J. M CORPORATION, MUMBAI V. ITO 25(3)(2), MUMBAI

ITA 3819/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7737 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 03-06-2016
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: RISHABH S HAH
• Keywords: Initiation of penalty proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.3819/M/2016 (AY 2003 - 2004) ITA NO.3820/M/2016 (AY 2004 - 2005) M/S. J.M. CORPORATION, B/503, LAXMI SADAN OPP. THAKUR PUBLIC SCHOOL, THAKUR VILLAGE, KANDIGVALI (E), MUMBAI 400 066. / VS. INCOME TAX OFFICER, WARD - 25(3)(2), MUMBAI. ./ PAN : AAEFJ1509M ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RISHABH SHAH / RESPONDENT BY : MS. BEENA SANTOSH, DR / DATE OF HEARING : 22.03.2017 / DATE OF PRONOUNCEMENT : 29 .03.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION. BOTH THESE APPEALS ARE FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2003 - 04 AND 2004 - 05. SINCE, THE ISSUES RAISED IN THESE APPEALS ARE IDENTICAL / INTER - CONNECTED, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAS OF THIS ORDER. 2. THE CORE ISSUE RAISED IN BOTH THE APPEALS RELATES TO THE PENALTY U/S 271(1)(C) OF THE ACT. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BR OUGHT MY ATTENTION TO THE NOTICE ISSUED U/S 274 OF THE ACT AND MENTIONED THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND. FURTHER, BRINGING MY ATTENTION TO THE ASSESSMENT ORDER, LD COUNSEL FOR THE ASSESSEE DEMONSTRATED THAT THE ASSESSING OFFICER INITI ATED THE PENALTY PROCEEDINGS BY MENTIONING THAT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE IT ACT ARE SEPARATELY INITIATED FOR CONCEALING / FURNISHING INACCURATE PARTICULARS OF INCOME. EXPLAINING THE ABOVE, LD COUNSEL FOR THE ASSESSEE DEMONSTRATED THAT TH E ASSESSING OFFICER HAS NOT CATEGORICALLY MENTIONED THE APPROPRIATE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. FURTHER, LD COUNSEL FOR THE ASSESSEE BROUGHT MY 2 ATTENTION TO THE PENALTY ORDER MENTIONING THAT THE PENALTY WAS LEVIED FOR CONCEALMENT OF INCOME WHICH IS NOT MENTIONED CLEARLY AT THE TIME OF INITIATING THE PENALTY PROCEEDINGS. LD COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATH CONNON AND GINNING FACTORY (359 ITR 565) . 3. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US, I FIND, THIS IS THE CASE WHERE I N THE NOTICE ISSUED U/S 274 R.W.S 271(1)(C) OF THE ACT , THE ASSESSING OFFICER DID NOT TICK THE CORRECT LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. THAT SUGGESTS NON - APPLICATION OF MIND BY THE AO AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS. CONSIDERING THE SAME, THIS APPEAL IS REQUIRED TO BE DISMISSED RELYING ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHRI SAMSON PERINCHERY IN IT APPEAL NO.1154 OF 2014 AND OTHERS DATED 5.1.2017 READ WITH THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATH CONNON AND GINNING FA CTORY (359 ITR 565), WHICH IS RELEVANT FOR THE PROPOSITION THAT PENALTY PROCEEDINGS DOES NOT SURVIVE WHEN THE AO FAILED TO DELETE FROM THE STANDARD PROFARMA OF THE RELEVANT CLAUSES, SUCH FAILURE LEADS TO AN INFERENCE AS TO NON - APPLICATION OF MIND. CONSI DERING THE ABOVE BINDING JUDGMENT ON THE ISSUE / ARGUMENTS OF THE LD COUNSEL FOR THE ASSESSEE, I FIND, THE ORDER S OF THE CIT (A) IN BOTH THE APPEALS ARE REQUIRED TO BE REVERSED. FOR THE SAID REASONS, PENALTY HA S TO BE DELETED. ACCORDINGLY I ORDER. THUS, GROUNDS RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE ALLOWED. 4. IN THE RESULT, BOTH THE APPEAL S OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON 2 9 T H MARCH, 2017. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 29.03.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 3 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI