PRAKASH H SAVLA, MUMBAI V. ASST CIT CEN CIR 33, MUMBAI

ITA 3381/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2045 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 09-08-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 03-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH GAIKWAD
• Assessee Lawyers: V CHANDRASHEKHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI BEFORE SHRI C. N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 3381 /MUM/201 5 ASSESSMENT YEAR: 20 0 3 - 04 PRAKASH H SAVLA VS. ACIT G - 1/2, MANGAL KUNJ S.V. RD, OPP. CENTRAL CIRCLE - 33 JAMBLI GULLY JAIN TEMPLE, MUMBAI - 400020. BORIVALI (W) MUMBAI - 400092 P AN NO. AACPS7628E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. CHANDRA SHEKHAR , & SHRI HARSH SHAH, AR REVENUE BY : SHRI KAILASH GAIKWAD, DR DATE OF HEARING : 05 / 10 /2016 DATE OF PRONOUNCEMENT: 11 / 1 1 /2016 ORDER PER N.K. PRADHAN, A.M THIS IS AN APPEAL FILED BY THE ASSESSEE . THE RELEVANT ASSESSMENT YEAR IS 20 0 3 - 04 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) - 53 MUMBAI AND ARISES OUT OF THE PENALTY ORDER U/S 271(1)(C) OF THE INCOME TAX ACT 1961, (THE ACT ). 2. WE BEGIN WITH GROUND OF APPEAL NUMBER 2.2 RAISED BY THE ASSESSEE WHICH READS AS UNDER: THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE NOTICE FOR INITIATION OF PENALTY AS TO WHETHER IT IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IS NOT DISCERNIBLE FROM THE NOTICE ISSUED AND CONSEQUENTLY THE LD. CIT(A) OUGHT TO HAVE CAN CELLED THE ORDER OF PENALTY UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE . ITA NO. 3381 /MUM/201 5 2 3. THE LD. COUNSEL OF THE ASSESSEE REFERRED TO THE NOTICE U/S 274 R.W.S. 271(1)(C) ISSUED BY THE AO. HE RELIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS . MANJUNATHA COTTON AND GINNING FACTORY [2013] 359 ITR 565 (KAR.) AND THE ORDER OF THE ITAT H BENCH , MUMBAI IN THE CASE OF SANGHAVI SAVLA COMMODITY BROKERS (P) LTD. VS. ACIT IN ITA NO. 1746/MUM/2 011 FOR THE AY 2007 - 08. 4. THE LD. DR SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 5 . WE HAVE CONSIDERED THE RIVAL SUBMISSION S AND PERUS ED THE RELEVANT MATERIAL ON RECORD. WE HAVE GONE THROUGH THE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT ISSUED ON 30.12.2009 BY THE AO (P.40 - 41 OF THE PAPER BOOK) . AT THE END OF THE NOTICE, IT HAS BEEN MENTIONED THAT INAPPROPRIATE WORDS AND PARAGRAPH SHOULD BE DELETED. THE AO HAS NOT DONE SO. IN FACT IN THE SAID NOTICE, HAVE CONCEALED THE PARTICULARS O F YOUR INCOME OR FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME ARE AP PEARING. THERE IS NO DENIAL ABOVE FACT BY THE LD. DR. 5 .1 IN CIT VS . MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) , THE HONBLE KARNATAKA HIGH COURT HELD THAT NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(L)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME. THE ITAT H BENCH MUMBAI IN THE CASE OF SANGHAVI SAVLA COMMODITY BROKERS (P) LTD. (SUPRA) FOLLOWED THE ABOVE JUDGEMENT AND HELD THE PENALTY NO TICE U/S 274 R.W.S. 271 AND THE PENALTY PROCEEDINGS AS INVALID. 5.2 IN THE C ASE OF CIT V. MANU ENGG. WORKS [1980] 122 ITR 306 , THE HONBLE GUJARAT HIGH HAS HELD : '...WE FIND FROM THE ORDER OF T HE INSPECTING ASSISTANT COMMISSIONER, IN THE PENALTY PROCEEDINGS, THAT IS, THE FINAL CONCLUSION AS EXPRESSED IN PARA 4 OF THE ORDER : I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. NOW, THE LANGUAGE OF AND/OR MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI - CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE INSPECTING ASSISTANT COMMISSIONER TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD ITA NO. 3381 /MUM/201 5 3 BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR - CUT FINDING WAS REACHED BY THE INSPECTING ASSISTANT COMMISSIONE R AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE INSPECTING ASSISTANT COMMISSIONER WAS LIABLE TO BE STRUCK DOWN.' (P. 310) 5.3 IN NEW SORATHIA ENGG. CO VS. CIT [2006] 155 TAXMAN 513 (GUJ.), IT HAS BEEN HELD BY THE HONBLE GUJARAT HIGH COURT THAT WHERE PENALTY ORDER AND ORDER OF COMMISSIONER (APPEALS) SHOWED THAT NO CLEAR - CUT FINDING HAD BEEN REACHED AS TO WHETHER PENALTY UNDER SECTION 271(1)(C) WAS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME BY ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF INCOME HAD BEEN FURNISHED, ORDER OF PENALTY COULD NOT BE SUSTAINED. 5.4 IN CIT VS. SMT. KAUSHALYA [1994] 75 TAXMAN 549 (BOM.), THE HONBLE BOMBAY HIGH COURT HAS HELD THAT THE VAGUENESS AND AMBIGUITY IN THE NOTICE HAD ALSO PREJUDICED THE R IGHT OF REASONABLE OPPORTUNITY OF THE ASSESSEE SINCE HE DID NOT KNOW WHAT EXACT CHARGES HE HAD TO FACE. IN THIS BACKGROUND, QUASHING OF THE PENALTY PROCEEDINGS FOR THE ASSESSMENT YEAR 1967 - 68 SEEMS TO BE FULLY JUSTIFIED. 6 . RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE HOLD THAT THE NOTICE DATED 30.12.2009 ISSUED BY THE AO U/S 274 R.W.S. 271 OF THE ACT FOR THE AY 2003 - 04 FOR INITIATING PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT IN THE PRESENT CASE IS INVALID. IN VIEW OF THE ABOVE, THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE AGAINST THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT REQUIRE NO ADJUDICATION AT THIS STAGE. THE ORDER OF THE LD CIT(A) DIRECTING THE AO TO IMPOSE PENALTY U/S 271(1)(C) O N RS. 1,00,000/ - IS THUS SET ASIDE . 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 / 1 1 /2016 SD/ - SD/ - ( C. N. PRASAD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO. 3381 /MUM/201 5 4 MUMBAI ; DATED: /1 1 /2016 AKS/ - ON TOUR (DOC) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI