Ramchandra Dada Shinde, Pune V. Deputy Commissioner of Income-tax,

ITA 2461/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5352 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 19-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Search and seizure; Document seized; Initiation of penalty proceedings; Reasonable cause; Documents seized
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , ' BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . .. . / ITA NO.2461/PUN/2016 $ $ / ASSESSMENT YEAR : 2006-07 RAMCHANDRA DADA SHINDE, ASHIRWAD, BHARATI NAGAR, PAUD ROAD, KOTHRUD, PUNE 411 029 PAN : ADFPS8569L ....... / APPELLANT / V/S. DCIT, CIRCLE-1(1), PUNE / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK SHRI MAHAVIR JAIN REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 28.06.2018 / DATE OF PRONOUNCEMENT : 18.07.2018 / ORDER PER D. KARUNAKARA RAO, AM: THIS IS THE APPEAL FILED BY ASSESSEE AGAINST THE ORDER O F CIT(A)-3, PUNE, DATED 25-07-2016 FOR THE A.Y. 2006-07. 2. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED HERE AS UNDER : ON FACTS AND IN LAW, 1. THE CIT(A) ERRED IN HOLDING THAT THE PENALTY ORD ER IS VALID IN LAW WITHOUT APPRECIATING THAT THE SAID ORDER WAS BARRED BY LIMITATION AND ACCORDINGLY, THE PENALTY LEVIED SHOULD BE DELETED. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS.1,01,23,250/- U/S. 271(1)(C) OF THE ACT BY HOLDI NG THAT THE ASSESSEE HAS CONCEALED HIS INCOME AND HENCE, THE A.O. WAS JU STIFIED IN LEVYING THE PENALTY. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E ADDITION MADE OF RS.2,00,50,000/- ON WHICH THE PENALTY WAS LEVIED WA S MADE AND SURMISES AND PRESUMPTIONS AND THEREFORE, NO PENALTY COULD BE LEVIED IN RESPECT OF SUCH AN ADDITION. 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE RE WAS NO CONCRETE 2 ITA NO.2461/PUN/2016 RAMCHANDRA DADA SHINDE EVIDENCE THAT THE ASSESSEE HAD ACTUALLY EARNED INCO ME OF RS.2,00,50,000/- AND ACCORDINGLY, THE PENALTY LEVIE D SHOULD BE DELETED. 5. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASS ESSEE SUBMITS THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY @ 150% AND THE PENALTY SHOULD BE REDUCED . 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 2.1 ASSESSEE ALSO RAISED THE FOLLOWING ADDITIONAL GROUND (LEGA L NATURE) AND THE SAME READS AS UNDER : 1. THE ASSESSEE SUBMITS THAT NO PROPER SATISFACTIO N WAS RECORDED BY THE LD. AO IN THE ASST. ORDER AND EVEN THE NOTICE I SSUED U/S.274 R.W.S.271(1)(C) WAS WITHOUT PROPER APPLICATION OF M IND AND HENCE, THE PENALTY ORDER PASSED U/S.271(1)(C) IS BAD IN LAW AN D THE PENALTY LEVIED MAY KINDLY BE DELETED. THE ASSESSEE SUBMITS THAT THE ADDITIONAL GROUND RAI SED IS LEGAL IN NATURE AND AS ALL THE FACTS ARE ON RECORD, THE ASSESSEE RE QUESTS FOR ADMISSION OF THE ABOVE GROUND. 3. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE FACT THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BEING PURELY A LEGAL ONE AND ALL FACTS ARE ALREADY BEFORE THE LOWER AUTHORITIES, THEREFORE, T HE SAME IS ADMITTED FOR ADJUDICATION IN THE LIGHT OF VARIOUS BINDING JUD GMENTS ON THE SAME. 4. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSE E IS AN INDIVIDUAL AND DERIVES INCOME FROM OTHER SOURCE. ON 20-07 -2005, THERE WAS SEARCH AND SEIZURE ACTION U/S.132 OF THE ACT AT THE OFFICE PREMISES OF BHARATI VIDYAPEETH BHAVAN, 13 SADASHIV PETH, PUNE-30 A S WELL AS THE RESIDENTIAL PREMISES OF THE ASSESSEE. THE SAID SEARCH AN D SEIZURE ACTION RESULTED IN SEIZURE OF CASH AMOUNTING TO RS.3,15,57,270/- AN D JEWELLERY TO THE TUNE OF RS.2,95,553/- APART FROM VARIOUS INCRIMINATING DOCUMENT S RELATING TO ADMISSIONS OF VARIOUS INSTITUTIONS OF BHARATI VIDYA PEETH GROUP. IN RESPONSE TO STATUTORY NOTICE ISSUED, THE ASS ESSEE FILED THE 3 ITA NO.2461/PUN/2016 RAMCHANDRA DADA SHINDE RETURN OF INCOME ON 26-04-2007 DECLARING TAXABLE INCOME OF RS.1,26,75,650/-. AT THE END OF ASSESSMENT PROCEEDINGS U/ S.143(3) OF THE ACT, THE ASSESSED INCOME IS DETERMINED AT RS.13,88,81,3 71/-. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WAS MADE AND LE VIED PENALTY OF RS.1,01,23,250/- INVOKING EXPLANATION-1 TO SECTION 271(1)(C) O F THE ACT. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) UPHELD THE PENALTY LEVIED BY THE AO. 5. AGGRIEVED WITH THE ORDER OF CIT(A) THE ASSESSEE IS IN AP PEAL BEFORE THE TRIBUNAL WITH THE GROUNDS/ADDITIONAL GROUND EXTRACTED ABOV E. 6. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REFERRING TO ADDITIONAL GROUND (LEGAL IN NATURE) SUBMITTED THAT THIS IS A CASE WHERE THE AO FAILED TO RECORD VALID SATISFACTION IN THE ASSESSMENT ORDER DURING WHICH THE PENALTY PROCEEDINGS WERE INITIATED. HIGHLIGHTING TH E LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LI MB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOUS BIND ING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN T HE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565 LD. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE AO IS UNSUS TAINABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE ASSESS MENT ORDER AS WELL AS THE PENALTY ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. 7. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDE RS OF AO/CIT(A). 8. WE HEARD BOTH THE PARTIES ON THIS SPECIFIC LEGAL ISSUE, I.E. RECORDING OF PROPER SATISFACTION BY THE AO. WE PERUSED THE ORDER OF THE AO AND FIND THE SATISFACTION RECORDED BY THE AO FOR INITIATING THE P ENALTY 4 ITA NO.2461/PUN/2016 RAMCHANDRA DADA SHINDE PROCEEDINGS U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THERE FORE, THE SAME IS REPRODUCED AS UNDER : 26. ASSESSED ACCORDINGLY. INTEREST U/S.234A, 234B , 234C CHARGED AS PER LAW. GIVE CREDIT TO THE TAXES PAID AFTER VERIF ICATION. ISSUE DN/CHALLAN ACCORDINGLY. ISSUE NOTICE U/S.274 INITIATING PENALTY U/S.271(1)( C) OF THE IT ACT, 1961. 8.1 WE ALSO PERUSED THE PENALTY ORDER DATED 31-07-2014 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 UN DER : 10. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE DISCUSSED ABOVE, I AM SATISFIED THAT THE ASSESSEE WITHOUT ANY SUFFICIENT & REASONABLE CAUSE HAS COMMITTED A DEFAULT AS DEFINED IN EXPLN.1 (A) TO SECTION 271(1)(C) OF IT ACT. THE AMOUNT OF RS.2,00,50,000/- IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. THIS ADDITION HAS BEEN CONFIRMED BY THE ITAT, WHICH IS THE HIGHEST FACT FINDING AUTHORITY. FURTHER, THE ADDITION HAS BEEN MADE ON THE BASIS OF DOCUMENTS SEIZED DURING COURSE OF THE SEARCH U/S.13 2 OF THE IT ACT, 1961, THE CONTENTS OF WHICH HAVE BEEN ADMITTED BY THE ASS ESSEE. BUT ASSESSEE FAILED TO DISCLOSE CORRECTLY THE INCOME EARNED BY H IM, WHICH IS EVIDENT FROM THE NOTINGS IN SEIZED DOCUMENTS. MOREOVER ASS ESSEE HAS TAKEN THE STAND THAT THE ADDITION IS BASED ON PRESUMPTIONS AN D SURMISES, WHICH HAS BEEN FOUND TO BE FALSE. HENCE THIS CASE NEEDS TO BE DISTINGUISHED FROM OTHER CASES OF CONCEALMENT OF INCOME AND CERTA INLY WARRANTS LEVY OF HIGHER THAN MINIMUM QUANTUM OF PENALTY. THEREFORE, THE UNDERSIGNED HEREBY LEVIES 150% OF TAX SOUGHT TO BE EVADED AS PE NALTY U/S.271(1)(C) R.W. EXPLANATION 1 TO IT OF IT ACT, 1961. 11. THUS, PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS PROPO SED TO BE LEVIED AT 150% OF THE TAX SOUGHT TO BE EVADED OF RS.1,01, 23,250/- ON THE ASSESSEE. FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO DID NOT SPECIFY ANY LIM B OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. THIS MANNER OF RECORDING OF SA TISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APP LICABILITY OF SPECIFIC LIMB. THERE IS NO HARMONY BETWEEN THE INITIATION OF P ENALTY PROCEEDINGS AND AT THE TIME OF LEVYING THE PENALTY. THERE FORE, WE ARE OF THE OPINION THAT CONSIDERING THE ABOVE REFERRED BINDING JU DGMENTS SUCH 5 ITA NO.2461/PUN/2016 RAMCHANDRA DADA SHINDE PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. AO IS UNDER O BLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS IS SUE, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, THE ORDER OF CIT(A) IS SET-ASIDE AND DIRECT THE AO TO DELETE THE PENALTY. ACCORDINGLY, THE GROUNDS/ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 18 TH DAY OF JULY, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER / PUNE; / DATED : 18 TH JULY, 2018. SATISH ' ) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-3, PUNE. 4. THE PR. CIT-1, PUNE. , , # , / DR, ITAT, B BENCH, PUNE. 6. & / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.