I E C Air Tools Pvt. Ltd., Pune V. Assistant Commissioner of Income-tax,

ITA 375/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7017 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-11-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Keywords: Bogus purchase
• Section: 143(3); 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.375/PUN/2016 / ASSESSMENT YEAR : 2009-10 IEC AIR TOOLS PVT. LTD., IEC HOUSE, 1145, SHIVAJINAGAR, OFFICE F.C. ROAD, PUNE 411 016. PAN : AAACI3915R. . / APPELLANT V/S ASST.COMMISSIONER OF INCOME TAX, CIRCLE 11(1), PUNE. . / RESPONDENT ASSESSEE BY : SHRI C.H. NANIWADEKAR. REVENUE BY : SHRI VIVEK AGGARWAL. / 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, PUNE DT. 27.01 .2016 FOR THE ASSESSMENT YEAR 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- 2.1 ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALES OF PNEUMATIC TOOLS ETC. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2009-10 ON 31.03.2010 DECLARING TOTAL INCOME AT RS.61,57,870/-. THE CAS E / DATE OF HEARING : 27.11.2017 / DATE OF PRONOUNCEMENT: 06.12.2017 2 WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.31.12.2013 AND THE T OTAL INCOME WAS DETERMINED AT RS.61,57,870/- BEING THE SAME AS FILED BY THE ASSESSEE. SUBSEQUENTLY, NOTICE U/S 148 OF THE ACT WAS ISSUED ON 22.03.2013 AND IN RESPONSE TO WHICH ASSESSEE FILED REPLY DT.02.04.2013 REQUESTING TO TREAT THE RETURN FILED ON 31.03 .2010 AS THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT . THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE ACT ON 31.12.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS.62,31,620-/- BY MAKING ADDITION ON ACCOUNT OF BOGUS PURCHASES OF RS.58,565/- AND UNMATCHED ITS DETAILS AT RS.15,187/-. ON THE DISALLOWANCE OF BOGUS PURCHASES, AO VID E ORDER DT.26.06.2014 LEVIED PENALTY OF RS.19,940/- U/S 271(1)(C) OF THE ACT ON ACCOUNT OF CONCEALING PARTICULARS OF INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.27.01.2016 (IN APPEAL NO.PN/CIT(A)- 1/DCIT/CIR.11(1)/PN/492/14-15) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. A. IN CONFIRMING THE PENALTY OF RS.19,940/- U /S 271(1)(C) OF THE INCOME TAX ACT, 1961. B. IN NOT APPRECIATING THAT EXPLANATION OFFERED BY THE COMPANY IS BONAFIDE AND EXPLANATION IS NOT FALSE. 3. BEFORE US, LD.A.R. SUBMITTED THAT BOTH THE GROUNDS BEING INTER-CONNECTED AND ARE WITH RESPECT TO LEVY OF PENALT Y U/S 271(1)(C) OF THE ACT. 3 4. BEFORE US, LD.A.R. SUBMITTED THAT ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALES OF PNE UMATIC TOOLS ETC. HE SUBMITTED THAT WHILE FRAMING THE ASSESSME NT U/S 143(3) R.W.S. 147 OF THE ACT, AO HAD MADE ADDITION ON ACCO UNT OF DISALLOWANCE OF BOGUS PURCHASES AT RS.58,565/- AND UNMAT CHED ITS DETAILS AT RS.15,187/- TOTALING TO RS.73,752/- AND D ETERMINED THE TOTAL INCOME AT RS.62,31,620/- AS AGAINST THE INCOME OF RS.61,57,870/- DECLARED BY THE ASSESSEE. ON DISALLOWANCE OF BOGUS PURCHASES, AO LEVIED PENALTY OF RS.19,940/- U/S 27 1(1)(C) OF THE ACT. HE SUBMITTED THAT WHILE PASSING THE ASSESSME NT ORDER, AO HAS NOT RECORDED ANY SATISFACTION FOR LEVY OF PENALTY B UT WHILE PASSING THE PENALTY ORDER U/S 271(1)(C) OF THE ACT, THE AO HAS LEVIED PENALTY FOR CONCEALMENT OF INCOME AS WELL AS FOR FURNISH ING INACCURATE PARTICULARS OF INCOME. HE, RELYING ON THE DECISIO N OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (ITA NO.1154 OF 2014 ORDER DT.05.01.2017), SUBMIT TED 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. HE THEREFO RE SUBMITTED THAT PENALTY LEVIED BY AO BE DELETED. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 5. 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 ON THE DISALLOWANCE OF BOGUS PURC HASES OF 4 RS.58,656/-. THE PERUSAL OF ASSESSMENT ORDER PASSED U/ S 143(3) R.W.S. 147 OF THE ACT REVEALS THAT AO HAD INITIATED PENALTY PROCEEDING BUT NO SATISFACTION WAS RECORDED. THEREAFTER IN THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT, AO HELD THAT ASSESSEE HAD CONCEALED PARTICULARS OF INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME U/S 271(1)(C) OF THE ACT. I T IS A SETTLED LAW THAT WHILE LEVYING PENALTY FOR CONCEALMENT, THE AO HAS TO RECORD SATISFACTION AND THEREAFTER 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 SATISFACTION WHILE COMPLETI NG THE ASSESSMENT AS TO WHETHER THE ASSESSEE HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOTI CE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER THEREAFTER HAS TO LEVY PE NALTY UNDER SECTION 271(1)(C) OF THE ACT FOR NON-SATISFACTION OF EITH ER OF THE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING O FFICER HAS TO COME TO A FINDING AS TO WHETHER THE ASSESSEE HA S CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHE RY IN ITA NO.1154 OF 2014 WITH OTHER ITA NOS.953 OF 2014, 1097 OF 2014 AND 1226 OF 2014, VIDE JUDGMENT DATED 05.01.2017 HELD TH AT WHERE INITIATION OF PENALTY IS ONE LIMB AND THE LEVY OF PENALTY 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. 6. IN THE PRESENT CASE, AS NOTED HEREINABOVE, IT IS SEEN THAT THE AO HAS NOT RECORDED ANY SATISFACTION AND FURTHER LEVIED P ENALTY ON 5 BOTH THE LIMBS I.E., FOR CONCEALMENT OF INCOME AND FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. CONSIDERING THE AFORESAID FACTS IN THE LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SOMSON PERINCHERY (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE THE BASIC CONDITION FOR LEVY OF PENALTY HAS N OT BEEN FULFILLED AND THAT THE PENALTY ORDER SUFFERS FROM NON-EXERCIS ING OF JURISDICTION POWER OF AO AND THEREFORE PENALTY ORDER CANN OT BE UPHELD. WE ACCORDINGLY SET ASIDE THE PENALTY ORDER PA SSED BY AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 06 TH DAY OF DECEMBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 6 TH DECEMBER, 2017. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, PUNE. PR.CIT-1, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.