DIPESH S. SHAH, MUMBAI V. ADDL CIT PANVEL RG, PANVEL, PANVEL

ITA 7169/MUM/2013

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4714 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 06-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 201

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR (AM) & SHRI RAMLAL NEGI ( JM) I.T.A. NO. 7169/MUM/2013 (ASSESSMENT YEAR 2006-0 7) MR. DIPESH S.SHAH C/O. M/S. SARAF & CHANDRA CA BHARAT INS. BLDG. 3 RD FLOOR, 15-A, HORNIMAN CIRCLE, FORT MUMBAI-400 001. PAN: AEKPS4204G VS . ADDL.CIT 3 RD FLOOR TRIFED TOWER OPP. KHANDA COLONY NEW PANVEL-410206 DISTRICT RAIGAD ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI M. SUBRAMANIAN DEPARTMENT BY SHRI D.G. PANSARI DATE OF HEARING 12 . 2 . 201 9 DATE OF PRONOUNCEMENT 22 . 2 . 201 9 O R D E R PER RAJESH KUMAR (AM) : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 23.08.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2006-07. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS AGAINST CONFIRMATION OF PENALTY BY LEARNED CIT(A) AS IMPOSED BY THE ASSE SSING OFFICER U/S. 271(1)(C) OF THE ACT. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT ORDER WAS FRAMED U/S. 143(3) VIDE ORDER DATED 30.12.2008 ASSESSING THE INCOME AT RS. 82,24,749/- AS AGAINST INCOME OF RS. 57,10,469/-. THE ASSESSING OF FICER HAS MADE TWO ADDITIONS WHILE FRAMING ASSESSMENT ONE IN RESPECT O F UNDERSTATEMENT OF SALES OF RS. 3,29,280/-AND SECOND ON ACCOUNT OF UNEXPLAIN ED CASH CREDIT IN THE GUISE OF UNSECURED LOAN OF RS. 21.85 LAKHS. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S . 271(1)(C) OF THE ACT WITHOUT 2 MENTIONING THAT WHETHER THE SAME IS FOR CONCEALMENT OF INCOME OR ON ACCOUNT OF FILING OF INACCURATE PARTICULARS OF INCOME. IN T HE PENALTY ORDER THE ASSESSING OFFICER STATED IN PARA 12 THAT THE ASSESSEE HAS NO EXPLANATION TO OFFER REGARDING DEFAULT OF CONCEALMENT OF INCOME/FURNISHI NG OF INACCURATE PARTICULARS OF INCOME AND FINALLY LEVIED PENALTY OF RS. 7,93,123/- EQUAL TO 100% OF TAX SOUGHT TO BE EVADED VIDE ORDER DATED 29 .7.2010. IN THE QUANTUM PROCEEDINGS, ADDITION AS REGARDS UNDERSTATEMENT OF SALES OF RS. 3,29,280/- WAS DELETED BY THE ITAT, WHEREAS IN RESPECT OF UNE XPLAINED UNSECURED LOAN HE ADDITION OF RS. 12.15 LAKHS WAS CONFIRMED BY LEARNE D CIT(A) AND ALSO UPHELD BY ITAT. 4. LEARNED AR VEHEMENTLY SUBMITTED FOR US THAT PENA LTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER WITHOUT APPLICATION OF MIN D AND IN MECHANICAL MANNER, WHICH IS NOT PERMISSIBLE UNDER INCOME TAX A CT AND MAY BE QUASHED AS THE SAME IS IN VIOLATION OF PRINCIPLES OF NATURA L JUSTICE FOR THE REASONS THAT THE ASSESSEE WAS NOT CONFRONTED WITH ONE OF THE TWO LIMBS, ON WHICH PENALTY WAS PROPOSED TO BE LEVIED BY THE ASSESSING OFFICER. LEARNED AR DREW OUR ATTENTION TO PAGE NO. 1 OF THE PAPER BOOK, WHICH CO NTAINS NOTICE ISSUED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT DATED 3 0.12.2008 IN WHICH THE ASSESSING OFFICER HAS STATED THAT IT APPEARS TO ME THAT YOU HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. EVEN IN THE PENALTY ORDER, LEARNED AR SUBMITTED THA T THE ASSESSING OFFICER HAS NOT SPECIFIED ONE OF THE TWO LIMBS OR SPECIFIC CHAR GE ON WHICH PENALTY WAS IMPOSED FINALLY . THEREFORE, LEARNED AR SUBMITTED T HAT THIS IS SETTLED LEGAL POSITION THAT NO PENALTY CAN BE IMPOSED IN THIS MEC HANICAL MANNER. IN DEFENSE OF HIS ARGUMENT, LEARNED AR RELIED HEAVILY ON THE O RDER OF HON'BLE HON'BLE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF SHRI SAMSON PERINCHERY ITA NO. 1154 OF 2014, WHEREIN HON'BLE COURT BY FOLL OWING THE RATIO LAID DOWN IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (359 ITR 565) CAME TO THE CONCLUSION THAT NO PENALTY CAN BE IMPOS ED PARTICULARLY WHEN LIMB ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED IS NOT MENTIONED AND NOTICE IS ISSUED IN A MECHANICAL MANNER. THUS, IN VIEW OF TH E RATIO LAID DOWN BY 3 HON'BLE BOMBAY HIGH COURT, THE ORDER OF LEARNED CIT (A) MAY BE SET ASIDE AND THE ASSESSING OFFICER BE DIRECTED TO DELETED THE PE NALTY. 5. LEARNED DR RELIED ON HEAVILY ON THE ORDER OF LEA RNED CIT(A) AND SUBMITTED THAT THERE IS NO CONFUSION AND AMBIGUITY IN ISSUING NOTICE U/S. 271(1)(C) OF THE ACT AS IT HAS BEEN CLEARLY STATED THAT PENALTY IS BEING PROPOSED TO BE LEVIED EITHER FURNISHING OF INACCURATE PARTIC ULARS OF INCOME OR CONCEALMENT OF INCOME. EVEN IN THE PENALTY ORDER TH E SAME HAS BEEN VERY CLEARLY MENTIONED. THEREFORE, THE ORDER OF LEARNED CIT(A) SHOULD BE AFFIRMED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING VARIOUS DECISIONS CITED BY LEAR NED AR. UNDISPUTED FACTS ARE THAT THE ASSESSING OFFICER WHILE FRAMING ASSESS MENT U/S. 143(3) OF THE ACT INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WITHOUT MENTIONING WHETHER THE SAME RELATES TO CONCEALMENT OF INCOME O R FILING OF INACCURATE PARTICULARS OF INCOME. SIMILARLY, WHEN NOTICE U/S. 271(1)(C) OF THE ACT WAS ISSUED ON 30.12.2008 THE SAME WAS ISSUED IN MECHANI CAL MANNER WITHOUT STRIKING OFF IRRELEVANT LIMB AND THEREFORE THERE W AS NO APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER. EVEN IN THE ORD ER IMPOSING PENALTY, THE ASSESSING OFFICER MENTIONED BOTH LIMBS. IN OUR VIEW IT IS MANDATORY ON THE PART OF THE ASSESSING OFFICER TO SPECIFICALLY STATE THE PARTICULAR CHARGE ON WHICH PENALTY IS PROPOSED TO BE LEVIED AND NON-STRIKING O FF IRRELEVANT PORTION OF PARTICULAR LIMB WILL GO TO THE ROOT OF JURISDICTION OF THE ASSESSING OFFICER TO PASS PENALTY ORDER. IN THE CASE OF MANJUNATH COTTON & GINNING FACTORY (SUPRA) AND M/S. SSAS EMERALD MEADOWS, ITA NO. 38 OF 2015 DATED 23.11.2015, IT HAS BEEN HELD THAT NO PENALTY CAN BE IMPOSED WHERE ONE OF THE TWO LIMBS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURA TE PARTICULARS OF INCOME ON WHICH PENALTY WAS PROPOSED TO BE IMPOSED IS NOT ME NTIONED. IN THE CASE OF M/S. SSAS EMERALD MEADOWS (SUPRA) SLP FILED IN HON 'BLE SUPREME COURT BY THE DEPARTMENT HAS ALSO BEEN DISMISSED. IN THE CASE OF SHRI SAMSON PERINCHERY (SUPRA) HON'BLE BOMBAY HIGH COURT HAS HE LD THAT PENALTY TO BE IMPOSED ON THE GROUND/LIMB ON WHICH PENALTY HAS BEE N INITIATED. THUS, IN 4 VIEW OF THE RATIO LAID DOWN BY VARIOUS COURTS AND J UDICIAL FORUMS, WE ARE OF THE VIEW THAT PENALTY ORDER IS BAD IN LAW. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER HAS BEEN PRONOUNCED IN THE COURT ON 22.2.2019 . SD/- SD/- (RAMLAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 22/2/2019 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( (( ( SENIOR PRIVATE SECRETARY) PS ITAT, MUMBAI