Radhesham Jhunjhunwala, Pune V. Income-tax Offficer,

ITA 83/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9530 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-01-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 19-01-2016
• 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 PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.82 & 83/PUN/2016 / ASSESSMENT YEARS : 2004-05 & 2008-09 RADHESHYAM JHUNJHUNWALA, MZSK & ASSOCIATES, LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESELY ROAD, PUNE 411 001 PAN : AAFHR1228F . /APPELLANT VS. ITO, WARD-2(2), AURANGABAD . / RESPONDENT / APPELLANT BY : SHRI RAJIV THAKKAR / RESPONDENT BY : DR. VIVEK AGGARWAL, CIT-DR / DATE OF HEARING : 02.01.2018 / DATE OF PRONOUNCEMENT: 03.01.2018 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE 2 APPEALS UNDER CONSIDERATION FILED BY TH E ASSESSEE AGAINST THE SEPARATE ORDERS OF CIT(A)-2, AURANGABAD COMMONL Y DATED 01-02-2015 FOR THE A.YRS. 2004-05 AND 2008-09. THE PENALTY WAS LE VIED BY THE AO U/S.271(1)(C) OF THE INCOME TAX ACT IN BOTH THE YEA RS. 2. WE SHALL FIRST TAKE UP THE APPEAL ITA NO.82/PUN/2016 A.Y. 2004- 05 . THE ONLY GROUND RAISED BY THE ASSESSEE READS AS UNDER : 1. THE LD. TAXING AUTHORITIES BELOW HAD ERRED IN L EVYING PENALTY OF RS.1,70,704/- U/S.271(1)(C) OF THE I.T. ACT. JUST AND PROPER RELIEF MAY BE GRANTED TO THE APPELLANT AS PER THE PROVISIONS OF L AW. ITA NOS.82 & 83/PUN/2016 RADHESHYAM JHUNJHUNWALA 2 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSES SEE IS A HUF. A SEARCH ACTION U/S.132 OF THE I.T. ACT WAS CONDUCTED ON THE SHAH GROUP OF JALNA AND JHUNJHUNWALA GROUP OF AURANGABAD ON 21-02-2007. TH E ASSESSEE BELONGS TO JHUNJHUNWALA GROUP AND IS CHAIRMAN OF THE GROUP CON CERN ORION LAMINATES LTD. THE RESIDENCE OF THE ASSESSEE AND HIS BUSINES S CONCERN WERE COVERED UNDER THE SEARCH ACTION. THE ASSESSEE FILED THE OR IGINAL RETURN OF INCOME ON 11-10-2004 DECLARING TOTAL INCOME OF RS.4,77,331/-. AS PER THE LAW, THE ASSESSEE FILED THE RETURN U/S.153A OF THE ACT DECLA RING INCOME OF RS.1,39,050/- AND AGRICULTURAL INCOME OF RS.1,38,067/-. THUS, IN THE OPINION OF THE AO, ASSESSEE DELIBERATELY UNDERSTATED AN INCOME OF RS.3 ,32,281/- WHICH AMOUNTS TO FURNISHING INACCURATE PARTICULARS OF INCOME AND LIA BLE FOR PENALTY U/S.271(1)(C) OF THE ACT. AO ALSO MADE ADDITION OF RS.12,04,584/ - ON ACCOUNT OF SALE OF LAND AT ISARWADI RELYING ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297 (SC). EVENTUALLY, AO MADE ADDITION OF RS.15,36,865/- TO THE TOTAL INCOME OF T HE ASSESSEE. PENALTY OF RS.1,70,704/- WAS LEVIED U/S.271(1)(C) OF THE ACT. CIT(A) DIRECTED THE AO TO RECOMPUTE THE TAX SOUGHT TO BE EVADED BY TAKING RS. 18,13,975/- AS ASSESSED INCOME INCLUDING CONCEALED INCOME AND RS.1,39,050/- AS ASSESSED INCOME EXCLUDING CONCEALED INCOME. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE SOLITARY GROUND EXTRACTED ABOVE STATING THAT THE SAID GROUND IS WIDE ENOUGH TO ACCOMMODATE THE LEGAL ISSUE RELATING TO T HE SATISFACTION OF THE AO INITIATING THE PENALTY U/S.271(1)(C) OF THE ACT. L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDERS OF THE AO, I.E. ASSESSMEN T ORDER AND THE PENALTY ORDER SUFFER FROM VARIOUS TECHNICAL ISSUES. FAILUR E TO SPECIFY THE LIMBS IN INITIATING THE PENALTY AND LEVYING PENALTY IS ONE O F THEM. ITA NOS.82 & 83/PUN/2016 RADHESHYAM JHUNJHUNWALA 3 5. BEFORE US, AT THE OUTSET, ON THE TECHNICAL ISSUE , LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING JUDGMENTS FOR THE PROPOSITION THAT PENALTY IS NOT SUSTAINABLE WHEN THERE IS NO CLEAR SATISFACTION RECORDED BY THE AO AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS : 1. HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PE RINCHERY JUDGMENT DATED 05-01-2017. 2. HONBLE KARNATAKA HIGH COURT JUDGMENT IN THE CASE O F CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (359 ITR 565) 6. LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND RELIED HEAVILY ON THE ORDERS OF THE AO/CIT(A). 7. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS O F THE REVENUE AUTHORITIES. WE HAVE ALSO CONSIDERED THE DECISIONS RELIED UPON BY THE LD. AR FOR THE ASSESSEE. AFTER GOING THROUGH THE ASSESSME NT ORDER AND THE PENALTY ORDER, WE FIND THE AO INITIATED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME . THUS, THIS IS A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME SO FAR AS ADDITION OF RS.3,32 ,281/- IS CONCERNED. RELEVANT LINES FROM PARA 9 OF THE ASSESSMENT ORDER ARE EXTRA CTED HERE AS UNDER : 9. . . . . . . . . . .THEREFORE, IT AMOUNT TO FURN ISHING INACCURATE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY U/S.271(1)(C) OF T HE ACT. THEREFORE, PENALTY U/S.271(1)(C) ARE INITIATED. 8. FURTHER, REGARDING OTHER ADDITION OF RS.12,04,58 4/- ALSO ON ACCOUNT OF SALE OF LAND AT ISARWADI IS CONCERNED, THERE IS NO SATISFACTION WHATSOEVER IS PROVIDED IN PARA 11 AND NO LIMBS OF CLAUSE (C) OF SECTION 271(1) ARE MENTIONED IN ANY FORM . FURTHER, WHEN IT COMES TO LEVY OF PENALTY ON THE ADDITION OF RS.3,32,281/- VIDE PENALTY ORDER DATED 28-03-2013, WE FIND IN PARA NO.4 THAT PENALTY WAS LEVIED FOR CONCEALING THE PARTICULARS OF INCOME . THERE IS NO REFERENCE TO THE OTHER ADDITION IN THE PENALTY ORDER. RELEVANT LINES FROM PARA NO.5 OF THE PENALTY ORDER ARE EXTRACTED H ERE AS UNDER : ITA NOS.82 & 83/PUN/2016 RADHESHYAM JHUNJHUNWALA 4 5. . . . . . . THEREFORE, I AM SATISFIED THAT THE ASSESSEE HAS COMMITTED DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE I.T. ACT. HENCE, A PENALTY OF RS.1,70,704/- IS HEREBY LEVIED. 9. THE ABOVE LINES FROM THE PENALTY ORDER IS OBVIOU S IN NOT CONTAINING ANY REFERENCE TO EITHER OF THE LIMBS OF CLAUSE (C) OF T HE SAID SECTION 271(1) OF THE I.T. ACT. IT ALSO SHOWS THAT THE AO HAS NOT APPLIE D HIS MIND TO THE FACT FOR WHICH REASON OF THE DEFAULT, THE PENALTY NOTICES WE RE ISSUED. WE FIND THE PENALTY ORDER OF THE AO FALLS SHORT OF LEGAL REQUIR EMENT ON THE ISSUE UNDER DISCUSSION. INITIATION OF PENALTY PROCEEDINGS IN T HIS CASE WAS DONE IN A CASUAL MANNER FOR BOTH THE LIMBS AND SUCH ORDERS ARE BAD I N LAW. ALREADY, WE HAVE HELD IN A NUMBER OF CASES THAT SAID MANNER OF LEVYI NG PENALTY WITHOUT MAKING ANY REFERENCE TO THE SPECIFIED LIMB, I.E. CONCEALM ENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, T HE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE ON TECHNICAL GROUNDS. FURTHER, THIS VIEW OF OURS GET STRENGTH BY THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. SHRI SAMSON PERINCHERY DATED 05-01-2017 AS WELL AS THE J UDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNA THA COTTON AND GINNING FACTORY 359 ITR 565. ACCORDINGLY, THE ONLY GROUND RAISED BY THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ITA NO.83/PUN/2016 A.Y. 2008-09 11. IN THIS ASSESSMENT YEAR, PENALTY OF RS.3,77,798 /- WAS LEVIED BY THE AO IN CONNECTION WITH CLAIM OF DEDUCTION U/S.54B OF TH E ACT. ASSESSEE SUBMITTED THAT IN THE SUBSEQUENT YEARS SUCH DENIAL OF DEDUCTI ON WAS HELD TO BE NOT COVERED BY THE PENALTY PROCEEDINGS ON MERITS AS WEL L. BRINGING OUR ATTENTION TO THE SATISFACTION OF THE AO WHILE INITIATING THE PEN ALTY PROCEEDINGS, LD. COUNSEL FOR THE ASSESSEE READ OUT PARA NO.8 OF THE ASSESSME NT ORDER WHERE PENALTY WAS ITA NOS.82 & 83/PUN/2016 RADHESHYAM JHUNJHUNWALA 5 INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. FOR THE SAKE OF COMPLETENESS OF THE ORDER, RELEVANT LINES ARE EXTRA CTED HEREUNDER : 8. SINCE THE ASSESSEE HAS FILED INACCURATE PARTICU LARS OF INCOME BY FILING WRONG CLAIM U/S.54B THE ASSESSEE HAS MADE HIMSELF L IABLE FOR PENALTY U/S.271(1)(C) . . . . . . 12. FURTHER, BRINGING OUR ATTENTION THE PENALTY ORD ER DATED 28-03-2013, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT PENALTY WAS LEVIED FOR NO SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. HE BRO UGHT OUR ATTENTION TO PARA NO.5 AND READ OUT THE FOLLOWING LINES : 5. . . . . . THEREFORE, I AM SATISFIED THAT THE AS SESSEE HAS COMMITTED DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE I.T. ACT . . . . .. 13. TAKING A CUE FROM THE ABOVE, LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE ABOVE MANNER OF LEVY OF PENALTY WITHOUT MA KING A SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) I S UNSUSTAINABLE. HE ALSO SUBMITTED THAT THE EXPRESSION CONCEALED INCOME US ED IN PARA NO.5 (IN THE TABLE) AMOUNTS TO LEVY OF PENALTY FOR CONCEALING THE INCOME AND NOT FOR FURNISHING INACCURATE PARTICULARS OF INCOME , I.E. SATISFACTION ORIGINALLY OPINED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. 14. AS DISCUSSED ABOVE, IN THE ASSESSEES OWN CASE FOR A.Y. 2004-05, THE ISSUE RAISED BY THE ASSESSEE IN THIS ASSESSMENT YEA R TOO IS VERBATIM. THEREFORE, SUCH MANNER OF LEVYING THE PENALTY GENER ALLY REFERRING TO THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT ARE NOT SUSTAINABLE IN LAW WHEN CLAUSE (C) CONTAINS TWO SPECIFIC LIMBS WHICH CONSTI TUTE 2 DIFFERENT KINDS OF OFFENCES FOR WHICH PENALTY IS LEVIABLE U/S.271(1)(C ) OF THE ACT. THEREFORE, WE DELETE THE PENALTY LEVIED BY THE AO AND ALLOW THE G ROUND RAISED BY THE ASSESSEE. ITA NOS.82 & 83/PUN/2016 RADHESHYAM JHUNJHUNWALA 6 15. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 03 RD DAY OF JANUARY, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 03 RD JANUARY, 2018 / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A)-2, AURANGABAD CIT-2, AURANGABAD , , B BENCH PUNE; / GUARD FILE.