M/s. Radiant Constructions, Pune V. Income-tax Officer,

ITA 2405/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2133 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 14-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Keywords: Initiation of penalty proceedings; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , , ! BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO.2405/PUN/2016 / ASSESSMENT YEAR : 2001-02 M/S. RADIANT CONSTRUCTIONS, 150, M.G. ROAD, CAMP, PUNE -411 001 PAN : AABFR4655D /APPELLANT VS. ITO, WARD-4(5), PUNE . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI SANJEEV GHEI / DATE OF HEARING : 13.11.2018 / DATE OF PRONOUNCEMENT: 14.11.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF C IT(A)-5, PUNE, DATED 11-07-2016 FOR THE ASSESSMENT YEAR 2001-02. 2. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED AS UNDER : ON FACTS AND IN LAW, 1. THE LD.CIT(A) ERRED IN CONFIRMING THE LEVY OF PENAL TY U/S.271(1)(C) OF RS.8,23,000/-. 2. THE LD.CIT(A) ERRED IN HOLDING THAT THE PENALTY ORD ER PASSED BY THE LD. AO WAS VALID IN LAW WITHOUT APPRECIATING THAT NOTIC E ISSUED BY THE LD. AO WAS BAD IN LAW AND ACCORDINGLY, THE PENALTY ORDER P ASSED BY THE LD. AO WAS NULL AND VOID. 3. THE LD.CIT(A) ERRED IN CONFIRMING THE LEVY OF PENAL TY IN RESPECT OF ADDITION OF RS.21,00,000/- ON THE GROUND THAT THE ASSESSEE H AD CONCEALED ITS INCOME WITHOUT APPRECIATING THAT THE ADDITION MADE ITSELF WAS NOT WARRANTED AND ACCORDINGLY, THE PENALTY LEVIED SHOUL D BE DELETED. 4. THE LD.CIT(A) FAILED TO APPRECIATE THAT THERE WAS N O CONCRETE EVIDENCE THAT THE ASSESSEE HAD ACTUALLY PAID RS.21,00,000/- FOR P URCHASE OF LAND ITA NO.2405/PUN/2016 M/S. RADIANT CONSTRUCTIONS 2 THEREFORE, NO PENALTY CAN BE LEVIED IN RESPECT OF S UCH AN ADDITION MADE ON PRESUMPTIONS AND SURMISES. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. THERE WAS SEARCH U/S.132 OF THE ACT AT THE BUSINESS PREMISES OF THE ASSES SEE. SEARCH RESULTED IN SEIZURE OF BUNDLE NO.2 NUMBERS 221 PAGES. THE SAID BUNDLE CONTAINED VARIOUS AGREEMENTS, SOCIETY DOCUMENTS, MEMORAN DUM OF UNDERSTANDING ETC. IN RESPECT OF LAND ADMEASURING 18,217 SQ.MTRS SITUATED AT ANDHERI, WEST MUMBAI. AT THE END OF THE ASSESSMENT U /S.143(3) OF THE ACT, THE AO PROCEEDED TO MAKE ADDITION OF RS.21 LAKHS ON THIS ISSUE. IN T HE FIRST APPELLATE PROCEEDINGS, THE LD.CIT(A) UPHELD THE VIEW TA KEN BY THE AO. CONTENTS OF PARA NO.4.3 OF THE ORDER OF CIT(A) ARE RELEVANT . AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE FILED THE PRESENT APPEA L WITH THE AFORESAID GROUNDS. 4. AT THE OUTSET, IN THE PROCEEDINGS BEFORE US, LD. COUN SEL FOR THE ASSESSEE REFERRING TO GROUND NO.2 SUBMITTED THAT THIS IS A CASE WHERE THE AO FAILED TO RECORD VALID AND LEGALLY SUSTAINABLE SATISFACTION IN THE ASSESSMENT ORDER WHILE INITIATING THE PENALTY PROCEEDINGS. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPEC IFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOU S BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (2 017) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH CO URT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 IT R 565, LD. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE AO IS UNSUSTA INABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE AS SESSMENT ORDER AS WELL AS THE PENALTY ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. ITA NO.2405/PUN/2016 M/S. RADIANT CONSTRUCTIONS 3 5. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO/CIT(A). 6. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS O F THE REVENUE. WE PROCEED TO ADJUDICATE THE ISSUE RELATING TO RECORDING OF PROPER SATISFACTION BY THE AO. IN THIS CONNECTION, WE PERUSED T HE ASSESSMENT ORDER DATED 31-12-2008 AND FIND THE SATISFACTION RECORDE D BY THE AO FOR INITIATING THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THEREFORE, THE SAME IS REPRODUCED AS UNDER : 5............. ................... I HAVE THEREFORE NO HESITATION TO CONCLUDE THAT THE PAYMENT OF RS.21 LAKHS HAS BEEN MADE OUT OF THE UNDISCLOSED SOURCES AND AD DED TO THE TOTAL INCOME OF THE ASSESSEE FOR A.Y. 2001-2002. THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE IT ACT, 1961, FOR CONCEALING THE PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF SUCH INCOME ARE SEPARATELY INITIATED. 6.1 WE ALSO PERUSED THE PENALTY ORDER DATED 30-03-2012 AND FIND THE SATISFACTION RECORDED BY THE AO FOR LEVYING THE PENALTY U /S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS UNDER: 7. I AM, THEREFORE, SATISFIED THAT THE ASSESSEE HA S WITHOUT ANY REASONABLE CAUSE COMMITTED THE DEFAULT WITHIN THE MEANING OF S ECTION 271(1)(C) AND MADE ITSELF LIABLE FOR PENALTY U/S.271(1)(C) FOR CONCEALING THE PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF SUCH INCOME ..... FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO MENTIONED BOTH THE LIMB S CONCEALING THE PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME . THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE E XISTENCE OF AMBIGUITY WITH REFERENCE TO APPLICABILITY OF SPECIFIC LIMB. THE REFORE, WE ARE OF THE OPINION THAT CONSIDERING THE ABOVE REFERRED BIN DING JUDGMENTS SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. IT IS A SETTLED LEGAL PROPOSITION THAT THE AO IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE ITA NO.2405/PUN/2016 M/S. RADIANT CONSTRUCTIONS 4 TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. I N VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WITHOUT GOING INTO THE MER ITS OF THE PENALTY, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIA BLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, THE ORDER OF CIT(A) IS SET-AS IDE AND DIRECT THE AO TO DELETE THE PENALTY ON TECHNICAL GROUNDS. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED ON TECHNICALITIES. ORDER PRONOUNCED ON THIS 14 TH DAY OF NOVEMBER, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 14 TH NOVEMBER, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-5, PUNE. 4. / THE PR.CIT-4, PUNE. 5. , , / DR A, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.