Vijay Mohan Harde, Ahmednagar V. Assistant Commissioner of Income tax, Ahmednagar

ITA 588/PUN/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5507 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-05-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF DATED PASSED
• Keywords: Capital Gains
• Section: 271(1)(c); 143(3); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, A PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.588/PUN/2017 / ASSESSMENT YEAR : 2011-12 VIJAY MOHAN HARDE, A/P.DEOLALI, TAL. PRAVRA, DIST. RAHURI PAN : ABEPH4172K VS. ACIT, AHMEDNAGAR APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER DATED 04-11-2016 PASSED BY THE CIT(A)-2, PUNE CONFIRMING THE PENALTY OF RS.31,42,000/- IMPOSED BY THE ASSESSING OFFICER (AO) U NDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R ALSO CALLED `THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2011-12. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E HAS BEEN THE PROPRIETOR OF M/S. FOOD LAND AGRO (INDIA) ENGA GED IN THE BUSINESS OF PROCESSING AND SALE OF MILK. THE RETURN OF IN COME WAS FILED DECLARING TOTAL INCOME OF RS.15,11,719/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD ASSESSEE BY SHRI S.N. PURANIK REVENUE BY SHRI S.P. WALIMBE DATE OF HEARING 13-05-2021 DATE OF PRONOUNCEMENT 17-05-2021 ITA NO.588/PUN/2017 VIJAY MOHAN HARDE 2 ENTERED INTO AN AGREEMENT WITH M/S. PRABHAT DIARY PVT. LTD. FO R TRANSFERRING ALL THE ASSETS AND LIABILITIES OF ITS BUSINESS FOR A TOTAL CONSIDERATION OF RS.1,36,06,044/-. THE AO OBSERVED THA T THE ASSESSEE HAS TRANSFERRED THE ENTIRE PROPRIETARY CONCERN TO M/S. PRABHAT DIARY PVT. LTD. AND DID NOT DISCLOSE THE CAPITAL GAINS AR ISING THEREFROM. THUS, INVOKING SECTION 50B OF THE ACT, HE MAD E AN ADDITION OF RS.91,43,141/-. SUBSEQUENTLY, A PENALTY OF RS.31,42,000/- WAS IMPOSED ON THIS SCORE BY THE AO U /S.271(1)(C) AFTER ISSUING NOTICE U/S 274 OF THE ACT. THE LD. CIT(A), A FTER ELABORATELY DISCUSSING THE ISSUE, UPHELD THE PENALTY. AGGRIEV ED THEREBY, THE ASSESSEE HAS COME UP IN APPEAL BEFORE THE T RIBUNAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH VIRTUAL COURT AND SCANNED THROUGH THE RELEVANT MATERIAL ON RECORD. A CO PY OF THE NOTICE ISSUED U/S 274 OF THE ACT HAS BEEN PLACED IN THE AP PEAL FOLDER, FROM WHICH IT IS DISCERNIBLE THAT THE AO DID NOT STRIKE OFF EITHER OF THE TWO LIMBS VIZ., CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, ALBEIT IT WAS A CASE O F FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PENALTY ORDER ALSO CAME TO BE PASSED BY HOLDING IN PARA 6.5 THAT: `THE AM OUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESS EE AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- ITA NO.588/PUN/2017 VIJAY MOHAN HARDE 3 SECTION (1) OF SECTION 271, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCUR ATE PARTICULARS HAVE BEEN FURNISHED. RECENTLY, THE FULL BENCH OF HONBLE BOMBAY HIGH 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 BENC H HELD THAT A DEFECT IN NOTICE OF NOT STRIKING THE RELEVANT WORDS VITIATES THE PENALTY EVEN THOUGH THE AO HAD PROPERLY RECORDED THE SATISFACTION FOR IMPOSITION 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. (202 1) 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.COM 249 (SC). IN VIEW OF THE OVERWHELMING POSITION, IT IS CLEAR THAT WHERE THE CHARGE IS NOT PROPERLY SET O UT IN THE NOTICE U/S 274 VIZ., BOTH THE LIMBS STAND THEREIN WITHOUT STR IKING OFF OF THE INAPPLICABLE LIMB, BUT THE PENALTY HAS BEEN, IN FA CT, LEVIED FOR ONE OF THE TWO, SUCH A PENALTY ORDER GETS VITIATED. ITA NO.588/PUN/2017 VIJAY MOHAN HARDE 4 4. TURNING TO THE FACTS OF EXTANT CASE, WE FIND FROM THE NOTICE U/S 274 OF THE ACT THAT THE AO DID NOT STRIKE OUT ONE OF THE TWO LIM BS. NOT ONLY THAT, THE PENALTY WAS ALSO IMPOSED IN THE SAME WAY B Y REFERRING TO BOTH THE LIMBS IN THE PENALTY ORDER. AS AGAINS T THAT, THE PENALTY WAS LEVIABLE ONLY ON ONE LIMB, NAMELY, FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN SUCH A SITUATION, THE PE NALTY ORDER GETS VITIATED. RESPECTFULLY FOLLOWING THE FULL BENCH JUDGMEN T OF THE HONBLE JURISDICTIONAL HIGH COURT, WE OVERTURN THE IMPUG NED ORDER AND DIRECT TO DELETE THE PENALTY. 5. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MAY, 2021. SD/- SD/- ( PARTHA SARATHI CHAUDHURY ) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 17 TH MAY, 2021 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-2, PUNE 4. 5. 6. THE PCIT-2, PUNE DR, ITAT, A BENCH, PUNE / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE ITA NO.588/PUN/2017 VIJAY MOHAN HARDE 5 DATE 1. DRAFT DICTATED ON 13-05-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 13-05-2021 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. *