Construction Portal Pvt.Ltd, Pune V. Income tax Officer, Pune

ITA 592/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1006 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-03-2019
• Assessment Year: 2005-2006
• Appeal Filed On: 10-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice; Revised return; Set aside
• Section: 271(1)(c); 143(3); 133A; 274; 69A; 69; 27; 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NOS.592 & 593/PUN/2017 / ASSESSMENT YEARS : 2005-06 & 2006-07 CONSTRUCTION PORTAL PVT. LIMITED, C/O.KHANDELWAL JAIN & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, RIVERSIDE BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE- 411 001. PAN: AACCC4302N. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 1(2), PUNE . / RESPONDENT. ASSESSEE BY : SHRI NEELESH KHANDELWAL. REVENUE BY : SHRI SUDHENDU DAS. / ORDER PER ANIL CHATURVEDI, AM : 1. THESE TWO APPEALS FILED BY THE ASSESSEE ARE EMANATING OUT OF THE SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS), 1 - PUNE DATED 09.12.2016 FOR A.YS. 2005-06 AND 2006-07. 2. BEFORE US, AT THE OUTSET, BOTH THE PARTIES SUBMITTED T HAT THOUGH THE APPEALS FILED BY THE ASSESSEE ARE FOR TWO DIFFERENT ASSESSM ENT YEARS BUT THE FACTS AND ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL EXCEPT FOR THE ASSESSMENT YEAR AND THE AMOUNTS INVOLVED AND THEREFO RE THE SUBMISSIONS MADE BY THEM WHILE ARGUING ONE APPEAL WOULD BE EQUALLY A PPLICABLE TO THE / DATE OF HEARING : 02.08.2019 / DATE OF PRONOUNCEMENT: 06.09.2019 2 OTHER APPEAL ALSO AND THUS BOTH THE APPEALS CAN BE HE ARD TOGETHER. IN VIEW OF THE AFORESAID SUBMISSIONS OF BOTH THE PARTIES, WE, F OR THE SAKE OF CONVENIENCE, PROCEED TO DISPOSE OF BOTH THE APPEALS BY A CONSOLIDATED ORDER. WE, HOWEVER, PROCEED WITH THE FACTS IN ITA NO.592/ PUN/2017 FOR A.Y. 2005-06. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUS INESS OF DEVELOPMENT OF PROPERTIES. ASSESSEE COMPANY FILED ITS RETU RN OF INCOME FOR A.Y. 2005-06 ON 31.10.2005 DECLARING NIL INCOME BY CLAIMING SET OFF OF BROUGHT FORWARD LOSSES AND FURTHER CLAIMING LOSS OF RS.1,26,14 ,888/- TO BE CARRIED FORWARD TO THE NEXT YEAR. IN THIS CASE, A SURVEY OPERATIO N U/S 133A OF THE ACT WAS CONDUCTED ON 24.01.2007 WHEREIN ASSESSEE DISCLOSED ADDITIONAL INCOME OF RS.58,00,000/- FOR A.Y. 2005-06 BY REVIS ING ITS RETURN ON 07.03.2007. THE CASE WAS TAKEN UP FOR SCRUTINY AN D THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE ACT V IDE ORDER DT.29.12.2008 WHEREIN THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE WHICH INCLUDES THE ADDITIONAL INCOME OF RS.58,00,000/- ON ACCO UNT OF UNEXPLAINED MONEY U/S 69A OF THE ACT WAS ACCEPTED BY T HE DEPARTMENT. ON THE AFORESAID ADDITION OF RS.58,00,000/-, AO VIDE ORDER DT.18.03.2016 PASSED U/S 271(1)(C) OF THE ACT LEVIED PENALTY OF RS.20,70,60 0/- U/S 271(1)(C) OF THE ACT. 4. FOR A.Y. 2006-07 THE DETAILS OF INCOME OFFERED BY THE AS SESSEE, ADDITIONAL INCOME AND THE PENALTY LEVIED ARE AS UNDER : 3 AGGRIEVED BY THE ORDERS OF AO, ASSESSEE CARRIED THE MAT TER BEFORE LD.CIT(A), WHO VIDE SEPARATE ORDERS FOR A.YS. 2005-06 AND 2 006-07 DT.18.03.2016 UPHELD THE LEVY OF PENALTY. AGGRIEVED BY THE ORDERS OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAIS ED THE FOLLOWING GROUNDS : 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CA SE AND AS PER THE PROVISIONS OF LAW, IT BE HELD THAT THE NOTICE ISSUE D BY THE LD. AO IS INAPPROPRIATE AND NOT IN COMPLIANCE WITH THE REQUIR EMENT OF THE SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT AND THER EFORE, IS A VAGUE NOTICE. CONSEQUENTLY, THE PENALTY ORDER PASSED BY THE LD. A O UNDER SECTION 271(1)(C) OF THE ACT AND CONFIRMED BY THE HON'BLE CIT(A) IS N OT SUSTAINABLE IN THE EYES OF LAW AND HENCE, THE PENALTY IMPOSED BY THE LD. AO AND CONFIRMED BY THE HON'BLE C!T(A) BE DELETED. 2. WITHOUT PREJUDICE TO THE GROUND 1 RAISED ABOVE, ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PRO VISIONS & SCHEME OF THE ACT, THE LEARNED AO AND THE HON'BLE CIT(A) ERRED IN HOLDING THAT THE PENALTY PROCEEDINGS WOULD BE TIME BARRED ON 31.03.2 016 U/S 275(1)(A). IT BE HELD THAT THE PROCEEDINGS HAVE BEEN TIME BARRED AS ON 30.06.2009 U/S 275(1)(C) AND THE ORDER PASSED BY THE LD. AO AND CO NFIRMED BY THE HON'BLE CIT(A) BE HELD AS INVALID IN LAW AND SET ASIDE. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 3. WITHOUT PREJUDICE TO GROUND 1 AND 2 ALREADY RAIS ED, ON FACTS & CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER THE PROVISIONS AND SCHEME OF THE ACT IT BE HELD THAT THE PENALTY IMPOSED U/S. 27 1(1)(C) IS UNJUSTIFIED, IMPROPER AND CONTRARY TO PROVISIONS OF THE ACT AND FACTS PREVAILING IN THE CASE. IT BE HELD THAT, THE CASE OF THE APPELLANT IS NOT COVERED BY MISCHIEF OF PROVISIONS OF SEC.271(1)(C) JUSTIFYING LEVY OF PENA LTY IN TERMS OF THE SAID SECTION. THE PENALTY IMPOSED BY THE LD. AO AND CONF IRMED BY THE HON'BLE CIT(A) BE DELETED. THE APPELLANT BE GRANTED JUST AN D PROPER RELIED IN THIS RESPECT. 4. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CAS E AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT, PENALTY PROCEEDI NGS FINALIZED BY THE LD. AO WITHOUT GRANTING PROPER AND ADEQUATE OPPORTUNITY AN D IN VIOLATION OF RULES OF NATURAL JUSTICE IS BAD IN LAW. THE PENALTY IMPOSED BY THE LD. AO AND CONFIRMED BY THE HON'BLE CIT(A) AS SUCH DESERVES TO BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 5. SUBSEQUENTLY, ASSESSEE HAS RAISED ADDITIONAL GROUNDS WHICH READS AS UNDER : A.Y. BUSINESS INCOME / LOSS AS PER ORIGINAL RETURN OF INCOME IN RS. TOTAL INCOME ASSESSED U/S 143(3) IN RS. PENALTY LEVIED 2006-07 (-) 9,14,350/- 73,00,000/- (UNEXPLAINED MONEY U/S 69 OF THE ACT) RS.22,33,800/-. 4 1. ON FACTS & CIRCUMSTANCES PREVAILING IN THE CASE & AS PER PROVISIONS OF LAW, IT BE HELD THAT THE ASSESSMENT FRAMED BY THE LEARNE D ASSESSING OFFICER U/S. 148 R.W.S. 143(3) OF THE ACT IS INVALID AND BAD IN LAW. PENALTY LEVIED IN PURSUANCE OF SUCH ASSESSMENT ORDER BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 2. WITHOUT PREJUDICE TO ORIGINAL GROUND NO. 1 AND A DDITIONAL GROUND NO. 1 AND ON FACTS & CIRCUMSTANCES PREVAILING IN THE CASE & AS PER PROVISIONS OF LAW, IT BE HELD THAT THE PENALTY LEVIED BY THE LEAR NED ASSESSING OFFICER AND UPHELD BY THE FIRST APPELLATE AUTHORITY UNDER SECTI ON 271(1)(C) OF THE ACT WITHOUT SPECIFYING THE CHARGE AGAINST WHICH THE PEN ALTY HAS BEEN INITIATED IN THE ASSESSMENT ORDER IS UNJUSTIFIED, I MPROPER AND CONTRARY TO THE PROVISIONS OF THE ACT. PENALTY LEVIED IN PURSUANCE OF SUCH NOTICE BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 6. SIMILAR GROUNDS, SO ALSO ADDITIONAL GROUNDS HAVE BEEN RAIS ED IN ITA NO.593/PUN/2017 FOR A.Y. 2006-07. 6.1. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT THOUG H ASSESSEE HAS RAISED VARIOUS GROUNDS BUT THE SOLE CONTROVERSY IS WITH RESPECT TO THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 7. ON THE ISSUE OF LEVY OF PENALTY, LD.A.R. SUBMITTED THAT WHILE PASSING THE ASSESSMENT ORDER AND WHILE RECORDING SATISFACTION, A O WAS NOT CLEAR AS TO WHETHER THE ASSESSEE HAD FURNISHED INACCURATE PART ICULARS OF INCOME OR CONCEALMENT OF INCOME. I N SUPPORT OF HIS CONTENTION HE POINTED TO PARA 2.3 OF THE ASSESSMENT ORDER. THEREAFTER, HE SUBMITTED T HAT IN THE PENALTY ORDER, AO HAD LEVIED THE PENALTY FOR CONCEALING THE INCOME . HE THEREFORE, RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN TH E CASE OF CIT VS. SAMSON PERINCHERY REPORTED IN (2017) 392 ITR 4 (BOM) SUBM ITTED THAT IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO ASSESSEE, P ENALTY U/S 271(1)(C) CANNOT BE LEVIED AND THEREFORE URGED THAT PENALTY LEVIED BY AO BE DELETED. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASES ARE WITH RESPE CT TO LEVY OF PENALTY 5 U/S 271(1)(C) OF THE ACT. FOR A.Y. 2005-06, PENALTY OF RS.20 ,70,600/- U/S 271(1)(C) OF THE ACT HAS BEEN LEVIED ON AMOUNT OF RS.58,00,00 0/- BEING THE ADDITION MADE U/S 69A OF THE ACT. THE PERUSAL OF ASSESSM ENT ORDER PASSED U/S 143(3) R.W.S. 147 OF THE ACT REVEALS THAT IN THE ASS ESSMENT ORDER AO HAD NOT RECORDED CLEAR SATISFACTION AS TO WHETHER ASSE SSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED PARTICU LARS OF INCOME. THEREAFTER, IN THE PENALTY ORDER PASSED U/S 271(1)(C) OF TH E ACT, AO HAD LEVIED PENALTY FOR CONCEALMENT OF INCOME. IT IS A SETTLED LAW THAT WHILE LEVYING PENALTY, THE AO HAS TO RECORD CLEAR SATISFACTION AN D THEREAFTER COME TO A FINDING IN RESPECT OF ONE OF THE LIMBS, WHICH IS SPECIFIED U NDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SATISFACTION WHILE COMPLETING THE ASSESSMENT AS TO WHETHER THE ASSESSEE HAD FURNIS HED INACCURATE PARTICULARS OF INCOME OR CONCEALED HIS INCOME. THEREAFTER, N OTICE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO TH E ASSESSEE. THE ASSESSING OFFICER THEREAFTER HAS TO LEVY PENALTY UNDER SEC TION 271(1)(C) OF THE ACT FOR NON-SATISFACTION OF EITHER OF THE LIMBS. WHILE COM PLETING THE ASSESSMENT, THE ASSESSING OFFICER HAS TO COME TO A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACC URATE PARTICULARS OF INCOME. THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI S AMSON PERINCHERY (SUPRA) HELD THAT WHERE INITIATION OF PENALTY IS O NE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PRO PER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 9. CONSIDERING THE FACTS OF THE PRESENT CASE IN THE LIGHT O F THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSON PERINC HERY (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE, THE BASIC C ONDITION FOR LEVY OF PENALTY HAS NOT BEEN FULFILLED AND THAT THE PENALTY ORDER SUFFERS FROM NON- EXERCISING OF JURISDICTION POWER AND THEREFORE PENALTY ORDE R CANNOT BE 6 UPHELD. WE ACCORDINGLY SET ASIDE THE PENALTY ORDER PASSE D BY AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO.592 /PUN/2017 FOR A.Y. 2005-06 IS ALLOWED. 11. NOW, WE TAKE UP ASSESSEES APPEAL IN ITA NO.593/PUN/ 2017 FOR A.Y. 2006-07. 11.1. AS FAR AS THE GROUNDS RAISED IN APPEAL IN ITA NO. 593/PUN/2017 FOR A.Y. 2006-07 IS CONCERNED, IN VIEW OF THE SUBMISSION OF BOTH THE PARTIES THAT THE FACTS OF THE CASE IN THE YEAR BEING IDENTICAL TO THE FACTS AN D ISSUE OF THE CASE IN ITA NO.592/PUN/2017 FOR A.Y. 2005-06, WE TH EREFORE FOR THE REASONS STATED HEREIN WHILE DISPOSING OF THE APPEAL IN ITA NO.592/PUN/2017 FOR A.Y. 2005-06 AND FOR SIMILAR REASONS A LLOW THE GROUNDS OF ASSESSEE. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 12. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO.593 /PUN/2017 FOR A.Y. 2006-07 IS ALLOWED. 13. TO SUM UP, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED . ORDER PRONOUNCED ON 6 TH DAY OF SEPTEMBER, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 6 TH SEPTEMBER, 2019. YAMINI 7 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, PUNE. PR. CIT-1, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.