Shri Dilipbhai G. Lalakia, RAJKOT-GUJARAT V. The Deputy Commissioner of Income Tax, Central Circle-2 , RAJKOT-GUJARAT

ITA 396/RJT/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6670 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 18-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARGOVIND SINGH
• Assessee Lawyers: DM RINDANI
• Keywords: Income from undisclosed sources; Search and seizure; Opportunity of being heard; Reasonable cause
• Section: 143(3); 153A; 27; 6; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI K. NAR A SIMHA CHARY , MEMBER ITA NO S . 395 TO 397 / RJT /201 4 ASS T. YEAR S : 200 6 - 0 7 TO 2008 - 09 SHRI DILIPBHAI G. LALAKIA 101, SHAKUNTAL , OPP. LALAKIA PARIMAL SCHOOL, KALAWAD ROAD, RAJKOT (APPELLANT) PAN : AAOPL2384C VS DCIT, CENTRAL CIRCLE - II, RAJKOT (RESPONDENT) APPELLANT BY : SHRI D.M. RINDANI, C.A RESPONDENT BY : SHRI HARGOVIND SINGH, DR DATE OF HEARING : 2 1 /0 3 /201 7 DATE OF PRONOUNCEMENT : 22 /0 3 /201 7 O R D E R PER K. NARSIMHA CHARRY, MEMBER, JM : THESE THREE APPEALS ARE FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 16.5.2014 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - IV, AHMEDABAD (FOR SHORT HER EINAFTER REFERRED TO AS LD. CIT(A) ) IN APPEAL NOS. CIT(A) - IV/156/RJT/CC - 2/13 - 14, CIT(A) - IV/157/RJT/CC - 2/13 - 14 AND CIT(A) - IV/158/RJT/CC - 2/13 - 14. 2. THE FACTS ARE SIMILAR AND THE ONLY GROUND INVOLVED IN ALL THESE THREE APPEALS IS IN RESPECT OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE 2 SHRI DILIPBHAI G. LALAKIA ITA NOS. 395 TO 397/RJT/2014 INCOME TAX ACT, 1961 (FOR SHORT HEREINAFTER REFERRED TO AS THE ACT). HENCE, THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER BY TAKING THE FACTS RELEVANT FOR ASSESSMENT YEAR 2006 - 07. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM REMUNERATION , SHARE OF PROFIT AND INCOME FROM OTHER SOURCES. ON 24.6.2010 THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED U/S 132 OF THE ACT AND PURSUANT TO THE NOTICE, ASSESSEE FILED THE RETURN OF I NCOME. SUBSEQUENTLY, ASSESSMENT WAS COMPLETED U/S 153A R.W.S. 143(3) OF THE ACT AND PENALTY PROCEEDINGS WERE INITIATED ON THE UNACCOUNTED INCOME DISCLOSED BY THE ASSESSEE BY ISSUING A NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT. BY WAY OF ORDER DATED 17.6 .2013, THE ASSESSING OFFICER LEVIED PENALTY ON THE ASSESSEE. CHALLENGING THE SAME, ASSESSEE CARRIED THE MATTERS IN APPEAL IN THREE SEPARATE APPEALS FOR ASSESSMENT YEARS 2006 - 07 TO 2008 - 09. THE LD. CIT(A), BY WAY OF A COMMON ORDER, DISMISSED THE APPEALS C ONFIRMING THE PENALTY PROCEEDINGS. HENCE, THE ASSESSEE IS BEFORE US IN THESE APPEALS CONTINUING HIS CHALLENGE AGAINST LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 4. IT IS THE ARGUMENT OF THE LD. AR THAT NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT DOES NOT C LEARLY SPELL OUT UNDER WHICH LIMB OF SEC. 271(1)(C) OF THE ACT EITHER IT IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME THAT THE PENALTY PROCEEDINGS ARE INITIATED. NOTICE DATED 17.1.2013 CLEARLY INDICATES THE PERFUNCTORY MANNER IN WHICH THE PENALTY PROCEEDINGS ARE INITIATED AND FURTHER NOTICE DATED 22.4.2013 ALSO DOES NOT SPELL OUT CLEARLY WHAT CHA RGE THE ASSESSEE IS TO DEFEND, A S SUCH, THE VERY BASIS OF THE PENALTY 3 SHRI DILIPBHAI G. LALAKIA ITA NOS. 395 TO 397/RJT/2014 PROCEEDINGS IS VITIATED AND THE ORDERS O F THE AUTHORITIES BELOW HAVE TO BE QUASHED. LD . AR PLACES RELIANCE ON THE DECISION REPORTED IN COMMISSIONER OF INCOME TAX VS SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) AND ALSO THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE O F SHRI RAHULBHAI VITTHALBHAI VADALIA VS ACIT IN IT(SS)A NO. 8/RJT/2014 DATED 28.11.2016 . 5. PER CONTRA, THE LD. DR IS HEAVILY RELYING UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITS THAT THE ORDER OF LD. CIT(A) IS VERY REASONED AND SELF - EXPLANATORY ONE. 6. WE HAVE CAREFULLY GONE THROUGH THE CONTENTIONS OF EITHER SIDE AND PERUSED THE MATERIAL PAPERS ON RECORD, PARTICULARLY THE NOTICE DATED 17.1.2013 U/S 274 R.W.S. 271(1)(C) OF THE ACT AND ALSO THE REMINDER DATED 22.4.2013 IN THE LIGHT OF THE DECISION S RELIED UPON BY THE ASSESSEE. FOR THE SAKE OF CLARITY, WE EXTRACT THE NOTICE U/S 274 OF THE ACT AS WELL AS THE REMINDER. NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 DATE : - 17/01/2013 PAN : AAOPL2384C TO, SRI DILIP GANGJIBHAI GAJERA (LALAKIA) 101, SHAKUNTAL, OPP. PARIMAL SCHOOL, KALAWAD ROAD, RAJKOT. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASST. YEAR 2006 - 07 (U/S. 143(3)), IT APPEARS TO ME THAT YOU * HAVE WITHOUT REASONABLE CAUSE FAILED TO FU RNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVEN UNDER SECTION 22(1)/22(2)/34 OF THE INDIAN INCOME TAX ACT, 1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139(1) OR BY A NOTICE GIVEN UNDER SECTION 139(2)/148 OF THE I NCOME TAX ACT, 1961 NO. _______ DATED ______ OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND THE MANNER REQUIRED BY THE SAID SECTION 139(1 OR BY SUCH NOTICE. 4 SHRI DILIPBHAI G. LALAKIA ITA NOS. 395 TO 397/RJT/2014 * HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH A NOTIC E UNDER SECTION 22(4)/23(2) OF THE INDIAN INCOME TAX ACT, 1922 OR UNDER SECTION 142(1)/143(2) OF THE INCOME TAX ACT, 1961. NO. __________ DATED ________ * HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME WITHIN 15 DAYS FROM THE RECEIPT OF THIS NOTICE AND SHOW CAUSE AS TO WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271(1)(C). SD/ - (V.J. B ORICHA) DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 2, RAJKOT REMINDER IS AS FOLLOWS: NO. DCIT/CC.2/PEN/13 - 14 OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE - 2, RAJKOT DATE : 22 - 04 - 2013 SHREE DILIPBHAI G. LALAKIYA 101, SHAKUNTAL APARTMENTS, NEAR PARIMAL SCHOOL, KASLAVAD ROAD, RAJKOT . SIR, SUB : PENALTY PROCEEDINGS U/S. 271(1)(C) IN YOUR CASE FOR AY 2006 - 07 PLEASE REFER TO THE ABOVE. ORDER U/S 143(3) IN YOUR CASE WAS PASSED ON 17 - 01 - 2013. PENALTY PROCEEDINGS U /S 271(1)(C) OF THE I T ACT WERE ALSO INITIATED AND A SHOW CAUSE NOTICE U/S 271(1)(C) WAS ALSO ISSUED AND SERVED UPON YOU, WITH A REQUEST TO SUBMIT YOUR REPLY IN THE MATTER WITHIN 15 (FIFTEEN) DAYS OF THE RECEIPT OF THE NOTICE. YOU ARE THEREFORE ONCE AGAIN REQUESTED TO SUBMIT YOUR REPLY TO PENALTY NOTICE EXPLAINING AS TO WHY PENALTY U/S 271(1)(C) SHOULD NOT BE LEVIED UPON YOU. YOUR REPLY SHOULD REACH THIS OFFICE LATEST BY 30/04/2013, FAILING WHICH IT SHALL BE PRESUMED THAT YOU HAVE NOTHING TO SAY IN THE MATTER. SD/ - (V.J. BORICHA) DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 2, RAJKOT 5 SHRI DILIPBHAI G. LALAKIA ITA NOS. 395 TO 397/RJT/2014 IT, THEREFORE, IS AMPLY CLEAR THAT THE ASSESSING OFFICER HAS NOT SPECIFIED WHETHER THE NOTICE WAS ISSUED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HONBLE SUPREME COURT IN SSAS EMERALD MEADOWS (SUPRA) DISMISSED THE SLA PREFERRED AGAINST THE DECISION OF THE HONBLE KARNA TAKA HIGH COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS , [2016] 73 TAXMANN.COM 241 (KARNATAKA) . THE HONBLE KARNATAKA HIGH COURT IN ITS DECISION HAS FOLLOWED THE DIVISION BENCH JUDGMENT IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY, 359 IT R 565 (KAR) . THE COORDINATE BENCH OF THIS TRIBUNAL HAS REFERRED TO AND FOLLOWED THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) . THE PRINCIPLES LAID DOWN BY THE DECISION IS CLEAR THAT THE NOTICE ISSUED U/S 27 4 R.W.S. 271(1)(C) OF THE ACT SHALL SPECIFY UNDER WHICH LIMB OF SEC. 271(1)(C) OF THE ACT THE PENALTY PROCEEDINGS WERE INITIATED, AND IN THE ABSENCE OF SUCH CLARITY, THE PROCEEDINGS ARE BAD IN LAW. THEREFORE, WHILE RESPECTFULLY FOLLOWING THE JUDGEMENTS RE FERRED TO ABOVE, WE HOLD THAT THE IMPUGNED PENALTY PROCEEDINGS ARE BAD IN LAW AND CANNOT BE SUSTAINED. WE, THEREFORE, WHILE QUASHING THE PROCEEDINGS, ALLOW THE APPEALS. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED AND THE PENALTY PROCEEDINGS ARE QUASHED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 N D MARCH, 2017. SD/ - SD/ - ( S.V. MEHROTRA ) ACCOUNTANT MEMBER ( K. NAR A SIMHA CHARY ) JUDICIAL MEMBER MUMBAI, DATE : 2 2 N D MARCH , 201 7 *SSL* 6 SHRI DILIPBHAI G. LALAKIA ITA NOS. 395 TO 397/RJT/2014 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, RAJKOT 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, RAJKOT