Magnaflux Systems Pvt.Ltd, Pune V. Income tax Officer,

ITA 42/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3664 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 06-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: PRASANN A L JOSHI
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 43B; 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO. 42/PUN/2017 / ASSESSMENT YEAR : 2008-09 MAGNAFLUX SYSTEMS PVT. LTD., (SINCE CHANGED TO ERAM MAGNAFLUX SYSTEMS PVT. LTD.) BLDG. NO.14, SHOP NO.1, ANAND NAGAR, PAUD ROAD, PUNE- 411 020 PAN : AACCM3616R ....... / APPELLANT / V/S. THE INCOME TAX OFFICER WARD 14(4), PUNE. / RESPONDENT ASSESSEE BY : SHRI PRASANNA L. JOSHI REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 19.02.2019 / DATE OF PRONOUNCEMENT : 20.02.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF CIT(APPEALS)-2, PUNE DATED 12.08.2016 FOR THE ASSESSMENT YEAR 2008-09 AS PER FOLLOWING GROUNDS OF APPEAL: PENALTY LEVIED U/S.271(1) (C) 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(APPEALS) ERRED IN CONFIRMING THE VALIDITY OF NOTICE ISSUED B Y THE LEARNED ASSESSING OFFICER U/S 274 R.W.S. 271(1)(C) AND REJE CTING THE PLEA OF 2 ITA NO. 42/PUN/2017 A.Y.2008-09 THE APPELLANT THAT THE NOTICE IS VOID AB-INITIO AND CONSEQUENTLY THE PENALTY PROCEEDINGS DESERVE TO BE QUASHED AT THE TH RESHOLD. 2. THE LEARNED CIT(APPEALS) ERRED IN NOT APPRECIATING THAT WHEN THE SPECIFIC CHARGE THAT THE APPELLANT WAS EXPECTED TO ANSWER WAS NOT SPECIFIED IN THE NOTICE, THE PROCEEDINGS THE LEVY O F PENALTY IN PURSUANCE OF THE NOTICE WAS EX-FACIE ILLEGAL. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER OF RS.8,49,750/- IN RESPECT OF DI SALLOWANCE OF EXCISE DUTY CLAIMED BY THE APPELLANT RS.25,00,000/- . 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER OF RS.1,78,161/- IN RESPECT OF D ISALLOWANCE OF BONUS U/S. 43B OF THE ACT RS.5,24,158/-. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER OF RS.1,60,467/- IN RESPECT OF DI SALLOWANCE OF REPAIRS EXPENSES U/S. 40(A)(IA) OF THE ACT RS.4,72, 100/-. GENERAL GROUNDS: 6. THE LEARNED CIT(A) ERRED IN DISREGARDING THE JUDICI AL PRONOUNCEMENTS IN THIS REGARD. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY OF THE GROUNDS OF APPEAL AT ANY TIME BEFORE THE TIME OF HEARING. 2. THOUGH THE ASSESSEE HAS PREFERRED MULTIPLE GROUNDS O F APPEAL, THE GRIEVANCE REVOLVES AROUND PENALTY LEVIED U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE FIRST TWO GROUNDS ARE LEGAL GROUND AND GROUND NO.3, 4 AND 5 ARE GROUNDS ON MERITS. WE PROCEED TO DECIDE THE ISSUE FIRST ON LEGAL GROUNDS. 3. THE LD. AR OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE NOTICE ISSUED U/S.274 R.W.S. 271(1)(C) OF THE ACT DID NOT SPECIFY ON WHICH LIM B PENALTY U/S.271(1)(C) OF THE ACT IS LEVIED. THE LD. AR OF THE ASSESSEE R ELIED ON THE LATEST JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY REPORTED AS 392 ITR 4 (BOM.) WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS FOLLOWED THE VIEW OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATH COTTON & GINNING FACTORY REPO RTED IN 359 ITR 3 ITA NO. 42/PUN/2017 A.Y.2008-09 565(KAR.) WHEREIN IT WAS OBSERVED THAT THE HON'BLE SUPRE ME COURT OF INDIA HAD HELD IN T. ASHOK PAI VS. CIT REPORTED AS 292 ITR 11 (SC) THAT ACT OF CONCEALMENT OF INCOME AND ACT OF FURNISHING INACCURATE PARTICULARS ARE TWO DIFFERENT THINGS. SINCE WHERE THE NOTICE DOES NOT SPECIFY FO R WHAT PENALTY IS BEING INITIATED, THE LEVY OF PENALTY WAS HELD TO BE INVALID. T HIS VIEW WAS FOLLOWED BY THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, 73 TAXMANN.COM 241( KAR.) AGAINST WHICH SUPREME COURT REJECTED THE REVENUES SLP. THE LD. AR FURTHER SUBMITTED THAT AS OF NOW SO FAR AS THE HON'BLE JURISDICTIONAL HIGH COURT IS CONCERNED, THE NON-STR IKING OF IRRELEVANT PORTION OF THE LIMB IS NOT JUST A PROCEDURAL MISTAKE BUT IF SUCH EXERCISE IS NOT DONE AND IF THE NOTICE DOES NOT SPECIFY THE LIMB IN WHICH T HE PENALTY IS BEING LEVIED U/S.271(1)(C) OF THE ACT, IN SUCH SCENARIO, THE IMPOSITION OF PENALTY SHALL BE VOID AB-INITIO. THE LD. AR FURTHER CONTENDED THAT T HE DECISION RELIED ON BY LD. CIT (APPEALS) FOR CONFIRMING PENALTY ARE OF DIFFERENT HIGH COURTS WHICH ARE DISTINGUISHABLE IN FACTS AND ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. 4. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS RELIED ON THE ORDERS OF THE SUB-ORDINATE AUTHORITIES. 5. WE HAVE PERUSED THE CASE RECORDS, HEARD THE RIVAL CONTENTION S AND HAVE CONSIDERED THE JUDICIAL PRONOUNCEMENTS PLACED BEFORE US. W E HAVE ALSO GIVEN CONSIDERABLE THOUGHT TO THE DOCUMENTS PLACED BEFORE US IN PAPER BOOK FILED. WE NOTICE THAT IN PAGE NO.1, SHOW CAUSE NOTICE HAS BEEN ISSUED TO THE ASSESSEE AND PARA 4 THEREIN, IT IS STATED THAT THE ASSE SSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 A S REQUIRED UNDER THE PROVISIONS OF SECTION 139(1) OF THE ACT. THE PROVISIONS OF SEC TION 271(1)(C) OF THE ACT IS THEREFORE ATTRACTED IN CASE OF THE ASSESSEE. PAGE 2 OF THE PAPER BOOK WHICH IS THE REPLY OF THE ASSESSEE WHEREIN, IT IS CLEARLY S TATED THAT THE 4 ITA NO. 42/PUN/2017 A.Y.2008-09 ASSESSEE HAS E-FILED ITS RETURN OF INCOME FOR ASSESSMENT Y EAR 2008-09 VIDE E- FILING ACKNOWLEDGMENT NO. 43968500300908 DATED 30.09.2008. THE ASSESSEE HAS ALSO SUBMITTED PHYSICAL COPY OF ITR V WITH ASST. COMMIS SIONER OF INCOME TAX, CIRCLE 11(2) ON 13.10.2008. THEREAFTER, IN PAGE 4 OF THE PAPER BOO K, THERE IS NOTICE U/S.274 R.W.S. 271 OF THE ACT WHEREIN, THE LIMB FOR WHICH PENALTY IS LEVIED IS NOT SPECIFIC. THE LD. AR HAS POINTED OUT BEFORE US THAT THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (SUPRA.) HAS HELD THAT CONCEALMENT OF INCOME AND FURNISH ING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C) CARRY DIFFERENT MEA NINGS /CONNOTATIONS AND THEREFORE, THE SATISFACTION OF THE ASSES SING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED U/S.2 71(1)(C) FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMPOSED FOR THE OTHER. THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT C ANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. THEREFORE, W HERE THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME, THE ORDER IMPOSING PENALTY FOR CONCEA LMENT OF INCOME WAS NOT VALID. MEANING THEREBY TO OUR HUMBLE UNDERSTANDING, THE ASSES SEE SHOULD BE READY WITH HIS DEFENSE FOR WHICH PENALTY HAS BEEN LEVIED BY THE REVENUE AUTHORITY. IT COULD NOT BE GENERALLY DONE THAT FOR CONC EALMENT OF INCOME AND ALSO FOR FURNISHING INACCURATE PARTICULARS OF INCOME, PENALT Y HAS BEEN LEVIED. THE LIMB FOR WHICH PENALTY IS LEVIED, SHOULD BE SPECIFIC ALLOWING OPPORTUNITY TO THE ASSESSEE TO GET READY WITH HIS DEFENSE. FURTHER, THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAM SON PERINCHERY (SUPRA.) AS STATED BY THE LD. AR IS THE LATEST JUDGMENT ON THE ISSUE WHICH IS THEREFORE, RELEVANT. THE LD. DR DID NOT BRING ANY DECISION S OF ANY OTHER 5 ITA NO. 42/PUN/2017 A.Y.2008-09 COURTS/ HIGH COURTS CONTRARY TO THE DECISIONS RELIED ON BY THE LD. AR ON THE ISSUE. RESPECTFULLY, FOLLOWING THE DIRECTIONS AND RULE OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE DIRECT THE DELETION OF PENALTY I N THE CASE OF THE ASSESSEE. THEREFORE, THE ORDER OF THE LD. CIT(APPEALS) IS S ET ASIDE AND THE LEGAL GROUNDS RAISED IN APPEAL BY THE ASSESSEE ARE ALLOWED. 6. THAT ONCE THE DECISION IN LEGAL GROUNDS HAS BEEN REN DERED IN FAVOUR OF THE ASSESSEE, OTHER GROUNDS ON MERITS I.E. GROUND NOS. 3 , 4 AND 5 BECOME ACADEMIC AND INFRUCTUOUS AND HENCE, ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 20 TH DAY OF FEBRUARY, 2019. SD/- SD/- ANIL CHATURVEDI PA RTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 20 TH FEBRUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-2, PUNE. 4. THE PR. CIT-6, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY// (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 6 ITA NO. 42/PUN/2017 A.Y.2008-09 DATE 1 DRAFT DICTATED ON 19 .0 2 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 19 .0 2 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER