Shri Parmanand Agarwal, Kolkata V. ACIT, Centre Circle-XXIII, Kolkata, Kolkata

ITA 34/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4754 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2014
• Court: TRIBUNAL
• Department Lawyers: RAJAT KUMAR KUREEL
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Search and seizure
• Section: 143(3); 153A

Judgement Text

1 ITA NO. 34/KOL/2014 PARMANAND AGARWAL AY 2007-08 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S. S. VISWAN ETHRA RAVI, JM] I.T.A NO. 34/KOL/2014 ASSESSMENT YEAR: 2007-08 SHRI PARMANAND AGARWAL VS. ASSISTANT COMMISSION ER OF INCOME-TAX, (PAN: ABUPA4065G) CENTRAL CIRCLE-XXIII, KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 14.07.2016 DATE OF PRONOUNCEMENT: 03.08.2016 FOR THE APPELLANT: SHRI MIRAJ D. SHAH, AR FOR THE RESPONDENT: SHRI RAJAT KUMAR KUREEL, J CIT, SR. DR ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), CENTRAL-III, KOLKATA VIDE APPEAL NO. 08/CC-XXIII/CIT(A)C-III/11-12/KOL DATED 24.12.2012. ASSESSMENT WAS FRAMED BY ACIT, CENTRAL CIRCLE-XXIII, KOLKATA U/S. 153A RE AD WITH SEC. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FO R AY 2007-08 VIDE HIS ORDER DATED 29.12.2010. PENALTY U/S. 271(1)(C) OF THE ACT WAS IMPOSED BY ACIT, CC-XXIII, KOLKATA VIDE HIS ORDER DATED 02.05.2011. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL OF ASSESSEE IS AS TO WHETHER THE LD CIT(A) IS JUSTIFIED IN CONFIRMING THE PENALTY U/S. 271(1) (C) OF THE ACT IN THE SUM OF RS.44,17,390/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THERE W AS A SEARCH AND SEIZURE OPERATION U/S. 132(1) OF THE ACT IN THIS CASE ON 04.04.2008. DURI NG THE COURSE OF SEARCH AT THE RESIDENCE OF THE ASSESSEE SEVERAL BOOKS OF ACCOUNT AND OTHER DOC UMENTS WERE FOUND AND SEIZED IN WHICH VARIOUS MONETARY TRANSACTIONS WERE FOUND AND RECORD ED. IN THE ASSESSMENT ORDER THE LD. AO OBSERVED THAT THE ASSESSEE ADMITTED THAT MANY OF THESE TRANSACTIONS WERE NOT RECORDED IN HIS REGULAR BOOKS OF ACCOUNTS. HE ALSO OBSERVED TH AT FROM THE NOTINGS OF SUCH TRANSACTIONS, THE ASSESSEE PREPARED A PEAK CASH STATEMENT INCORPO RATING THEREIN THOSE RECEIPTS AND EXPENSES DURING THE PREVIOUS YEAR 2005-06 AND MADE DISCLOSURE OF RS.1,30,80,560/- AND OFFERED IT FOR TAXATION. THE LD. AO THEREAFTER ISSU ED NOTICE TO THE ASSESSEE ON 29.12.2010 2 ITA NO. 34/KOL/2014 PARMANAND AGARWAL AY 2007-08 CALLING FOR EXPLANATION AS TO WHY PENALTY U/S. 271( 1)( C) OF THE ACT SHALL NOT BE IMPOSED. IN RESPONSE TO THE SAME, THE ASSESSEE STATED THAT THE PENALTY SHOULD NOT BE IMPOSED AS THE ASSESSEE HAS VOLUNTARILY DISCLOSED AN AMOUNT OF RS. 1,30,80,560/- WHICH WAS WORKED OUT ON THE BASIS OF PEAK AMOUNT AS SUCH THE ASSESSEE STATE D THAT THERE WAS NEITHER WILLFUL NEGLECT NOR WAS THE EVIDENCE PRODUCED FOUND TO BE FALSE, FA BRICATED OR FRAUDULENT. ANOTHER UNACCOUNTED TRANSACTION OF RS.43,000/- WAS ALSO FOU ND FROM THE SEIZED RECORDS, WHICH HAD NOT BEEN DISCLOSED BY THE ASSESSEE IN HIS RETURN OF INCOME, WAS ALSO ADDED BY THE AO TO THE RETURNED INCOME OF THE ASSESSEE AND PENALTY WAS ALS O IMPOSED ON IT. THE AO DID NOT ACCEPT THE PLEA OF THE ASSESSEE AND IMPOSED PENALTY OF RS. 44,17,390/- BEING 100% OF THE TAX AS PER PROVISIONS OF SECTION 271(1)(C) OF THE ACT. AGGRIE VED, ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A), WHO UPHELD THE ACTION OF AO BY OBSERVING AS UNDER: IN THE INSTANT CASE THE SEARCH U/S.132(1) WAS CAR RIED OUT ON 04.04.2008 WHEREAS THE ASSESSMENT YEAR INVOLVED IS 2007-08. THE DUE DATE F OR FILING OF RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL HAD EXPIRED BEFORE THE DATE OF SEARCH AND SINCE, THE APPELLANT HAD DISCLOSED UNACCOUNTED ADDITIONAL INCOME OF RS.L ,30,80,560/- DURING THE COURSE OF SEARCH, THAT INCOME WAS DEFINITELY NOT DECLARED BY HIM IN A NY RETURN OF INCOME FILED BY HIM BEFORE THE DATE OF SEARCH. THEREFORE, EVEN THOUGH THE APPELLAN T HAD DECLARED SUCH INCOME IN HIS RETURN OF' INCOME FURNISHED U/S.L53A, I.E., AFTER THE DATE OF SEARCH, PARTICULARS OF SUCH INCOME ARE DEEMED TO HAVE BEEN CONCEALED OR INACCURATE PARTICU LARS OF SUCH INCOME ARE DEEMED TO HAVE BEEN FURNISHED AS PROVIDED BY EXPLANATION 5A. SIMILARLY, THE AO HAD GIVEN A FINDING IN THE ASSES SMENT ORDER THAT THE CASH RECEIPT OF RS.43,000/- FOUND RECORDED ON PAGE NO.40 OF THE SE IZED MATERIAL MARKED AS ANNEXURE AS/10 WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE APPELLANT. SINCE, SUCH INCOME WAS NOT DISCLOSED BY THE APPELLANT TO THE DEPARTMENT, SUCH INCOME IS DEFINITELY CONCEALED INCOME OF THE APPELLANT IN RESPECT OF WHICH LEVY OF PENALTY U /S.271 (1)(C) IS FULLY JUSTIFIED. IN LIGHT OF THE ABOVE DISCUSSION, PENALTY OF RS.44, 17,390/- ULS.271(1)(C) HAS RIGHTLY BEEN LEVIED BY THE AO IN THIS CASE. HENCE, THE LEVY OF PENALTY IS CONFIRMED. AGGRIEVED, ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD AR ARGUED PLACED THE COPY OF THE SHOW CAU SE NOTICE FOR INITIATING PENALTY PROCEEDINGS U/S 274 READ WITH SECTION 271(1) (C ) O F THE ACT WHEREIN, THE LD AO HAD MERELY TICKED THE PORTION OF CONCEALMENT OF INCOME OR FURN ISHING OF INACCURATE PARTICULARS OF INCOME WITHOUT MAKING SPECIFIC CHARGE ON THE ASSESS EE TO RESPOND. IT IS WELL SETTLED THAT THE PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE F ROM ASSESSMENT PROCEEDINGS. HE PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH DECISIONS OF THIS TRIBUNAL, DELHI TRIBUNAL, MUMBAI TRIBUNAL AND BANGALORE TRIBUNAL A S MENTIONED IN THE COMPILATION OF CASE LAWS RUNNING FROM PAGES 2 TO 122 OF HIS PAPER BOOK. IN RESPONSE TO THIS, THE LD DR VEHEMENTLY RELIED ON THE ORDERS OF THE LOWER AUTHOR ITIES. 3 ITA NO. 34/KOL/2014 PARMANAND AGARWAL AY 2007-08 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FO R THE SAKE OF BREVITY. IT IS WELL SETTLED THAT THE PENALTY PROCEEDINGS ARE DISTINCT AND SEPAR ATE FROM ASSESSMENT PROCEEDINGS. IT IS ALSO WELL SETTLED THAT THE LD AO SHOULD SPECIFICALLY PIN POINT THE CHARGE OF OFFENCE COMMITTED BY THE ASSESSEE IN AS MUCH AS TO WHETHER HE HAD CONCEA LED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME IN H IS PENALTY NOTICE. WE FIND THAT THE SHOW CAUSE NOTICE U/S.274 OF THE ACT DATED 29.12.2010 KE PT IN PAGE 1 OF THE ASSESSEES PAPER BOOK, WHICH IS IN A PRINTED FORM DOES NOT STRIKE OU T AS TO WHETHER THE PENALTY IS SOUGHT TO BE LEVIED ON THE FOR FURNISHING INACCURATE PARTICULAR S OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. ON THIS ASPECT WE FIND THAT IN THE SH OW CAUSE NOTICE U/S.274 OF THE ACT THE AO HAS NOT STRUCK OUT THE IRRELEVANT PART. IT IS TH EREFORE NOT SPELT OUT AS TO WHETHER THE PENALTY PROCEEDINGS ARE SOUGHT TO BE LEVIED FOR FU RNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GIN NING FACTORY, 359 ITR 565 (KARN), HAS HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPE CIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PAR TICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS FURTHER LAID DOWN THAT CERTAIN PRINTED FORM WHERE ALL THE GROUNDS GIVEN IN SECTION 271 ARE GIVEN WOULD NOT SATISFY THE REQUIREMENT OF LAW. WE ALSO FIND THAT THIS CASE LAW HAS BEEN RELIED UPON IN THE FOLLOWING CASES OF THE CO-ORDINATE BENCHES OF THIS TRIBUNAL A ND OTHER TRIBUNALS :- (I) SATYANANDA ACHARIYA BISWAS VS DCIT IN ITA NO. 0 5/KOL/2010 DATED 2.12.2015 (KOLKATA TRIBUNAL) (II) GOURI DAS MAITY VS ITO IN ITA NO. 2590/KOL/201 3 DATED 2.2.2016 (KOLKATA TRIBUNAL) (III) DEEPAK KUMAR PATWARI VS ACIT IN ITA NOS. 616 TO 618/KOL/2013 DATED 3.2.2016 (KOLKATA TRIBUNAL) (IV) RAMESH PRASAD SAO VS DCIT IN ITA NO. 997/KOL/2 011 DATED 3.2.2016 (KOLKATA TRIBUNAL) (V) DCIT VS PRATAP PROPERTIES PVT LTD IN ITA NOS. 1 386-1388/KOL/2010 DATED 10.2.2016 (KOLKATA TRIBUNAL) (VI) E KRISHNAPPA VS ITO IN ITA NOS. 313 TO 315/BAN G/2014 DATED 14.8.2015 (BANGALORE TRIBUNAL) (VII) ASHWANI KUMAR ARORA VS ACIT IN ITA NO. 844/DE L/2014 DATED 19.5.2016 (DELHI TRIBUNAL) 4 ITA NO. 34/KOL/2014 PARMANAND AGARWAL AY 2007-08 (VIII) ITO VS GOPE M ROCHLANI IN ITA NO. 7737/MUM/2 011 DATED 24.5.2013 (MUMBAI TRIBUNAL) 6. IT IS CLEAR FROM THE AFORESAID DECISIONS THAT ON THE FACTS OF THE PRESENT CASE THAT THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT IS DEFECTIVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGHT TO BE IMPOSED. FOLLOWING THE DECI SION OF THE HONBLE KARNATAKA HIGH COURT WHICH HAS BEEN FOLLOWED IN THE AFORESAID TRIB UNAL DECISIONS, WE HOLD THAT THE ORDER IMPOSING PENALTY IN THE ASSESSMENT YEAR 2007-08 HAV E TO BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANCELLED. 7. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT LEVY O F PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED. WE THEREFORE CANCEL THE ORDERS IMPOSI NG PENALTY ON THE ASSESSEE AND ALLOW THE APPEAL BY THE ASSESSEE. IN VIEW OF OUR ABOVE CONCLU SIONS ON THE ISSUE OF NOT RECORDING OF PROPER SATISFACTION AND THE DEFECT IN SHOW CAUSE NO TICE U/S.274 OF THE ACT, WE ARE NOT DEALING WITH THE OTHER ARGUMENTS MADE ON MERITS OF THE ORDER IMPOSING PENALTY ON THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.08.2016 SD/- SD/- (S. S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED :3 RD AUG, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT SHRI PARMANAND AGARWAL, 11, BALLYGUNGE PARK ROAD, FLAT NO. 2B, KOLKATA-700 019. 2 RESPONDENT ACIT, CENTRAL CIRCLE-XXIII, KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .