FAIRDEAL TRADELINK COMPANY, MUMBAI V. ACIT 15(1), MUMBAI

ITA 3445/MUM/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3595 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 17-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMATHA MULLAMUDI
• Assessee Lawyers: R C JAIN; AJAY DBAGA
• Keywords: Business income
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.3445/MUM/2016(A.Y.2011-12) FAIRDEAL TRADELINK COMPANY, C/O. K K KHADARIA & CO. A-401, PEARL ARCADE, OPP. P.K.JEWELLERS, OFF J P ROAD, ANDHERI (W), MUMBAI 400 007 PAN:AABFF4424C ...... APPELLANT VS. ITO 19(1)(5), MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007 ..... RESPONDENT APPELLANT BY : S/SHRI R.C.JAIN & AJAY DBAGA RESPONDENT BY : MS.SAMATHA MULLAMUDI DATE OF HEARING : 04/11/2019 DATE OF PRONOUNCEMENT : 05/11/2019 ORDER PER VIKAS AWASTHY, JM: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-30, MUMBAI ( I N SHORT THE CIT(A) ) DATED 14/03/2016 CONFIRMING THE LEVY OF PENALTY UND ER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). 2. SHRI R.C. JAIN APPEARING ON BEHALF OF ASSESSEE SUBMITTED THAT THIS IS A RECALLED MATER. THE TRIBUNAL HAD EARLIER VIDE OR DER DATED 10/10/2018 DISMISSED THE APPEAL OF THE ASSESSEE ON MERITS WITH OUT ADJUDICATING LEGAL 2 ITA NO.3445/MUM/2016(A.Y.2011-12) GROUND CHALLENGING VALIDITY OF PENALTY PROCEEDINGS RAISED AS ADDITIONAL GROUND OF APPEAL ON 19/03/2018. 3. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IN THE ASSESSMENT PROCEEDINGS DISALLOWANCE OF STT ON S PECULATIVE TRANSACTIONS WAS MADE. THE PENALTY PROCEEDINGS UND ER SECTION 271(1)(C) OF THE ACT WERE INITIATED IN RESPECT OF ABOVE SAID ADDITION. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMIT TED THAT A PERUSAL OF ASSESSMENT ORDER WOULD SHOW THAT PENALTY PROCEEDING S WERE INITIATED FOR FILING INACCURATE PARTICULARS OF INCOME. HOWEVER, WHILE LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT VIDE ORDER DATED 27/06/2014, THE ASSESSING OFFICER MENTIONED BOTH THE CHARGES OF SECTION 271(1)(C) OF THE ACT I.E. FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSON PER INCHERY,392 ITR 04 HAS HELD THAT PENALTY IS TO BE MADE ONLY ON GROUND FOR WHICH PENALTY PROCEEDINGS HAVE BEEN INITIATED. PENALTY CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 4. ON THE OTHER HAND, MS.SAMATHA MULLAMUDI, REPRES ENTING THE DEPARTMENT DEFENDED VALIDITY OF PENALTYT PROCEEDI NGS. THE LD.DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE T RIBUNAL HAS ALREADY CONFIRMED THE ADDITION. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SIDE S AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSES SEE IN ADDITIONAL GROUNDS OF APPEAL HAS CHALLENGED VALIDITY OF PENA LTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ON THE LEGAL ISSUE OF RECORDING OF SATISFACTION. 6. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT PEN ALTY UNDER SECTION 3 ITA NO.3445/MUM/2016(A.Y.2011-12) 271(1)(C) OF THE ACT HAS BEEN LEVIED BY ASSESSING O FFICER BY OBSERVING AS UNDER:- ALSO, THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT ARE HEREBY INITIATED FOR FILING INACCURATE PARTICULARS OF INCOME BY WAY OF I NCORRECT DEDUCTION FROM NON- SPECULATIVE BUSINESS INCOME . AT THE TIME OF PASSING ORDER UNDER SECTION 271(1) (C) OF THE ACT THE ASSESSING OFFICER OBSERVES AS UNDER:- THE ASSESSEE IS OBLIGED TO FURNISH THE TRUE PARTIC ULARS OF HIS INCOME AND IF HE CONCEALS THE INCOME, THEN THE LAW PRESCRIBES LEVY OF PENALTY. BY FURNI SHING THE INACCURATE PARTICULARS , THE ASSESSEE HAS SHOWN FALSE RESULT IN THE ACCOUN TS. THE FALSITY IN THE ACCOUNT THUS HAS THE ELEMENT OF CONC EALMENT. IN VIEW OF THE ABOVE, I AM SATISFIED THAT THIS IS A FIT CASE FOR L EVY OF PENALTY UNDER SECTION. 271(1)(C) OF THE INCOME TAX ACT, 1961. A BARE PERUSAL OF SATISFACTION RECORDED FOR INITIAT ING PENALTY AT THE TIME OF PASSING ASSESSMENT ORDER AND THE ORDER LEVYING PENA LTY SHOWS INCOHERENCE OF CHARGES INVOKED UNDER SECTION 271(1) (C) OF THE ACT . 7. AT THE TIME OF RECORDING SATISFACTION THE ASSESS ING OFFICER HAS INITIATED PENALTY FOR FURNISHING INACCURATE PARTI CULARS. HOWEVER, AT THE TIME OF LEVY OF PENALTY, THE ASSESSING OFFICER MENT IONED BOTH THE CHARGES OF SECTION 271(1)(C) OF THE ACT I.E. FURNISHING IN ACCURATE PARTICULARS AND CONCEALMENT. THE AMBIGUITY IN THE MIND OF ASSESS ING OFFICER WITH REGARD TO CHARGING FOR LEVY OF PENALTY IS APPARENT FROM T HE ORDER DATED 27/06/2014 PASSED UNDER SECTION 271(1)(C) OF THE AC T. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSON PERINCHERY( SUPRA) HAS HELD THAT PENALTY CANNOT BE LEVIED ON A CHARGE OTHER THAN FOR WHICH THE SATISFACTION HAS BEEN RECORDED. THE RELEVANT EXTRA CT OF THE JUDGMENT READS AS UNDER:- 4 ITA NO.3445/MUM/2016(A.Y.2011-12) 6. THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN T. ASHOK PAL V. CI T[20Q7] 292 ITR 11/161 TAXMAN 340 [RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY, (SUPRA)} - WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCU RATE PARTICULARS OF INCOME IN SECTION 271(L)(C) OF THE ACT, CARRY DIFFERENT MEANI NGS/CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD T O ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(L)(C) OF THE ACT, FOR I NITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMPOSED FOR THE OT HER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE P ENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER I MPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE 8. IN THE LIGHT OF ABOVE DECISION OF HONBLE BOMBAY HIGH COURT AND THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND MERIT I N THE ADDITIONAL LEGAL GROUNDS RAISED BY THE ASSESSEE. THE ORDER PASSED U NDER SECTION 271(1)(C) OF THE ACT DATED 27/06/2014 SUFFERS LEGAL INFIRMIT Y AND, HENCE, IS VOID. THE SUBSEQUENT PROCEEDINGS ARISING THEREFROM ARE AL SO VITIATED. THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 8. SINCE WE HAVE DECIDED APPEAL OF THE ASSESSEE ON THE LEGAL ISSUE, THE GROUNDS RAISED BY ASSESSEE ON MERITS HAVE BECOME AC ADEMIC AND HENCE, NOT DELIBERATED UPON. 9. IN THE RESULT, IMPUGNED ORDER IS SET-ASIDE AND T HE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY THE 5 TH DAY OF NOVEMBER, 2019. SD/- SD/- (G. MANJUNATHA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 05/11/2019 VM , SR. PS(O/S) 5 ITA NO.3445/MUM/2016(A.Y.2011-12) 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