Pradeep Sweets Pvt Ltd, Pune V. Deputy Commissioner of Income tax, Pune

ITA 408/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6438 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 17-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIPIN GUJARATHI
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 133A

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / ITA NO.408/PUN/2017 / ASSESSMENT YEAR : 2012-13 PRADEEP SWEETS PVT. LTD., 64/B, D-2, MIDC, CHINCHWAD, PUNE 411 019. PAN : AABCP0354J. . / APPELLANT V/S THE DY.COMMISSIONER OF INCOME TAX, CIRCLE 10, PUNE. . / RESPONDENT ASSESSEE BY : SHRI VIPIN GUJARATHI. REVENUE BY : SHRI RAJESH GAWALI. / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS) 6, PUNE DATED 21.12 .2016 FOR THE ASSESSMENT YEAR 2012-13 VIDE WHICH THE PENALTY LEV IED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) HAS BEEN UPHELD. 2. SHRI VIPIN GUJARATHI APPEARING ON BEHALF OF THE ASSESSE E SUBMITTED THAT A SURVEY ACTION U/S 133A WAS CARRIED OU T ON THE ASSESSEE COMPANY AND ITS GROUP CONCERNS ON 12.07.2011. DURING THE COURSE OF SURVEY ACTION, ASSESSEE DISCLOSED ADDITIONAL INCOM E OF RS.45 / DATE OF HEARING : 07.05.2019 / DATE OF PRONOUNCEMENT: 08.05.2019. 2 ITA NO.408/PUN/2017 LACS FOR THE IMPUGNED ASSESSMENT YEAR. THE ASSESSEE T HEREAFTER, IN ITS RETURN OF INCOME DECLARED THE ADDITIONAL INCOME DISCLOSE D DURING SURVEY ACTION. THE ASSESSING OFFICER (AO) WHILE FRAMING ASSESS MENT U/S 143(3) OF THE ACT INITIATED PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE ACT IN RESPECT OF THE AFORESAID INCOME DISCLOSED IN THE RE TURN OF INCOME. THE LD.A.R. SUBMITTED THAT THE HONBLE DELHI HIGH COU RT IN THE CASE OF CIT VS. S.A.S. PHARMACEUTICALS REPORTED AS 335 ITR 259 HAS HELD THAT NO PENALTY U/S 271(1)(C) FOR CONCEALMENT IS LE VIABLE WHERE THE ASSESSEE IN HIS RETURN OF INCOME HAS DECLARED THE INCOME DISCLOSED DURING SURVEY ACTION. CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASS ESSEE HAS TO BE IN THE INCOME TAX RETURN. SINCE, THE ASSESSEE HAS DISCLOSED THE ADDITIONAL INCOME IN RETURN, THERE IS NO QUESTION OF CONCEALM ENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE PUNE BENCH OF TRIBUNAL IN VARIOUS CASES HAS BEEN CONSISTENTLY TAKING A SIMILAR VIEW AND HAS DELETED PENALTY LEVIED U/S 271(1)(C) ON SU CH DISCLOSURES MADE IN RETURN OF INCOME AFTER SURVEY ACTION. TO FURTHER BUTTRESS HIS SUBMISSIONS, LD.A.R. PLACED RELIANCE ON THE FOLLOWIN G DECISIONS : I. ASHOK S. AGARWAL VS. DCIT, CIRCLE-8, PUNE (ITA NO.1227/PUN/2016). II. NANDKISHORE TULSIDAS KATHORE VS. ACIT CENTRAL, CIR 1, NASIK (ITA NO.2174 TO 2180/PUN/2014). 2.1. THE LD.A.R. FURTHER CONTENDED THAT THE PENALTY LEVIED U /S 271(1)(C) IS LIABLE TO BE KNOCKED DOWN ON ACCOUNT OF DIFFERENT CHARGES OF SEC.271(1)(C) BEING INVOKED AT THE TIME OF RECORDING SATIS FACTION AND LEVY OF PENALTY. THE LD.A.R. POINTED THAT AT THE TIME OF REC ORDING 3 ITA NO.408/PUN/2017 SATISFACTION FOR INITIATING PENALTY PROCEEDINGS U/S 271(1)(C), THE AO HAS MENTIONED CONCEALMENT OF INCOME. HOWEVER, WHILE PASSING THE ORDER LEVYING PENALTY, THE AO HAS MENTIONED THAT THE PENALTY IS LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE MANNER IN W HICH PENALTY HAS BEEN LEVIED IS CONTRARY TO THE LAW LAID DOWN B Y THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAMSON PER INCHERY REPORTED AS (2017) 392 ITR 4 (BOM). 3. ON THE OTHER HAND, SHRI RAJESH GAWALI REPRESENTING T HE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER CO NFIRMING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES ON RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. 5. PENALTY U/S 271(1)(C) OF THE ACT HAS BEEN LEVIED IN RESPE CT OF INCOME DECLARED BY ASSESSEE IN THE RETURN OF INCOME FILED C ONSEQUENT TO SURVEY ACTION. DURING SURVEY, CERTAIN INCRIMINATING DOCU MENTS WERE FOUND. THE ASSESSEE DISCLOSED ADDITIONAL INCOME OF RS.4 5 LACS ON ACCOUNT OF UNACCOUNTED SALES DURING THE IMPUGNED ASSESS MENT YEAR. THE ADDITIONAL INCOME DISCLOSED DURING SURVEY WAS OFFERED T O TAX BY THE ASSESSEE IN RETURN OF INCOME. 6. THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT IS ATTRACTED WHERE THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN THE RETURN. PENALTY U/S 271(1)(C) OF THE ACT IS NOT THE CONSEQUENCE OF ADDITIONAL INCOME DEC LARED DURING SURVEY. IN THE INSTANT CASE, THE AO DURING ASSESSMENT PROCEEDINGS 4 ITA NO.408/PUN/2017 HAS ACCEPTED THE RETURN FILED BY THE ASSESSEE WITH THE ADDITIONAL INCOME OF RS.45 LACS DISCLOSED DURING SURVEY ACTION. THUS, THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTIC ULARS OF INCOME IN THE RETURN QUA RS.45 LACS. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. S.A.S. PHARMACEUTICALS (SUPRA) WHILE D EALING WITH A SIMILAR ISSUE IN A VERY EXPLICIT MANNER HAS EXPLAINED T HE MEANING OF EXPRESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT USED IN SECTION 271(1)(C) OF THE ACT. THE HONBLE COUR T DELETED THE PENALTY LEVIED U/S 271(1)(C) ON THE DISCLOSURE MADE DURIN G SURVEY AND OFFERED TO TAX IN THE RETURN OF INCOME. THE RELEVANT EXTRACT OF THE JUDGMENT IS REPRODUCED HEREIN BELOW : 12. AFTER CONSIDERING THE RESPECTIVE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE PARTIES, WE ARE OF THE VIEW THAT TH E ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE HAS TO PREVAIL AS IT CARRIED SUBSTANTIAL WEIGHT. IT IS TO BE KEPT IN MIND THAT SECTION 271(1 )(C) OF THE ACT IS A PENAL PROVISION AND SUCH A PROVISION HAS TO BE STRI CTLY CONSTRUED. UNLESS THE CASE FALLS WITHIN THE FOUR-CORNERS OF TH E SAID PROVISION, PENALTY CANNOT BE IMPOSED. SUB-SECTION (1) OF SECTI ON 271 STIPULATES CERTAIN CONTINGENCIES ON THE HAPPENING WHEREOF THE AO OR THE COMMISSIONER (APPEALS) MAY DIRECT PAYMENT OF PENALTY BY THE ASSESSEE. WE ARE CONCERNED HEREWITH THE FUNDAMENTAL ITY PROVIDED IN CLAUSE (C) OF SECTION 271 (1) OF THE ACT, WHICH AUT HORIZES IMPOSITION OF PENALTY WHEN THE AO IS SATISFIED THAT THE ASSESSEE HAS EITHER; (A) CONCEALED THE PARTICULARS OF HIS INCOME; OR (B) FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME. 13. IT IS NOT THE CASE OF FURNISHING INACCURATE PAR TICULAR OF INCOME, AS IN THE INCOME TAX RETURN, PARTICULARS OF INCOME HAVE B EEN DULY FURNISHED AND THE SURRENDERED AMOUNT OF INCOME WAS DULY REFLE CTED IN THE INCOME TAX RETURN. THE QUESTION IS WHETHER THE PARTICULARS OF INCOME WERE CONCEALED BY THE ASSESSEE OR NOT. IT WOULD DEPEND U PON THE ISSUE AS TO WHETHER THIS CONCEALMENT HAS REFERENCE TO THE INCOME TAX RETURN FILED BY THE ASSESSEE, VIZ., WHETHER CONCEALMENT IS TO BE FO UND IN THE INCOME TAX RETURN. 14. WE MAY, FIRST OF ALL, REJECT THE CONTENTION OF THE LEARNED COUNSEL FOR THE REVENUE RELYING UPON THE EXPRESSION IN THE COU RSE OF ANY PROCEEDINGS UNDER THIS ACT OCCURRING IN SUB-SECTION (1) OF SECTION 271 OF THE ACT AND CONTENDING THAT EVEN DURING SURVEY W HEN IT WAS FOUND THAT THE ASSESSEE HAD CONCEALED THE PARTICULAR OF H IS INCOME, IT WOULD AMOUNT CONCEALMENT IN THE COURSE OF ANY PROCEEDINGS . THE WORDS IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT ARE PREFACED BY THE SATISFACTION OF THE AO OR THE COMMISSIONER OF INCOM E TAX (APPEALS). WHEN THE SURVEY IS CONDUCTED BY A SURVEY TEAM, THE QUESTION OF 5 ITA NO.408/PUN/2017 SATISFACTION OF AO OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER DOES NOT ARISE. WE HAVE TO KEEP IN MIND THAT IT IS T HE AO WHO INITIATED THE PENALTY PROCEEDINGS AND DIRECTED THE PAYMENT OF PENALTY . HE HAD NOT RECORDED ANY SATISFACTION DURING THE COURSE OF SURVEY. DECISION TO INITIATE PENALTY PROCEEDINGS WAS TAKEN WHILE MAKING ASSESSMENT ORDER. IT IS, THUS, OBVIOUS THAT THE EXPRESSION IN THE CO URSE OF ANY PROCEEDINGS UNDER THIS ACT CANNOT HAVE THE REFERENCE TO SURVEY PROCEEDINGS, I N THIS CASE. 15. IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PART ICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME BY TH E AS IN THE CASE OF COMMISSIONER OF INCOME TAX, DELHI-I VS. MOHAN DAS HA SSA NAND 141 ITR 203 AND IN RELIANCE PETROPRODUCTS PVT. LTD. (SU PRA), THE SUPREME COURT HAS CLINCHED THIS ASPECT, VIZ., THE ASSESSEE CAN FURNISH THE PARTICULARS OF INCOME IN HIS RETURN AND EVERYTHING WOULD DEPEND UPON THE INCOME TAX RETURN FILED BY THE ASSESSEE. THIS V IEW GETS SUPPORTED BY EXPLANATION 4 AS WELL AS 5 AND 5A OF SECTION 271 OF THE ACT AS CONTENDED BY THE LEARNED COUNSEL FOR THE RESPONDENT . 16. NO DOUBT, THE DISCREPANCIES WERE FOUND DURING T HE SURVEY. THIS HAS YIELDED INCOME FROM THE ASSESSEE IN THE FORM OF AMO UNT SURRENDERED BY THE ASSESSEE. PRESENTLY, WE ARE NOT CONCERNED WITH THE ASSESSMENT OF INCOME, BUT THE MOOT QUESTION IS TO WHETHER THIS WO ULD ATTRACT PENALTY UPON THE ASSESSEE UNDER THE PROVISIONS OF SECTION 2 71(1) (C) OF THE ACT. OBVIOUSLY, NO PENALTY CAN BE IMPOSED UNLESS THE CON DITIONS STIPULATED IN THE SAID PROVISIONS ARE DULY AND UNAMBIGUOUSLY S ATISFIED. SINCE THE ASSESSEE WAS EXPOSED DURING SURVEY, MAY BE, IT WOUL D HAVE NOT DISCLOSED THE INCOME BUT FOR THE SAID SURVEY. HOWEV ER, THERE CANNOT BE ANY PENALTY ONLY ON SURMISES, CONJECTURES AND POSSI BILITIES. SECTION 271 (1) (C) OF THE ACT HAS TO BE CONSTRUED STRICTLY. UN LESS IT IS FOUND THAT THERE IS ACTUALLY A CONCEALMENT OR NON-DISCLOSURE OF THE P ARTICULARS OF INCOME, PENALTY CANNOT BE IMPOSED. THERE IS NO SUCH CONCEAL MENT OR NON- DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISC LOSURE IN THE INCOME TAX RETURN AND OFFERED THE SURRENDERED AMOUN T FOR THE PURPOSES OF TAX. 7. THE PUNE BENCH OF TRIBUNAL IN THE CASE OF ASHOK S. AGA RWAL VS. DCIT (SUPRA) AND NANDKISHORE TULSIDAS KATHORE VS. ACIT (S UPRA) AND IN VARIOUS OTHER CASES, DELETED PENALTY LEVIED U/S 271(1)(C) OF THE ACT UNDER SIMILAR CIRCUMSTANCES BY FOLLOWING THE RATIO LAID DOWN IN THE CASE OF CIT VS. S.A.S. PHARMACEUTICALS (SUPRA). THUS, WE FIND MERIT IN THE APPEAL OF ASSESSEE. THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT ON THE AMOUNT DISCLOSED IN THE RETURN OF INCOME IS UNWARRANTED. 8. THE LD.A.R. HAS FURTHER BROUGHT TO OUR NOTICE THE DISCR EPANCY IN MENTIONING DIFFERENT LIMBS OF SEC.271(1)(C) OF THE ACT WHILE RECOR DING 6 ITA NO.408/PUN/2017 SATISFACTION FOR INITIATING PENALTY PROCEEDINGS AND AT THE TIME OF LEV YING OF PENALTY. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THA T PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED FOR CONCE ALING INCOME, WHEREAS, IN PENALTY ORDER THE AO HAS LEVIED PENALTY U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THIS SHOWS AMBIGUITY IN THE MIND OF AO WITH REGARD TO CHAR GE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (SUPRA) HA S HELD THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INTIATED, AND IT CANOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 9. THUS, THE CHARGE FOR WHICH PENALTY HAS BEEN INITIATED U/S 271(1)(C) OF THE ACT AND THE CHARGE AT THE TIME OF LEVY OF P ENALTY SHOULD BE CONSISTENT. THE PENALTY CANNOT BE LEVIED ON A CHARGE DIFFERENT FROM THE ONE FOR WHICH IT IS BEING INITIATED. THEREFORE, THE PENALT Y PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE LIABLE TO BE SET AS IDE ON THIS GROUND AS WELL. 10. IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND T HE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 08 TH DAY OF MAY, 2019. SD/- SD/- (R.S. SYAL) (VIKA S AWASTHY ) VICE PRESIDENT JUDICIAL MEMB ER PUNE; DATED : 08 TH MAY, 2019. YAMINI 7 ITA NO.408/PUN/2017 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-6, PUNE. PR. CIT-5, PUNE. '#$ %%&',&', / DR, ITAT, A PUNE; $,-./ GUARD FILE. / BY ORDER // // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY &', / ITAT, PUNE.