Jagdish Prabhakar Deshpande, Pune V. Deputy Commissioner of Income tax, Pune

ITA 625/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7909 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 25-07-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 15-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N ASHOK BABU
• Keywords: Initiation of penalty proceedings; Wrong claim; Non compliance
• Section: 271(1)(c); 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.625/PUN/2017 / ASSESSMENT YEAR : 2010-11 JAGDISH PRABHAKAR DESHPANDE, 95/B, FLAT NO.7, SIDDHATEK APPTS., PRABHAT ROAD, ERANDAWANE, PUNE-411004. PAN : AAPPD5823M ....... / APPELLANT / V/S. DCIT, CIRCLE-11, PUNE. / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI N. ASHOK BABU / DATE OF HEARING : 25.07.2019 / DATE OF PRONOUNCEMENT : 14.08.2019 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-1, PUNE DATED 29.03.2016 FOR THE ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT, PENALTY RETAINED U/S 271(1)(C) WITH REFERENCE TO THE DISALLOWANCE OF DEDUCTION U/S 54F AMOUNTING TO RS.1,42,16,833/- BY COMMISSIONER OF INCOME TAX APPEALS IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THE PENALTY U/S 271(1)(C) BE DELETED IN FULL. JUST IN PROPER RELIEF MAY BE GRANTED TO THE APPELLANT. 2. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, AMEND, MODIFY, RECTIFY, DELETE, RAISE ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 2 ITA NO.625/PUN/2017 3. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS AN ARCHITECT BY PROFESSION AND IS ENGAGED IN RUNNING OF WINDMILL. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,02,98,450/-. AT THE END OF THE ASSESSMENT U/S 143(3) OF THE ACT, THE ASSESSING OFFICER ASSESSED THE TOTAL INCOME OF THE ASSESSEE AFTER MAKING CERTAIN ADDITIONS ON DIFFERENT HEADS AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.2,60,62,805/-. VIDE CONTENTS OF PARA 9 AT PAGE 10 OF THE ASSESSMENT ORDER, THE LIST OF SIX ADDITIONS ARE GIVEN IN THE TABLE. HOWEVER, THE ASSESSING OFFICER LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT ONLY IN RESPECT OF THREE (3) OF THE SAID ADDITIONS. 4. DURING THE FIRST APPELLATE PROCEEDINGS, HOWEVER, THE PENALTY LEVIED ONLY ON ONE ADDITION I.E. RELATING TO CLAIM OF DEDUCTION U/S 54F OF THE ACT WAS SUSTAINED BY THE CIT(A). THEREFORE, THIS PART OF THE PENALTY IS THE SUBJECT-MATTER OF THE ADJUDICATION IN THIS APPEAL. 5. DURING THE PROCEEDINGS BEFORE US, LD. COUNSEL FOR THE ASSESSEE RAISED THE ISSUE OF SATISFACTION QUA THE CLAIM OF DEDUCTION U/S 54F OF THE ACT. TAKING US THROUGH THE CONTENTS OF PARA 4 TO 8 OF THE ASSESSMENT ORDER, LD. COUNSEL SUBMITTED THAT THE PENALTY IS INITIATED FOR CONCEALMENT OF INCOME ON THIS ISSUE OF CLAIM OF DEDUCTION U/S 54F OF THE ACT. 6. FURTHER, BRINGING OUR ATTENTION TO THE PENALTY ORDER OF THE ASSESSING OFFICER, RELEVANT TO THE SAID CLAIM OF DEDUCTION U/S 54F OF THE ACT, LD. COUNSEL SUBMITTED THAT FURNISHING OF INACCURATE PARTICULARS OF 3 ITA NO.625/PUN/2017 INCOME IS THE COMMON SATISFACTION RECORDED BY THE ASSESSING OFFICER IN PARA 8 OF THE PENALTY ORDER. NO ADDITION-WISE SATISFACTION WAS RECORDED AS EVIDENT FROM PARA 3.A OF THE PENALTY ORDER. 7. IN THIS REGARD, THE LD. AR FURTHER SUBMITTED THAT THE ORDER OF THE CIT(A) SHALL HAVE TO BE SET-ASIDE ON THE LEGAL ISSUE RELATING TO THE AMBIGUITY IN THE MIND OF THE ASSESSING OFFICER WHILE DEALING WITH THE INITIATION AND LEVY OF PENALTY. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOUS BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565, LD. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW AND THE SAME IS WRONGLY UPHELD BY THE CIT(A). 8. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 9. WE SHALL NOW PROCEED TO ADJUDICATE THE LEGAL GROUND RELATING TO THE SATISFACTION. IN THIS REGARD, WE PROCEED TO EXTRACT THE RELEVANT PARA FROM THE ASSESSMENT ORDER QUA THE SATISFACTION GIVEN IN PARA 4.A AND ITS SUB- PARAGRAPHS. THE RELEVANT LINES AT THE END OF PARA4.A OF THE ASSESSMENT ORDER READ AS UNDER :- 4.A. .......... IN FACT, THE WHOLE THEORY HAS BEEN CREATED TO JUSTIFY HIS WRONG CLAIM OF DEDUCTION U/S 54F. ACCORDINGLY, UNDER THESE CIRCUMSTANCES AND AFTER UNEARTHING THESE FACTS, THE CLAIM OF ASSESSEE U/S 4 ITA NO.625/PUN/2017 54F OF RS.1,42,16,833/- IS DISALLOWED AND ADDED BACK IN THE INCOME OF ASSESSEE AND FOR THIS ACT OF CONCEALMENT ON THE PART OF THE ASSESSEE, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT ARE INITIATED SEPARATELY. 10. FURTHER, WE EXTRACT THE RELEVANT PARA 8 OF THE PENALTY ORDER :- 8. CONSIDERING THE ABOVE FACTS OF THE CASE AND ASSESSEE NON COMPLIANCE TO THE OPPORTUNITIES ACCORDED, I AM SATISFIED THAT THE ASSESSEE HAS COMMITTED DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT BY FURNISHING INACCURATE PARTICULARS AND RENDERED HIMSELF LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT BY CLAIMING DEDUCTIONS AND EXPENSES NOT ALLOWABLE UNDER THE LAW. THE ASSESSEE CASE IS THEREFORE, HIT BY THE PROVISIONS CONTAINED BY EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT AND PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE. 11. THUS, THE ABOVE EXTRACTS REVEAL THAT THE ASSESSING OFFICER SUFFERS FROM AMBIGUITY IN HIS MIND WHILE RECORDING THE SATISFACTION AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 12. THEREFORE, CONSIDERING THE ABOVE REFERRED BINDING JUDGMENTS, WE ARE OF THE VIEW THAT SUCH PENALTY IS UNSUSTAINABLE IN LAW LEGALLY. IT IS A SETTLED LEGAL PROPOSITION THAT THE ASSESSING OFFICER IS UNDER OBLIGATION TO SPECIFY THE APPROPRIATE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WITHOUT GOING INTO THE MERITS OF THE CASE, WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ENTIRE PENALTY IMPOSED BY HIM. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED ON LEGAL ISSUE. 5 ITA NO.625/PUN/2017 13. CONSIDERING THE RELIEF ON LEGAL ISSUE, THE ADJUDICATION OF OTHER GROUNDS ON MERITS BECOMES AN ACADEMIC EXERCISE ONLY. ACCORDINGLY, THE OTHER GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED AS ACADEMIC. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 14 TH DAY OF AUGUST, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 14 TH AUGUST, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-1, PUNE. 4. THE PR. CCIT, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.