Sakal Paper Ltd., Pune V. DCIT, Cir.-6, Pune

ITA 498/PUN/2010

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 8939 (ITAT-PUNE)
• Duration Of Justice: 8 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-10-2018
• Assessment Year: 2005-2006
• Appeal Filed On: 08-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ASHOK KOTHARY
• Keywords: Capital asset; Business income; Wrong claim
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , ! ' , # $ BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO.498/PUN/2010 #& ' (' / ASSESSMENT YEAR : 2005-06 SAKAL PAPERS LTD. 595, BUDHWAR PETH, PUNE-411 002 PAN : AAACS7605Q ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, PUNE. / RESPONDENT . / ITA NO.759/PUN/2013 #& ' (' / ASSESSMENT YEAR : 2006-07 SAKAL PAPERS LTD. 595, BUDHWAR PETH, PUNE-411 002 PAN : AAACS7605Q ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, PUNE. / RESPONDENT ASSESSEE BY : SHRI ASHOK KOTHARY REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 03.10.2018 / DATE OF PRONOUNCEMENT : 10.10.2018 2 ITA NO.498/PUN/2010 ITA NO.759/PUN/2013 ) / ORDER PER D. KARUNAKARA RAO, AM: THESE ARE THE TWO APPEALS FILED BY COMMON ASSESSEE AG AINST THE SEPARATE ORDERS OF CIT(APPEALS)-III, PUNE, DATED 16.12.2009 AND 10.12.2012 RESPECTIVELY FOR THE A.YS. 2005-06 & 2006-07. ITA NO.498/PUN/2010 A.Y. 2005-06 2. GROUNDS RAISED BY THE ASSESSEE IN ITA NO.498/PUN/20 10 ARE EXTRACTED HERE AS UNDER: ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CAS E THE LEARNED ASSESSING OFFICER AND CIT APPEALS ERRED IN: 1. HOLDING THAT THE ASSESSEE CONCEALED THE INCOME A ND/OR FURNISHED THE INACCURATE PARTICULARS OF INCOME ATTRACTING PRO VISION S OF SEC.271(1)(C) OF THE INCOME TAX ACT, 1961 AND LEVYI NG THE PENALTY OF RS.23,27,607/-. THIS ACTION OF THE BEING BAD IN LAW IT IS SUBMITTED THAT THE PENALTY OF RS.23,27,607/- BE DELETED. 2. INVOKING THE PROVISIONS OF SEC.271(1)(C) AND LEV YING PENALTY OF RS. 28,27,607/-. THE ACTION BEING BAD IN LAW AND NOT BO RNE OUT BY THE FACTS IT IS PRAYED THAT THE PENALTY 'BE DELETED. 3. NOT ACCEPTING AND I OR NOT CONSIDERING THE EXPLANATION GIVEN AND SUBMISSIONS MADE BY THE ASSESSEE AND LEVYING PENALT Y OF RS.23,27,607/- U/S.271(1)(C). IT PRAYED THAT THE EX PLANATIONS GIVEN BY THE ASSESSEE BE CONSIDERED AND ACCEPTED AND THE PEN ALTY BE DELETED. 4. HOLDING THE DISALLOWANCE OF CLAIM U/S.80IA COULD BE INFERRED AS CONSCIOUS CONCEALMENT OF THE PARTICULARS OF INCOME OR DELIBERATE FURNISHING OF INACCURATE PARTICULARS ATTRACTING PRO VISIONS OF SEC. 271(1)(C) AND LEVYING PENALTY OF RS.23,27,607/- UND ER THE SAID SECTION. IT IS PRAYED THAT THE CONTENTION BE REJECTED AND TH E PENALTY BE DELETED. THE APPELLANT NAMED ABOVE CRAVES LEAVE TO ADD, TO A LTER AND TO MODIFY THE GROUNDS OF APPEAL IF AND WHEN REQUIRED. 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS ENGAGED IN PRINTING AND PUBLISHING OF NEWSPAPER AND PERIODICALS. THE ASS ESSEE FILED RETURN OF INCOME ON 31.10.2005 DECLARING TOTAL INCOME OF 3 ITA NO.498/PUN/2010 ITA NO.759/PUN/2013 RS.10,93,06,133/-. THE ASSESSING OFFICER ISSUED NOTICE U/S.143 (2) AND 142(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT) ON 22.02.2006 TO THE ASSESSEE. THE ASSESSEE FILED REVISED RET URN ON 11.12.2006 REVISING THE TOTAL INCOME TO RS.11,52,23,360/-. DURING THE AS SESSMENT, AO ASSESSED THE TOTAL INCOME OF ASSESSEE AT RS.16,82,27,990/ -. THE ASSESSING OFFICER LEVIED PENALTY OF RS.23,27,607/- U/S.271(1)(C) OF THE ACT FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME BY CLAIMING WRONG DEDUCTION OF RS.64,88,107/-U/S.80IA(4)(IV)(A) OF THE ACT. IN THE FIRST APPELLAT E PROCEEDINGS, THE CIT(A) CONFIRMED THE PENALTY IMPOSED OF RS. 23,27,607/- U/S. 271(1)(C) OF THE ACT. 4. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL WITH THE GROUNDS EXTRACTED ABOVE. 5. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER AND DEMONSTRATED T HE FACT OF DETERMINING ASSESSED INCOME AT RS.16,82,27,990/- AS AGAINST RETURN OF INCOME AT RS.10,93,06,133/-. PENALTY WAS LEVIED U/S.271(1)(C) OF THE ACT IN BOTH THE APPEALS FOR A.YS.2005-06 & 2006-07 UNDER CONSIDERATION. DU E TO WRONG CLAIM OF DEDUCTION U/S.80IA(4)(IV)(A) OF THE ACT, ASSESSING OFFICER IN ITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. BRINGING OUR AT TENTION TO THE ASSESSMENT ORDER, QUA THE RECORDING OF SATISFACTION AT T HE TIME OF INITIATING PENALTY PROCEEDINGS, LD. COUNSEL FOR THE ASSESSEE DEMONS TRATED THAT ASSESSING OFFICER NEVER MADE REFERENCE TO SPECIFIC LIMBS OF CLA USE (C) OF SECTION 271(1) OF THE ACT. IN THIS REGARD, OUR ATTENTION IS DRAWN TO PARA 6.4 OF THE ASSESSMENT ORDER AND SUBMITTED THAT PENALTY U/S.271(1)(C) IS INITIATED FOR MAKING WRONG CLAIM OF DEDUCTION U/S.80IA(4)(I V)(A) OF THE ACT . 4 ITA NO.498/PUN/2010 ITA NO.759/PUN/2013 6. FURTHER, BRINGING OUR ATTENTION TO THE PENALTY ORDER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT PENALTY WAS LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME . LD. COUNSEL FOR THE ASSESSEE READ OUT THE RELEVANT LINES FROM PARA 4.8 OF THE PENALTY ORDER. 7. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO/CIT(A). BEFORE THE TRIBUNAL 8. WE HEARD BOTH THE PARTIES ON THIS SPECIFIC LEGAL ISSUE, I.E. MENTIONING SPECIFIC LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT WHILE INITIA TING PENALTY PROCEEDINGS. WE PERUSED THE ORDER OF ASSESSING OFFICER FOR INITIATING THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT AND THE SA ME IS REPRODUCED AS UNDER : 6.4. IT WILL BE SEEN FROM THE ABOVE WORKING THAT AS ON 31.03.2005 THERE IS BROUGHT FORWARD LOSS OF RS.4,20,18,236/- TO THE ASS ESSEE AND THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR ANY DEDUCTION U/S.80IA . THE ARGUMENTS OF THE ASSESSEE THAT THE LOSS WAS ALREADY SET OFF IN THE E ARLIER YEARS AND, THEREFORE, THE CLAIM SHOULD BE ALLOWED DOES NOT CARRY ANY WEIG HT PARTICULARLY BECAUSE THE SPECIFIC PROVISION OF THE SECTION 80IA(5) REQUI RES THE ASSESSEE TO SHOW THAT THERE IS A PROFIT FROM THE UNIT AND SUCH PROFIT IS TO BE WORKED OUT TREATING THE UNIT AS A SEPARATE ENTITY. AFTER SUCH TREATMENT THE RE IS NO PROFIT TO THE ASSESSEE AND THEREFORE, THE ASSESSEE IS NOT ENTITLE D FOR ANY DEDUCTION U/S.80IA(4)(IV)(A). ACCORDINGLY, THE ASSESSEES CLA IM FOR DEDUCTION U/S.80IA IS REJECTED. PENALTY U/S.271(1)(C) IS INITIATED FOR MA KING WRONG CLAIM OF DEDUCTION U/S.80IA(4)(IV)(A). 9. WE ALSO PERUSED THE PENALTY ORDER DATED 31.03.2009 AN D FIND THE SATISFACTION RECORDED BY THE AO FOR LEVYING THE PENALTY U/ S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS UNDER: 4.8 . IN VIEW OF THE FACTS MENTIONED ABOVE, I AM OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS COMMITTED A DEFAULT WITHIN THE MEA NING OF EXPLANATION-1(B) TO SECTION 271(1)(C) OF THE I.T. ACT, 1961, BY FURN ISHING INACCURATE PARTICULARS OF INCOME BY CLAIMING WRONG DEDUCTION OF RS.64,88,107/ -. I, THEREFORE, LEVY PENALTY OF RS.23,27,607/- U/S. 271(1)(C) OF THE ACT 5 ITA NO.498/PUN/2010 ITA NO.759/PUN/2013 FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATIO N OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO HELD THAT PENALTY U/S.2 71(1)(C) IS INITIATED FOR MAKING WRONG CLAIM OF DEDUCTION U/S.80IA(4)(IV)(A). B UT AT THE TIME OF LEVYING PENALTY QUA IN PENALTY ORDER, AO HELD THAT T HE ASSESSEE HAS COMMITTED A DEFAULT WITHIN THE MEANING OF EXPLANATION-1(B) T O SECTION 271(1)(C) OF THE I.T. ACT, 1961, BY FURNISHING INACCURATE PARTIC ULARS OF INCOME BY CLAIMING WRONG DEDUCTION OF RS.64,88,107/-. 10. THUS, THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APPLICABILITY OF SPECIFIC LIMB. THER EFORE, WE ARE OF THE OPINION THAT CONSIDERING THE ABOVE REFERRED BIN DING JUDGMENTS SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. AO IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATION AS WE LL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, THE ORDER OF CIT(A) IS SET-ASIDE AND DIRECT THE AO TO DELETE THE PENALTY. ACCORDINGLY, THE LEGAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED ON TECHNICALITIES. IN VIEW OF THE SAME, WE FIND, ADJUDIC ATION OF THE MERITS OF PENALTY, BECOME AN ACADEMIC EXERCISE. HENCE, MER ITS-LINKED GROUNDS ARE DISMISSED AS SUCH. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.759/PUN/2013 A.Y. 2006-07 12. GROUNDS RAISED BY ASSESSEE IN ITA NO.759/PUN/2013 FOR A.Y.2006-07 READS AS UNDER: 6 ITA NO.498/PUN/2010 ITA NO.759/PUN/2013 ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CA SE THE LEARNED ASSESSING OFFICER AND CIT APPEALS ERRED IN: 1. HOLDING THAT THE ASSESSEE CONCEALED THE INCOME A ND L OR CONCEALED THE PARTICULARS OF INCOME ATTRACTING PROVISIONS OF SEC.271(1)(C) OF THE INCOME TAX ACT, 1961 AND LEVYING THE PENALTY OF RS. 1,76,29,666/-. THIS ACTION BEING BAD IN LAW IT IS PRAYED THAT THE PENAL TY OF RS.1,76,29,666/- BE DELETED. 2. INVOKING THE PROVISIONS OF SEC.271(1)(C) AND LEV YING PENALTY OF RS.1,76,29,666/-. THE ACTION BEING BAD IN LAW IT IS SUBMITTED THAT THAT THE PENALTY BE DELETED. 3. NOT ACCEPTING AND I OR NOT CONSIDERING AND L OR HOLDING THAT THE ARGUMENTS THE EXPLANATION GIVEN. SUBMISSIONS MADE, AND ARGUMENTS ADVANCED BY THE ASSESSEE ARE NOT CONVINCING AND AS SUCH ARE NOT ACCEPTABLE AND THEREBY LEVYING PENALTY OF RS.1,76,2 9,666/- U/S 271(1)(C). IT IS SUBMITTED THAT THE EXPLANATIONS GI VEN BY THE ASSESSEE BE CONSIDERED AND ACCEPTED AND THE PENALTY BE DELETED. THE APPELLANT NAMED ABOVE CRAVES LEAVE TO ADD, TO A LTER AND TO MODIFY THE GROUNDS OF APPEAL IF AND WHEN REQUIRED. 13. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT T HE ASSESSEE FILED RETURN OF INCOME ON 08.12.2006 DECLARING TOTAL INCOME OF RS.29,07,60,184/ -. DURING THE ASSESSMENT U/S.143(3) OF THE ACT, AO ASSESSED THE T OTAL INCOME OF ASSESSEE AT RS.34,66,61,540/-. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS SEPARATELY U/S.271(1)(C) OF THE ACT FOR CONCEALM ENT OF INCOME/ FILING INACCURATE PARTICULARS OF INCOME AND LEVIED PENALTY OF RS.1,76,29,666/- U/S.271(1)(C) OF THE ACT FOR FURNISHING IN ACCUR ATE PARTICULARS OF INCOME. IN THE FIRST APPELLATE PROCEEDINGS, TH E CIT(A) CONFIRMED THE PENALTY IMPOSED OF RS.1,76,29,666/- U/S. 271(1)(C) OF THE ACT . 14. ARGUMENTS AND COUNTER ARGUMENTS ADVANCED BY LD. C OUNSEL FOR THE ASSESSEE ARE SAME AS THAT OF APPEAL ITA NO.498/PUN/20 10 FOR A.Y. 2005- 06. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFER ENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELY ING ON VARIOUS BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCH ERY (2017) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN 7 ITA NO.498/PUN/2010 ITA NO.759/PUN/2013 THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACT ORY 359 ITR 565 LD. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTE NTION TO THE ASSESSMENT ORDER AS WELL AS THE PENALTY ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. 15. ON HEARING BOTH THE PARTIES ON THIS SPECIFIC LEGAL ISSUE, I.E. RECORDING OF PROPER SATISFACTION BY THE AO. WE PERUSED THE ORDER OF THE AO AND FIND THE SATISFACTION RECORDED BY THE AO FOR INITIATING THE PENA LTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THEREFOR E, THE SAME IS REPRODUCED AS UNDER: .I PROCEED TO TREAT THE PROFIT DERIVED ON SA LE OF SHARES WHICH WERE TREATED AS LONG TERM CAPITAL ASSETS AND SHORT TERM CAPITAL ASSETS AS PROVIDES DERIVED FROM TRADING BUSINESS. HENCE, THE PROFIT DE RIVED FROM TRADING IN SHARES AND UNITS OF RS.11,20,27,918.76/- IS TREATED AS BUSINESS INCOME. PENALTY PROCEEDINGS U/S.271(1)(C) ARE INITIATED SEP ARATELY FOR CONCEALMENT OF INCOME/ FILING INACCURATE PARTICULARS OF INCOME OF RS.5,28,64,61,185/- WHICH WAS TREATED AS CAPITAL GAINS. 16. WE ALSO PERUSED THE PENALTY ORDER DATED 28.03.2011 A ND FIND THE SATISFACTION RECORDED BY THE AO FOR LEVYING THE PENALTY U/ S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS UNDER: 03.3HENCE, IT IS CLEAR THAT ASSESSEE HAS AVO ID THE LEGITIMATE TAX LIABILITY BY FURNISHING INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT AND MADE ITSELF LIA BLE FOR PENALTY U/S. 271(1)(C) OF THE ACT. ACCORDINGLY, A PENALTY OF THE AMOUNT OF 100% OF TAX SOUGHT TO BE EVADED IS LEVIED ON ASSESSEE... 17. SINCE THE FACTS, ISSUES, ARGUMENTS AND COUNTER ARGUME NTS ARE SAME AS THAT OF APPEAL ITA NO.498/PUN/2010 FOR A.Y. 2005-06, THE DECISION GIV EN IN THE SAID APPEAL APPLIES TO THIS ASSESSMENT YEAR TOO. THEREFORE, WITH SIMILAR REASONING, WE DIRECT THE AO TO DELETE THE PENALTY A ND THE LEGAL GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED ON TECHNICALIT IES. IN VIEW OF THE 8 ITA NO.498/PUN/2010 ITA NO.759/PUN/2013 SAME, WE FIND, ADJUDICATION OF THE MERITS OF PENALTY BECOME AN ACADEMIC EXERCISE. HENCE, MERITS-LINKED GROUNDS ARE DISMISSED AS SUCH. 18. TO SUM UP, BOTH THE APPEALS OF THE ASSESSEE FOR A.Y.2 005-06 & 2006- 07 ARE PARTLY ALLOWED. ORDER PRONOUNCED 10 TH DAY OF OCTOBER, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . ! /D. KARUNAKARA RAO) '# $/ JUDICIAL MEMBER % $/ ACCOUNTANT MEMBER % / PUNE; &$ ' / DATED : 10 TH OCTOBER, 2018. SB ) * +#,-! .!(, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-III, PUNE. 4. THE CIT-III, PUNE. 5. *+ ## ,- , . ,- , /0 , % / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // TRUE COPY // .$%4 / BY ORDER, SENIOR PRIVATE SECRETARY . ,- , % / ITAT, PUNE.