Mulay Brothers Pvt. Ltd., Aurangabad V. Assistant Commissioner of Income-tax,

ITA 78/PUN/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7712 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-03-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 18-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Keywords: Initiation of penalty proceedings; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE , , , BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 78 /P U N/201 6 / ASSESSMENT YEAR : 20 11 - 12 MULAY BROTHERS PRIVATE LIMITED, 2 ND FLOOR, TAPADIA TERRACES, ADALAT ROAD, AURANGABAD 431001 PAN : AABCM7161J ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD / RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : DR. VIVEK AGGARWAL / DATE OF HEARING : 19 - 0 3 - 2018 / DATE OF PRONOUNCEMENT : 10 - 0 5 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1, AURANGABAD DATED 27 - 11 - 2015 IMPUGNING THE PENALTY LEVIED U/S. 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR THE ASSESSMENT YEAR 2011 - 12. 2 ITA NO . 78/PUN/2016, A.Y. 2011 - 12 2. SHRI SUNIL GANOO APPEARING ON BEHALF OF THE ASSESSEE FILED AN ADDITIONAL GROUND OF APPEAL ASSAILING LEVY OF PENALTY ON ACCOUNT OF VAGUENESS IN THE SHOW - CAUSE NOTICE DATED 28 - 12 - 2010 ISSUED U/S. 274 R.W.S. 271(1)(C) OF THE ACT AND MENTION ING OF INCONSISTENT CHARGE FOR LEVYING PENALTY WHILE RECORDING SATISFACTION AND AT THE TIME OF LEVY OF PENALTY. THE LD. AR SUBMITTED THAT THE PENALTY HAS BEEN LEVIED U/S. 271(1)(C) FOR CLAIMING INTEREST CHARGES PAID ON ACCOUNT OF LATE PAYMENT OF TDS. THE ASSESSING OFFICER IN ASSESSMENT PROCEEDINGS HAS RECORDED SATISFACTION FOR LEVY OF PENALTY U/S. 271(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOTICE DATED 28 - 12 - 2010 U/S. 274 R.W.S. 271(1)(C) WAS SERVED ON THE ASSESSEE WHEREI N BOTH THE LIMBS OF SECTION 271(1)(C) I.E. CONCEALED THE PARTICULARS OF INCOME OR FURNISH ED INACCURATE PARTICULARS OF INCOME WERE MENTIONED. WHEREAS IN THE ORDER LEVYING PENALTY U/S. 271(1)(C) , THE PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME. THE MANNER IN WHICH PENALTY HAS BEEN LEVIED CLEARLY SHOWS THAT THERE WAS AMBIGUITY IN THE MIND OF ASSESSING OFFICER ABOUT THE CHARGE ON WHICH PENALTY IS TO BE LEVIED. THE AMBIGUITY IS REFLECTED IN THE NOTICE AND THE ORDER LEVYING PENALTY. THE L D. AR SUBMITTED THAT WHERE THERE IS AMBIGUITY IN THE MIND OF ASSESSING OFFICER WITH RESPECT TO CHARGE FOR LEVYING PENALTY, THE ORDER LEVYING PENALTY IS NOT SUSTAINABLE IN THE EYE OF LAW. TO SUPPORT HIS CONTENTIONS THE LD. AR PLACED RELIANCE ON THE DECISIO N OF HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SAMSON PERINCHERY REPORTED AS 392 ITR 4. 2.1 ON MERITS , THE LD. AR SUBMITTED THAT THE ASSESSEE HAD CLAIMED INTEREST PAID TO THE DEPARTMENT ON DELAYED PAYMENT OF TDS. THE ASSESSE E WAS NOT AWARE AS TO WHETHER PAYMENT OF INTEREST ON DELAYED DEPOSIT OF TDS IS ALLOWABLE OR NOT. THE ASSESSEE WAS UNDER BONAFIDE BELIE F THAT THE 3 ITA NO . 78/PUN/2016, A.Y. 2011 - 12 PAYMENT OF INTEREST IS COMPENSATORY AND NOT PENAL IN NATURE. THE AUDITORS HAVE ALSO NOT MENTIONED IN TAX AUDIT REPORT THAT THE AMOUNT IS NOT ALLOWABLE. THE MISTAKE ON THE PART OF CHARTERED ACCOUNTANT HAS RESULTED IN CLAIMING OF INTEREST PAID ON DELAYED PAYMENT OF TDS AS EXPENDITURE. FOR ANY FAULT ON THE PART OF CHARTERED ACCOUNTANT , THE PENALTY SHOULD NOT B E FASTENED ON THE ASSESSEE. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISION S : I . PRICE WATERHOUSE COOPERS PVT. LTD. VS. COMMISSIONER OF INCOME TAX AND ANOTHER REPORTED AS 348 ITR 306 (SC); II . CONCORD OF INDIA INSURANCE CO. LT D. VS. SMT. NIRMALA DEVI AND OTHERS, 118 ITR 507 (SC); III . DCIT VS. M/S. NARAYANI ISPAT PVT. LTD. IN ITA NO. 2127/KOL/2014 FOR ASSESSMENT YEAR 2010 - 11 DECIDED ON 30 - 08 - 2017 (KOL. - TRIB.). 3. ON THE OTHER HAND DR. VIVEK AGGARWAL REPRESENTING THE DEPARTMENT VEH EMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE LEVY OF PENALTY. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS DELIBERATELY CLAIMED INTEREST ON DELAYED PAYMENT OF TDS AMOUNTING TO RS.34,11,198/ - . THE LD. DR POINTED THAT IN PARA 5 OF THE PENALTY ORDER, THE ASSESSING OFFICER HAS SPECIFICALLY MENTIONED THAT PENALTY IS LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE LD. DR SUBMITTED THAT THERE IS NO PARTICULAR FORMAT FOR RECORDING SATISFACTION FOR LEVY OF PENALTY . ON MERITS, THE LD. DR CONTENDED THAT THE ASSESSEE HAS DELIBERATELY CLAIMED INTEREST ON LATE PAYMENT OF TDS. THE ASSESSEE ADMITTED HIS MISTAKE DURING ASSESSMENT PROCEEDINGS. UNDER SUCH CIRCUMSTANCES PENALTY HAS BEEN RIGHTLY LEVIED BY THE ASSESSING OFFI CER ON WRONG CLAIM BY ASSESSEE. THE LD. DR TO SUPPORT HIS SUBMISSIONS PLACED RELIANCE ON THE FOLLOWING CASE LAWS : 4 ITA NO . 78/PUN/2016, A.Y. 2011 - 12 I . COMMISSIONER OF INCOME TAX VS. ZOOM COMMUNICATION (P) LTD., 327 ITR 510 (DELHI); II . M/S. MAHARAJ GARAGE & COMPANY VS. COMMISSIONER OF INCOME TAX IN INCOME TAX REFERENCE NO. 21 OF 2008 DECIDED ON 22 - 08 - 2017; III . MAK DATA PVT. LTD. VS. COMMISSIONER OF INCOME TAX IN CIVIL APPEAL NO. 9772 OF 2013 DECIDED ON 30 - 10 - 2013. 4 . W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE RIVAL SIDES HAVE PLACED RELIANCE IN SUPPORT OF THEIR CONTENTIONS. A PERUSAL OF ASSESSMENT ORDER SHOWS THAT WHILE RECORDING SATISFACTION FOR LEVY OF PENALTY U/S. 2 71(1)(C) OF THE ACT, THE ASSESSING OFFICER HAS RECORDED THAT PENALTY PROCEEDINGS ARE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE RELEVANT EXTRACT OF THE SATISFACTION RECORDED BY THE ASSESSING OFFICER IN ASSESSMENT ORDER READS AS UNDE R : PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT ARE SEPARATELY INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREAFTER, AT THE TIME OF PASSING ORDER LEVYING PENALTY U/S. 271(1)(C) OF THE ACT, THE ASSESSING OFFICER REFERRED TO THE OTHER LIMB OF SECTION 271(1)(C) I.E. CONCEALMENT. THE OBSERVATIONS OF THE ASSESSING OFFICER IN PARA 4 OF THE ORDER LEVYING PENALTY READS AS UNDER : HENCE, THE AMOUNT ADDED TO THE TOTAL INCOME IN COMPUTING THE TOTAL INCOME FOR THE PURPOSE OF CLAUSE (C) OF SECTION 271(1) OF THE ACT, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 5 . WE FURTHER OBSERVE THAT IN PARA 5 OF PENALTY ORDER THE ASSESSING OFFICER HAS AGAIN MENTIONED THAT THE ASSESSEE HAS FURNISHED INACCURAT E 5 ITA NO . 78/PUN/2016, A.Y. 2011 - 12 PARTICULARS OF INCOME. THE RELEVANT EXTRACT OF PARA 5 IS REPRODUCED HERE - IN - BELOW : I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND MADE ITSELF LIABLE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT, 1961. ACCORDINGLY , ORDER U/S. 271(1)(C) OF THE I.T. ACT, 1961, LEVYING PENALTY OF RS.11,33,116/ - IS PASSED. 6 . FROM THE PERUSAL OF PENALTY ORDER IT IS EVIDENT THAT THE ASSESSING OFFICER IS NOT CLEAR IN HIS MIND AS TO UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY IS TO BE LEVIED. WHETHER IT IS A CASE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN PARA 4 OF THE ORDER THE ASSESSING OFFICER REFERRED TO THE EXPRESSION PARTICULARS HAVE BEEN CONCEALED , WHERE AS IN PARA 5 THE ASSESSING OFFICER HA S OBSERVED THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME . BOTH THESE EXPRESSIONS CARR Y DIFFERENT CONNOTATIONS. 7 . THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SAMSON PERINCHERY (SUPRA) UNDER SIMILA R CIRCUMSTANCES WHERE BOTH THE EXPRESSIONS WERE USED BY ASSESSING OFFICER FOR LEVY OF PENALTY HAS HELD THE PENALTY ORDER BAD IN LAW. THE RELEVANT EXTRACT OF THE ORDER OF HONBLE HIGH COURT READS AS UNDER : 6. THE ABOVE SUBMISSION ON THE PART OF THE REVEN UE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN ASHOK PAI V/S. CIT 292 ITR 11 [RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY (SUPRA)] WHEREIN IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SE CTION 271(1)(C) OF THE ACT, CARRY DIFFERENT MEANINGS/ CONNOTATIONS. 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 OF PENALTY PROCEEDINGS WILL NO T WARRANT/ PERMIT PENALTY BEING IMPOSED FOR THE OTHER BREACH. THIS IS 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, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 6 ITA NO . 78/PUN/2016, A.Y. 2011 - 12 8 . IN THE PRESENT CASE , AS HAS BEEN POINTED EARLIER THE SATISFACTION HAS BEEN RECORDED FOR INITIATING PENALTY ON ONE CHARGE OF SECTION 271(1)(C) , WHEREAS , PENALTY HAS BEEN LEVIED ON OTHER CHARGE OF SECTION 271(1)(C). THE MANNER IN WHICH PENALTY HAS BEEN LEVIED FALLS S HORT OF LE GAL REQUIREMENT AS HAS BEEN ENUNCIATED BY THE HONBLE JURISDICTIONAL HIGH COURT. ACCORDINGLY, THE ADDITIONAL GROUND RAISED IN THE APPEAL IS ALLOWED. 9 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 10 TH DAY OF M AY, 2018 . SD/ - SD/ - ( / ANIL CHATURVEDI ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 10 TH MAY, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 1, AURANGABAD 4. THE PR. COMMISSIONER OF INCOME TAX - 1, AURANGABAD 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE