT SE L F I S DEFECT I VE A N D F URT HER, T H ERE I S NO FI NDIN G OR SAT I SFAC TI ON R ECO R DE D IN R E L A TI O N TO CO N CEA LM E N T OR FU RNI SHI N G OF IN ACCURATE P ARTICU L ARS . 9. FO R T H E A FOR ESA ID R EASO N S, WE H O LD TH AT N O S UB S T A N T I A L QU ES TIONS O F L AW A RI SES IN THI S A PP EA L . C ON SE Q UE N T L Y, T HI S A PP EA L IS DI S MI SSE D . WE ARE OF THE VIEW THAT THE RATIO OF THE DECISION IN THE CASE OF GOA COAST AL RESORTS & RECREATION PVT. LTD. (SUPRA) IS APPLICABLE TO THE FACTS OF T HE PRESENT CASE. WE THEREFORE RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF GOA COASTAL RESORTS & RECREATION P VT. LTD., (SUPRA) HOLD THAT AO WAS NOT JUSTIFIED IN LEVYING PENALTY U/S 271(1)(C) OF THE AC T AND THEREFORE DIRECT ITS DELETION. 6 ITA NO.2387/PUN/2017 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 21 ST DAY OF FEBRUARY, 2020. SD/- SD/- ( GEORGE MATHAN ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 21 ST FEBRUARY, 2020. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, NASHIK. PR. CIT-1, NASHIK. '#$ %%&',) &', / DR, ITAT, PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.