SMT. DIVYA SHAILESH BHADALIYA, MUMBAI V. INCOME TAX OFFICER 33(1)(4), MUMBAI

ITA 7273/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6574 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 19-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: V G GINDIE A R SHRI KUMAR KALE
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 250; 274; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.7273/M/2018 ASSESSMENT YEAR: 2014-15 SMT. DIVYA SHAILESH BHADALIYA, C-1204, HULAS BASTI TOWER, MAHAVIR NAGAR, DAHANUKARWADI, KANDIVALI (WEST), MUMBAI 400 067 PAN: AAEPB9622K VS. INCOME TAX OFFICER 33(1)(4), ROOM NO.708, C-12, PRATYAKHKAR BHAVAN, BANDRA KURLA COMPLEX, MUMBAI - 400051 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI V.G. GINDIE, A.R. SHRI KUMAR KALE, A.R. REVENUE BY : SHRI D.G. PANSARI, D.R. DATE OF HEARING : 18.02.2019 DATE OF PRONOUNCEMENT : 20.02.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 10.09.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: BEING AGGRIEVED BY THE ORDER DATED 10.09.2018 PASS ED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-45, MUMBAI [L D. CIT(A)'] U/S 250 OF THE INCOME-TAX ACT,1961 ('ACT'), YOUR APPELLANT PREFERS THIS APPEAL, AMONG OTHERS, ON THE FOLLOWING GROUNDS OF APPEAL, EACH OF WHICH IS W ITHOUT PREJUDICE TO, AND INDEPENDENT OF, THE OTHER: ITA NO.7273/M/2018 SMT. DIVYA SHAILESH BHADALIYA 2 1- LEVY OF PENALTY U/S. 271(1)(C) : RS.6,66,104/- A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE SHOW CAUSE NOTIC E U/S. 274 R. W. S. 271(L)(C) OF THE ACT DATED 28.12.2016 ISSUED BY THE LD. AO WAS BAD I N LAW, HAVING BEEN ISSUED WITHOUT SPECIFYING THE PRECISE CHARGE FOR IMPOSITIO N OF PENALTY. B. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE PENALTY ORDER IS BAD IN LAW INASMUCH AS THE PENALTY WAS IMPOSED BY THE LD. AO FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME, WHEREAS THE CHARGE MADE OUT AGAINST THE APPELLANT I N THE RELEVANT ASSESSMENT ORDER WAS FOR FURNISHING INACCURATE PARTICULARS OF INCOME WITH A VIEW TO CONCEALMENT OF INCOME. C. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND ALSO IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY, WITHOUT AP PRECIATING THAT THE APPELLANT HAD OFFERED SATISFACTORY EXPLANATION WHICH WAS SUBSTANT IATED BY THE DOCUMENTARY EVIDENCE PLACED ON RECORD, AND THAT THEREFORE, THER E WAS NO BASIS FOR IMPOSITION OF THE PENALTY UNDER SECTION 271(L)(C) OF THE ACT. YOUR APPELLANT, THEREFORE, PRAYS THAT THE LD. AO'S ORDER IMPOSING THE PENALTY OF RS.6,66,104/- U/S. 271FL)(C) OF THE ACT BE QUASH ED AND THE PENALTY BE CANCELLED. YOUR APPELLANT CRAVES LEAVE TO ALTER, MODIFY, AMEND OR DELETE THE ABOVE GROUNDS OF APPEAL, OR TO ADD ONE OR MORE NEW GROUND(S), AS MAY BE NECESSARY. 3. IN THE FIRST GROUND, THE ASSESSEE HAS CHALLENGED THE ORDER OF LD. CIT(A) UPHOLDING THE ORDER OF AO ON THE IMPO SITION OF PENALTY BY IGNORING THE FACT THAT SHOW CAUSE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT IS BAD IN LAW AS ISSUED WITHOUT SPECIFYING THE SPECIFIC CHARGE FOR I MPOSITION OF PENALTY. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WAS PASSED ON 28.12.2016 ASSESSING THE TOTAL INCOME AT RS.24,32,115/- AS AGAINST THE R ETURN INCOME OF RS.2,76,440/-. THE ONLY ADDITION MADE BY THE AO IS ON ACCOUNT OF BOGUS THE LONG TERM CAPITAL GAIN OF RS.2 1,30,675/- WHICH WAS CLAIMED EXEMPT UNDER SECTION 10(38) OF TH E ACT AND THUS AO ADDED THE ENTIRE SALE PROCEEDS OF SHARES OF ITA NO.7273/M/2018 SMT. DIVYA SHAILESH BHADALIYA 3 RS.21,30,675/- TO THE INCOME OF THE ASSESSEE FOR BE ING NON GENUINE. WHILE PASSING THE ASSESSMENT ORDER, THE A O INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITH A VIEW TO CON CEALMENT OF INCOME. THEREAFTER, THE NOTICE DATED 28.12.2016 WA S ISSUED A COPY OF WHICH IS PLACED AT PAGE NO.1 OF THE PAPER B OOK WHEREIN THE AO HAS NOT STRUCK DOWN THE IRRELEVANT OF THE TW O LIMBS AND THUS THE NOTICE WAS ISSUED IN A STANDARD FORMAT. T HE ORDER PASSED UNDER SECTION 271(1)(C) DATED 19.06.2017 WHE REIN THE AO IN PARA 4(A) THAT THE PENALTY PROCEEDINGS UNDER SEC TION 271(1)(C) WERE INITIATED FOR CONCEALMENT OF INCOME ON THE BAS IS OF CONCRETE INFORMATION AND MATERIAL ON RECORD. IN PARA 4(E) THE AO STATED THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT WERE ATT RACTED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND FINALLY IMPOSED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY INVOKING EXPLANATION 4 TO SECTION 271 OF THE ACT E QUAL TO 100% OF THE TAX SOUGHT TO BE EVADED. 5. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE US THAT THERE WAS A COMPLETE NON APPLICATION OF MIND ON THE PART OF THE AO AS IS APPARENT FROM THE FACTS OF THE CASE. THE LD. A .R. REFERRED TO THE ASSESSMENT ORDER PASSED BY THE AO WHEREIN THE P ENALTY PROCEEDINGS WERE INITIATED UNDER SECTION 271(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITH A VIEW TO CONCEALMENT OF INCOME. THE AO ALSO ISSUED NOTICES UNDER SECTION 2 71(1)(C) READ WITH SECTION 274 DATED 28.12.2016 WHEREIN BOTH THE CHARGES WERE MENTIONED. THEREAFTER, THE LD. A.R. TOOK US T HROUGH THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) WHEREI N FINALLY THE PENALTY WAS IMPOSED IN ACCORDANCE WITH EXPLANATION 4 TO SECTION ITA NO.7273/M/2018 SMT. DIVYA SHAILESH BHADALIYA 4 271 OF THE ACT. THE LD. A.R. VEHEMENTLY SUBMITTED THAT THERE IS GLARING INCONSISTENCIES IN THE WHOLE PROCESS OF IMP OSITION OF PENALTY THEREBY DEPRIVING THE ASSESSEE OF HIS LEG ITIMATE RIGHT TO RESPOND TO THE PARTICULAR CHARGE IN THE SHOW CAUSE NOTICE ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED AS NO S PECIFIC CHARGE WAS INDICTED IN THE NOTICE ISSUED TO THE ASS ESSEE AND THEREFORE THE ASSESSEE COULD NOT RESPOND TO THE SA ME. THE AR CONTENDED THAT THUS THE PENALTY PROCEEDINGS AND CO NSEQUENT ORDER PASSED BY THE AO ARE VITIATED AND BAD IN LAW. THE LD. A.R. ALSO SUBMITTED THAT THE EXPLANATION 4 TO SECTION 27 1(1)(C) IS ATTRACTED IN THE CASE OF CONCEALMENT OF INCOME AND NOT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH E LD. A.R. RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASES OF SHIVKUMAR DEVIDUTT SARAF, HUF VS. ITO IN ITA NO.2063/M/2014 A .Y. 2004- 05 AND M/S. QUIKR INDIA PVT. LTD. VS. DCIT IN ITA NO.1046/M/2017 A.Y. 2009-10. 6. THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSES SEE ON THIS ISSUE BY HOLDING THAT THE NON MENTIONING OF PARTICU LAR LIMB IN THE PENALTY ORDER IS A CLERICAL MISTAKE ON THE PART OF THE AO AND CAN NOT VITIATE THE PENALTY PROCEEDINGS . 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD INCLUDING THE DECISIONS CITED BY THE ASSESSE E THAT WHILE PASSING THE ASSESSMENT ORDER THE AO HAS INITIATED T HE PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITH A VIEW TO CONCEALMENT OF INCOME. THE NOTICE U/S 271(1) WAS I SSUED ON 28.12.2016 IN A STANDARD FORMAT WITHOUT MENTIONING THE ONE OF THE TWO LIMBS OR ONE OF THE TWO CHARGES ON WHICH TH E PENALTY WAS PROPOSED TO BE LEVIED. FINALLY THE PENALTY WAS IMPOSED BY ITA NO.7273/M/2018 SMT. DIVYA SHAILESH BHADALIYA 5 AO INVOKING EXPLANATION 4 TO SECTION 271(1)(C) OF T HE ACT WHICH IS APPLICABLE IN THE CASE OF CONCEALMENT OF INCOME. IT IS CLEAR FROM THE ABOVE THAT AO HAS NOT PASSED THE ORDER AFT ER DUE APPLICATION OF MIND AND THUS , ASSESSEE WAS DEPRIVE D OF THE OPPORTUNITY TO RESPOND TO THE SHOW CAUSE NOTICE IN A PROPER MANNER AS THE ASSESSEE WAS NOT AWARE OF THE SPECIFI C CHARGE ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED. WE HA VE CAREFULLY PERUSED THE DECISIONS RELIED UPON BY THE COUNSEL IN THE CASE OF SHIVKUMAR DEVIDUTT SARAF, HUF VS. ITO (SUPRA) AND M /S. QUIKR INDIA PVT. LTD. VS. DCIT (SUPRA) WHEREIN UNDER SIMI LAR SET OF FACTS THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS HEL D THAT NO PENALTY CAN BE IMPOSED IN SUCH CASES WHERE THE AO H AS PASSED THE ORDER IN A MECHANICAL MANNER. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. 8. SINCE WE HAVE DECIDED THE ISSUE ON TECHNICAL GRO UND IN FAVOUR OF THE ASSESSEE, THE OTHER ISSUE RAISED ON M ERIT NEED NO ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.02.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 20.02.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH ITA NO.7273/M/2018 SMT. DIVYA SHAILESH BHADALIYA 6 //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.