SHRI RAMESH SAMRATHMAL SETH L/H. SAMRATHMAL PHOOLCHAND SETH, MUMBAI V. INCOME TAX OFFICER 16(1|)(4), MUMBAI

ITA 6068/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3086 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 29-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: ASHOK J PATIL
• Keywords: Depreciation; Initiation of penalty proceedings; TDS; Set aside
• Section: 271(1)(c); 201; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE SHRI B.R. BASKARAN , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 6067 /MUM/1 7 2011 - 12 SHRI RAMESH SAMRATHMAL SETH, L/H. SAMRATHMAL PHOOLCHAND SETH, 309, GUNDECHA CHAMBERS, N.M. ROAD, FORT, MUMBAI [PAN: AAM PS8245B ] INCOME TAX OFFICER - 16(1 )( 4 ), MUMBAI 6 0 68 /MUM/1 7 20 12 - 1 3 APPELLANT BY : S HRI ASHOK J. PATIL RESPONDENT BY : S HRI D.G. PANSARI, SR.AR - CIT DATE OF HEARING : 0 6 - 03 - 201 9 DATE OF PRONOUNCEMENT : 06 - 03 - 201 9 O R D E R PER B.R. BASKARAN , ACCOUNTANT MEMBER: TH E ASSESSEE HAS FILED TH E S E APPEAL S , CHALLENGING THE ORDER S PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 4 , MUMBAI, CONFIRMING THE PENALTY LEVIED BY THE AO FOR THE AY S . 201 1 - 1 2 & 2012 - 13 . 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. 3. THE AO RECEIVED INFORMATION THAT THE ASSESSEE WAS IN RECEIPT OF INTEREST INCOME IN BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION FROM WHICH TDS WAS DEDUCTED BY THE PAYER OF ITA NO S . 6067 & 6068 /MUM/ 20 1 7 : 2 : INTEREST U/S. 194A OF THE INCOME TAX ACT (ACT). IT WAS NOTICED THAT THE ASSESSEE HAS NOT FURNISHED RETURN S OF INCOME FOR BOTH THE YE ARS UNDER CONSIDERATION. HENCE , THE AO ISSUED NOTICES U/S. 148 OF THE ACT , ASKING THE ASSESSEE TO FILE THE RETURNS OF INCOME. FOR AY. 2011 - 12, THE ASSESSEE FILED RETURN OF INCOME DECLARING THEREIN GROSS INTEREST INCOME OF RS. 51,28,594/ - AND CLAIMED EXPENSES AGGREGATING TO RS. 31,70,406/ - ON ACCOUNT OF INTEREST ON LOAN, MOTOR - CAR EXPENSES, DEPRECIATION AND SALARY ETC. FOR THE AY. 2012 - 13, THE ASSESSEE DECLARED GROSS INTEREST INCOME OF RS. 47,82,322/ - AND CLAIMED EXPENSES TO THE TUNE OF RS. 28,91,666/ - . IN BOTH THE YEARS, AO DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE , SINCE THE ASSESSEE FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE AND FURTHER THE ASSESSEE COULD NOT PROVE THAT THESE EXPENSES WERE INCURRED FOR EARNING INTEREST INCOME. T HE AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN RESPECT OF DISALLOWANCE OF EXPENSES MADE BY HIM . T HE AO LEVIED PENALTY OF RS. 9,79,655/ - FOR THE AY. 2011 - 12 AND RS. 8,93,525/ - FOR THE AY. 2012 - 13. IN THE PENALTY ORDER, THE AO HAS MADE THE FOLLOWING OBSERVATIONS, WHILE LEVYING THE PENALTY: ITA NO S . 6067 & 6068 /MUM/ 20 1 7 : 3 : 7.I. IN VIEW OF THE ABOVE AND AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOME FOR THE YEAR UNDER CONSIDERATION WITHIN THE MEANING OF SECTION 271(1)(C), READ WITH EXPLANATION 1 THERETO, OF THE INCOME - TAX ACT, 1961 AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF THE SAID SECTION, AND THEREBY, RENDERING HIMSELF LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT. THEREFORE, I AM SATISFIED THAT THIS IS A FIT CASE FOR IMPOSITION O F PENALTY U/S. 271(1)(C) OF THE I.T.ACT, 1961. 3.1. LD. CIT(A) CONFIRMED THE PENALTY IN BOTH THE YEARS AND HENCE THE ASSESSEE HAS FILED THESE APPEALS BEFORE US. 4. AS NOTICED EARLIER, THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT HE HAS INITIATED PENALTY PROCEEDINGS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN RESPECT OF DISALLOWANCE OF EXPENSES IN BOTH THE YEARS . AT THE TIME OF HEARING, THE ASSESSEE FURNISHED COP IES OF THE PENALTY NOTICE S ISSUED BY THE AO, WHEREIN WE NOTICED THAT THE AO HAS NOT STRUCK - OFF THE INAPPLICABLE PORTION OUT OF THE TWO LIMBS PRESCRIBED U/S. 271(1)(C) OF THE ACT. A PERUSAL OF THE OBSERVATIONS OF THE AO MADE IN THE PENALTY ORDER, WHICH IS EXTRACTE D ABOVE , WOULD SHOW THAT THE AO HAS LEVIED THE PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME AND ALSO FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . WE NOTICED THAT THE AO HAS TAKEN CONTRADICTORY STAND WITH REGARD TO THE CHARGE UNDER WHICH PENALTY WAS IMPOSED. ITA NO S . 6067 & 6068 /MUM/ 20 1 7 : 4 : 5. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHRI SAMSON PERINCHERY IN INCOME TAX APPEAL NO. 1154 OF 2014 , DT. 5 TH JANUARY, 2017 HAS REFERRED TO THE DE CISION OF THE HON'BLE SUPREME COURT RENDERED IN THE CASE OF ASHOK PAI REPORTED IN (2007) [292 ITR 11] (SC) , WHEREIN IT IS OBSERVED THAT THE CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME U/S. 271(1)(C) OF THE ACT CARRY DIFFERENT MEANINGS/CONNOTATION S. THEREFORE, THE SATISFACTION OF THE AO WITH REGARD TO ONLY ONE OF THE TWO LIMBS MENTIONED U/S. 271(1)(C) FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMPOSED FOR OTHER LIMB. THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT THE AO SHOULD BE CLEAR AS TO WHICH OF THE TWO LIMBS UNDER WHICH PENALTY IS IMPOSABLE HA S BEEN CONTRAVENED OR INDICAT E THAT BOTH HAVE BEEN CONTRAVENED WHILE INITIATING PENALTY PROCEEDINGS. IT CANNOT BE THAT THE INITIATION WOULD BE UNDER ONE LIMB, WHILE IMPOSITION OF PENALTY ON THE OTHER LIMB. 5 .1. IN THE INSTANT CASE, AS NOTICED EARLIER, THE AO HAS INITIATED PENALTY PROCEEDINGS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HOWEVER, WHILE IMPOSING PENALTY, AO HAS HELD THAT T HE ASSESSEE HAS CONCEALED PARTICULARS OF ITA NO S . 6067 & 6068 /MUM/ 20 1 7 : 5 : INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME . E VEN THOUGH THE AO HAS MENTIONED BOTH THE LIMBS, VIZ., CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME , IT IS NOT C LEAR AS TO WHICH ONE HAS WEIGHED HIS MIND WHILE IMPOSING PENALTY . THIS INDICATES THE NON - APPLICATIO N OF MIND ON THE PART OF THE AO AND THE SAME WOULD VITIATE PENALTY PROCEEDINGS IN BOTH THE YEARS. 5.2 . ACCORDINGLY, WE SET ASIDE THE ORDERS PASSED BY THE LD. CIT(A) IN BOTH THE YEARS UNDER CONSIDERATION AND QUASH THE PENALTY ORDERS PASSED BY THE AO IN BOTH THE YEARS. SINCE WE HAVE QUASHED THE PENALTY ORDERS ON LEGAL ISSUE, WE DO NOT FIND IT NECESSARY TO ADDRESS THE ISSUES ON MERITS. 6 . IN THE RESULT, BOTH T HE APPEAL S OF ASSESSEE ARE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DAY OF MA R CH , 2019 SD/ - SD/ - (RAVISH SOOD ) ( B. R . BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI; / DATED : 6 TH MARCH , 201 9 TNMM ITA NO S . 6067 & 6068 /MUM/ 20 1 7 : 6 : / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) , MUMBAI 4. / CIT, MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, //TRUE COPY// / (DY./ASST. REGISTRAR) , / ITAT, MUMBAI