MR.GANPAT BABAJI DESHMUKH, PANVEL V. INCOME TAX OFFICER WARD-1, PANVEL

ITA 4783/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2272 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 08-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Keywords: Initiation of penalty proceedings; Non compliance; Capital Gains
• Section: 271(1)(c); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4783 /MUM/201 8 ASSESSMENT YEAR: 20 10 - 11. MR. GANPAT BABAJI DESHMUKH, H. NO. 592/1/2, AT KOPAR, POST GAVHAN, DIST. PANVEL - 410206. VS. I.T.O., WARD - 1, PANVEL. PAN NO. AVAPD6727E APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI V. VINOD KUMAR, ( DR ) DATE OF HEARING : 06.03.2020 DATE OF PRONOUNCEMENT : 16.03.2020 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2010 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 2, PUNE [IN SHORT CIT(A)] AND ARISES OUT OF THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THOUGH THE CASE WAS FIXED FOR HEARING ON 26.11.2019, 18.02.2020 AND 06.03.2020, NEITHER THE ASSESSEE NOR HIS AUTHORISED REPRESENTATIVE APPEARED BEFORE THE TRIBUNAL ON THE ABOVE DATES. AS THERE IS REPEATED NON COMPLIANCE BY THE ASSESSEE, WE ARE PROCEEDING TO DISPOSE OF THIS APPEAL AFTER EXAMINING THE MATERIALS AVAILABLE ON RECORD AND AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE (DR). 2 ITA NO. 4783/MUM/2018 3. THE BACKGROUND FACT IS THAT THE ASSESSEE HAD ENTERED INTO A TRIPARTITE AGREEMENT FOR TRANSFER OF PLOT NO. 159, ADMEASURING 449.9 SQ.MTR. AT ULWE ON 05.03.2010 WITH MR. JAYANT VISHWANATH VAIDYA, HAVING RESIDENCE AT 703, 7 TH FLOOR, PA RADISE HEIGHT, NEAR PRABHAT TALKIES, SHIVAJI MARG, THANE (W). THE SALE CONSIDERATION OF THIS PLOT IS RS.12,59,720/ - . HOWEVER, THE ASSESSEE HAD NOT OFFERED THE ABOVE CAPITAL GAIN DOF RS.12,59,720/ - TO TAX ON THE SAID TRANSACTION. THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S 144 R.W.S. 147 OF THE ACT ON 29.02.2016 ON SHORT TERM CAPITAL GAINS OF RS.12,59,720/ - . SIMULTANEOUSLY, IN THE ASSESSMENT ORDER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS BY THE A SSESSEE AND THEREBY CONCEALING THE TAXABLE INCOME. THEREAFTER, THE AO LEVIED A MINIMUM PENALTY OF RS.2,90,370/ - U/S 271(1)(C) ON THE REASON THAT IT IS A FIT CASE FOR LEVY OF PENALTY FOR CONCEALING THE PARTICULARS OF INCOME TO THE EXTENT OF RS.12,59,720/ - AS SHORT TERM CAPITAL GAINS. 4. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A). WE FIND THAT VIDE ORDER DATED 03.04.2018, THE LEARNED CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE ON THE REASON THAT: BY NOT DI SCLOSING THE TRANSACTION TO THE DEPARTMENT, THE APPELLANT IS CLEARLY LIABLE FOR CONCEALING THE PARTICULARS OF INCOME WITH REGARDS TO CAPITAL GAINS INCOME ON TRANSFER OF CIDCO PLOT. NO COMPLIANCE WHATSOEVER WAS MADE BEFORE THE ASSESSING OFFICER EITHER AT TH E STAGE OF ASSESSMENT OR AT THE STAGE OF PENALTY PROCEEDINGS. THERE CAN BE SOME AMOUNT OF SYMPATHY WITH REGARD TO THE ARGUMENTS TAKEN ON THE POINT OF ADVANCED AGE AND NOT BEING WELL CONVERSANT ENOUGH, HOWEVER, SUCH IGNORANCE AND REASONS CANNOT BE AN EXCU S E FOR NOT FOLLOWING THE RULE OF LAW. EVEN PERSISTENT NON COMPLIANCE AT THE STAGE OF THE ASSESSING OFFICER SHOWS THAT THE APPELLANT DID NOT CARE ABOUT FOLLOWING THE PROVISIONS OF THE ACT AND IT DID NOT HAVE ANY REGARD TO VARIOUS PROCEEDINGS UNDER THE IT ACT. IN THE LIGHT OF AFORESAID FACTS AND DISCUSSIONS, I HOLD THAT THE APPELLANT IS LIABLE FOR CONCEALING THE PARTICULARS OF HIS INCOME UNDER THE HEAD STCG AMOUNTING TO RS.12,59,720/ - AND THE ASSESSING OFFICER HAS CORRECTLY LEVIED 3 ITA NO. 4783/MUM/2018 PENALTY U/S 271(1)(C) TO THE TUNE OF RS.2,90,370/ - . THE ORDER OF THE ASSESSING OFFICER IS ACCORDINGLY CONFIRMED AND THE APPEAL IS DISMISSED. 5. BEFORE US THE LEARNED DR SUBMITS THAT THE LEARNED CIT(A) HAS RIGHTLY DISMISSED THE APPEAL FILED BY THE ASSESSEE AS THE APPELLANT HAD EARNED STCG ON SALE OF LEASEHOLD RIGHTS ON THE PLOT ALLOTTED TO HIM BY CIDCO AND HE HAD NOT DISCLOSED HIS TRANSACTION TO THE DEPARTMENT. NOT ONLY THAT, HE DID NOT FILE ANY RETURN OF INCOME AND EVEN AFTER ISSUANCE OF NOTICE U/S 148 OF THE ACT, THE ASSESSEE FAILE D TO RESPOND AND NO RETURN OF INCOME WAS FILED. IT IS STATED BY HIM THAT THE ASSESSEE DID NOT HAVE ANY CASE ON MERIT ON THE POINT OF QUANTUM ADDITION AND THEREFORE, HE PREFERRED NOT TO FILE ANY APPEAL. THUS THE LEARNED DR EXPLAINS THAT BY NOT DISCLOSING TH E TRANSACTION TO THE DEPARTMENT, THE ASSESSEE IS CLEARLY LIABLE FOR CONCEALING THE PARTICULARS OF INCOME WITH REGARD TO CAPITAL GAINS INCOME ON TRANSFER OF CIDCO PLOT. ON THE GROUND RAISED BY THE ASSESSEE THAT THE AO FAILED TO SPECIFY THE LEG OF EXPLANATI ON TO SECTION 271(1)(C) THAT WHETHER THE APPELLANT HAD CONCEALED THE PARTICULARS OF INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND INSTEAD STATED BOTH IN THE NOTICE ISSUED U/S 271(1)(C), THE LEARNED DR RELIES ON THE DECISION IN CIT VS. SMT. KAUSHALYA (1994) 75 TAXMAN 549 (BOM) AND CIT VS. MAHARAJ KRISHNA (2001) 115 TAXMAN 301 (DELHI). 6. WE HAVE HEARD THE LEARNED DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN THE CASE OF SMT. KAUSHALYA (SUPRA) , IT IS HELD THAT MERE MISTAKE IN LANGUAGE US ED OR MERE NON - STRIKING OFF OF INACCURATE PORTION CANNOT BY ITSELF INVALIDATE NOTICE U/S 274. HOWEVER, IT IS HELD THEREIN THAT THE VAGUENESS AND AMBIGUITY IN NOTICE DATED 28.03.1972 HAD PREJUDICED THE RIGHT OF REASONABLE OPPORTUNITY OF ASSESSEE SINCE HE W AS UNAWARE OF EXACT CHARGES HE HAD TO FACE. 4 ITA NO. 4783/MUM/2018 IN MAHARAJ KRISHNA (SUPRA), THE ISSUE RELATED TO PENALTY U/S 271(1)(A) FOR LATE FILING OF RETURN. IT IS HELD THEREIN THAT WHERE THERE WAS A CLEAR DIRECTION OF THE AO IN ASSESSMENT ORDER FOR INITIATION OF PENALTY PROCEEDINGS FOR LATE FILING OF RETURN BY THE ASSESSEE, MERE FACT THAT UNNECESSARY PORTION IN FIRST NOTICE WAS NOT DELETED AND SUBSEQUENTLY SECOND NOTICE WAS ISSUED, WOULD NOT INVALIDATE THE FIRST NOTICE . IN CIT VS. SAMSON PERINCHERRY (ITA NO. 953, 1097, 1154 & 1226 OF 2014), THE HON'BLE BOMBAY HIGH COURT HAS HELD: 'THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PENALTY PROC EEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE.' AS MENTIONED EARLIER , T HE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S 144 R.W.S. 147 OF THE ACT ON 29.02.2016 ON SHORT TERM CAPITAL GAINS OF RS.12,59,720/ - . SIMULTANEOUSLY, IN THE ASSESSMENT ORDER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) FOR FURNISHING INACCU RATE PARTICULARS BY THE ASSESSEE AND THEREBY CONCEALING THE TAXABLE INCOME. THEREAFTER, THE AO LEVIED A MINIMUM PENALTY OF RS.2,90,370/ - U/S 271(1)(C) ON THE REASON THAT IT IS A FIT CASE FOR LEVY OF PENALTY FOR CONCEALING THE PARTICULARS OF INCOME TO THE E XTENT OF RS.12,59,720/ - AS SHORT TERM CAPITAL GAINS. THUS IN THE INSTANT CASE, THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN SAMSON PERINCHERRY (SUPRA) IS SQUARELY APPLICABLE. FOLLOWING THE SAME, WE DELETE THE PENALTY OF RS. 2,90,370/ - LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 5 ITA NO. 4783/MUM/2018 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/03/2020. SD/ - SD/ - ( C.N. PRASAD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 16/03/2020 WAKODE, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI