M/S.KRISH DEVELOPERS, MUMBAI V. ACIT CIRCLE-4, Thane

ITA 4554/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9083 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 20-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S MICHAEL JERALD
• Keywords: Assessment record; Set aside
• Section: 271(1)(c); 143(3); 274; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.4554/M/2018 ASSESSMENT YEAR: 2010-11 M/S. KRISH DEVELOPERS, 3 & 4, UNIQUE VAIBHAV, TIRUPATI NAGAR-1, BOLINJ, VIRAR (WEST), THANE PAN: AAIFK0931E VS. ACIT CIRCLE-4, A WING, 4 TH FLOOR, ASHAR IT PARK, ROAD NO.16Z, AMBIKA NAGAR, WAGLE ESTATE, THANE 400 604 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIMAL PUNMIYA, A.R. REVENUE BY : SHRI S. MICHAEL JERALD, D.R. DATE OF HEARING : 26.11.2019 DATE OF PRONOUNCEMENT : 19.12.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 08.05.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE CHALLENGED BY THE ASSESSEE IN THE VARIOUS GROUNDS OF APPEAL IS THE CONFIRMATION OF PENALTY OF RS.5,00,548/- BY LD. CIT(A) AS LEVIED BY THE AO UND ER SECTION 271(1)(C) OF THE ACT. 3. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS VIDE APPLICATION DATED 25.11.2109 WHICH IS REPRODUCED AS UNDER: ITA NO.4554/M/2018 M/S. KRISH DEVELOPERS 2 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ORDER PASSED BY LEARNED AO U/S 271(L)(C) WHICH IS BAD IN LAW AS THE ASSESSMENT ORDER ISSUED IS NOT SURE AS T O WHETHER THE PENALTY PROCEEDINGS IS INITIATED FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THEREFORE THE PENALTY IMPOSE D IS VOID AB INITIO. 4. THE LD. A.R. SUBMITTED THAT THE LEGAL ISSUE BEIN G RAISED IS EMANATING OUT OF THE ASSESSMENT RECORDS AND THEREFO RE NO NEW FACTS ARE REQUIRED TO BE VERIFIED AT THE LEVEL OF A O. THE LD. A.R. PRAYED BEFORE THE BENCH THAT SINCE THE ISSUE IS PUR ELY OF LEGAL AND JURISDICTIONAL NATURE, THE SAME MAY KINDLY BE ADMITTED IN THE INTEREST OF JUSTICE AND FAIRPLAY. IN DEFENCE O F HIS ARGUMENT, THE LD. A.R. RELIED ON THE FOLLOWING DECISIONS: 1. NATIONAL THERMAL POWER COMPANY LTD. VS. CIT 229 ITR 383 (SC) 2. CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS PVT. LT D. (2012) 349 ITR 336 (BOM.) AND 3. JUTE CORPORATION INDIA VS. CIT (1991) 187 (ITR) 688. 5. THE LD. D.R., ON THE OTHER HAND, OPPOSED THE ADM ISSION OF ADDITIONAL GROUNDS ON THE PLEA THAT THIS GROUND WAS NOT RAISED AT THE TIME OF FILING OF APPEAL BEFORE THE TRIBUNAL NOR RAISED BEFORE THE FIRST APPELLATE AUTHORITY, THEREFORE THE ADMISSION OF ADDITIONAL GROUND MAY KINDLY BE DENIED AT THIS STAG E OF ADJUDICATION. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ISSUE RAISED BY THE ASS ESSEE IS PURELY OF LEGAL AND JURISDICTIONAL IN NATURE WHICH AROSE OUT OF THE ASSESSMENT RECORDS ONLY AND NO FURTHER VERIFI CATION OF FACTS IS REQUIRED SO FAR AS THE ADMISSION OF ADDITIONAL G ROUND IS CONCERNED. WE ARE THEREFORE INCLINED TO ADMIT THE SAME FOR THE ADJUDICATION BY FOLLOWING THE RATIO LAID DOWN IN TH E NATIONAL THERMAL POWER COMPANY LTD. VS. CIT (SUPRA), CIT VS. PRUTHVI ITA NO.4554/M/2018 M/S. KRISH DEVELOPERS 3 BROKERS AND SHAREHOLDERS PVT. LTD. (SUPRA) AND JUTE CORPORATION INDIA VS. CIT (SUPRA). 7. THE FACTS IN BRIEF ARE THAT THE AO ISSUED NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT DATED 18.03.2013. IN THE SAID NOTICE THE AO HAS NOT STRUCK OFF THE ON E OF THE TWO LIMBS OF PENALTY I.E. FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME WHICH WAS NOT R ELEVANT. MOREOVER, IN THE ASSESSMENT ORDER DATED 18.03.2013 PASSED UNDER SECTION 143(3) OF THE ACT, THE ASSESSEE HAS R ECORDED A SATISFACTION THAT ASSESSEE HAS CONCEALED THE INCOME AS IT HAS FURNISHED THE INACCURATE PARTICULARS OF INCOME AND THEREFORE THE SAME IS LIABLE FOR INITIATION OF PENALTY PROCEEDING S UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT. IN THE SAID PENALTY ORDER PASSED DATED 27.09.2013 THE AO HAS RECORDED THE SAT ISFACTION THAT ASSESSEE IS LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR THE CONCEALMENT OF INCOME TO THE TUNE OF RS .16,19,896/-. IT IS PERTINENT TO NOTE THAT ASSESSEE HAS NOT FILED ANY APPEAL AGAINST QUANTUM ADDITION. 8. THE LD. A.R. REFERRING TO THE NOTICE DATED 18.0 3.2013 SUBMITTED THAT THE SAID NOTICE HAS BEEN ISSUED IN A MECHANICAL MANNER WITHOUT APPLICATION OF MIND BY THE AO AS THE AO HAS FAILED TO STRIKE OFF ONE OF THE TWO LIMBS WHICH IS NOT RELEVANT FOR IMPOSITION OF PENALTY THEREBY THE ASSESSEE IS DEPRI VED OFF FROM RESPONDING TO THE SPECIFIC CHARGE ON WHICH THE PENA LTY IS PROPOSED TO BE LEVIED. THE LD AR SUBMITTED BEFORE THE BENCH THAT IN SUCH A SCENARIO, THE PENALTY AS IMPOSED BY THE AO IS BAD IN LAW. THE LD. A.R. IN DEFENCE OF HIS ARGUMENT REL IED ON THE FOLLOWING DECISIONS: ITA NO.4554/M/2018 M/S. KRISH DEVELOPERS 4 A)CIT VS SSAS EMERALD MEADOWS(SC) (2016) 73 TAXMAN N.COM 241 KARNATAKA SLP DISMISSED AS REPORTED IN (2016) 73 TAXMANN.COM 248 (SC) B) CIT VS. MANJUNATH COTTON AND GINNING FACTORY (20 13) 359 ITR 565 (KAR.) C) CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) D) CIT VS. MRS. PIEDADE PERINCHERY ITXA NO.1310 OF 2014 ORDER DATED 10.01.2017 (BOM. HC) 9. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT THERE IS NO MERITS IN THE ARGUMENTS OF THE LD. A.R. THAT AO HAS FAILED TO MENTION ONE OF THE TWO LIMBS ON WHICH THE PENALTY W AS PROPOSED TO BE LEVIED. THE LD DR ARGUED THAT THE AO HAS COR RECTLY ISSUED NOTICE SPECIFYING THE PENALTY CHARGES ON WHICH THE PENALTY COULD BE LEVIED AND FINALLY LEVIED THE PENALTY FOR CONCEA LMENT OF INCOME. IN VIEW OF THESE FACTS, THE LD. D.R. SUBMI TTED THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE MAY KINDLY BE DISMISSED. 10. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE NOTICE HAS BEEN ISSUED UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT WITHOUT MENTIONING THE LIMB ON WHICH THE PENALTY WAS PROPOS ED TO BE LEVIED I.E. THE AO HAS NOT STRUCK OFF IRRELEVANT AN D REDUNDANT LIMB IN THE NOTICE THEREBY NOT AFFORDING THE ASSESS EE AN OPPORTUNITY TO RESPOND THE CHARGE ON WHICH THE PENA LTY WAS PROPOSED TO BE LEVIED. IN OUR VIEW, THE NON MENTIO NING OF THE CHARGE ON THE PENALTY NOTICE IS BAD IN LAW AND GOES TO THE ROOT OF THE PENALTY PROCEEDINGS AND THE PENALTY ORDER PASSE D CONSEQUENT TO THE SAID NOTICE CAN NOT BE SUSTAINED. THE HONBLE BOMBAY HIGH COURT IN THE CASE CIT VS SHRI SAMSON PER INCHERY & CIT VS. MRS. PIEDADE PERINCHERY (SUPRA) HAS HELD THAT PENALTY ITA NO.4554/M/2018 M/S. KRISH DEVELOPERS 5 CAN NOT BE LEVIED WHERE THE AO HAS ISSUED NOTICE IN A MECHANICAL MANNER WITHOUT STRIKING OFF THE REDUNDAN T LIMB OR WITHOUT MENTIONING THE LIMB ON WHICH THE PENALTY IS PROPOSED TO BE LEVIED. IN VIEW OF THE ABOVE DISCUSSION AND IN T HE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT, W E ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND D IRECT THE AO TO DELETE THE PENALTY. 11. SINCE THE ISSUE HAS BEEN DECIDED ON LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, THE MERIT BECOMES ACADEMIC AND NEED N O ADJUDICATION. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.12.2019. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 19.12.2019. * 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 ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.