Shri Kaushikaben A. Patel, Ahmedabad V. Income Tax Officer, Aurangabad

ITA 3331/AHD/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5324 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 02-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: ADITI SHETH
• Keywords: Initiation of penalty proceedings

Judgement Text

SMC-ITA NO. 3331/AHD/2015 KAUSHIKABEN A PATEL VS. ITO AY : 2009-10 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ] ITA NO. 3331/AHD/2015 ASSESSMENT YEAR : 2009-10 KAUSHIKABEN A PATEL ............APPELLANT 8, LAVKUSH SOCIETY, NR. VYAS WADI, NAVA WADAJ, AHMEDABAD 380 013 [PAN : AINPP 3805 B] VS. INCOME TAX OFFICER .......................RESPONDENT WARD 2 (2)(2), AHMEDABAD APPEARANCES BY: ADITI SHETH, FOR THE APPELLANT SONIA KUMAR, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 12.10.2018 DATE OF PRONOUNCING THE ORDER : 15.10.2018 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF ORDER DATED 2 ND NOVEMBER 2015 PASSED BY THE CIT(A) UPHOLDING THE P ENALTY IMPOSED UPON THE ASSESSEE UNDER SECTION 271(1)(C) O F THE INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2009-10. 2. GRIEVANCE OF THE ASSESSEE, IN SUBSTANCE, IS AGAI NST LEARNED CIT(A)S CONFIRMING THE PENALTY OF RS.4,10,000/-. 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE TAKEN NOTE OF. IN THIS CASE, AN ADDITION OF RS.13,09,800 /- WAS MADE IN THE HANDS OF THE ASSESSEE, FOR CASH DEPOSITS IN HIS BANK ACCOUNT WHI CH WERE TREATED AS UNEXPLAINED. THE MATTER DID NOT END AT THAT. THE ASSESSING OFFICER ALSO IMPOSED PENALTY UNDER SECTION 271(1)(C) IN RESPECT OF THE S AID ADDITION WHICH HAS BEEN CONFIRMED IN APPEAL AS WELL. THE ASSESSEE IS NOT S ATISFIED AND IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 5. I FIND THAT THE EXPLANATION OF THE ASSESSEE, ABO UT SOURCE OF CASH DEPOSITS, IS THAT THE DEPOSITS WERE MADE OUT OF CASH WITHDRAWN F ROM THE BANK IN PAST, BUT THEN NO SUPPORTING DETAILS ARE AVAILABLE. ON MERITS, HOW EVER, I DO NOT HAVE ANY REASONS SMC-ITA NO. 3331/AHD/2015 KAUSHIKABEN A PATEL VS. ITO AY : 2009-10 PAGE 2 OF 3 TO INTERFERE IN THE MATTER. HOWEVER, I FIND THAT I N THIS CASE PENALTY WAS INITIATED FOR CONCEALMENT OF INCOME BUT PENALTY WAS IMPOSED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . LEARNED DEPARTMENTAL REPRESENTATIVE ALSO DOES N OT DISPUTE THAT FACTUAL ASPECT. I FIND THAT, IN THE L IGHT OF DIVISION BENCH DECISIONS IN THE CASE OF ITO VS. RAMESHWAR R. MANIYAR (ITA NO.3206/A HD/2015; ORDER DATED 17.07.2018) AND KANTIBHAI N. PRAJAPATI VS. ITO (ITA NO.2880/AHD/2014; ORDER DATED 15.02.2018) WHICH BIND THIS SMC, SUCH A COU RSE OF ACTION IS NOT PERMISSIBLE. 5. WE HAVE CAREFULLY PERUSED THE QUANTUM ORDER PAS SED BY THE AO AS WELL AS PENALTY ORDER AND THE ORDER OF THE CIT(A) APPEAL ED AGAINST. A BARE PERUSAL OF THE ASSESSMENT ORDER PASSED UNDER S.143( 3) OF THE ACT DATED 05.12.2013 SHOWS THAT A SATISFACTION AS CONTEMPLATE D UNDER S. 271(1)(C) OF THE ACT R.W.S. 271(1B) HAS FORMED TOWARDS CONCEALME NT OF PARTICULARS OF INCOME IN RESPECT OF LONG TERM CAPITAL GAINS ARISIN G ON SALE OF CERTAIN IMMOVABLE PROPERTY. HOWEVER, A PERUSAL OF THE PENAL TY ORDER DATED 13.06.2014 PASSED UNDER S. 271(1)(C) OF THE ACT SHO WS THAT THE AO HAS SHIFTED FROM ITS ORIGINAL SATISFACTION AND IMPOSED PENALTY FOR DEFAULT COMMITTED ON ACCOUNT OF FILING 'INACCURATE PARTICUL ARS OF INCOME' WITH REFERENCE TO LONG TERM CAPITAL GAINS. THEREFORE, TH ERE IS A DEFINITE CHANGE IN THE BASIS OF INITIATION OF PENALTY PROCEEDINGS AND IMPOSITION THEREOF WHICH IS NOT PERMISSIBLE IN LAW. THE ISSUE IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH I N IN SHRI KANTIBHAI NARANBHAI PRAJAPATI VS. ITO ITA NO. 2880/AHD/2014 O RDER DATED 15.02.2018. THE RELEVANT OPERATIVE PARA OF THE ORDE R OF THE CO-ORDINATE BENCH IS REPRODUCED HEREUNDER: '8. WE STRAIGHT AWAY FIND THAT THE AO VIDE PENALTY ORDER DATED 25/11/2013 UNDER S.271(1)(C) OF THE ACT IMPOSED PEN ALTY ON ADDITIONS MADE ALLEGING 'CONCEALMENT OF PARTICULARS OF INCOME'. HOWEVER, THE CIT(A), ON THE OTHER HAND, HAS CONFIRM ED THE PENALTY ON THE GROUND OF 'FURNISHING INACCURATE PARTICULARS OF INCOME'. APPARENTLY, THE BASIS AND FOUNDATION FOR IMPOSITION OF PENALTY HAS BEEN ALTERED BY THE CIT(A). IT IS THUS OSTENSIBLE T HAT FINDINGS RECORDED BY THE CIT(A) SHOW THAT PENALTY HAS BEEN C ONFIRMED ON A DIFFERENT PREMISE AND THE ORIGINAL SATISFACTION FOR IMPOSITION OF PENALTY HAS BEEN ALTERED OR MODIFIED BY THE APPELLA TE AUTHORITY. IN SUCH CIRCUMSTANCES, WHERE THE ORIGINAL BASIS OF IMP OSITION OF PENALTY HAS BEEN ALTERED IN A SIGNIFICANT WAY BY THE FIRST APPELLATE AUTHORITY, THE VERY BASIS FOR SUSTAINING THE PENALTY IS RENDER ED NON-EXISTENT. NEEDLESS TO SAY, THE IMPOSITION OF PENALTY IS SOLEL Y DEPENDENT UPON THE 'SATISFACTION' OF THE AO [UNLESS INITIATED BY C IT(A)] AND NON- ELSE. THE GROUND FOR ACTION BY AO WAS ALLEGATION OF 'CONC EALMENT'. THIS GROUND HAS BEEN SUBSTITUTED BY CIT(A) TO 'FURNISHIN G INACCURATE PARTICULARS OF INCOME' WHILE CONFIRMING THE PENALTY QUANTIFIED BY THE AO. THUS, IN THE ABSENCE OF CONTINUITY IN THE FINDI NGS OF THE AO AND THE CIT(A), THE ORDER OF THE PENALTY PASSED BY THE AO IS LIABLE TO BE STRUCK DOWN ON THIS GROUND ALONE. FOR SUCH A VIEW, WE USEFULLY REFER TO THE DECISION OF THE HON'BLE GUJARAT HIGH COURT I N THE CASE OF NEW SMC-ITA NO. 3331/AHD/2015 KAUSHIKABEN A PATEL VS. ITO AY : 2009-10 PAGE 3 OF 3 SORATHIA ENGINEERING COMPANY VS. CIT (2006) 282 ITR 642 (GUJ.) AND CIT VS. MANU ENGINEERING WORKS (1980) 122 ITR 3 06 (GUJ.). SIMILAR VIEW HAS BEEN TAKEN BY THE COORDINATE BENCH OF THE TRIBUNAL IN GIAN CHAND BATIA VS. DCIT 61 ITD 24(ALL.). THERE FORE, WHER E CONCURRENT I.T.AUTHORITIES ARE NOT SURE ABOUT NATUR E OF DEFAULT, THE PENAL ACTION UNDER S.271(1)(C) OF THE ACT IS NOT SU STAINABLE IN LAW. 9. CONSEQUENTLY, THE PENALTY ORDER OF THE AO DATED 25/11/2013 IS SET ASIDE AND PENALTY IMPOSED THEREBY IS CANCELLED.' 6. SINCE THE IMPOSITION OF PENALTY STANDS DELETED O N THE AFORESAID LEGAL GROUND, WE ARE NOT INCLINED TO DEAL WITH OTHER ASPE CTS OF THE ARGUMENTS RAISED ON BEHALF OF THE ASSESSEE FOR DELETION OF PE NALTY. THUS, WE FIND NO ERROR IN THE CONCLUSION DRAWN BY THE CIT(A) FOR DEL ETION OF PENALTY. 6. RESPECTFULLY FOLLOWING THE ESTEEMED VIEW OF THE DIVISION BENCHES, I DELETE THE IMPUGNED PENALTY. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 7. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON THIS 15 TH DAY OF OCTOBER, 2018. SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) AHMEDABAD, THE 15 TH DAY OF OCTOBER, 2018 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: ... ORDER PREPARED AS PER 2 PAGES MANUSCRIPTS OF HONBLE AM, WHICH ARE ATTACHED HEREWITH-15.10.18 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 15.10.2018...... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: ... 15.10.2018..... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: .. 15.10.2018.. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : . 15.10.2018. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 8. DATE OF DESPATCH OF THE ORDER: ......