Manav Packaging Industries Pvt.Ltd, Pune V. Income-tax Officer, Ward - 11(1), Pune

ITA 2418/PUN/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8500 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-06-2021
• Assessment Year: 2006-2007
• Appeal Filed On: 16-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Depreciation; Set aside
• Section: 271(1)(c); 143(3); 274; 22; 153C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO S.2418 TO 2420 /PUN/201 7 / ASSESSMENT YEAR S : 20 06 - 07 TO 2008 - 09 MANAV PACKAGING INDUSTRIES PVT. LTD., PLOT NO. 76/77, D - 3, BLOCK MIDC, CHINCHWAD, PUNE PAN : AABCM1824A ...... / APPELLANT / V/S. THE ITO, WARD - 11(1), PUNE / RESPONDENT ASSESSEE BY : SHRI KISHOR B. PHADKE REVENUE BY : SHRI S.P. WALIMBE / DATE OF HEARING : 30 - 06 - 2021 / DATE OF PRONOUNCEMENT : 18 - 0 8 - 2021 / ORDER PER S.S. VISWANETHRA RAVI, JM : TH ESE THREE APPEALS BY THE ASSESSEE AGAINST SEPARATE COMMON ORDER DATED 29 - 09 - 2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 7, PUNE [CIT(A)] FOR ASSESSMENT YEAR S 2006 - 07 TO 2008 - 09. 2 ITA NO S.2418 TO 2420/PUN/2017, A.YS. 2006 - 07 TO 2008 - 09 2. FIRST, WE SHALL TAKE UP THE APPEAL IN ITA NO. 2418/PUN/2017 FOR A.Y. 2006 - 07. 3. THIS APPEAL WAS FILED WITH A DELAY OF 222 DAYS. THE ASSESSEE FILED AN AFFIDAVIT EXPLAINING THE REASONS FOR DELAY. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE REASONS STATED BY THE ASSESSEE ARE BONAFIDE WHICH REALLY PREVENTED THE ASSESSEE TO FILE THE PRESENT APPEAL IN TIME. THEREFORE, THE DELAY OF 222 DAYS ARE CONDONED. 4. WE NOTE THAT THE ISSUES RAISED IN ALL THE THREE APPEALS ARE SIMILAR BASING ON THE SAME IDENTICAL FACTS. THEREFORE, WITH THE CONSENT OF BOTH THE PARTIES, WE PROCEED TO HEAR ALL THE THREE APPEALS TOGETHER AND TO PASS A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 5. APART FROM THE GROUNDS OF APPEAL RAISED IN FORM NO.36, ASSESSEE ALSO RAISED ADDITIONAL GROUNDS AND THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITS THAT THE ADDITIONAL GROUNDS RAISED IS A LEGAL GROUND WHICH GOES TO THE ROOT OF THE CASE, PRAYED TO HEAR THE SAID ADDITIONAL GROUNDS AS PRELIMINARY ISSUE. 6. THE LD. D.R REPORTED NO OBJECTION IN PROSECUTING THE ADDITIONAL GROUND AS PRELIMINARY ISS UE AND WE TAKING INTO CONSIDERATION THAT NO NEW FACTS ARE REQUIRED TO BE VERIFIED, PROCEED TO HEAR THE ADDITIONAL GROUNDS AS PRELIMINARY ISSUE. 7. THE ASSESSEE RAISED ADDITIONAL GROUNDS AS UNDER : 6. APPELLANT CONTENDS THAT THE LEARNED CIT(A) - 7, PUNE ERR ED IN LAW AND ON FACTS IN CONFIRMING PENALTY U/S . 271(1)(C) OF THE ITA, 1961; LEVIED 3 ITA NO S.2418 TO 2420/PUN/2017, A.YS. 2006 - 07 TO 2008 - 09 BY THE LEARNED A O , WITHOUT APPRECIATING THAT, THE LEARNED A O HAS NOT MENTIONED ANY SPECIFIC CHARGE OR LIMB FOR LEVY OF PENALTY U/S . 271(1)(C) OF THE ITA, 1961 IN PENALTY ORDER. 7. APPELLANT CONTENDS THAT THE LEARNED CIT(A) - 7, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY U/S 271(1)(C) OF THE ITA, 1961 LEVIED BY THE LEARNED A O , WITHOUT APPRECIATING THAT, THE NOTICE U/S . 274 R.W.S. 271(1) (C) DATED 31/12/2010, REFERS TO BOTH THE LIMBS OF SECTION 271(1) (C), WHEREAS, PENALTY HAS BEEN LEVIED WITHOUT MENTIONING ANY SPECIFIC CHARGE OR LIMB IN PENALTY ORDER. 8. BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN CORRUGATED BOXES AND FILED RETURN OF INCOME DECLARING AT N IL. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT PROCEEDINGS DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.27,61,669/ - INTER - ALIA MAKING DISALLOWANCE ON ACCOUNT OF INTEREST, KEYMAN INSURANCE , DEPRECIATION ON PLANT & MACHINERY AND UNDER SEC.43B OF THE ACT ETC . UNDER SEC.143 RWS 147 OF THE ACT. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF THE INCOME BY TREATING ABOVE DISAL LOWANCE S AS SUPPRESSION OF INCOME BY CLAIMING SET OFF OF LOSSES/EXPENSES IN RESPECT OF DISCONTINUED BUSINESSES. IN RESPONSE TO THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT , THE ASSESSEE MADE ITS SUBMISSIONS WHICH ARE REPRODUCED IN PENALTY ORDER FROM PAGE NOS . 2 TO 4. AS APPARENT FROM THE RECORD THAT THE ASSESSING OFFICER DID NOT ACCEPT THE SUBMISSIONS AS MADE BY THE ASSESSEE IN RELATION TO THE DISALLOWANCES MADE THEREIN IN THE ASSESSMENT PROCEEDINGS AND THEREBY THE ASSESSING OFFICER IMPOSED PENALTY OF RS.8 ,45,100/ - U/S 271(1)(C) OF THE ACT. IN THE FIRST APPELLATE PROCEEDINGS, THE LD. CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER IN LEVYING PENALTY UNDER SEC.271(1)(C) OF THE ACT ONLY ON THE GROUND THAT THE ASSESSEE COULD NOT SUCCEED IN THE QUANTUM PROCEED INGS BEFORE THE LEARNED COMMISSIONER 4 ITA NO S.2418 TO 2420/PUN/2017, A.YS. 2006 - 07 TO 2008 - 09 OF INCOME - TAX (APPEALS) AND ALSO FOR THE REASON THAT THE ASSESSEE DID NOT CONTEST SOME OF THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE APPELLATE PROCEEDINGS. 9. NOW BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE RAISED ADDITIONAL GROUNDS CHALLENGING THE ACTION OF THE ASSESSING OFFICER FOR NOT MENTIONING ANY SPECIFIC CHARGE IN THE NOTICE ISSUED U/S 274 / 271(1)(C) OF THE ACT AND REFERRED TO NOTICE AT PAGE NO.17 OF THE PAPER BOOK . THE LD. AR CONTEND ED THAT WHEN THERE IS NO SPECIFIC CHARGE MENTIONED IN THE NOTICE U/S 274 OF THE ACT, NO PENALTY CAN BE LEVIED ON SUCH NOTICE AND PLACED RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF MOHD. FARHAN A. SHAIKH REPORTED IN (2021) 125 TA XMANN.COM 253 (BOM.). THE LD. D.R. RELIED ON THE ORDER OF LD. CIT(A). 10. HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE MAIN CONTENTION REVOLVES AROUND ADDITIONAL GROUNDS RAISED , THAT NO PENALTY IS LEVIABLE ON THE NOTICE ISSUE D U/S. 274 OF THE ACT WITHOUT STRIK ING OF THE IRRELEVANT CHARGE. WE FIND , THAT THE NOTICE DATED 31 - 12 - 2010 ISSUED BY THE AO TO THE ASSESSEE IS AT PAGE NO. 17 OF THE PAPER BOOK WHEREIN IT IS OBSERVED THAT THE AO NEITHER STRUCK OF THE IRRELEVANT PART NOR MA DE TICK MARK ON RELEVANT CHARGE. THEREFORE, IT IS ESTABLISHED THAT WITHOUT INDICATING ANY CHARGE OR PARTICULAR LIMB OF SECTION 271(1)(C) OF THE ACT, THE AO ISSUED NOTICE INITIATING THE PENALTY PROCEEDINGS. THE LD. AR PLACED ON RECORD MANY DECISIONS IN TH E PAPER BOOK FROM PAGE NOS. 49 TO 78 ON THE ISSUE OF NON - STRIKING OF IRRELEVANT CHARGE AMOUNTS TO INVALIDATION OF PENALTY PROCEEDINGS. FURTHER, AS NOTED ABOVE, THE LD. AR ALSO PLACED ON RECORD THE 5 ITA NO S.2418 TO 2420/PUN/2017, A.YS. 2006 - 07 TO 2008 - 09 JUDGMENT OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF MO HD. FARHAN A. SHAIKH (SUPRA). 11. LET US REFER THE DECISION OF HONBLE FULL BENCH OF JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF MOHD. FARHAN A. SHAIKH (SUPRA), WE NOTE THAT DIVISION BENCH OF HONBLE HIGH COURT OF BOMBAY AT GOA FOUND A DIRECT CON FLICT BETWEEN THE DECISION S IN THE CASES OF GOA DOURADO PROMOTIONS AND SMT. KAUSHALYA REPORTED IN 216 ITR 660 (BOM.). THE HONBLE DIVISION BENCH AT GOA VIDE ORDER DATED 28 - 02 - 2020 PRAYED HONBLE CHIEF JUSTICE TO RESOLVE THE ISSUE BY REFERRING IT TO LARGER BENCH. THE DIVISION BENCH FRAMED THE ISSUE IN QUESTION AS UNDER : [IN] THE ASSESSMENT ORDER OR THE ORDER MADE UNDER SECTIONS 143(3) AND 153C OF THE IT ACT, [WHEN] THE ASSESSING OFFICER HAS CLEARLY RECORDED SATISFACTION FOR THE IMPOSITION OF PENALTY ON ONE OR THE OTHER, OR BOTH GROUNDS MENTIONED IN SECTION 271(1)(C), [WO ULD] A MERE DEFECT IN THE NOTICE OF NOT STRIKING OUT THE RELEVANT WORDS [] VITIATE THE PENALTY PROCEEDINGS? 12. THE HONBLE CHIEF JUSTICE CONSTITUTED THE FULL BENCH TO RESOLVE THE PRECEDENTIAL TANGLE. IN ACCORDANCE WITH SUCH REFERENCE THE FULL BENCH OF HONBLE HIGH COURT OF BOMBAY DISCUSSED THE ISSUE IN DETAIL AND REFERRED TO THE DECISIONS MENTIONED IN PARA NOS. 2 AND 22 OF THE SAID JUDGMENT AND CONFINED ITS DISCUSSION ONLY TO PRECEDENTIAL CLEAVAGE THE DIVISION BENCH HAS PERCEIVED BETWEEN T HE TWO DECISIONS IN THE CASES OF SMT. KAUSHALYA (SUPRA) AND GOA DOURADO PROMOTIONS (SUPRA). THE FULL BENCH HELD THE IMPOSITION OF PENALTY IS NOT AUTOMATIC AND NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) , I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. SENDING PRINTED FORM WHERE ALL THE GROUNDS MENTIONED IN SECTION 271 WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE 6 ITA NO S.2418 TO 2420/PUN/2017, A.YS. 2006 - 07 TO 2008 - 09 ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET THE SPECIFICALLY. FURTHER, HELD, THAT THE DECISION IN THE CASE OF GOA DOURADO PROMOTIONS (SUPRA) ADOPTED AN APPROACH MORE IN CONSONANCE WITH THE STATUTORY SCHEME AND THE DECISION IN THE CASE OF SMT. KAUSHALYA (SUPRA) DOES NOT LAY DOWN THE CORRECT PROPOSITION TO LAW, THEREBY, ANSWERED THE QUESTION THAT NON STRIKING OFF THE IRRELEVANT MATTER IN THE NOTICE, IS A DEFECT, CONSEQUENTLY, VITIATE THE PENALTY PROCEEDINGS, DIRECTED THE REGISTRY TO PLACE APPEALS BEFORE THE DIVISION BENCH CONCERNED OF HONBLE HIGH COURT OF BOMABY FOR FURTHER ADJUDICATION. 13. IN THE PRESENT CASE, AS NOTED ABOVE, THE AO WITHOUT STRIKING OF F THE IRRELEVANT PART ISSUED NOTICE U/S. 274 OF THE ACT, THEREFORE, IN OUR OPINION THE SAID NOTICE DATED 31 - 12 - 2010 IS DEFECTI VE, CONSEQUENTLY, THE PENALTY IMPOSED AND AS CONFIRMED BY THE CIT(A) IS NOT JUSTIFIED. THUS, THE ORDER OF CIT(A) IS SET ASIDE AND THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 14. IN VIEW OF OUR DECISION IN ADDITIONAL GROUNDS, THE MAIN GRO UNDS RAISED BY THE ASSESSEE BECOMES ACADEMIC, HENCE, REQUIR ES NO ADJUDICATION. 15. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO. 2418/PUN/2017 IS ALLOWED. ITA NOS. 2419 & 2420/PUN/2017, A.YS. 2007 - 08 & 2008 - 09. 16. BOTH SIDES ARE UNANIMOUS IN S TATING THAT THE ISSUES RAISED IN THE APPEAL AND THE FACTS IN ITA NO. 2418/PUN/2017 ARE IDENTICAL TO ITA NOS. 2419 & 2420/PUN/2017. SINCE, THE FACTS IN ITA NOS. 2419 & 7 ITA NO S.2418 TO 2420/PUN/2017, A.YS. 2006 - 07 TO 2008 - 09 2420/PUN/2017 ARE SIMILAR TO ITA NO. 2418/PUN/2017, THE FINDINGS GIVEN BY US WHILE DECID ING THE APPEAL OF ASSESSEE IN ITA NO. 2418/PUN/2017 WOULD MUTATIS MUTANDIS APPLY TO ITA NOS. 2419 & 2420/PUN/2017, AS WELL. THE APPEALS OF ASSESSEE ARE ALLOWED, ACCORDINGLY. 17. TO SUM UP, ALL THE THREE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON 18 TH AUGUST, 202 1 . SD/ - SD/ - ( R.S. SYAL ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 18 TH AUGUST, 202 1 . RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - 7, PUNE 4. THE PR. CIT - 6, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE