Shrivallabh V.Shete, Pune V. Deputy Commissioner of Income-tax, Circle - 5, Pune

ITA 539/PUN/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5498 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-05-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 26-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHOR PHADKE REVEN
• Assessee Lawyers: ARISE OUT OF SEPARA TE S DATED
• Keywords: Question of law
• Section: 271(1)(c); 143(3); 274; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, B PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER . / ITA NO.538 & 539/PUN/2018 / ASSESSMENT YEARS : 2009-10 & 2011-12 SHRIVALLABH V. SHETE, SHREE ASSOCIATES, 24, BHAGWATI COMPLEX, 4 TH FLOOR, ABOVE BHARTI SAH. BANK LTD., PAN CARD CLUB ROAD, BANER, PUNE 411 045 PAN : AVJPS3017K VS. DCIT, CIRCLE-5, PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THESE TWO APPEALS BY THE ASSESSEE ARISE OUT OF THE SEPAR ATE ORDERS DATED 30-08-2017 & 13-09-2017 CONFIRMING PENALTY OF RS.81,950/- IN RELATION TO THE ASSESSMENT YEAR 2009-10 AN D RS.29,50,876/- IN RELATION TO THE ASSESSMENT YEAR 2011-12 U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALS O CALLED `THE ACT). 2. IT IS SEEN THAT THE ASSESSMENT ORDER FOR THE A.Y. 2009- 10 WAS PASSED U/S.144 OF THE ACT MAKING AN ADDITION OF RS.2,73,17 0/- TOWARDS LOSS ON SALE OF CAR WHICH WAS CLAIMED BY THE ASSE SSEE BY ASSESSEE BY SHRI KISHOR PHADKE REVENUE BY SHRI MAHADEVAN A.M. KRISHANAN DATE OF HEARING 17-05-2021 DATE OF PRONOUNCEMENT 18-05-2021 ITA NO.538 & 539/PUN/2018 SHRIVALLABH V. SHETE 2 DEBITING HIS PROFIT AND LOSS ACCOUNT, BUT NOT ALLOWED BY THE ASSESSING OFFICER (AO) FOR THE REASON OF NO SEPARATE ALLO WABILITY OF SUCH LOSS AFTER THE ADVENT OF THE SCHEME OF BLOCK OF ASS ETS. THEREAFTER, PENALTY WAS IMPOSED U/S.271(1)(C) WITH REFERE NCE TO THIS ADDITION, WHICH CAME TO BE AFFIRMED IN THE FIRST APPEAL. 3. FOR THE A.Y. 2011-12, THE ASSESSEE CLAIMED EXEMP T AGRICULTURAL INCOME OF RS.1,01,62,920/-. IN MAKING THE ASSESSMENT U/S.144, THE AO MADE ADDITION FOR SUCH A SUM. THEREAFTER, PENALTY WA S IMPOSED BY THE AO U/S.271(1)(C) WITH REFERENCE TO THIS ADDITION, WHIC H CAME TO BE COUNTENANCED IN THE FIRST APPEAL. THE ASSESSEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH THE VIRTUAL C OURT AND SCANNED THROUGH THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS RAISED THE FOLLOWING TWO ADDITIONAL GROUNDS IN BOTH THE APPE ALS: 4. APPELLANT CONTENDS THAT THE LEARNED CIT(A)-3, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY U/S.271(1)(C ) OF THE ITA, 1961; LEVIED BY THE LEARNED AO, WITHOUT APPRECIATING THAT, THE LEARNED AO HAS NOT MENTIONED ANY SPECIFIC CHARGE OR LIMB FOR INITIATING PENALTY U/S.271(1)(C) OF THE ITA, 1961 IN ASSESSMENT ORDER. 5. APPELLANT CONTENDS THAT THE LEARNED CIT(A)-3, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY U/S.271(1)(C ) OF THE ITA, 1961 LEVIED BY THE LEARNED AO, WITHOUT APPRECIATING THAT, THE NOTICE U/S.274 R.W.S.271(1)(C) DATED 25/03/2014, REFERS TO BOTH THE LIMBS OF SECTION 271(1)(C) OF THE ITA, 1961. ITA NO.538 & 539/PUN/2018 SHRIVALLABH V. SHETE 3 5. THE HONBLE SUPREME COURT IN NATIONAL THERMAL POWER COMPANY LTD. VS. CIT (1998) 229 ITR 383 (SC) HAS OBSERVED THAT THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TA XING AUTHORITIES IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JU DICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUN AL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUC TION IS DENIED, WE DO NOT SEE ANY REASON WHY THE ASSESSEE SHOU LD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESP ECT OF THAT ITEM. ANSWERING THE QUESTION POSED BEFORE IT IN AFFIRMATIVE , THEIR LORDSHIPS HELD THAT ON THE FACTS FOUND BY THE AUTHORITIES BELOW , IF A QUESTION OF LAW ARISES (THOUGH NOT RAISED BEFORE THE AUTHOR ITIES) WHICH HAS BEARING ON THE TAX LIABILITY OF THE ASSESSEE, THE TR IBUNAL HAS JURISDICTION TO EXAMINE THE SAME. HAVING GONE THROUGH THE SUBJECT MATTER OF THE ADDITIONAL GROUNDS TAKEN BY THE ASSESSE E, IT IS DISCERNIBLE THAT THEY RAISE A PURE QUESTION OF LAW. WE, THEREF ORE, ADMIT THE SAME. 6. THE CASE OF THE ASSESSEE IS THAT THE AO DID NOT STRIKE O FF THE IRRELEVANT LIMB IN THE NOTICE ISSUED U/S.274 R.W.S. 271(1)(C) OF THE ACT. WE HAVE EXAMINED THE NOTICE U/S.274 FOR THE ASSESSME NT YEAR ITA NO.538 & 539/PUN/2018 SHRIVALLABH V. SHETE 4 2009-10, WHOSE COPY HAS BEEN PLACED AT PAGE 1 OF THE PAPER BOOK IN WHICH BOTH THE LIMBS ARE PRESENT, NAMELY, HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF YOUR INCOME . NONE OF THEM WAS STRUCK OFF BY THE AO. AS AGAINST THAT, THE PENALTY HAS ACTUALLY BEEN IMPOSED ON ACCOUNT OF CLAIMING LOSS ON SALE OF ASSET, WHICH FALLS ONLY UNDER THE SECOND LI MB, NAMELY, FURNISHING OF INACCURATE PARTICULARS OF INCOME . 7. SIMILAR IS THE POSITION FOR THE ASSESSMENT YEAR 2011 -12. A COPY OF NOTICE U/S.274 HAS BEEN PLACED ON RECORD. THE FIRST NOTICE U/S.274 OF THE ACT IS DATED 25-03-2014 AND THE SECOND IS DATED 23- 07-2014 BOTH FOR THE YEAR UNDER CONSIDERATION. IN BOTH THE NOTICES, THE AO HAS NOT STRUCK OFF EITHER OF THE LIMBS AND B OTH THE LIMBS ARE PRESENT. AS AGAINST THAT, AGAIN THE POINT IS THAT THE ADDITION IS BECAUSE OF THE DENIAL OF STATUS OF AGRICULTURAL INCO ME CLAIMED BY THE ASSESSEE. THE PENALTY, IF ANY, ON THIS SCOR E COULD HAVE BEEN IMPOSED UNDER THE SECOND LIMB, NAMELY, FURNISHING OF INACCURATE PARTICULARS OF INCOME . IT IS EVIDENT THAT FOR BOTH THE YEARS UNDER CONSIDERATION THAT THE AO DID NOT MENTION CORRECT CHARGE IN THE NOTICES U/S 274 OF THE ACT. HE ALLOWED TO RE MAIN PRESENT BOTH THE CHARGES ENVISAGED U/S 271(1)(C) IN HIS N OTICES U/S 274 OF THE ACT. RECENTLY, THE FULL BENCH OF HONBLE BOMBAY HIGH ITA NO.538 & 539/PUN/2018 SHRIVALLABH V. SHETE 5 COURT IN MOHD. FARHAN A. SHAIKH VS. DY.CIT (2021) 125 TAXMANN.COM 253 (BOM) HAS CONSIDERED THIS VERY ISSUE. ANSWERING THE QUESTION IN AFFIRMATIVE, THE FULL BENCH HELD THAT A DEFECT IN NOTICE OF NOT STRIKING THE RELEVANT WORDS VITIATES THE PENALTY EVE N THOUGH THE AO HAD PROPERLY RECORDED THE SATISFACTION FOR IM POSITION OF PENALTY IN THE ORDER U/S 143(3) OF THE ACT. IN ANOTHER JUDGMENT, THE HONBLE BOMBAY HIGH COURT IN PR.CIT VS. GOLDEN PEACE HOTELS AND RESORTS (P.) LTD. (2021) 124 TAXMANN.COM 248 (BOM) ALSO TOOK SIMILAR VIEW THAT WHERE INAPPLICABLE PORTIONS WERE NOT STRUCK OFF IN THE PENALTY NOTICE, THE PENALTY WAS VITIATED. THE SLP OF THE DEPARTMENT AGAINST THIS JUDGMENT HAS RECENTLY BEEN DISMISSED BY THE HON'BLE SUPREME COURT IN PR.CIT VS. GOLDEN PEACE HOTELS AND RESORTS (P.) LTD. (2021) 124 TAXMANN.CO M 249 (SC). 8. IN VIEW OF THIS OVERWHELMING POSITION, IT IS CLEAR THAT WHERE THE CHARGE IS NOT PROPERLY SET OUT IN THE NOTICE U/S 274 VIZ., BO TH THE LIMBS STAND THEREIN WITHOUT STRIKING OFF OF THE INAPPLICABLE LIMB, BUT THE PENALTY HAS, IN FACT, BEEN LEVIED FOR ONE OF THE TWO, S UCH A PENALTY ORDER GETS VITIATED. TURNING TO THE FACTS OF THE EXTANT CASES, WE FIND FROM THE NOTICES U/S 274 OF THE ACT THAT THE AO DID NO T STRIKE OUT THE IRRELEVANT LIMB THERE FROM. RESPECTFULLY FOLLOWING THE ITA NO.538 & 539/PUN/2018 SHRIVALLABH V. SHETE 6 FULL BENCH JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, WE OVERTURN THE IMPUGNED ORDERS ON THIS LEGAL ISSUE AND DIRECT TO DELETE THE PENALTY FOR BOTH THE YEARS. 9. IN THE RESULT, THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MAY, 2021. SD/- SD/- ( S.S. VISWANETHRA RAVI ) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 18 TH MAY, 2021 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-3, PUNE 4. 5. 6. THE PCIT-2, PUNE DR, ITAT, B BENCH, PUNE / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE ITA NO.538 & 539/PUN/2018 SHRIVALLABH V. SHETE 7 DATE 1. DRAFT DICTATED ON 17-05-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 17-05-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *