SHRI ANIL BAFNA, Nagpur V. THE ITO, WARD- 1(1), Nagpur

ITA 535/NAG/2014

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7432 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 24-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI
• Assessee Lawyers: ANIL BAFNA
• Keywords: Principle of natural justice; Set aside
• Section: 271(1)(c); 201

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL BENCH, NAGPUR (AT E - COURT, PUNE) BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO. 535 /NAG /20 14 / ASSESSMENT YEAR : 2010 - 11 SHRI ANIL DALPATMAL BAFNA, FLAT NO.606, RACHANA YUTHIKA APARTMENT, AFTER POSTAL COLONY, AMRAWATI ROAD, NAGPUR - 440033. PAN : AESPB0883J ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD - 1(1) , NAGPUR. / RESPONDENT A SSESSEE BY : SHRI ANIL BAFNA REVENUE BY : DR. MILIND BHUSARI / DATE OF HEARING : 16 .10 .2019 / DATE OF PRONOUNCEMENT : 16 .10 .2019 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(APPEAL) - I, NAGPUR DATED 28.08.2014 FOR THE ASSESSMENT YEAR 2010 - 11 AS PER THE GROUNDS OF APPEAL ON RECORD. 2 ITA NO. 535 /NAG /20 14 A.Y. 2010 - 11 2. THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO THE IMPOSITION OF PENALTY U/S.271 (1) (C) OF THE IN COME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 3. AT THE VERY OUTSET, THE LD. AR OF THE ASSESSEE SUBMITTED THAT AS PER THE ASSESSMENT ORDER, THE PENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER FOR CONCEALMENT OF INCOME BY OBSERVING AS FOLLOWS: AS THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME, PENALTY PROCEEDINGS INITIATED U/S.271(1) (C) OF THE I.T. ACT. THAT HOWEVER, WHILE LEVYING PENALTY, IN THE PENALTY ORDER, THE ASSESSING OFFICER HAS HELD AS FOLLOWS: THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME TO THE EXTENT OF RS.1,56,20,809/ - AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. I AM CONVINCED THAT THE ASSESSEE HAS COMMITTED A DEFAULT WITHIN THE MEANIN G OF SECTION 271(1) (C) OF THE I.T. ACT, 1961 AND PENALTY IS EXIGIBLE TO THE FACTS OF THE CASE. 3.1 . THE LD . AR OF THE AS SESSEE VEHEMENTLY SUBMITTED AFTER STATING THAT THE PENALTY MAY BE LEVIED U/S.271(1) (C) OF THE ACT FOR CONCEALMENT OF INCOME IN THE ASSESSMENT ORDER , I N THE PENALTY ORDER, THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND FURNISHED INACCURATE PA RTICULARS OF INCOME . T H EREFORE, THE ASSESSING OFFICER HA S NOT DERIVED PROPER SATISFACTION AS TO WHICH LIMB ; THE PENALTY HAS TO BE LEVIED ON THE ASSESSEE. FOR THIS PROPOSITION, T HE L D. AR OF THE ASSESSEE RELIED ON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAMSON PER INCHERY REPORTED AS 392 ITR 4 ( BOM.) WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS FOLLOWED THE VIEW OF KARNATAKA HIGH COURT IN THE 3 ITA NO. 535 /NAG /20 14 A.Y. 2010 - 11 CASE OF CIT VS. MANJUNATH COTTON & GINNING FACTORY REPORT ED IN 359 ITR 565(KAR.) WHEREIN IT WAS OBSERVED THAT THE HON'BLE SUPREME COUR T OF INDIA HAD HELD IN T. ASHOK PAI VS. CIT REPORTED AS 292 ITR 11 (SC) THAT ACT OF CONCEALMENT OF INCOME AND ACT OF FURNISHING INACCURATE PARTICULARS ARE TWO DIFFERENT THINGS. 4. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS RELIED ON THE ORDERS OF THE SUB - ORDINATE AUTHORITIES. 5. W E HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS. WE FIND THAT THOUGH IN THE ASSESSMENT ORDER, PENALTY HAS BEEN INITIATED FOR CONCEALMENT OF INCOME , HOWEVER, IN THE PENALTY ORDER ITSELF, THE ASSESSING OFFICER HAS NOT ARRIVED AT PROP ER SATISFACTION SO A S TO IMPOSE THE SPECIFIC LIMB O N WHICH HE PROPOSED TO LEVY THE PENALTY ON THE ASSESSEE U/S.271(1) (C) OF THE ACT WHETHER IT IS FOR CONCEALMENT OF INCO ME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . T HE JUDICIAL PRONOUNCEMENTS AS RELIED ON BY THE LD.AR OF THE ASSESSEE AND VARIOUS OTHER DECISIONS ARE CLEAR ON THE ISSUE THAT PENALTY PROVISIONS ARE SEPARATE FROM ASSESSMENT PROCEEDINGS AND LEVY OF PENALTY IS NOT GOOD NEWS FOR THE ASSESSEE . THAT TAKING GUIDANCE FROM THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (SUPRA.) WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS CONSIDERED THE DECISION OF HON'BLE KARNATAKA HIGH CO URT IN THE CASE OF CIT VS. MANJUNATH COTTON AND GINNING FACTORY (SUPRA.) , T HE LEGAL PROPOSITION THAT COMES OUT AND WHICH IS BINDING IN NATURE IS THAT THE ASSESSING OFFICER SHOULD BE CLEAR AS TO WHICH OF THE TWO LIMBS UNDER WHICH PENALTY IS IMPOSABLE, HAS B EEN CONTRAVENED OR INDICATE THAT BOTH HAVE BEEN CONTRAVENED WHILE INITIATING PENALTY PROCEEDINGS. IT CANNOT BE THAT THE 4 ITA NO. 535 /NAG /20 14 A.Y. 2010 - 11 INITIATION WOULD BE ONLY ON ONE LIMB I.E. FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHILE IMPOSITION OF PENALTY ON THE OTHER LIMB I.E. CONCEALMENT OF INCOME. 6 . THE SANCTITY IN TERMS OF NATURAL JUSTICE WITH REGARD TO THIS PROPOSITION IS THAT THE ASSESSEE UNDER THE SCHEME OF WELFARE LEGISLATION WHICH IS E MBEDDED IN THE INCOME TAX ACT, 1961 SHOULD GET AN OPPORTUNITY TO PREPARE HIMSEL F FOR THE DEFENSE AS REGARDS TO THE EXACT CHARGE ON WHICH PENALTY IS IMPOSED UPON HIM U/S. 271(1)(C) OF THE ACT. IN THE INSTANT CASE, THE CHARGE IS VAGUE AND THEREFORE, LEVY OF PENALTY IS NOT WARRANTED. TAKING TOTALITY OF FACTS AND LEGAL SCENARIO INTO CONSIDERATION AND ON EXAMINATION OF DOCUMENTS ON RECORD ON THE VERY FA CT THAT PENALTY ISSUE IS AMBIGUOUS AND THE CHARGE IS NOT SPECIFIC , WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY FROM THE HANDS OF THE ASSESSEE. 7 . SINCE THE ASSESSEE GETS RELIEF ON THE LEGAL GROUND, ALL OTHER GROUNDS ON MERITS BECOMES ACADEMIC IN NATURE. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED ON 16 TH DAY OF OCTOBER , 201 9 . SD/ - SD/ - D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 16 TH OCTOBER, 2019. SB 5 ITA NO. 535 /NAG /20 14 A.Y. 2010 - 11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEAL) - I, NAGPUR. 4. THE CIT - 1, NAGPUR. 5 . , , / DR, ITAT, NAGPUR. 6. / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 6 ITA NO. 535 /NAG /20 14 A.Y. 2010 - 11 DATE 1 DRAFT DICTATED ON 16 . 10 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 16 .10 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER