Assistant Commissioner of Income Tax, Circle 1(1), Panaji V. M/s Goa Dourado Promotions Pvt. Ltd., Dona Paula, Goa

ITA 276/PAN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8541 (ITAT-PANAJI)
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 07-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V RAVIRAJ
• Assessee Lawyers: SHRINIVAS NAYAK
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 43B; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI SHAMIM YAHYA , A M AND SHRI RAM LAL NEGI , J M ITA NO. 276 / PAN . / 2017 (ASSESSMENT YEAR: 2008 - 09 ) ASST. CIT, CIRCLE 1(1) 1 ST FLOOR, AAYARKAR BHAWAN, EDC COMPLEX, PATTO PLAZA, PANAJI VS. M/S. GOA DOURADO PROMOTIONS PVT. LTD. A - 1, VILLA ALTO MONTE, DONA PAULA, GOA PAN/GIR NO. AAACG 7058 B ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI Y. V. RAVIRAJ RESPONDENT BY : SHRI SHRINIVAS NAYAK DATE OF HEARING : 15.11.2018 DATE OF PRONOUNCEMENT : 01.01 .201 9 O R D E R PER SHAMIM YAHYA, A. M.: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) PANAJ I , DATED 21.08.2017, WHEREIN PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT' FOR SHORT) HAS BEEN DELETED FOR THE ASSESSMENT YEARS 2008 - 09. 2. T HE GROUNDS OF APPEAL READ AS UNDER : 1. THE ORDER OF THE LD. CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING TH E PENALTY U/S 271(1)(C) OF THE I .T.ACT LEVIED BY THE ASSESSING OFFICER FOR CONCEALMENT OF PARTICULARS OF INCOME. 3. THE LD. CIT(A) FAILED TO CONSIDER THE FACT THAT PENALTY U/S. 271(1}{C) IS LEVIABLE IF AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER THE IT. ACT THAT ANY PERSON HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. FROM THE ASSESSMENT ORDERS, IT IS NOTED THAT THE AO HAS RECORDED THE SATISFACTION AT PARA 4 ON PAGE 2 OF THE ASSESSMENT ORDER, THAT THE ASSESSEE CONCEALED THE PARTICULARS OF INCOME. THUS, AO IS SPECIFIC AS REGARDS THE CONCEALMENT LIMB OF THE PENALTY IN THE ASSESSMENT ORDER. 4. THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271( 1)(C) MERELY ON THE GROUND THAT THE AO HAS FAILED TO SPECIFY THE SAID LIMB IN THE NOTICE ISSUED U/S. 274 R.W.S. 271(1)(C) OF THE IT ACT 5. THE LD.CIT(A) FAILED TO CONSIDER THE FACT THAT THE ASSESSEE HAD DELIBERATELY CONCEALED HIS INCOME AND HAS FURNISHE D INACCURATE PARTICULARS OF INCOME IN THE 2 ITA NO. 276/PAN./2017 ORIGINAL RETURN FILED. HE HAS QUOTED VARIOUS SUPREME COURT AND HIGH COURT JUDGMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO PROVE THAT THE NOTICE U/S 271(1)(C) ISSUED BY THE AO FOR IMPOSING PENALTY IS BAD I N LAW. AT NO POINT THE ASSESSEE WAS ABLE TO EXPLAINED/PROVE THE REASONS FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. THE ACTION OF THE ASSESSEE DOES NOT GET DILUTED BY QUOTING VARIOUS DECISIONS OF HON'BLE SUPREME COURT AND HIG H COURT. 6. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF THE HEARING, THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER RESTORED. 3. B RIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT ORDER IN THIS CASE WAS PASSED ON 28/12/2011 U /S. 153A READ WITH SECTION 143(3) OF THE ACT. I N THE ASSESSMENT ORDER , IN PARAGRAPH 4 , THE ASSESSING OFFICER OBSERVED THAT CONSEQUENT TO SEARCH, THE ASSESSEE COMPANY HAD GIVEN A DISCLOSURE OF RS.2,7 6,70,700/ - FOR THE PERIOD UNDER CONSIDERATION. ON VERIFICATION OF THE RETURN OF INCOME AND ENCLOSURES IT IS OBSERVED THE ASSESSEE HAS DISCLOSED ITS INCOME AT RS.3,61,96,710/ - . CONSIDERING THE FACT THAT THE COMPANY HAS FILED THE RETURN OF INCOME BY DECLARIN G THE INCOME UNEARTHED DURING THE COURSE OF SEARCH/POST SEARCH PROCEEDINGS, THE COMPANY CONCEALED PARTICULARS OF INCOME THEREBY ATTRACTING PROVISIONS OF SECTION 271(1)(C) OF THE ACT. HENCE, PENALTY PROCEEDINGS INITIATED SEPARATELY. 4. THEREAFTER , THE ASSESSING OFFICER (A.O. FOR SHORT) OBSERVED THAT AFTER VERIFICATION , THE ASSESSMENT IS COMPLETED . THEREAFTER , THE A.O. MADE THE FOLLOWING ADDITION S : TOTAL INCOME RETURNED RS.3,61,96,711/ - O N ACCOUNT OF EXPENSE DISALLOWED RS.3,69,980/ - O N ACCOUNT OF PROFIT FROM TRANSACTION OF 45 ACRES OF RS.51,30,000/ - O N ACCOUNT OF DISALLOWANCE U /S. 43B RS.15,20,360/ - RS.70,20,340/ - TOTAL INCOME RS.4,32,17,051/ - 3 ITA NO. 276/PAN./2017 5 . IN THE END, THE A.O. NOTED THAT PENALTY PROCEEDING U /S. 271 (1)(C) WAS INITIATED SEPARATELY . I N THIS REGARD , WE NOTE THAT THE A.O. HAS MENTIONED IN THE FIRST PARAGRAPH OF HIS ORDER THAT ASSESSEE HAS MADE DISCLOSU RE OF INCOME PURSUANT TO SEARCH, W HICH WAS ALSO RETURNED IN THE RETURN O F INCOME . THE A.O. HAS HELD THAT THIS WAS CONCEALMENT OF INCOME AND PENALTY PROCEEDINGS INITIATED SEPARATELY. PENALTY PROCEEDINGS WERE ALSO INITIATED ON THE ADDITIONS OF RS.70,20,340/ - AS MENTIONE D HERE - IN - ABOVE. HOWEVER WITH REGARD TO THESE ADDITIONS , THE A.O. IN THE ASSESSMENT ORDER HAS NOT SPECIFIED AS TO WHETHER HE WAS SATISFIED THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR IS GUILTY OF CONCEALMENT OF THE PARTICULARS OF INCOME . T HEREAFTER , PENALTY NOTICE WAS ISSUED. IN THE SAID NOTICE , IN THE PRINTED FORMAT , THE RELEVANT LIMB WAS NOT SPE CIFIED AS TO WHETHER THE NOTICE IS BEING ISSUED FOR THE CHARGE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE PENALTY ORDER , THE PENALTY WAS LEVIED WITH REFERENCE TO THE TOTAL INCOME OF RS.4,32,17,051/ - AS IN THE ASSESSM ENT ORDER. IN THE PENALTY ORDER , THE A.O. HELD THAT PENALTY WAS BEING LEVIED FOR CONCEALMENT OF INCOME. 6 . AGAINST THE ABOVE ORDER , THE ASSESSEE APPEALED BEFORE THE LEARNED CIT - A. 7 . THE LEARNED CIT - A DELETED THE ADDITION ON THE GROUND THAT THE RELEVANT LIMB OF SPECIFIC CHARGE WAS NOT IDENTIFIED IN THE NOTICE ISSUED U /S .271(1)(C) OF THE ACT. I N THIS REGARD , THE LEARNED CIT - A PLACED RELIANCE UPON SEVERAL CASE LAWS FROM THE HON'BLE JURISDICTIONAL HIGH COURT AND HONBLE APEX COURT. 8 . T HE LEARNED CIT - A IN A COMMON ORDER C ONCLUDED AS UNDER : 4.15. IN VIEW OF THE ABOVE DECISIONS OF THE HON'BLE SUPREME COURT AND IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF SSA'S EMERALD MEADOWS (REFERRED SUPRA) WHICH CONFIRMS THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY (SUPRA), 'INAPPROPRIATE WORDS' AND 'PARAGRAPHS' IN THE STANDARD PROFORMA OF THE NOTICES ISSUED U/S. 274 R.W.S. 271 OF THE ACT AS USED BY THE AO WERE 4 ITA NO. 276/PAN./2017 REQUIRED TO BE DELETED TO SP ECIFY AS TO ON WHICH LIMB OF SECTION 271(1)(C), THE PENALTY WAS PROPOSED TO BE LEVIED. HAVING FAILED TO DO SO, THE IMPUGNED NOTICES ISSUED ON 28.12.2011 FOR ASSESSMENT YEARS 2007 - 08, 2008 - 09 AND 2009 - 10 SUFFER FROM NON - APPLICATION OF MIND. HENCE, THE SAID NOTICES ISSUED FOR INITIATION OF PENALTY PROCEEDINGS U/S. 274 R.W S. 271 OF THE ACT FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT FOR THE SAID 3 A.YS. ARE DEFECTIVE AND ISSUED WITHOUT APPLICATION OF MIND AND HENCE, ARE INVALID. CONSEQUENTLY, THE ORDERS LEV YING PENALTY U/S. 271(1)(C) OF THE ACT FOR THE 3 ASSESSMENT YEARS 2007 - 08, 2008 - 09 AND 2009 - 10 ARE INVALID AND LIABLE TO BE CANCELLED. ACCORDINGLY, ADDITIONAL GROUND NO.3 RAISED BY THE APPELLANT FOR ALL THE THREE ASSESSMENT YEARS 2007 - 08, 2008 - 09 AND 2009 - 10 ARE ALLOWED. 9 . A GAINST THE ABOVE ORDER , THE R EVENUE IS IN APPEAL BEFORE US. 1 0 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THA T THE ADDITION IN THIS CASE HAS TWO COMPONENTS: INCOME RETURNED BY THE ASSESSEE RS.3,61,96,711/ - ADDITION MADE BY THE A.O. RS.70,20,340/ - TOTAL RS.4,32,17,051/ - AS REGARDS THE LEVY OF PENALTY ON THE RETURNED INCOME OF RS.3,61,96,711/ - IS CONCERNED, THE SAME CANNOT BE SUSTAINED AS THE PENALTY FOR CONCEALMENT CANNOT BE LEVIED IF THE INCOME I S SHOWN IN THE RETURN OF INCOME. IF ANYTHING WAS FOUND ON SEARCH OR STATED AT THE TIME OF SEARCH HAS ALSO NOT BEEN SPECIFIED BY THE A.O. IN THIS REGARD, WE DRAW SUPPORT FROM THE OF HON'BLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. SAS PHARMACEUTICA LS [2011] 335 ITR 259 (DEL). THE HONBLE HIGH COURT HAS EXPOUNDED THAT PENALTY U/S. 271(1)(C) CAN ONLY BE LEVIED IF IN THE COURSE OF PROCEEDINGS, THE A.O. IS SATISFIED THAT THERE IS AN CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. THE WORDS ' IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT MEAN THE ASSESSMENT PROCEEDINGS ' . HOWEVER, THE QUESTION WHETHER THERE IS CONCEALMENT OR INACCURATE PARTICULARS HAS TO BE DETERMINED WITH REFERENCE TO THE RETURNED INCOME. ACCORDINGLY, IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, THE PENALTY LEVIED WITH REFERENCE TO INCO ME RETUNED IS NOT SUSTAINABLE. 5 ITA NO. 276/PAN./2017 11. AS REGARDS THE PENALTY ON ADDITION OF RS.70,20,340/ - IS CONCERNED, W E FIND THAT THE ENTIRE ADDITION MADE BY THE A.O. IN THIS CASE FINALLY STOOD DELETED BY THE LD. CIT(A) AND CONFIRMED BY THE ITAT ( IN ITA NO. 28/PAN/2017 VIDE ORDER DATED 12.04.2018). IN THIS VIEW OF THE MATTER, THE PENALTY DOESN'T SURVIVE INASMUCH AS THE ADDITION WITH REFERENCE TO WHICH THE PENALTY HAS BEEN LEVIED HAS BEEN DELETED . 12. W E FURTHER FIND THAT IN THIS CASE , THE CHARGE ON WHICH PENALTY HAS B EEN LEVIED HAS NOT BEEN SPECIFIED IN THE ASSESSMENT ORDE R , AS TO WHETHER THE PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITH REGARD TO THE ADDITION MADE BY THE A.O. THIS IS FOLLOWED BY A NOTICE FOR THE LEVY OF PENALTY U/S.271(1)(C) IN WHICH THE SPECIFIC LIMB IDENTIFYING THE CHARGE HAS NOT BEEN IDENTIFIED. IN SUCH SCENARIO , THE LEARNED CIT - A HAS RELIED UPON SEVERAL CASE LAWS FROM THE HON'BLE JURISDICTIONAL HIGH COURT AND THE HONBLE APEX COURT THAT PENALTY LEVIED WITHOUT SPECIFICATION OF CHARGE IS NOT SUSTAINABLE. IN THIS REGARD , REFERENCE HAS B EEN MADE TO FOLLOWING CASE LAWS: CIT VS. M/S. SSAS EMERALD MEADOWS (2015) 380 ITA (SC) CIT VS. MANJUNATHA COTTON AND GINNING FACTORY & ORS . (TS - 936 - HC - 2012 (KAR)) CIT VS. SHRI SAMSON PERINCHERY (IT APPEALS NOS. 953/1097/1154/1226 OF 2014 VIDE ORDER DATED 05.01.2017) 1 3 . IN VIEW OF THE ABOVE SAID CASE LAWS DUE TO ABSENCE OF SATISFACTION AND IDENTIFICATION OF THE SPECIFIC CHARGE FOR LEVY OF PENALTY, THE PENALTY IN THIS CASE DESERVES TO BE DELETED ON THIS ACCOUNT ALSO . I N THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT , WE UPHOLD THE DELETION OF PENALTY IN THIS CASE. 6 ITA NO. 276/PAN./2017 1 4 . IN THE RESULT , THIS APPEAL STANDS DISMISSED . O RDER PRONOUNCED BY LISTING THE RESULT ON THE NOTICE BOARD OF THE BENCH UNDER RULE 34(4) OF THE APPELLATE TRIBUNAL RULES, 1963. SD/ - RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER DATED : 0 1 . 0 1 . 2 0 1 9 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, PANJI CITY CONCERNED; (5) THE DR, ITAT, PANJI ; (6) GUARD FILE . BY ORDER ROSHANI , SR. PS ( SR. P.S. / P.S. ) ITAT