Mahalaxmi Co-op. Bank Ltd, Kolhapur V. Assistant Commissioner of Income tax,

ITA 2949/PUN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2806 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-06-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 27-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N ASHOK BABU
• Keywords: Principle of natural justice; Set aside
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 2949 /PUN/201 6 / ASSESSMENT YEAR : 20 11 - 12 SHRI MAHALAXMI CO - OP. BANK LTD., 167 - B, MANGALWAR PETH, KOLHAPUR 416012 PAN : AAATS3679R ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, KOLHAPUR / RESPONDENT ASSESSEE BY : WRITTEN SUBMISSION REVENUE BY : SHRI N. ASHOK BABU / DATE OF HEARING : 1 0 - 06 - 2019 / DATE OF PRONOUNCEMENT : 13 - 06 - 2019 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1, KOLHAPUR DATED 26 - 10 - 2016 FOR THE ASSESSMENT YEAR 2011 - 12 CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) . 2 ITA NO . 2949/PUN/2016, A.Y. 2011 - 12 2. NONE HAS APPEARED TO REPRESENT THE ASSESSEE DESPITE SERVICE OF NOTICE. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS AND HAS PRAYED TO DECIDE THE APPEAL ON THE BASIS OF SAME. THUS, IN VIEW OF THE WRITTEN REQUEST MADE ON BEHALF OF THE ASSESSEE, THE APPEAL IS TAKEN UP FOR HEARING WITH THE ASSISTANCE OF LD. DR, WRITTEN SUBMISSIONS OF ASSESSEE AND THE MATERIAL AVAILABLE ON RECORD. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A CO - OPERATIVE BANK REGISTERED UNDER MAHARASHTRA C O - OPERATIVE SOCIETY ACT, 1960. THE ASSESSEE CLAIMED DEDUCTION U/S. 36(1)(VIIA) OF THE ACT IN RESPECT OF RESERVE FOR B AD AND D OUBTFUL D EBTS RS.2,51,01,379/ - , AS AGAINST THE PROVISION CREATED BY ASSESSEE IN THE BOOKS FOR B AD AND D OUBTFUL D EBTS RS.56,00,000/ - . THE ASSESSING OFFICER RESTRICTED THE ADDITION TO THE EXTENT OF PROVISION MADE BY THE ASSESSEE IN THE BOOKS I.E. RS.56,00,000/ - AND DISALLOWED THE REMAINING DEDUCTION CLAIMED BY THE ASSESSEE I.E. RS.1,95,01, 379/ - . ON THE DISALLOWANCE MADE, THE ASSESSIN G OFFICER INITIATED PENALTY U/S. 271(1)(C) OF THE ACT. THE ASSESSING OFFICER VIDE ORDER DATED 31 - 03 - 2016 LEVIED PENALTY OF RS.1,26,27,082/ - IN RESPECT OF ADDITION MADE. AGAINST THE ORDER OF PENALTY, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF IN COME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE PENALTY LEVIED IN RESPECT OF ADDITION OF RS.1,95,01,379/ - . HENCE, THE PRESENT APPEAL BY THE ASSESSEE. 4. SHRI N. ASHOK BABU REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. 3 ITA NO . 2949/PUN/2016, A.Y. 2011 - 12 5. W E HAVE HEARD THE SUBMISSIONS MADE BY LD. DR AND HAVE PERUSED THE IMPUGNED ORDERS. A PERUSAL OF ASSESSMENT ORDER DATED 23 - 01 - 2014 REVEAL THAT AT THE TIME OF INITIATING PENALTY PROCEEDINGS QUA ADDITION OF RS.1,95,01,379/ - , THE ASSESSING OFFICER HAS NOT MENTIONED SPECIFIC CHARGE FOR WHICH PENALTY PROCEEDINGS ARE INITIATED U/S. 271(1)(C) OF THE ACT. THE RELEVANT EXTRAC T OF THE ASSESSMENT ORDER WHEREIN THE ASSESSING OFFICER HAS RECORDED SATISFACTION FOR INITIATING PENALTY READS AS UNDER : THE ASSESSEE HAS CLAIMED EXCESS DEDUCTION OF RS.1,95,01,379/ - IN THE COMPUTATION OF INCOME; BECAUSE OF WHICH THE PROFIT OF RS.2,15,06 ,413/ - SHOWN IN THE P&L ACCOUNT IS REDUCED BY RS.1,95,01,379/ - . THEREFORE, I HEREBY DISALLOW A SUM OF RS.1,95,01,379/ - AND ADD IT BACK TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 36(1)(VIIA) OF THE ACT. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) A RE BEING INITIATED SEPARATELY. 6. A PERUSAL OF ORDER LEVYING PENALTY DATED 31 - 03 - 2016 REVEAL THAT THE ASSESSING OFFICER HAS LEVIED PENALTY U/S. 271(1)(C) INVOKING BOTH THE LIMBS OF AFORESAID SECTION I.E. CONCEALMENT OF INCOME AS WELL AS INACCURATE PARTICULARS OF INCOME. THE RELEVANT EXTRACT OF PENALTY ORDER READS AS UNDER : IN VIEW OF THE ABOVE, IT IS HELD THAT THE ASSESSEE FAILED TO SATISFY THE CONDITIONS AS LAID DOWN IN EXPLANATION 1(B) OF SECTION 271(1)(C) OF THE ACT AND ACCORDINGLY, I AM SATI SFIED THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF ITS INCOME IN AS MUCH AS FILED INACCURATE PARTICULARS OF INCOME THEREBY MAKING LIABLE FOR LEVY OF PENALTY WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. 7. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY REPORTED AS 359 ITR 565 HAS HELD : 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THA T THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJRAT HIGH COURT IN THE CASE OF MANU ENGINEERING 4 ITA NO . 2949/PUN/2016, A.Y. 2011 - 12 REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO TH E LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURN ISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON - APPLICATION OF MIND. THE HONBLE HIGH COURT WHILE SUMMING UP THE LAW LAID DOWN IN THE JUDGMENT INTER ALIA HELD : R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. 8 . IN THE INSTANT CASE, THE ASSESSING OFFICER WHILE RECORDING SATISFACTION HAS FAILED TO MENTION THE CHARGE U/S. 271(1)(C) OF THE ACT . HOWEVER, AT THE TIME OF PASSING ORDER LEVYING PENALTY THE ASSESSING OFFICER HAS MENTIONED BOTH THE LIMBS OF SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER HAS TO BE SPECIFIC AND CATEGORIC IN MENTIONING THE CHARGE U/S. 271(1)(C) AT THE TIME OF RECORDING SATISFACTION, AS WELL AS AT THE TIME OF LEVY OF PENALTY. WHERE PENALTY PROVISIONS HAVE BEEN INVOKED IN INDISTINCT MANNER, PENALTY PROCEEDINGS WOULD FAIL THE TEST OF LEGAL REQUIREMENTS. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 13 TH DAY OF JUNE, 2019. SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 13 TH JUNE, 2019 RK 5 ITA NO . 2949/PUN/2016, A.Y. 2011 - 12 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 1, KOLHAPUR 4. THE PR. COMMISSIONER OF INCOME TAX - 1, KOLHAPUR 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE