Manoj Ghanshyamdas Sharma, V. Income-Tax Officer,

ITA 2498/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0844 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 27-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT DUA
• Keywords: Unexplained investment; Initiation of penalty proceedings; Reasonable cause
• Section: 271(1)(c); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , . ! , ' , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM $ / ITA NO. 2498/PUN/2016 % & & / ASSESSMENT YEAR : 2005-06 SHRI MANOJ GHANSHYAMDAS SHARMA, 340, NAVI PETH, JALGAON-425 001 PAN : AREPS5866R ....... / APPELLANT '% / V/S. THE INCOME TAX OFFICER, WARD 1(2), JALGAON. / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI AMIT DUA, JCIT / DATE OF HEARING : 29.11.2018 / DATE OF PRONOUNCEMENT : 30.11.2018 ( / ORDER PER D. KARUNAKARA RAO, AM: THIS IS THE APPEAL FILED BY ASSESSEE AGAINST THE ORDER O F CIT(A)-2, NASHIK, DATED 19.08.2016 FOR THE A.Y. 2005-06. 2. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED HERE AS UNDER : 1. ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) [THE COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK] ERRED IN SUSTAINING THE PENALTY ORDER LEVYING PENALTY U/S.27 1(1)(C) OF THE INCOME TAX ACT (THE ACT) AS PASSED BY THE AO WITHOU T APPRECIATING THE FACTS, SUBMISSIONS AND DOCUMENTS PLACED ON RECORD. WITHOUT PREJUDICE 2 ITA NO.2498/PUN/2016 A.Y.2005-06 2. NO DEFAULT HAS BEEN COMMITTED DURING THE YEAR UN DER CONSIDERATION THE LEARNED CIT(A) ERRED WHEN HE SUSTAINED THE PENA LTY LEVIED U/S.271(1)(C) WITHOUT APPRECIATING THE FACT THAT TH E DEFAULT-INACCURATE FURNISHING OR CONCEALING THE PARTICULARS OF INCOME, IF ANY, HAS NOT BEEN COMMITTED IN THE YEAR UNDER CONSIDERATION. 3. NO SATISFACTION BEFORE INITIATION OF THE PENALTY THE LEARNED CIT(A) ERRED IN LAW WHILE SUSTAINING TH E PENALTY WHEN THE AO NEITHER RECORDED SATISFACTION BEFORE INITIATING THE PENALTY PROCEEDINGS NOR DOES HIS SATISFACTION DISCERN FROM RECORDS. 4. NOT FINDING ON CHARGE FOR PENALTY THE LEARNED CIT(A) ERRED IN SUSTAINING THE PENALTY WHEN AT BOTH THE EVENTS, AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVYING THE PENALTY, THE AO DID NOT SPELL OUT THE DEFAULT COMMIT TED BY THE APPELLANT (CONCEALMENT OR INACCUR ATE FURNISHING OF INCOME) TO ATTRACT PENAL PROVISIONS. PRAYER TO AMEND GROUNDS OF APPEAL 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ALTER, VARY AND /OR WITHDRAW ANY OR ALL THE ABOVE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING. 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED THE RETURN OF INCOME ON 13.06.2006 DECLARING TOTAL INCOME OF RS.99,753/-. THE ASSESSING OFFICER ISSUED NOTICE U/S. 148 OF T HE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 0 6.09.2007. ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 10.12.20 08 DETERMINING THE ASSESSED INCOME AT RS.453,190/-. THE ASSE SSING OFFICER MADE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S.69 OF THE ACT. THE FIRST APPELLATE AUTHORITY CONFIRMED THE ADDITIONS. HOWEVER, I NCOME TAX APPELLATE TRIBUNAL REMANDED THE MATTER TO THE ASSESSING OFFICER. AT THE END OF THE SET ASSESSMENT PROCEEDINGS, AO ASSESSED THE TOTAL INCOME OF ASSESSEE AT RS.3,53,720/- U/S.143(3) R.W.S.250 OF THE ACT VIDE ORDER DATED 04.03.2014. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT ARE SEPARATELY INITIATED. THE ASSESSING OFFICER LEVIED PENALTY OF RS.66,800/- U /S. 271(1)(C) OF THE ACT FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME . IN THE FIRST 3 ITA NO.2498/PUN/2016 A.Y.2005-06 APPELLATE PROCEEDINGS, THE CIT(A) CONFIRMED THE SAID PENALTY IMPOSED OF RS.66,800/-U/S. 271(1)(C) OF THE ACT. 4. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL WITH THE GROUNDS AS EXTRACTED ABOV E. BEFORE THE TRIBUNAL 5. HEARING OF NOTICE WAS ISSUED ON 13.11.2018 FOR 29.11.2018 . NOTICE WAS SERVED ON THE ASSESSEE 26.11.2018 AS IS EVIDENT FRO M THE ACKNOWLEDGEMENT PLACED ON RECORD. TODAY I.E. ON 29.11.2018, ONE ADJOURNMENT APPLICATION DATED 28.11.2018 HAS BEEN FILED STATING ASS ESSEES INABILITY TO APPEAR BEFORE THE COURT. CONSIDERING SIMPLICITY O F THE FACTS AND ISSUE UNDER CONSIDERATION, WE REFUSED TO ACCEPT THE SAID ADJOURNMENT APPLICATION AND THE ISSUE RAISED IN APPEAL IS BEING ADJUDICA TED WITH THE ASSISTANCE OF THE LD. DR FOR THE REVENUE AND DOCUMENTS ON RECORD. 6. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO/CIT(A). 7. ON PERUSAL OF THE RECORD AND ORDERS OF THE AUTHORITIES BELOW, IT APPEARS THAT THIS IS A CASE WHERE THE AO FAILED TO RECOR D VALID SATISFACTION IN THE ASSESSMENT ORDER DURING WHICH THE PENALTY PROCEE DINGS U/S. 271(1) (C) OF THE ACT WERE INITIATED. THE LEGAL REQUIREMENT OF MAKIN G A SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) O F THE ACT AND RELYING ON VARIOUS BINDING 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 THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565 ARE NOT MET BY THE ASSESS ING OFFICER. 4 ITA NO.2498/PUN/2016 A.Y.2005-06 THEREFORE, THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW DUE TO DEFICIENCY WITH RESPECT TO THE ISSUE OF VALID SATISFACTION. 8. RECORDING OF VALID/ PROPER SATISFACTION BY THE AO IS THE ISSUE HERE IN THIS APPEAL. WE PERUSED THE ORDER OF THE AO AND FIND T HE SATISFACTION RECORDED 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: 7 DEDUCTING THERE FROM THE AVAILABLE FUND AS DISCUSSE D ABOVE I.E.99,470/- THE UNEXPLAINED INVESTMENT WORK S OUT TO RS.3,04,967/- AS AGAINST CALCULATED AT THE ORIGINAL ASSESSMENT OR DER AT RS.4,04,437/. PENALTY PROCEEDINGS U/S. 271 (1)(C) ARE SEPARATELY INITIATED 9. WE ALSO PERUSED THE PENALTY ORDER DATED 19.09.2014 AN D 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: 6.3. SINCE THE ASSESSEE HAS NOT SUBSTANTIATED A NY REASONABLE CAUSE FOR FURNISHING THE INACCURATE PARTICULARS , HENCE THE ACT OF ASSESSEE MADE HIM LIABLE FOR PENALTY U/S.271(1)(C) OF THE ACT, 1961. FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO DID NOT MENTION ANY OF THE LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT IN THE ORDER OF ASSES SMENT. THE PENALTY ORDER SUGGESTS THE LEVY OF PENALTY FOR THE DEFAU LT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO AP PLICABILITY OF SPECIFIC LIMB OF THE CLAUSE. THE SAME FALLS SHORT OF THE LEGAL R EQUIREMENT. THEREFORE, WE ARE OF THE OPINION THAT CONSIDERING THE ABOV E REFERRED BINDING JUDGMENTS SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALL Y. AO IS UNDER 5 ITA NO.2498/PUN/2016 A.Y.2005-06 OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATIO N AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATIO N ON THIS ISSUE, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO B E QUASHED ON THIS LEGAL ISSUE. THUS, THE ORDER OF CIT(A) IS SET-ASIDE AN D DIRECT THE AO TO DELETE THE PENALTY. ACCORDINGLY, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED 30TH DAY OF NOVEMBER, 2018. SD/- SD/- ( / SUSHMA CHOWLA ) ( . ! / D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; !' / DATED : 30 TH NOVEMBER, 2018. SB ()*+,-.-+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEAL)-2, NASHIK 4. THE PR. CIT-2, NASHIK. 5. %&' () , * () , +,- , / DR, ITAT, A BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // * 2 / BY ORDER, 3 (- /PRIVATE SECRETARY * () , / ITAT, PUNE.