Smt. Surekha Nayyar, Pune V. Assistant Commissioner of Income-tax, Pune

ITA 615/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9110 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 06-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: APOORVA CHANDAKKAR
• Keywords: Initiation of penalty proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NO.615/PUN/2016 / ASSESSMENT YEAR : 2007-08 SMT. SUREKHA NAYYAR, BELVEDERE, H-2/601, ITI ROAD, AUNDH, PUNE 411 007 PAN : AAIPN0957B . /APPELLANT VS. ACIT, CIRCLE-4, PUNE . / RESPONDENT / APPELLANT BY : SMT. APOORVA CHANDAKKAR / RESPONDENT BY : SHRI AJAY MODI, JCIT / DATE OF HEARING : 12.03.2018 / DATE OF PRONOUNCEMENT: 16.03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF C IT(A)-3, PUNE, DATED 20-01-2016 FOR THE ASSESSMENT YEAR 2007-08. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : ON FACTS AND IN LAW, 1] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PEN ALTY ORDER PASSED U/S.271(1)(C) WAS CORRECT WITHOUT APPRECIATING THAT THE NOTICE ISSUED WAS INVALID AND ACCORDINGLY, THE PENALTY ORDER OUGHT TO HAVE BEEN DECLARED NULL AND VOID. 2] THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C) OF RS.2,34,560/-. 3] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASS ESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE COMPUTATION OF CAPITAL GAIN ON SALE OF LAND AND HENCE, THE A.O. WAS JUSTIFIED I N LEVYING PENALTY U/S.271(1)(C). 4] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE ASSESSEE HAD COMMITTED A BONA FIDE MISTAKE IN NOT DISCLOSING THE CORRECT AMOUNT OF SALE CONSIDERATION RECEIVED ON SALE OF LAND AND HENCE, T HERE WAS NO REASON TO LEVY PENALTY ON ACCOUNT OF BONA FIDE MISTAKE COMMITTED BY THE ASSESSEE. 2 5] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. BRIEFLY STATED RELEVANT FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL AND FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.48,49 ,271/-. IN THE SCRUTINY ASSESSMENT U/S.143(3) OF THE ACT, AO QUANTIFIED THE ASSESSED INCOME AT RS.1,33,44,300/- AFTER GRANTING ELIGIBLE DEDUCTIONS. IN THE APPEAL OF THE ASSESSEE, MAKING AN ADDITION OF RS.10,04,089/- ON ACCOUNT OF COST OF CONSTRUCTION IS THE SUBJECT MATTER OF PENALTY U/S.271(1)(C) O F THE ACT. DURING THE ASSESSMENT PROCEEDINGS, AS PER THE DISCUSSION GIVEN IN PARA NO.5.2 OF THE ASSESSMENT ORDER, THE ASSESSEE ACCEPTED FO R MAKING THE SAID ADDITION. THIS ADDITION RELATES TO THE RESIDENTIAL PREMISES ADMEASURING 2500 SQ.FT. + 2 CAR PARKINGS OWNED BY THE ASSESSEE. APP LYING THE RATE OF COST OF CONSTRUCTION OF THE SAID PREMISES AS PER THE PMC RATES, THE UNDISCLOSED COMPONENT OF INVESTMENT BY THE ASSESSEE IN THE RESIDENTIAL PREMISES WAS WORKED OUT BY THE AO AT RS.10,04,089/-. AS SESSEE ADMITTED THE SAME IN THE ASSESSMENT AND THE CONTENTS ON PARA 7 OF THE ASSESSMENT ORDER ARE RELEVANT. THE PENALTY PROCEEDINGS ARE INITIATED SEPARATELY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . THE SAID PENALTY WAS CONFIRMED BY THE CIT(A) VIDE HIS PENALTY ORDER DATED 20-01 -2016 FOR THE A.Y. 2007-08. 4. AGGRIEVED WITH THE SAME, THE ASSESSEE IS IN APPEAL BEFO RE US WITH THE GROUNDS EXTRACTED ABOVE. 5. BRINGING OUR ATTENTION TO THE GROUND NO.1 OF THE APP EAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTY ORDER CONS TITUTES AN INVALID ONE IN VIEW OF THE IMPROPER SATISFACTION WITH REFERENCE TO THE LIM BS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. ON THIS ISSUE, LD. COUNSEL BROU GHT OUR ATTENTION TO PARA 7 OF THE ASSESSMENT ORDER WHICH CONT AINS THE AOS SATISFACTION FOR THE INITIATION OF THE PENALTY PROCEEDINGS AND IT REFERS TO 3 FURNISHING OF INACCURATE PARTICULARS OF INCOME . FURTHER, LD. COUNSEL BROUGHT OUR ATTENTION TO THE PENALTY ORDER OF THE AO D ATED 29-03-2012, IN GENERAL, AND THE CONTENTS OF PARA NO.5 OF THE PENALTY OR DER, IN PARTICULAR, AND SUBMITTED THAT THE PENALTY IS ACTUALLY LEVIED FOR BOTH THE LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. 6. IN REPLY TO THIS LEGAL ISSUE, LD. DR FOR THE REVENUE SU BMITTED THAT THE AO IS JUSTIFIED IN LEVYING THE PENALTY AS THE OFFENCE ATTRACT S BOTH THE LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. 7. WE HEARD BOTH THE PARTIES ON THIS LEGAL ISSUE AND PE RUSED THE ORDERS OF THE REVENUE. FOR THE SAKE OF COMPLETENESS OF THIS ORD ER, WE PROCEED TO EXTRACT THE RELEVANT LINES FROM PARA 7 OF THE ASSESSMENT ORDER AND PARA NO.5 OF THE PENALTY ORDER AND THE SAME READS AS UNDER : PARA 7 OF THE ASSESSMENT ORDER : 7. PENALTY PROCEEDINGS ARE INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. PARA 5 OF THE PENALTY ORDER : 5. THUS, IT IS HELD THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME ONLY WITH A VIEW TO PAY LESSER TAX AND MADE ITSELF LIABLE FOR PENALTY U/S.2 71(1)(C) OF THE ACT. FROM THE ABOVE, IT IS CLEAR THAT THE AO INITIATED THE PEN ALTY PROCEEDINGS FOR THE OFFENCE OF FURNISHING OF INACCURATE PARTIC ULARS OF INCOME AND LEVIED THE SAME FOR BOTH FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALED THE PARTICULARS OF INCOME. THEREFORE, IT IS A CASE WHERE THE AO DID NOT HAVE CLARITY OF THOUGHT AND HE SUFFERED FROM AMBIGUITY IN HIS MIND WITH REGARD TO THE APPLICABLE LIMB OF CLAU SE (C) OF SECTION 271(1) OF THE ACT TO THE FACTS OF THE CASE. TH EREFORE, WE FIND THE PENALTY ORDER OF THE AO FALLS SHORT OF LEGAL REQUIREMENT ON THE ISSUE. INITIATION OF PENALTY PROCEEDINGS IN THIS CASE WAS DONE IN A CASUAL MANNER AND THE PENALTY WAS LEVIED FOR BOTH THE LIMBS. SUCH PENALT Y ORDER IS 4 UNSUSTAINABLE IN LAW LEGALLY. SUCH VIEW WAS ALREADY TAKEN IN A NUMBER OF CASES. SAID MANNER OF INITIATING AND LEVYING OF PENALTY WITHO UT MAKING REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) IS UNSUSTAINED. A O IS UNDER OBLIGATION TO SPECIFYING THE SAME AND CORRECT LIMB AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. THEREFORE, THE PE NALTY LEVIED BY THE AO IS UNSUSTAINABLE ON TECHNICAL GROUNDS. FURTHER, THIS VI EW OF OURS GET STRENGTH BY THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF CIT VS. SHRI SAMSON PERINCHERY DATED 05-01-2017 AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MA NJUNATHA COTTON AND GINNING FACTORY 359 ITR 565. 8. CONSIDERING THE LEGAL GROUND IN FAVOUR OF THE ASSESSEE, WE ARE OF THE OPINION THAT ADJUDICATION OF OTHER GROUNDS BECOMES AN AC ADEMIC EXERCISE. THEREFORE, THE SAME ARE DISMISSED AS ACADEMIC. ACCORDINGL Y, THE GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 16 TH DAY OF MARCH, 2018. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKAR A RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 16 TH MARCH, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-3, PUNE 4. / THE CIT-3, PUNE 5. , , / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE