PRADEP THAMPI, MUMBAI V. ACIT 20(2), MUMBAI

ITA 7068/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9872 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 21-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL LD
• Assessee Lawyers: VIJAY MEHTALD
• Keywords: Salary income; Principle of natural justice
• Section: 143(3)

Judgement Text

ITA NO.7068/MUM/2014 PRADEEP THAMPI ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 7068/MUM/2014 ( / ASSESSMENT YEAR: 2009-10) PRADEEP THAMPI 2201 MEGHDOOTA LOKHANDWALA BACK ROAD ANDHERI(W) MUMBAI 400 053 / VS. ASSISTANT COMMISSIONER OF INCOME TAX 20(2) MUMBAI ./ ./PAN/GIR NO. AABPT-8165-G ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : VIJAY MEHTA,LD. AR REVENUE BY : RAJAT MITTAL, LD. DR / DATE OF HEARING : 28/06/2017 / DATE OF PRONOUNCEMENT : 07/07/2017 ITA NO.7068/MUM/2014 PRADEEP THAMPI ASSESSMENT YEAR 2009-10 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 ASSAILS THE ORDER OF LD. COMMISSIONER OF IN COME TAX (APPEALS)-31 [CIT(A)], MUMBAI DATED 10/09/2014 QUA CONFIRMATION OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS RAISED ADDITIONAL GROUND OF APPEAL WHICH ASSAILS PE NALTY PROCEEDINGS ON LEGAL GROUNDS. SINCE THE SAME IS LEGAL GROUND AND D O NOT REQUIRE APPRECIATION OF NEW FACTS, THE SAME IS TAKEN ON REC ORD AS PER JUDGMENT OF APEX COURT IN NATIONAL THERMAL POWER CORPORATION LTD. [229 ITR 383]. 2. BRIEFLY STATED, THE ASSESSEE BEING RESIDENT INDIVIDUAL EARNING INCOME FROM SALARY & COMMISSION / INTEREST WAS ASSESSED U/S 143(3) AT RS.2,95,32,390/- AFTER CERTAIN ADDITIONS / DISALLOW ANCES AS AGAINST RETURNED INCOME OF RS.1,95,32,388/- FILED BY THE AS SESSEE ON 24/09/2009. 2.1 THE ASSESSEE WAS FOUND TO HAVE MADE CASH DEPOSI T OF RS.29.00 LACS IN TWO BANK ACCOUNTS, WHICH WAS OFFERED FOR TA XATION DURING ASSESSMENT PROCEEDINGS. AGAINST THE SAME, PENALTY P ROCEEDINGS U/S 271(1)(C) WERE INITIATED IN THE ASSESSMENT ORDER AN D CONSEQUENTLY SHOW CAUSE NOTICE U/S 274 READ WITH SECTION 271(1)(C) DATED 25/10/2011 WAS ISSUED TO THE ASSESSEE. ITA NO.7068/MUM/2014 PRADEEP THAMPI ASSESSMENT YEAR 2009-10 3 2.2 THE ASSESSEE DID NOT CONTEST THE PENALTY PROCEE DINGS WHICH LED THE AO TO LEVY THE PENALTY OF RS.9,85,710/- AGAINST THE SAID ADDITION VIDE PENALTY ORDER DATED 30/04/2012. 2.3 AGGRIEVED, THE ASSESSEE ASSAILED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 10/09/2 014 AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR ASSESSEE, BY WAY OF ADDITION AL GROUNDS OF APPEAL, HAS CONTESTED THE PENALTY PROCEEDINGS BY CO NTENDING THAT THE PENALTY HAS BEEN INITIATED / LEVIED BY LD. AO WITHO UT DUE APPLICATION OF MIND AND THEREFORE, LIABLE TO BE QUASHED AS PER VAR IOUS JUDICIAL PRONOUNCEMENTS. THE LD. AR HAS QUESTIONED THE VALID ITY OF THE PENALTY PROCEEDINGS ON ACCOUNT OF NON-RECORDING OF PROPER S ATISFACTION BY THE LD. AO. OUR ATTENTION HAS BEEN DRAWN TO THE GROUNDS /LIMBS ON WHICH PENALTY WAS INITIATED, SHOW CAUSE NOTICE U/S 274 READ WITH SECTION 271(1)(C) AND THE GROUNDS ON WHICH THE PENALTY HAS FINALLY BE EN LEVIED. RELIANCE HAS BEEN PLACED ON MANY JUDICIAL PRONOUNCE MENTS OF VARIOUS HIGHER AUTHORITIES FOR THE CONTENTION THAT MERE DEF ECT IN THE SHOW-CAUSE NOTICE VITIATES THE PENALTY PROCEEDINGS ITSELF. 3.1 PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] JUSTIFIED THE LEVY OF PENALTY BY CONTENDING THAT THE ASSESSEE COULD NO T OFFER ANY EXPLANATION OF CASH DEPOSIT AND THEREFORE DID NOT C ONTEST THE PENALTY PROCEEDINGS BEFORE LD. AO AND HENCE PRECLUDED FROM ASSAILING THE PENALTY PROCEEDINGS AT THIS STAGE. 4. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED R ELEVANT MATERIAL ON RECORD. ADMITTEDLY, THE PENALTY HAS BEEN LEVIED ON VOLUNTARY ITA NO.7068/MUM/2014 PRADEEP THAMPI ASSESSMENT YEAR 2009-10 4 SURRENDER MADE BY THE ASSESSEE DURING ASSESSMENT PR OCEEDINGS. HOWEVER, A PERUSAL OF QUANTUM ASSESSMENT ORDER REVE ALS THAT PENALTY HAS BEEN INITIATED BY LD. AO ON THIS ADDITION OF RS .29.00 LACS BY MAKING FOLLOWING OBSERVATION:- PENALTY PROCEEDINGS U/S 271(1)(C) ARE SEPARATELY IN ITIATED FOR CONCEALING THE PARTICULARS OF INCOME. AGAINST THE SAME, A SHOW CAUSE NOTICE IN ITNS FORM U/S 274 READ WITH SECTION 271(1)(C) DATED 25/10/2011 HAS BEEN ISSUED TO THE ASSESSEE WHICH STATES AS FOLLOWS: WHERE IN THE COURSE OF PROCEEDINGS BEFORE ME FOR TH E ASSESSMENT YEAR 2009-10 IT APPEARS TO ME THAT YOU:- *HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME FINALLY, THE PENALTY HAS BEEN IMPOSED BY LD. AO BY MAKING FOLLOWING OBSERVATION IN THE PENALTY ORDER:- IN VIEW OF THE ABOVE, I AM SATISFIED THAT THIS IS A FIT CASE TO LEVY PENALTY U/S 271(1)(C) OF THE I.T.ACT, 1961. THE TOTAL ADDITIONS OF RS.29,00,000/- WAS MADE IN THE ASSESSMENT ORDER U/S 143(3) OF THE I.T.ACT, 1961 DA TED 25.10.2011 AS MENTIONED ABOVE, IS CONSIDERED AS CONCEALMENT OF INCOME ON AC COUNT OF FURNISHING INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. THE ABOVE OBSERVATIONS / FACTS, IN OUR OPINION, REV EAL INCONSISTENT THINKING ON THE PART OF LD. AO SINCE, PRIMA FACIE, HE HIMSELF IS NOT SURE AS TO THE GROUNDS / BASIS FOR WHICH PENALTY WAS BEI NG INITIATED FOR THE REASONS STATED HEREINAFTER. 4.1 A PERUSAL OF THE QUANTUM ASSESSMENT ORDER REVEA LS THAT THE PENALTY HAS BEEN INITIATED FOR CONCEALING THE PARTICULARS OF INCOME WHEREAS THE SHOW CAUSE NOTICE DO NOT SPECIFY THE LI MB FOR WHICH PENALTY ITA NO.7068/MUM/2014 PRADEEP THAMPI ASSESSMENT YEAR 2009-10 5 WAS BEING INITIATED. THE PENALTY HAS FINALLY BEEN L EVIED FOR CONCEALMENT OF INCOME ON ACCOUNT OF FURNISHING OF INACCURATE PA RTICULARS OF INCOME . WE OBSERVE THAT THE EXPRESSIONS FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME AS PER VARIOUS LEGAL PRONOUNCEMENTS, ARE TWO DIFFERENT LIMBS CARRYING DIFFERENT CONNOTATIONS / MEANING. THE SAME ALSO BECOMES CLEAR FROM THE LANGUAGE OF SHOW-CAUSE NOTICE WHICH STATES THAT THE ASSESSEE HAVE CONCEALED THE PARTICU LARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. UNDISPU TEDLY, THE AO WAS REQUIRED TO SPECIFY THE EXACT CHARGE FOR WHICH THE ASSESSEE WAS BEING PENALIZED WHICH HE HAS FAILED TO DO SO AND THEREFOR E THE SAME VITIATES THE PENALTY PROCEEDINGS ITSELF. 4.2 OUR VIEW IS FORTIFIED BY THE JUDGMENT OF HONBL E SUPREME COURT RENDERED IN DILIP N.SHROFF VS. JCIT (291 ITR 519) WHEREIN THE SUPREME COURT OBSERVED THAT THE CONCEALMENT OF INCOME AND F URNISHING OF INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THE HONBLE COURT FURTHER HELD THAT NON-STRIKING OFF OF THE RELEVANT PORTIONS OF STANDARD SHOW-CAUSE NOTICE REFLECTS NON-APPLICATION OF MIND BY AO AND H ENCE VITIATES THE PENALTY. IT IS FURTHER NOTED THAT THE RATIO OF THI S CASE WAS VERY MUCH RELEVANT AND VALID DESPITE THE JUDGMENT OF APEX COU RT IN THE CASE OF CIT VS. DHARMENDRA TEXTILE PROCESSOR ( 306 ITR 277) IN VIEW OF ANOTHER JUDGMENT OF SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. [322 ITR 158] WHEREIN IT WAS OBSERVED THAT REASONING GIVEN IN TH E CASE OF DILIP N.SHROFF COULD NOT BE FAULTED EXCEPT TO THE EXTENT OF OBSERV ATIONS REGARDING NECESSITY OF MENS-REA FOR THE PURPOSE OF SECTION 271(1)(C). SIMILAR VIEW HAS BEEN EXPRESSED IN THE JUDGMENT REN DERED BY HONBLE ITA NO.7068/MUM/2014 PRADEEP THAMPI ASSESSMENT YEAR 2009-10 6 KARNATAKA HIGH COURT IN CIT VS. MANJUNATHA COTTON & GINNING FACTORY [2013 359 ITR 565] WHICH WAS LATER FOLLOWED BY THE SAME COURT IN CIT VS. SSAS EMERALD MEADOWS [ITA NO. 380 OF 2015 23/11/2015] AGAINST WHICH SPECIAL LEAVE PETITION [SLP] FILED BY THE REVENUE BEFORE APEX COURT IN CC NO.11485/2016 ORDER DATED 05/08/2016 WAS DISMISSED BY THE HONBLE COURT, FINDING NO MERITS I N THE CASE. FURTHER, HONBLE BOMBAY HIGH COURT HAS FOLLOWED THE RATIO OF SAME JUDGMENT IN CIT VS. SHRI SAMSON PERINCHERY [ITA NO. 1154 OF 201 4 ORDER DATED 05/01/2017] AND FURTHER TRIBUNAL, IN CATENA OF JUDGMENT AND MOR E PARTICULARLY IN WADHWA ESTATE & DEVELOPERS VS. ACIT [ITA N0. 2158/MUM/2016 DATED 24/02/2017] HAS TAKEN THE SAME VIEW FOLLOWING THE AFORESAID JUDGMENTS. EVEN IN THE CASE OF CIT VS. SMT. KAUSHALYA [SUPRA], THE HONBLE JURISDICTIONAL HIGH COURT OBSERVED THAT THE NOTICE ISSUED UNDER SECTION 274 MUST REVEAL APPLICATION OF MIND BY THE ASSESSING OFFICER AND THE ASSESSEE MUST BE AWARE OF THE EXACT CHARGE ON WHICH HE HAD TO FILE HIS EXPLANATION. IT WAS FUR THER OBSERVED THAT VAGUENESS AND AMBIGUITY IN THE NOTICE DEPRIVES THE ASSESSEE OF REASONABLE OPPORTUNITY TO CONTEST THE SAME. 4.3 THEREFORE RESPECTFULLY FOLLOWING THE RATIO OF A BOVE JUDICIAL PRONOUNCEMENTS, WE ARE OF THE CONSIDERED OPINION TH AT THE PENALTY PROCEEDINGS STOOD VITIATED FOR WANT OF SATISFACTION AND IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND THEREFORE, LIABLE TO BE QUASHED. WE HELD SO WHICH RESULTS INTO ASSESSEES APPEAL BEING ALLOW ED ON LEGAL GROUNDS. 4.4 SINCE, WE HAVE QUASHED THE PENALTY PROCEEDINGS ON LEGAL GROUNDS, WE SEE NO NECESSITY TO DELVE UPON THE MATTER ON MER ITS ANY FURTHER. ITA NO.7068/MUM/2014 PRADEEP THAMPI ASSESSMENT YEAR 2009-10 7 5. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH JULY, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMARAGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 07 .07.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. #&. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI