Shree Hatkeshwara Cargo Movers, Pune V. Deputy Commissioner of Income-tax,

ITA 388/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7014 (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: 2011-2012
• Appeal Filed On: 10-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KISHOR PHADKE SHRI MUKESH JHA
• Keywords: Revised return
• Section: 143(3); 133A

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.388/PUN/2016 / ASSESSMENT YEAR : 2011-12 SHREE HATKESHWARA CARGO MOVERS, OFFICE NO.8, WONDER CITY BLDG., KATRAJ BY PASS ROAD, KATRAJ, PUNE 411 046. PAN : AATFS8504N. . / APPELLANT V/S DY. COMMISSIONER OF INCOME TAX, CIRCLE - 2, PUNE. . / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE. REVENUE BY : SHRI MUKESH JHA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A)-4, PUNE DT. 22.12 .2015 FOR THE ASSESSMENT YEAR 2011-12. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- / DATE OF HEARING : 27.11.2017 / DATE OF PRONOUNCEMENT: 06.12.2017 2 2.1 ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF TRANSPORT AND CARGO MOVERS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. ON 18.09.2011 DECLARING TOTAL INCOME AT RS.NIL. A SU RVEY ACTION U/S 133A OF THE ACT WAS CARRIED OUT ON 05.10.201 2. DURING THE COURSE OF SURVEY ACTION, AO NOTICED THAT ASSESSEE FIR M WAS IN REGULAR PRACTICE OF PAYING SPEED MONEY TO RTO OFFICERS, TRA FFIC POLICE ETC. FOR SMOOTH MOVEMENT OF THE FLEET OF ITS VEHICLES AND THIS FACT WAS ALSO ADMITTED BY THE PARTNER SHRI ADITYARAJ SHA H DURING THE COURSE OF SURVEY ACTION. ASSESSEE THEREAFTER REVIS ED ITS RETURN OF INCOME ON 04.01.2013 INCORPORATING THE DISALLOWANCE OF CAS H PAYMENTS MADE TO RTO OFFICERS ETC., AND ACCORDINGLY OFFERE D AN INCOME OF RS.1,75,82,536/- FOR A.Y. 2011-12. THEREAFTER, THE C ASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS FRAMED U /S 143(3) OF THE ACT VIDE ORDER DT.07.03.2014 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,91,76,160/- BEING THE REVISED RETURN OFFERED BY THE ASSESSEE. ON THE AMOUNT OF RS.1.75 CRORE OFFERED BY THE ASSESSEE IN THE REVISED RETURN INCOME, AO VIDE ORDER DT. 24.09.2014 LEVIED PENALTY OF RS.57,52,848/- U/S 271(1)(C) OF THE ACT ON ACCOUNT OF CONCEALING THE PARTICULARS OF INCOME AND FOR FU RNISHING INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORD ER DT.22.12.2015 (IN APPEAL NO.PN/CIT(A)-4/DCIT, CIRCLE-2, PUNE/407/2014-15) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1.THE LEARNED CIT(A)-4, PUNE ERRED IN LAW AND ON F ACTS IN SUSTAINING THE CONCEALMENT PENALTY OF RS. 57,52,848 /- LEVIED BY THE LEARNED DCIT, CIRCLE-2, PUNE . THE LEARNED CIT(A) OUGHT TO HAVE 3 APPRECIATED THE DETAILED SUBMISSIONS ON LAW AND ON FACTS DEMONSTRATING BONA FIDES OF THE APPELLANT AS WELL A S VARIOUS ERRORS & MISTAKES IN THE PROCESS OF LEVY OF CONCEALMENT PENA L TY. 2.THE LEARNED CIT(A)-4,PUNE ERRED IN LAW IN OBSERVI NG THAT THERE EXIST THREE D I FFERENT SITUATIONS FOR LEVY OF CONCEALMENT PENALTY, WHEREAS, SECTION 271(1)(C) ENVISAGES ONLY TWO SITUA TIONS I . E. LIMBS, FIRST BEING CONCEALMENT OF PARTICULARS OF INCOME AN D SECOND BEING FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LEARNED AO THUS, ASSUMED AN INCORRECT APPROACH WHILE ANALYZ I NG THE RELATED PROVISIONS OF LAW . 3 . THE L EARNED CIT(A)-4,PUNE ERRED IN LAW AND ON FACTS IN N OT APPRECIATING THAT THE LEARNED AO HAS NOT DISCHARGED THE ONUS OF SUBSTANTIATING THE CONCEALMENT PENALTY, SINCE THE S AID PENALTY WAS LEVIED FOR THE SECOND LIMB OF SECTION 271(1)(C) I . E . FOR 'FURNISHING OF INACCURATE PARTICULARS'. AS PER THE PLAIN READING O F THE SAID SECTION 271(1)(C), ONUS OF DISCHARGE FOR THE SECOND L IMB RESTS ON THE LEARNED AO, UNLIKE THE CASE OF FIRST LIMB, WHEREIN, ONUS RE STS OF THE ASSESSEE. 4 . THE LEARNED CIT(A)-4,PUNE ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT APPELLANT HAS NOT EARNED ANY INCO ME BY CLAIMING SPEED-MONEY EXPENSES AND AS SUCH , BASIC INGREDIENTS OF SECTION 271(1)(C) STAND UNFULFILLED . 5 . THE LEARNED CIT(A)-4, PUNE ERRED IN FACTS IN NOT AP PRECIATING THAT THE APPELLANT'S ACTS OF CLAIMING SPEED-MONEY PAYMENT EXPENSES WAS BASED ON A BONA FIDE BELIEF OF TRADE PRACT I CE . LEARNED CIT(A)-4 , PUNE OUGHT NOT TO HAVE APPLIED THE TESTS OF ETHICS WHILE DECIDING THE COMPELLED TRADE PRACTICE ISSUES , AND THAT TOO, I N CONCEALMENT PENALTY PROCEEDINGS . 6 . THE LEARNED CIT(A)-4,PUNE FURTHER ERRED IN NOT APPR ECIATING THE REALITY OF TRANSPORT INDUSTRY E M ANATING FROM THE REPORT OF SHRIRAM TRANSPORT (A REPORT AVAILABLE IN PUBLIC DOMAIN) WHE REIN, C O M PELLED STATUS OF TRANSPORT OPERATORS IS REFERRED TO. THE L EARNED CIT(A)- 4,PUNE OUGHT TO HAVE D EC I DED THE APPEAL ON THE TESTS OF BUSINESS REALITIES AND TRADE PRACTICES RATHER THAN APPLY I NG TESTS OF ETH I CS AND SO CALLED NON-PLAYING FIELDS OF SMALL TRANSPORTERS, ETC. 7 . THE LEARNED CIT(A)-4 ,PUNE ERRED IN LAW AND ON FACTS IN REFERRING TO SELECTED 2-3 QUESTIONS IN THE SURVEY STATEMENT. LEA RNED CIT(A) OUGHT TO HAVE REFERRED TO VARIOUS OTHER QUESTIONS & ANSWERS TOO OF THE SAID STATEMENT TO APPRECIATE THE BONA FIDES OF THE APPELLANT . 8.THE LEARNED CIT(A)-4, PUNE ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT, CONSIDERING THE REVISED RETURN FILED BY THE APPELLANT AND CONSIDERING THE ACCEPTANCE OF THE SAM E BY THE LEARNED AO, NO ANY CONCEALMENT REMAINS THEREAFTER . 9.THE LEARNED CIT(A)-4 PUNE FURTHER ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE APPELLANT HAS MADE SIZEABLE D ECLARATIONS OF ADDITIONAL INCOME DURING THE SURVEY U/S 133A, PAID TAXES ON THE SAME 4 TO THE COMPLETE SATISFACTION OF THE AO ( INCLUDING INTEREST THERE UPON ) , AVOIDED FURTHER LITIGATION AND THUS, ATTEMPTED TO ACQUIRE A QUIETUS / BUY PEACE OF MIND. LEARNED CIT(A)-4 ,PUNE OU G HT TO HAVE RELIED UPON THE DECISION OF CIT VS SURESH CHANDRA MITTAL - 251 ITR 0009 (SC) INSTEAD OF MAK DATA P LTD VS CIT ,263 ITR 1 (SC) IN THIS REGARD. THEREAFTER, THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS : 1. THE APPELLANT CONTENDS THAT, THOUGH THE CONCEAL MENT PENALTY PROCEEDINGS WERE INITIATED FOR FURNISHING OF INACCU RATE PARTICULARS OF INCOME (I.E., LIMB-2), THE NOTICES U/S 274 DATED 07 .03.2014 AND 05.08.2014 DID NOT REFER TO ANY SPECIFIC LIMB OF CO NCEALMENT PENALTY SECTION I.E., CONCEALMENT OF PARTICULARS OF INCOME (I.E. LIMB-1) OR FURNISHING OF INACCURATE PARTICULARS OF INCOME (I.E ., LIMB-2) 2. THE LEARNED AO ERRED IN LEVYING AND THE LEARNED CIT(A) ERRED IN CONFIRMING THE CONCEALMENT PENALTY, BY REFERRING T O BOTH LIMBS OF SECTION 271(1)(C) OF ITA, 1961, I.E., LIMB-1 FOR CO NCEALMENT OF PARTICULARS OF INCOME AND LIMB-2 FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. THE LEARNED AO ERRED IN LEVYING AND THE LEARNED CIT(A) ERRED IN CONFIRMING, THE CONCEALMENT PENALTY, WHICH WAS COMP UTED AS PER A TOTALITY UNRELATED EXPLANATION-4(C) OF SECTION 271( 1)(C) OF ITA, 1961. 4. 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. 5. BEFORE US, LD.A.R. SUBMITTED THAT ASSESSEE IS A PARTNER SHIP FIRM ENGAGED IN THE BUSINESS OF TRANSPORT AND CARGO MOVE RS. HE SUBMITTED THAT WHILE FRAMING THE ASSESSMENT U/S 143(3) OF T HE ACT, AO OPINED THAT THE DIFFERENCE OF INCOME IN THE ORIGINAL RETUR N FILED AND THAT OF THE REVISED RETURN, INCORPORATING THE UNDISC LOSED INCOME DUE TO SURVEY ACTION, NEEDS TO BE TREATED AS CONCEALED INCOME AND THAT UNDISCLOSED INCOME OFFERED BY ASSESSEE WA S ONLY DUE TO SURVEY ACTION CARRIED BY THE DEPARTMENT. AS S UCH, AO LEVIED PENALTY OF RS.57,52,848/- U/S 271(1)(C) OF THE ACT ON 5 ACCOUNT OF CONCEALMENT OF PARTICULARS OF INCOME AND FURNIS HING OF INACCURATE PARTICULARS OF INCOME. HE SUBMITTED THAT WHILE PA SSING THE ASSESSMENT ORDER, AO HAS NOT RECORDED ANY SATISFAC TION FOR LEVY OF PENALTY BUT WHILE PASSING THE PENALTY ORDER U/S 271(1)(C) OF THE ACT, THE AO HAS LEVIED PENALTY FOR CONCEALMENT OF INCOME A S WELL AS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HE, RELYING O N THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. SAMSON PERINCHERY (ITA NO.1154 OF 2014 ORDER DT.05.01.2017 ), SUBMITTED THAT WHEN INITIATION OF PENALTY IS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND PENALTY WAS LEVIED ON CONCEALMENT OF INCOME, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO ASSESSEE, PENALTY U/S 271(1)(C) CANNOT BE LEVIED. HE THEREFORE 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 FOR CONCEALING THE PARTICULARS OF IN COME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PERU SAL OF ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT REVEALS THAT AO HAD INITIATED PENALTY PROCEEDING BUT NO SATISFACTION WAS RECORD ED. THEREAFTER IN THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT, AO HELD THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND HAD CONCEALED THE INCOME U/S 271(1)(C) OF THE ACT. IT 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 6 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. TH E 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. 7. IN THE PRESENT CASE, AS NOTED HEREINABOVE, IT IS SEEN THAT THE AO HAS NOT RECORDED ANY SATISFACTION AND FURTHER LEVIED P ENALTY ON 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 7 UPHELD. WE ACCORDINGLY SET ASIDE THE PENALTY ORDER PA SSED BY AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 6 TH DAY OF DECEMBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 6 TH DECEMBER, 2017. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-4, PUNE. PR.CIT-2, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.