NIKHIL P. GANDHI, MUMBAI V. ACIT CENT. CIR. - 38, (NOW DCIT CENT. CIR. 6(3)), MUMBAI

ITA 5931/MUM/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1491 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 05-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JANG
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 153A; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5931/M/2016 ASSESSMENT YEAR: 2011-12 SHRI NIKHIL P. GANDHI, C/O. SKIL HOUSE, 209, BANK STREET CROSS LANE, FORT, MUMBAI 400 023 PAN: AABPG9516A VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-6(3), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MIHIR C. M., A.R. SHRI RUTURAJ GURJAR, A.R. REVENUE BY : SHRI M.S. JANG PANGI, D.R. DATE OF HEARING : 26.09.2019 DATE OF PRONOUNCEMENT : 08.11.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 21.06.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) UPHOLDING THE LEVY OF PENALTY OF RS.18,5 4,000/- BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 28.09.2011 DECLARING INCOME OF RS.5,69,37 ,620/-. ITA NO.5931/M/2016 SHRI NIKHIL P. GANDHI 2 THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT ON 27.03.2014 ASSESSING THE INCOME AT RS.6,30,70,825/- BY MAKING ADDITION OF RS.60 LAKHS. IN THE ORIGINAL RETURN, THE ASSESSEE DECLARED THE INCOME F ROM OTHER SOURCES OF RS.1,64,705/- WHEREAS IN THE RETURN FILE D IN RESPONSE UNDER SECTION 153A OF THE ACT ,THE INCOME FROM OTHE R SOURCES HAS BEEN DECLARED AT RS.61,64,705/- AND THUS THERE WAS A DIFFERENCE OF RS.60 LAKHS AND ACCORDINGLY PENALTY P ROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED I N THE ASSESSMENT ORDER FOR FURNISHING OF INACCURATE PARTI CULARS OF INCOME. THE NOTICE DATED 28.03.2014 WAS ISSUED UND ER SECTION 271(1)(C) OF THE ACT WITHOUT STRIKING OFF THE IRREL EVANT PART OF THE NOTICE. IN OTHER WORDS, THE NOTICE WAS ISSUED BY M ENTIONING BOTH THE LIMBS I.E. CONCEALMENT OF INCOME AS WELL A S FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND FINALLY AFTER CONSIDERING THE REPLY OF THE ASSESSEE THE AO IMPOSE D A PENALTY OF RS.18,54,000/- BEING 100% OF TAX SOUGHT TO BE EV ADED BY OBSERVING THAT ASSESSEE HAS CONCEALED THE INCOME AN D FURNISHED THE INACCURATE PARTICULARS OF INCOME. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DIS MISSED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ORDER OF AO ON THE GROUND OF LEVY OF PENALTY AND HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE PENALTY PROCEEDINGS WER E INITIATED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) RE AD WITH SECTION 153A OF THE ACT DATED 27.03.2014. THE PENA LTY PROCEEDINGS WERE INITIATED TOWARDS RS.60 LAKHS DECL ARED BY THE ITA NO.5931/M/2016 SHRI NIKHIL P. GANDHI 3 ASSESSEE IN THE RETURN FILED UNDER SECTION 153A OF THE ACT UNDER THE HEAD INCOME FROM OTHER SOURCES WHICH WAS NOT DE CLARED IN THE ORIGINAL RETURN OF INCOME. THE ASSESSEE HAS FI LED THE COPY OF THE NOTICE DATED 28.03.2014 WHEREIN WE OBSERVE THAT AO HAS NOT INDICATED ONE OF THE TWO LIMBS OF THE PENALTY ON W HICH THE PENALTY IS PROPOSED TO BE LEVIED AND THUS WE FIND T HAT ASSESSEE HAS NOT BEEN CONFRONTED WITH THE PARTICULAR CHARGE ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED THEREBY DENYING T HE ASSESSEE AN OPPORTUNITY TO RESPOND TO THE PENALTY. IN SUCH A SCENARIO THE PENALTY AS LEVIED BY THE AO AND AFFIRMED BY LD CIT( A) CAN NOT BE SUSTAINED. THE CASE OF THE ASSESSEE IS SQUARELY CO VERED BY THE FOLLOWING DECISIONS: A) CIT VS SSAS EMERALD MEADOWS(SC) (2016) 73 TAXMANN.COM 241 KARNATAKA SLP DISMISSED AS REPORTED IN (2016) 73 TAXMANN.COM 248 (SC) B) CIT VS. MANJUNATH COTTON AND GINNING FACTORY (2 013) 359 ITR 565 (KAR.) C) CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) D) CIT VS. MRS. PIEDADE PERINCHERY ITXA NO.1310 OF 2014 ORDER DATED 10.01.2017 (BOM. HC) 6. THE HONBLE BOMBAY HIGH COURT IN THE CASE CIT VS SHRI SAMSON PERINCHERY & CIT VS. MRS. PIEDADE PERINCHERY (SUPRA) HAS HELD THAT PENALTY CAN NOT BE LEVIED WHERE THE A O HAS ISSUED NOTICE IN A MACHANICAL MANNER WITHOUT STRIKING OFF THE REDUNDANT LIMB OR WITHOUT MENTIONING THE LIMB ON WH ICH THE PENALTY WAS PROPOSED TO BE LEVIED. IN VIEW OF THE A BOVE DISCUSSION AND IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT, WE ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. ITA NO.5931/M/2016 SHRI NIKHIL P. GANDHI 4 7. SINCE THE ISSUE HAS BEEN DECIDED ON LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, THE MERIT BECOMES ACADEMIC. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.11.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 08.11.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.