Fire Solution India Pvt.Ltd, Pune V. Deputy Commissioner of Income-tax, Circle - 1(2), Pune

ITA 2930/PUN/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5981 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI LALIET KUMAR, JM . / ITA NO.2930/PUN/2017 / ASSESSMENT YEAR : 2009-10 FIRE SOLUTION INDIA PVT. LTD., 44, KIRTI BHAVAN, SHEELA VIHAR COLONY, PAUD ROAD, KOTHRUD, PUNE-411038. PAN : AAACF7722P ....... / APPELLANT / V/S. DCIT, CIRCLE-1(2), PUNE. / RESPONDENT ASSESSEE BY : SHRI M. K. KULKARNI REVENUE BY : SHRI DEEPAK GARG / DATE OF HEARING : 10.02.2020 / DATE OF PRONOUNCEMENT : 11.02.2020 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-1, PUNE DATED 13.09.2017 FOR THE ASSESSMENT YEAR 2009-10. 2. THE EFFECTIVE GROUND RAISED BY THE ASSESSEE IS AS UNDER :- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT WHICH WAS SO LEVIED BY THE A.O. WITHOUT CONSIDERING THE PROPER LIMB OF S.271(1)(C) AS TO WHETHER CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF 2 ITA NO.2930/PUN/2017 INCOME. THE PENALTY LEVIED AND CONFIRMED IS NOT SUSTAINABLE IN LAW. IN VIEW OF SETTLED LAW IN THE MATTER. THE PENALTY LEVIED BE DELETED. 3. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS A COMPANY AND ENGAGED IN THE BUSINESS OF FIRE FIGHTING EQUIPMENTS AND INSTALLATION OF THE SAME AT THE SITES OF THE CUSTOMERS. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.40,16,422/-. AT THE END OF THE ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT, THE ASSESSING OFFICER ASSESSED THE TOTAL INCOME OF THE ASSESSEE AFTER MAKING ADDITION OF RS.2,12,919/- ON ACCOUNT OF NON- ESTABLISHMENT OF GENUINENESS OF THE PURCHASE BILLS. ASSESSING OFFICER DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.42,29,340/-. FURTHER, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDING STATING THAT PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IS BEING INITIATED SEPARATELY BY WAY OF ISSUING OF NOTICE FOR CONCEALMENT OF INCOME.. (PARA 3.1 OF THE ASSESSMENT ORDER). 4. IN THE PENALTY ORDER, THE ASSESSING OFFICER CLEARLY STATED THAT THE LEVY OF PENALTY IS FOR THE DEFAULT OF ..........CONCEALING THE PARTICULARS OF INCOME BY NOT DECLARING INCOME OF RS.2,12,919/- (PARA 6 OF THE PENALTY ORDER). 5. THE CIT(A) CONFIRMED THE PENALTY AS LEVIED BY THE ASSESSING OFFICER. THE CONTENTS OF PARA 6 ONWARDS OF THE APPELLATE ORDER ARE RELEVANT IN THIS REGARD. 3 ITA NO.2930/PUN/2017 6. AGGRIEVED WITH THE SAID DECISION OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE ABOVE EXTRACTED GROUND. 7. ACCORDING TO THE LD. AR, THE ORDER OF THE CIT(A) SHALL HAVE TO BE SET- ASIDE ON THE LEGAL ISSUE RELATING TO THE AMBIGUITY IN THE MIND OF THE ASSESSING OFFICER WHILE DEALING WITH THE INITIATION AND LEVY OF PENALTY. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF 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, LD. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW AND THE SAME IS WRONGLY UPHELD BY THE CIT(A). 8. ON THE OTHER HAND, LD. DR FOR THE REVENUE HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HEARD BOTH THE PARTIES ON THIS LEGAL ISSUE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THIS IS A CASE WHERE THE ASSESSING OFFICER FAILED TO RECORD PROPER SATISFACTION WHILE INITIATING AND LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. IN THIS REGARD, WE PURSED THE ORDERS OF THE REVENUE AUTHORITIES. ON PERUSAL OF PARA 3.1 OF THE ASSESSMENT ORDER, WE FIND THE FOLLOWING IS THE REASONS FOR INITIATION OF PENALTY PROCEEDINGS :- PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IS BEING INITIATED SEPARATELY BY WAY OF ISSUING OF NOTICE FOR CONCEALMENT OF INCOME . 4 ITA NO.2930/PUN/2017 10. FURTHER, WE ALSO PERUSED THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER ON 18.04.2016. ON PERUSAL OF PENALTY ORDER, WE FIND THE FOLLOWING IS THE REASONS FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT :- 6. .......... CONCEALING THE PARTICULARS OF INCOME BY NOT DECLARING INCOME OF RS.2,12,919/- 11. THE ABOVE EXTRACTS REVEAL THAT THE ASSESSING OFFICER SUFFERS FROM AMBIGUITY IN HIS MIND WHILE RECORDING THE SATISFACTION AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 12. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE LEGAL REQUIREMENT OF MAKING A CLEAR CUT REFERENCE TO THE APPLICABLE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT, IS NOT MET BY THE ASSESSING OFFICER WHILE INITIATING AND LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. THUS, THE SATISFACTION OF THE ASSESSING OFFICER SUFFERS FROM AMBIGUITY IN HIS MIND. 13. THEREFORE, CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS, WE ARE OF THE VIEW THAT SUCH PENALTY IS UNSUSTAINABLE IN LAW LEGALLY. IT IS A SETTLED LEGAL PROPOSITION THAT THE ASSESSING OFFICER IS UNDER OBLIGATION TO SPECIFY THE APPROPRIATE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WITHOUT GOING INTO THE MERITS OF THE CASE, WE SET- ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE 5 ITA NO.2930/PUN/2017 ENTIRE PENALTY IMPOSED BY HIM. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED ON LEGAL ISSUE. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 11 TH DAY OF FEBRUARY, 2020. SD/- SD/- (LALIET KUMAR) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 11 TH FEBRUARY, 2020. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-1, PUNE. 4. THE PR. CIT-1, PUNE. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.