M/s. M. Waseeq Cafetaria, Raigad V. Income-tax Officer,

ITA 8/PUN/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6974 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-12-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 02-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 08 /P U N/20 1 4 / ASSESSMENT YEAR : 20 05 - 06 M/S. M. WASEEQ CAFETARIA, 92, PATEL MOHALLA, PANVEL, RAIGAD . / APPELLANT PAN: AALFM3549F VS. THE INCOME TAX OFFICER, WARD - 2, PANVEL . / RESPONDENT / APPELLANT BY : SHRI PRAKASH PANDIT / RESPONDENT BY : S HRI VIVEK AGGARWAL / DATE OF HEARING : 07 . 12 .2017 / DATE OF PRONOUNCEMENT: 15 . 1 2 .2017 / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) - I , THANE , DATED 15 .1 0 .201 3 RELATING TO ASSESSMENT YEAR 20 05 - 06 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. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT APPEALS ERRED IN CONFIRMING PENALTY LEVIED BY THE A.O. UNDER SECTION 271(1)(C) OF THE ACT OF RS.11,74,600/ - AND FURTHER ERRED IN ENHANCING THE PENALTY TO RS.45,43,069/ - UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961. 2 ITA NO. 08 /PUN/20 1 4 M/S. M. WASEEQ CAFETARIA 2. REASONS GIVEN BY THE A.O. FOR LEVYING PENALTY OF RS.11,74,600/ - UNDER SECTION 271(1)(C) OF THE ACT AND ALSO THE REASONS GIVEN BY THE CIT APPEALS FOR ENHANCING THE PENALTY LEVIED BY A.O. TO RS.45,43,069/ - UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, ARE WRONG INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCE ON RECORD. 3. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND OF APPEAL, WHICH READS AS UNDER: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED A.O. ERRED IN LEVYING PENALTY RELYING ON BOTH LIMBS OF SECTION 271(1)(C) WITHOUT SPECIFICALLY INVOKING THE SAME IN THE SHOW CAUSE NOTICES DATED 19.12.2008 AS WELL AS DATED 08.06.2010 AND 04.03.2011. 4. THE APPEAL FILED BY THE ASSESSEE INVOLVES THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS.11,74,600/ - BY THE ASSESSING OFFICER. THE CIT(A) HAD ENHANC ED PENALTY TO RS.45,43,069/ - . THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND OF APPEAL THAT THE ASSESSING OFFICER HAD ERRED IN LEVYING PENALTY FOR CONCEALMENT OF INCOME ON BOTH LIMBS OF SECTION 271(1)(C) OF THE ACT WITHOUT SPECIFICALLY INVOKING THE SAME I N SHOW CAUSE NOTICES ISSUED. 5. BRIEFLY, IN THE FACTS OF THE CASE, SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON THE PREMISES OF ASSESSEE AS THE ASSESSEE HAD NOT FILED RETURN OF INCOME FOR ASSESSMENT YEARS 2005 - 06 TO 2007 - 08. DURING THE COURSE OF SURVEY ACTION, BOOKS AND DOCUMENTS WERE FOUND AND IMPOUNDED. THE SURVEY TEAM ALSO NOTED THE DETAILS OF PROPERTIES IN THE IMPOUNDED DOCUMENTS WHICH ARE TABULATED UNDER PARA 2 AT PAGE 2 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED THAT THERE WERE SALE TRANSACTION S WHICH PERTAIN TO DIFFERENT ASSESSMENT YEARS , THEREFORE, INCOME NEEDS TO BE ASSESSED ACCORDINGLY. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SHOWN INCOME FROM SALE OF SHORT TERM CAPITAL GAINS AND ALSO CLAIMED LOSS ON ACCOUNT OF LONG TERM CAPITAL LOSS. THE ASSESSING OFFICER INITIATED PENA LTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALING PARTICULARS OF INCOME AT RS.1,24,20,250/ - . IT MAY BE 3 ITA NO. 08 /PUN/20 1 4 M/S. M. WASEEQ CAFETARIA POINTED OUT THAT INCOME OF ASSESSEE CONSTITUTED OF RETURNED INCOME OF RS.1.24 CRORES AND ADDITION ON PROTECTIVE BASIS OF RS.32,09,950/ - . THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AGAINST ADDITION OF RS.32,09,950/ - , WHICH WAS DELETED BY THE CIT(A) AS THE SAID ADDITION WAS UPHELD IN ASSESSMENT YEAR 2004 - 05. THE EXPLANATION OF ASSESSEE DURING PENALTY PROCEEDINGS WAS THAT SINCE THE ADDITION MADE ON PROTECTIVE BASIS HAS BEEN DELETED BY THE CIT(A), THERE WAS NO MERIT IN PENALTY PROCEEDINGS INITIATED UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER HOWEVER, HELD THE ASSESSEE TO HAVE CONCEALED INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN MEANING OF SECTION 271(1)(C) OF THE ACT. THEREFORE, HE LEVIED PENALTY AT RS.11,74,601/ - . THE CO MPUTATION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS AS UNDER: - (I) TAX ON TOTAL INCOME OF RS.1,24,15,300/ - : RS.45,43,069/ - (II) TAX ON INCOME EXCLUDING CONCEALED INCOME (RS.1,24,15,300 MINUS RS.32,09,950 - = 92,05,350/ - ) : RS. 33,68,468/ - (II I) TAX SOUGHT TO BE EVADED (I II) : RS.11,74,601/ - MINIMUM PENALTY LEVIABLE - 100% OF TAX SOUGHT TO BE EVADED : RS.11,74,601/ - 6. BEFORE THE CIT(A), THE PLEA OF ASSESSEE WAS THAT NO PENALTY WAS LEVIABLE AS THE CONCEALED INCOME OF RS.92,09,950/ - WAS DELETED AND ALSO THE CONDITIONS OF EXPLANATION 3 OF SECTION 271(1)(C) OF THE ACT WERE NOT SPECIFIED. THE CIT(A) HELD THAT CONCEALMENT OF INCOME IN THE HANDS OF ASSESSEE WAS RS.1,24,20,250/ - AND HENCE THE ASSESSEE WAS LIABLE TO LEVY OF PENALTY UNDER EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. THE CIT(A) HENCE, ENHANCED PENALTY TO RS.45,43,069/ - . 7. THE ASSESSEE IS IN APPEAL BEFORE US AND HAS RAISED AN ADDITIONAL GROUND OF APPEAL AS TO LEVY OF PENALTY BY THE ASSESSING OFFICER ON BOTH LIMBS OF SECT ION 4 ITA NO. 08 /PUN/20 1 4 M/S. M. WASEEQ CAFETARIA 271(1)(C) OF THE ACT WITHOUT SPECIFICALLY INVOKING THE SAME IN SHOW CAUSE NOTICE. THE ASSESSEE IS ALSO AGGRIEVED BY THE ENHANCEMENT MADE BY THE CIT(A). 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT AS ON THE DATE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE RETURNED INCOME AFTER SURVEY WAS ACCEPTED. THE PROTECTIVE ADDITION MADE IN THE HANDS OF ASSESSEE WAS SUBSTANTIALLY MADE IN ASSESSMENT YEAR 2004 - 05, WHICH WAS CONFIRMED BY THE CIT(A). FURTHER, THE TRIBUNA L DECIDED THE APPEAL ON TECHNICAL GROUNDS. OUR ATTENTION WAS DRAWN TO THE ASSESSMENT ORDER, WHEREIN THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEEDINGS ON THE INCOME OF RS.1.24 CRORES BY RECORDING SATISFACTION O N CONCEALING THE PARTICULARS OF INCOME. HOWEVER, PENALTY WAS LEVIED BY THE ASSESSING OFFICER ON ADDITION OF RS.32 LAKHS (APPROX.) ON BOTH THE LIMBS. THE CIT(A) HAS CONFIRMED THE SAME. HE PLACED RELIANCE ON 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. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW AND STRONGLY OPPOSED THE ARGUMENTS OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST JURISDICTIONAL ISSUE RAISED BY THE ASSESSEE IS AGAINST RECORDING OF SATISFACTION BY THE ASSES SING OFFICER AND CONSEQUENTLY LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE REQUIREMENT OF THE ACT IS THAT THE ASSESSING OFFICER WHILE FINALIZING THE ASSESSMENT HAS TO RECORD SATISFACTION AS TO WHICH LIMB OF SECTION 271(1)(C) OF 5 ITA NO. 08 /PUN/20 1 4 M/S. M. WASEEQ CAFETARIA THE ACT HAS NOT BEEN FULFILLED BY THE ASSESSEE AND ACCORDINGLY, ISSUE SHOW CAUSE NOTICE TO THE ASSESSEE. PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE WHERE THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE TWO LIMBS OF SE CTION 271(1)(C) OF THE ACT ARE INDEPENDENT AND PENALTY PROCEEDINGS HAVE TO BE COMPLETED ACCORDINGLY. 11. IN THE FACTS OF THE PRESENT CASE, CONSEQUENT TO SURVEY ACTION CONDUCTED ON THE PREMISES OF ASSESSEE, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOT AL INCOME OF RS.1,24,20,250/ - . THE SAID RETURNED INCOME WAS ACCEPTED AS SUCH BY THE ASSESSING OFFICER. HOWEVER, ADDITION OF RS.32,09,950/ - WAS MADE ON PROTECTIVE BASIS IN THE HANDS OF ASSESSEE. THE ASSESSING OFFICER HAS DEALT WITH THE PROTECTIVE ADDITIO N IN FIRST PART OF PARA 4 AND NO SATISFACTION HAS BEEN RECORDED FOR INITIATING PENALTY PROCEEDINGS AGAINST THE SAME. HOWEVER, IN RESPECT OF RETURNED INCOME FILED BY THE ASSESSEE DECLARING TOTAL INCOME OF RS.1,24,20,250/ - , THE ASSESSING OFFICER OBSERVED TH AT THE SAID TRANSACTION IN RESPECT OF PROPERTY WAS REQUIRED TO BE DISCLOSED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION BUT THE ASSESSEE FAILED TO DO THE SAME AND EVEN DID NOT PAY ANY ADVANCE TAX. HENCE , PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED FOR CONCEALING PARTICULARS OF INCOME OF RS.1,24,20,250/ - . THEREAFTER, DIRECTIONS WERE GIVEN TO ISSUE NOTICE UNDER SECTION 271(1)(C) OF THE ACT. THE CIT(A) IN THE QUANTUM APPEAL DELETED ADDITION O F RS.32,09,950/ - AND THE RETURNED INCOME OF RS.1.24 CRORES WAS ASSESSED IN THE HANDS OF ASSESSEE. THE ASSESSING OFFICER WHILE LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT WAS SATISFIED THAT THE ASSESSEE HAS CONCEALED INCOME AND FURNI SHED INACCURATE PARTICULARS OF INCOME WITHIN MEANING OF SAID SECTION. CONSEQUENTLY, PENALTY OF RS.11,74,601/ - WAS LEVIED ON CONCEALED INCOME. THE 6 ITA NO. 08 /PUN/20 1 4 M/S. M. WASEEQ CAFETARIA ASSESSING OFFICER WHILE COMPUTING PENALTY UNDER SECTION 271(1)(C) OF THE ACT CONSIDERED THE TAX ON TOTAL INC OME OF RS.1.24 CRORES AND TAX ON INCOME EXCLUDING CONCEALED INCOME OF RS.32,09,950/ - AND OBSERVED THAT ON THE TAX SOUGHT TO BE EVADED , PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE AT RS.11,74,601/ - . 12. THE PERUSAL OF ASSESSMENT ORDER AND THE PE NALTY ORDER REFLECTS THAT THE ASSESSING OFFICER HAS MISMATCHED THE FIGURES. THE RETURNED INCOME WAS RS.1.24 CRORES AND AFTER MAKING ADDITION ON PROTECTIVE BASIS OF ABOUT RS.32 LAKHS, THE TOTAL INCOME ASSESSED WAS RS.1.56 CRORES. HOWEVER, THE ASSESSING OF FICER ADOPTED THE RETURNED INCOME AS TOTAL INCOME ASSESSED IN THE HANDS OF ASSESSEE AND HENCE AN ERROR IN COMPUTATION. ANOTHER POINT WHICH NEEDS TO BE CONSIDERED IS THE CONCLUSION OF THE ASSESSING OFFICER IN COMING TO FINDING THAT THE ASSESSEE HAS CONCEAL ED INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. 13. THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY (SUPRA) HELD THAT WHERE INITIATION OF PENALTY IS ON ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PRO PER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 14. APPLYING THE SAID PROPOSITION TO THE FACTS OF THE CASE, WHERE THE ASSESSEE WAS SHOW CAUSED IN RESPECT OF CONCEALING PARTICULARS OF INCOME AND THEREAFTER, PENALTY WAS LEVIED O N ACCOUNT OF NON - SATISFACTION ON BOTH THE LIMBS I.E. CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE SAME IS AGAINST PROPOSITION LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY (SUPRA). THE LEARNE D DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HERE STRONGLY OPPOSED THE SAME AND POINTED OUT THAT PENALTY 7 ITA NO. 08 /PUN/20 1 4 M/S. M. WASEEQ CAFETARIA UNDER SECTION 271(1)(C) OF THE ACT COULD BE LEVIED ON BOTH THE LIMBS OF SAID SECTION. WE FIND NO MERIT IN THE PLEA OF LEARNED DEPARTMENTAL REPRESENTA TIVE FOR THE REVENUE IN THIS REGARD, WHEREIN THE RETURNED INCOME WAS FINALLY ACCEPTED BY THE CIT(A) / TRIBUNAL AND THE PROTECTIVE ADDITION MADE IN THE HANDS OF ASSESSEE WAS DELETED. ACCORDINGLY, WE HOLD THAT PENALTY ORDER PASSED IN THE CASE SUFFERS FROM I NFIRMITY AND THE SAME IS INVALID IN LAW. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE SAID PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS.11,74,601/ - . 15. NOW, COMING TO THE ORDER OF CIT(A), WHEREIN VIDE PARA 6 AT PAGE 3 OF THE APPELLATE ORDE R, THE CIT(A) NOTES THAT HOWEVER, WHILE CALCULATING THE PENALTY U/S. 271(1)(C), THE A.O. MISTAKENLY CALCULATED THE PENALTY WITH RESPECT TO AMOUNT OF RS.32,09,950/ - WHEREAS THE SAME SHOULD HAVE BEEN CALCULATED WITH RESPECT TO ADDITION OF RS.1,24,20,250/ - BE CAUSE THIS WAS THE AMOUNT WHICH HAD BEEN CONCEALED BY THE APPELLANT BY NOT FILING HIS RETURN OF INCOME BY THE DUE DATE AND IN RESPECT OF WHICH DOCUMENTARY EVIDENCE IN THE FORM OF LAND TRANSACTIONS HAD BEEN FOUND DURING THE COURSE OF SURVEY AND THIS WAS THE AMOUNT IN RESPECT OF WHICH PENALTY PROCEEDINGS U/S 271(1)(C) HAD BEEN INITIATED IN THE ASSESSMENT ORDER. WITHOUT GOING INTO MERITS OF ENHANCEMENT ORDER OF THE CIT(A), WE MAKE REFERENCE TO THE JURISDICTIONAL ISSUE RAISED BY THE ASSESSEE IN THIS REGARD. W E HAVE IN THE PARAS HEREINABOVE HAVE ALREADY HELD THAT LEVY OF PENALTY BY THE ASSESSING OFFICER HOLDING THE ASSESSEE TO HAVE CONCEALED INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME WAS INVALID AND BAD IN LAW AND THE PENALTY ORDER PASSED BY THE ASSE SSING OFFICER HAS BEEN CANCELLED. CONSEQUENTLY, THE ENHANCEMENT MADE O N SUCH ORDER PASSED BY THE ASSESSING OFFICER, WHICH IS HELD TO BE INVALID, DOES NOT STAND. SINCE THE CIT(A) HAS BASED HIS CALCULATION ON 8 ITA NO. 08 /PUN/20 1 4 M/S. M. WASEEQ CAFETARIA THE ORDER OF ASSESSING OFFICER HOLDING THAT TH E PENALTY IS TO BE CALCULATED WITH REGARD TO CONCEALED INCOME OF RS.1.24 CRORES AND NOT THE ADDITIONAL INCOME OF RS.32,09,950/ - , THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAD MISTAKENLY CALCULATED THE SAME WITH RESPECT TO INCOME OF RS.32,09,950/ - . AC CORDINGLY, WE DELETE THE PENALTY LEVIED BY THE CIT(A) AT RS.45,43,069/ - . THE ADDITIONAL GROUND OF APPEAL IS THUS, ALLOWED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE THUS, BECOME ACADEMIC IN NATURE. 1 6 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 15 TH DAY OF DECEM BER , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 15 TH DECEM BER , 201 7 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I, THANE ; 4. THE C IT - II, THANE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE