Abhijit Shankarrao Gaikwad, Pune V. Deputy Commissioner of Income tax, Pune

ITA 336/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8039 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 09-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N ASHOK BABU
• Keywords: Capital asset; Search and seizure; Initiation of penalty proceedings; Set aside
• Section: 271(1)(c); 143(3); 2(14); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM SL. NO. ITA NO. NAME OF APPELLANT NAME OF RESPONDENT ASST. YEAR 1 334/PUN/2017 SUBHASH SHANKARRAO GAIKWAD, S.NO.127/1A, A.G. TECHNOLOGY PARK, 2 ND FLOOR, AUNDH, PUNE - 411007. PAN: AAVPG2825L DCIT, CENTRAL CIRCLE - 2(1), PUNE. 2009 - 10 2 335/PUN/2017 AJIT SUBHASH GAIKW AD, S.NO.127/1A, A.G. TECHNOLOGY PARK, 2 ND FLOOR, AUNDH, PUNE - 411007. PAN: AIPPG6313B DCIT, CENTRAL CIRCLE - 2(1), PUNE. 2009 - 10 3 336/PUN/2017 ABHIJIT SHANKARRAO GAIKWAD, S.NO.127/1A, A.G. TECHNOLOGY PARK, 2 ND FLOOR, AUNDH, PUNE - 411007. PAN: AIOPG4167C DCIT, CENTRAL CIRCLE - 2(1), PUNE. 2009 - 10 ASSESSEE BY : SHRI ABHAY AVCHAT REVENUE BY : SHRI N. ASHOK BABU / DATE OF HEARING : 14.08.2019 / DATE OF PRONOUNCEMENT : 19.08.2019 / ORDER PER D. KARUNAKARA RAO, AM: THERE ARE THREE APPEALS UNDER CONSIDERATION. ALL THESE THREE APPEALS ARE FILED BY THE DIFFERENT ASSESSEE AGAINST THE COMMON ORDERS OF CIT(A)-12, PUNE DATED 04.10.2016 FOR THE ASSESSMENT YEAR 2009-10 RESPECTIVELY. SINCE THE FACTS AND ISSUES ARE COMMON IN ALL THESE THREE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMPOSITE ORDER. 2 ITA NOS.334 TO 336/PUN/2017 2. SINCE THE ISSUES INVOLVED IN ALL THESE THREE APPEALS ARE COMMON, THE APPEAL IN ITA NO.334/PUN/2017 FOR THE ASSESSMENT YEAR 2009-10 TAKEN AS THE LEAD CASE FOR ADJUDICATION. ITA NO.334/PUN/2017 3. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE AS UNDER :- 1) THAT THE LEARNED CIT APPEAL 12 HAS ERRED IN LEVYING THE PENALTY OF RS. 21,83,923/- IN THE ASSESSMENT ORDER PASSED FOR A.Y.2009-2010. 2) THE APPROPRIATE AUTHORITY TO DECLARE ANY LAND AS AGRICULTURAL LAND IS GOVERNMENT OF MAHARASHTRA, REVENUE DEPARTMENT AND NOT THE INCOME TAX AUTHORITY. THE 7/12 EXTRACTS SHOWS THE NATURE OF LAND. SEVERAL COURTS HAVE HELD THAT ANY LAND CAPABLE OF BEING USED AS AGRICULTURE LAND IS TO BE TREATED AS AGRICULTURAL LAND. THE LTCG CHARGED IS NOT CORRECT AS PER THE LETTER AND SPIRIT OF LAW AND DISPUTES TO BE REJECTED. 3) THE SAID AGRICULTURE LAND IS NOT A CAPITAL ASSET U/S 2(14) OF THE INCOME TAX ACT 1961 SINCE IT IS NOT WITHIN THE JURISDICTION OF A MUNICIPALITY OR A CANTONMENT BOARD HAVING POPULATION OF TEN THOUSAND OR MORE AND NOT WITHIN EIGHT KILOMETERS FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR A CANTONMENT BOARD. THEREFORE THE ASSESSMENT ORDER PASSED BY THE A.O. IS NOT JUSTIFIED AND THEREFORE THE SAME IS NOT TENABLE. 4) LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HUGE PENALTY OF RS. 21,83,923/- LEVIED ON THE INCOME BY THE A.O. MAY PLEASE BE WAIVED. 5) THE APPELLANT PRAYS TO BE ALLOW TO ADD, AMEND, DELETE, MODIFY, RECTIFY ANY GROUNDS OF APPEAL DURING THE COURSE OF HEARING. 4. THE ASSESSEE RAISED ADDITIONAL GROUNDS OF APPEAL WHICH READ AS UNDER :- 1. THE NOTICE OF PENALTY AND THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER SUFFERS FROM INFIRMITY AND NEEDS TO BE SET ASIDE SINCE THERE IS NO SPECIFIC MENTION OF LIMB UNDER WHICH THE PENALTY NOTICE HAS BEEN ISSUED AND THE PENALTY ORDER MENTIONED THE OTHER LIMB. THE LD. CIT (A) HAS ERRED IN CONFIRMING THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER. 2. THE PENALTY NOTICE AND THE PENALTY ORDER FAILS TO MENTION THE CORRECT LIMB AND THERE IS NO PROPER SATISFACTION RECORDED BY THE ASSESSING OFFICER WHILE PASSING THE PENALTY ORDER. THEREFORE BOTH THE PENALTY NOTICE AND PENALTY ORDER ARE BAD IN LAW AND NEEDS TO BE CANCELLED. 3 ITA NOS.334 TO 336/PUN/2017 5. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS AN INDIVIDUAL. CONSEQUENT TO THE SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT, THE ASSESSING OFFICER PASSED AN ORDER U/S 143(3) R.W.S. 153A OF THE ACT DETERMINING THE TOTAL INCOME OF THE ASSESSEE AND ASSESSED THE TOTAL INCOME AT RS.96,37,787/- AFTER MAKING CERTAIN ADDITIONS ON ACCOUNT OF (I) INCOME FROM OTHER SOURCES RS.10,359/- AND (II) CAPITAL GAIN RS.96,27,428/-. FURTHER, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS STATING THAT ..... CONCEALMENT OF INCOME FURNISHING IN ACCOUNT PARTICULARS OF SUCH INCOME. (PAGE 5 OF THE ASSESSMENT ORDER). 6. IN THE PENALTY ORDER, THE ASSESSING OFFICER CLEARLY STATED THAT THE LEVY OF PENALTY IS FOR THE DEFAULT OF ..... FURNISHED INACCURATE PARTICULARS OF ITS INCOME . (PARA 06 OF THE PENALTY ORDER). 7. THE CIT(A), RELYING ON THE JUDGEMENTS OF THE JURISDICTIONAL HIGH COURT AND THE APEX COURT AND THE DECISION OF THE TRIBUNAL, CONFIRMED THE PENALTY AS LEVIED BY THE ASSESSING OFFICER. THE CONTENTS OF PARA 3.2 ONWARDS OF THE APPELLATE ORDER ARE RELEVANT IN THIS REGARD. 8. AGGRIEVED WITH THE SAID DECISION OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE ABOVE EXTRACTED GROUNDS/ADDITIONAL GROUNDS. 9. ACCORDING TO THE LD. AR, THE ORDER OF THE CIT(A) SHALL HAVE TO BE SET- ASIDE ON THE LEGAL ISSUE RELATING TO THE AMBIGUITY IN THE MIND OF THE ASSESSING OFFICER WHILE DEALING WITH THE INITIATION AND LEVY OF PENALTY. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON 4 ITA NOS.334 TO 336/PUN/2017 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 THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW AND THE SAME IS WRONGLY UPHELD BY THE CIT(A). 10. ON THE OTHER HAND, LD. DR FOR THE REVENUE HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 11. WE HEARD BOTH THE PARTIES ON THIS LEGAL ISSUE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THIS IS A CASE WHERE THE ASSESSING OFFICER FAILED TO RECORD PROPER SATISFACTION WHILE INITIATING AND LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. IN THIS REGARD, WE PURSED THE ORDERS OF THE REVENUE AUTHORITIES. ON PERUSAL OF ASSESSMENT ORDER, WE FIND THE FOLLOWING IS THE REASONS FOR INITIATION OF PENALTY PROCEEDINGS :- ..... CONCEALMENT OF INCOME FURNISHING IN ACCOUNT PARTICULARS OF SUCH INCOME. 12. FURTHER, WE ALSO PERUSED THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER ON 28.10.2015. ON PERUSAL OF PENALTY ORDER, WE FIND THE FOLLOWING IS THE REASONS FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT :- 06. ..... FURNISHED INACCURATE PARTICULARS OF ITS INCOME . 13. THE ABOVE EXTRACTS REVEAL THAT THE ASSESSING OFFICER SUFFERS FROM AMBIGUITY IN HIS MIND WHILE RECORDING THE SATISFACTION AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 5 ITA NOS.334 TO 336/PUN/2017 14. THEREFORE, CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS, WE ARE OF THE VIEW THAT SUCH PENALTY IS UNSUSTAINABLE IN LAW LEGALLY. IT IS A SETTLED LEGAL PROPOSITION THAT THE ASSESSING OFFICER IS UNDER OBLIGATION TO SPECIFY THE APPROPRIATE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT 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 CASE, WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ENTIRE PENALTY IMPOSED BY HIM. ACCORDINGLY, THE RELEVANT GROUNDS/ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ON LEGAL ISSUE ARE ALLOWED. 15. CONSIDERING THE RELIEF TO THE ASSESSEE ON LEGAL ISSUE, THE ADJUDICATION OF THE OTHER GROUNDS/ADDITIONAL GROUNDS ON MERITS OF PENALTY BECOMES AN ACADEMIC EXERCISE ONLY. ACCORDINGLY, THE SAID GROUNDS/ADDITIONAL GROUNDS ARE DISMISSED AS ACADEMIC. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.334/PUN/2017 IS ALLOWED. 17. WE SHALL NOW TAKE UP THE REST OF THE 2 APPEALS OF THE ASSESSEE FOR ADJUDICATION. ISSUES ARE IDENTICAL IN THESE TWO APPEALS OF THE ASSESSEE. ITA NOS.335 & 336/PUN/2017 (2 APPEALS) 18. CONSIDERING THE COMMONALITY OF THE ISSUES RELATING TO SATISFACTION WHILE INITIATED THE PENALTY PROCEEDINGS AS WELL AS THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE, WE ARE OF THE OPINION, LEGAL ISSUES RAISED IN THE REST OF 2 APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2009-10 SHOULD ALSO BE ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE 6 ITA NOS.334 TO 336/PUN/2017 RELEVANT LEGAL GROUNDS/ADDITIONAL GROUNDS OF THESE 2 APPEALS OF THE ASSESSEE STANDS ALLOWED. 19. CONSIDERING THE RELIEF TO THE ASSESSEE, THE ADJUDICATION OF OTHER GROUNDS/ADDITIONAL GROUNDS ON MERITS BECOMES AN ACADEMIC EXERCISE ONLY. ACCORDINGLY, THE OTHER GROUNDS/ADDITIONAL GROUNDS ARE DISMISSED AS ACADEMIC. 20. TO SUM UP, ALL THE THREE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED . ORDER PRONOUNCED ON 19 TH DAY OF AUGUST, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 19 TH AUGUST, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-12, PUNE. 4. THE PR.CIT, CENTRAL, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.