Patel Brothers, Ahmedabad V. The ITO, Ward No.- 3(4), Now ITO, Ward- 1(3)(4), Ahmedabad

ITA 628/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8238 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 11-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIPKUMAR KEDIA, ACCOUNTANT MEMBER ITA NO.628/AHD/2016 / ASSTT.YEAR : 2007-2008 PATEL BROTHERS C/O. NITINBHAI SHANTILAL PATEL 38, VALLABHKUNJ SOCIETY NR.BETHAK, NARODA AHMEDABAD 382330 PAN : AAFFP 5741 C VS ITO, WARD - 3(4) AHMEDABAD NOW ITO, WARD-1(3)(4) AMBAWADI AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI H EM CH H AJED, AR REVENUE BY : SHRI JAMES KURIAN, SR.DR / DATE OF HEARING : 28/02/2018 / DATE OF PRONOUNCEMENT: 10/05/2018 !'/ O R D E R PER PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER OF THE CIT(A)-7, AHMEDABAD DATED 1.12.2015 ARISING IN THE PENALTY ORDER DATED 14.11.2014 PASSED BY THE ASSESSING OFFICER UNDER SE CTION 271(1)(C) OF THE INCOME TAX ACT CONCERNING ASSESSMENT YEAR 2007-08. 2. IN THE CAPTIONED APPEAL, THE ASSESSEE HAS CHALLE NGED IMPOSITION OF PENALTY OF RS.5,89,050/- BY THE AO AND CONFIRMED BY THE CIT(A). ITA NO.628/AHD/2016 2 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LD.A R FOR THE ASSESSEE, MR. HEM CHAHJED CONTENDED THAT PENALTY ORDER PASSED BY THE AO IS NOT SUSTAINABLE ON MORE THAN ONE GROUNDS. THE LD.AR SU BMITTED THAT FOREMOST REASON FOR NON-MAINTAINABILITY OF PENALTY IS APPARE NT ON THE FACE OF THE RECORD. IT WAS CONTENDED THAT THE AO HAS NOT SPECIFIED THE NATURE OF DEFAULT ALLEGEDLY COMMITTED BY ASSESSEE IN THE ASSESSMENT ORDER WHILE INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. TH EREFORE, SATISFACTION CONTEMPLATED UNDER SECTION 271(1B) HAS NOT BEEN REC ORDED OR SPECIFIED. SIMILARLY, NOTICE ISSUED UNDER SECTION 274 R.W.S. 271(1)(C) ALSO DOES NOT SPECIFY THE NATURE OF DEFAULT ALLEGED AGAINST THE A SSESSEE. THEREFORE, THERE IS TOTAL ABSENCE OF SATISFACTION ON THE PART OF THE AO WHILE INVOKING POTENT PROVISION OF SECTION 271(1)(C) OF THE ACT. THE LD. AR SUBMITTED THAT OWING TO VAGUENESS IN THE ALLEGATIONS AGAINST THE ASSESSEE, THE ASSESSEE WAS NOT IN A POSITION TO OBJECTIVELY RESPOND TO THE CHARGE LEVEL ED AGAINST HIM. THE LD.AR IS THUS ARGUED THAT ON THIS GROUND ALONE, PENALTY P ASSED BY THE AO IS NOT SUSTAINABLE IN LAW. 4. THE LD.DR RELIED UPON THE ORDER OF THE CIT(A). 5. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS. ON PERUSAL OF THE ASSESSMENT ORDER, WE NOTICE THAT THE AO HAS ALLEGED THAT THE ASSESSEE HAS COMMITTED DEFAULT FOR INACCURATE PARTICULARS OF INCOME AND OR CONCEAL ING PARTICULARS OF INCOME . SHOW CAUSE NOTICE ISSUED SEEKING RESPONSE FROM T HE ASSESSEE ALSO DOES NOT SPECIFY NATURE OF DEFAULT AG AINST WHICH THE ASSESSEE IS SOUGHT TO BE PROSECUTED. IN OTHER WORDS, PENALTY N OTICE DOES NOT SPECIFY ANY OF THE TWO LIMBS AS MENTIONED IN PROVISIONS OF SECT ION 271(1)(C) OF THE ACT AND DO NOT STRIKE OFF APPROPRIATE PORTION TO MAKE I T CLEAR. PENALTY ORDER OF THE AO IN TURN ALSO DRAWS BLANK ON THE NATURE OF DEFAUL T FOR WHICH PENALTY HAS BEEN IMPOSED. THUS, UPTO TO THE STAGE OF THE AO, N O VALID SATISFACTION HAS ITA NO.628/AHD/2016 3 BEEN DRAWN AS CONTEMPLATED IN LAW. IN SUCH CIRCUMS TANCES, THE RIGHTS OF THE ASSESSEE ARE SIGNIFICANTLY AFFECTED TO COUNTER THE ALLEGATIONS. NEEDLESS TO SAY, IMPOSITION OF PENALTY IS SOLELY DEPENDENT UPON SAT ISFACTION OF THE AO (UNLESS INITIATED BY THE CIT(A)) AND NONE-ELSE. GR OUND FOR ACTION BY THE AO IS NOT KNOWN. ON THIS GROUND ALONE, PENALTY ORDER PASSED BY THE AO IS LIABLE TO BE STRUCK DOWN AT THE THRESHOLD. WHERE THE AO I S NOT SURE ABOUT THE NATURE OF DEFAULT, PENAL ACTION UNDER SECTION 271(1)(C) IS NOT SUSTAINABLE IN LAW. CONSEQUENTLY, PENALTY ORDER OF THE AO DATED 14.11.2 014 IS SET ASIDE AND PENALTY IMPOSED THEREOF IS CANCELLED. 6. SINCE IMPOSITION OF PENALTY STANDS DELETED ON TH E AFORESAID LEGAL GROUND, WE ARE NOT INCLINED TO DEAL WITH OTHER ASPE CTS OF THE ARGUMENTS ON MERIT FOR DELETION OF PENALTY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 10 TH MAY, 2018 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (PRADIPKUMAR KEDIA ) ACCOUNTANT MEMBER AHMEDABAD; DATED 10/05/2018