NITIN DESAI & SANDEEP SHIRKE ASSOCIATES, MUMBAI V. ACIT - 26 (2), MUMBAI

ITA 3786/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7348 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 30-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIK
• Section: 271(1)(c); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B , MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.3786/MUM/2018(A.Y. 2013-14) NITIN DESAI & SANDEEP SHIRKE ASSOCIATES, 201-A, CENTRAL AVENUE, VENTURA SHOPPING CENTER, POWAI, MUMBAI 400 076 PAN:AAJFN1544R ...... APPELLANT VS. ACIT-26(2) MUMBAI ..... RESPONDENT APPELLANT BY : SHRI SHRI DEVENDRA JAIN RESPONDENT BY : MS. KAVITA P. KAUSH IK DATE OF HEARING : 18/09/2019 DATE OF PRONOUNCEMENT : 17/10/2019 ORDER PER VIKAS AWASTHY, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 38, MUMBAI DATED 20/02/2018 FOR THE ASSESSMENT YEAR 2013-14 CONFIRMING LEVY OF PENALTY UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. SHRI DEVENDRA JAIN APPEARING ON BEHALF OF THE AS SESSEE SUBMITTED THAT PENALTY PROCEEDINGS INITIATED BY THE ASSES SING OFFICER UNDER SECTION 271(1)(C) OF THE ACT SUFFERS FROM LEGAL DE FECT OF WRONGFUL RECORDING OF SATISFACTION. THE LD. AUTHORIZED REP RESENTATIVE OF THE ASSESSEE POINTED THAT WHILE RECORDING SATISFACTI ON, THE ASSESSING OFFICER 2 ITA NO.3786/MUM/2018(A.Y. 2013-14) MENTIONED THAT THE PENALTY PROCEEDINGS UNDER SECT ION 274 R.W.S. 271(1)(C) OF THE ACT IS INITIATED FOR CONCEALING PARTICULARS OF INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME. THUS , FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS EVIDENT THAT THERE WAS AMBI GUITY IN THE MIND OF ASSESSING OFFICER REGARDING CHARGE TO BE INVOKED FO R INITIATING PENALTY PROCEEDINGS. THE LD. AUTHORIZED REPRESENTATIVE O F THE ASSESSEE FURTHER POINTED THAT EVEN WHILE PASSING ORDER LEVYING PEN ALTY DATED 30/06/2016, THE ASSESSING OFFICER AT SOME PLACES HAS USED THE E XPRESSION CONCEALED ALONG WITH FURNISHING INACCURATE PARTICULARS OF IN COME AND WHILE CONCLUDING THE ORDER HE HAS HELD THAT PENALTY IS B EING LEVIED FOR CONCEALMENT. THE LD. AUTHORIZED REPRESENTATIVE O F THE ASSESSEE ASSERTED THAT WHERE THERE IS AMBIGUITY IN RECORDI NG OF SATISFACTION AND LEVY OF PENALTY, THE PENALTY ORDER IS LIABLE TO BE SET-ASIDE. IN SUPPORT OF HIS SUBMISSIONS THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- 1. CIT VS. MANJUNATHA COTTON & GINNING FACTORY, 35 9 ITR 565(KAR) 2. CIT VS. SAMSON PERINCHERY, 88 TAXMANN.COM 413(B OM) 3. PER CONTRA, MS KAVITA P. KAUSHIK REPRESENTING TH E DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD. DE PARTMENTAL REPRESENTATIVE SUBMITTED THAT THE PENALTY HAS BEEN INITIATED AND LEVIED BY THE ASSESSING OFFICER AS PER PROVISIONS OF THE A CT. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS ASSAILED PENALTY PROCEEDINGS INITIATED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT, ON THE GROUND OF AM BIGUITY IN RECORDING OF 3 ITA NO.3786/MUM/2018(A.Y. 2013-14) SATISFACTION. A PERUSAL OF THE ASSESSMENT ORDER SH OWS THAT PENALTY IN RESPECT OF ADDITION OF RS.6,26,253/- HAS BEEN INI TIATED AGAINST THE ASSESSEE BY ASSESSING OFFICER BY OBSERVING AS UNDER :- PENALTY PROCEEDINGS UNDER SECTION 274 R.W.S. 271(1 )(C) ARE SEPARATELY INITIATED FOR CONCEALING PARTICULARS OF INCOME BY FURNISHING INAC CURATE PARTICULARS OF INCOME. 4.1 THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF T. ASHOK PAI VS. CIT, 292 ITR 11(SC) HAS HELD THAT CONCEALMENT O F INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THUS, THESE EXPRESSIONS CANNOT BE USED INTER CHANGE ABLY. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNA THA COTTON & GINNING FACTORY (SUPRA), AFTER CONSIDERING THE AFORESAID DE CISION BY THE HONBLE APEX COURT HELD, THAT THE ASSESSEE SHOULD KNOW THE GROUND WHICH HE HAS TO MEET SPECIFICALLY, OTHERWISE, PRINCIPLES OF NATU RAL JUSTICE IS OFFENDED. THUS, FROM THE READING OF ABOVE JUDGMENTS IT CAN BE SAFELY CONSTRUED THAT ON THE BASIS OF SUCH AMBIGUOUS RECORDING OF SATISF ACTION NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. THE CHARGE FOR LEVY OF PENALTY HAS TO BE CLEAR, I.E. CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. WHERE THE CHARGE IS UNCLEAR, PENALTY IS NOT SUSTAINABLE. 4.2 IN THE PRESENT CASE, A PERUSAL OF THE PENALTY O RDER UNDER SECTION 271(1)(C) OF THE ACT DATED 30/06/2016 FURTHER SHOWS THAT THERE WAS AMBIGUITY IN THE MIND OF ASSESSING OFFICER EVEN AT THE TIME OF LEVY OF PENALTY. THE ASSESSING OFFICER IN THE CONCLUDING P ART OF THE PENALTY ORDER OBSERVED AS UNDER:- THE CONTENTIONS OF ASSESSEE ARE NOT ACCEPTED AND I T IS HELD THAT ASSESSEE HAS CONCEALED THE TAXABLE INCOME AS WELL AS FURNISHED INACCURATE PARTICULARS WITHIN THE MEANING OF SEC. 271 (1) (C) OF THE ACT AND EXPL ANATION OFFERED BY HIM IS NOT BONAFIDE AND IS INCORRECT AND FALSE ON FACTS, THERE FORE, THE ASSESSEE IS HELD LIABLE FOR LEVY OF PENALTY U/S 271(1) (C) OF THE AC T. ACCORDINGLY, THE ASSESSEE HAS 4 ITA NO.3786/MUM/2018(A.Y. 2013-14) CONCEALED THE INCOME OF RS.6,26,253/- IN RESPECT OF WHICH THE PENALTY I S LEVIED AT 100% OF THE TAX SOUGHT TO BE EVADED ON THE CONCE ALED INCOME. A BARE PERUSAL OF THE ABOVE FINDING OF THE ASSESSIN G OFFICER WOULD SHOW THAT THE ASSESSING OFFICER WAS NOT CLEAR AS TO WHIC H CHARGE OF SECTION 271(1)(C) OF THE ACT IS TO BE INVOKED FOR LEVY OF P ENALTY. THE VAGUENESS IN THE MIND OF ASSESSING OFFICER IS APPARENT WRIT LAR GE EVEN AT THE TIME OF PASSING PENALTY ORDER. THUS, IN VIEW OF THE FACTS AND THE CASE LAWS DISCUSSED ABOVE, WE FIND MERIT IN THE SUBMISSIONS M ADE BY THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. THE PEN ALTY ORDER IS LIABLE TO BE QUASHED ON ACCOUNT OF AMBIGUITY. WE HOLD AND D IRECT ACCORDINGLY. THE SUBSEQUENT PROCEEDINGS ARISING THEREFROM ARE VI TIATED AND HENCE, SET-ASIDE. 5. IN THE RESULT, APPEAL BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY THE 17 TH DAY OF OCTOBER 2019. SD/- SD/- (RAJESH KUMAR ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 17/10/2019 VM , SR. PS(O/S) 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