Rohit Sumatilal Bhandari, Nashik V. Income-tax Officer,

ITA 44/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6904 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-12-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 11-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Keywords: Initiation of penalty proceedings; Revised return
• Section: 143(3); 133A; 27; 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.44/PUN/2016 / ASSESSMENT YEAR : 2008-09 SHRI ROHIT SUMATILAL BHANDARI, ARIHANT MARBLES, OPP. JANARDAN SWAMI MATH, AURANGABAD ROAD, PANCHVATI, NASHIK 422003. PAN : AIMPB3417A. . / APPELLANT V/S INCOME TAX OFFICER, WARD 1(1), NASHIK. . / RESPONDENT ASSESSEE BY : SHRI SANKET JOSHI REVENUE BY : SHRI VIVEK AGGARWAL. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A)-1, NASHIK DT. 08.1 0.2015 FOR THE ASSESSMENT YEAR 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- 2.1 ASSESSEE IS AN INDIVIDUAL AND STATED TO BE ENGAGED IN THE BUSINESS OF TRADING OF MARBLES, KOTA, GRANITE AND OTHER ST ONE MATERIALS ON RETAIL BASIS UNDER THE NAME AND STYLE OF M/S . ARIHANT / DATE OF HEARING : 28.12.2017 / DATE OF PRONOUNCEMENT: 29.12.2017 2 MARBLES AT NASHIK. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2008-09 ON 30.09.2008 DECLARING TOTAL INCOME AT RS.2,82,67 0/-. A SURVEY ACTION U/S 133A OF THE ACT WAS CARRIED OUT ON 24.09.2009 AT THE BUSINESS PREMISES OF THE ASSESSEE AT NASHIK. DUR ING THE COURSE OF SURVEY ACTION, AO NOTICED CERTAIN DISCREPANCIES, INCLUDING SHORTAGE OF CASH, NEGATIVE STOCK, TRANSACTION OF UNRECORDED SALES AND PURCHASES. CONSEQUENT TO THE SU RVEY PROCEEDINGS, ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS.4 0 LACS INCLUDING THE ADMISSION OF ADDITIONAL INCOME OF RS.30 LACS FOR A.Y. 2009-10. ASSESSEE THEREAFTER REVISED HIS RETURN OF INCOM E ON 31.10.2010 DECLARING TOTAL INCOME OF RS.10,84,510/- WHICH INCLUDED RS.8,21,845/- ON ACCOUNT OF PROFIT ON UNACCOUNTED SALE AND CASH SHORTAGE. SUBSEQUENTLY, NOTICE U/S 148 OF T HE ACT WAS ISSUED TO ASSESSEE ON 16.12.2011 AND IN RESPONSE TO W HICH, ASSESSEE REQUESTED TO TREAT THE RETURN FILED ON 31.03.2 008 AS THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. T HEREAFTER, ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE ACT ON 28.03.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS.11,33,864/- BY MAKING ADDITION OF RS.49,349/- ON ACCOU NT OF 19.5% ON UNRECORDED SALES. ON ADDITION MADE AND THE AD DITIONAL INCOME DECLARED BY ASSESSEE IN THE REVISED RETURN, AO VIDE ORDER DT.18.09.2013 LEVIED PENALTY OF RS.2,82,210/- U/S 271(1)(C) OF THE ACT ON ACCOUNT OF CONCEALING PARTICULARS OF INCOME BY FURN ISHING INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORD ER DT.08.10.2015 (IN APPEAL NO.NSK/CIT(A)-1/641/2013-14) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE O RDER OF 3 LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS R AISED THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE PENA LTY LEVIED U/S 271(1)(C) OF RS.2,82,210/- ON THE GROUND THAT THE A SSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY CONCE ALING THE FACTS. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE LEA RNED A.O. WAS JUSTIFIED IN LEVYING PENALTY U/S 271(1)(C) OF RS.2, 82,210/- IN RESPECT OF THE ADDITIONAL INCOME OF RS.8,21,845/- OFFERED B Y THE ASSESSEE IN THE REVISED RETURN FILED AFTER SURVEY ACTION U/S 13 3A CONDUCTED IN THE CASE OF THE ASSESSEE. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE REOPENING OF THE ASST. U/S 147 WAS NOT JUSTIFIED IN LAW SINCE AT THE TIME OF ISSUING THE NOTICE U/S 148, THE A.O. DID NOT HAVE A VALID R EASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASST. A ND HENCE, THE PENALTY INITIATED AND LEVIED IN THE COURSE OF SUCH INVALID REASST. PROCEEDINGS WAS ALSO BAD IN LAW. 4. THE ASSESSEE SUBMITS THAT IN THE NOTICE U/S 274 R.W.S. 271(1)(C), THE A.O. HAS NOT RECORDED PROPER SATISFACTION AS TO WHETHER THE ASSESSEE HAS CONCEALED HIS INCOME OR WHETHER HE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND HENCE, THE SAI D NOTICE FOR INITIATION OF PENALTY PROCEEDINGS U/S 274 R.W.S. 27 1(1)(C) IS BAD IN LAW AND THEREFORE, THE PENALTY LEVIED U/S 271(1)(C) IS NOT WARRANTED. 5. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE ADDITIONAL INCOME OF RS.8,21,845/- OFFERED BY THE ASSESSEE CON SISTED OF RS.8,21,845/- OFFERED TOWARDS GROSS PROFIT ON UNACC OUNTED SALES AND RS.3,90,000/- TOWARDS CASH SHORTAGE (NEGATIVE C ASH) AND HENCE, THE ASSESSEE WAS ELIGIBLE TO CLAIM THE TELES COPING BENEFIT TO THE EXTENT OF RS.3,90,000/- WHICH WAS TAXED TWICE A ND THEREFORE, THERE WAS NO REASON TO LEVY PENALTY U/S 271(1)(C) T O THAT EXTENT MERELY BECAUSE THE ASSESSEE HAD VOLUNTARILY OFFERED THE SAME IN THE REVISED RETURN. 3. BEFORE US, LD.A.R. SUBMITTED THAT ALL THE GROUNDS ARE INTE R- CONNECTED AND ARE WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 4. BEFORE US, LD.A.R. SUBMITTED THAT ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF TRADING OF MARBLES ETC., ON RETAIL BASIS. HE SUBMITTED THAT WHILE FRAMING THE ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT, AO HAD MADE ADDITION OF RS.49,354/- O N ACCOUNT OF G.P. AT 17.5% ON THE UNRECORDED SALES AND DE TERMINED 4 THE TOTAL INCOME AT RS.11,33,860/- AS AGAINST THE ASSES SEES REVISED RETURN OF INCOME AT RS.10,84,510/-. ON ADDITION O F GROSS PROFIT ON UNRECORDED SALES, AO LEVIED PENALTY OF RS.2,82,21 0/- U/S 271(1)(C) OF THE ACT. HE SUBMITTED THAT WHILE PASSING TH E ASSESSMENT ORDER, AO HAS INITIATED PENALTY FOR CONCEALING T HE INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME BU T WHILE PASSING THE PENALTY ORDER U/S 271(1)(C) OF THE ACT, T HE AO HAS LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HE SUBMITTED THAT WHILE COMPLETING THE ASSESSMENT, AO HAS CO ME TO A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED HIS INCO ME OR FURNISHED INACCURATE PARTICULARS OF INCOME. HE, RELYING ON T HE 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 IN THE ABSENCE OF PROPER SHOW CAUSE NOT ICE TO ASSESSEE, PENALTY U/S 271(1)(C) CANNOT BE LEVIED. HE THEREFO RE SUBMITTED THAT PENALTY LEVIED BY AO BE DELETED. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 5. 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 AT RS.2,82,210/- ON THE ADDITION O F GROSS PROFIT ON UNRECORDED SALES. THE PERUSAL OF ASSESSMENT OR DER PASSED U/S 143(3) R.W.S. 147 OF THE ACT REVEALS THAT AO HAD INITIATED PENALTY PROCEEDING FOR CONCEALING THE INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. THEREAFTER IN TH E PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT, AO HELD THAT 5 ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF 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 TH EREAFTER COME TO A FINDING IN RESPECT OF ONE OF THE LIMBS, WHICH IS SPE CIFIED UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SATISFACTION WHILE COMPLETING THE ASSESSMENT AS TO WHETHER THE ASSESSEE HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOTICE 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 PENALTY UNDER SECTION 271(1)(C ) OF THE ACT FOR NON-SATISFACTION OF EITHER OF THE LIMBS. WHILE COMPLETIN G THE ASSESSMENT, THE ASSESSING OFFICER HAS TO COME TO A FIN DING AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FUR NISHED INACCURATE PARTICULARS OF INCOME. THE HONBLE BOMBAY HIG H COURT IN CIT VS. SHRI SAMSON PERINCHERY 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 THAT WHERE INITIATION O F PENALTY IS ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB , THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESS EE, THERE IS NO MERIT IN LEVY OF PENALTY. 6. IN THE PRESENT CASE, AS NOTED HEREINABOVE, IT IS SEEN THAT THE AO IN THE ASSESSMENT ORDER HAS NOT RECORDED ANY CLEA R SATISFACTION I.E., WHETHER IT IS A CASE OF FURNISHING OF INACCURAT E PARTICULAR OF INCOME OR CONCEALMENT OF INCOME BUT HAD LEVIE D PENALTY ON FURNISHING OF INACCURATE PARTICULARS OF INCOME. CONSIDERING THE AFORESAID FACTS IN THE LIGHT OF THE DECISION OF 6 HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSON PERINC HERY (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE THE BASIC CONDITION FOR LEVY OF PENALTY HAS NOT BEEN FULFILLED AND THAT THE PENALTY ORDER SUFFERS FROM NON-EXERCISING OF JURISDICTION POW ER OF AO AND THEREFORE PENALTY ORDER CANNOT BE UPHELD. WE A CCORDINGLY SET ASIDE THE PENALTY ORDER PASSED BY AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 29 TH DAY OF DECEMBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 29 TH DECEMBER, 2017. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, NASHIK. PR.CIT-1, NASHIK. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.