Vikram Anjana, Pratapgarh V. ACIT, Circle, Chittorgarh

ITA 46/JODH/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4074 (ITAT-JODHPUR)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 19-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c); 143(3); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH (SMC), JODHPUR BEFORE SHRI N.K. SAINI, VICE PRESIDENT ITA NO. 46/JODH/2019 (ASSESSMENT YEAR-2006-07) SHRI VIKRAM ANJANA, VILL - KESUNDA, TEHSIL CHHOTISADRI, PRATAPGARH (RAJ.) 312604 VS THE ACIT, CIRCLE-CHITTORGARH (APPELLANT) (RESPONDENT) PAN: AFKPA0575R REVENUE BY SH. P.K. SINGI, DR ASSESSEE BY SHRI AMIT KOTHARI, CA DATE OF HEARING 07.05.2019 DATE OF PRONOUNCEMENT 05.2019 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 21.12.2018 OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, UD AIPUR. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L RELATES TO THE SUSTENANCE OF PENALTY LEVIED BY THE ASSESSING OFFI CER U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE WAS ENGAGED IN MONEY LENDING BUSINESS, FILED THE RETURN OF INCOME DECLAR ING AN INCOME OF RS. 2 33,70,264/-WHICH WAS ASSESSED AT AN INCOME OF RS. 43,53,248/- U/S 143(3) OF THE ACT ON 12.12.2008. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) WHO ALLOWED PART RELIEF AND UPHELD THE ADDITION OF RS. 1,10,895/-. 5. THEREAFTER, THE ASSESSING OFFICER INITIATED PENA LTY PROCEEDINGS AND LEVIED THE PENALTY OF RS. 37,350/- U/S 271 (1) (C) OF THE ACT. 6. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) WHO SUSTAINED THE PENALTY. 7. NOW THE ASSESSEE IS IN APPEAL. 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTY PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER WITHOUT SPE CIFYING ANY CHANGE I.E. AS TO WHETHER THERE WAS CONCEALMENT OF INCOME OR INACC URATE PARTICULARS OF INCOME WERE FURNISHED. HE DREW MY ATTENTION TOWARD S THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WHEREIN IT HAS BEEN MENTIONED THAT PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE ACT WERE INITIA TED BUT NOWHERE IT WAS MENTIONED AS TO WHETHER THE PENALTY PROCEEDINGS WER E INITIATED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. IT WAS ALSO STATED THAT EVEN IN THE PENALTY ORDER TH E ASSESSING OFFICER HAD NOT MENTIONED AS TO WHETHER THE ASSESSEE FURNISHED INAC CURATE PARTICULARS OF INCOME OR CONCEALED HIS INCOME. HE DREW MY ATTEN TION TOWARDS PARA 7.2 OF THE PENALTY ORDER WHEREIN THE ASSESSING OFFICER MEN TIONED THAT THE ASSESSEE HAD CONCEALED HIS TRUE INCOME AND ALSO HAD FURNISHE D INACCURATE PARTICULARS OF HIS INCOME TO THE TUNE OF RS. 1,10,895/- AND IN PARA 8, HE MENTIONED THAT 3 ASSESSEE WILLFULLY CONCEALED HIS INCOME TO THE TUNE OF RS. 1,10,895/-. ACCORDINGLY, IT WAS SUBMITTED THAT THE ASSESSING O FFICER WAS NOT SURE AS TO WHETHER THE ASSESSEE CONCEALED HIS INCOME OR FURNI SHED INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, THE CHARGE WAS NOT SPECIFIC, THEREFORE, PENALTY WAS NOT LEVIABLE. MY ATTENTION WAS ALSO DRA WN TOWARDS PAGE NO. 18 OF THE ASSESSEE'S PAPER BOOK, WHICH IS COPY OF THE PENALTY NOTICE ISSUED TO THE ASSESSEE WHEREIN IT HAS BEEN MENTIONED THAT THE PENALTY U/S 271 (1)(C) OF THE ACT WAS INITIATED FOR CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. RELIANCE WAS PLA CED ON THE DECISION OF THE ITAT DELHI BENCH IN THE CASE OF SWAMI SARAN GARG VS . ITO IN ITA NO. 4549/DEL./2011 FOR THE ASSESSMENT YEAR 2001-02, OR DER DATED 03.10.2019, COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLAC ED AT PAGES 31 TO 43 OF THE ASSESSEE'S PAPER BOOK. 9. IN HIS RIVAL SUBMISSIONS, THE LD. SR. DR STRON GLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT THE ASSESSING OFFICER WHILE IMPOSING THE PENALTY HA D NOT SPECIFICALLY MENTIONED THAT THE ASSESSEE HAD CONCEALED THE INCOM E OR FURNISHED THE INACCURATE PARTICULARS OF INCOME. THE ASSESSING OF FICER WHILE IMPOSING PENALTY U/S 271 (1) (C) OF THE ACT HAS NOT MENTION ED SPECIFICALLY AS TO WHETHER THE ASSESSEE HAS CONCEALED THE INCOME OR F URNISHED INACCURATE PARTICULARS OF INCOME. ON AN IDENTICAL ISSUE, THE I TAT, DELHI BENCH 'G' NEW DELHI IN THE CASE OF SWAMI SARAN GARG VS. ITO (SUPR A) HELD AS UNDER:- 4 '11. BARE PERUSAL OF THE NOTICE ISSUED TO THE ASS ESSEE U/S 271(1)(C) OF THE ACT REPRODUCED ABOVE GOES TO PROVE THAT ASSESSEE HAS NOT BEEN CALLED UPON TO EXPLAIN IF HE HAS CONCE ALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF SUCH INCOME RATHER A TICK HAS BEEN MARKED AGAINST BOTH T HE CHARGES MENTIONED IN THE PRINTED PROFORMA. HON'BLE KARNATAK A HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FA CTORY & ORS. (SUPRA) DEALT WITH THE IDENTICAL ISSUE THREADBARE A ND CAME TO THE FOLLOWING CONCLUSION :- '63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EM ERGES IS AS UNDER: A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIABI LITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSIN G PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILIT IES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIE NT FOR ATTRACTING CIVIL LIABILITY. D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 271(1)(C) IS A SINE QUA NON FOR INITIATION OF PENAL TY PROCEEDINGS UNDER SECTION 271. E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF T HE APPELLATE AUTHORITY OR REVISIONAL AUTHORITY. F) EVER IF THERE IS NO SPECIFIC FINDING REGARDING T HE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATIO N 1(A) & (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALME NT BECAUSE OF DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASSESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 271(L)(C) IS A S INE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE T O THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AN D THE COMMISSIONER. I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. 5 J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORDE R OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TA X AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT H AS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILI TY CAME TO BE ADMITTED AND IF NOT IT WOULD HAVE ESCAPE D FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPLANATION OFFERED IS FOUND TO BE FALSE OR WHEN TH E ASSESSEE FAILS TO PROVE THAT THE EXPLANATION OFFERE D IS NOT BONAFIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUBSTANTIATED BY THE ASSESSEE, BUT IS FOUND TO BEBONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHO UT ANY AMBIGUITY. O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INI TIATE PENALTY PROCEEDINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF I NCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOM E 6 Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HA S TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATU RAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDIN GS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS 'CONCEALMENT OF INCOME' AN D 'FURNISHING OF INCORRECT PARTICULARS' WOULD NOT OPE RATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS O PEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIE D, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS . THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS.' 12. SO, FOLLOWING THE LAW LAID DOWN BY HON'BLE HIG H COURT, WE ARE OF THE CONSIDERED VIEW THAT WHEN THE ASSESSEE H AS NOT BEEN SPECIFICALLY MADE AWARE OF THE CHARGES LEVELED AGAI NST HIM AS TO WHETHER THERE IS A CONCEALMENT OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME ON HIS PART, THE PENALTY U/S 271(1)(C) OF THE ACT IS NOT SUSTAINABLE. THE CASE LAW RELIED UPON BY THE LD . DR ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THIS C ASE IN THE FACE OF THE DECISIONS RENDERED BY THE HON'BLE HIGH COURT IN MAN JUNATHA COTTON AND GINNING FACTORY & ORS. (SUPRA), AFFIRMED BY THE HON'BLE APEX COURT . 7 11 . SO RESPECTFULLY, FOLLOWING THE AFORESAID REFERRED T O ORDER DATED 3.10.2018, THE PENALTY LEVIED BY THE ASSESSING OFF ICER AND SUSTAINED BY THE CIT(A) IS DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D (ORDER PRONOUNCED IN THE COURT ON 07.05.2019) SD/- (N.K. SAINI) VICE PRESIDENT DATED : 07.05.2019 .. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , ! , $ / DR, ITAT, JODHPUR 6. ' / GUARD FILE / BY ORDER / ASSISTANT REGISTRAR