Sh. Jagjit Singh, Amritsar. V. The Income Tax Officer, Amritsar.

ITA 368/ASR/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2236 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-08-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 05-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM DE B LD
• Assessee Lawyers: P N ARORA LD
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.368(ASR)/2014 ASST. YEAR:2007 -08 SHRI JAGJIT SINGH, S/O SHRI AMRIK SINGH, GALLI GUJJRAN, JANDIALA GURU, AMRITSAR PAN:AWNPS 5528A VS. INCOME TAX OFFICER, WARD-4(2), AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P. N. ARORA (LD. ADV.) RESPONDENT BY: SH. GAUTAM DEB (LD. DR) DATE OF HEARING: 08.08.2018 DATE OF PRONOUNCEMENT: 31.10.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/APPELLANT, ON FEELING AGGRIEVED AGAINST THE OR DER DATED 02.04.2014 PASSED BY THE LD. CIT(A)-, AMRITSAR U/S. 25 0(6) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT), WHEREBY HE CONFIRMED THE PENALTY OF RS.26,83,981/- AS IMPOSED BY THE ASSESSING OFF ICER. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THE LD. CIT (APPEALS) HAS GROSSLY ERRED IN CONFIRMI NG THE ORDER OF THE AO THEREBY LEVYING PENALTY OF RS.26,83,981/- UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, AND THE SAME MAY BE CANCELLED. 2. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THERE WAS NO DEFAULT UNDER SECTION 271(1)( C) OF THE INCOME-TAX ACT, 1961, AND THE CASE DOES NOT FALL, WITHIN THE MISCHIEF OF SECTION 271 ( 1)( C) OF THE INCOME-TAX ACT, 1961. AS SUCH THE ORDER THEREBY CONFIRMING THE PENALTY IS BAD IN LAW AND THE SAME IS LIABLE TO BE CANCELLED. ITA NO.368/ASR/2014 SH. JAG JIT SINGH, AMRITSAR V. ITO 2 3. THAT THE LD. CIT (APPEALS) HAS DECIDED THE CASE ON LEGAL GROUND AND NOT DECIDED THE CASE ON MERITS. THE LD. CIT (AP PEALS) SHOULD HAVE DECIDED THE CASE ON MERITS ALSO. 4. THAT THE ORDER OF THE LD. CIT (APPEALS) THEREBY CONFIRMING THE PENALTY OF RS.26,83,981/- IS LIABLE TO BE CANCELLED . THE LD. CIT (APPEALS) DID NOT APPRECIATE THAT THIS CASE DOES NOT FALL WIT HIN THE MISCHIEF OF SECTION 271(1)( C) OF THE INCOME-TAX ACT, 1961. AS SUCH THE LD. CIT (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE AO, TH EREBY LEVYING PENALTY OF RS.26,83,981/-. AS SUCH THE ORDER OF THE LD. CIT (A PPEALS) IS BAD IN LAW AND THE SAME IS LIABLE TO BE CANCELLED. ALTERNATIVELY, THE PENALTY LEVIED IS VERY HIGH & EX CESSIVE. 5. THAT THE LD. CIT (APPEALS) FAILED TO APPRECIATE THAT THE PENALTY ORDER UNDER SECTION 271 (1)( C) OF THE INCOME-TAX ACT, 19 61, IS BAD IN LAW AND THE LD. CIT (APPEALS) MISERABLY FAILED TO APPRECIATE TH AT THE PENALTY WAS INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND WHEREAS THE PENALTY WAS LEVIED FOR CONCEALING THE PARTICULARS O F INCOME. THUS NO REASONABLE OPPORTUNITY OF BEING HEARD WAS ALLOWED B EFORE LEVYING THE PENALTY. AS SUCH THE ORDER LEVYING PENALTY U/S 271( 1)(C) OF THE I.T ACT, 1961, IS BAD IN LAW, INASMUCH AS, THERE WAS NO APPL ICATION OF MIND AS THE LEVY OF PENALTY IS DIFFERENT FROM THE BASIS OF INIT IATION OF PENALTY PROCEEDINGS. AS SUCH THE ORDER LEVYING PENALTY U/S 271(1)(C) OF THE INCOME- TAX ACT, 1961, IS BAD IN LAW AND IS LIABLE TO BE CA NCELLED. 6. THAT THE LD. CIT (APPEALS) HAS MISERABLY FAILED TO APPRECIATE THAT THE ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDI NGS ARE QUITE DIFFERENT AND AS SUCH THERE WAS NO JUSTIFICATION IN CONFIRMING THE PENALTY. THE PENALTY ORDER IS BAD IN LAW AND THE SAME MAY BE CANCELLED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD DECLA RED NET INCOME OF RS.93,800/- AS WELL AS RS.90,000/- INCOME FROM AGRICULTURE AND THE ASSESSING OFFICER VIDE ORDER DATED 30 .12.2009 ASSESSED THE INCOME U/S 143(3), TO THE TUNE OF RS.80,93,8 00/-+ RS.90,000/- (AGRICULTURE INCOME) AFTER MAKING AN ADDIT ION OF RS.80 LACS WHILE CONSIDERING THE FACTS THAT THE ASSESSEE BY VIRT UE OF REGISTERED GENERAL POWER OF ATTORNEY DATED 24-07-200 6 EXECUTED BY SH. PARAMDEEP SINGH (OWNER OF AMRITSAR GAS SERVICE), HAD SOLD GAS AGENCY NAMELY AMRITSAR GAS SERVICE, SITUATED AT DILAWAR I STREET, PUTLIGHAR, AMRITSAR, VIDE AGREEMENT DATED 29.09.2009 TO THE RESPECTIVE BUYERS NAMELY SH. SADHA SINGH SHARE, SH. N IRMAL SINGH ITA NO.368/ASR/2014 SH. JAG JIT SINGH, AMRITSAR V. ITO 3 AND SH. SAWINDER SINGH SHARE , ALL RESIDENTS OF VIL LAGE MAHAL, RAM TIRTH ROAD, AMRITSAR. THE ASSESSMENT ORDER WAS CHALLENGED BY THE ASSESSEE BEFORE THE LD CIT(A), WHO VIDE ORDER DATED 05-04-2011 SET A SIDE THE ASSESSMENT ORDER, THEREAFTER THE ORDER OF CIT(A) WAS CHAL LENGED BEFORE THE ITAT, AMRITSAR. THE CO-ORDINATE BENCH OF IT AT AMRITSAR, VIDE ORDER DATED 11-09-2012, WHILE RESTORING THE ASSESS MENT ORDER , REVERSED THE ORDER PASSED BY THE LD. CIT(A). THEREAFT ER ON RESTORATION OF ASSESSMENT ORDER BY ITAT, THE PENALTY PROCEEDING HAV E ALSO BEEN INITIATED SEPARATELY AND A NOTICE FOR HEARING FOR DAT ED 22.01.2013 WAS DULY SERVED UPON THE ASSESSEE BY THE NOTICE SERVER ON DATE D 16.01.2013, HOWEVER NEITHER NO ONE ATTENDED ON BEHA LF OF THE ASSESSEE NOR SOUGHT ANY ADJOURNMENT, THEREAFTER FINAL OP PORTUNITY WAS GIVEN, HOWEVER, ON DATED 8.3.2013, THE ASSESSEES COUNSEL REQUESTED FOR ADJOURNMENT, HOWEVER THE ASSESSEE WAS DIRECTED TO FI LE REPLY BY 15.03.2013 AND THEREAFTER UP TO 20 TH MARCH, 2013, THE SAME REMAINED UN-COMPLIED, THEREFORE, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOTHING TO SAY IN THE MATTER AND FI NALLY IT WAS CONCLUDED BY THE ASSESSING OFFICER THAT FROM THE ABOVE FACT S, ONE THING IS CLEAR THAT OMISSION WAS THERE ON THE PART OF THE ASSESSEE, SINCE HE FAILED TO DISCLOSE HIS CORRECT INCOME AND PAY TAX I N FULL IN RETURN OF THE INCOME FILED BY HIM. FINALLY THE ASSESSING OFFICER IMPOSED THE PENALTY OF RS.26,83,981/- FOR CONCEALING TH E PARTICULARS OF INCOME. 4. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD . CIT(A), WHO AFFIRMED THE SAME. 5. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.368/ASR/2014 SH. JAG JIT SINGH, AMRITSAR V. ITO 4 6. HAVING HEARD THE PARTIES AT LENGTH AND CONSIDERED THE MATERIAL ON RECORDS. IN THE INSTANT CASE, THE ASSESSEE HAD CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT(A) ON VARIOUS GROUNDS INTER ALIA THAT THE PENALTY ORDER IS BAD IN LAW AS THE PENALTY WAS INITIATED FOR F URNISHING INACCURATE PARTICULARS OF INCOME WHEREAS THE PENALTY WAS LEVIED FO R CONCEALING PARTICULARS OF INCOME AND THUS, NO REASONABLE OPPORTUNIT Y OF BEING HEARD WAS OFFERED WHILE LEVYING PENALTY. FURTHER, TH ERE IS NON- APPLICATION OF MIND WHILE LEVYING THE PENALTY AS THE PROCEEDINGS WERE INITIATED ON DIFFERENT FOOTINGS AND THE PENALTY WAS L EVIED ON SEPARATE FOOTINGS. FURTHER, IT WAS SUBMITTED THAT THE ASSESSING OF FICER HAS NOT APPLIED HIS MIND INDEPENDENTLY AS THE ASSESSMENT AND THE PENALTY PROCEEDING ARE SEPARATE PROCEEDINGS AND REQUIRES TO BE A DJUDICATED INDEPENDENTLY ON ITS OWN REASONS, HOWEVER, FROM THE PE NALTY ORDER PASSED BY THE ASSESSING OFFICER, IT DOES NOT REFLECT THAT HE HAD APPLIED HIS MIND INDEPENDENTLY, SIMPLY HE HAS OBSERVED THAT FR OM THE FACTS ONE THING IS CLEAR THAT THE OMISSION WAS THERE ON THE PART O F THE ASSESSEE SINCE HE FAILED TO DISCLOSE HIS CORRECT INCOME AND PAY TAX I N FULL IN THE RETURN OF INCOME FILED BY HIM. FURTHER IT WAS SUBMITTE D BY THE LD. A R THAT THE LD. CIT(A) WRONGLY INTERPRETED THE SETTLED LAW AND AFFIRMED THE PENALTY ORDER WITHOUT TAKING INTO ACCOUNT THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE BECAUSE IN THE INSTANT CASE, THE SATISF ACTION WAS RECORDED FOR FURNISHING INACCURATE PARTICULARS OF INCO ME, HOWEVER, NOTICE WAS ISSUED ON BOTH OF THE LIMBS I.E. CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOM E, HOWEVER, THE PENALTY ORDER WAS PASSED FOR THE CONCEALMENT OF PART ICULARS OF INCOME, THEREFORE, ON THIS GROUND ALSO THE PENALTY ORD ER IS LIABLE TO BE SET ASIDE. ITA NO.368/ASR/2014 SH. JAG JIT SINGH, AMRITSAR V. ITO 5 IN THE INSTANT CASE, THE ASSESSMENT ORDER WAS PASSED AND ADDITION OF RS.80 LACS WAS MADE IN THE INCOME OF THE AS SESSEE, WHICH WAS CHALLENGED BY THE ASSESSEE BEFORE THE LD. CIT(A), WHO DELETED THE ADDITION, THEREAFTER, THE REVENUE DEPARTMENT PREFER RED THE APPEAL BEFORE THE ITAT, AMRITSAR BENCH AND THE CO-ORDINATE B ENCH AT AMRITSAR REVERSED THE ORDER PASSED BY THE LD. CIT(A) BY RESTORI NG THE ORDER OF THE ASSESSING OFFICER, THEREAFTER, THE ASSESSING OFFICER PASSED THE PENALTY ORDER DATED 22.03.2013, HOWEVER, THE CO-ORD INATE BENCH AT AMRITSAR VIDE ITS ORDER DATED 16.06.2016 PASSED IN MISC. APPLICATION NO.04(ASR)/2013 RECALLED ITS EARLIER ORDER DATED 11.09 .2012 AND FINALLY VIDE ORDER DATED 31-10-2018, THIS BENCH SET ASIDE THE O RDERS PASSED BY THE AUTHORITIES BELOW WHILE OBSERVING THE ACTS AND OMI SSIONS OF THE AUTHORITIES BELOW, WHICH GOES TO SHOW THAT THE ISSUE I NVOLVED IN THE INSTANT CASE IS COMPLEX IN NATURE AND DEBATABLE AND EVE N OTHERWISE THE ASSESSING OFFICER, WHILE LEVYING PENALTY WITHOUT DEMONSTR ATING INDEPENDENT AND REASONABLE REASONING/MATERIAL/GROUNDS ON THE BASIS OF WHICH THE PENALTY IS JUSTIFIABLE, SIMPLY OBSERVED THAT FROM THE FACTS ONE THING IS CLEAR THAT THE OMISSION WAS THERE ON THE P ART OF THE ASSESSEE SINCE HE FAILED TO DISCLOSE HIS CORRECT IN COME AND PAY TAX IN FULL IN THE RETURN OF INCOME FILED BY HIM . ON THE AFORESAID CONSIDERATIONS AND OBSERVATIONS, WITHOUT GOING INTO THE TECHNICAL AND LEGAL ISSUES RAISED BY THE ASSESSEE, CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES AND SPECIFICALLY BECAUSE THE ORDERS PASSED BY THE AUTHORITIES BELOW HAVE ALREADY BEEN SET ASIDE, WE ARE OF THE VIEW THAT THE PENALTY IN ANY SENSE CANNOT BE LEVIABLE AND HENCE DOES NOT SURVIVE, RESULTANTLY WE DO NOT HAVE ANY HESITATION TO DELETE T HE PENALTY. ITA NO.368/ASR/2014 SH. JAG JIT SINGH, AMRITSAR V. ITO 6 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 .10.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31.10.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) SHRI JAGJIT SINGH, S/O SHRI AMRIK SINGH, GALI GUJJR AN, JANDIALA GURU, AMRITSAR (2) INCOME TAX OFFICER, 4(2), AMRITSAR (3) THE CIT(A)-AMRITSAR (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER