Jagatsingh Pratapsingh Jadhav, Nashik V. Income-tax Officer,

ITA 675/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9099 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-03-2018
• Assessment Year: 2004-2005
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Keywords: Unexplained investment; Principle of natural justice; Initiation of penalty proceedings; Non compliance

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NO.675/PUN/2015 / ASSESSMENT YEAR : 2004-05 JAGATSINGH PRATAPSINGH JADHAV, 42, KRUSHI NAGAR, COLLEGE ROAD, NASHIK 422 005 PAN : AAPPJ1588D . /APPELLANT VS. ITO, WARD-1(3), NASIK . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : SHRI ANIL KUMAR CHAWARE / DATE OF HEARING : 21.03.2018 / DATE OF PRONOUNCEMENT: 26 .03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF C IT(A)-1, NASHIK, DATED 20-03-2015 FOR THE ASSESSMENT YEAR 2004-05. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE ORDER PASSED BY CIT(A)-1, NASHIK, CONFIRMI NG THE LEVY OF PENALTY ON THE ADDITION OF RS.5,00,000/- BE SET ASIDE AS THE P RINCIPLES OF NATURAL JUSTICE ARE VIOLATED BY THE CIT(A)-1, NASHIK. 2. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND AS PER LAW, THE CIT(A)-1, NASHIK, IS NOT JUSTIFIED IN CONF IRMING PENALTY U/S.271(1)(C) OF THE ACT ON THE ADDITION OF RS.5,00,000/- ON ACCO UNT OF UNEXPLAINED INVESTMENTS U/S.69 OF THE ACT CONFIRMED BY HIM. 3. THE APPELLANT CRAVES FOR ADDITION TO, DELETION, ALTERATION, MODIFICATION, CHANGE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. BRIEFLY STATED RELEVANT FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF ARCHITECT, BUILDERS AND DEVELOP ERS. ASSESSEE 2 FILED THE RETURN OF INCOME ON 23-03-2005 DECLARING TOTAL INC OME OF RS.4,65,043/-. DURING THE COURSE OF SEARCH ACTION U/S.132 OF THE ACT AT THE PREMISES OF SHRI CHANDULAL SADHURAM KHEMANI, CERTAIN DOCUMENTS/BOOKS OF ACCOUNTS PERTAINING TO THE ASSESSEE WERE SEIZED. IT WAS FOUND THAT AN IMMOVABLE PROPERTY WAS SOLD FOR RS.30,34 ,000/- AND SALE DEED WAS ENTERED INTO BETWEEN ZONZDEN F. LOBO, SHR I ARUN CHACHAD & SHRI J.P. JADHAV (I.E.ASSESSEE WHO WAS ONE OF THE CONFIRMING PAR TY). FROM THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH JANLAXMI CO-OP BANK BEARING A/C.NO.200550, SAMARTH NAGAR, BRANCH, IT WAS NOTICE D THAT THERE IS CREDIT OF RS.10 LAKHS IN THE CASH BOOK OF J.P. BUILDERS AND DEVELOPERS. THE AO WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY T HE ASSESSEE. AT THE END OF THE ASSESSMENT, HE MADE TOTAL ADDITION OF RS.11 LAKHS U/S.69 OF THE ACT APART FROM OTHERS. AO DETERMINED THE TOTAL INCO ME OF THE ASSESSEE AT RS.21,12,250/-. EVENTUALLY, AO ALSO LEVIED PENALTY OF RS.3,6 2,999/- U/S.271(1)(C) OF THE ACT FOR CONCEALING THE PARTICULARS OF INCOME. 4. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) DISMISSED THE APP EAL FOR NON COMPLIANCE TO VARIOUS NOTICES. MATTERS WAS CARRIED B EFORE THE TRIBUNAL, WHICH VIDE ORDER DATED 09-05-2013, WERE REMAND ED THE ISSUE BACK TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION. IN THE FIRST ROUND, THE C IT(A) VIDE ORDER DATED 20-03-2015 DELETED ADDITION OF RS.6 LAKH S AND CONFIRMED THE PENALTY ON THE BALANCE AMOUNT OF RS.5 LAKHS BY OBSERVING AS UN DER : IN VIEW OF THE FACTS GIVEN ABOVE, IT IS ESTABLISHE D THAT THE APPELLANT CONCEALED THE TRUE PARTICULARS OF INCOME AND FURNIS HED INACCURATE PARTICULARS OF INCOME IN RESPECT OF RS.5,00,000/- THAT HE HAD INTRODUCED IN CASH IN THE BOOKS OF ACCOUNT OF M/S. J.P. BUILDERS AND DEVELOPERS. THE APPELLANT, WITH A MALAFIDE INTENTION TO EVADE TAX F URNISHED CONCOCTED SET OF DOCUMENTS IN REGARD TO HIS TRANSACTIONS WITH SHRI S URYAVANSHI. THE APPELLANT HAS, THEREFORE, CONCEALED HIS INCOME AND EVADED TAX THEREON. IN VIEW OF THE ABOVE CONCEALMENT PENALTY U/S.271(1)(C) IS CONFIRMED ON RS.5,00,000/-. THE PENALTY ON THE ADDITION OF RS.6 ,00,000/- IS DELETED. APPELLANTS GROUND OF APPEAL IS PARTLY ALLOWED. 5. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE IS IN A PPEAL BEFORE US WITH THE GROUNDS EXTRACTED ABOVE. 3 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS A CASE WHERE PENALTY IS REQUIRED TO BE DELETED IN VIEW OF HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHRI SAMSON PERINCHERY DATED 05-01- 2017 AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH C OURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 I TR 565. BRINGING OUR ATTENTION TO THE CONTENTS OF PARA 8 OF THE ASSESSM ENT ORDER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS A CASE W HERE ADDITION OF RS.11 LAKHS WAS MADE ORIGINALLY U/S.69 OF THE ACT. AO INITIAT ED THE PENALTY PROCEEDINGS STATING THAT THE PENALTY IS INITIATED FOR CONCEALING THE PARTICULARS OF INCOME . FURTHER, BRINGING OUR ATTENTION TO PARA NO.7 OF THE PENALTY ORDER DT 15-03-2013, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT PENALTY IS LEVIED BOTH FOR FURNISHING INACCURATE PARTICULARS OF INCOME AS WELL AS CONCEALING HIS PARTICULARS OF INCOME. 7. IN REPLY TO THIS LEGAL ISSUE, LD. DR FOR THE REVENUE SUB MITTED 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. 8. WE HEARD BOTH THE PARTIES ON THIS LEGAL ISSUE AND PER USED THE ORDERS OF THE REVENUE. FOR THE SAKE OF COMPLETENESS OF THIS ORD ER, WE PROCEED TO EXTRACT THE RELEVANT LINES FROM PARA 8 OF THE ASSESSMENT ORDER AND PARA NO.7 OF THE PENALTY ORDER AND THE SAME READS AS UNDER : PARA 8 OF THE ASSESSMENT ORDER : 8. THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE IT ACT, IS INITIATED FOR CONCEALING THE PARTICULARS OF INCOME ON THIS POINT. PARA 7 OF THE PENALTY ORDER : 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT IT IS A FIT CASE FOR LEVY O F PENALTY IN TERMS OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE INCOME TA X ACT, 1961 FOR FURNISHING INACCURATE PARTICULARS OF INCOME . I HAVE, THEREFORE, NO ALTERNATIVE BUT TO LEVY THE PENALTY FOR CONCEALING HIS PARTICULARS OF INCOME . I, THEREFORE, DIRECT THE ASSESSEE TO PAY BY WAY OF PENALTY U/S.27 1(1)(C) AT RS.3,62,999/- . 4 FROM THE ABOVE, IT IS CLEAR THAT THE AO INITIATED THE PEN ALTY PROCEEDINGS FOR THE OFFENCE OF CONCEALING THE PARTICULARS 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 AO SUFFERED FR OM AMBIGUITY IN HIS MIND WITH REGARD TO THE APPLICABLE LIMB OF CLAUSE (C) OF SEC TION 271(1) OF THE ACT TO THE FACTS OF THE CASE. THEREFORE, WE FIND TH E 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 PENALTY ORDER IS UNSUSTAINA BLE IN LAW LEGALLY. SUCH VIEW WAS ALREADY TAKEN IN A NUMBER OF CASES. SAID MAN NER OF INITIATING AND LEVYING OF PENALTY WITHOUT MAKING REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) IS UNSUSTAINED. AO IS UNDER OBLIGATION TO SP ECIFYING THE SAME AND CORRECT LIMB AT THE TIME OF INITIATION AS WELL AS A T THE TIME OF LEVY OF PENALTY. THEREFORE, THE PENALTY LEVIED BY THE AO IS UNSU STAINABLE ON TECHNICAL GROUNDS. FURTHER, THIS VIEW OF OURS GET STRENG TH BY THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. S HRI SAMSON PERINCHERY AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (S UPRA). ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 26 TH DAY OF MARCH, 2018. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKAR A RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 26 TH MARCH, 2018. SATISH 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-1, NASHIK 4. / THE CIT-1, NASHIK 5. , , A / DR A, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE