Babu Sayabanna Mehetre, Pune V. Assistant Commissioner of Income tax, Pune

ITA 530/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7262 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 06-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Initiation of penalty proceedings; Revised return
• Section: 271(1)(c); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.530/PUN/2017 / ASSESSMENT YEAR : 2012-13 BABU SAYABANNA MEHETRE, OFFICE NO.8, DEEP LAXMI BUILDING, NEAR POWER HOUSE CHOWK, CHINCHWAD GAON, PUNE-411033. PAN : ABAPM3697A ....... / APPELLANT / V/S. ACIT, CIRCLE-9, PUNE. / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 20.03.2019 / DATE OF PRONOUNCEMENT : 25.04.2019 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-13, PUNE DATED 27.12.2016 FOR THE ASSESSMENT YEAR 2012-13. 2. THE EFFECTIVE GROUND RAISED BY THE ASSESSEE IS AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED ASSESSING OFFICER HAVE ERRED IN LEVYING PENALTY OF RS.36,45,400/- BY INVOKING PROVISIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, BY DISREGARDING APPELLANTS CONTENTION IN THIS REGARD. 4. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS A PROMOTER, BUILDER & DEVELOPER AND IS ENGAGED IN THE BUSINESS OF CIVIL 2 ITA NO.530/PUN/2017 CONSTRUCTION UNDER THE NAME AND STYLE M/S. RENUKA CONSTRUCTION. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,88,70,377/-. A SURVEY ACTION U/S 133A OF THE ACT WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 18.02.2013. DURING THE COURSE OF SURVEY, THE ASSESSEE DISCLOSED AN ADDITIONAL INCOME OF RS.1,21,88,000/- FOR THE YEAR UNDER CONSIDERATION ON THE BASIS OF UNACCOUNTED CASH RECEIPTS DETECTED WITH RESPECT TO SALE OF FLATS WHICH WERE NOT FOUND TO BE APPEARING IN THE BOOKS. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE EXPLAINED THAT HE HAD ALREADY PAID THE TAXES ON THE SAID ADDITIONAL INCOME AND IN THIS REGARD FILED THE REVISED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER DID NOT SATISFY WITH THE EXPLANATION OF THE ASSESSEE AND ADDED THE SAID ADDITIONAL INCOME OF RS.1,21,88,000/- TO THE RETURNED INCOME OF THE ASSESSEE. THE ASSESSING OFFICER FURTHER INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WITHOUT MENTIONING ANY LIMB OF THE ACT. (PARA 4.1 OF THE ASSESSMENT ORDER). 4. IN THE PENALTY ORDER, THE ASSESSING OFFICER CLEARLY STATED THAT THE LEVY OF PENALTY FOR THE DEFAULT OF CONCEALMENT OF INCOME (PARA 7 OF THE PENALTY ORDER). 5. THE CIT(A) CONFIRMED THE PENALTY AS LEVIED BY THE ASSESSING OFFICER. THE CONTENTS OF PARA 2.4 ONWARDS OF THE APPELLATE ORDER ARE RELEVANT IN THIS REGARD. 3 ITA NO.530/PUN/2017 6. AGGRIEVED WITH THE SAID DECISION OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE ABOVE EXTRACTED GROUND. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND FIND THAT THIS IS A CASE WHERE THE ASSESSING OFFICER FAILED TO RECORD PROPER SATISFACTION WHILE INITIATING AND LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. IN THIS REGARD, WE PURSED THE ORDERS OF THE REVENUE AUTHORITIES. ON PERUSAL OF PARA 4.1 OF THE ASSESSMENT ORDER, WE FIND THE FOLLOWING IS THE REASONS FOR INITIATION OF PENALTY PROCEEDINGS :- 4.1 CONSEQUENTLY, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ARE INITIATED SEPARATELY. 8. FURTHER, WE ALSO PERUSED THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER ON 30.07.2015. ON PERUSAL OF PARA 7 OF THE PENALTY ORDER, WE FIND THE FOLLOWING IS THE REASONS FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT :- 7. .. I AM THEREFORE SATISFIED THAT THIS IS A CLEAR CASE OF CONCEALMENT. 9. THE ABOVE EXTRACTS REVEAL THAT THE ASSESSING OFFICER SUFFERS FROM AMBIGUITY IN HIS MIND WHILE RECORDING THE SATISFACTION AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 10. ACCORDING TO THE LD. AR, THE ORDER OF THE CIT(A) SHALL HAVE TO BE SET- ASIDE ON THE LEGAL ISSUE. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOUS BINDING JUDGMENTS IN THE CASE CIT VS. SHRI 4 ITA NO.530/PUN/2017 SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565, LD. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW AND THE SAME IS WRONGLY UPHELD BY THE CIT(A). 11. ON THE OTHER HAND, LD. DR FOR THE REVENUE HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 12. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE LEGAL REQUIREMENT OF MAKING A CLEAR CUT REFERENCE TO THE APPLICABLE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT, IS NOT MET BY THE ASSESSING OFFICER WHILE INITIATING AND LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. THUS, THE SATISFACTION OF THE ASSESSING OFFICER SUFFERS FROM AMBIGUITY IN HIS MIND. 13. THEREFORE, CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS, WE ARE OF THE VIEW THAT SUCH PENALTY IS UNSUSTAINABLE IN LAW LEGALLY. IT IS A SETTLED LEGAL PROPOSITION THAT THE ASSESSING OFFICER IS UNDER OBLIGATION TO SPECIFY THE APPROPRIATE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WITHOUT GOING INTO THE MERITS OF THE CASE, WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER 5 ITA NO.530/PUN/2017 TO DELETE THE ENTIRE PENALTY IMPOSED BY HIM. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED ON LEGAL ISSUE. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 25 TH DAY OF APRIL, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 25 TH APRIL, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-13, PUNE. 4. THE CCIT, PUNE. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.