AMIRALI ABDULSULTAN JIWANI, MUMBAI V. ITO 13(3)(3), MUMBAI

ITA 7605/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8101 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 27-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Opportunity of being heard
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 7605 /MUM/ 2013 ASSESSMENT YEAR: 2007 - 08 AMIRALI ABDUL S ULTAN JIWANI MAKKER& CO. SHOP NO. 9, SHAMJIMORARJI BUILDING, CHAMPSIBHIMJI ROAD, MAZGAON, MUMBAI - 400010. VS. ITO - 13(3)(3) AAYAKARBHAVAN, NEW MARINE LINES, MUMBAI - 400020. PAN NO. ADWPJ8074A APPELLANT RESPONDENT ASSESSEE BY : MR. JITENDRA SINGH , AR REVENUE BY : MR. RAJESH KUMAR YADAV , DR DATE OF HEARING : 03.10.2017 DATE OF PRONOUNCEMENT : 14/12/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2007 - 08 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 24 , MUMBAI AND ARISES OUT OF THE PENALTY ORDER U/S 271(1)(C) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE SOLITARY GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AGAINST THE ORDER OF THE LD. CIT(A) CONFIRMING THE PENALTY OF RS.6,78,000/ - IMPOSED BY THE ASSESSING OFFICER(AO) U/S 271(1)(C) . AMIRALI ABDULSULTAN JIWANI ITA NO. 7605/MUM/2013 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY 2007 - 08 ON 11.05.2007 DECLARING TAXABLE INCOME OF RS. 97,820 / - . THE AO FOUND DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAD DEPOSITED CASH OF RS.21,66,000/ - IN BANK ACCOUNT NO. 0031040000 4875 WITH D EVELOPMENT C REDIT B ANK DURING THE PERIOD FROM 01.04.2006 TO 31.03.2007 AND PURCHASED F LAT FROM THE SAME. THE ASSESSEE WAS NOT IN A POSITION TO FURNISH THE SOURCE OF CASH CREDIT S AND SUBMITTED BEFORE THE AO THAT HE HAD DECIDED TO OFFER THE AMOUNT OF RS.22,60,000/ - AS HIS INCOME DURING THE FINANCIAL YEAR 2006 - 07 RELEVANT TO THE IMPUGNED ASSESSMENT YEAR. THEREFORE, THE AO M ADE AN ADDITION OF RS.22,60,000/ - U/S 69A. THEN HE IMPOSED A MINIMUM PENALTY OF RS.6,78,000/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) UPHELD THE PENALTY LEVIED BY THE AO AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT IN THE PRESENT CASE THE AO HAS INITIATED PENALTY ON ONE L IMB I.E. CONCEALMENT WHEREAS HE HAS IMPOSED PENALTY ON THE OTHER L IMB I.E. FURNISHING INACCURATE PARTICULARS OF INCOME. RELYING ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY (ITA NO. 1154/953/1097/1226 OF 2014) , HE SUBMITS THAT THE PENALTY OF RS.6,78,000/ - LEVIED BY THE AO U/S 271(1)(C) BE DELETED. 6. ON THE OTHER HAND, THE LD. DR RELIES ON THE DECISION IN K.P. MADHUSUDHANAN VS. CIT (2001) 118 TAXMAN 324 (SC) AND SAMSON MARITIME LTD. VS. CIT (ITA NO. 1718 OF 2014) (BOMBAY HIGH COURT). AMIRALI ABDULSULTAN JIWANI ITA NO. 7605/MUM/2013 3 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. WE FIND THAT IN THE ASSESSMENT ORDER DATED 21.12.2009 (PAGE 4) THE AO HAS IN ITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR CONCEALMENT , WHEREAS IN THE PENALTY ORDER DATED 12.03.2012 (PAGE 4) HE HAS LEVIED THE PENALTY ON THE ASSESSEE FOR FILING INACCURATE PARTICULARS OF INCOME. BEFORE A PENALTY IS IMPOSED, THE ASSESSEE MUST B E APPRISED OF THE PRECISE CHARGE BROUGHT AGAINST HIM. HE MUST BE TOLD DISTINCTLY WHETHER HE IS HELD GUILTY OF HAVING CONCEALED THE PARTICULARS OF HIS INCOME OR OF HAVING FURNISHED INACCURATE PARTICULARS THEREOF. SECTION 274(1) PROVIDES FOR A REASONABLE OPP ORTUNITY TO BE GIVEN TO THE ASSESSEE SO THAT HE CAN MEET THE CHARGE. WHERE THE PENALTY PROCEEDINGS U/S 271(1)(C) ARE COMMENCED AGAINST THE ASSESSEE ON A PARTICULAR FOOTING, VIZ. , OF CONCEALMENT OF PARTICULARS OF INCOME BUT THE FINAL CONCLUSION OF LEVYING T HE PENALTY IS BASED ON A DIFFERENT FOOTING ALTOGETHER, VIZ., ON THE FOOTING OF FURNISHING INACCURATE PARTICULARS OF HIS INCOME, IT CANNOT BE SAID THAT IN SUCH CIRCUMSTANCES THE ASSESSEE HAD BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE THE ORDE R I MPOSING THE PENALTY WAS PASSED. IN SUCH A CASE THE PENALTY IMPOSED IS NOT JUSTIFIED AS HELD IN CIT VS. LAKHDHIR LALJI (1972) 85 ITR 77. IN SAMSON PERINCHERRY (SUPRA) , THE HONBLE BOMBAY HIGH COURT HELD: THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION AMIRALI ABDULSULTAN JIWANI ITA NO. 7605/MUM/2013 4 OF PENALTY PROCEEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMPOSED FOR THE ORDER BREACH. THIS I S MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. 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, A ND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 7.1 THUS, THE BASIS OF THE ISSUANCE OF NOTICE SHOULD REMAIN THE SAME WHILE IMPOSING PENALTY. IF THE NOTICE IS ISSUED IN THE CONTEXT OF CONCEALMENT OF INCOME, THEN THE PENALTY CANNOT B E LEVIED BY SHIFTING THE BASIS TO INACCURACY OF PARTICULARS. THIS IS TO INSURE THAT THE ASSESSEE GETS AN ADEQUATE OPPORTUNITY IN RESPECT OF THE DEFAULT WHICH IS DETECTED AND ALLEGED AGAINST HIM AND WHICH FORMS THE BASIS OF THE ISSUANCE OF THE NOTICE U/S 27 1(1)(C). THE PURPOSE IS TO ENSURE THAT THE ASSESSEE IS NOT PUT TO PERIL OF ANSWERING AGAINST SOMETHING WHICH NEVER WAS SPECIFI CALLY DETERMINED AS HIS DEFAULT AS HELD IN A.M. SHAH AND CO. VS. CIT (1999) 238 ITR 415, 433 (GUJ). 7.2 WE MAY MENTION HERE THAT THE DECISIONS RELIED ON BY THE LD. DR IN K.P . MADHUSUDHANAN AND SAMSON MARI TIME (SUPRA) DO NOT ADDRESS THE ABOVE ASPECTS. IN K.P. MADHUSUDHANAN , IT IS HELD THAT THE EXPLANATION TO SECTION 271(1)(C) IS A PART OF SECTION 271. WHEN THE AO ISSUES TO AN ASSESSEE A NOTICE U/S 271, HE MAKES THE ASSESSEE AWARE THAT THE PROVISIONS THE REOF ARE TO BE USED AGAINST HIM. IN SAMSON MARITIME , IT IS HELD THAT THE SO CALLED VOLUNTARY DISCLOSURE WAS NOT VOLUNTARY, BUT MADE ONLY IN RESPONSE TO NOTICES U/S 142 AND 143 OF THE ACT. 7.3 WE ARE OF THE CONSIDERED VIEW THAT THE DECISIONS DELINEATED AT PARA 7 & 7.1 HEREINBEFORE SQUARELY APPLY TO THE FACTS IN THE INSTANT CASE. AMIRALI ABDULSULTAN JIWANI ITA NO. 7605/MUM/2013 5 FOLLOWING THE SAME, WE DELET E THE PENALTY OF RS.6,78,000/ - LEVIED BY THE AO U/S 271(1)(C). 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/12/2017. SD/ - SD/ - ( D.T. GARASIA ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 14/12/2017 RAHUL SHARMA, SR. P.S. 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// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI