M/s. Shivaji Yashwant Karpe, Ahmednagar V. Income-tax Officer, Ward - 4, Ahmednagar

ITA 3087/PUN/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0720 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 27-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Initiation of penalty proceedings; Reasonable cause; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , ' BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO.3087/PUN/2017 / ASSESSMENT YEAR : 2008-09 M/S. SHIVAJI YASHWANT KARPE, PASAYDAN, JAYPRAKASH ROAD, RANGARALLI, SANGAMNER, AHMEDNAGAR 422 605 PAN : ABIPK4400B /APPELLANT VS. ITO, WARD-4, AHMEDNAGAR . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : SHRI M.K. VERMA / DATE OF HEARING : 27.09.2018 / DATE OF PRONOUNCEMENT: 03.10.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF C IT(A)-2, PUNE, DATED 11-08-2017 FOR THE ASSESSMENT YEAR 2008-09. 2. CONDONATION OF DELAY : THERE IS DELAY OF 78 DAYS IN FILING THIS APPEAL BEFORE THE TRIBUNAL. IN THIS CONNECTION, LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE AFFIDAVIT GIVEN BY THE ASSESSEE DAT ED 26-12-2017 AND DEMONSTRATED THE DELAY. THE CONTENTS OF THE AFFIDAVIT READ AS UNDE R : THIS ORDER WAS DELIVERED TO MY CONSULTANT FOR FURT HER ACTION OF FILING AN APPEAL, HOWEVER, DUE TO HEAVY PRESSURE OF STATUTORY OBLIGATION IN THE MONTH OF OCTOBER AND NOVEMBER, 2017, HE COULD NOT FILE TH E APPEAL DOCUMENTS IN TIME, WHICH HAS RESULTED INTO THE DELAY IN FILING T HE APPEAL BEFORE THE HONBLE TRIBUNAL DUE TO THIS REASON THERE IS A DELAY OF APPROXIMATE 78 DAYS. ITA NO.3087/PUN/2017 M/S. SHIVAJI YASHWANT KARPE 2 WITH THIS AFFIDAVIT I MOST HUMBLY PRAY BEFORE YOUR H ONOURS TO CONDONE THE DELAY AND ADMIT THE APPEAL. 3. AFTER HEARING THE LD. COUNSEL FOR THE ASSESSEE AND PE RUSING THE CONTENTS OF THE AFFIDAVIT, WE ARE OF THE OPINION THAT THERE WAS A REASONABLE CAUSE FOR THE ASSESSEE TO FILE THE APPEAL BEFORE THE ITAT WITH DELAY OF 78 DAYS. THE LAPSE ON THE TAX CONSULTANT SHOULD NOT MAKE THE ASSESSEE HELPLESS. THEREFORE, WE CONDONE THE DELAY AND ADMIT THE A PPEAL FOR ADJUDICATION. PENALTY LIMBS RELATED ISSUE 4. BRIEFLY STATED RELEVANT FACTS OF THE ASSESSEE INCLUDE T HAT THE ASSESSEE IS ENGAGED IN MEDICAL PROFESSION AND ALSO DERIVES INCOME FRO M AGRICULTURE. DURING THE IMPUGNED ASSESSMENT YEAR, ASSESSEE FILED THE R ETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,20,000/-. AS PER THE AIR INFO RMATION, AO CAME TO KNOW THAT THE ASSESSEE IS MAINTAINING SAVINGS BA NK ACCOUNT WITH DENA BANK, SANGAMNER AND THE SAME WAS NOT DISCLOSED IN THE RETURN OF INCOME. IN THE ASSESSMENT PROCEEDINGS U/S.143(3) OF THE A CT, AO MADE OF ADDITION OF RS.19,82,640/- ON ACCOUNT OF UNEXPLAINED CASH DE POSITS MADE IN DENA BANK, SANGAMNER AND REJECTED THE EXPLANATION OF THE ASSESS EE THAT THE SAID DEPOSITS PERTAIN TO THE AGRICULTURAL INCOME OF THE HUF. PENALTY PROCEEDINGS U/S.271(1)(C) R.W.S. 274 OF THE I.T. ACT ARE ALSO INITIATED ON THE ASSESSEE FOR CONCEALING THE PARTICULARS OF INCOME AND EVEN TUALLY LEVIED PENALTY OF RS.6,03,143/-. THE CIT(A), IN THE QUANTUM PROCEED INGS, CONFIRMED THE ADDITION MADE BY THE AO. AGGRIEVED WITH S AID ORDER OF CIT(A), THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUN AL AND THE TRIBUNAL VIDE ITS ORDER DATED 12-08-2016 DISMISSED THE AP PEAL OF THE ASSESSEE. ITA NO.3087/PUN/2017 M/S. SHIVAJI YASHWANT KARPE 3 5. AGAINST THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT ALSO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) RELY ING ON THE JUDGMENT OF ALLAHABAD HIGH COURT IN THE CASE OF SHANTI SWA RUP BHATNAGAR VS. CIT 279 ITR 451 AS WELL AS THE JUDGMENT OF HONBLE M ADRAS HIGH COURT IN THE CASE OF K.PILLAI VS. CIT 108 ITR 612 CONFIRMED THE PEN ALTY LEVIED BY THE AO BY HOLDING AS UNDER : 4.5 IN THE LIGHT OF AFORESAID FACTS OF THE CASE AN D DECISIONS CITED, IT IS HELD THAT THE APPELLANT IS LIABLE FOR CONCEALING THE PARTICULARS OF INCOME WITH REGARD TO CASH DEPOSITS OF RS.19,82,640/ IN THE UND ISCLOSED BANK ACCOUNT MAINTAINED WITH DENA BANK. THE ADDITION MADE BY TH E AO WAS CONFIRMED BY CIT(A) AS WELL AS BY THE ITAT, PUNE BENCH . I THEREFORE UPHOLD THE ORDER OF THE AO IN LEVYING PENALTY U/S.271(1)(C) AT RS.6,03,143/-. 6. NOW THE ASSESSEE FILED THE APPEAL CHALLENGING THE PENA LTY LEVIED BY THE AO AND UPHELD BY THE CIT(A) WITH THE FOLLOWING SOLITARY GROUND : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LOWER AUTHORITIES HAVE ERRED IN LEVYING THE PENALTY U/S.271(1)(C) A SUM OF RS.6,03,143/- BY REJECTING APPELLANTS CONTENTION IN THIS REGARD. 7. AT THE OUTSET, IN THE PROCEEDINGS BEFORE US, LD. COUN SEL FOR THE ASSESSEE RAISING THE ORAL GROUND RELATING TO RECORDING OF SATISFACTION BY THE AO SUBMITTED THAT THIS IS A CASE WHERE THE AO FAILED TO R ECORD VALID SATISFACTION IN THE ASSESSMENT ORDER AS WELL AS DURING THE PENALTY PROCEEDINGS. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A S PECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) O F 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 TH AT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER AS WELL AS THE PENALT Y ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. ITA NO.3087/PUN/2017 M/S. SHIVAJI YASHWANT KARPE 4 8. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO/CIT(A ). 9. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS O F THE REVENUE. BEFORE PROCEEDING TO ADJUDICATE THE SOLITARY ISSUE RAISED BY THE ASSESSEE, WE PROCEED TO ADMIT THE ORAL GROUND (LEGAL IN NATURE) RAIS ED BY THE ASSESSEE REGARDING THE RECORDING OF PROPER SATISFACTION BY THE AO. IN THIS CONNECTION, WE PERUSED THE ASSESSMENT ORDER DATED 09- 12-2010 AND FIND THE SATISFACTION RECORDED BY THE AO FOR INITIATING THE PENA LTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THEREFOR E, THE SAME IS REPRODUCED AS UNDER : ............. ISSUE SHOW CAUSE NOTICE U/S.271(1)(C) R.W.S. 274 OF THE I.T. ACT, 1961 FOR CONCEALING THE PARTICULARS OF INCOME OF RS.19,86,561/- AND AGRICULTURE INCOME OF RS.30,000/-.............. . 9.1 WE ALSO PERUSED THE PENALTY ORDER DATED 30-03-2016 AND FIND THE SATISFACTION RECORDED BY THE AO FOR LEVYING THE PENALTY U/ S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS UNDER: 8. .................... ........................... I AM THEREFORE SATISFIED THE INACCURATE PARTICULARS OF CASH DEPOSITED IN BANK ACCOUNT. ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALED THE INCOME OF RS.19,82,640/-, BEING UNDISCLOSED CASH DEPOSIT. FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO MENTIONED THE LIMB CONCEALED THE PARTICULARS OF INCOME WHEREAS WHILE LEVYING THE PENALTY, AO MENTIONED BOTH LIMBS ( FURNISHED INACCURATE PARTICULARS OF INCOME AND THER EBY CONCEALED THE INCOME) OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APPLICABILITY OF SPECIFIC LIMB. THEREFORE, WE ARE OF THE OPINION THAT CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS SU CH PENALTY ORDER ITA NO.3087/PUN/2017 M/S. SHIVAJI YASHWANT KARPE 5 IS UNSUSTAINABLE IN LAW LEGALLY. IT IS A SETTLED LEGAL PROPOS ITION THAT THE AO IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB 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 PENALTY, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, THE ORDER OF CIT(A) IS SET-ASIDE AND DIRECT THE AO TO DELETE THE PENALTY ON TECHNICAL GROUNDS WITHOUT GOING INTO MERITS OF THE CASE. 10. SINCE WE HAVE ALLOWED THE ORAL GROUND RAISED BY THE A SSESSEE, IN OUR VIEW, ADJUDICATION OF GROUND RAISED BY THE ASSESSEE IN TH E APPEAL BECOMES AN ACADEMIC EXERCISE. THEREFORE, THE SAID GROUND IS DISMISSED AS ACA DEMIC. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED ON TECHNICALITIES. ORDER PRONOUNCED ON THIS 03 RD DAY OF OCTOBER, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 03 RD OCTOBER, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-2, PUNE. 4. / THE PR.CIT-1, PUNE. 5. , , / DR B, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.