SYMA TECHNOLOGY P.LTD, MUMBAI V. DCIT 8(3), MUMBAI

ITA 4632/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0675 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 07-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN LD
• Assessee Lawyers: RAHUL HAKANI LD
• Keywords: Principle of natural justice

Judgement Text

ITA.NO.4632/MUM/2014 SYRMA TECHNOLOGY PRIVATE LIMITED ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.4632/MUM/2014 ( / ASSESSMENT YEAR: 2011-12) SYRMA TECHNOLOGY PRIVATE LIMITED UNIT NO.601, 6 TH FLOOR FLORAL DECK PLAZA, MIDC, ANDHERI(E) MUMBAI-400 093 / VS. DEPUTY COMMISSIONER OF INCOME TAX 8(3) AAYKAR BHAVAN, M.K.ROAD MUMBAI-400 020 !' ./ ./PAN/GIR NO. AAICS-5745-D ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) A SSESSEE BY : RAHUL HAKANI, LD.AR RE VENUE BY : V.JUSTIN, LD. DR / DATE OF HEARING : 21/12/2017 / DATE OF PRONOUNCEMENT : 17/01/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-18 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-18/DCIT-8(3)/IT- 206/2013-14 DATED 08/05/2014 QUA CONFIRMATION OF PENALTY U/S 271(1)(C) FOR RS.6.09 LACS. THE IMPUGNED PENALTY U/S 271(1)(C ) WAS LEVIED BY LD. DEPUTY COMMISSIONER OF INCOME TAX 8(3), MUMBAI [AO] ON 24/09/2013 . ITA.NO.4632/MUM/2014 SYRMA TECHNOLOGY PRIVATE LIMITED ASSESSMENT YEAR-2011-12 2 THE ASSESSEE, IN THE QUANTUM ASSESSMENT U/S 143(3), WAS SADDLED WITH CERTAIN ADDITIONS AGGREGATING TO RS.18,32,847/- AGA INST WHICH THE IMPUGNED PENALTY HAS BEEN LEVIED. 2. THE LD. COUNSEL FOR ASSESSEE [AR], AT THE OUTSET , DREW OUR ATTENTION TO ADDITIONAL GROUNDS OF APPEAL BEING FIL ED BY THE ASSESSEE ON 05/10/2017 AND PLEADED THAT SINCE THE SAME QUESTION S THE VALIDITY OF PENALTY PROCEEDINGS AND GOES TO THE ROOT OF THE MAT TER AND THEREFORE, SHOULD BE TAKEN UP FIRST. AFTER PERUSING THE SAME, WE FIND THAT THE SAME ARE LEGAL GROUNDS AND DO NOT REQUIRE APPRECIATION O F NEW FACTS AND HENCE TAKEN ON RECORD. THE SAME READS AS FOLLOWS:- 1. THE LEARNED CIT(A) ERRED IN CONFIRMING ORDER OF ASSESSING OFFICER LEVYING PENALTY U/S 271(1)(C) WITHOUT APPRECIATING THAT THE PENALTY NOTICE IS BAD AS IT DOES NOT SPECIFY THE CHARGE FOR LEVYING PENALTY, TH EREBY VIOLATING PRINCIPLE OF NATURAL JUSTICE AND HENCE, PENALTY MAY BE DELETED. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT PENALTY IS LEVIED FOR BOTH THE CHARGES WHICH IS IMPERMISSIBLE IN LAW AND HENCE, TH E ORDER OF CIT(A) OUGHT TO BE QUASHED. 3. THE LD. AR, TAKING US THROUGH QUANTUM ASSESSMENT ORDER, SHOW- CAUSE NOTICE AND PENALTY ORDER, CONTENDED THAT NO SPECIFIC CHAR GE HAS BEEN MENTIONED BY LD. AO WHILE LEVYING PENALTY AND THEREFORE, THE SAME BEING IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE, VITIATES THE PENALTY PROCEEDINGS ITSELF AND HENCE LIABLE TO BE QUASHED. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] PLEADED THAT THE A SSESSEE WAS WELL AWARE OF THE CHARGES FOR WHICH HE WAS BEING PENALIZ ED WHICH IS QUITE EVIDENT FROM THE FACT THAT THE ASSESSEE ACTIVELY CO NTESTED THE PENALTY PROCEEDINGS AND NEVER RAISED THIS ISSUE BEFORE ANY OF THE LOWER AUTHORITIES. ITA.NO.4632/MUM/2014 SYRMA TECHNOLOGY PRIVATE LIMITED ASSESSMENT YEAR-2011-12 3 4. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. UPON PERUSAL OF QUANTUM ASSESSM ENT ORDER, IT IS EVIDENT THAT PENALTY HAS BEEN INITIATED BY LD. AO A GAINST QUANTUM ADDITIONS BY MAKING THE FOLLOWING ASSERTIONS:- PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ARE INITIATED SEPARATELY FOR THE DEFAULT COMMITTED WITHIN THE MEA NING OF THAT SECTION. A PERUSAL OF THE ABOVE SHOWS THAT THE LD. AO HAS FA ILED TO SPECIFY THE SPECIFIC LIMB I.E. CONCEALMENT OF INCOME OR FURNISHING OF INACCUR ATE PARTICULARS FOR WHICH THE PENALTY WAS BEING INITIATED AGAINST T HE ASSESSEE. PROCEEDING FURTHER, A PERUSAL OF SHOW-CAUSE NOTICE DATED 28/03/2013 AS PLACED ON PAGE NO. 58 OF THE PAPER BOOK REVEALS THAT THE LD. AO HAS NOT ONLY FAILED TO MARK THE SPECIFIC CLA USE BUT ALSO FAILED TO STRIKE-OFF / MARK THE APPROPRIATE CHARGE. FINALLY, A PERUSAL OF PENALTY ORDER DATED 24/09/2013 REVEALS THAT THE PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF INCOME AS WELL AS FURNISHING OF INAC CURATE PARTICULARS OF INCOME. THE THREE EVENTS, AS STATED ABOVE, PUT TOGE THER, REVEAL THAT LD. AO HAS FAILED TO ADHERE TO THE SETTLED LEGAL PROPOS ITIONS WHILE IMPOSING PENALTY ON THE ASSESSEE WHICH IS QUITE EVIDENT FROM CERTAIN LEGAL JUDICIAL PRONOUNCEMENTS AS ENUMERATED BY US IN THE SUCCEEDIN G PARAGRAPH. 5. THE HONBLE SUPREME COURT IN THE JUDGMENT TITLED AS DILIP N.SHROFF VS. JCIT (291 ITR 519) HAS OBSERVED THAT THE CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE DIFFERENT AND CARRY DIFFERENT CONNOTATIONS. THE HONBLE COURT FURTHER H ELD THAT NON-STRIKING OFF OF THE RELEVANT PORTIONS OF STANDARD SHOW-CAUSE NOTICE REFLECTS NON- APPLICATION OF MIND BY AO AND HENCE VITIATES THE PE NALTY. WE ALSO NOTE THAT THE RATIO OF THIS JUDGMENT WAS VERY MUCH RELEV ANT AND VALID DESPITE ITA.NO.4632/MUM/2014 SYRMA TECHNOLOGY PRIVATE LIMITED ASSESSMENT YEAR-2011-12 4 THE JUDGMENT OF APEX COURT IN THE CASE OF CIT VS. DHARMENDRA TEXTILE PROCESSOR ( 306 ITR 277) IN VIEW OF ANOTHER JUDGMENT OF SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. [322 ITR 158] WHEREIN IT WAS OBSERVED THAT REASONING GIVEN IN THE CASE OF DILIP N.SHROFF COULD NOT BE FAULTED EXCEPT TO THE EXTENT OF OBSERVATIONS REGARD ING NECESSITY OF MENS- REA FOR THE PURPOSE OF SECTION 271(1)(C). SIMILAR VIEW HAS BEEN EXPRESSED IN THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN CIT VS. MANJUNATHA COTTON & GINNING FACTORY [2013 3 59 ITR 565] WHICH WAS LATER FOLLOWED BY THE SAME COURT IN CIT VS. SSAS EMERALD MEADOWS [ITA NO. 380 OF 2015 23/11/2015] AGAINST WHICH SPECIAL LEAVE PETITION [SLP] FILED BY THE REVENUE BEFORE AP EX COURT IN CC NO.11485/2016 ORDER DATED 05/08/2016 WAS DISMISSED BY THE HONBLE COURT, FINDING NO MERITS IN THE CASE. FURTHER, HON BLE BOMBAY HIGH COURT HAS FOLLOWED THE RATIO OF SAME JUDGMENT IN CIT VS. SHRI SAMSON PERINCHERY [ITA NO. 1154 OF 2014 ORDER DATED 05/01/ 2017] AND FURTHER TRIBUNAL, IN CATENA OF JUDGMENT AND MORE PARTICULAR LY IN WADHWA ESTATE & DEVELOPERS VS. ACIT [ITA N0. 2158/MUM/2016 DATED 24/02/2017] HAS TAKEN THE SAME VIEW FOLLOWING THE AFORESAID JUDGMEN TS. 6. UPON CONSIDERATION OF FACTUAL MATRIX AS NOTED BY US IN PARAGRAPH 4, WE FIND THAT THE THREE EVENTS, PUT TOGETHER, REFLEC TS NON-APPLICATION OF MIND ON THE PART OF AO AND THE AO HIMSELF WAS NOT S URE ABOUT THE LIMB / EXACT CHARGE FOR WHICH THE ASSESSEE WAS BEING PENAL IZED. THEREFORE, THE PENALTY ORDER STOOD VITIATED FOR WANT OF PRINCI PLES OF NATURAL JUSTICE AND HENCE, LIABLE TO BE QUASHED. RESPECTFULLY FOLLO WING THE CATENA OF JUDGMENTS FAVORING ASSESSEE ON THE ISSUE, WE DELETE THE IMPUGNED PENALTY AND ALLOW ASSESSEES APPEAL. ITA.NO.4632/MUM/2014 SYRMA TECHNOLOGY PRIVATE LIMITED ASSESSMENT YEAR-2011-12 5 7. SINCE THE APPEAL HAS BEEN ALLOWED ON LEGAL GROUN DS ITSELF, THE QUESTION OF GOING INTO THE MERITS OF THE CASE REMAI NS MERELY ACADEMIC IN NATURE AND THEREFORE, WE FIND NO REASON TO DELVE IN TO THE SAME. FINALLY, THE ASSESSEES APPEAL STANDS ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY,2018 SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 17.01.2018 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. %'- , - , / DR, ITAT, MUMBAI 6. . / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI