Vaishali Anil Jain, Nashik V. Income-tax Officer,

ITA 849/PUN/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7621 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Search and seizure; Salary income; Reasonable cause
• Section: 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NO.849/PUN/2016 / ASSESSMENT YEAR : 2010-11 VAISHALI ANIL JAIN, 11, SNEH, MURKUTE COLONY, NEW PANDIT COLONY, SHARANPUR ROAD, NASHIK 422 002 PAN : AAOPJ7081N . /APPELLANT VS. INCOME TAX OFFICER, CENTRAL I, NAHSIK . / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI ACHAL SHARMA / DATE OF HEARING : 07.05.2018 / DATE OF PRONOUNCEMENT: 14.05.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-12, PUNE, DATED 23-02-2016 FOR THE ASSESSMENT YEAR 2010-11. 2. ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE BASIS OF FACTS AND THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE CIT(A)-12, PUNE IS NOT JUSTIFIED IN CONFIR MING THE PENALTY U/S.271(1)(C) OF THE ACT OF RS.2,500/- OF THE ACT L EVIED BY THE AO. 2. ON THE BASIS OF FACTS AND THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE CIT(A)-12, PUNE IS NOT JUSTIFIED IN ENHANC ING THE PENALTY U/S.271(1)(C) OF THE ACT BY HOLDING THAT ENTIRE AMO UNT OF RS.4,34,768/- DECLARED BY THE APPELLANT IN THE RETURN OF INCOME F ILED IN RESPONSE TO NOTICE ISSUED U/S.153A OF THE ACT FOR THE YEAR UNDE R APPEAL IS CONCEALED INCOME. 3. ON THE BASIS OF FACTS AND THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW, THE CIT(A)-12, PUNE IS NOT JUSTIFIED IN CONFIR MING AND ENHANCING THE PENALTY U/S.271(1)(C) OF THE ACT PARTICULARLY WHEN THE NOTICE ISSUED U/S.274 R.W.S.271(1)(C) OF THE ACT DATED 22-03-2013 ISSUED BY THE A.O. DOES NOT SPECIFY THE SPECIFIC CHARGE FRAMED AG AINST THE APPELLANT, I.E. WHETHER THE NOTICE WAS ISSUED FOR F URNISHING OF INACCURATE PARTICULARS OF INCOME OR FOR CONCEALMENT OF INCOME OF FOR ANY OTHER REASON. 2 4. THE APPELLANT CRAVES FOR ADDITION TO DELETION, A LTERATION, MODIFICATION, CHANGE ANY OF THE GROUNDS. 3. BEFORE US, THERE IS NONE TO REPRESENT THE CASE OF TH E ASSESSEE BEFORE US. ON GOING THROUGH THE GROUND NO.3 RELATING TO INITIATION AND LEVY OF PENALTY WITHOUT MAKING SPECIFIC REFERENCE TO ANY LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT, LD. DR SUBMITTED THAT IN VIEW OF CATENA OF DECISIONS OF THE PUNE BENCH OF THE TRIBUNAL O N THIS LEGAL ISSUE , IT IS APPROPRIATE TO ADJUDICATE THE APPEAL BASED ON THE BASIS OF INFORMATION AVAILABLE ON RECORD. OF COURSE, THE ASSISTANCE OF LD. DR FOR THE REVENUE IS AVAILABLE. 4. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM SALARY PROFESSIONAL FEES, BANK INTEREST ETC. THERE WAS SEARCH AND SEIZURE ACTION U/S .132 OF THE ACT IN THE SUYOJIT GROUP OF CASES ON 17-09-2010. ASSESSEE FILED THE RETURN OF INCOME ORIGINALLY ON 30-03-2011 DECLARING TOTAL INCOME OF RS.4,22,610/-. IN RESPONSE TO NOTICE U/S.153A ASSESSEE FILED THE RETURN OF INCOME ON 10-02-2012 DECLARING TOTAL INCOME OF RS.4,34,768/-. AT THE END OF THE ASSESSMENT PROCEEDINGS U/S.143(3) R.W.S. 153A OF THE ACT, AO ASSESSED THE INCOME OF THE ASS ESSEE AT RS.4,34,768/-, THE SAME INCOME AS RETUNED BY THE ASSESSE E IN RESPONSE TO NOTICE U/S.153A OF THE ACT. AO WAS OF THE VIEW THAT A SSESSEE HAS CONCEALED THE PARTICULARS OF AMOUNT TO THE EXTENT OF RS.1 2,158/- AND LEVIED PENALTY OF RS.2,504/- ON THE SAID SUM WITH THE MEAN ING OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. 5. AGGRIEVED WITH THE ORDER OF AO ASSESSEE CHALLENGED THE LEVY OF PENALTY BEFORE THE CIT(A). THE CIT(A) CONSIDERED THE SUBMISS IONS OF THE ASSESSEE DT. NIL AND THE SUBMISSIONS OF THE ASSESSEE DT. 19-02-2016 IN RESPONSE TO NOTICE U/S.251(2) AS WELL AS THE DECISIONS RELIED ON BY THE 3 ASSESSEE IN THE CASES OF MANJUNATH COTTON & GINNING FAC TORY 359 ITR 565 AND SANJOG TARACHAND LODHA IN ITA NOS. 688 & 689/ PN/2014, DATED 31-08-2015. CONTENTS OF PARA NO.4 AND 4.2 OF THE ORDER OF CIT(A) ARE RELEVANT. CIT(A) ALSO DISCUSSED THE PROVISIONS OF EXPLAN ATION 5A TO SECTION 271(1)(C) OF THE ACT, SATISFACTION OF THE AO WHILE INITIAT ING AND LEVYING THE PENALTY, DECISIONS RELIED ON BY THE ASSESSEE. E VENTUALLY RELYING ON THE JUDGMENT OF GUJARAT HIGH COURT IN THE CA SE OF SORATHIA ENGINEERING 282 ITR 642, THE CIT(A) ENHANCED THE PENALTY LEVIED BY THE AO BY OBSERVING AS UNDER : 4.7 . . . . . . . .INCOME DISCLOSED IS BASED ON EN TRIES IN THE BOOKS OF ACCOUNTS OR TRANSACTIONS UNDERTAKEN BY THE APPELLAN T DURING THE PREVIOUS YEAR HENCE IN VIEW OF PROVISIONS OF SECTION 271(1)( C) READ WITH EXPLANATION 5A, THE INCOME OF RS.4,34,768/- WOULD B E TREATED AS CONCEALED INCOME FOR LEVY OF PENALTY. THE AO IS ACCORDINGLY DIRECTED TO RE-COMPUTE THE PENALTY LEVIABLE U/S.271(1)(C) @1 00% OF TAX SOUGHT TO BE EVADED ON CONCEALED INCOME OF RS.4,34, 768/- AS AGAINST CONCEALED INCOME OF RS.12,158/- CONSIDERED BY THE AO WHILE LEVYING THE PENALTY. PENALTY LEVIED U/S.271( 1)(C) WOULD GET ENHANCED TO THAT EXTENT AND THE GROUND RAISED BY TH E APPELLANT IS HEREBY DISMISSED. 6. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE FILED THE PRESENT APPEAL WITH THE AFOREMENTIONED GROUNDS. 7. LD. DR FOR THE REVENUE SUBMITTED THAT THE CIT(A) IS JU STIFIED IN ENHANCING THE PENALTY LEVIED BY THE AO AND THEREFORE, PRA YED FOR CONFIRMING THE ORDER OF THE CIT(A). HOWEVER, HE FAIRLY CONCE DED TO THE ABSENCE OF MENTIONING OF SPECIFIC REFERENCE TO ANY LIMB OF SEC TION 271(1) OF THE ACT. 8. AFTER HEARING THE LD. DR FOR THE REVENUE AND PERUSING THE FACTS OF THE CASE AND THE ORDERS OF THE REVENUE, WE FIND THAT T HERE IS AMBIGUITY IN THE MIND OF AO IN RECORDING THE SATISFACTION WHILE INITIATING AND LEVYING THE PENALTY. ON GOING THROUGH PARA NO.6 OF THE A SSESSMENT ORDER DATED 22-02-2013, WE FIND THAT THE AO INITIATED THE PENALTY PROCEEDINGS STATING THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF 4 SUCH INCOME WITHIN THE MEANING OF EXPLANATION -5A TO SECTION 271(1)(C) OF THE I.T. ACT. FURTHER, ON GOING THROUGH THE PARA NO.9 OF THE PENALTY ORDER, DATED 10-07-2013, WE FIND THAT AO LEVIED T HE PENALTY STATING THAT THE ASSESSEE HAS WITHOUT ANY REASONABLE CAUSE, FURNISHED INACCURATE PARTICULARS OF INCOME AND THER EBY CONCEALED HIS INCOME . THEREFORE, ON THE ISSUE OF SATISFACTION OF THE AO, WE FIND TH E AO DID NOT HAVE CLARITY OF THOUGHT AND AO SUFFERED FROM AMBIG UITY IN HIS MIND WITH REGARD TO THE APPLICABLE LIMB OF CLAUSE (C) OF SECTIO N 271(1) OF THE ACT TO THE FACTS OF THE CASE. THEREFORE, WE FIND T HE PENALTY ORDER OF THE AO FALLS SHORT OF LEGAL REQUIREMENT ON THE ISSUE OF REC ORDING OF SATISFACTION. THIS VIEW WAS ALREADY TAKEN BY THE PUNE BEN CH IN A SERIES OF CASES. THE MANNER OF INITIATING AND LEVYING OF PENALTY WIT HOUT MAKING REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) IS UNSUSTA INED. AO IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME O F INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. THEREFORE, THE PENAL TY LEVIED BY THE AO IS UNSUSTAINABLE ON TECHNICAL GROUNDS. THIS VIEW O F OURS GET STRENGTH BY THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF CIT VS. SHRI SAMSON PERINCHERY AS WELL AS THE JUD GMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJU NATHA COTTON AND GINNING FACTORY (SUPRA). 9. FURTHER, WE FIND, IN A RECENT CASE, THE MUMBAI BENCH O F THE TRIBUNAL IN THE CASE OF SACHIN MANOHAR DESHMUKH VS. ACIT ITA NO.3767/MUM/2016, DATED 23-03-2018 HAS DEALT WITH AN IDE NTICAL ISSUE AND QUASHED THE PENALTY ORDER OF THE AO. THE OP ERATIONAL PARA NO.12 OF THE ORDER OF THE TRIBUNAL IS EXTRACTED HERE AS UNDER : 12. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO T HE ISSUE BEFORE US, AND AFTER DELIBERATING ON THE FACTS ARE OF THE CONS IDERED VIEW THAT NOW WHEN THE A.O AFTER RECORDING HIS SATISFACTION HAD I NITIATED THE PENALTY PROCEEDINGS IN THE BODY OF THE ASSESSMENT ORDER FOR FURNISHING INACCURATE 5 PARTICULARS AND CONCEALMENT OF INCOME, THEREFORE, P UTTING THE ASSESSEE TO NOTICE AND CALLING UPON HIM TO EXPLAIN AS TO WHY PE NALTY MAY NOT BE IMPOSED ON HIM UNDER SEC. 271(1)(C) FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, FOL LOWED BY IMPOSING OF PENALTY UNDER SEC. 271(1)(C) IN HIS HANDS FOR FURN ISHING OF INACCURATE PARTICULARS OF INCOME , CAN IN NO WAY BE CONSTRUED AS HAVING FAIRLY PUT THE ASSESSEE TO NOTICE AS REGARDS THE DEFAULT/DEFAU LTS FOR WHICH PENALTY WAS SOUGHT TO BE IMPOSED IN HIS HANDS. WE ARE OF TH E CONSIDERED VIEW THAT A FAILURE ON THE PART OF THE A.O TO CLEARLY PUT THE A SSESSEE TO NOTICE AS REGARDS THE DEFAULT/DEFAULTS FOR WHICH PE NALTY UNDER SEC. 271(1)(C) IS SOUGHT TO BE TO BE IMPOSED ON HIM , HAS TO BE VISITED WITH AND ACCORDED THE SAME TREATMENT AS IN A CASE W HERE THE A.O HAD FAILED TO STRIKE OFF THE IRRELEVANT DEFAULT IN THE SHOW CAUSE NOTICE, BECAUSE, IN BOTH THE SITUATIONS THE ASSESSEE IS NOT INFORMED AND RATHER IS LEFT GUESSING OF THE DEFAULT/DEFAULTS FOR WHICH HE IS BEING PROCEEDED AGAINST FOR. WE THUS IN THE BACKDROP OF OUR AFORESA ID OBSERVATIONS ARE OF A STRONG CONVICTION THAT AS THE A.O HAD CLEARLY FAILED TO DISCHARGE HIS STATUTORY OBLIGATION OF FAIRLY PUTTING THE ASSESSEE TO NOTICE AS REGARDS THE DEFAULT/DEFAULTS FOR WHICH HE WAS BEING PROCEEDED AGAINST, THEREFORE, ARE OF THE CONSIDERED VIEW THAT THE PEN ALTY UNDER SEC. 271(1)(C) OF RS.12,14,140/- IMPOSED BY THE A.O IN CLEAR VIOLATION OF THE MANDATE OF SEC. 274(1) OF THE ACT, CANNOT BE SUSTAINED. WE THUS NOT ABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE IMPOSITION OF PENALTY BY THE A.O, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) WHO HAD UPHELD THE SAME. THE PENALTY OF RS.12,14,140/-IMPOSED BY THE A.O UNDER SEC.271(1)(C) IS QUASHED IN TERMS OF OUR AFORESAID OBSERVATIONS. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE ORDER S OF AO/ CIT(A) ARE REQUIRED TO BE SET-ASIDE ON THE LEGAL GROUND OF RECORDING OF SATISFACTION BY THE AO. PENALTY IS DELETED ON LEGAL GROUND. 10. SINCE WE ALLOW THE APPEAL OF THE ASSESSEE ON THE TECH NICAL/LEGAL GROUND, IN FAVOUR OF THE ASSESSEE, THE ADJUDICATION OF ORIG INAL GROUNDS RAISED BY THE ASSESSEE ON MERITS BECOME AN ACADEMIC EX ERCISE. THEREFORE, THE ORIGINAL GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED . 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF MAY, 2018. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 14 TH MAY, 2018 6 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE. 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-12, PUNE 4. CIT-12, PUNE 5. , , A BENCH PUNE; 6. / GUARD FILE.