Nitin Padmakar Kibe, Pune V. Deputy Commisisoner of Income-tax,

ITA 759/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9237 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 22-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Depreciation; Additional evidence; Initiation of penalty proceedings; Revised return
• Section: 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 759 /P U N/201 5 / ASSESSMENT YEAR : 20 0 7 - 08 NITIN PADMAKAR KIBE, SILVER WING FARMS, MAMURDI, DEHU ROAD, PUNE - 412101 . / APPELLANT PAN: ABFPK3535J VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI P.S. NAIK / DATE OF HEARING : 21 .0 6 . 2017 / DATE OF PRONOUNCEMENT: 30 . 0 6 .201 7 / ORDER P ER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) , PUNE - 6 , DATED 16 .0 2 .201 5 RELATING TO ASSESSMENT YEAR 20 0 7 - 08 AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS.34,74,080/ - . HE OUGHT TO HAVE APPRECI ATED THE FACTS OF THE CASE AND THE ARGUMENTS ADVANCED IN THIS BEHALF. 2. THE APPELLANT REQUESTS FOR ADMISSION OF ADDITIONAL EVIDENCES, IF ANY, REQUIRED IN SUPPORT OF THE ABOVE GROUNDS OF APPEAL. ITA NO. 759 /P U N/20 1 5 NITIN P KIBE 2 3. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE ON BOTH THE DATES OF HEARING FIXED. WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE AS THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN INCOME TAX APPEAL NO.1154 OF 2014 WITH OTHER INCOME TAX APPEALS NOS.953 OF 2014, 1097 OF 2014 AND 1226 OF 2014, JUDGMENT DATED 05.01.2017. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURN ISHED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.10,48,340/ - . THE CASE OF ASSESSEE WAS PICKED UP FOR SCRUTINY AND ADDITION WAS MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF CAPITAL GAINS ARISING ON ACCOUNT OF SALE OF FLATS AND SALE OF LAND. UNDER TH E FIRST ONE, THE CAPITAL GAINS WORKED OUT BY THE ASSESSEE WAS RE - WORKED AND AS AGAINST CAPITAL LOSS OF RS.25,320/ - , THE ASSESSING OFFICER TAXED THE CAPITAL GAINS AT RS.16,91,680/ - . THE ASSESSEE HAD SHOWN THE SAID CAPITAL GAINS IN THE ORIGINAL RETURN OF IN COME ; THOUGH IT WAS FILED IN THE REVISED COMPUTATION, WHICH WAS BEYOND THE TIME FOR FILING THE REVISED RETURN OF INCOME. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE DECLARING OF CAPITAL WAS DONE ONLY AFTER THE ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT AND SPECIFIC REQUIREMENT OF BANK ACCOUNT EXTRACT, THEREFORE, ON FACTS THERE WAS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME, FOR WHICH PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE SEPARATELY INITIATED . SIMILARLY, IN RESPECT OF CAPITAL GAINS ON ACCOUNT OF SALE OF LAND, THE DEDUCTION CLAIMED ON ACCOUNT OF PURCHASE OF NEW ASSET I.E. FLAT UNDER SECTION 54F OF THE ACT WAS DENIED TO THE ASSESSEE AND THE CAPITAL GAINS ARISING ON SALE OF LAND WAS BROUGHT TO T AX IN THE HANDS OF ASSESSEE. THE ASSESSING OFFICER HELD THE ACT OF ASSESSEE AMOUNTS TO CONCEALMENT OF INCOME OR FURNISHING ITA NO. 759 /P U N/20 1 5 NITIN P KIBE 3 INACCURATE PARTICULARS OF INCOME AND HENCE, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE SEPARATELY INITIATED. ANOT HER ADDITION WAS ON ACCOUNT OF INCOME FROM OTHER SOURCES, AGAINST WHICH ALSO, THE ASSESSEE WAS HELD TO HAVE CONCEALED THE INCOME AND FURNISH ED INACCURATE PARTICULARS OF SUCH INCOME AND PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE SEPARATEL Y INITIATED. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT, ISSUED NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT. IN THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE CONCEALED THE INCOME ON ALL THE THREE COUNTS AND LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 5. THE CIT(A) HAS UPHELD THE LEVY OF PENALTY AT RS.34,74,080/ - . 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. THE LIMITED ISSUE WHICH ARISES IN THE PRE SENT APPEAL IS AGAINST PENALTY PROCEEDINGS INITIATED IN THE PRESENT CASE AGAINST THE ASSESSEE VIDE ORDER PASSED UNDER SECTION 143(3) OF THE ACT. THE ASSESSING OFFICER HAD RE - COMPUTED THE INCOME FROM CAPITAL GAINS ON SALE OF FLATS AND ALSO ON SALE OF LAND. HOWEVER, WHILE MAKING THE AFORESAID ADDITION, THE REQUIREMENT OF THE ACT IS TO RECORD A SATISFACTION AS TO THE ASSESSEE HAVING WILLFULLY EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IN ORDER TO INITIATE PENALTY PROCEEDINGS UN DER SECTION 271(1)(C) OF THE ACT. HOWEVER, THE ASSESSING OFFICER IN THE PRESENT SET OF FACTS, HAS INITIATED PENALTY PROCEEDINGS ON BOTH THE LIMBS I.E. FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN RESPECT OF EACH ADDITION . THE ASSESSING OFFICER HAD TO RECORD SATISFACTION AS TO WHICH OF THE TWO LIMBS THE ASSESSEE HAS NOT FULFILLED. HOWEVER, THE ASSESSING OFFICER HAS NOT RECORDED SATISFACTION IN THIS REGARD. ITA NO. 759 /P U N/20 1 5 NITIN P KIBE 4 8. WE FIND THAT SIMILAR ISSUE OF LEVY OF PENALTY FOR NON - RECORDING OF SATISFACTION, AROSE BEFORE THE TRIBUNAL IN SHRI SURESH PANDIT BORALE VS. JCIT IN ITA NOS.2032 & 2033/PUN/2013, RELATING TO ASSESSMENT YEAR 2009 - 10, ORDER DATED 23.06.2017, WHEREIN IT WAS HELD AS UNDER: - 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS.27,39,028/ - . BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FILED THE RETURN OF INCOME DECLARING NIL INCOME AND AGRICULTURAL I NCOME AT RS.6,36,716/ - AND ALSO CARRY FORWARD OF LOSSES, DEPRECIATION AND BUSINESS LOSSES. THEREAFTER, REVISED RETURN OF INCOME WAS FILED BY THE ASSESSEE DECLARING TOTAL INCOME AT NIL AND CURRENT YEARS LOSSES AT RS.41,47,414/ - . THE CASE OF ASSESSEE WAS PICKED UP FOR SCRUTINY AND AFTER PERUSING SEVERAL DETAILS, THE ASSESSING OFFICER NOTED CERTAIN DISCREPANCIES IN THE BOOKS OF ACCOUNT AND ALSO SALE OF THE PROPERTY AT A PRICE HIGHER THAN THE ONE DECLARED BY THE ASSESSEE. THE ASSESSEE OFFERED ADDITIONAL INC OME ON ACCOUNT OF SALE OF PROPERTY AT RS.80 LAKHS OVER THE ABOVE SALE CONSIDERATION OF RS.50 LAKHS AND THE SAME WAS ADDED IN THE HANDS OF ASSESSEE BY THE ASSESSING OFFICER VIDE PARA 6 OF THE ASSESSMENT ORDER. THEREAFTER, HE FAILS TO RECORD ANY SATISFACTIO N AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT HAS BEEN VIOLATED BUT SIMPLY INITIATES THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THEREAFTER, OTHER ADDITIONS WERE MADE IN THE HANDS OF ASSESSEE. HOWEVER, ONLY IN RESPECT OF INTEREST ELE MENT ON CASH BALANCES UN - UTILIZED WAS WORKED OUT AT RS.3,75,000/ - AND WAS ADDED TO THE INCOME OF ASSESSEE AND AGAINST IT, PENALTY PROCEEDINGS WERE INITIATED. HOWEVER, THE ASSESSING OFFICER FAILS TO RECORD SATISFACTION AS TO WHICH LIMB OF SAID SECTION HAS BEEN VIOLATED BY THE ASSESSEE. THEREAFTER, THE ASSESSING OFFICER ISSUES SHOW CAUSE NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT. THE ASSESSING OFFICER PURSUANT TO THE SAID ASSESSMENT ORDER HAD PASSED ORDER UNDER SECTION 271(1)(C) OF THE ACT LEVYI NG PENALTY UPON THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND LEVIED PENALTY AT RS.27,39,028/ - . HOWEVER, AN INFIRMITY HAD OCCURRED IN THE ORDER OF ASSESSING OFFICER, WHEREIN THE ASSESSING OFFICER HAS FAILED TO RECORD SATISFACTION WHILE COMPLETING THE ASSESSMENT PROCEEDINGS AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. 8. AS PER PROVISIONS OF SECTION 271(1)(C) OF THE ACT, PENALTY FOR CONCEALMENT CAN BE LEVIED EITHER FOR CONCEALING IN COME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. EITHER OF LIMB MAY BE SATISFIED FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER IN THIS REGARD BEFORE INITIATING PENALTY PROCEEDINGS HAS TO RECORD SATISFACTION TO THAT EFFECT AND IN THE ABSENCE OF THE SAME, PENALTY PROCEEDINGS INITIATED AGAINST THE ASSESSEE SUFFERS FROM LACUNAE WHICH COULD NOT BE CORRECTED BY PASSING AN ORDER ON ONE OF THE LIMBS OF SECTION 271(1)(C) OF THE ACT. THE TWO LIMBS ARE DISTINCT AS HAS BEEN HEL D BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY (SUPRA) AND FURTHER IT HAS BEEN HELD THAT THE SATISFACTION OF ASSESSING OFFICER WITH REGARD TO ONLY ONE OF TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PEN ALTY PROCEEDINGS WOULD NOT WARRANT / PERMIT PENALTY BEING IMPOSED FOR OTHER BREACHES. IT IS FURTHER HELD IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON THE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 9. APPLYING THE SAID RATIO TO THE FACTS OF PRESENT CASE, WHERE THE ASSESSING OFFICER HAS FAILED TO RECORD SATISFACTION AND SHOW CAUSE THE ASSESSEE AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT HAS NOT BEEN SATISFIED BY THE ITA NO. 759 /P U N/20 1 5 NITIN P KIBE 5 ASSESSEE, THEN INITIATION OF PENALTY PROCEEDINGS WAS WITHOUT ANY BASIS AND CONSEQUENT ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT NEEDS TO BE QUASHED. ACCORDINGLY, WE HOLD SO. WE FURTHER FIND SIMILAR PROPOSITI ON HAS BEEN LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN VARIOUS OTHER CASES INCLUDING THE LEAD CASE IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA) . ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED AT RS.27,39,028/ - . THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS, ALLOWED. 9. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSING OFFICER HAS FAILED TO RECORD CORRECT SATISFACTION IN THE PRESENT CASE IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND C ONSEQUENTLY, THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER IS INVALID AND THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS THUS, DELETED 1 0 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF JUNE , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 30 TH JUNE , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLA NT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A)PUNE - 6 ; 4. / THE PR. CIT - 5, PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE