M/S FREE TRADE UNION MULTIPURPOSE PROJECTS TRUST, MUMBAI V. ITO (E) 1 (3), MUMBAI

ITA 7537/MUM/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9443 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2003-2004
• Appeal Filed On: 08-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N R AGGARWAL
• Keywords: Search and seizure
• Section: 148; 132; 271(1)(c); 143(3); 142(1); 250; 274; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER & SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA No.7537/Mum/2019 (A.Y: 2003-04) M/s. Free Trade Union Multipurpose Projects Trust, Kennedy House, 4 th Floor, Goregaonkar Road, Mumbai – 400007 Vs. ITO (Exe) – 1(3) 5 th Floor, Piramal Chambers, Mumbai – 400012. ./ज आइआर ./PAN/GIR No. : AAAPZ1431A Appellant .. Respondent Appellant by : Shri NR Aggarwal, AR Respondent by : Ms. Usha Gaikwad, DR Date of Hearing 06.09.2021 Date of Pronouncement 07.09.2021 आद श / O R D E R PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order of the Commissioner of Income Tax (Appeals)- 1, Mumbai passed u/s 271(1)(c) and 250 of the Income Tax Act, 1961. The assessee has raised the following grounds of appeal: 1. The Ld. CIT(A) erred in confirming the Penalty order by ITO passed u/s 271(1)(c) of the Act. 2. The Ld. CIT(A) erred in confirming the penalty u/s 271(1)(c) even though AO issued penalty notice at the time of original ITA No. 7537Mum/2019 M/s. Free Trade Union Multipurpose Projects Trust, Mumbai - 2 - order u/s 143(3) r.w.s 147 by observing that For escapement of income & taxes & AO failed to strike off unwanted limb in penalty notice issued & while successor AO had levied penalty by observing that assessee committed default within the remaining of section 271(1)(c) of the Act. 2. The brief facts of the case are that the assessee is a trust. There was a search and seizure operations u/s 132 of the Act was on the Chandbibi Group on 20.08.2009. The A.O. has reason to believe that there is an escapement of income and issued notice u/s 148 of the Act. The assessee was provided reasons of reopening of assesseement. The assessee has filed the original return of income on 21.10.2003 with a total income of Rs. Nil. The assessee has filed a letter to treat the earlier return of income filed in compliance to the notice u/s 148 of the Act. Subsequently the A.O. has issued notice u/s 143(2) and 142(1) of the Act. In compliance the Ld. AR of the assessee appeared from time to time and produced the books of accounts along with bills, vouchers and the case was discussed. The A.O. found that the assessee trust is engaged various philanthropic activities as per the trust deed. During the previous year it has earned income from capital gain and other sources. The A.O considered the facts and the clauses in the trust deed. The A.O. dealt on transactions of trust at Para 3 & 4 of the order and found that the trust has factual irregularities and ITA No. 7537Mum/2019 M/s. Free Trade Union Multipurpose Projects Trust, Mumbai - 3 - observed that there is a transaction of transfer of amount which falls within the purview of Sec. 13(1)(c) r.w.s 13(3) of the Act. Accordingly computed the total income of Rs. 1,30,99,930/- and passed order u/s 143(3) r.w.s 147 of the Act dated 27-12-2010. 3. Subsequently, the A.O. has initiated penalty proceedings u/s 271(1)(c) of the Act. In the penalty proceedings the A.O. has considered the findings of the scrutiny assessment and the assessee has filed the explanations referred in the penalty order. But the A.O was not satisfied with the explanations and levied the penalty and passed order u/s 271(1)(c) of the Act dated 30-03-2015. 4. Aggrieved by the penalty order, the assessee has filed an appeal before the CIT(A). In the appellate proceedings the assessee has filed the submissions. Whereas the CIT(A) was not satisfied with the explanations and confirmed the penalty levied by the Assessing officer and dismissed the appeal. Aggrieved by the CIT(A) order, the assessee has filed an appeal before the Honble Tribunal. 5. At the time of hearing, the Ld.AR of the assessee submitted that the assessee has cooperated in submitting ITA No. 7537Mum/2019 M/s. Free Trade Union Multipurpose Projects Trust, Mumbai - 4 - the information before the A.O. Further the notice issued for levy of penalty is invalid and supported the submissions with the judicial decisions and paper book and prayed for allowing the appeal. 6. Contra, the Ld.DR submitted that the CIT(A) has rightly confirmed the penalty though technicalities raised by the assessee in the ground of appeal are devoid of merits and prayed for dismissal of the assessee appeal. 7. We heard the rival contentions and perused the material on record. The sole crux of the disputed issue is that the assessee has challenged the levy of penalty on legal issue as the A.O. has not applied his mind and non striking of charge in the penalty notice i.e. whether the charge is for concealment of income or furnishing of in accurate particulars of income. The Ld.AR demonstrated the copy of penalty notice and the submissions are realistic. We find the Jurisdictional Honble High Court of Bombay in Mohd Farhan A Shaikh Vs. DCIT in Tax Appeal No. 51 to 57 of 2012 dated 11.03.2021. (2021) 125. taxmann.com 253 (Bombay) has dealt on this disputed issue of not striking off charge in the penalty notice would vitiate ITA No. 7537Mum/2019 M/s. Free Trade Union Multipurpose Projects Trust, Mumbai - 5 - the penalty proceedings. The Hon’ble High Court has made observations at page 56 as under; 180. One course of before us is curing a defect in the notice by referring to the assessment order, which may or not contain reason for the penalty proceedings. The other course of action is the prevention of defect in the notice – and that prevention takes just a tick mark. Prudence demands prevention is better than cure. Answers: Question No. 1: If the assessment order clearly records satisfaction for imposing penalty on one or the other, or both grounds mentioned in Sec. 271(1)(c), does a mere defect in the notice – not striking off the irrelevant matter vitiate the penalty proceedings? 181. It does. The primary burden lies on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under Sec. 271(1)(c), r.w.s. 274 of the Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other’s defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a deferent statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 182. More Particularly, a penal provision, even with civil consequences, must be construed strictly. And ambiguity, if any, must be resolved in the affected assessee’s favour. ITA No. 7537Mum/2019 M/s. Free Trade Union Multipurpose Projects Trust, Mumbai - 6 - 8. We have considered the facts, circumstances and ratio of the decision of Honble High Court and are of the view that in the present case the A.O has not has not strike off the charge for levy of penalty for concealment of income or for furnishing of inaccurate particulars of income. Accordingly, we set aside the order of the CIT(A) and quash the penalty notice. And allow the grounds of appeal in favour of the assessee. 9. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 07.09.2021. Sd/- Sd/- ( MANOJ KUMAR AGGARWAL) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 07.09.2021 KRK, PS /Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent. 3. आ र आ / The CIT(A) 4. आ र आ ( ) / Concerned CIT 5. "#$ % & &' , आ र ) र*, हमद द / DR, ITAT, Mumbai ITA No. 7537Mum/2019 M/s. Free Trade Union Multipurpose Projects Trust, Mumbai - 7 - 6. % -. / 0 / Guard file. ान ु सार/ BY ORDER, " & //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai