Dilipbhai A. Patel, Gandhinagar V. The Income Tax Officer, Ward-1, Gandhinagar

ITA 3021/AHD/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7644 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 18-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: D K PARIKH
• Keywords: Set aside
• Section: 271(1)(c)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 3021/AHD/2016 ( ASSESSMENT YEAR : 2010-11) DILIPBHAI A. PATEL 7, PATEL SOCIETY, ADALAJ, GANDHINAGAR / VS. INCOME TAX OFFICER WARD 1, GANDHINAGAR, 4 TH FLOOR, BLOCK NO.14, UDYOG BHAVAN, SECTOR-11, GANDHINAGAR ./ ./ PAN/GIR NO. : ASEPP-2927-R ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI D. K. PARIKH, A.R. / RESPONDENT BY : SHRI LALIT P. JAIN, SR. DR DATE OF HEARING 02/04/2019 !'# / DATE OF PRONOUNCEMENT 25/04/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS), GANDHINAGAR (CIT(A) IN SHORT), DATED 1 2.09.2016 ARISING IN THE PENALTY ORDER DATED 20.03.2015 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2010-11. ITA NO.3021/AHD/16 [DILIPBHAI A. PATEL VS. ITO] A.Y. 2010-11 - 2 - 2. THE CAPTIONED APPEAL OF THE ASSESSEE SEEKS TO AS SAIL THE IMPOSITION OF PENALTY OF RS.77,705/- IMPOSED BY THE AO UNDER S.271(1)(C) OF THE ACT AND CONFIRMED BY THE CIT(A). 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE AT THE OUTSET REFERRED TO THE ASSESSMENT O RDER AND SUBMITTED THAT THE SATISFACTION WAS FORMED BY THE AO FOR CONC EALMENT OF PARTICULARS OF INCOME WHILE PASSING THE ASSESSMENT ORDER UNDER S.143(3) OF THE ACT. HOWEVER, WHILE IMPOSING THE P ENALTY UNDER S. 271(1)(C) OF THE ACT, THE AO HAS CHARGED THE ASSESS EE WITH DEFAULT IN THE FORM OF FURNISHING INACCURATE PARTICULARS OF IN COME TO THE EXTENT OF RS.4,77,102/-. THE LEARNED AR THUS CONTENDED THAT IN THE ABSENCE OF THE CONTINUITY IN THE FORMATION OF SATISFACTION, TH E PENALTY UNDER S. 271(1)(C) OF THE ACT IS NOT SUSTAINABLE. FOR THIS PROPOSITION, THE LEARNED AR REFERRED TO THE DECISION OF THE CO-ORDIN ATE BENCH OF TRIBUNAL IN HATISH PRABHUDAS CHAUDHARY VS. ITO ITA NO. 3557/AHD/2016 ORDER DATED 19.06.2018. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE APPELLATE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THE LEGAL ISSUE RAISED ON BEHALF OF THE ASSESSEE. IN THE ABSENCE OF PROPER S ATISFACTION ABOUT THE NATURE OF DEFAULT COMMITTED BY THE ASSESSEE, THE PE NALTY IS NOT SUSTAINABLE IN LAW. WE FIND THAT THE AFORESAID LEG AL ISSUE HAS BEEN DEALT WITH BY THE CO-ORDINATE BENCH IN FOLLOWING TE RMS: 9. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ASSESSMENT ORDER, PENALTY ORDER AND THE FIRST APPEL LATE ORDER IN PENALTY PROCEEDINGS. THE MATERIAL REFERRED IN THE COURSE O F HEARING WAS ALSO PERUSED. AS NOTED ABOVE, THE CONTROVERSY REVOLVES AROUND THE MAINTAINABILITY OF PENALTY ON INCOME BY WAY OF SHOR T TERM CAPITAL GAIN NOT INCLUDED IN THE RETURN OF INCOME BUT OFFERED FOR TA XATION IN THE COURSE OF SCRUTINY PROCEEDINGS. IN THIS REGARD, IT IS NOTED THAT THE ASSESSEE HAS ITA NO.3021/AHD/16 [DILIPBHAI A. PATEL VS. ITO] A.Y. 2010-11 - 3 - READILY OFFERED THE INCOME ON SALE IN THE COURSE OF ASSESSMENT PROCEEDINGS AND PAID TAXES THEREON. NO DOUBT, IT IS THE BOUNDE N DUTY OF AN ASSESSEE TO OFFER THE INCOME CHARGEABLE TO TAX IN THE RETURN OF INCOME ITSELF. THE ASSESSEE HAS FILED REVISED COMPUTATION AFTER THE IS SUANCE OF SCRUTINY NOTICE SEEKING PERTINENT DETAILS INCLUDING BANK STA TEMENT WHICH COULD HAVE EASILY UNEARTHED THE CAPITAL GAINS NOT OFFERED THUS FAR. HOWEVER, THIS BY ITSELF WILL NOT, IN OUR VIEW, PROPEL A REAS ONABLE PERSON TO DRAW AN INFLEXIBLE INFERENCE THAT OMISSION WAS DELIBERATE. THE TOTALITY OF CIRCUMSTANCES IS REQUIRED TO BE GAUGED. THE INTENT ION REQUIRES TO BE SEEN FROM THE CONDUCT OF THE ASSESSEE. THE ASSESSEE HE REIN IS A TECHNICAL PERSON AND MAY NOT NECESSARILY KNOW THE COMPLICATED TAX LAWS. A PERUSAL OF LAND SALE AGREEMENT SUGGESTS THAT THE LAND WAS I N THE NATURE OF AGRICULTURAL LAND THE GAIN ON SALE OF WHICH, UNDER THE POPULAR BELIEF, IS NOT TAXABLE. HOWEVER, ON OBJECTIVE CONSIDERATION, IT WAS FOUND THAT SUCH AGRICULTURAL LAND WAS ALSO REQUIRED TO UNDERGO AGRI CULTURAL OPERATIONS, WHICH WAS MISSING IN THE PRESENT CASE. IN THESE CI RCUMSTANCES, THE ASSESSEE ACTING ON LEGAL ADVICE, READILY CAME FORWA RD AND OFFERED THE CAPITAL GAINS WITHOUT RESORTING TO LITIGATION. ON WEIGHING THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ONUS OF BONAFIDE THEREFORE, IN OUR VIEW, IS BROADLY DISCHARGED. THE STRICT PROVISI ONS OF SECTION 271(1)(C) OF THE ACT SHOULD NOT APPLY IN THESE FACTS. COUPLE WITH THIS, WE SIMULTANEOUSLY NOTICE THAT THE ACTION OF THE AO IS QUITE VAGUE. THE SATISFACTION IN THE COURSE OF THE ASSESSMENT WAS FORMED FOR ALLEGED FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PENALTY NOTICE DOES NOT SPECIFY THE NATURE OF DEFAULT AND THUS SUFFERS FROM VICE OF AMBIGUITY. THE AO, HOWEVER, IN DEPARTURE WITH THE SATISFACTION FORMED IN THE ASSESSMENT PROCEEDINGS, WENT ON TO IMPOSE PENALTY O N A DIFFERENT GROUND I.E. CONCEALMENT OF PARTICULARS OF INCOME. OSTENSI BLY, THE ORIGINAL BASIS OF INITIATION OF PENALTY HAS BEEN ALTERED IN A SIGN IFICANT WAY BY THE AO HIMSELF BY IMPOSING THE PENALTY. THE BASIS FOR FOR MATION OF SATISFACTION, THUS, WAS ALTERED AND RENDERED NONEXISTENT. HENCE, IN THE ABSENCE OF CONTINUITY IN THE SATISFACTION OF THE AO AT THE QUA NTUM STAGE VIS--VIS PENALTY STAGE, THE PENALTY ORDER PASSED BY THE AO I S LIABLE TO BE STRUCK DOWN ON THIS GROUND ALSO. FOR SUCH A VIEW, WE MAY USEFULLY REFER TO THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF NEW SORATHIA ENGINEERING CO. (SUPRA) AS WELL AS ANOTHER DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MANU ENGI NEERING WORKS (1980) 122 ITR 306 (GUJ). THUS, IN TOTALITY, PENAL ACTION UNDER S.271(1)(C) OF THE ACT IS NOT SUSTAINABLE IN LAW. 6. IN PARITY WITH THE VIEW TAKEN AS QUOTED ABOVE, W E FIND FORCE IN THE PLEA OF THE ASSESSEE THAT WHERE THE PENALTY HAS BEEN IMPOSED ON A GROUND DIFFERENT FROM THE GROUND FOR WHICH THE PENA LTY WAS ORIGINALLY INITIATED, THE IMPOSITION OF PENALTY IS VITIATED IN LAW. IT IS APPARENT THAT THE SATISFACTION OF THE AO IN THE PENALTY PROC EEDINGS IS NOT CONSISTENT WITH THAT OF THE SATISFACTION FORMED IN THE COURSE OF QUANTUM ASSESSMENT. THEREFORE, IN PARITY WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH, THE PENALTY IMPOSED IS LIABLE TO BE STRUCK DOWN ON ITA NO.3021/AHD/16 [DILIPBHAI A. PATEL VS. ITO] A.Y. 2010-11 - 4 - THIS SCORE ALONE. ACCORDINGLY, WE SET ASIDE THE FI RST APPELLATE ORDER PASSED BY THE CIT(A) IN THIS REGARD AND DIRECT THE AO TO DELETE THE PENALTY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 25/04/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 25/04/2019