Amar Manjrekar, Pune V. Deputy Commissioner of Income-tax,

ITA 324/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7518 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-08-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 27-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Initiation of penalty proceedings

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . . . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 324/PUN/2015 / ASSESSMENT YEAR : 2009-10 SHRI AMAR MANJREKAR, 418, SINDH COOPERATIVE SOCIETY, BANER ROAD, PUNE 411 007 PAN : AFGPM5599H . / APPELLANT V/S DCIT, CENTRAL CIRCLE - 2(1), PUNE . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI AJAY MODI / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF CIT(A)-12, PUNE DATED 28-01-2015 PASSED U/S.271(1)(C) OF THE ACT FO R THE ASSESSMENT YEAR 2009- 10. AO LEVIED PENALTY OF RS.69,74,391/- U/S.271(1) (C) OF THE ACT. 2. ASSESSEE RAISED 8 GROUNDS WHICH ARE EITHER ARGUM ENTATIVE OR GENERAL IN NATURE. WHILE DISMISSING THE ABOVE SAID SEVEN GROU NDS, WE FOUND THAT THEY ALL REVOLVE AROUND THE COMMON ISSUE RAISED IN GROUND NO .1 AND WE PROCEED TO EXTRACT THE GROUND WHICH READS AS UNDER : 1. THE LD.CIT(A) ERRED IN CONFIRMING THE LEVY OF P ENALTY U/S.271(1)(C) OF RS.69,74,391/-. / DATE OF HEARING : 23.08.2017 / DATE OF PRONOUNCEMENT: 30.08.2017 2 ITA NO.324/PUN/2015 SHRI AMAR MANJREKAR 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND ORIGINALLY FILED THE RETURN OF INCOME ON 17-12-2009 DECLARING TOTAL INCOME OF RS.12,83,31,220/-. ON 08-09-2010, THERE WAS SEARCH ACTION ON THE ASSESSEE U/S.132 OF THE ACT AND THE ASSESSEE DECLARED RS.2 C RORES AS HIS ADDITIONAL INCOME WHICH CONSTITUTES ON-MONEY RECEIVED ON SALE OF TH E FLATS. IN RESPONSE TO NOTICE U/S.153A, ASSESSEE FILED THE RETURN OF INCOME ON 16 -10-2012 DISCLOSING TOTAL INCOME OF RS.14,83,31,220/- WHICH INCLUDES THE SAID ADDITIONAL INCOME OF RS.2 CRORES. AO ASSESSED THE TOTAL INCOME OF THE ASSESS EE AT RS.14,89,16,841/-. REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE AO ALSO INITIATED PENALTY PROCEEDINGS SEPARATELY AND LEVIED PENALTY OF RS.69, 74,391/- @100% OF THE TAX SOUGHT TO BE EVADED ON THE ADDITIONAL INCOME OF RS. 2 CRORES OFFERED BY THE ASSESSEE. CIT(A) CONFIRMED THE SAME. 4. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE AS SESSEE BROUGHT OUR ATTENTION TO THE ADDITIONAL GROUND RAISED BY THE A SSESSEE AND READ OUT THE FOLLOWING : 1. THE ASSESSEE SUBMITS THAT THE NOTICE ISSUED U/S .273 R.W.S 271(1)(C) WAS WITHOUT PROPER APPLICATION OF MIND AND HENCE, THE P ENALTY ORDER PASSED U/S.271(1)(C) IS BAD IN LAW AND THE PENALTY LEVIED MAY KINDLY BE DELETED. 5. ELABORATING ON THE SAID ADDITIONAL AND LEGAL GRO UND, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ORDER OF THE AO WHICH CONTAINED THE INITIAL SATISFACTION FOR INITIATING THE PENALTY U/S.271(1)( C) OF THE ACT IN RESPECT OF THE SAID ADDITIONAL INCOME OF RS.2 CRORES. HE READ OUT THE RELEVANT LINES FROM PARA NO.5 OF THE ORDER AND SUBMITTED THE SAME IS NOT SPE CIFIC TO ANY ONE OF THE LIMBS PROVIDED IN CLAUSE (C) TO SECTION 271(1) OF THE ACT . FURTHER, BRINGING OUR ATTENTION TO THE PENALTY ORDER DATED 27-09-2013, LD . COUNSEL FOR THE ASSESSEE READ OUT THE RELEVANT LINES FROM PARA NO.5 AND SUBM ITTED THAT THE AO IS AMBIGUOUS IN HIS MIND REGARDING THE CORRECTNESS OF THE LIMB THAT DEALS WITH THE SAID AMOUNT OF RS.2 CRORES, IF IT CONSISTS OF CASE OF CONCEALED INCOME OR A CASE 3 ITA NO.324/PUN/2015 SHRI AMAR MANJREKAR OF FURNISHING OF INACCURATE PARTICULARS OF SUCH IN COME. HE ALSO DREW OUR ATTENTION TO THE NOTICES ISSUED U/S.274 DATED 19-0 3-2013 AND DATED 23-08-2013 (TWO OFFICERS ISSUED THE SAID NOTICES AT DIFFERENT TIME; MAY BE DUE TO CHANGE IN INCUMBENCY). AS PER THE ABOVE, NOTICES ISSUED WERE FOR VIOLATION OF BOTH THE LIMBS OF CLAUSE (C) TO SECTION 271(1) OF THE ACT. IT IS THE SUMMARY OF THE ARGUMENTS OF THE LD. COUNSEL THAT ON THIS LEGAL ISS UE/ADDITIONAL GROUND, BY NOT SPECIFYING THE APPLICABLE LIMB OF CLAUSE (C) TO SEC TION 271(1) OF THE ACT, THE AOS AMBIGUITY IN MIND IS VERY CLEAR. THEREFORE, THE PE NALTY PROCEEDINGS SUFFERS FROM INCURABLE DEFICIENCIES. FOR THE PROPOSITION, HE RE LIED ON VARIOUS JUDGMENTS INCLUDING THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN INCOME TAX APPEAL NO.1154 OF 2014 WITH OTHER INCOME TAX APPEAL NOS. 953 OF 2014, 1097 OF 2014 AND 1226 OF 2014 JUD GMENT DATED 05-01-2017 AND JUDGMENT OF HONBLE KARNATAKA HIGH COURT JUDGMENT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (359 ITR 565) AND SUBMITTED THAT THE PENALTY IS NOT SUSTAINABLE WHEN THERE IS NO CLEAR S ATISFACTION RECORDED BY THE AO AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS. 6. LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HEAVILY RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 7. WE HEARD BOTH THE PARTIES ON THIS LEGAL ISSUE/AD DITIONAL GROUND AND PERUSED THE ASSESSMENT ORDER/PENALTY ORDER AND THE TWO NOTICES ISSUED U/S.274 AND FIND THE FOLLOWING OPERATIONAL LINES ARE FOUND WORTH TO BE EXTRACTED IN THIS ORDER : (1) EXTRACT FROM THE ASSESSMENT ORDER (PARA NO.5) : 5. . . . . . . . . . . . HENCE, PROVISIONS OF EXPL ANATION -5A OF SEC.271(1) ARE CLEARLY APPLICABLE IN THIS CASE AND ASSESSEE HA S CONCEALED INCOME AS PER THE PROVISIONS. (2) EXTRACT FROM THE PENALTY ORDER (PARA NO.5) : 4 ITA NO.324/PUN/2015 SHRI AMAR MANJREKAR 5. IN VIEW OF ABOVE DISCUSSION, THE UNDERSIGNED I S OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS CONCEALED THE INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AND IS LIABLE FOR PENALTY U/S.271(1)(C) OF THE I.T. ACT, 1961 . . . . . . . . . . (3) EXTRACT FROM NOTICE U/S.274 R.W.S. 271(1)(C) OF THE ACT DT.19-03- 2013 : WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE A.Y. 2009-10, IT APPEARS TO ME THAT YOU : HAVE CONCEALED THE PARTICULARS OF YOUR INCOME AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. . . . (4) EXTRACT FROM NOTICE U/S.274 R.W.S. 271(1)(C) OF THE ACT DT.23-08- 2013 : WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE A.YRS. 2009-10 TO 2011-12, IT APPEARS TO ME THAT YOU HAVE CONCEALE D THE PARTICULARS OF YOUR INCOME AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. . . . 8. FROM THE ABOVE 4 EXTRACTS, THE AO IS FOUND TO HA VE USED OR AT ONE PLACE, AND AT OTHER PLACE AND CONCEALED THE PARTICULARS OF YOUR INCOME AT ONE PLACE AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AT OTHER PLACE ETC., NOWHERE, THE CORRECT LIMB OF CLA USE (C) TO SECTION 271(1) OF THE ACT IS CLEARLY REFERRED TO. IN VIEW OF THE DOCUMEN TS (ASSESSMENT ORDER/PENALTY ORDER/NOTICES U/S.274) CITED ABOVE, IN OUR CONSIDER ED VIEW, WITHOUT GOING INTO THE MERITS OF THE PENALTY AS WELL AS THE NATURE OF ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME FILES U/S.153A OF THE ACT. THE AMBIGUITY IN THE MIND OF THE AO IS OBVIOUS AT THE TIME OF INITIA TION AS WELL AS LEVY OF PENALTY PROCEEDINGS. ACCORDINGLY, THE ADDITIONAL GROUND RA ISED BY THE ASSESSEE IS ALLOWED. THEREFORE, OTHER GROUNDS ON MERITS ARE DI SMISSED AS ACADEMIC. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 30 TH AUGUST, 2017. 5 ITA NO.324/PUN/2015 SHRI AMAR MANJREKAR / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - 12, PUNE 4 . 5. THE CIT - 12, PUNE % , , B BENCH PUNE; 6 . / GUARD FILE.