Shri Harishbhai K.Soni, Dist.Panchmahal V. The Income tax Officer,Ward-2, Godhra

ITA 577/AHD/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9134 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-09-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 07-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH SENIOR
• Section: 271(1)(c)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRI P K BANSAL AND MAHAVIR SINGH) ITA NO.577/AHD/2007 (ASSESSMENT YEAR: 2002-03) SHRI HARISHBHAI K SONI, MAIN BAZAR, VEJALPUR, TALUKA: KALOL, DISTRICT: PANCHMAHAL V/S THE INCOME-TAX OFFICER, WARD-2, GODHRA [APPELLANT] [RESPONDENT] PAN NO.: AHAPS 2668 B APPELLANT BY :- SHRI SAKAR SHARMA RESPONDENT BY:- SMT. NEETA SHAH, SENIOR DR O R D E R PER P K BANSAL (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( A) DATED 01-11- 2006 BY WHICH THE CIT(A) HAS CONFIRMED THE LEVY OF PENALTY BY THE AO U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 [ THE ACT FOR SHORT]. 2 AT THE OUTSET, THE LEARNED AR REFERRED TO THE PE NALTY ORDER PASSED U/S 271(1)(C) OF THE ACT AND POINTED O UT THAT THE AO HAS LEVIED THE PENALTY U/S 271(1)(C) FOR CONCEALING TRUE PARTICULARS OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME. THIS ISSUE IS DIRECTLY COVERED BY THE DECIS ION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF NEW SORATHIA 2 ENGINEERING CO. V CIT (2006) 282 ITR 642 (GUJ), IN WHICH THE HONBLE HIGH COURT HAS CLEARLY HELD THAT IT IS INCU MBENT UPON THE AO TO STATE WHETHER PENALTY HAS BEEN LEVIED FOR CON CEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE OR WHETHER AN Y INACCURATE PARTICULARS OF INCOME HAD BEEN FURNISHED BY THE ASS ESSEE. THE AO IN THIS CASE HAS NOT CLEARLY LAID DOWN WHAT DEFE CT HAS BEEN COMMITTED BY THE ASSESSEE. THEREFORE, PENALTY MUST BE DELETED. 3 THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE AUTHORITIES BELOW AND CONTENDED THAT SINCE T HE ADDITION HAS BEEN SUSTAINED IN VIEW OF EXPLANATION 1 TO SECTION 271(1)(C), IT IS DEEMED THAT THE ASSESSEE HAS SUBMITTED INACCURATE P ARTICULARS OF INCOME. THE AO HAS RIGHTLY LEVIED THE PENALTY. 4 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. WE HAVE GONE TH ROUGH THE ORDER OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. V CIT (2006) 282 ITR 642 ( GUJ) . WE FIND THAT IN THIS CASE THE HONBLE HIGH COURT HAS H ELD AS UNDER:- IT IS INCUMBENT UPON THE ASSESSING OFFICER TO STAT E WHETHER PENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF I NCOME HAD BEEN FURNISHED BY THE ASSESSEE. WHERE THE TRIBUNAL FAILS TO TAKE INTO CONSIDERATION AND DEAL WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT IT WOULD CONSTITUTE AN ERROR IN LAW WHICH GOES TO THE VERY BASIS OF THE CONTROVE RSY INVOLVED. AN ADDITION OF RS.61,000 WAS MADE TO THE INCOME OF THE ASSESSEE IN THE ASSESSMENT YEAR 1981-82. PENALTY WAS IMPOSED. T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONE R (APPEALS) WHO 3 UPHELD THE PENALTY BY OBSERVING . . . THEREFORE, R S.61,000 CLEARLY IS INCOME WHICH IS CONCEALED OR IN WHICH INACCURATE PA RTICULARS OF INCOME HAVE BEEN FURNISHED. THE ASSESSEE, THEREFOR E, FILED SECOND APPEAL BEFORE THE TRIBUNAL BUT DID NOT SUCCEED. ONE OF THE CONTENTIONS RAISED BEFORE THE TRIBUNAL WAS BASED ON A DECISION OF THE COURT IN THE CASE OF CIT V. MANU ENGINEERING WORKS [1980] 122 IT R 306 (GUJ). IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE PE NALTY COULD NOT BE SUSTAINED IN THE ABSENCE OF A CLEAR-CUT FINDING BY THE ASSESSING OFFICER. THE TRIBUNAL DID NOT DEAL WITH THE CONTENT ION AND UPHELD THE ORDER OF PENALTY. ON A REFERENCE: HELD, THAT THE PENALTY ORDER AND THE ORDER OF THE C OMMISSIONER (APPEALS) SHOWED THAT NO CLEAR-CUT FINDING HAD BEEN REACHED. THE TRIBUNAL HAD FAILED TO APPRECIATE THIS LEGAL ISSUE. THE RATIO IN CIT V. MANU ENGINEERING WORKS [1980] 122 ITR 306 (GUJ) WAS APPLICABLE AND THE ORDER OF PENALTY COULD NOT BE UPHELD BY THE TRIBUNAL. THE ORDER WAS INVALID. CIT V MANU ENGINEERING WORKS (1980) 122 ITR 306 (GU J) FOLLOWED. A M SHAH AND CO. V CIT (1999) 238 ITR 415 (GUJ) AND CIT V VINAYCHAND HARILAL (1979) 120 ITR 752 (GUJ) REFER RED TO. WE NOTED FROM THE PENALTY ORDER THAT THE AO IN THIS CASE HAS NOT CLEARLY LAID DOWN WHETHER THE ASSESSEE HAS CONCEALE D THE PARTICULARS OF INCOME OR WHETHER THE ASSESSEE HAS F URNISHED INACCURATE PARTICULARS OF HIS INCOME. THE AO HAS LE VIED THE PENALTY BY OBSERVING THAT HE IS CONVINCED THAT THE ASSESSEE IS LIABLE TO PENALTY U/S 271(1)(C) OF THE ACT FOR CONC EALING TRUE PARTICULARS OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF HIS INCOME. THE HONBLE HIGH COURT IN THE AFORESAID DEC ISION HAS CLEARLY LAID DOWN THAT THE AO IS BOUND TO STATE WHE THER THE PENALTY IS LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME OR 4 WHETHER IT HAS BEEN LEVIED FOR FILING INACCURATE PA RTICULARS OF INCOME BY THE ASSESSEE. THUS, IN OUR VIEW, THE AFOR ESAID DECISION IS DULY APPLICABLE TO THE FACTS OF THE CASE. RESPEC TFULLY FOLLOWING THE AFORESAID DECISION OF THE HONBLE HIGH COURT, W E DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 5 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 17-09- 2009 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (P K BANSAL) ACCOUNTANT MEMBER DATE : 17-09-2009 COPY OF THE ORDER FORWARDED TO : 1. SHRI HARISHBHAI K SONI, MAIN BAZAR, VEJALPUR, TA LUKA: KALOL, DISTRICT: PANCHMAHAL 2. THE ITO, WARD-2, GODHRA 3. CIT CONCERNED 4. CIT(A)-VI, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABA