Bharat Glass Tube Ltd., Ahmedabad V. Asssistant Commissioner of Income-tax,

ITA 27/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6930 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-12-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Unexplained cash credit
• Section: 143(3); 68; 154

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NOS.27 AND 28/PUN/2016 / ASSESSMENT YEARS : 2005-06 AND 2007-08 BHARAT GLASS TUBE LTD., 501, 5 TH FLOOR, ASTRON TOWER, ISCON CROSS ROAD, SATELLITE, AHMEDABAD 380015. PAN : ABCB5703D. . / APPELLANT V/S ASST.COMMISSIONER OF INCOME TAX, CIRCLE 1, NASHIK. . / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE. REVENUE BY : SHRI MUKESH JHA. / ORDER PER ANIL CHATURVEDI, AM : 1. THESE TWO APPEALS FILED BY THE ASSESSEE ARE EMANATING OUT OF THE TWO SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (A)-1, NASHIK DT. 06.01.2016 FOR THE ASSESSMENT YEARS 2005-06 AND 2007-08 WHEREBY LD.CIT(A) HAS CONFIRMED THE LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. 2. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT THOUGH THE APPEALS OF THE ASSESSEE ARE FOR TWO DIFFERENT ASSESSMENT YEARS BUT THE ISSUE INVOLVED IN BOTH THE APPEALS IS COMMON NAMELY, THE LEVY OF PENALTY U/S 271(1)(C) OF THE I.T. ACT. HE THEREFORE SUBMIT TED THAT THE / DATE OF HEARING : 12.12.2017 / DATE OF PRONOUNCEMENT: 20.12.2017 2 SUBMISSIONS MADE BY HIM WHILE ARGUING APPEAL FOR ONE YEAR W OULD BE EQUALLY APPLICABLE TO OTHER YEAR AND THEREFORE BOTH THE APPEALS CAN BE HEARD TOGETHER. LD.D.R. DID NOT OBJECT TO THE AFORESAID SUBMISSION OF LD.A.R. WE THEREFORE FOR THE SAKE OF CONVENIENCE PROCEED TO DISPOSE OF BOTH THE APPEALS BY A CONSOLIDATED ORDER BUT HOWEVER PROCEED WITH NARRATING THE FACTS IN ITA NO.27/PUN/2016 FOR ASSESSMENT YEAR 20 05- 06. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- 3.1 ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF FIGURED AND WIRED GLASSES AT ITS PLANT AT N ASHIK. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2005-06 ON 31 .10.2005 DECLARING TOTAL INCOME AT RS.65,09,170/-. THE CASE WAS SE LECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143 (3) OF THE ACT VIDE ORDER DT.31.12.2007 AND THE TOTAL INCOME WAS DET ERMINED AT RS.1,73,58,152/- BY MAKING DISALLOWANCE OF CLAIMS AND BREAK AGE EXPENSES AT RS.21,01,279/-, DISALLOWANCE OF EXPENSES OF RS.79,50,110/- U/S 40(A)(IA) OF THE ACT, ADDITION OF RS.5,00,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AN D DISALLOWANCE OF RS.44,876/- ON ACCOUNT OF INTEREST ON U NEXPLAINED CASH CREDIT THUS MAKING TOTAL ADDITIONS OF RS.1,05,96,265/-. THEREAFTER, AN ORDER U/S 154 OF THE ACT WAS PASSED ON 31.12.2008 WHEREBY THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT WAS REWO RKED TO RS.21,255/- AND THE TOTAL INCOME WAS REVISED TO RS.94,29,29 7/-. ON THE QUANTUM ADDITIONS MADE BY AO, ASSESSEE PREFERRED AP PEAL BEFORE LD.CIT(A), WHO GRANTED PARTIAL RELIEF TO ASSESSEE AND SUST AINED THE 3 ADDITIONS OF RS.5,00,000/- ON ACCOUNT OF UNEXPLAINED CASH CR EDITS AND RS.44,876/- BEING INTEREST THEREON. ON THE AFORES AID ADDITIONS ON ACCOUNT OF UNEXPLAINED CASH CREDITS AT RS.5,00,000/- AN D INTEREST THEREON AT RS.44,876/-, PENALTY PROCEEDINGS U/S 271(1)(C) O F THE ACT WAS INITIATED BY ISSUING NOTICE DT.24.01.2013 AND THEREAFTER AO VIDE ORDER DT.19.03.2014 LEVIED PENALTY OF RS.1,83,404/- U/S 2 71(1)(C) OF THE ACT ON ACCOUNT OF CONCEALING PARTICULARS OF INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORD ER DT.02.11.2015 (IN APPEAL NO.NSK/CIT(A)-1/108/2014-15) DISMIS SED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF L D.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FO LLOWING EFFECTIVE GROUND : IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE , EVIDENCES ON RECORD, SUBMISSIONS MADE AND THE PROVISIONS OF LAW, THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE LEVY OF PENALT Y U/S 271(1)(C) OF RS.1,83,404/-. THEREFORE, IT IS PRAYED THAT THE PE NALTY CONFIRMED BY THE LD.CIT(A), MAY PLEASE BE CANCELLED / DELETED. 4. BEFORE US, LD.A.R SUBMITTED THAT WHILE FRAMING THE ASSESSM ENT U/S 143(3) OF THE ACT, AO HAD MADE ADDITIONS ON ACCOUNT OF BREAKAGE EXPENSES, EXPENSES U/S 40(A)(IA) OF THE ACT, UN-EXPLAINED CA SH CREDITS U/S 68 OF THE ACT AND INTEREST THEREON TOTALING TO RS.1,0 5,96,265/- AND DETERMINED THE TOTAL INCOME AT RS.1,73,58,152/-. ON APPEAL FILED BY THE ASSESSEE, LD.CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE SUSTAINING THE ADDITIONS OF UN-EXPLAINED CASH CRE DITS AT RS.5,00,000/- AND RS.44,876/- BEING INTEREST THEREON. ON T HE ADDITIONS SUSTAINED BY LD.CIT(A), AO LEVIED PENALTY OF RS.1,83,4 04/- U/S 271(1)(C) OF THE ACT. HE SUBMITTED THAT WHILE PASSING TH E 4 ASSESSMENT ORDER, AO HAS NOT RECORDED ANY SATISFACTION FOR LEVY OF PENALTY BUT WHILE PASSING THE PENALTY ORDER U/S 271(1)(C) OF THE ACT, THE AO HAS LEVIED PENALTY FOR CONCEALMENT OF INCOME AS WELL AS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HE, RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (ITA NO.1154 OF 2014 ORDER DT.05.01.2017), SUBMITT ED THAT WHEN INITIATION OF PENALTY IS FOR FURNISHING OF INACCURATE PARTI CULARS OF INCOME AND PENALTY WAS LEVIED ON CONCEALMENT OF INCOME, THE N IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO ASSESSEE, PENALTY U/S 271 (1)(C) CANNOT BE LEVIED. HE THEREFORE SUBMITTED THAT PENALTY LEV IED BY AO BE DELETED. AS FAR AS THE LEVY OF PENALTY FOR AY. 2007-08 IS CONCERNED, HE SUBMITTED THAT WHILE PASSING THE ASSESSMENT ORDER, NO SATISFACTION WAS RECORDED BY THE AO THAT WHETHER THE ASSESSEE HA D CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AO IN THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT HAD NOTED T HAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. HE THEREFOR E RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSON PERINCHERY (SUPRA), SUBMITTED THAT PENALTY ORDER CANNOT B E UPHELD. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASES IS FOR A.YS.200 5-06 AND 2007-08 IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE, AS FAR AS A.Y. 2005-06 IS CONCERNED, PENALTY HAS BEEN LEVIED ON THE ADDITION MADE OF RS.5,00,000/- ON ACCOU NT OF UN- EXPLAINED CASH CREDIT AND INTEREST THEREON AT RS.44,876/ -. THE PERUSAL OF ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT REVEALS THAT 5 AO HAD INITIATED PENALTY PROCEEDING BUT NO SATISFACTION WAS RECORDED. THEREAFTER IN THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT, AO HELD THAT ASSESSEE HAD FAILED TO PROVE THAT IT HAD NOT CONCEALED PARTICULARS OF INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME U/S 271(1)(C) OF THE ACT. AS FAR AS A.Y. 2007-08 IS CONCERN ED, IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT, NO SATISFA CTION ABOUT CONCEALING THE INCOME OR FURNISHING OF INACCURATE PARTICULARS WAS RECORDED BY AO. IT IS A SETTLED LAW THAT WHILE LEVYING P ENALTY FOR CONCEALMENT, THE AO HAS TO RECORD SATISFACTION AND THER EAFTER COME TO A FINDING IN RESPECT OF ONE OF THE LIMBS, WHICH IS SPECIFIED UND ER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SA TISFACTION WHILE COMPLETING THE ASSESSMENT AS TO WHETHER THE ASSES SEE HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOTICE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER THEREAFT ER HAS TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR NON-SATISFACT ION OF EITHER OF THE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE ASSESSIN G OFFICER HAS TO COME TO A FINDING AS TO WHETHER THE ASSESSEE HA S CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE H ONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN IT A NO.1154 OF 2014 WITH OTHER ITA NOS.953 OF 2014, 1097 OF 2 014 AND 1226 OF 2014, VIDE JUDGMENT DATED 05.01.2017 HELD THAT WH ERE INITIATION OF PENALTY IS ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 6 6. IN THE PRESENT CASE, AS NOTED HEREINABOVE FOR A.Y. 20 05-06, IN THE ASSESSMENT ORDER, AO HAS NOT RECORDED ANY SATISFAC TION ABOUT WHICH OF LIMBS OF SEC.271(1)(C), THE PENALTY HAS BEEN INITIATED. A S FAR AS A.Y. 2007-08 IS CONCERNED, IT IS SEEN THAT THE AO HAS NOT RECORDED ANY SATISFACTION AND FURTHER LEVIED PENALTY ON BOTH THE LIMB S I.E., FOR CONCEALMENT OF INCOME AND FOR FURNISHING OF INACCURATE PART ICULARS OF INCOME. CONSIDERING THE AFORESAID FACTS IN THE LIGHT OF THE D ECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SOMSON PERINCHE RY (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASES, THE BASIC CONDITION FOR LEVY OF PENALTY HAS NOT BEEN FULFILLED AND THAT THE PENALTY ORDER SUFFERS FROM NON-EXERCISING OF JURISDICTION POWER OF AO AND T HEREFORE PENALTY ORDERS CANNOT BE UPHELD. WE ACCORDINGLY SET A SIDE THE PENALTY ORDER PASSED BY AO FOR A.Y. 2005-06 AND 2007-08 . THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA NO.27/PUN/2016 FOR A.Y. 2005-06 AND IN ITA NO.28/PU N/2016 FOR A.Y. 2007-08 ARE ALLOWED. ORDER PRONOUNCED ON 20 TH DAY OF DECEMBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 20 TH DECEMBER, 2017. YAMINI 7 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, NASHIK. PR.CIT-1, NASHIK. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.