TAINWALA PERSONAL CARE PRODUCTS P. LTD, MUMBAI V. ASS CIT 11(3)(1), MUMBAI

ITA 296/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5404 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Keywords: Principle of natural justice; Assessment record; Set aside
• Section: 271(1)(c); 244A; 201; 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.296/M/2017 ASSESSMENT YEAR: 2012-13 M/S. TAINWALA PERSONAL CARE PRODUCTS P. LTD., PLOT NO.118, TAINWALA HOUSE, ROOM NO.118, MIDC, ANDHERI (EAST), MUMBAI 400 093 PAN: AAACT1967C VS. ASST. COMMISSIONER OF INCOME TAX (APPEALS)- 11(3)(1), MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SASHI TULSIYAN, A.R. REVENUE BY : SHRI D.G. PANSARI, D.R. DATE OF HEARING : 19.09.2018 DATE OF PRONOUNCEMENT : 29.10.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 31.10.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD, CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY AMOUNTING T O RS. 2,10,000/- U/S. 271(L)(C) OF THE INCOME-TAX ACT, 1961. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING PENALTY U/S. 271(L)(C) OF THE INCOME- TAX ACT, 1961: ITA NO.296/M/2017 M/S. TAINWALA PERSONAL CARE PRODUCTS P. LTD. 2 A) EVEN THOUGH THE A.O. HAD VIOLATED THE PRINCIPLES OF NATURAL JUSTICE INASMUCH AS HE INITIATED PENALTY PROCEEDINGS FOR FU RNISHING OF INACCURATE PARTICULARS OF INCOME YET LEVIED PENALTY FOR FAMISH ING FALSE INFORMATION LEADING TO CONCEALMENT OF PARTICULARS OF INCOME THE REBY NOT PROVIDING THE APPELLANT OPPORTUNITY TO MEET THE GROUNDS RAISED AG AINST HIM. B) AS THE BASIS FOR INITIATION OF PENALTY IS NOT ID ENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE SAID IMPOSITION OF PENALTY IS NOT VALID. WITHOUT PREJUDICE TO THE ABOVE: (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A), ERRED IN CONFIRMING PENALTY U/S. 271(1)(C) OF THE INCOME-TAX ACT, 1961 EVEN THOUGH THERE WAS NO MOTIVE OR INCENTIVE T O CONCEAL ANY PARTICULARS OF INCOME AS THE APPELLANT HAD INCURRED HUGE LOSSES AND FILED A NIL RETURN OF INCOME. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S. 271(L)( C) OF THE INCOME-TAX ACT, 1961 EVEN THOUGH THE APPELLANT FURNISHED ALL THE FA CTS PERTAINING TO INCOME BEFORE THE LD. A. O. AND DID NOT CONCEAL ANY PARTIC ULARS OF INCOME. (5) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD, CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S. 271(L)( C) OF THE INCOME-TAX ACT, 1961 EVEN THOUGH INTEREST INCOME. AMOUNTING TO RS.3 0,422/- BEING INTEREST U/S. 244A OF THE ACT WAS NOT INCLUDED IN THE TOTAL INCOME DUE TO OVERSIGHT AS THE SAID AMOUNT WAS NOT REFLECTED IN THE FORM 26AS. (6) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S. 271(1)( C) OF THE INCOME-TAX ACT, 1961 EVEN THOUGH CAPITAL GAIN OF RS. 6,00,0007- ON THE SALE OF LAND AND BUILDING WAS INADVERTENTLY OFFERED BY THE APPELLANT IN A. Y. 2013-14 DUE TO ACCOUNTING ERROR AND NOT WITH ANY MOTIVE OR INTENTI ON FOR CONCEALMENT. (7) THE APPELLANT CRAVES TO ADD, ALTER OR DELETE AL L OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 3. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND W HICH IS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY AMOUNTING T O RS. 2,10,0007- U/S 271(L)(C) OF THE INCOME-TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING PENALTY U/S 271(1 )(C) OF THE I NCOME-TAX ACT, 1961: ITA NO.296/M/2017 M/S. TAINWALA PERSONAL CARE PRODUCTS P. LTD. 3 A) EVEN THOUGH THE LD. A.O. HAD VIOLATED THE PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS HE INITIATED PENALTY PROCEEDINGS FOR FURNISHING INACCURATE PARTICULARS OF INCOME YET LEVIED PENALTY FOR FURNIS HING FALSE INFORMATION LEADING TO CONCEALMENT OF PARTICULARS OF INCOME THE REBY NOT PROVIDING THE APPELLANT OPPORTUNITY TO MEET THE GROUNDS RAISED AG AINST HIM. B) AS THE BASIS FOR INITIATION OF PENALTY IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE SAID IMPOSITI ON OF PENALTY IS NOT VALID. 4. AFTER HEARING BOTH THE PARTIES ON THE MAINTAINAB ILITY OF THE ADDITIONAL GROUND, WE FIND THAT THE ISSUE RAISED BY THE LD. COUNSEL IS A LEGAL ISSUE ARISING OUT OF ASSESSMENT RECORD WHICH WAS BEFORE THE AUTHORITIES BELOW AND WHICH DO NOT R EQUIRE ANY FURTHER VERIFICATION OF FACTS. WE, THEREFORE, ARE INCLINED TO ADMIT THE SAME FOR ADJUDICATION. 5. THE ISSUE RAISED IN ADDITIONAL GROUND IS THAT TH E AO HAS INITIATED PENALTY PROCEEDINGS FOR FURNISHING OF INA CCURATE PARTICULARS OF INCOME BUT LEVIED PENALTY FOR FURNIS HING FALSE INFORMATION LEADING TO CONCEALMENT OF PARTICULARS O F INCOME THEREBY NOT PROVIDING THE ASSESSEE OPPORTUNITY TO R EPLY ON THIS SPECIFIC CHARGE QUA THE LIMB OF PENALTY ON WHICH IT WAS PROPOSED AND ULTIMATELY LEVIED. 6. THE FACTS IN BRIEF ARE THAT THE PENALTY HAS BEEN LEVIED UNDER SECTION 271(1)(C) IN RESPECT OF ADDITIONS MAD E TOWARDS INTEREST ON INCOME TAX REFUND OF RS.30,422/- AND C APITAL GAIN OF RS.6 LAKHS WHICH WERE NOT OFFERED IN RETURN OF INCO ME. FROM THE ASSESSMENT ORDER DATED 12.03.2015 IT IS CLEAR THAT IN RESPECT OF BOTH THE ADDITIONS THE PENALTY HAS BEEN INITIATED F OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE NOTICE DA TED 12.03.2015 WAS ISSUED UNDER SECTION 274 READ WITH S ECTION 271 ITA NO.296/M/2017 M/S. TAINWALA PERSONAL CARE PRODUCTS P. LTD. 4 WHEREIN THE AO HAS NOT STRUCK OFF THE RELEVANT PART AND/OR MARKED THE RELEVANT LIMB OF THE TWO ON WHICH THE PE NALTY WAS PROPOSED TO BE LEVIED. THEREAFTER THE PENALTY ORDE R WAS PASSED DATED 28.09.2015 ON WHICH THE AO HAS LEVIED PENALTY FOR CONCEALMENT OF INCOME OF RS.2,10,000/-. THE SAID PENALTY WAS ALSO AFFIRMED BY THE LD. CIT(A). 7. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE RELEVANT MATERIAL ON RECORD, WE FIND FROM THE PERUSAL OF THE NOTICE THAT AO HAS NOT MARKED ONE OF THE TWO LIMBS ON WHICH THE PENALTY AS BEING PROPOSED TO BE LEVIED AND THUS THIS IS A CLEA R VIOLATION OF PRINCIPLE OF NATURAL JUSTICE BY NOT CONFRONTING THE ASSESSEE WITH RESPECT TO THE LIMB ON WHICH THE PENALTY WAS PROPOS ED AND ULTIMATELY LEVIED. IN OTHER WORDS THE AO HAS NOT S PECIFIED THE SPECIFIC CHARGE IN THE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) FOR INITIATION OF PENALTY WHICH A SINE QUA NON FOR INITIATING AND LEVYING PENALTY AND THEREFORE TH E NOTICE IS NOT A VALID NOTICE AND IS BAD IN LAW. THE CASE OF THE AS SESSEE IS SQUARELY COVERED BY THE HONBLE BOMBAY HIGH COURT I N THE CASE OF CIT VS. SAMSON PERINCHERRY IN ITA NO.1154 OF 201 4 AND OTHERS DATED 05.01.2017 WHEREIN IT HAS BEEN HELD TH AT THE AO SHOULD BE CLEAR AS TO WHICH OF THE TWO LIMBS TO WHI CH THE PENALTY IS IMPOSABLE. THE HIGH COURT HAS HELD THAT IT IS NO T OPENED TO THE AO TO INITIATE PENALTY ON THE ONE LIMB FOR FURN ISHING OF INACCURATE PARTICULARS OF INCOME AND IMPOSED THE PE NALTY ON THE OTHER LIMB I.E. CONCEALMENT OF INCOME AND THUS CONS TITUTED A NON APPLICATION OF MIND ON THE PART OF THE AO WHILE ISSUING PENALTY NOTICE AND THEREFORE THE SAME IS BAD IN LAW AND PENALTY HAS TO BE DELETED. THE CASE OF THE ASSESSEE IS ALS O SUPPORTED BY ITA NO.296/M/2017 M/S. TAINWALA PERSONAL CARE PRODUCTS P. LTD. 5 HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT AND ANR. VS. MANJUNATH COTTON & GINNING FACTORY (2013) 359 ITR 5 65 (KAR.) DATED 13.12.2012 WHEREIN THE HIGH COURT HAS HELD TH AT THE AO WHILE ISSUING NOTICE HAS TO COME TO THIS SPECIFIC C ONCLUSION WHETHER THE PENALTY IS TO BE IMPOSED FOR CONCEALMEN T OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCO ME AS BOTH THESE CHARGES HAVE DIFFERENT MEANING AND ANY FAILUR E ON THE PART OF THE AO TO MENTION THE PARTICULAR LIMB ON WHICH P ENALTY IS BEING PROPOSED TO BE LEVIED IS A NON APPLICATION OF MIND ON THE PART OF THE AO. THE ASSESSEES CASE IS ALSO SUPPOR TED BY THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. M/S. SSAS EMERALD MEADOWS ITA NO.380 OF 2015 WH ICH IS AFFIRMED BY THE HONBLE SUPREME COURT IN SLP NO.114 85/2016 DATED 23.11.2015 WHEREIN IT HAS BEEN HELD AS UNDER: 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 R EAD WITH SECTION 271(L)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT) TO BE BA D IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(2)(C) OF THE ACT, THE PEN ALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHI LE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISIO N BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX -VS- MANJVNA THA COTTON AND GINNING FACTORY (2013) 359ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL QUESTI ON OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDIN GLY DISMISSED. IN VIEW OF THE ABOVE SAID FACTS AND RATIO LAID DOWN BY THE VARIOUS JUDICIAL FORUMS, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. SINCE WE HAVE ALREADY DELETED THE PENALTY ON THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, THE ISSUE RAISED ON MERIT NEED NO ADJUDICATION. ITA NO.296/M/2017 M/S. TAINWALA PERSONAL CARE PRODUCTS P. LTD. 6 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 29.10.2018. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 29.10.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.