SARLA AGENCIES, MUMBAI V. ACIT CIR 17(2), MUMBAI

ITA 305/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0101 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 10-08-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 10-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: N M PORWAL
• Keywords: Principle of natural justice; Application of stay; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI BEFORE SRI G.S. PANNU, AM AND SRI PAWAN SINGH, JM ( ITA NO. 305/MUM/2013 ) WITH SA NO. 310/MUM/2017 (A.Y:2006-07) SARLA AGENCIES PANCHSTEEL PURNA DARE WADI, GOKHALE ROAD (N), DADAR (W), MUMBAI-310 028 PAN NO. AAQFS8913A VS. ASST. COMMISSIONER OF INCOME TAX CIRCLE 17(2) MUMBAI- APPELLANT .. RESPONDENT ASSESSEE BY .. SHRI N.M. PORWAL, AR REVENUE BY .. SHRI A.K. NAYAK, DR DATE OF HEARING .. 23 - 06 - 2017 DATE OF PRONOUNCEMENT .. 23 - 06 - 2017 O R D E R PER PAWAN SINGH SINGH, JM : THIS APPEAL WAS LISTED TODAY ON FILING STAY PETITI ON BY ASSESSEE FOR SEEKING THE STAY OF OUTSTANDING DEMAND OF RS. 7,65 ,900/-. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE LIABILITY OF OUT STANDING TAX IS ON ACCOUNT OF PENALTY LEVIED BY AO UNDER SECTION 271(1)(C) OF THE ACT. IT WAS FURTHER ARGUED THAT THE ASSESSEE HAS ALREADY FILED ITS APPE AL BEFORE TRIBUNAL IN ITA NO. 305/MUM/2013 AND THE SAME IS PENDING BEFORE THE SAME BENCH. IT WAS ARGUED THAT THE ASSESSEE GOOD CASE ON MERIT AND IS LIKELY TO SUCCEED AS THE GROUNDS OF APPEAL RAISED IN THE MAIN APPEAL IS COVE RED BY VARIOUS DECISIONS OF TRIBUNAL AND BY THE ORDER OF BOMBAY HIGH COURT. THUS, WITH THE CONSENT OF LD. DR FOR THE REVENUE, THE MAIN APPEAL OF THE A SSESSEE WAS ALSO TAKEN UP AND HEARD. IN ITA NO. 305/MUM/2013 FOR AY 2006-07 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: - 310/MUM/2017 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE FINDINGS BY ASSES SING OFFICER FOR FURNISHING OF INACCURATE PARTICULARS FO R FILLING OF REVISED COMPUTATION OF INCOME ON ACCOUNT OF BONA FI DE MISTAKES AT THE STAGE OF ASSESSMENT PROCEEDINGS. TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE GIVEN CONSIDERATION TO THE FACT OF CASE AND OU GHT TO HAVE PROVIDED SUFFICIENT OPPORTUNITY AND FAILED TO CONSIDER THE RELEVANT MATERIAL, DOCUMENTS AND EXPLANATIONS SUBMITTED TO ASSESSING OFFICER BEFORE PASSING OF ORDER LEVYING PENALTY. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ORDER MADE BY THE LEARNED ASSESSING OFFICER U/S 271(1)(C) OF THE ACT AS, BAD-IN LAW, AND DID NOT APPRECIATE THE FACTS, SUBMI SSION, EXPLANATIONS AND EVIDENCES IN THEIR PROPER PERSPECT IVE PROVIDED TO THE ASSESSING OFFICER AND AS SUCH ORDER BY THE LEARNED CIT (APPEAL) IS LIABLE TO BE ANNULLED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR ON 31-10-2006 DECLARIN G THE TOTAL INCOME AT RS. 26,33,560/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 23-12-2008 IN DETERMINING THE TOTAL INCOME AT RS. 4 9,23,730/- WHILE FRAMING THE ASSESSMENT ORDER THE AO MADE ADDITION ON ACCOUN T OF INTEREST INCOME OF RS. 5,95,795/- AND ADDITION ON ACCOUNT OF SALARY OF PARTNERS FOR RS.16,80,620/-, ADDITION ON ACCOUNT OF CERTAIN EXP ENSES OF RS. 1,27,290/- AND DISALLOWANCE ON ACCOUNT OF LEASE RENT OF CAR WO RTH RS. 13,750/- AND IN THE ASSESSMENT ORDER DATED 23-12-2008. THE AO SIMUL TANEOUSLY, ISSUED NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C ) OF THE ACT DATED 23-12- 2008. NO APPEAL WAS FILED BY ASSESSEE AGAINST THE A DDITIONS IN THE QUANTUM 310/MUM/2017 3 ASSESSMENT. THE SHOW CAUSE NOTICE WAS CONTESTED BY THE ASSESSEE BY FILING REPLY DATED 08-06-2009. IN THE REPLY THE ASS ESSEE CONTENDED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE INF ORMED ABOUT THE ERRORS IN THE RETURN OF INCOME AND VIDE APPLICATION DATED 21-11-2008, ASSESSEE ADMITTED THE ERROR AND FILED REVISE COMPUTATION OF INCOME AND PRAYED THAT THE PENALTY PROCEEDINGS BE DROPPED. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND LEVIED THE PENALTY FOR F URNISHING THE INACCURATE PARTICULARS OF INCOME AT THE RATE OF 100% OF THE TA X SOUGHT TO BE EVADED VIDE ORDER DATED 29-06-2009. ON APPEAL BEFORE CIT(A ), THE PENALTY WAS SUSTAINED. THUS, FURTHER AGGRIEVED BY THE ORDER OF CIT(A), THE PRESENT APPEAL IS FILED BEFORE TRIBUNAL. 4. WE HAVE HEARD THE LEARNED AR FOR ASSESSEE AND DR FOR REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. A R FOR THE ASSESSEE ARGUED THAT THE NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) DATED 23.12.2008 WAS INVALID. THE AO HAS NOT STRIKE OUT T HE IRRELEVANT PORTION OF THE NOTICE TO SPECIFY WHETHER THE PENALTY IS INITIA TED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS. THE LEARNED AR FOR THE ASSESSEE PLACED COPY OF NOTICE DATED 23-12-2008 ON RECORD. IT WAS FURTHER ARGUED THAT NON-STRIKE OF THE IRRELEVANT PORTION OF SHOW CAUSE NOTICE REFLECTS THE NON-APPLICATION OF MIND BY AO. THE PENALTY P ROCEEDINGS ARE BASED ON THE SUCH ARE INVALID. IT WAS SUBMITTED THAT THE SU BMISSION RAISED BY THE LEARNED AR FOR THE ASSESSEE ARE PURELY LEGAL IN NAT URE WHICH GOES TO THE ROOT OF THE CASE. IN SUPPORT OF HIS SUBMISSION THE LEARNED AR FOR THE ASSESSEE RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (BOM) IN ITA NO. 1154 OF 2014 AND 310/MUM/2017 4 DATED 05-01-2017 AND THE DECISION OF TRIBUNAL IN GUPTA GEM HOUSE PRIVATE LTD. VS ITO IN ITA NO. 7370, 7371 OF 2014 DATED 17- 05-2017. ON MERIT, IT WAS ARGUED THAT THE ASSESSEE HAS NOT CONCEALED ANY PART ICULAR OF INCOME OR DETAILS AND PARTICULARS WERE PROVIDED TO THE AO WHILE FURNI SHING REVISED RETURN OF INCOME. THE ASSESSEE POINTED OUT THE ERRORS DURING THE ASS ESSMENT PROCEEDINGS, THE ERRORS WERE RECTIFIED BY FILING REVISED RETURN OF I NCOME. IT WAS ARGUED THAT MERE, DISALLOWANCE OF BONAFIDE CLAIM THE PENALTY UNDER SE CTION 271(1)(C) OF THE ACT IS NOT LEVIABLE. IN SUPPORT OF HIS SUBMISSION THE LD. AR RELIED UPON THE DECISION OF APEX COURT IN CIT VS RELIANCE PETROPRODUCTS 322 ITR 158( SC). ON THE OTHER HAND, THE LEARNED DR FOR THE REVENUE SUPPORTED THE ORDER OF A UTHORITIES BELOW. IT WAS ARGUED THAT THE ASSESSEE WAS NOT RAISED A SPECIFIC LEGAL GROUND ON JURISDICTIONAL ISSUE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE L D. REPRESENTATIVE OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE PERUSAL OF NOTICE UNDER SECTION 270(4) AND READ WITH SECTION 2 71(1)(C) OF THE ACT REVEALS THAT THE AO HAS NOT STRIKE OUT THE IRRELEVA NT PORTION IN SAID NOTICE. THE ASSESSING OFFICER INITIATED THE PENALTY FOR FUR NISHING OF INACCURATE PARTICULARS OF INCOME HOWEVER, WHILE ISSUING THE NO TICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT, THE AO HAS NOT SPECIFIED UNDER WHICH LIMB, PENALTY IS INITIATED. IT IS SETTLED LAW THAT BOTH THE LIMBS ARE HAVING DIFFERENT CONNOTATION AND CARRY DIFFERENT MEANINGS. WE HAVE SEEN THAT THE COORDINATE BENCH IN GUPTA GEM HOUSE PRIVATE LTD. ( SUPRA) WHILE DEALING WITH THE SIMILAR ISSUE PASS THE FOLLOWING ORDER: - 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD INCLUDING CITED CAS E LAWS. SINCE THE LEGAL GROUNDS GOES TO THE ROOTS OF THE MA TTE, WE TAKE UP THE SAME FIRST. A PERUSAL OF THE QUANTUM ASSESSMENT ORDER REVEALS THAT THE PENALTY HAS BEEN INITIATED WITHOUT SPECIFYING THE LIMB I.E. FURNISHI NG OF INACCURATE PARTICULARS OF INCOME / CONCEALMENT OF 310/MUM/2017 5 INCOME FOR WHICH THE PENALTY WAS BEING INITIATED AS BOTH THE LIMBS, AS PER SETTLED LEGAL PROPOSITIONS, ARE D IFFERENT CONNOTATIONS AND CARRY DIFFERENT MEANING. THE SAME ALSO BECOMES CLEAR FROM THE LANGUAGE OF SHOW-CAUSE NOTICE WHICH STATES THAT THE ASSESSEE HAVE CONCEALE D THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. EVEN THE SHOW-CAUSE NOTICE D ID NOT SPECIFY THE LIMB I OFFENCE FOR WHICH THE PENALT Y WAS BEING INITIATED. FINALLY, THE PENALTY HAS BEEN LEVI ED FOR FILING OF INACCURATE PARTICULARS OF INCOME LEADING TO CONCEALMENT OF INCOME WHICH SHOWS INCONSISTENT THINKING ON THE PART OF AO. UNDISPUTEDLY, THE AO WA S REQUIRED TO SPECIFY THE EXACT CHARGE FOR WHICH THE ASSESSEE WAS BEING PENALIZED WHICH HE HAS FAILED TO DO SO AND THE SAME HAS RESULTED INTO TAKING AWAY ASSESSEE'S VALUABLE RIGHT OF CONTESTING THE SAME AN D THEREBY VIOLATES THE PRINCIPLES OF NATURAL JUSTICE. OUR VIEW IS FORTIFIED BY THE CITED JUDICIAL PRONOUNCEME NTS OF SUPERIOR COURT AND EVEN THE SLA FLIED BY THE REVENU E IN CIT VS. SSA'S EMERALD MEADOWS [SUPRA] HAS BEEN DISMISSED BY THE APEX COURT, BEING DEVOID OF ANY MERITS. EVEN IN THE CASE OF CIT VS. SMT. KAUSHALYA [SUPRA], THE HON'BLE JURISDICTIONAL HIGH COURT OBSE RVED THAT THE NOTICE ISSUED UNDER SECTION 274 MUST REVEA L APPLICATION OF MIND BY THE ASSESSING OFFICER AND TH E ASSESSEE MUST BE AWARE OF THE EXACT CHARGE ON WHICH HE HAD TO FILE HIS EXPLANATION. IT WAS FURTHER OBSE RVED THAT VAGUENESS AND AMBIGUITY IN THE NOTICE DEPRIVES THE ASSESSEE OF REASONABLE OPPORTUNITY TO CONTEST THE S AME. THEREFORE, VIEWED IN THE LIGHT OF PRINCIPLES LAID D OWN IN THE JUDICIAL PRECEDENTS DISCUSSED HEREINABOVE, WE A RE INCLINED TO CONCLUDE THAT THE PENALTY PROCEEDINGS S TOOD VITIATED FOR WANT OF PRINCIPLES OF NATURAL JUSTICE AND HENCE LIABLE TO BE QUASHED. ACCORDINGLY, WE DELETE THE SAME AND ALLOW THE ASSESSEES APPEAL ON LEGAL GROUNDS. 310/MUM/2017 6 CONSIDERING THE DECISION OF CO-ORDINATE BENCH AND THE LATEST DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SA MSON PERINCHERY (S UPRA) , WE ACCEPT THE SUBMISSION OF LD. AR OF THE ASSESSEE ON JURISDICTIONAL/ LEGAL ISSUE. AS WE HAVE ACCEPTED THE SUBMISSION OF THE LD . AR FOR ASSESSEE ON JURISDICTIONAL ISSUE, RESULTANTLY THE GROUNDS OF AP PEAL RAISED BY THE ASSESSEE AE ALLOWED. SA NO. 310/MUM/2017 (ARISING IN ITA NO. 305/MUM/201 3) 7. CONSIDERING THE FACT THAT WE HAVE ALLOWED THE AP PEAL OF THE ASSESSEE, HENCE, THE STAY APPLICATION FILED BY THE ASSESSEE B ECAME INFRUCTUOUS. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO. 30 5/MUM/2013 IS ALLOWED AND THE STAY APPLICATION OF THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 23-06-2017. SD/ SD/ (G.S PANNU) (PAWAN SINGH) ACCOUNTANT MEMEBR JUDICIAL MEMBER MUMBAI, DATED: 23-06-2017 SUDIP SARKAR /SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, /TRUE CO// ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE.