Shri Kishorbhai Devshibhai Iyava, Kheda V. The Income Tax Officer, Ward-2, Nadiad

ITA 2540/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5958 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 16-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANTOSH KARNANI
• Assessee Lawyers: B T THAKKAR
• Keywords: Revised return
• Section: 271(1)(c); 143(3); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH BEFORE: SHR I SUDHANSHU SRIVASTAVA , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER KISHORBHAI D IYAVA TYPE - III, 73/4, GSECL COLONY, WANAKBORI, DIST: KHEDA PAN: AADPI0457Q (APPELLANT) VS THE IT O , WARD - 2 , NADIAD AHMEDABAD (RESPONDENT) REVENUE BY : S H RI SANTOSH KARNA NI , SR. D . R. ASSESSEE BY: SHRI B.T. THAKKAR, A.R. DATE OF HEARING : 28 - 06 - 2 019 DATE OF PRONOUNCEMENT : 31 - 07 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2011 - 12 , ARI SES FROM ORDER OF THE CIT(A) - 2, VADODARA DATED 29 - 08 - 2 017 , IN PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE NOTICE ISSUE D U/S 274 READ WITH SEC. 271 OF THE ACT DT. 24/02/2014 DID NOT SPECIFIED ANY SPECIFIC LIMB OR CLAUSE WHETHER PENALTY INITIATED FOR CONCEALMENT OF INCOME OR FOR PROVIDING INACCURATE PARTICULARS OF INCOME, WAS THUS BY ISSUE OF INVALID AND DEFECTIVE NOTICE. T HE PENALTY ORDER PASSED IS THUS BAD IN LAW AND HENCE PENALTY ORDER PASSED BY A.O AND CONFIRMED BY CIT(A) - 2 VADODARA BE DIRECTED TO BE DELETED BEING VOID. I T A NO . 2540 / A HD/20 17 A SS ESSMENT YEAR 2011 - 12 I.T.A NO. 2450 /AHD/20 17 A.Y. 2011 - 12 PAGE NO KISHORBHAI D. IYAVA VS. IT O 2 2. THERE BEING NO CONCEALMENT OF PARTICULARS OF INCOME, THE PENALTY ORDER CONFIRMED BY LD. CIT(A) - 2, V ADODARA U/S 271(1)(C) IS UNJUST AND UNLAWFUL AND CONSIDERING FACTS OF THE CASE, THE PENALTY OF RS. 5,58,360/ - BE DELETED NOW. 3. THE BRIEF FACT IS THAT ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED ON 24 TH FEB, 2014 AND TOTAL INCOME WAS ASSESSED AT RS. 14 , 62 , 510/ - AS AGAINST THE RETURNED INCOME OF RS. 3 , 77 , 040/ - . IN THE ASSESSMENT, ADDITION OF RS. 10 , 85 , 472/ - ON ACCOUNT OF COMMISSION INCOME AND INTEREST INCOME WERE MADE WHICH WAS ALSO CONFIRMED BY THE LD. CIT(A). THE ITAT HAS ALSO SUSTAINED THE ORDER OF LD. CIT(A). DURING THE COURSE OF PENALTY PROCEE DINGS, THE ASSESSING OFFICER STATED THAT ASSESSEE HAS NOT DISCLOSED THE COMMISSION OF R S. 5 , 47 , 868/ - RECEIVED FROM JINDAL ALUMINUM LTD. AND RS. 5 , 32 , 003/ - FROM BAMCO ALUMINUM LTD. THE INFORMATION REGARDI NG RECEIPT OF AFORESAID COMMISSI ON INCOME WAS GATHERED FROM F O R M NO. 26A WHICH WAS NOT DISCLOSED BY THE ASSESSEE AS INCOME IN THE ORIGINAL RETURN OF INCOME. 4. DURING THE COURSE OF PENALTY PROCEE DINGS, THE SHOW CAUSE NOTICES AND LETTER DATED 13 - 08 - 2014 , 23 - 03 - 2015 AND 26 - 06 - 2016 WERE ISSUED, HOWEVER, THE ASSESSEE HAD NOT MADE ANY COMPLIANCE. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS COMMITTED A DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT AND IMPOSED MAXIMUM PENALTY@ 300% OF THE TAX SOUGHT TO BE EVADED TO T HE AMOUNT O F RS. 8,37,540/ - CONSIDERING BEING SECOND DEFAULT OF CONCEALMENT. 5. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). T HE LD. CIT(A) HAS PROVIDED PARTIAL RELIEF AND RESTRICTED THE IMPOSITION OF PENA LTY @ I.T.A NO. 2450 /AHD/20 17 A.Y. 2011 - 12 PAGE NO KISHORBHAI D. IYAVA VS. IT O 3 200% AFTER TAKING INTO CONSIDERATION THAT ASSESSEE HAS COMMITTED SIMILAR DEFAULT SECOND TIME. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS PLACED RELIANCE ON THE DECI SI ON ON T H E HON BLE KARNATAKA HIGH COURT IN THE C ASE OF CIT VS. MANJUNATH C OTTON AND GINNING FACTORY (2013) 35 ITR T AXMAN.COM 250 (KAR) AND STATED THAT ASSESSING OFFICER HAS NOT DELETED THE INAPPROPRIATE WORDS AND PART OF NOTICE THEREFORE IT WAS NOT CLEAR WHAT WAS DEFAULT COMMITTED BY THE ASSESSEE. THE LD. C OU N SEL HAS ALSO SUBMITTED THAT ASSESSEE WAS A SALARIED EMPLOYEE, HOWEVER , HE HAS DISCLOSED THE COMMISSION INCOME IN THE REVISED RETURN OF INCOME FILED. THEREFORE , THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE PENALTY LEVIED BY T H E ASSESSING OFFIC ER. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS VEHEMENTLY CONTENDED THAT ASSESSEE HAS NOT DISCLOSED THE COMMISSION IN THE ORIGINAL RETURN OF INCOME FILED AND THE ASSESSING OFFICER HAS OBTAINED THE INFORMATION FRO M F O R M NO. 26A THAT ASSESSEE HA S NOT OFFERED ANY TAX ON THE COMMISSION INCOME, THEREFORE, THE LD. CIT(A) HAS CORRECTLY SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 7 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSEE HAS FI L E D H IS RETURN OF INCOME ON 13 TH SEP, 2011 DECLARING TOTAL INCOME AT RS. 3 , 77 , 044/ - . THE ASSESSING OFFICER WAS HAVING INFORMATION AS PER INFORMATION IN FORM NO. 26AS THAT ASSESSEE HAD RECEIVED COMMISSION AS WELL AS INTEREST INCOME. THEREFORE A LETTER WAS ISSUED TO THE ASSESSEE ON 19 TH JAN, 2012 TO FURNISH DETAIL OF INCOME F R O M OTHER SOURCES EARNED IF ANY. IN RESPONSE, THE ASSESSE HAS FILED A REVISED I.T.A NO. 2450 /AHD/20 17 A.Y. 2011 - 12 PAGE NO KISHORBHAI D. IYAVA VS. IT O 4 RETURN ON 30 TH DEC, 2012 DECLARING TOTAL INCOME AT RS. 9 , 71 , 910/ - . DURING ASSESSMENT , THE TOTAL INCOME OF THE AS SESSEE WAS ASSESSED AT RS. 14 , 62 ,510/ - AS THE ASSESSEE HAS FAILED TO SUBSTA NTIATE THE CLAIM OF EX PENSES OF RS. 4 , 85 , 000/ - INCURRED FOR EARNING COMMISSION INCOME. SINCE THE ASSESSEE HAS NOT FI L E D THE ORIGINAL RETURN WITHIN THE PERIOD PRESCRIBED U/S. 139(1 ) OF THE INCOME TAX ACT, THEREFORE, REVISED RETURN FILED AFTER A QUE RY LETTER RAISED BY THE ASSESSING OFFICER ON 19 TH JAN, 2012 WAS CONSIDERED AS BELATED RETURN OF INCOME. DURING THE COURSE OF PENALTY PROCEEDINGS , THE ASSESSEE HAS NOT MADE ANY COMPLIANCE , SINCE THE ASSESSEE HAS COMMITTED THE SAME NATURE OF DEFAULT SECOND TIME, THEREFORE, THE ASSESSING OFFICER HAS IMPOSED 300% OF PENALTY FOR NOT DISCLOSING COMMISSION INCOME AND INTEREST INCOME IN THE RETURN OF INCOME. AS ELABORATED SUPRA IN THIS ORDER, TH E ASSESSEE HAS NOT DISCLOSED THE COMMISSION AND INTEREST INCOME TO THE AMOUNT OF RS. 10,85,472/ - IN THE ORIGINAL RETURN OF INCOME, THEREFORE, THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSEE HA S NOT MADE ANY COMPLIANCE BEFORE THE ASSESSING OFFICER IN SPITE OF ISSUING OF NUMBERS OF NOTICES AND LETTERS AS CITED ABOVE IN THIS ORDER. WE HAVE ALSO GONE THROUGH THE PENALTY ORDER PASSED U/S. 271(1)(C) OF THE ACT AND IT IS NOTICED THAT ASSESSING OFFIC ER HAS CATEGORICALLY CONCLUDED THAT IT IS CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME WHICH ATTRACT THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. AFTER CONSIDERING THE DETAILED FINDINGS OF THE LD. CIT(A) OF THE LD. CIT(A) AND THE DECISI ON OF H ON BLE GUJARAT HIGH COURT IN THE CASE OF SUNITA TRANSPORT, WE DO NOT FIND ANY MERIT IN THE APPEAL OF T HE ASSESSEE . FINALLY, WHILE PASSING THE PENALTY ORDER U/S. 271(1)(C) OF THE ACT, THE ASSESSING OFFICER HAS CATEGORICALLY STATED THAT THIS BEING S ECOND DEFAULT OF CONCEALMENT OF I.T.A NO. 2450 /AHD/20 17 A.Y. 2011 - 12 PAGE NO KISHORBHAI D. IYAVA VS. IT O 5 PARTICULARS OF SAME TYPE OF INCOME THEREFORE HE WAS SATISFIED TO IMPOSE MAXIMUM PENALTY @ 300% OF THE TAX SOUGHT TO BE EVADED. REGARDING CONTENTION OF THE ASSESSEE THAT ASSESSING OFFICER HAS FAILED TO SPECIFY CHARGE WHETH ER PENALTY IS BEING IMPOSED FOR FURNISHING INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. WE FIND THAT THIS ASPECT HAS BEEN CONSIDERED BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SNITA TRANSPORT P. LD. VS. ACIT 42 TAXMANN.COM 54 (GUJ). IN THIS CASE THE HON'BLE HIGH COURT HAS OBSERVED THAT FOR THE PURPOSE OF ISSUING SHOW CAUSE, THE ID.AO CAN USE EXPRESSION 'AND/OR' IN BETWEEN WHETHER EXPLANATION OF THE ASSESSEE IS BEING SOUGHT FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME . HOWEVER, WHILE PASSING THE FINAL ORDER, THE AO HAS TO SPECIFY HIS CONCLUSION WHETHER HE VISITED THE ASSESSEE WITH PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. THE DISCUSSION MADE BY THE HON'BLE HIGH COURT IN PARA - 9 IN THIS R EGARD IS WORTH TO NOTE. IT READS AS UNDER: '9. REGARDING THE CONTENTION THAT THE ASSESSING OFFICER WAS AMBIVALENT REGARDING UNDER WHICH HEAD THE PENALTY WAS BEING IMPOSED NAMELY FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS, WE MAY RECORD THAT THOUGH IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DID ORDER INITIATION OF PENALTY ON BOTH COUNTS, IN THE ULTIMATE ORDER OF PENALTY THAT HE PASSED, HE CLEARLY HELD THAT LEVY OF PENALTY IS SUSTAINED IN VIEW OF THE FACT THAT THE ASSESSE E HAD CONCEALED THE PARTICULARS OF INCOME. THUS INSOFAR AS FINAL ORDER OF PENALTY WAS CONCERNED, THE ASSESSING OFFICER WAS CLEAR AND PENALTY WAS IMPOSED FOR CONCEALING PARTICULARS OF INCOME. IN LIGHT OF THIS, WE MAY PERUSE THE DECISION OF THIS COURT IN CAS E OF MANU ENGINEERING WORKS (SUPRA). IN THE SAID DECISION, THE DIVISION BENCH CAME TO THE CONCLUSION THAT LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE FOR PENALTY, BUT IT WAS INCUMBENT UPON THE ASSESSING AUTHORITY TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THEM. IF NO SUCH CLEAR CUT FINDING IS REACHED BY THE AUTHORITY, PENALTY CANNOT BE LEVIED. IT WAS A CASE IN WHICH IN FINAL CONCLUSION THE AUTHORITY HAD RECORDED THAT 'I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' IT WAS IN THIS RESPECT THE BENCH OBSERVED THAT 'NO W THE LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI - CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR CUT FINDING WAS REACHED BY THE IAC AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS LIABLE TO BE STRUCK DOWN.' I.T.A NO. 2450 /AHD/20 17 A.Y. 2011 - 12 PAGE NO KISHORBHAI D. IYAVA VS. IT O 6 IN THE PRESENT CASE, THE AO HAS CONCLUSIVELY HELD IN THE PENALTY ORDER THAT PENALTY I S BEING IMPOSED FOR CONCEALMENT OF PARTICULAR OF SAME TYPE OF INCOME. ON MERIT, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A). HOWEVER, CONSIDERING THE TOT ALITY OF THE FACTS THAT ASSESSEE WAS WORKING AS PLANT OPERATOR, WE CONSIDER IT WILL BE JUSTIFIED TO RESTRICT THE IMPUGNED PENALTY AT 100% OF TAX SOUGHT TO BE EVADED. THE ASSESSING OFFICER IS DIRECTED TO LEVY PENALTY AS DIRECTED ABOVE, THEREFORE, THE APPE AL OF THE ASSESSEE IS PARTLY ALLOWED. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 3 1 - 07 - 201 9 SD/ - SD/ - ( SUDHANSHU SRIVASTAVA ) ( AMARJIT SINGH ) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD : DATED 31 /07 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,