Amarsingh Gulzarsingh Hazari, Aurangabad V. Income-tax Officer,

ITA 530/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9449 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 24-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GAURAV BOTHAM
• Assessee Lawyers: GANESH BHALERAO
• Keywords: Opportunity of being heard; Principle of natural justice; Initiation of penalty proceedings
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 530 /P U N/201 5 / ASSESSMENT YEAR : 20 05 - 06 MR. AMARSINGH GULZARSINGH HAZARI, H.NO.4 - 8 - 32, NAWABPURA, GAWALIPURA, AURANGABAD. PAN : A COPH3217J . / APPELLANT VS. THE INCOME TAX OFFICER , WARD - 2(3), AURANGABAD . . / RESPONDENT / APPELLANT BY : S HRI GANESH BHALERAO / RESPONDENT BY : SHRI GAURAV BOTHAM / DATE OF HEARING : 25 .0 4 . 2017 / DATE OF PRONOUNCEMENT: 17 . 0 5 .201 7 / ORDER PER SUSHMA CHOWLA, J M : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF CIT (A) - 2, AURANGABAD DATED 2 4.02.2015 RELATING TO ASSESSMENT YEAR 20 05 - 06 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) - 2 , AURANGABAD THROUGH APPELLATE ORDER NO . ABD/CIT(A ) /89/2012 - 13 (A - 2/44) DATED 24/02/2015 HAS DISMISSE D AN APPEAL AGAINST THE ORDER OF ITO WARD 2(3) , AURANGABAD AGAINST TO PENALTY OF RS . 1,50 , 177/ - U /S 271(1)(C) OF THE INCOME TAX ACT, 1961 DATED 21/06/2012 RELATING TO THE A.Y . 2005 - 06. 2. THE APPELLANT CONTENDS THAT THE PENALTY ORDER PASSED BY THE A.O. A ND CONFIRMED BY THE IT(APPEALS} IS BARRED BY TIME LIMIT PRESCRIBED U/S 275 OF THE IT ACT, 1965. THE QUANTUM APPELLATE ORDER DATED 11/03/2011 WAS RECEIVED BY COMMISSIONER OF INCOME TAX IN APRIL, 2011 I.E. 12/04/2011. THE APPELLANT IS ITA NO. 530 /P U N/20 1 5 AM A RSINGH G. HAZARI 2 SURPRISED TO SEE THAT H OW THE TRANSFER OF ORDER IN THE SAME OFFICE CAN TAKE MORE THAN 20 - DAYS. FURTHER THE APPELLANT WOULD LIKE TO BRING TO THE NOTICE OF YOUR HONOUR THAT IF THE APPELLATE ORDER DATED 11/03/2011 WAS RECEIVED BY THE CIT (APPEALS) BEFORE 31/03/2011, THE TIME LIMIT AVAILABLE WITH CIT (APPEALS) BEFORE 31/03/2011, THE TIME LIMIT AVAILABLE WITH CIT(APPEALS) TO IMPOSE PENALTY U/S.271(1)(C) WOULD BE 31/03/2012 AS MENTIONED IN SEE 275(1). THUS THE APPELLANT IS OF THE OPINION THAT PENALTY ORDER U/S 271(1 ) (C) DATED 21/06/20 12 IS TIME BARRED AND PRAYS TO DROP THE PROCEEDINGS OF PENALTY AGAINST THE APPELLANT. 3. FURTHER THE APPELLANT WAS HAVING NO ANY INTENTION TO DISCLOSE FALSE INFORMATION IN THE RETURN OR DURING THE PROCEEDINGS. THE CLA I M IN THE RETURN THAT THE AGRICULTURE LAND IS SITUATED BEYOND 9.5KM I . E. BEYOND 8KM FROM THE MUNICIPAL LIMITS OF AURANGABAD AND HENCE NOT LIABLE TO CAP I TA L GA I NS TAX WAS ONLY TAKEN ON THE BASIS OF THE LETTER OF THE TALATHI. 4. FURTHER THE APPELLANT HAS PAID ALL THE TAXES DETERMINED BY THE I TO AND COMMISSIONER(APPEALS ) IMMEDIATELY AND CO - OPERATED IN ALL THE ENQU I R I ES RELATING TO THE ASSESSMENT OF HIS INCOME . THE APPELLANT HAS ALSO PAID INTEREST U/S 220(2) IMMEDIATELY. THESE CLEARLY I NDICATES THAT THERE WAS NEVER AN INTENTION OF THE APPELLANT TO HIDE ANY PAYMENT OF TAX. 5. IN ORDER TO SUPPORT HIS CONTENTION , THE APPELLANT WANTS T O BRING TO T HE NOT I CE OF YOUR HONOUR THAT IN THE PENALTY ORDER U/S 271(1)(C) DATED. 21/06/2012 IT IS STATED THAT THE APPELLATE ORDE R DATED 11/03/2011 IS RECEIVED BY T HE CIT(APPEALS} ON 12/04/2011 . HOWEVER LATER IN THE ORDER IT IS STATED THAT AN OPPORTUNITY OF BEING HEARD WAS AFFORDED TO THE APPELLANT BEFORE LEVYING PENALTY VIDE NOTICE DATED 08/04/2011 . HERE AGAIN THE APPELLANT IS SURPRISED THAT HOW AN OPPORTUNITY OF BE ING HEARD CAN BE GIVEN ON 08/04/2011 I . E . BEFORE RECEIPT OF NOTICE BY THE COMMISSIONER. AND THUS THE APPELLANT CONSIDERS THAT THE PENALTY ORDER U/S 271(1) (C) DATED. 21/06/2012 IS BAD IN LAW . 6. THE A.O. HAS REJECTED THE CLAIM OF THE APPELLANT THAT THE LA ND SOLD WAS AGRICULTURE LAND AND STATED THAT THE LAND SOLD WAS IN FACT N.A . LAND. HERE THE APPELLANT WANTS TO BRING TO NOTICE YOUR HONOUR THAT : A . THE SAID LAND WAS PURCHASED AS AGRICULTURE LAND IN 1991 . B . THE APPELLANT CARRIED AGRICULTURE ACTIVITY TILL THE DATE OF SALE. THE LAND HAS BEEN USED FOR AGRICULTURAL PURPOSES BY THE INDIVIDUAL OR HIS PARENTS OR BY THE HUF FOR A PERIOD OF 2YEARS IMMEDIATELY BEFORE THE DATE OF TRANSFER. C . THE APPELLANT HAS APPLIED FOR CONVERSION OF THE SAID AGRICULTURAL LAND FOR NON - AGRICULTURAL USE ONLY WITH AN INTENTION TO GAIN INCREASED SALE CONSIDERATION WHICH IS A COMMON MAN'S THINKING. THE SAID LAND WAS CONVERTED FROM AGRICULTURE LAND TO N.A . AND JUST BEFORE THE DATE OF TRANSFER. 7. YOUR APPELLANT THEREFORE, PRAYS THAT THE ORD ER OF THE LEARNED CIT(APPEALS) - 2, AURANGABAD IS AGAINST THE WEIGHT OF EQUITY AND NATURAL JUSTICE. 8. YO UR APPELLANT PRAYS LEAVE TO ADDUCE SUCH OTHER EVIDENCES AS MAY BE NECESSARY TO SUBSTANTIATE HIS CASE. 9. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND AND/OR CHANGE ANY OR ALL THE GROUNDS OF APPEAL AS AN WHEN THE OCCASION DEMANDS. THUS TAKING ALL THE CONTENTIONS OF THE APPELLANT, THE APPELLANT PREFERS AN APPEAL TO ITAT PRAYING TO DELETE THE PENALTY LEVIED. ITA NO. 530 /P U N/20 1 5 AM A RSINGH G. HAZARI 3 3 . THE ASSESSEE HAS ALSO RAISED THE I SSUE AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C)OF THE ACT AT RS.1,50,177/ - . THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE ELABORATELY REFERRED TO THE FACTS AND CIRCUMSTANCES IN RELATION TO THE TECHNICAL ISSUE OF THE TIME LIMIT FOR PASSING THE PE NALTY ORDER UNDER SECTION 271(1)(C)OF THE ACT. HE ALSO POINTED OUT THAT THE ASSESSING OFFICER HAD FAILED TO RECORD ANY SATISFACTION WHILE PASSING THE ASSESSMENT ORDER UNDER SECTIO N 143(3) OF THE ACT FOR INITIATION OF PENALTY UNDER SECTION 271(1)(C)OF THE ACT. 4 . THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN ORDER TO ADJUDICATE THE ISSUES RAISED IN THE PRESENT APPEAL , WE FIRS T REFER TO THE PRELIMINARY ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C)OF THE ACT WITHOUT RECORDING ANY SATISFACTION BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT. THE ASSESSING OFFICER IN THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT DATED 28 - 12 - 2007 HAD RECOMPUTED THE INCOME FROM CAPITAL GAINS AND HAD ALSO DENIED THE DEDUCTION CLAIMED ON CONSTRUCTION OF THE PROPERTY BEING BEYOND THE STIPULATED TIME PROVIDED IN THE ACT. AFTER RECOMPUTING THE INCOME FRO M LONG TERM CAPITAL GAINS , THE SAID INCOME WAS ASSESSED UNDER SECTION 143(3) OF THE ACT. THE ASSESSING OFFICER GAVE DIRECTIONS FOR GIVING CREDIT TO THE PREPAID TAXES, IF ANY AND ALSO FOR CHARGING INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT, WHER EVER APPLICABLE. HE THEN INITIATED PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ALSO DIRECTED THE ISSUE OF DEMAND NOTICE/CHALLAN ACCORDINGLY. THE SAID ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER LACKS SATISFACTION TO BE RECORDED BY THE ASSESSING O FFICER BEFORE INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AGAINST THE ASSESSEE, I.E. WHETHER IT IS A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER AT THE PRELIMINARY STAGE W HILE ITA NO. 530 /P U N/20 1 5 AM A RSINGH G. HAZARI 4 COMPLETING THE ASSESSMENT, I.E. AFTER MAKING THE ADDITION HAS TO GIVE A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY INITIATE THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT I N RESPECT OF ONE OF THE LIMITS, WHICH ARE SATISFIED BY THE ASSESSEE. THIS BASIC EXERCISE OF RECORDING THE SATISFACTION IS MISSING FROM THE ASSESSMENT ORDER IN THE PRESENT CASE. THE ASSESSING OFFICER IN THE FINAL DIRECTION HAS INITIATED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WITHOUT RECORDING ANY SATISFACTION. THE SAID INITIATION OF THE PENALTY PROCEEDINGS IS THUS INCORRECT AND INVALID AS PER LAW I N THE ABSENCE OF ANY SATISFACTION RECORDED WHILE INITIATING THE PENALTY PROCEEDINGS WHILE PASSING TH E ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER LACKS INHERENT JURISDICTION TO START AND COMPLETE THE PROCEEDINGS AGAINST THE ASSESSEE FOR LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, THE PENAL TY ORDER PASSED BY THE ASSESSING OFFICER IS INVALID AND THE SAME IS QUASHED. 6 . THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE HAD VEHEMENTLY ARGUED ABOUT THE TIME LIMIT WITHIN WHICH THE SAID ORDER HAS TO BE PASSED BY THE ASSESSING OFFICER AND THE SAM E HAS NO MERIT AS THE INITIATION OF PENALTY PROCEEDINGS IS INCORRECT BEING INITIATED WITHOUT RECORDING ANY SATISFACTION. ACCORDINGLY, WE HOLD SO. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS ALLOWED. 7 . IN THE RESULT, THE APPE AL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 17 TH D AY OF MAY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / J UDICIAL MEMBER / PUNE ; DATED : 17 TH MAY, 201 7 . SATISH ITA NO. 530 /P U N/20 1 5 AM A RSINGH G. HAZARI 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 & 2 , KOLHAPUR PUNE ; 4. / THE CIT - 1 & 2, KOLHAPUR ; 5. , , / DR A, ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE