Nandu A.Rajput, Pune V. Assistant Commissioner of Income tax,

ITA 2833/PUN/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0655 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 14-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Section: 40A(3); 132

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 NOS. 2832 TO 2836/PUN/2016 #& ' (' / ASSESSMENT YEARS: 2006-07 TO 2010-11 SHRI NANDU A. RAJPUT, S. NO. 125, ARJUN HIGHTS, NEAR WARJE JAKAT NAKA, WARJE, PUNE-411 052 PAN : AAPPR5684Q ....... / APPELLANT & / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 2(3), PUNE. / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI M.K. VERMA / DATE OF HEARING : 24.09.2018 / DATE OF PRONOUNCEMENT : 28.09.2018 ) / ORDER PER VIKAS AWASTHY, JM IN THIS BUNCH OF APPEALS FILED BY THE ASSESSEE FOR THE AS SESSMENT YEARS 2006-07 TO 2010-11, THE ASSESSEE HAS ASSAILED TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-12, PUNE DATED 06.10.2 016 COMMON FOR THE IMPUGNED ASSESSMENT YEARS IN CONFIRMING LEV Y OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRE D TO AS THE ACT). 2 ITA NOS.2832 TO 2836/PUN/2016 A.YS.2006-07 TO 2010-11 2. SINCE, THE ADDITIONS ON WHICH PENALTY U/S.271(1)(C) IS LEVIED AND TH E REASONS FOR LEVY OF PENALTY IN ALL THESE APPEALS ARE SIMILAR, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DISPOSED OF VIDE THIS COMMON ORDER. 3. THE NOTICE OF APPEALS WAS SENT TO THE ASSESSEE THRO UGH RPAD ON 01.08.2018. THE ACKNOWLEDGEMENT OF THE NOTICE AVAILABLE ON R ECORD INDICATES THAT THE NOTICE OF THE APPEALS HAS BEEN DULY S ERVED ON THE ASSESSEE. DESPITE SERVICE OF NOTICE, NONE HAS APPEARED O N BEHALF OF THE ASSESSEE TO PURSUE THE APPEALS NOR ANY REQUEST SEEKIN G ADJOURNMENT HAS BEEN RECEIVED FROM ASSESSEE/APPELLANT. IN SUCH CIRCUMSTA NCES, WE PROCEED TO DECIDE THESE APPEALS IN THE ABSENCE OF ASSES SEE OR HIS AR WITH THE ASSISTANCE OF LD. DR AND THE MATERIAL AVAILABLE ON RECORD. 4. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: A SEARCH ACTION U/S. 132 OF THE ACT WAS CONDUCTED IN THE CASE O F NANDU RAJPUT GROUP ON 12.10.2010. NOTICE U/S.153A WAS ISSUED TO THE AS SESSEE FOR THE IMPUGNED ASSESSMENT YEARS. IN RESPONSE TO THE SAID NOT ICE, THE ASSESSEE FILED SEPARATE RETURN OF INCOME FOR THE IMPUGNED ASSESSMEN T YEARS. THE ASSESSING OFFICER IN ASSESSMENT PROCEEDINGS U/S.143(3) R.W.S.1 53A OF THE ACT MADE ADDITIONS/DISALLOWANCES ON FOLLOWING COUNTS : ADDITION/ DISALLOWANCES ASSESSMENT YEAR 2006-07 2007-08 2008-09 2009-10 2010-11 RECEIPTS OF ON MONEY INVESTMENT IN BUNGALOW 3 ITA NOS.2832 TO 2836/PUN/2016 A.YS.2006-07 TO 2010-11 DISALLOWANCE U/S.40(3) _ _ UNDER VALUATION OF WORK IN PROGRESS _ _ _ _ RE-CASTING OF PROFIT _ _ _ _ 4.1 IN ASSESSMENT YEAR 2006-07, ASSESSING OFFICER WHILE MA KING ADDITION IN RESPECT OF ON MONEY AND INVESTMENT IN FARMHO USE/BUNGALOW AT KHANAPUR INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF T HE ACT. HOWEVER, NO SATISFACTION WAS RECORDED FOR INITIATING PENALTY PROCEEDINGS IN RESPECT OF DISALLOWANCE U/S. 40A(3) OF THE ACT. 4.2 IN ASSESSMENT YEAR 2007-08, WHILE MAKING ADDITIONS IN R ESPECT OF ON MONEY AND INVESTMENT IN FARMHOUSE/BUNGALOW AT KHA NAPUR, ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) ON BOTH THE COUNTS. 4.3 IN ASSESSMENT YEAR 2008-09, THE POSITION IS SIMILAR TO ASSESSMENT YEAR 2006-07 AND PENALTY PROCEEDINGS WERE INITIATED IN RE SPECT OF RECEIPT OF ON MONEY AND INVESTMENT IN FARMHOUSE/BUNGALOW AT KHANAPUR. 4.4 IN ASSESSMENT YEAR 2009-10, THE ADDITION WAS MADE O N ACCOUNT OF RECEIPT OF ON MONEY, INVESTMENT IN FARMHOUSE/BUNGALOW AT KHANAPUR AND UNDER VALUATION OF WORK IN PROGRESS. THE ASSESSING OFFIC ER INITIATED PENALTY PROCEEDINGS IN RESPECT OF ALL THE THREE ADDITIONS. 4.5 IN ASSESSMENT YEAR 2010-11, THE ADDITION WAS MADE O N ACCOUNT OF RECEIPT OF ON MONEY, INVESTMENT IN FARMHOUSE/BUNGALOW AT KHANAPUR, 4 ITA NOS.2832 TO 2836/PUN/2016 A.YS.2006-07 TO 2010-11 DISALLOWANCE U/S.40A(3) AND RECASTING OF PROFITS. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) IN RESPECT OF ALL AD DITIONS EXCEPT DISALLOWANCE U/S.40A(3) OF THE ACT. THE ASSESSING OFFICER LEVIED PENALTY U/S.271(1)(C) OF THE ACT IN RESPECT OF THE ADDITIONS FOR WHICH SATISFACTION WAS RECORDE D. PENALTY ORDER FOR RESPECTIVE ASSESSMENT YEARS ARE OF EVEN DATE I.E. 27.03.2015. 5. AGGRIEVED BY THE ORDER LEVYING PENALTY, ASSESSEE FILED A PPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER O F INCOME TAX (APPEALS) VIDE COMMON ORDER FOR ASSESSMENT YEARS 200 6-07 TO 2010- 11 CONFIRMED THE LEVY OF PENALTY ON ALL THE ADDITIONS EXCEP T INVESTMENT IN BUNGALOW AT KHANAPUR IN ASSESSMENT YEAR 2006-07. 6. AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE LEVY OF PENALTY, THE ASSESSEE IS IN SECOND AP PEAL BEFORE THE TRIBUNAL. 7. SHRI M.K. VERMA REPRESENTING THE DEPARTMENT VEHEMENT LY SUPPORTED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING T HE APPEALS OF THE ASSESSEE. THE LD. DR SUBMITTED THAT BUT FOR SEARCH AND SEIZUR E ACTION, ASSESSEE WOULD NOT HAVE DISCLOSED THIS INCOME. THEREFORE , PENALTY U/S.271(1)(C) HAS BEEN RIGHTLY LEVIED BY THE ASSESSING OFFICE R AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 8. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD. DR AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE FACTS NARR ATED IN THE FOREGOING PARAGRAPHS ARE NOT DISPUTED. 5 ITA NOS.2832 TO 2836/PUN/2016 A.YS.2006-07 TO 2010-11 ITA NO. 2832/PUN/2016 ASSESSMENT YEAR 2006-07 9. FOR THE SAKE OF CONVENIENCE, WE WILL FIRST TAKE THE APPE AL OF THE ASSESSEE FOR ASSESSMENT YEAR 2006-07. IN ASSESSMENT Y EAR 2006-07, THE ASSESSING OFFICER HAS RECORDED SATISFACTION FOR LEVY OF PENALT Y U/S. 271(1)(C) IN RESPECT OF TWO ADDITIONS I.E. (I) RECEIPT OF ON MONE Y ON SALE OF FLATS/SHOPS; AND (II) INVESTMENT IN FARM-HOUSE/BUNGALOW AT KH ANAPUR. WE OBSERVE THAT WHILE RECORDING SATISFACTION IN RESPECT O F BOTH THE ADDITIONS, THE ASSESSING OFFICER HAS MENTIONED BOTH THE LIMB S OF SECTION 271(1)(C) OF THE ACT I.E. CONCEALMENT OF INCOME AND FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. THE RELEVANT EXTRACT OF THE SATISFACTION RECORDED BY THE ASSESSING OFFICER WHILE MAKING ASSESSMENT IS REPRODUCED HERE IN BELOW: - SATISFACTION IN RESPECT OF ADDITION ON ACCOUNT OF O N MONEY RECORDED AT THE END OF PARA 3 OF ASSESSMENT ORDER. SINCE THE ABOVE ADDITIONAL INCOME OFFERED TO TAX B Y THE ASSESSEE ONLY AFTER THE SEARCH ACTION IN HIS CASE, PENALTY PROCEEDING U /S.271(1)(C) OF THE I.T ACT, ARE BEING SEPARATELY INITIATED IN THIS CASE FOR CON CEALING THE INCOME AND FOR FURNISHING INACCURATE PARTICULARS OF INCOME. - SATISFACTION IN RESPECT OF ADDITION ON ACCOUNT OF U NDISCLOSED INVESTMENT IN BUNGALOW/ FARM HOUSE AT KHANAPUR. 4.1.8..FURTHER, CONSIDERING THE ABOVE FACTS OF THE CASE, PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE I.T. ACT ARE BEIN G SEPARATELY INITIATED IN THIS CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING THE INCOME. THE MANNER IN WHICH SATISFACTION HAS BEEN RECORDED BY TH E ASSESSING OFFICER IN RESPECT OF BOTH THE ADDITIONS CLEARLY IN DICATES 6 ITA NOS.2832 TO 2836/PUN/2016 A.YS.2006-07 TO 2010-11 AMBIGUITY IN THE MIND OF ASSESSING OFFICER QUA THE EXACT CHA RGE FOR LEVYING PENALTY U/S. 271(1)(C) OF THE ACT. 10. THE AMBIGUITY IN THE MIND OF ASSESSING OFFICER CONTINUES EVEN AT THE TIME OF LEVY OF PENALTY. THE ASSESSING OFFICER WHILE PASS ING ORDER LEVYING PENALTY U/S. 271(1)(C) OF THE ACT RECORDS THAT PENALT Y IS BEING LEVIED FOR CONCEALING THE INCOME BY FURNISHING INACCURATE PAR TICULARS OF INCOME. THE RELEVANT PARA OF THE PENALTY ORDER DATED 27.03.2015 REA DS AS UNDER: 11. HENCE IN VIEW OF THE ABOVE DISCUSSION IT IS HER EBY HELD THE ASSESSEE HAS TRIED TO CONCEAL THE INCOME BY FURNISHING INACC URATE PARTICULARS OF INCOME AND IS THUS LIABLE FOR PENALTY U/S.271(1)(C) OF THE I.T. ACT, 1961 AND HENCE IT IS A FIT CASE FOR LEVY OF PENALTY U/S. 271 (1)(C). A PERUSAL OF THE PENALTY ORDER REVEALS VAGUENESS WITH R ESPECT TO CHARGE FOR LEVYING PENALTY U/S.271(1)(C) OF THE ACT IS PERPET UAL. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY REPORTED AS 392 ITR 04 AND THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY, REPORT ED AS 359 ITR 565 (KAR) HAS HELD THAT CONCEALMENT OF INCOME AND FURN ISHING OF INACCURATE PARTICULARS OF INCOME ARE TWO DIFFERENT EXPRESS IONS CARRYING DIFFERENT CONNOTATIONS. RECORDING OF SATISFACTION FOR LEVY OF PENALTY U/S. 271(1)(C) ON ONE CHARGE AND LEVY OF PENALTY ON ANOTHER CHARGE WOU LD MAKE THE PENALTY ORDER UNSUSTAINABLE IN THE EYE OF LAW. SIMILARL Y, RECORDING OF SATISFACTION CITING BOTH CHARGES AND LEVY OF PENALTY ON ON E OF THE CHARGES AND VISE-VERSA WOULD ALSO VITIATE PENALTY PROCEEDINGS. WHE RE THE SATISFACTION FOR LEVY OF PENALTY U/S.271(1)(C) IS RECORDED BY CITING BOTH THE CHARGES OF SECTION IN A MECHANICAL MANNER AND THE PEN ALTY IS ALSO LEVIED IN A CASUAL MANNER BY REFERRING TO BOTH THE CHARGES OF SECTION 271(1)(C), 7 ITA NOS.2832 TO 2836/PUN/2016 A.YS.2006-07 TO 2010-11 SUCH AN ORDER LEVYING PENALTY IS NOT LEGALLY SUSTAINABLE. T HE TRIBUNAL HAS BEEN CONSISTENTLY TAKING A VIEW THAT PENALTY ORDER IS VIT IATED WHERE SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER FOR LEVYING PENALTY U/S.271(1)(C) BY MENTIONING BOTH THE LIMBS OF SECTION 271(1 )(C) OF THE ACT. THUS, IN VIEW OF THE FACTS OF THE CASE, WE ARE OF CONS IDERED VIEW THAT PENALTY LEVIED U/S.271(1)(C) OF THE ACT IN ASSESSMENT YEAR 2006-07 FALLS SHORT OF THE LEGAL REQUIREMENT AS ENVISAGED UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT AND VARIOUS LEGAL PRONOUNCEM ENTS. ACCORDINGLY, PENALTY ORDER IS SET ASIDE AND SUBSEQUENT PROCEEDINGS ARISING THERE FROM ARE QUASHED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.283 2/PUN/2016 FOR ASSESSMENT YEAR 2006-07 IS ALLOWED. ITA NOS. 2833 TO 2836/PUN/2016 ASSESSMENT YEARS 2007-08 TO 2010-11 12. THE FACTS IN THE ASSESSMENT YEARS 2007-08 TO 2010- 11 ARE IDENTICAL TO THE FACTS IN ASSESSMENT YEAR 2006-07. IN ASSESSMENT YEARS 2007-08 TO 2010-11, ADDITIONS ARE MADE FOR SIMILAR REASONS. IN ASSESSM ENT YEARS 2009-10 AND 2010-11, SOME MORE ADDITIONS HAVE BEEN MA DE. HOWEVER, THE SATISFACTION RECORDED BY THE ASSESSING OFFICER IN RESPE CT OF ALL THE ADDITIONS IS ON SIMILAR LINES AND HENCE, SUFFERS FROM AMBIGUITY . ORDERS LEVYING PENALTY ARE ALSO WORDED IN IDENTICAL MANNER PERPETU ATING AMBIGUITY. THEREFORE, FINDINGS GIVEN BY US IN ASSESSMENT YEA R 2006-07 WOULD MUTATIS-MUTANDIS APPLY TO ASSESSMENT YEARS 2007-08 TO 2010-11. ACCORDINGLY, ORDER LEVYING PENALTY FOR THE RESPECTIVE ASSE SSMENT YEARS ARE 8 ITA NOS.2832 TO 2836/PUN/2016 A.YS.2006-07 TO 2010-11 SET ASIDE AND APPEALS OF THE ASSESSEE FOR ALL THE ASSESSM ENT YEARS I.E. 2007-08 TO 2010-11 ARE ALLOWED. 13. TO SUM UP, ITA NOS. 2832 TO 2836/PUN/2016 FOR ASS ESSMENT YEARS 2006-07 TO 2010-11, RESPECTIVELY ARE ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 28 TH DAY OF SEPTEMBER, 2018. SD/- SD/- ( . / D. KARUNAKARA RAO ) ( ! ' /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 28 TH SEPTEMBER, 2018 SB ) * +#,-! .!(, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-12, PUNE. 4. THE PR. CIT, CENTRAL, PUNE. 5. %&' () , * () , +,- , / DR, ITAT, B BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // *2 / BY ORDER, 3 (- / PRIVATE SECRETARY * () , / ITAT, PUNE.