SHAILESH B. WAGHANI, MUMBAI V. DCIT (OSD-I) CEN CIR 7, MUMBAI

ITA 6407/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1083 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2003-2004
• Appeal Filed On: 17-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Assessee Lawyers: SUSHAN KOTIAN
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE S HRI B.R. BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 6407 /MUM/20 1 4 ASSESSMENT YEAR: 2003 - 2004 SH. SHAILESH B. WAGHANI, MOHANLAL JAIN & CO. CHARTERED ACCOUNTANTS, 10, CHARTERED HOUSE, GROUND FLOOR, DR. C.H. STREET, MARINE LINES, MUMBAI - 400002 PAN: AEBPV1661B VS. THE DCIT (OSD - I), CENTRAL RANGE 7, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHAN KOTIAN (AR) RESPONDE NT BY : DR. A.K. NAYAK (DR) DATE OF HEARING: 13 /04 /201 7 DATE OF PRONOUNCEMENT: 28 / 0 4 /201 7 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 17/ 06/2014 PASSED BY THE CIT (APPEALS ) - 40 , MUMBAI FOR THE A S S ESSMENT YEAR 2003 - 2004 , WHEREBY THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT,1961(FOR SHORT THE ACT). 2. THE ASSESSEE HAS CHALLENGED THE IM PUGNED ORDER BY RAISING THE FOLLOWING EFFECTIVE GROUND: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT (A) ERRED IN UPHOLDING THE PENALTY LEVIED BY THE LD. AO OF RS. 19,950/ - U/S. 271(1)(C) OF THE ACT 1961 AND THE REASON AS SIGNED FOR 2 ITA NO. 6407/MUM/2014 ASSESSMENT YEAR: 2003 - 2004 DOING SO ARE WRONG AND CONTRARY TO THE PROVISION OF INCOME TAX ACT AND RULES MADE THERE UNDER. 3. BEFORE US , THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTY HAS BEEN LEVIED ON THE ESTIMATED INCOME OF RS. 1,50,000/ - DETERMINED BY TH E AO IN THE ASSESSMENT PROCEEDINGS INITIATED AFRESH AS PER THE DIRECTIONS OF ITAT ISSUED IN THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) . SINCE, THE INCOME HAS BEEN DETERMINED ON ESTIMATION BASIS PENALTY U/S 271 (1) (C) OF THE ACT CANNOT BE LEVIED. 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE RELYING ON THE FINDINGS OF THE AUTHORITIES BELOW SUBMITTED THAT THE PENALTY HAS BEEN LEVIED IN RESPECT OF THE CONFIRMED INCOME OF RS. 1,50,000/ - OF THE ASSESSEE, THEREFORE, THE C ONTENTION OF THE ASSESSEE HAS NO MERIT AND THE APPEAL IS LIABLE TO BE DISMISSED. 5. IN THE PRESENT CASE SEARCH WAS CONDUCTED BY THE ENFORCEMENT DIRECTORATE, MUMBAI IN THE CASE OF BHARAT G. KAKADIA AT OPERA HOUSE, MUMBAI AND DURING THE COURSE OF SUCH ACT ION , 4000 CARATS OF D IAMONDS WERE FOUND FROM THE POSSESSION OF THE ASSESSEE. THE SAID INFORMATION WAS PASSED ON BY THE ENFORCEMENT DIRECTORATE TO THE INCOME TAX DEPARTMENT. THE ASSESSE E FILED RETURN OF INCOME DECLARING THE TOTAL INCOME AS NIL. HOWEVER, THE AO PASSED ASS ESSMENT ORDER U/S 143 (3) R.W.S. 153A OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 4,00,000/ - . THE CIT (A) CONFIRMED THE ASSESSMENT ORDER IN FIRST APPEAL. HOWEVER, ON FURTHER APPEAL, THE ITAT SET ASIDE THE IMPUGNED ORDER AND RESTORED THE IS SUE TO THE FILE OF AO WITH THE DIRECTION TO PASS THE ASSESSMENT ORDER AFRESH . 6. IN PURSUANCE THEREOF T HE AO ASSESS ED THE INCOME OF THE ASSESSEE AT RS. 1,50,000/ - AND AFTER INITIATING PENALTY PROCEEDINGS , LEVIED PENALTY OF RS. 19,950/ - U/S 271(1)(C) OF T HE ACT. IN THE FIRST APPEAL, THE LD. CIT (A) CONFIRMED THE SAME. 7 . WE NOTICE THAT IN THE ORIGINAL ASSESSMENT ORDER, THE AO ESTIMATED THE INCOME OF THE ASSESSEE FROM DIAMOND ASSORTMENT AT RS. 4,00,000/ - , HOWEVER, IN FRESH 3 ITA NO. 6407/MUM/2014 ASSESSMENT YEAR: 2003 - 2004 ASSESSMENT ORDER THE AMOUNT WAS R EDUCED TO RS. 1,50,000/ - . AS PER THE SETTLED LAW, MERE ESTIMATION OF THE INCOME OF THE ASSESSEE DOES NOT IPSO FACTO MAKE THE ASSESSEE LIABLE FOR PENALTY. THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO DIFFERENT PROCEEDINGS AND THE STANDARD OF P ROOF REQUIRED IN BOTH THE PROCEEDINGS ARE DIFFERENT. SINCE, THE INCOME HAS BEEN DETERMINED ON ESTIMATION BASIS, IT CANNOT BE SAID CONCLUSIVELY THAT THE ASSESSEE HAS CONCEALED THE EXACT INCOME OF RS. 1,50,000/ - SO AS TO IMPOSE PENALTY. IN ORDER TO LEVY PENA LTY U/S 271(1)(C) OF THE ACT, THE AO HAS TO ESTABLISH CONCEALMENT OF THE PARTICULARS OF INCOME BY THE ASSESSEE OR FURNISHING OF INACCURATE PARTICULARS THEREOF. IN VIEW OF THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE , IT CANNOT BE CONCLUDED SAFELY THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR HAS FURNISH ED INACCURATE PARTICULARS THEREOF TO LEVY PENALTY U/S 271 (1) (C) OF THE ACT. HENCE, IN OUR CONSIDERED OPINION , THIS IS NOT A FIT CASE TO LEVY PENALTY U/S 271 (1)(C) OF THE ACT. WE TH EREFORE , ALLOW THE SOLE GROUND OF APPEAL OF THE ASSESSEE AND SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT (A). AO IS ACCORDINGLY DIRECTED TO DELETE THE PENALTY. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003 - 2004 IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL , 2017 . SD/ - SD/ - ( B.R. BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 28 / 0 4 / 2017 ALINDRA PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, 4 ITA NO. 6407/MUM/2014 ASSESSMENT YEAR: 2003 - 2004 ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI