M/s. Patankar Wind Farm Pvt.Ltd, Satara V. Deputy Commissioner of Income-Tax, Satara

ITA 749/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5533 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 30-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Section: 271(1)(c); 14A; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 749 /PUN/201 7 / ASSESSMENT YEAR : 200 8 - 09 M/S. PATANKAR WIND FARM PVT. LTD., SHIKKA MANSION, PATAN, TALUKA PATAN, DISTT. - SATARA, PIN 415206 PAN : AABCP1365R ....... / APPELLANT / V/S. DEPUTY COMMISSIONER OF INCOME TAX, SATARA CIRCLE, SATARA / RESPONDENT ASSESSEE BY : SHRI PRAYAG JHA REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 1 8 - 03 - 2019 / DATE OF PRONOUNCEMENT : 03 - 06 - 2019 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 4 , PUNE DATED 30 - 12 - 2016 FOR THE ASSESSMENT YEAR 20 0 8 - 09 , CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE AC T ). 2 ITA NO .749/PUN/2017, A.Y. 2008 - 09 2. SHRI PRAYAG JHA APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 25 - 09 - 2008 DECLARING TOTAL INCOME OF RS.19,41,040/ - . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF WIND POWER GENERATION AND TRADING OF LAND. THE ASSESSEE IS ALSO ENGAGED IN LAND DEVELOPMENT ACTIVITIES. IN RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80IA (4) IN RESPECT OF INCOME FROM POWER GENERATION. THE ASSES SING OFFICER IN SCRUTINY ASSESSMENT PROCEEDINGS INTER ALIA MADE DISALLOWANCE QUA EXCESSIVE DEDUCTION CLAIMED U/S. 80IA (4) OF THE ACT. APART FROM ABOVE DISALLOWANCE OF RS.1,77,857/ - U/S. 14A OF THE ACT WAS ALSO MADE. THE ASSESSING OFFICER INITIATED PENALT Y PROCEEDINGS U/S. 271(1)(C) OF THE ACT IN RESPECT OF AFORESAID DISALLOWANCES. THE ASSESSING OFFICER LEVIED PENALTY OF RS.54,958/ - U/S. 271(1)(C) VIDE ORDER DATED 05 - 03 - 2015 ONLY IN RESPECT OF DISALLOWANCE U/S. 14A OF THE ACT. NO PENALTY WAS LEVIED QUA DISALLOWANCE U/S. 80IA (4) OF THE ACT. 2.1 THE LD. AR FURTHER CONTENDED THAT WHILE INITIATING PENALTY PROCEEDINGS ON DISALLOWANCE U/S. 14A , THE ASSESSING OFFICER MENTIONED BOTH THE LIMBS OF SECTION 271(1)(C) I.E. FURNISHING INACCURATE PARTICULARS OF INC OME AND CONCEALMENT OF INCOME. SIMILARLY, WHILE LEVYING PENALTY THE ASSESSING OFFICER INVOKED BOTH THE CHARGES OF SECTION 271(1)(C) I.E. FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. THE MANNER IN WHICH PENALTY PROCEEDINGS HAVE BEEN INITIATED AND THE PENALTY HAS BEEN LEVIED CLEARLY INDICATES THAT THERE WAS AMBIGUITY IN THE MIND OF ASSESSING OFFICER WITH RESPECT TO CHARGE U/S. 271(1)(C) TO BE IMPOSED FOR LEVY OF PENALTY. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMI SSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY REPORTED AS 359 ITR 565 AND THEREAFTER, THE TRIBUNAL IN VARIOUS 3 ITA NO .749/PUN/2017, A.Y. 2008 - 09 DECISIONS HAVE CONSISTENTLY HELD THAT LEVY OF PENALTY U/S. 271(1)(C) WHERE BOTH THE LIMBS OF SECTION 271(1)(C) ARE MENTIONED IS NOT SUSTAINABLE. 3. ON THE OTHER HAND SHRI PANKAJ GARG REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. THE LD. DR SUBMITTED THAT THE ASSESSEE IN RETURN OF INCOME FAILED TO DISCLOSE INTEREST INCOME OF RS.1,77,857/ - RECEIVED FROM P ATAN URBAN CO - OPERATIVE BANK LTD., T HEREFORE, PENALTY U/S. 271(1)(C) OF THE ACT HAS BEEN RIGHTLY LEVIED. 4. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS CHALLENGED LEVY OF PENALTY U/S. 271(1)(C) ON THE GROUND OF AMBIGUITY IN SPECIFYING THE CHARGE U/S. 271(1)(C) OF THE ACT. A PERUSAL OF ASSESSMENT ORDER SHOWS THAT PENALTY U/S. 271(1)(C) QUA DISALLOWANCE U/S. 14A HAS BEEN INITIATED BY MENTIONING BOTH THE LIMBS OF SECTION 271(1)(C). THE RELEVANT EXTRACT OF THE ASSESSING OFFICER WHERE PENALTY HAS BEEN INITIATED READS AS UNDER : FURTHER, IN VIEW OF ABOVE DISCUSSION, PENALTY PROCEE DINGS U/S. 271(1)(C) OF THE I.T. ACT, 1961, ARE BEING INITIATED SEPARATELY, FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING THE INCOME . 5. THEREAFTER, WHILE PASSING PENALTY ORDER DATED 05 - 03 - 2015 THE ASSESSING OFFICER AGAIN MENTIONED BOTH THE LIMBS OF SECTION 271(1)(C). THE RELEVANT EXTRACT OF PENALTY ORDER READS AS UNDER : I AM, THEREFORE, SATISFIED THAT THE ASSESSEE FAILS TO PROVE THAT ALL THE FACTS AND MATERIAL RELATING TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY IT, HENCE THE AMOUNT OF RS.1,77,857/ - SO ADDED IN COMPUTING THE TOTAL INCOME IS, FOR THE PURPOSES OF CLAUSE (C) OF SUB - SECTION (1) OF SECTION 271, DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATELY FURNISHED . 4 ITA NO .749/PUN/2017, A.Y. 2008 - 09 6. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF T. ASHOK PAI VS. COMMISSIONER OF INCOME TAX REPORTED AS 292 ITR 11 HAS HELD, CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS CARRY DIFFERENT CONNOTATIONS. CONCEALMENT REFERS TO DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSIO VERI OR SUGGESTIO FALSI . EXPRESSION CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CANNOT BE USED I NTERCHANGEABLY. CONCEALMENT OF INCOME CONNOTES WHERE THERE IS ESCAPMENT OF INCOME FROM TAX NET BY VIRTUE OF ASSESSEE CONCEALING INFORMATION/DOCUMENTS ETC. OR NON - FURNISHING OF INFORMATION ABOUT INCOME EARNED IN THE RETURN OF INCOME DURING THE RELEVANT P ERIOD. ON THE OTHER HAND EXPRESSION FURNISHING INACCURATE PARTICULARS OF INCOME SIGNIFIES WHERE THE ASSESSEE HAS FURNISHED PARTICULARS OF INCOME BUT THE INFORMATION/DOCUMENTS FURNISHED ARE FALSE/WRONG/INCORRECT OR ERRONEOUS. 7 . THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS HELD : 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS TH AT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSIO N THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULAR S OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJRAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO T HE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FUR NISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON - APPLICATION OF MIND. 5 ITA NO .749/PUN/2017, A.Y. 2008 - 09 8 . IN THE INSTANT CASE, THERE WAS AMBIGUITY AND VAGUENESS IN THE MIND OF ASSESSING OFFICER WH ILE RECORDING SATISFACTION WITH RESPECT TO CHARGE U/S. 271(1)(C) OF THE ACT TO BE INVOKED. THE SAME AMBIGUITY PERSISTED AT THE TIME OF PASSING ORDER LEVYING PENALTY. THE ASSESSING OFFICER HAS TO BE SPECIFIC AND CATEGORIC IN MENTIONING THE CHARGE U/S. 271 (1)(C) AT THE TIME OF RECORDING SATISFACTION , AS WELL AS AT THE TIME OF LEVY OF PENALTY. W HERE PENALTY PROVISIONS HAVE BEEN INVOKED IN INDISTINCT MANNER, PENALTY PROCEEDINGS WOULD FAIL THE TEST OF LEGAL REQUIREMENTS. ACCORDINGLY, THE IMPUGNED ORDER IS SE T ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 03 RD DAY OF JUNE, 2019. SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 03 RD JUNE, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4, PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 3, PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE