Bhushan Vitthal Wagh, Nashik V. Income-tax Officer,

ITA 367/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9253 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHIRUDE
• Keywords: Invalid notice
• Section: 143(3); 27

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.367/PUN/2016 / ASSESSMENT YEAR : 2009-10 SHRI BHUSHAN VITTHAL WAGH DATTA MANDIR ROAD, MANMAD, DIST. NASHIK 423104. PAN : AAJPW7092H. . / APPELLANT V/S INCOME TAX OFFICER, WARD 3(3), MALEGAON. . / RESPONDENT ASSESSEE BY : SHRI M.R. SHIRUDE. REVENUE BY : SHRI ACHAL SHARMA, ADDL.CIT. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 1, NASHIK, DT.03.1 2.2015 FOR THE ASSESSMENT YEAR 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER : ASSESSEE IS AN INDIVIDUAL AND STATED TO BE ENGAGED AS CIV IL CONTRACTOR. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2 009-10 ON 30.09.2011 DECLARING TOTAL INCOME OF RS.3,52,910/-. THE CA SE WAS / DATE OF HEARING : 07.02.2018 / DATE OF PRONOUNCEMENT: 27.02.2018 2 SELECTED FOR SCRUTINY AND THEREAFTER, ASSESSMENT WAS FRAM ED U/S 143(3) OF THE ACT VIDE ORDER DT.23.11.2011 AND THE TOTAL IN COME WAS DETERMINED AT RS.12,83,770/- INTER-ALIA BY MAKING ADDITION OF RS.7,75,860/-. THE AFORESAID ADDITION WAS WITH RESPECT TO CONTRACT WORK OF B.P. SANGLE CONSTRUCTION PVT. LTD., CARRIED OUT B Y THE ASSESSEE AND SHOWN IN FORM 26AS AND NOT CONSIDERED BY THE ASSESSEE IN COMPUTATION OF INCOME. ON THE AFORESAID ADDITIO N OF RS.7,75,860/-, AO VIDE ORDER DT.27.09.2013 LEVIED PENALTY OF RS.18,735/- U/S 271(1)(C) OF THE ACT. AGGRIEVED BY THE PENALTY ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.03.12.2015 (IN APPEAL NO.NSK/CIT(A)-1/705/2013 -14), WHO DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY T HE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAIS ED THE FOLLOWING GROUNDS : IN THE FACTS, CIRCUMSTANCES AND POSITION OF LAW LE ARNED INCOME TAX OFFICER ERRED IN IMPOSING PENALTY U/S 271(1)(C) BY INVOKING EXPLANATION-1 TO THE SAID SECTION AT RS.18,735/- 2. IN THE FACTS, CIRCUMSTANCES AND POSITION OF LAW T HE PENALTY ORDER U/S 271(1)(C) IMPOSING PENALTY FOR BOTH CONCEALING THE PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME AT RS.18,735/- IS BAD IN LAW AND VOID AB INITIO AND HE NCE MAY BE ANNULLED.. SUBSEQUENTLY, ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS : 1. EXACT CHARGE ON THE BASIS OF WHICH THE PENALTY PROCEEDINGS HAVE BEEN INITIATED U/S 274 R.W.S. 271(1)(C) VIDE NOTICE DATED 23.11.2011 IS NOT STATED IN THE NOTICE AND HENCE THE NOTICE IS SUED U/S 274 R.W.S. 271(1)(C) IS BAD IN LAW AND CONSEQUENTLY PENALTY LE VIED ON THE BASIS OF SUCH INVALID NOTICE IS BAD IN LAW. 2. THE ASSESSING OFFICER HAS NOT RECORDED PROPER AN D CLEAR SATISFACTION IN THE ASSESSMENT ORDER FOR INITIATING PENALTY PROCEEDINGS AS PENALTY PROCEEDINGS ARE INITIATED FOR CONCEALMEN T AND FURNISHING OF INACCURATE PARTICULARS OF INCOME (VIDE PARA NO.6 .2 OF THE ASSESSMENT ORDER) AND WHILE ISSUING NOTICE U/S 274 R.W.S. 271(1)(C), 3 THE AO HAS MENTIONED THE LIMBS I.E., CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 3. BEFORE US, LD.A.R. SUBMITTED THAT ALL THE GROUNDS ARE INT ER- CONNECTED AND ARE WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 4. IN THE PRESENT CASE, AO HAD MADE ADDITION OF RS.7,75,86 0/- TOWARDS CONTRACTS RECEIPTS AND DETERMINED THE TOTAL IN COME AT RS.12,83,770/- AS AGAINST THE INCOME OF RS.3,62,913/- DE CLARED BY THE ASSESSEE. DURING THE COURSE OF PENALTY PROCEEDINGS, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A)-I, NASHIK (IN APPEAL NO.NSK/CIT(A)-1/495/2011-12) DT.16.01.2013, WHO REDUCED TH E ADDITION OF RS.7,75,860/- TO RS.60,630/- BY ESTIMATING THE N ET PROFIT @ 8%. ON THE CONFIRMED NET PROFIT OF RS.60,630/- AO LEVIED PENALTY OF RS.18,735/- U/S 271(1)(C) OF THE ACT. 5. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT INADVERTENTLY T HE RECEIPTS OF RS.7,57,860/- FROM B.P. SANGLE CONSTRUCTION PVT. LTD., WERE REMAINED TO BE DISCLOSED AND THAT THE SAME WERE CREDITE D IN THE BANK ACCOUNT AND IT WAS REQUESTED THAT THE NET PROFIT S ON RECEIPTS BE ADOPTED. HE THEREFORE SUBMITTED THAT THERE WAS NO CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. LD.A.R THEREAFTER SUBMITTED THAT WHILE PASSING THE ASSESS MENT ORDER, AO HAS NOT RECORDED ANY SATISFACTION FOR LEVY OF P ENALTY BUT WHILE PASSING THE PENALTY ORDER U/S 271(1)(C) OF THE ACT, TH E AO LEVIED PENALTY FOR CONCEALMENT OF INCOME AS WELL AS FOR FURNIS HING INACCURATE PARTICULARS OF INCOME. LD.A.R. RELYING ON THE DE CISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON 4 PERINCHERY (ITA NO.1154 OF 2014 ORDER DT.05.01.2017), SUBMITT ED THAT WHEN INITIATION OF PENALTY IS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND PENALTY WAS LEVIED ON CONCEALMEN T OF INCOME, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO ASSESSEE, PENALTY U/S 271(1)(C) CANNOT BE LEVIED. LD.A.R. THERE FORE SUBMITTED THAT PENALTY LEVIED BY AO BE DELETED. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT CA SE, PENALTY HAS BEEN LEVIED AT RS.18,735/- ON THE ADDITION OF RS.60,63 0/- CONFIRMED BY CIT(A)-1, NASHIK. THE PERUSAL OF ASSESSMENT O RDER PASSED U/S 143(3) OF THE ACT REVEALS THAT AO HAD INITIATE D PENALTY PROCEEDING BUT NO SATISFACTION WAS RECORDED WHILE PASSING THE ASSESSMENT ORDER. THEREAFTER IN THE PENALTY ORDER PASS ED U/S 271(1)(C) OF THE ACT, AO HELD THAT ASSESSEE HAD FURNISHED IN ACCURATE PARTICULARS OF INCOME AND HAD CONCEALED THE INCOME U/S 27 1(1)(C) OF THE ACT. IT IS A SETTLED LAW THAT WHILE LEVYING PENALTY FO R CONCEALMENT, THE AO HAS TO RECORD SATISFACTION AND THER EAFTER COME TO A FINDING IN RESPECT OF ONE OF THE LIMBS, WHICH IS SPECIFIED UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SA TISFACTION WHILE COMPLETING THE ASSESSMENT AS TO WHETHER THE ASSES SEE HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOTICE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER THEREA FTER HAS TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR NON-SATIS FACTION OF EITHER OF THE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE AS SESSING OFFICER HAS TO COME TO A FINDING AS TO WHETHER THE ASSESS EE HAS 5 CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PER INCHERY IN ITA NO.1154 OF 2014 WITH OTHER ITA NOS.953 OF 2014, 10 97 OF 2014 AND 1226 OF 2014, VIDE JUDGMENT DATED 05.01.2017 HE LD THAT WHERE INITIATION OF PENALTY IS ONE LIMB AND THE LEVY OF PENAL TY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOT ICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 7. IN THE PRESENT CASE, AS NOTED HEREINABOVE, IT IS SE EN THAT THE AO HAS NOT RECORDED ANY SATISFACTION FOR LEVY OF PENALTY IN THE ASSESSMENT ORDER BUT HAD LEVIED PENALTY ON BOTH THE LIMB S I.E., FOR CONCEALMENT OF INCOME AND FOR FURNISHING OF INACCURATE PARTIC ULARS OF INCOME WHILE PASSING THE PENALTY ORDER. CONSIDERING THE AFORESAID FACTS IN THE LIGHT OF THE DECISION OF HONBLE BOMBA Y HIGH COURT IN THE CASE OF SAMSON PERINCHERY (SUPRA), WE ARE O F THE VIEW THAT IN THE PRESENT CASE THE BASIC CONDITION FOR LEVY OF PENALTY HAS NOT BEEN FULFILLED AND THAT THE PENALTY ORDER SUFFERS FROM N ON- EXERCISING OF JURISDICTION POWER OF AO AND THEREFORE PENAL TY ORDER CANNOT BE UPHELD. WE ACCORDINGLY SET ASIDE THE PENALTY ORDER PASSED BY AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 27 TH DAY OF FEBRUARY, 2018. SD/- SD/- ( VIKAS AWASTHY ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; DATED : 27 TH FEBRUARY, 2018. YAMINI 6 '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-1, NASHIK. PRL.CIT-1, NASHIK. '#$ %%&',) &', / DR, ITAT, A PUNE; $+,-/ GUARD FILE. / BY ORDER , T// ///TRUE TRUE COPY // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.