Shashikant Balasaheb, Nashik V. Income-tax Officer,

ITA 563/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7364 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-09-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 27-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause
• Section: 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.563/PUN/2015 [ [ / ASSESSMENT YEAR : 2008-09 SHRI SHASHIKANT BALASAHEB TAKTE, ASHIRWAD S.T. COLONY, GANGAPUR ROAD, NASHIK 422 005. PAN : AAKPT1043J. . / APPELLANT V/S INCOME TAX OFFICER, WARD 1(2), NASHIK. . / RESPONDENT ASSESSEE BY : SHRI ABHAY AVCHAT REVENUE BY : SHRI AJAY MODI. / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL OF THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 2, NASHIK DATED 17.12.2014 FOR THE ASSESSMENT YEAR 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- / DATE OF HEARING : 20.09.2017 / DATE OF PRONOUNCEMENT: 16.10.2017 2 2.1 ASSESSEE IS AN INDIVIDUAL STATED TO BE LAND DEALER AND ESTATE AGENT. HE FILED HIS RETURN OF INCOME FOR A.Y. ON 06.11.2008 DECLARING TOTAL INCOME AT RS.49,48,920/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.31.12.2010 AND THE TOTAL INCOME WAS DETERMINED AT RS.74,83,293/- INTER-ALIA BY DISALLOWING INTEREST EXPENSES OF RS.25,34,373/-. ON THE AFORESAID DISALLOWANCE OF INTEREST, AO VIDE ORDER DT.31.10.2012 LEVIED PENALTY OF RS.3,44,991/- U/S 271(1)(C) OF THE ACT ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.17.12.2014 (IN APPEAL NO.NSK/CIT(A)- 2/122/12-13) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING OFFICER HAS ERRED IN LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF RS.3,91,930/- AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK HAS ERRED IN CONFIRMING THE SAME. 2. WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW OBTAINING, THE ASSESSING OFFICER HAS ERRED IN LEVYING THE PENALTY AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK HAS ERRED IN CONFIRMING THE SAME. 3. THE ORDER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, DATED 20.05.2014 OF THE ASSESSING OFFICER AND CONFIRMATION OF THE SAME BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK IN CASE OF THE ASSESSEE BAD IN LAW. 3. THE CASE FILE REVEALS THAT AGAINST THE ORDER OF LD.CIT(A) DT.17.12.2014, THE ASSESSEE WAS REQUIRED TO FILE APPEAL BEFORE 24.03.2015 BUT HOWEVER THERE WAS DELAY IN FILING THE APPEAL AND IT WAS FILED ON 27.04.2015 AND THUS THERE IS A DELAY OF 51 DAYS. BEFORE US, ASSESSEE HAS FILED AN AFFIDAVIT OF THE ASSESSEE WHEREIN THE REASONS WHICH LED TO DELAY IN FILING THE PRESENT APPEAL HAVE BEEN STATED AND 3 THE ASSESSEE HAS PRAYED FOR CONDONATION OF DELAY. LD.D.R. DID NOT SERIOUSLY OBJECT TO THE PRAYER OF CONDONATION. CONSIDERING THE AVERMENTS MADE BY THE ASSESSEE IN THE AFFIDAVIT, WE ARE OF THE VIEW THAT THE REASON FOR DELAYED FILING HAS BEEN EXPLAINED BY THE ASSESSEE AND THAT THERE WAS REASONABLE CAUSE FOR DELAY AND THEREFORE THE DELAY NEEDS TO BE CONDONED. WE ACCORDINGLY CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 4. BEFORE US, LD.A.R. SUBMITTED THAT ALL THE GROUNDS BEING INTER- CONNECTED AND ARE WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 5. BEFORE US, LD.A.R. SUBMITTED THAT ASSESSEE IS AN INDIVIDUAL STATED TO BE LAND DEALER AND ESTATE AGENT. HE SUBMITTED THAT WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT, AO HAD MADE ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES AMOUNTING TO RS.25,34,373/- AND DETERMINED THE TOTAL INCOME AT RS.74,83,293/- AS AGAINST THE INCOME OF RS.49,48,920/- DECLARED BY THE ASSESSEE. OUT OF THE TOTAL ADDITIONS MADE, AO LEVIED PENALTY OF RS.3,49,991/- U/S 271(1)(C) OF THE ACT ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE ADDITION OF RS.11,49,970/- MADE ON ACCOUNT OF ALLEGED EXCESS CLAIM OF INTEREST PAYMENT. HE SUBMITTED THAT WHILE PASSING THE ASSESSMENT ORDER, AO HAS NOT RECORDED ANY SATISFACTION FOR LEVY OF PENALTY BUT WHILE PASSING THE PENALTY ORDER U/S 271(1)(C) OF THE ACT, THE AO HAS LEVIED PENALTY FOR CONCEALMENT OF INCOME AS WELL AS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HE, RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (ITA NO.1154 OF 2014 ORDER 4 DT.05.01.2017), SUBMITTED THAT WHEN INITIATION OF PENALTY IS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND PENALTY WAS LEVIED ON CONCEALMENT OF INCOME, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO ASSESSEE, PENALTY U/S 271(1)(C) CANNOT BE LEVIED. HE THEREFORE SUBMITTED THAT PENALTY LEVIED BY AO BE DELETED. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE, PENALTY HAS BEEN LEVIED ON THE DISALLOWANCE OF INTEREST EXPENSES OF RS.11,49,970/-. THE PERUSAL OF ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT REVEALS THAT AO HAD INITIATED PENALTY PROCEEDING BUT NO SATISFACTION WAS RECORDED. THEREAFTER IN THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT, AO HELD THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND HAD CONCEALED THE INCOME U/S 271(1)(C) OF THE ACT. IT IS A SETTLED LAW THAT WHILE LEVYING PENALTY FOR CONCEALMENT, THE AO HAS TO RECORD SATISFACTION AND THEREAFTER COME TO A FINDING IN RESPECT OF ONE OF THE LIMBS, WHICH IS SPECIFIED UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SATISFACTION WHILE COMPLETING THE ASSESSMENT AS TO WHETHER THE ASSESSEE HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOTICE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER THEREAFTER HAS TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR NON-SATISFACTION OF EITHER OF THE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAS TO COME TO A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. 5 THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN ITA NO.1154 OF 2014 WITH OTHER ITA NOS.953 OF 2014, 1097 OF 2014 AND 1226 OF 2014, VIDE JUDGMENT DATED 05.01.2017 HELD THAT WHERE INITIATION OF PENALTY IS ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 7. IN THE PRESENT CASE, AS NOTED HEREINABOVE, IT IS SEEN THAT THE AO HAS NOT RECORDED ANY SATISFACTION AND FURTHER LEVIED PENALTY ON BOTH THE LIMBS I.E., FOR CONCEALMENT OF INCOME AND FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. CONSIDERING THE AFORESAID FACTS IN THE LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SOMSON PERINCHERY (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE THE BASIC CONDITION FOR LEVY OF PENALTY HAS NOT BEEN FULFILLED AND THAT THE PENALTY ORDER SUFFERS FROM NON-EXERCISING OF JURISDICTION POWER OF AO AND THEREFORE PENALTY ORDER CANNOT BE UPHELD. WE ACCORDINGLY SET ASIDE THE PENALTY ORDER PASSED BY AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 16 TH DAY OF OCTOBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 16 TH OCTOBER, 2017. YAMINI 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5 6. CIT(A)-2, NASHIK. CIT-2, NASHIK. , , / DR, ITAT, B PUNE; [ / GUARD FILE. / BY ORDER // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE.