ITO, New Delhi V. Sh Ashutosh Pahare, Maharashtra

ITA 4851/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2702 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-03-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 12-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BHIM SINGH
• Assessee Lawyers: ASHUTOSH PAHARE
• Keywords: Share purchase agreement
• Section: 142(1); 147; 144

Judgement Text

ITA NO.4851/DEL/2012 ASSTT.YEAR: 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A NEW DELHI BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.4851/DEL/2012 ASSTT. YEAR: 2005-06 INCOME TAX OFFICER, VS SHRI ASHUTO SH PAHARE, WARD 46(3), TIFFANY BUILDING, 4 TH FLOOR, NEW DELHI. HIR ANANDANI ESTATE, OPP. GHODBUNDER ROAD, THANE (WEST), MAHARASHTRA. (PAN: AGAPP2294H) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BHIM SINGH, SR. DR RESPONDENT BY : SHRI ASHUTOSH PAHARE O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-XXX, NEW DELHI, DATED 29.06.2012 IN APPEAL N O.895 & 896/2012- 13 FOR AY 2005-06. THE MAIN GROUNDS RAISED IN THIS APPEAL READ AS UNDER:- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN:- I) DELETING THE PENALTY U/S 271(1)(C) RIGHTLY LEVIED B Y THE AO. II) DELETING THE PENALTY LEVIED U/S 271(1)(C) IGNORING THE FACT THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCR UTINY U/S 147 BY THE AO AFTER CONDUCTING THE INQUIRY U/S 133( 6). ITA NO.4851/DEL/2012 ASSTT.YEAR: 2005-06 2 III) DELETING THE PENALTY LEVIED U/S 271(1)(C) IGNORING THE FACT THAT THE ADDITION WAS MADE BY THE AO AFTER ESTABLIS HING THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOM E UNDER ESOP. THE APPELLANT CRAVES THE RIGHT TO ALTER, AMEND ADD OR SUBSTITUTE THE GROUNDS OF APPEAL. 2. BRIEF FACTS GIVING RISE TO THIS APPEAL ARE THAT THE ASSESSMENT WAS COMPLETED U/S 144/143(3) OF THE INCOME TAX ACT, 196 1 (FOR SHORT THE ACT) ON 24.12.2009 AT TOTAL TAXABLE INCOME OF RS.12,31,490 AGAINST NIL RETURNED INCOME. DURING THE ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER MADE AN ADDITION OF RS.12,31,490 ON ACCOUNT OF SHORT TERM C APITAL GAIN ON UN-LISTED SHARES OF IBM DAKSH. SUBSEQUENTLY, THE ASSESSING O FFICER ISSUED A NOTICE RELATED TO PENALTY PROCEEDINGS FOR CONCEALING AND F URNISHING INACCURATE PARTICULARS BY ISSUING NOTICE U/S 274 R/W SECTION 2 71 OF THE ACT ON 24.12.2009 FIXING THE DATE OF HEARING FOR 24.01.201 0. DESPITE SEVERAL NOTICES ISSUED TO THE ASSESSEE, THESE REMAINED UNCO MPLIED WITH AND NEITHER THE ASSESSEE NOR HIS REPRESENTATIVE ATTENDED THE PE NALTY PROCEEDINGS. THE ASSESSING OFFICER FINALIZED THE PENALTY PROCEEDINGS BY HOLDING THAT ASSESSEE HAS GROSSLY FAILED TO DECLARE HIS TRUE AND CORRECT PARTICULARS OF INCOME AND THEREBY CONCEALED AND FURNISHED INACCURATE PARTICUL ARS OF INCOME. THEREFORE, IT WAS FURTHER HELD THAT THE ASSESSEE IS LIABLE FOR IMPOSITION OF PENALTY U/S 271(1)( C) OF THE ACT. ITA NO.4851/DEL/2012 ASSTT.YEAR: 2005-06 3 3. BEING AGGRIEVED WITH THE ABOVE PENALTY ORDER, TH E ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(A) WHI CH WAS ALLOWED BY THE IMPUGNED ORDER WITH FOLLOWING OBSERVATIONS:- ORDER U/S 271(1)(C) OF THE INCOME TAX ACT-PENALTY OF RS.3,85,346/- THE AO HAD IMPOSED A PENALTY U/S 271(1)(C) OF THE I NCOME TAX ACT OF RS.3.8S.3461- EQUIVALENT TO I()O% OF TAX SOUGHT TO BE EVADED. THERE IS NO DATE IN THE PENALTY OR DER U/S 271( 1)(C) PASSES BY THE AO. THE AUTHORISED REPRESE NTATIVE ARGUED THAT NO NOTICE U/S 143(2)/\42(\) WAS SERVED ON THE APPELLANT AT ANY TIME BEFORE IMPOSITION OF PENALTY U/S 271(1)(B) OR 271(1)( C) OR WHILE PASSING THE QUANTU M ORDER U/S 144 OF THE INCOME TAX. FROM THE ASSESSMENT RECO RD. IT IS FOUND THAT THE LETTERS SUBMITTED BY SPEED POST DATE D 17/04/2008, 17/09/2008, 23/07/2009 FOUND UNSERVED A ND RETURNED BACK TO AO. THE ADDRESSES MENTIONED IN THE NOTICES ARE 2/1103,325. LOKANDWALA. COMPLEX. ANDHERI (WEST) - MUMBAI-400053 . D-103. REGIONAL TOWER, . NEHRU PARK . AHEMDAHAD. WHEREAS HIS ADDRESS FOR THE ABOVE PERIOD WAS TIFFANY BUILDING. 4TH FLOOR, HIRANANDANI ESTATE, TH ANE (WEST) MAHARASHTRA-400607. THE APPELLANT HAD NOT FL IED HIS INCOME TAX RETURNS FOR THE ABOVE A.Y. 2005-06. WITH THE BELIEF THAT HIS CA MR NANAVATI HAS FILED IT. WHO HA D DIED IN JULY 2005. ALL THESE COLLOCATIONS LED TO HEAVY PENA LTY AND INTEREST ON THE APPELLANT. THE APPELLANT IS A DIREC TOR IN A BIG BPO COMPANY CONVERGYS LTD. RIGHT NOW. THE AO SHOULD HAVE TRACED HIM IN HIS ITRS OR TELEPHONE OR EMAIL I D OR THROUGH EX-EMPLOYER SOMEHOW. NON SERVICE OF NOTICES U/S 143(2)/142( 1 ) LEADS TO ANNULMENT OF ASSESSMENTS B AD IN LAW. CONSIDERING THE FACTS OF THE CASE DISCUSSED IN SUFF ICIENT DETAILS AND THE POSITION OF THE LAW ON THE SUBJECT. I HOLD THAT THE INTERPRETATION OF THE AO ON THIS ACCOUNT IS INC ORRECT AND ITA NO.4851/DEL/2012 ASSTT.YEAR: 2005-06 4 FALLACIOUS. I THEREFORE DIRECT THE AO TO DELETE THE PENALTY U/S 271(1) (C) OF RS. 3,85,346/- AS THE APPELLANT IS PA YING FULL TAX WITH INTEREST AND HIS ACTION BONAFIDE WITH REAS ONABLE CAUSE. THE APPELLANT COULD NOT GET EVIDENCES FROM EX- EMPLOYER/BANK AS THINGS ARE VERY OLD AND RELATED TO F.Y. 2004-05 AND NO NOTICE U/S 143(2)/142(1) IS SERVED O N APPELLANT. IN THE RESULT, THE APPEAL IS ALLOWED. NOW, THE REVENUE IS BEFORE THIS TRIBUNAL IN THIS AP PEAL WITH THE GROUNDS AS MENTIONED HEREINABOVE. 4. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY PERUSED THE RECORD PLACED BEFORE US AND ORDERS OF T HE AUTHORITIES BELOW. 5. LD. DR SUBMITTED THAT DURING THE QUANTUM PROCEED INGS AND PENALTY PROCEEDINGS, THE ASSESSEE DID NOT COMPLY WITH THE N OTICES ISSUED BY THE ASSESSING OFFICER AND BOTH THE PROCEEDINGS WERE COM PLETED EX PARTE U/S 144 OF THE ACT ON THE PRINCIPLE OF BEST JUDGMENT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER. THE DR FURTHER SUBMITTED THAT FROM THE RETURN, EVIDENCE AND INFORMATION AVAI LABLE BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS , IT WAS NOTICED THAT UNDER THE SHARE PURCHASE AGREEMENT DATED 06.04.2004 , THE ASSESSEE PURCHASED SHARES FROM ITS EMPLOYER AND THE ASSESSEE WAS FOUND TO HAVE SOLD THE SAID 7819 SHARES ON 22.06.2004 AND TO HAVE RECE IVED CONSIDERATION OF RS.12,31,492 DURING THE YEAR UNDER CONSIDERATION ON SALE OF SUCH SHARES. ITA NO.4851/DEL/2012 ASSTT.YEAR: 2005-06 5 THE DR FURTHER SUBMITTED THAT THE ASSESSEE HAD NOT DECLARED CAPITAL GAIN IN THE RETURN FILED ON 13.02.2005, THEREFORE, SHORT TE RM CAPITAL GAIN ARISING TO THE ASSESSEE ON SALE OF SHARES WAS THE SUBJECT OF A SSESSMENT. HENCE, THE ASSESSING OFFICER RIGHTLY HELD THAT THE ASSESSEE HA D NOT FURNISHED FULL AND TRUE PARTICULARS OF ITS INCOME AND WAS ALSO LIABLE FOR PENALTY U/S 271(1)( C) OF THE ACT. 6. THE DR ALSO SUBMITTED THAT DURING THE PENALTY PR OCEEDINGS, THE ASSESSEE DID NOT COMPLY WITH THE NOTICES ISSUED TO HIM AND NEITHER THE ASSESSEE NOR HIS REPRESENTATIVE ATTENDED THE PROCEE DINGS AND CONSEQUENTLY IN ABSENCE OF COOPERATION FROM THE ASSESSEE, THE PENAL TY PROCEEDINGS ALSO CONCLUDED EX PARTE AND THE COMMISSIONER OF INCOME T AX(A) DELETED THE PENALTY WITHOUT ANY LOGICAL AND JUSTIFIED REASON. THE DR SUPPORTED THE PENALTY ORDER AND SUBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER. 7. AFTER CAREFUL CONSIDERATION OF THE ABOVE SUBMISS IONS, CONTENTIONS AND ORDERS OF THE AUTHORITIES BELOW, AT THE OUTSET, WE OBSERVE THAT ADMITTEDLY, THE QUANTUM PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS WERE COMPLETED EX PARTE AND NEITHER THE ASSESSEE NOR HIS REPRESENTATI VE ATTENDED THE ITA NO.4851/DEL/2012 ASSTT.YEAR: 2005-06 6 PROCEEDINGS. THE APPEAL IN HAND IS RELATED TO THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND DELETED BY THE COMMISSIONER O F INCOME TAX(A). FROM THE RELATED PART OF THE IMPUGNED ORDER AS REPR ODUCED HEREINABOVE, WE OBSERVE THAT THE COMMISSIONER OF INCOME TAX(A) HAS CONSIDERED THE ISSUE OF SERVICE OF NOTICE ON THE ASSESSEE DURING THE QUA NTUM PROCEEDINGS AND HELD THAT THE ASSESSEE HAD NOT FILED HIS INCOME TAX RETU RN FOR THE YEAR UNDER CONSIDERATION I.E. 2005-06 WITH THE BELIEF THAT HIS CA MR. NANAVATI HAD ALREADY FILED IT WHO DIED IN JULY 2005. THE COMMIS SIONER OF INCOME TAX(A) FURTHER OBSERVED THAT EX PARTE ASSESSMENT PR OCEEDINGS LED TO HEAVY PENALTY ON THE APPELLANT ASSESSEE AND THE ASSESSING OFFICER SHOULD HAVE TRACED HIM IN HIS INCOME TAX RETURN OR TELEPHONE OR EMAIL ID THROUGH EX- EMPLOYER. THE COMMISSIONER OF INCOME TAX(A) FURTHE R HELD THAT NON- SERVICE OF NOTICE U/S 143(2) AND 142(1) OF THE ACT LEADS TO ANNULMENT OF ASSESSMENT BAD IN LAW. IN THE LAST PARA OF THE ORD ER, THE COMMISSIONER OF INCOME TAX(A) SIMPLY HELD THAT THE CASE DISCUSSED I N SUFFICIENT DETAIL AND THE POSITION OF LAW ON THE SUBJECT, THE COMMISSIONE R OF INCOME TAX(A) HELD THAT THE INTERPRETATION OF THE ASSESSING OFFICER ON THIS ACCOUNT WAS INCORRECT AND FALLACIOUS AND THE PENALTY WAS DELETED. ITA NO.4851/DEL/2012 ASSTT.YEAR: 2005-06 7 8. IN VIEW OF ABOVE, WE OBSERVE THAT THE ASSESSING OFFICER COMPLETED ASSESSMENT PROCEEDINGS EX PARTE IN THE ABSENCE OF A SSESSEE AND HIS REPRESENTATIVE. THE COMMISSIONER OF INCOME TAX(A) HELD THAT THE NOTICES WERE NOT PROPERLY SERVED ON THE ASSESSEE AND THE AO SHOULD HAVE TRACED HIM THROUGH EX-EMPLOYER OF THE ASSESSEE. ACCORDINGLY, WE HOLD THAT THE ASSESSEE COULD HAVE GOT REASONABLE OPPORTUNITY OF H EARING BEFORE THE ASSESSING OFFICER AND THE FINDINGS OF THE COMMISSIO NER OF INCOME TAX(A) ARE ALSO BASED ON THE DETAILS SUBMITTED BY THE ASSE SSEE DURING THE FIRST APPELLATE PROCEEDINGS BUT THE SAME WAS NOT CONFRONT ED TO THE ASSESSING OFFICER. FROM THE IMPUGNED ORDER WE ALSO OBSERVE T HAT THE ORDER IS CRYPTIC AND DOES NOT CONTAIN NECESSARY DISCUSSION, OBSERVAT ION AND FINDINGS FOR ORDERING THE ASSESSING OFFICER TO DELETE THE PENALT Y IMPOSED ON THE ASSESSEE U/S 271(1)(C) OF THE ACT. IN THIS SITUATION, WE AR E OF THE CONSIDERED OPINION THAT THE ISSUE OF LEVYING PENALTY DESERVES TO BE RE STORED TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION THAT THE ASSESSI NG OFFICER SHALL DECIDE THE ISSUE ON MERITS AFTER GIVING DUE OPPORTUNITY OF HEA RING TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO COOPERATE AND ATTEND THE PR OCEEDINGS BEFORE THE ASSESSING OFFICER. THE APPEAL OF THE REVENUE IS DI SPOSED OF BY SETTING ASIDE THE IMPUGNED ORDER WITH THE DIRECTION TO THE ASSESS ING OFFICER AS INDICATED ABOVE AND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.4851/DEL/2012 ASSTT.YEAR: 2005-06 8 ORDER PRONOUNCED IN THE OPEN COURT ON 30.04.2013. SD/- SD/- (B.C. MEENA) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 30 TH APRIL ,2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR