JALAN CAPITAL PRIVATE LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, RANGE-8(2), MUMBAI

ITA 6149/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0850 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2011-2012
• Appeal Filed On: 09-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Principle of natural justice; Question of law
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6149/MUM/2017 (ASSESSMENT YEAR: 2011-12) M/S. JALAN CAPITALS P. LTD. VS. DCIT, RANGE - 8(2) 1001 B WING, OBEROI EQUISITE 1 MOHAN GOKHALE MARG OFF W.E. HIGHWAY, BEHIND OBEROI, MALL, GOREGAON (E) MUMBAI 400063 ROOM NO. 218, 2 ND FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI 400020 PAN AABCJ4137H APPELLANT RESPONDENT APPELLANT BY: MS. NEHA PARANJPE RESPONDENT BY: MS. N. HEMALATHA DATE OF HEARING: 26.12.2017 DATE OF PRONOUNCEMENT: 24.01.2018 O R D E R PER RAJESH KUMAR, AM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-17, MUMBAI DATED 27.07.2017 FOR A.Y. 2011-12 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: - LEGAL GROUND: 1. THE NOTICE DATED 27.02.2014 ISSUED UNDER SECTION 274 R.W.S 271(1)(C) OF THE ACT IS BAD IN LAW AS THE SAME IS N OT SPECIFIED ANY PARTICULAR CHARGE ON THE BASIS OF WHICH THE CONCEAL MENT PENALTY HAS BEEN LEVIED. THUS, THE NOTICE ISSUED AND THE SU BSEQUENT PENALTY ORDER PASSED UNDER SECTION 271(1)(C) ARE VO ID AB INITIO AND THE SAME MAY BE QUASHED. ON MERIT: 2. THE LD. CIT (A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN PASSING THE ORDER DATED 27.07.2017 UNDER SECTION 27 1(1)(C) OF THE ACT BY LEVYING PENALTY OF RS.20,50,500/- WITHOU T APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E. THUS, THE LEVY OF PENALTY AMOUNTING TO RS.20,50,500/- UNDER S ECTION 271(1)(C) OF THE ACT IS NOT JUSTIFIED AND SAME MAY BE DELETED. ITA NO. 6149/MUM/2017 M/S. JALAN CAPITALS P. LTD. 2 3. THE LD.CIT (A) FAILED TO APPRECIATE THAT APPELLA NT HAS NEITHER CONCEALED ANY PARTICULARS OF INCOME NOR FURNISHED A NY INACCURATE PARTICULARS OF INCOME. THUS, THE LEVY OF PENALTY AMOUNTING TO RS. 20,50,500/- UNDER SECTION 271(1)(C ) OF THE ACT IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED . 4. THE LD. CIT (A), FURTHER, FAILED TO APPRECIATE T HAT THE INCOME DECLARED IN THE REVISED COMPUTATION HAS BEEN ACCEPT ED BY THE LD.A.O. WHILE PASSING THE ASSESSMENT ORDER. THUS, T HE LEVY OF PENALTY OF RS.20,50,500/- UNDER SECTION 271(1)(C) O F THE ACT ON THE BASIS SUO MOTO DECLARED INCOME IS UNJUSTIFIED A ND THE SAME MAY BE DELETED. 5. THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY U NDER SECTION 271(1)(C) OF THE ACT PM ACCOUNT OF ADDITION MADE UN DER INCOME FROM OTHER SOURCES AMOUNTING TO RS.1,03,685/- WITHO UT APPRECIATING FACTS AND CIRCUMSTANCES OF THE CASE. T HUS, THE LEVY OF PENALTY IS UNJUSTIFIED AND THE SAME MAY BE DELET ED. 3. THE ISSUE RAISED IN GROUND NO. 1 IS A LEGAL ISSUE CHALLENGING THE VALIDITY OF THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT ON THE GROUND THAT THE PENALTY WAS INITIATE D FOR FILING INACCURATE PARTICULARS OF INCOME WHEREAS IT WAS FINALLY IMPOS ED FOR CONCEALMENT OF INCOME. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMEN T WAS FRAMED IN THIS CASE VIDE ORDER DATED 27.02.2014 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT ASSESSING TOTAL INCOME AT ` 86,52,493/- AS AGAINST THE RETURNED LOSS OF ` 1,83,05,166/-. WHILE FRAMING THE ASSESSMENT THE AO INITIATED PENALTY PROCEEDINGS FOR FURNISHING OF INA CCURATE PARTICULARS OF INCOME WHICH READS AS UNDER: - PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE I NITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHI CH LEAD TO CONCEALMENT OF PARTICULARS OF INCOME. WHILE PASSING THE PENALTY ORDER UNDER SECTION 271( 1)(C) OF THE ACT DATED 28.08.2014, THE AO IMPOSED PENALTY OF ` 20,50,500/- FOR CONCEALMENT OF INCOME. 5. THOUGH THE LEGAL ISSUE OF CHALLENGING THE ORDER IMP OSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS NOT TAKEN UP BEFORE THE CIT(A) AND ITA NO. 6149/MUM/2017 M/S. JALAN CAPITALS P. LTD. 3 BEING TAKEN FOR THE FIRST TIME BEFORE THIS BENCH, I N OUR OPINION THE ASSESSEE IS WITHIN ITS FULL RIGHTS TO RAISE THE ISS UE BEFORE US. THE LEARNED A.R. VEHEMENTLY SUBMITTED BEFORE US THAT THE ORDER IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS BAD IN LAW AN D VOID AB INITIO FOR THE REASON THAT THE AO HIMSELF IS NOT CLEAR AS TO ON WH ICH CHARGE PENALTY WAS TO BE LEVIED. THE AO INITIATED THE PENALTY PROCEEDI NGS FOR FILING INACCURATE PARTICULARS OF INCOME WHEREAS THE PENALTY WAS FINAL LY IMPOSED FOR CONCEALMENT OF INCOME BY THE ASSESSEE. THE LEARNED A.R. CONTENDED THAT THE ORDER PASSED BY AO DESERVED TO BE QUASHED ON TH IS GROUND ONLY AND IN DEFENCE OF HIS ARGUMENT THE LEARNED A.R. RELIED ON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF SHRI SAMSON PERINCH ERY IN ITA NOS. 4625 TO 4630/MUM/2013, WHICH HAS BEEN AFFIRMED BY THE HO N'BLE BOMBAY HIGH COURT VIDE ORDER DATED 05.01.2017. IN VIEW OF THE ABOVE FACTS THE LEARNED A.R. SUBMITTED THAT THE PENALTY ORDER BE QU ASHED. 6. PER CONTRA, THE LEARNED A.R. DEFENDING THE ORDER OF THE AUTHORITIES BELOW SUBMITTED THAT THE PENALTY PROCEEDINGS WERE I NITIATED BY STATING THAT PENALTY PROCEEDINGS BEING INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME LEADING TO CONCEALMENT OF INCOME AND FINALLY IMPOSED PENALTY FOR CONCEALMENT OF INCOME. THE LEARNED D.R. SUBMITTED T HAT IT IS IMMATERIAL THAT ON WHICH LIMB PENALTY WAS IMPOSED BY THE AO. I T WAS RIGHTLY INITIATED ON BOTH THE LIMBS. THE LEARNED D.R. RELIED ON THE D ECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MR. SHANTI RAMANAND SAGAR AND OTHERS VS. CIT IN INCOME TAX REFERENCE NO. 22 OF 20 00. THE LEARNED D.R. FINALLY PRAYED THAT SINCE THE PENALTY HAS BEEN CORR ECTLY LEVIED THE ORDER OF THE CIT(A) DESERVES TO BE AFFIRMED. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE AO INITIATED PENA LTY PROCEEDINGS FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHEREAS THE PENALTY WAS FINALLY IMPOSED FOR CONCEALMENT OF INCOME. IN OUR C ONSIDERED VIEW THE AO HAS TO SPECIFICALLY POINT OUT ONE OF THE TWO LIMBS ON WHICH THE PENALTY IS PROPOSED TO BE LEVIED ON THE ASSESSEE SO THAT THE A SSESSEE CAN GET FULL NATURAL JUSTICE TO RESPOND TO THE CHARGE FOR WHICH IT IS PENALISED BUT IN THE ITA NO. 6149/MUM/2017 M/S. JALAN CAPITALS P. LTD. 4 PRESENT CASE THIS IS NOT SO AND THUS THE AO HIMSELF WAS NOT CLEAR AS TO WHICH LIMB PENALTY WAS TO BE IMPOSED. THE CASE OF T HE ASSESSEE ALSO GETS SUPPORT FROM THE DECISION OF THE COORDINATE BENCH I N THE CASE SAMSON PERINCHERY (SUPRA) WHEREIN IT HAS BEEN HELD THAT TH E AO HAS TO SPECIFY THE CHARGE ON WHICH PENALTY IS BEING IMPOSED FAILING WH ICH THE PENALTY ORDER CANNOT BE SUSTAINED. THE SAID ORDER OF THE TRIBUNAL STANDS AFFIRMED BY THE HON'BLE BOMBAY HIGH COURT VIDE ORDER DATED 05.01.20 17. THE RELEVANT PORTION OF THE ORDER OF THE HON'BLE BOMBAY HIGH COU RT IS EXTRACTED FOR READY REFERENCE: - 3 THE IMPUGNED ORDER OF THE TRIBUNAL DE LETED THE PENALTY IMPOSED UPON THE RESPONDENT-ASSESSEE. THIS BY HOLDI NG THAT THE INITIATION OF PENALTY UNDER SECTION 271(1)(C) OF TH E ACT BY ASSESSING OFFICER WAS FOR FURNISHING INACCURATE PARTICULAR S OF INCOME WHILE THE ORDER IMPOSING PENALTY IS FOR CONCEALMENT OF IN COME. THE IMPUGNED ORDER HOLDS THAT THE CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CO NNOTATIONS. THEREFORE, THE ASSESSING OFFICER SHOULD BE CLEAR AS TO WHICH OF THE TWO LIMBS UNDER WHICH PENALTY IS IMPOSABLE, HAS BEE N CONTRAVENED OR INDICATE THAT BOTH HAVE BEEN CONTRAVENED WHIL E INITIATING PENALTY PROCEEDINGS. IT CANNOT BE THAT THE INITIATION WOULD BE ONLY ON ONE LIMB I.E. FOR FURNISHING INACCURATE PARTICULARS OF INCOM E WHILE IMPOSITION OF PENALTY ON THE OTHER LIMB I.E. CONCEALMENT OF INCOM E. FURTHER, THE TRIBUNAL ALSO NOTED THAT NOTICE ISSUED UNDER SECTIO N 274 OF THE ACT IS IN A STANDARD PROFORMA, WITHOUT HAVING STRIKED OUT IRRELEVANT CLAUSES THEREIN. THIS INDICATES NON-APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER WHILE ISSUING THE PENALTY NOTICE. 4 THE IMPUGNED ORDER RELIED UPON THE F OLLOWING EXTRACT OF KARNATAKA HIGH COURT'S DECISION IN CIT V/S. MANJUNATH COTTON AND GINNING FACTORY 359 ITR 565 TO DELETE THE PENAL TY: - THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT T O INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF A NY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCE ALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THU S, THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CON CLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT AS CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COUR T IN THE CASE OF ASHOK PAI REPORTED IN [2007] 292 ITR 11 (SC) AT PAG E 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HI GH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AN D THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING P. LTD., REPOR TED IN 171 TAXMAN ITA NO. 6149/MUM/2017 M/S. JALAN CAPITALS P. LTD. 5 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR P ENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE H AS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNI SHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WI THOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS T O NON-APPLICATION OF MIND. 5 THE GRIEVANCE OF THE REVENUE BEFORE US IS THAT T HERE IS NO DIFFERENCE BETWEEN FURNISHING OF INACCURATE PARTICU LARS OF INCOME AND CONCEALMENT OF INCOME. THUS, DISTINCTION DRAWN BY T HE IMPUGNED ORDER IS BETWEEN TWEEDLEDUM AND TWEEDLEDEE. IN THE ABOVE VIEW, THE DELETION OF THE PENALTY IS UNJUSTIFIED. 6 THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN ASHOK PAI V/S. CIT 292 ITR 11 [RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY (SUPRA)] WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNI SHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C) OF THE A CT, CARRY DIFFERENT MEANINGS/CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PEN ALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT PENALTY BEING IMPOSED FOR THE O THER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GRO UND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, A ND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 7 THEREFORE, THE ISSUE HEREIN STANDS CONCLUDED IN FAVOUR OF THE RESPONDENT-ASSESSEE BY THE DECISION OF THE KARNATAK A HIGH COURT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (S UPRA). NOTHING HAS BEEN SHOWN TO US IN THE PRESENT FACTS WHICH WOU LD WARRANT OUR TAKING A VIEW DIFFERENT FROM THE KARNATAKA HIGH COU RT IN THE CASE OF MANJUNATH COTTON AND GINNING FACTORY (SUPRA). 8 IN VIEW OF THE ABOVE, THE QUESTION AS FRAMED DO NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAI NED. 8. THE FACTS OF THE CASE OF THE ASSESSEE ARE SQUARELY COVERED BY THE ABOVE DECISION. IN THE INSTANT CASE ALSO THE AO INI TIATED PENALTY ON ONE LIMB BUT IMPOSED PENALTY ON THE OTHER WHICH IS WRON G AND THEREFORE ORDER OF CIT(A) CANNOT BE SUSTAINED. IN VIEW OF THE RATI O LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT AS STATED HEREINABOVE W E ARE OF THE VIEW THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE SAID DECISION AND WE, ITA NO. 6149/MUM/2017 M/S. JALAN CAPITALS P. LTD. 6 RESPECTFULLY FOLLOWING THE SAME , SET ASIDE THE ORD ER OF CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2018. SD/ - SD/ - (JOGINDER SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24 TH JANUARY, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -17, MUMBAI 4. THE CIT - 10, MUMBAI 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.