Shri Mithelesh Kumar R Singh, Pune V. ACIT, Circle-9, Pune

ITA 423/PUN/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7492 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 11-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARI KRISHAN
• Keywords: Income from undisclosed sources
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 423 /P U N/201 3 / ASSESSMENT YEAR : 20 0 8 - 09 SHRI MITHELESH KUMAR R. SINGH, 403, NISARG DARSHAN, PRADHIKARAN NIGADI, PUNE 411044 PAN : BFWPS6612G ....... / APPELLANT / V/S. ACIT, CIRCLE 9, PUNE / RESPONDENT ASSESSEE BY : S HRI HARI KRISHAN REVENUE BY : SHRI AJAY MODI / DATE OF HEARING : 1 6 - 08 - 2017 / DATE OF PRONOUNCEMENT : 31 - 0 8 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - V, PUNE DATED 14 - 12 - 2012 FOR THE ASSESSMENT YEAR 2008 - 09 CONFIRMING LEVY OF PENALTY U/S. 271 (1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2. SHRI HARI KRISHAN APPEARING ON BEHALF OF THE AS SESSEE SUBMITTED THAT THE ASSESSEE IS A PARTNER IN TWO FIRMS VIZ. M/S. SOUTH CARRYING 2 ITA NO . 423/PUN/2013, A.Y. 2008 - 09 CORPORATION AND M/S. SEAGULL LOGISTICS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE ADDITION OF RS.30,46,100/ - ON ACCOUNT OF UNEXPLAI NED CAPITAL INTRODUCED IN THE PARTNERSHIP FIRM WITH M/S. SEAGULL LOGISTICS. THE LD. AR SUBMITTED THAT THE ASSESSEE ACCEPTED ADDITION AND NO APPEAL WAS FILED BY ASSESSEE. THE ASSESSING OFFICER AFTER MAKING ADDITIONS ALSO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. PENALTY OF RS.10,35,369/ - WAS LEVIED VIDE ORDER DATED 30 - 06 - 2011 U/S. 271(1)(C) OF THE ACT. THE ASSESSEE FILED APPEAL AGAINST THE ORDER LEVYING PENALTY . T HE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CONTENTIONS OF THE ASSE SSEE AND CONFIRMED THE LEVY OF PENALTY. HENCE, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 2.1 THE LD. AR CONTENDED THAT ALTHOUGH IN ORIGINAL GROUNDS OF APPEAL THE ASSESSEE HAS CHALLENGED THE LEVY OF PENALTY ON MERITS. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUNDS OF APPEAL ASSAILING LEVY OF PENALTY ON TECHNICAL GROUNDS I.E. I . LEVY OF PENALTY ON BOTH THE LIMBS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. II . ISSUE OF DEFECTIVE NOTICE U/S. 274 R.W.S. 271(1)(C), WITHOUT STRIKING OFF IRRELEVANT LIMB FOR LEVY OF PENALTY . 2.2 THE LD. AR SUBMITTED THAT A PERUSAL OF ASSESSMENT ORDER SHOWS THAT THE PENALTY HAS BEEN LEVIED FOR CONCEALMENT AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF IN COME. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE FOR LEVY OF PENALTY U/S. 274 R.W.S. 271(1)(C) WHEREIN , BOTH THE LIMBS FOR LEVY OF PENALTY I.E. CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME WAS MENTIONED. THUS, THERE WAS AMBIG UITY IN THE MIND OF ASSESSING OFFICER AT THE TIME OF RECORDING SATISFACTION AS WELL AS AT THE TIME OF ISSUING NOTICE. THEREAFTER, AT THE TIME OF LEVY OF PENALTY THE 3 ITA NO . 423/PUN/2013, A.Y. 2008 - 09 ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND HAS CONCEALED INCOME. THE ASSESSING OFFICER HAS ERRED IN LEVYING PENALTY UNDER BOTH THE LIMBS OF SECTION 271(1)(C) OF THE ACT. 2.3 ON MERITS , THE LD. AR SUBMITTED THAT DURING SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSEE HAS PLACED ON RECORD BALANCE SHEET O F BOTH THE PARTNER SHIP FIRMS WHEREIN THE ASSESSEE IS A PARTNER. THE ASSESSING OFFICER AFTER EXAMINING BALANCE SHEET OF FIRMS CAME TO THE CONCLUSION THAT ASSESSEE HAS INTRODUCED CAPITAL OF RS.30,46,100/ - IN M/S. SEAGULL LOGISTICS. THUS, THERE WAS NO INTEN TION ON THE PART OF ASSESSEE TO CONCEAL ANY PARTICULARS OF INCOME. THE BALANCE SHEET OF FIRMS WERE VOLUNTARILY FURNISHED BY THE ASSESSEE. 3. ON THE OTHER HAND SHRI AJAY MODI REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD. DR SUBMITTED THAT THE ASSESSEE FOR THE FIRST TIME HAS TAKEN PLEA OF DEFECT IN NOTICE AND DEFECTIVE RECORDING OF SATISFACTION BEFORE THE TRIBUNAL. NO SUCH PLEA WAS TAKEN BY THE ASSESSEE BEFORE THE FIRST APPELLATE A UTHORITY. THE LD. DR FURTHER SUBMITTED T HAT A PERUSAL OF ASSESSMENT ORDER SHOWS THAT THERE WAS NO CONFUSION IN THE MIND OF ASSESSING OFFICER WITH RESPECT TO CHARGE ON WHICH PENALTY IS TO BE LEVIED. THE ASSESSING OFFICER WHILE RECORDING SATISFACTION HAS CATEGORICALLY OBSERVED THAT PENALTY IS BEI NG LEVIED FOR CONCEALMENT AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME AND EVEN WHILE PASSING THE ORDER LEVYING PENALTY U/S. 271(1)(C), THE PENALTY HAS BEEN LEVIED FOR CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THUS, AT B OTH THE STAGES I.E. AT THE TIME OF RECORDING SATISFACTION AND AT THE TIME OF LEVYING PENALTY BOTH THE LIMBS WERE UNIFORMLY MENTIONED. IT IS NOT A CASE WHERE THE SATISFACTION HAS BEEN RECORDED ON ONE COUNT AND THE 4 ITA NO . 423/PUN/2013, A.Y. 2008 - 09 PENALTY HAS BEEN LEVIED ON THE OTHER. THE LD. DR PRAYED FOR REJECTING THE CONTENTIONS OF ASSESSEE AND UPHOLDING THE IMPUGNED ORDER. 4. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . IN THE ORIGINAL GROUNDS OF APPEAL THE ASSESSEE HAS ASSAILED LEVY OF PENALTY ON MERITS. THEREAFTER, THE ASSESSEE HAS FILED ADDITIONAL GROUNDS OF APPEAL CHALLENGING LEVY OF PENALTY ON TECHNICAL GROUNDS VIZ. AMBIGUITY IN RECORDING OF SATISFACTION. FURTHER, IT HAS BEEN CONTENDED THAT WHILE ISSUING NOTICE U/S. 274 R.W.S. 271(1)(C) , THE ASSESSING OFFICER HAS NOT STRUCK OF F IRRELEVANT CHARGE FOR LEVY OF PENALTY. 5. A PERUSAL OF ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER WHILE RECORDING SATISFACTION HAS OBSERVED AS UNDER : 4. ACCORDINGLY, AN AMOUNT OF RS.30,46,100/ - IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS HIS UNACCOUNTED INCOME AND FOR THIS ACT OF CONCEALMENT AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE, P ENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT ARE INITIATED SEPARATELY. THEREAFTER, IN PENALTY ORDER, THE ASSESSING OFFICER LEVIED PENALTY BY OBSERVING AS UNDER : 6. IN VIEW OF THE ABOVE, I AM OF THE VIEW THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTI CULARS AND HAS CONCEALED INCOME OF RS.30,46,100/ - WHICH HAS BEEN RIGHTFULLY ADDED TO HIS INCOME DURING ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961. THEREFORE, PENALTY U/S. 271(1)(C) OF THE I.T. ACT, 1961 IS ALSO LEVIABLE IN HIS CASE. A CCORDINGLY, PENALTY U/S. 271(1)(C) OF THE I.T. ACT IS IMPOSED IN HIS CASE. 6 . THE ASSESSING OFFICER WHILE RECORDING SATISFACTION , AS WELL AS WHILE LEVYING PENALTY HAS INTRODUCED BOTH THE LIMBS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PA RTICULARS OF INCOME FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF T. 5 ITA NO . 423/PUN/2013, A.Y. 2008 - 09 ASHOK PAI VS. COMMISSIONER OF INCOME TAX REPORTED AS 292 ITR 11 HAS HELD , C ONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS CARRY DIFFERENT CONNOTATIONS. CONCEALMENT REFERS TO DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSIO VERI OR SUGGESTIO FALSI . EXPRESSION CONCEALMENT OF INCOME A ND FURNISHING INACCURATE PARTICULARS OF INCOME CANNOT BE USED INTERCHANGEABLY. CONCEALMENT OF INCOME CONNOTES WHERE THERE IS ESCAPMENT OF INCOME FROM TAX NET BY VIRTUE OF ASSESSEE CONCEALING INFORMATION/DOCUMENTS ETC. OR NON - FURNISHING OF INFORMATION ABOUT INCOME EARNED IN THE RETURN OF INCOME DURING THE RELEVANT PERIOD. ON THE OTHER HAND EXPRESSION FURNISHING INACCURATE PARTICULARS OF INCOME SIGNIFIES WHERE THE ASSESSEE HAS FURNISHED PARTICULARS OF INCOME BUT THE INFORMATION/DOCUMENTS FURNISHED ARE FALSE/WRONG/INCORRECT OR ERRONEOUS . 7 . THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY REPORTED AS 359 ITR 565 HAS HELD : 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEA LMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJRAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 IT R 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSE SSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE 6 ITA NO . 423/PUN/2013, A.Y. 2008 - 09 APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON - APPLICATION OF MIND. 8 . THUS, IN VIEW OF THE FACTS OF THE CASE AND DECISIONS DISCUSSED ABOVE, WE ARE OF CONSIDERED OPINION THAT THERE WAS AMBIGUITY AND VAGUENESS IN THE MIND OF ASSESSING OFFICER WHILE RECORDING SATISFACTION , AS WELL AS WHILE LEVYING PENALTY UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. UNDER SUCH CIRCUMSTANCES , WHERE PENALTY PROVISIONS HAVE BEEN INVOKED IN IN DISTINCT MANNER , PENALTY PROCEEDINGS WOULD NOT SURVIVE. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND APPEAL OF THE ASSESSEE IS ALLOWED. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 31 ST DAY OF AUGUST, 2017 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 31 ST AUGUST, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - V, PUNE 4. / THE CIT - V, PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE