SURAT JAGANATH CHAVAN, MUMBAI V. ITO 25(3)(4), MUMBAI

ITA 4540/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0821 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 01-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: AJAY R SINGH
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.4540/M/2016 ASSESSMENT YEAR: 2006-07 SHRI SURESH JAGANATH CHAVAN, 47/929, SAMTA NAGAR, KANDIVLI (EAST), MUMBAI 400 101 PAN: ACSPC1666N VS. THE INCOME TAX OFFICER- 25(3)(4), C-10-307, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI AJAY R. SINGH, A.R. REVENUE BY : SHRI M.C. OMI NINGSHEN, D.R. DATE OF HEARING : 11.04.2017 DATE OF PRONOUNCEMENT : 09.05.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 29.03.2016 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2006-07. 2. THE SHORT FACTS OF THE CASE ARE THAT ASSESSEE FI LED RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 DECLARING THE INCOME OF RS. 1,62,419/- WHEREAS THE INCOME TAX OFFICER (ITO) HAS ASSESSED THE INCOME OF THE ASSESSEE AT RS.15,82,220/- SINCE CASH DEPOSITS OF RS.15,82,220/ - APPEARED IN ASSESSEES BANK ACCOUNT AND ADDED THE SAME TO THE INCOME OF TH E ASSESSEE TREATING IT AS UNEXPLAINED CASH CREDITS. FURTHER, PENALTY PROCEED INGS UNDER SECTION 271(1)(C) WERE ALSO INVOKED IN RESPECT OF THIS ADDITION AND N OTICE UNDER SECTION 274 R.W.S. 271(1)(C) WAS SENT TO THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS, ITA NO.4540/M/2016 SHRI SURESH JAGANATH CHAVAN 2 ASSESSEE EXPLAINED THE SOURCE OF DEPOSITS MADE IN T HE BANK ACCOUNT WHICH WAS NOT ACCEPTED BY THE ITO SINCE THE SAME WAS NOT SUPP ORTED WITH DOCUMENTARY EVIDENCE. 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF RS.4,00,000/-, HOWEVER, U PHELD THE PENALTY. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LD. A.R. SUBMITTED THAT THE PENAL TY SHOULD BE IMPOSED ON ONE LIMB FOR FURNISHING OF INACCURATE PARTICULARS O F INCOME OR CONCEALMENT OF INCOME. THE AO SHOULD SPECIFY THE CHARGE BEFORE LE VYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE LD. A.R., RELYIN G UPON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SH RI SAMSON PERINCHERY IN ITA NO.1154 OF 2014 & OTHERS, HAS SUBMITTED THAT WH EN THE AO HAS NOT SPECIFIED WITH THE CHARGE, THE PENALTY CANNOT BE LE VIED. HE FURTHER SUBMITTED THAT IN THE CASE OF SHRI SAMSON PERINCHERY (SUPRA), IN AN IDENTICAL CASE, DEPARTMENTAL APPEAL AGAINST THE TRIBUNALS ORDER HA S BEEN DISMISSED BY THE HONBLE BOMBAY HIGH COURT. HE FURTHER RELIED UPON THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS E MERALD MEADOWS IN ITA NO.380 OF 2015 AND HAS SUBMITTED THAT THE HONBLE K ARNATAKA HIGH COURT DISMISSED THE DEPARTMENTAL APPEAL IN IDENTICAL CASE HENCE, THE PRESENT APPEAL OF THE ASSESSEE MAY BE ALLOWED. 5. LD. D.R. HAS RELIED UPON THE REVENUE AUTHORITIES . 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SH RI SAMSON PERINCHERY (SUPRA) HAS HELD THAT THE IMPUGNED ORDER OF THE TRI BUNAL DELETED THE PENALTY IMPOSED UPON THE ASSESSEE BY HOLDING THAT THE INITI ATION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY AO WAS FOR FURNISHI NG OF INACCURATE PARTICULARS ITA NO.4540/M/2016 SHRI SURESH JAGANATH CHAVAN 3 OF INCOME WHILE THE ORDER IMPOSING PENALTY IS FOR C ONCEALMENT OF INCOME. THE IMPUGNED ORDER HOLDS THAT THE CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CO NNOTATIONS. THEREFORE, THE AO SHOULD BE CLEAR AS TO WHICH OF THE TWO LIMBS UND ER WHICH PENALTY IS IMPOSABLE, HAS BEEN CONTRAVENED OR INDICATE THAT BO TH HAVE BEEN CONTRAVENED WHILE INITIATING PENALTY PROCEEDINGS. IT CANNOT BE HELD THAT THE INITIATION WOULD BE ONLY ON ONE LIMB I.E. FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME WHILE IMPOSITION OF PENALTY ON THE OTHER LIMB I.E. CONCEALMENT OF INCOME. THE RELEVANT PARA OF THE HONBLE BOMBAY HIGH COURT IS REPRODUCED AS UNDER: 4. THE IMPUGNED ORDER RELIED UPON THE FOLLOWING EX TRACT OF KARNATAKA HIGH COURTS DECISION IN CIT V/S. MANJUNATH COTTON AND G INNING FACTORY 359 ITR 565 TO DELETE THE PENALTY. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT T O INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF A NY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING I NACCURATE 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 PARTICULAR S. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COU RT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING P. LTD., REPORTED IN 171 TAXMAN 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. THEREFOR E, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CON CEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CAS E FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHO UT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NO N-APPLICATION OF MIND. 7. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED O PINION THAT THE ISSUE IN THE PRESENT APPEAL IS COVERED IN FAVOUR OF THE ASSE SSEE. HENCE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHRI SAMSON PERINCHERY (SUPRA), WE DELETE THE PENAL TY. ITA NO.4540/M/2016 SHRI SURESH JAGANATH CHAVAN 4 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 09.05.2017. SD/- SD/- (MANOJ KUMAR AGGARWAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 09.05.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.