Deputy Commissioner of Income-tax, V. Shri Vivek Diwakar Chaudhari, Jalgaon

ITA 54/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0888 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 06-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , ! ' , #$ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 54/PN/2014 #% & '& / ASSESSMENT YEAR : 2006-07 THE DY. CIT, CIRCLE - 1, JALGAON . / APPELLANT V/S SHRI VIVEK DIWAKAR CHAUDHARI, GAJANAN HEART HOSPITAL, 370, ONKAR NAGAR, JALGAON 425001 PAN NO. ACVPC2417Q . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK DEPARTMENT BY : SHRI B.C. MALAKAR ( / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE REVENUE ASSAILING THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK DATED 10-10-2013 FOR THE ASSESSMENT YEAR 2006-07. IN APPE AL, THE REVENUE HAS IMPUGNED THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE PENALTY OF RS.12,03,498/- LEVIED U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) 2. A SURVEY ACTION U/S.133A WAS CARRIED OUT IN THE CAS E OF ASSESSEE ON 04-10-2006. DURING THE COURSE OF SURVEY THE ASSESSE E HAD DECLARED / DATE OF HEARING :14.09.2015 / DATE OF PRONOUNCEMENT: 06.11.2015 2 ITA NO. 54/PN/2014, A.Y. 2006-07 ADDITIONAL INCOME OF RS.15 LAKHS, 35 LAKHS AND 35 LAKHS IN THE A. YRS. 2005-06, 2006-07, & 2007-08 RESPECTIVELY. THE A SSESSEE FILED ORIGINAL RETURN OF INCOME DECLARING TOTAL INCOME OF RS.9,76,266/ -. POST SURVEY, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 28- 02-2007 DECLARING TOTAL INCOME OF RS.44,76,892/-. THE AO AFTER MAKING ADDITIONS/DISALLOWANCE ON ACCOUNT OF CERTAIN EXPENDITURES CLAIMED BY THE ASSESSEE ASSESSED THE TOTAL INCOME AT RS.44,96,685/- . THE ASSESSING OFFICER AFTER MAKING SUCH ADDITIONS/DISALLOWANCE DID NOT INITIATE ANY PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2007-08 THE AS SESSING OFFICER NOTICED THAT THE APPELLANT HAD CREDITED AN AMOUNT OF RS.44,96,897/- IN HIS BOOKS OF ACCOUNT. THE ASSESSEE EXP LAINED THAT THE ABOVE MENTIONED AMOUNT INTRODUCED IN THE A.Y. 2007-0 8 IS OUT OF UNDISCLOSED RECEIPTS OF RS.15 LAKHS AND RS.35 LAKHS DECLARED IN A. YRS. 2005-06 AND 2006-07, RESPECTIVELY. THE CIT(A) WHILE ADJUD ICATING THE QUANTUM APPEALS FOR A.Y. 2007-08 ACCEPTED THE CONTENTI ONS OF THE ASSESSEE. HOWEVER, VIDE HIS ORDER DATED 25-11-2011 THE COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO INIT IATE PENALTY PROCEEDINGS IN THE A.Y. 2006-07 BY APPLYING THE P ROVISIONS OF EXPLANATION 2 TO SECTION 271(1)(C) OF THE ACT. ON THE DIRECT IONS OF THE COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSING OFFICER IN ITIATED PENALTY PROCEEDINGS AND VIDE ORDER DATED 28-06-2011 LEV IED THE PENALTY OF RS.12,03,498/-. AGGRIEVED BY THE PENALTY ORDER U/S. 271(1)(C), THE ASSESS EE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) BY PLACING RELIANCE ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CI T VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565 (KAR N) DELETED THE PENALTY VIDE IMPUGNED ORDER. NOW, THE REVENUE IS IN A PPEAL 3 ITA NO. 54/PN/2014, A.Y. 2006-07 AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE PENALTY. 3. SHRI B.C. MALAKAR REPRESENTING THE DEPARTMENT SUBMITTE D THAT THE POWERS OF COMMISSIONER OF INCOME TAX (APPEALS) ARE CO -TERMINUS WITH THAT OF THE ASSESSING OFFICER. THEREFORE, THE COMMISSION ER OF INCOME TAX (APPEALS) HAS RIGHTLY INITIATED PENALTY PROCEED INGS AGAINST THE ASSESSEE FOR THE A.Y. 2006-07. THE COMMISSIONER OF IN COME TAX (APPEALS) BEFORE DIRECTING THE ASSESSING OFFICER TO ISSUE NOTIC E AND INITIATE PENALTY PROCEEDINGS HAS RECORDED SATISFACTION. THE ASSESSEE HAS ACCEPTED THE QUANTUM ADDITION IN THE IMPUGNED ASSES SMENT YEAR, THEREFORE, IT IS A FIT CASE FOR LEVY OF PENALTY. THE LD. DR VE HEMENTLY SUPPORTED THE ORDER U/S.271(1)(C) LEVYING PENALTY. 4. ON THE OTHER HAND SHRI NIKHIL PATHAK APPEARING ON BEHA LF OF THE ASSESSEE SUBMITTED THAT A PERUSAL OF THE ASSESSMENT OR DER DATED 18- 06-2008 FOR THE A.Y. 2006-07 SHOWS THAT THE ASSESSING OFFICER HAS NOT INITIATED ANY PENALTY PROCEEDINGS ON THE UNDISCLOSED INCOME . THE COMMISSIONER OF INCOME TAX (APPEALS) IN QUANTUM APPEAL FOR THE A.Y. 2007-08 ACCEPTED THE CONTENTIONS OF THE ASSESSEE, GIVES THE BENEFIT OF TELESCOPING BUT HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO INITIATE PENALTY PROCEEDINGS U/S. 271(1)(C) BY INVOKING EXPLANATION 2 FOR THE A.Y. 2006-07. THE LD. AR SUBMITTED THAT IN THE FIRST INSTAN CE PROVISIONS OF EXPLANATION 2 ARE NOT APPLICABLE IN THE PRESEN T SET OF FACTS. SECONDLY, THE PENALTY HAS TO BE INITIATED AND LEVIED BY THE SAME AUTHORITY. IN SUPPORT HIS SUBMISSIONS THE LD. AR PLACED R ELIANCE ON THE DECISION RENDERED IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA). THE LD. AR VEHEMENTLY SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND PRAYED FOR DISMISSIN G THE APPEAL OF REVENUE. 4 ITA NO. 54/PN/2014, A.Y. 2006-07 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO PERUSED THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA). THE ASSESSEE FILED REVISED RETURN OF INCOME FOR THE A.Y. 2006-07 DECLARING INCOME OF RS.44,76,266/- WHICH INCLUDED ADDITIONAL INCOME OF RS.35 LAKHS DECLARED DURING SURVEY ACTION. THE ASSESSING OFFICER ACCEP TED THE INCOME RETURNED BY THE ASSESSEE AND DID NOT INITIATE PE NALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. IN APPEAL AGAINST T HE ASSESSMENT ORDER FOR A.Y. 2007-08 THE COMMISSIONER OF INCOME TAX (AP PEALS) DIRECTED THE ASSESSING OFFICER TO INITIATE PENALTY PROCEEDIN GS IN A.Y. 2006-07 BY APPLYING THE PROVISIONS OF EXPLANATION2 TO SECTION 271 (1)(C). THIS FACT IS EVIDENT FROM THE PERUSAL OF ORDER U/S. 271(1)(C) D ATED 28- 06-2011 VIDE WHICH THE ASSESSING OFFICER HAS LEVIED PENALTY OF RS.12,03,498/- IN A.Y. 2006-07. THE RELEVANT EXTRACT OF THE ORDER READS AS UNDER: IN THIS CASE, THE ASSESSEE WAS IN APPEAL BEFORE TH E HON. CIT(A)-II, NASHIK AGAINST THE ASSESSMENT ORDER U/S.143(3) DATED 31-12 -2009 FOR THE A.Y. 2007- 08. WHILE DISPOSING THE SAID APPEAL, THE HONBLE C IT(A) VIDE HIS ORDER DATED 25-11-2011 DIRECTED TO INITIATE PENALTY PROCEEDING U/S. 271(1)(C) FOR A.Y. 2006-07 AS PER THE PROVISION OF EXPLANATION 2 TO SE CTION 271(1)(C) AS THE ASSESSEE HAS EXPLAINED SOURCE OF CASH INTRODUCED IN A.Y. 2007-08 OUT OF UNDISCLOSED INCOME OF RS.35,00,000/- OF THE PRECEDI NG YEAR. IN VIEW OF THE ABOVE, WHILE GIVING EFFECT TO THE CIT(A)-II NASHIK S ORDER FOR A.Y. 2007-08, THE NOTICE U/S. 271(1)(C) FOR A.Y. 2006-07 HAS BEEN ISS UED ON 19-12-2011. 6. A BARE READING OF PROVISIONS OF SECTION 271(1) MAKES IT C LEAR THAT THE OFFICER WHETHER IT BE ASSESSING OFFICER OR COMMISSIONER (APPEALS) IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT IF SATISFIED T HAT THE PERSON HAS CONCEALED PARTICULARS OF HIS INCOME OR HAS FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME MAY DIRECT SUCH PERSON TO PAY PENALTY. THUS, BEFORE INITIATING PENALTY PROCEEDINGS THE OFFICER CONC ERNED SHOULD BE SATISFIED. IT IS THE SATISFACTION OF THE OFFICER INITIATING P ENALTY PROCEEDINGS WHICH IS ESSENTIAL AND PREREQUISITE FOR LEVY OF PENALTY. 5 ITA NO. 54/PN/2014, A.Y. 2006-07 7. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJU NATHA COTTON AND GINNING FACTORY (SUPRA) HAS LAID DOWN GENERAL PRINCIPLES RELATING TO LEVY OF PENALTY. THE HONBLE HIGH COURT AFTER D ETAILED DISCUSSION HAS EXPLAINED AS TO WHO CAN INITIATE PENALTY PR OCEEDINGS. THE RELEVANT EXTRACT OF THE JUDGMENT IN THE CASE OF MAN JUNATHA COTTON AND GINNING FACTORY (SUPRA) IS AS UNDER : WHO INITIATES PENALTY PROCEEDINGS 54. AS IS CLEAR FROM THE WORDS IN SECTION 271, IF T HE ASSESSING OFFICER OR THE COMMISSIONER OF APPEALS OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PE RSON HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF HIS INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PEN ALTY THE AMOUNT MENTIONED THEREIN. THEREFORE, THE PENALTY PROCEEDIN GS HAVE TO BE INITIATED BY THE PERSON WHO IS SATISFIED ABOUT THE CONCEALMENT O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE COURSE OF A NY PROCEEDINGS UNDER THIS ACT. IN A GIVEN CASE IF THE ASSESSING OFFICER HAS N OT. RECORDED ANY SATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS, IN APPEAL OR IN REVISION, THE AUTHORITY IS SATISFIED REGARDING CONC EALMENT AND FURNISHING OF INACCURATE PARTICULARS, THEN IT IS THAT AUTHORITY W HICH IS SATISFIED ABOUT THE SAID CONCEALMENT OR FURNISHING OF INACCURATE PARTIC ULARS HAS TO INITIATE PENALTY PROCEEDINGS AND THEN PASS ORDERS IN RESPECT OF THE PENALTY TO BE IMPOSED. THE IMPOSITION OF PENALTY MAY BE DONE AT T HE STAGE OF ASSESSMENT OR AT THE STAGE OF AN APPEAL. AT THE ASSESSMENT STAGE, THE ASSESSING OFFICER HAS TO ISSUE A NOTICE TO THE ASSESSEE TO SHOW CAUSE WHY A PENALTY SHOULD NOT BE IMPOSED AND THIS NOTICE HAS TO BE ISSUED IN THE COU RSE OF THE ASSESSMENT PROCEEDINGS. THE IMPOSITION OF THE PENALTY HAS ALSO TO BE DONE BY THE ASSESSING OFFICER BUT THIS CAN BE DONE WITHIN THE T IME PRESCRIBED IN SECTION 275. 55. IN THE CASE OF INITIATION OF PENALTY PROCEEDING S DURING THE COURSE OF APPEAL OR REVISION PROCEEDINGS, THE AUTHORITY WHO HAS TO B E SATISFIED IS THE AUTHORITY IN WHOSE PROCEEDINGS THE ISSUE IS EXAMINED AND NOT A NY OTHER AUTHORITY. THE LEVY OF PENALTY HAS ALSO TO BE DONE BY THE SAME OFF ICER AS THE LANGUAGE USED IN THE LATER PART OF SECTION 271 IS THAT 'HE MAY DIREC T THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY'. THE AUTHORITY IN WHICH PROCEEDI NGS, THERE IS SATISFACTION OF CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME ALONE CAN LEVY THE PENALTY AND NOT ANY OTHER AUTHORITY. IF THE COMMISSIONER (APPEALS) IN THE COURSE OF APPEAL PROCEEDINGS IS SATISFIED THEN I T IS THE COMMISSIONER (APPEALS) WHO HAVE TO INITIATE THE PENALTY PROCEEDI NGS AND ALSO COMPLETE THE SAME BY LEVYING THE PENALTY. HE CANNOT PERMIT THE ASSESSING AUTHORITY TO LEVY PENALTY. (EMPHASIS SUPPLIED BY US) THUS, FROM THE READING OF THE AFORESAID JUDGMENT IT IS UNAMBIGUOUSLY CLEAR THAT, IF THE COMMISSIONER (APPEALS) HAS INITIATED 6 ITA NO. 54/PN/2014, A.Y. 2006-07 THE PENALTY PROCEEDINGS, THE PENALTY HAS TO BE LEVIED BY HIM ONLY AND HE CANNOT DIRECT THE ASSESSING OFFICER TO LEVY PENALTY. 8. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) IN DELETING THE PENALTY IN THE PRESEN T CASE. THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ARE UPHE LD AND THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. ORDER PRONOUNCED ON FRIDAY, THE 06 TH DAY OF NOVEMBER, 2015. SD/- SD/- ( . . ! / R.K. PANDA) ( ' # / VIKAS AWASTHY) $# / ACCOUNTANT MEMBER & ' $# / JUDICIAL MEMBER / PUNE; ($ / DATED : 06 TH NOVEMBER, 2015 SATISH/RK ()*#+,!-!'+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ) ) ( / THE CIT(A)-2, NASHIK 4. ) / THE CIT-2, NASHIK 5. ',- ''./ , ./ , 01 , / DR, ITAT, B BENCH, PUNE. 6. -!2 34 / GUARD FILE. // ' ' // TRUE COPY// $5 / BY ORDER, '6 .1 / PRIVATE SECRETARY, ./ , / ITAT, PUNE