Shri Divyesh Chhaganlal Patel, Ahmedabad V. The Income Tax Officer, Ward-7(1)(5), Ahmedabad

ITA 3196/AHD/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3544 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-11-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 02-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NK GOEL
• Section: 271(1)(c); 274; 143(2)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO. 3196/AHD/2016 / ASSESSMENT YEAR: 2010-11 SHRI DIVYESH CHHAGANLAL PATEL C/27, UMA FLATS, BEHIND VISHRAM NAGAR SOCIETY GURUKUL ROAD, MEMNAGAR AHMEDABAD 380 052. PAN : ABEPP 0203 B VS ITO, WARD-7(1)(5) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI PRITESH SHAH, AR REVENUE BY : SHRI N.K. GOEL, SR.DR / DATE OF HEARING : 13/11/2019 /DATE OF PRONOUNCEMENT : /11/2019 O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-7, AHMEDABAD DATED 10.10.2016 PASSED FOR THE ASSTT.YEAR 2010-11. 2. SOLE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING IMPOSITION OF PENALTY OF RS .7,34,685/- BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 3. BRIEF FACTS OF THE CASE AS IT EMERGES FROM THE R ELEVANT RECORD ARE THAT THE ASSESSEE WAS SALARIED EMPLOYEE OF THE STAT E GOVERNMENT UNDERTAKING. HE FILED HIS RETURN OF INCOME ON 1.9. 2010 SHOWING TOTAL INCOME AT RS.3,49,624/-. THE SAME WAS PROCESSED UN DER SECTION 143(1); HOWEVER, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AS ITA NO.3196/AHD/2016 - 2 PER CASS AND ISSUED AND SERVED NOTICE UNDER SECTION 143(2) OF THE ACT. ON THE BASIS OF AIR INFORMATION RECEIVED, IT REVEALED TO THE DEPARTMENT THAT ASSESSEE HAS DEPOSITED CASH OF RS.2 5,30,000/- IN HIS SAVING BANK ACCOUNT NO.20045821969 WITH STATE BANK OF INDIA, CIVIL HOSPITAL, AHMEDABAD. THE LD.AO CALLED FOR BANK ST ATEMENT FROM THE BANK, AND HE NOTICED THE CASH DEPOSITS IN THE ASSES SEES ACCOUNT AS UNDER: DATE AMOUNT DEPOSITED REMARKS 09/10/2019 25,00,000 CASH DEPOSITED 09/10/2019 - RS.12,00,000 WITHDRAWAL BY CHEQUE NO.275346 09/10/2019 - RS.13,00,000 WITHDRAWAL BY CHEQUE NO.275347 10/1 1 /2019 7,000 CASH DEPOSITED 10/1 1 /2019 8,000 CASH DEPOSITED 14/12/2019 15,000 CASH DEPOSITED TOTAL 25,30,000/ - 4. THE LD.AO SOUGHT EXPLANATION FROM THE ASSESSEE S OURCE OF THE CASH FOR MAKING THE DEPOSITS AND ALSO SHOW CAUSED AS TO WHY THE ABOVE CASH DEPOSITS SHOULD NOT BE TREATED AS DEPOSITS MADE FRO M UNDISCLOSED INCOME. HOWEVER, THE ASSESSEE IN HIS REPLY DENIED HAVING MADE SUCH DEPOSITS IN THE BANK AND CONTENDED THAT THESE WERE MISTAKES COMMITTED BY THE BANK OFFICIALS. IT WAS CONTENDED BY THE AS SESSEE THAT WHEN THE BANK COMMITTED THE MISTAKE, TO REVERSE THE SAID ENT RY, THE ASSESSEE WAS ASKED TO GIVE TWO CHEQUES ON THE SAME DAY I.E. FOR RS.12.00 LAKHS AND RS.13.00 LAKHS. THEY WERE SIMPLE PAPER TRANSACTION S AT THE INSTANCE OF THE BANK WITHOUT PHYSICAL MOVEMENT OF CASH, AND THE REFORE, NO ADDITION ITA NO.3196/AHD/2016 - 3 COULD BE MADE TO THE INCOME OF THE ASSESSEE. THE LD.AO DID NOT SATISFY WITH THE EXPLANATION OF THE ASSESSEE, AND HE MADE A DDITION OF RS.25.00 LAKHS TO THE INCOME OF THE ASSESSEE. ACTION OF THE AO WAS CHALLENGED BEFORE THE LD.FIRST APPELLATE AUTHORITY, BUT OF NO AVAIL. ACCORDINGLY, THE LD.AO INITIATED PENALTY PROCEEDINGS BY ISSUANCE OF NOTICE UNDER SECTION 274 R.W.S 271(1)(C) OF THE ACT. IN THE PENALTY PRO CEEDINGS, THE ASSESSEE REITERATED ITS SUBMISSIONS, BUT DID NOT SATISFY THE LD.AO, WHO IMPOSED PENALTY OF RS.7,34,685/- BEING MINIMUM PENALTY LEVA BLE UNDER SECTION 271(1)(C) OF THE ACT. ACTION OF THE AO WAS CONFIRM ED BY THE LD.FIRST APPELLATE AUTHORITY. ASSESSEE IS NOW BEFORE ME IN FURTHER APPEAL. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. IT IS PERTINENT TO MENTION HE RE THAT THE ASSESSEE HAD CHALLENGED ADDITION ON WHICH PENALTY HAS BEEN IMPOS ED VIDE QUANTUM APPEAL IN ITA NO.362/AHD/2014. THIS APPEAL HAS BEE N DISMISSED BY ME ON MERIT, AND ORDERS OF THE REVENUE AUTHORITIES STAND CONFIRMED. HOWEVER, WHILE GOING THROUGH THE IMPUGNED PENALTY O RDER, I AM OF THE VIEW THAT THE SAME HAS TO BE ANALYSISED FROM DIFFER ENT ANGLE. A PERUSAL OF THE PENALTY ORDER WOULD INDICATE THAT THE LD.AO HAS IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT WITHOUT RECORDIN G ANY CATEGORICAL FINDING, WHETHER IT IS BEING IMPOSED FOR CONCEALMEN T OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE L D.AO JUST IN ONE-LINE HELD THAT PENALTY HAS BEEN IMPOSED FOR CONCEALING TRUE PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME. HONBLE GUJARAT HIGH COURT IN THE CASE OF SNITA TRANSPORT P .LTD. VS. ACIT, (2014) REPORTED 42 TAXMANN.COM 54 (GUJ) HAS PROPOUNDED THA T THE ASSESSING OFFICER OUGHT TO HAVE RECORDED CATEGORICAL FINDING FOR THE BREACH FOR ITA NO.3196/AHD/2016 - 4 WHICH HE IMPOSING PENALTY UPON THE ASSESSEE. THE DISCUSSION MADE BY THE HONBLE COURT IN PARA-9 IS WORTH TO NOTE. I T READS AS UNDER: 9. REGARDING THE CONTENTION THAT THE ASSESSING OFF ICER WAS AMBIVALENT REGARDING UNDER WHICH HEAD THE PENALTY WAS BEING IM POSED NAMELY FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS, WE MAY RECORD THAT THOUGH IN THE ASSESSMENT ORDER T HE ASSESSING OFFICER DID ORDER INITIATION OF PENALTY ON BOTH COUNTS, IN THE ULTIMATE ORDER OF PENALTY THAT HE PASSED, HE CLEARLY HELD THAT LEVY O F PENALTY IS SUSTAINED IN VIEW OF THE FACT THAT THE ASSESSEE HAD CONCEALED TH E PARTICULARS OF INCOME. THUS INSOFAR AS FINAL ORDER OF PENALTY WAS CONCERNE D, THE ASSESSING OFFICER WAS CLEAR AND PENALTY WAS IMPOSED FOR CONCE ALING PARTICULARS OF INCOME. IN LIGHT OF THIS, WE MAY PERUSE THE DECISIO N OF THIS COURT IN CASE OF MANU ENGINEERING WORKS (SUPRA). IN THE SAID DECIS ION, THE DIVISION BENCH CAME TO THE CONCLUSION THAT LANGUAGE OF 'AND/ OR' MAY BE PROPER IN ISSUING A NOTICE FOR PENALTY, BUT IT WAS INCUMBENT UPON THE ASSESSING AUTHORITY TO COME TO A POSITIVE FINDING AS TO WHETH ER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER AN Y INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY TH EM. IF NO SUCH CLEAR CUT FINDING IS REACHED BY THE AUTHORITY, PENALTY CA NNOT BE LEVIED. IT WAS A CASE IN WHICH IN FINAL CONCLUSION THE AUTHORITY HAD RECORDED THAT 'I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE A SSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PART ICULARS OF SUCH INCOME.' IT WAS IN THIS RESPECT THE BENCH OBSERVED THAT 'NOW THE LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOT ICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI-CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSE SSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURN ISHED BY THE ASSESSEE. NO SUCH CLEAR CUT FINDING WAS REACHED BY THE IAC AN D, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS L IABLE TO BE STRUCK DOWN.' 6. AS PER THE ABOVE JUDGMENT IF AN ASSESSING OFFICE R USED EXPRESSION OR IN BETWEEN THE CONCEALMENT OF INCOME/FURNISHIN G INACCURATE PARTICULARS, THEN THAT SHOW CAUSE NOTICE BE NOT FAT AL TO THE PROCEEDINGS, BUT WHILE VISITING THE ASSESSEE WITH PENALTY THE LD .AO OUGHT TO HAVE RECORDED A SPECIFIC FINDING, FOR WHICH BREACH, HE H AS VISITED THE ASSESSEE ITA NO.3196/AHD/2016 - 5 WITH PENALTY I.E. WHETHER HE HAS VISITED THE ASSESSEE WITH PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. IN THE PENALTY ORDER HE CANNOT USE BOTH THE EXPRESS ION. WHILE ISSUING SHOW CAUSE NOTICE UNDER SECTION 274 R.W.S. 271(1)(C ) OF THE ACT FOR INVITING EXPLANATION OF THE ASSESSEE, AS TO WHY PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT BE NOT IMPOSED UPON THE ASSESS EE, CAN USE EXPRESSION OR BETWEEN FURNISHING INACCURATE PARTI CULARS VIS--VIS CONCEALMENT OF INCOME. HOWEVER, WHILE ADJUDICATING THE ISSUE REGARDING IMPOSITION OF PENALTY, THE LD.AO HAS TO R ECORD A CONCLUSIVE FINDING FOR WHICH HE IS IMPOSING THE PENALTY, I.E. WHETHER HE IS IMPOSING PENALTY FOR FURNISHING INACCURATE PARTICUL ARS OF INCOME OR FOR CONCEALMENT OF INCOME. THE LD.AO CANNOT USE PHRASE THAT PENALTY IS BEING IMPOSED FOR FURNISHING INACCURATE PARTICULARS /CONCEALMENT OF INCOME. THIS PHRASEOLOGY DOES NOT DISCLOSE THE FOR MATION OF OPINION AT THE END OF THE ASSESSING OFFICER, AND SUCH PENALTY ORDER IS NOT SUSTAINABLE. THUS, I CANCEL THE IMPUGNED PENALTY A ND ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 14 TH NOVEMBER, 2019. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 14 /11/2019