M/s. Diamond & Vishal Associates, Pune V. Assistant Commissioner of Income tax, Pune

ITA 879/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2804 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 11-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Principle of natural justice; Revised return; Set aside
• Section: 271(1)(c); 133A; 148; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO S.878 & 879 /PUN/201 7 / ASSESSMENT YEAR S : 20 11 - 12 & 2012 - 13 M/S. DIAMOND & VISHAL ASSOCIATES, 209, ASHISH PLAZA, PLOT SDC 1, SECTOR - 27A, PRADHIKARAN, NIGDI, PUNE 411044 PAN : AAGFD4717M ....... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI M.K. VERMA / DATE OF HEARING : 1 5 - 04 - 2019 / DATE OF PRONOUNCEMENT : 13 - 06 - 2019 / ORDER PER VIKAS AWASTHY, JM : TH ESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 13, PUNE DATED 27 - 01 - 2017 COMMON FOR THE ASSESSMENT YEARS 2011 - 12 AND 2012 - 13 , CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2 ITA NO S.878 & 879/PUN/2017, A.YS. 2011 - 12 & 2012 - 13 ITA NO. 878/PUN/2017 (A.Y. 2011 - 12) 2. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A BUILDER AND DEVELOPER. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEARS DECLARING TOTAL INCOME AS NIL. A SURVEY OPERATION U/S. 133A OF THE ACT WAS CARRIED OUT ON THE PREMISES OF ASSESSEE ON 25 - 10 - 2012. DURING THE COURSE OF SURVE Y , THE ASSESSEE DISCLOSED ADDITIONAL INCOME OF RS.92,30,630/ - FOR ASSESSMENT YEAR 2011 - 12. NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 13 - 09 - 2013. IN RESPONSE TO NOTICE, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.92,30,630/ - . TH E INCOME RETURNED BY THE ASSESSEE WAS ACCEPTED , HOWEVER, PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE INITIATED. THE LD. AR SUBMITTED THAT WHILE RECORDING SATISFACTION FOR INITIATING PENALTY PROCEEDINGS THE ASSESSING OFFICER HAD NOT SPECIFIED THE CH ARGE U/S. 271(1)(C) FOR WHICH THE PENALTY IS BEING LEVIED. THEREAFTER, THE ASSESSING OFFICER VIDE ORDER DATED 21 - 08 - 2015 LEVIED PENALTY OF RS.27,69,189/ - U/S. 271(1)(C) FOR CONCEALMENT OF INCOME. THE LD. AR SUBMITTED THAT THE MANNER IN WHICH SATISFACTION HAS BEEN RECORDED IS CONTRARY TO THE LAW LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY REPORTED AS 359 ITR 565 AND VARIOUS DECISIONS OF THE TRIBUNAL. 3. ON THE OTHER HA ND SHRI M.K. VERMA REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND THE MANNER OF RECORDING SATISFACTION BY THE ASSESSING OFFICER FOR INITIATING PENALTY PROCEEDINGS. 4. BOTH SIDES HEARD. A PERUSAL OF ASSESSMENT ORDER SHOWS THAT TH E ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) AGAINST THE ASSESSEE WITHOUT SPECIFYING THE CHARGE I.E. WHETHER IT IS THE CASE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME . 3 ITA NO S.878 & 879/PUN/2017, A.YS. 2011 - 12 & 2012 - 13 THE RELEVANT EXTRACT OF THE AS SESSMENT ORDER WHERE THE ASSESSING OFFICER HAS RECORDED SATISFACTION FOR INITIATING PENALTY PROCEEDINGS READS AS UNDER: 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE FIRM FILED ITS REVISED RETURN OF INCOME FOR A.Y. 2011 - 12 DECLARING A TOTAL INCOME AT RS.92,30,630/ - (INCOME AS PER ORIGINAL RETURN OF RS. NIL + ADDITIONAL INCOME DECLARED DURING SURVEY OF RS.92,30,630/ - ) ON 26/11/2013. AS THE INCOME OF RS.92,30,630/ - HAS BEEN DISCLOSED BY THE ASSESSEE ONLY ON ACCOUNT OF SURVEY ACTION CONDUCTED IN THE CASE UNDER SECTION 133A OF THE ACT, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ARE IN ITIATED SEPARATELY . WHILE PASSING ORDER LEVYING PENALTY U/S. 271(1)(C) DATED 21 - 08 - 2015 THE ASSESSING OFFICER HELD THAT IT IS A CASE OF CONCEALMENT OF INCOME. 5. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS HELD THAT UNLESS THE CHARGE FOR WHICH PENALTY IS TO BE LEVIED U/S. 271(1)(C) IS COMMUNICATED TO THE ASSESSEE, THE ASSESSEE WOULD NOT BE ABLE TO DEFEND HIS CASE. THE HONBLE HIGH COURT HELD : 61. THE ASSESSING OFFIC ER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCU RATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE O F ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJRAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES T O INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO N ON - APPLICATION OF MIND. THE HONBLE HIGH COURT WHILE SUMMING UP THE LAW LAID DOWN IN THE JUDGMENT INTER ALIA HELD : 4 ITA NO S.878 & 879/PUN/2017, A.YS. 2011 - 12 & 2012 - 13 R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. 6. THE MANNER IN WHICH SATISFACTION HAS BEEN RECORDED CLEARLY SHOWS THAT THE ASSESSING OFFICER HAS RECORDED SATISFACTION IN A MECHANICAL MANNER. THE ASSESSING OFFIC ER FAILED TO COMMUNICATE TO THE ASSESSEE IN AN UNAMBIGUITY MANNER THE CHARGE U/S. 271(1)(C) FOR WHICH THE PENALTY PROCEEDINGS ARE INITIATED. THE TRIBUNAL IN AN UMPTEEN NUMBER OF CASES HAS HELD THAT WHERE THE ASSESSEE HAS FAILED TO SPEFICY THE CHARGE WHIL E RECORDING SATISFACTION THE PENALTY PROCEEDINGS ARE UNSUSTAINABLE. T HE INSTANT CASE IS ONE OF THE SUCH CASE. ACCORDINGLY, THE PENALTY PROCEEDINGS ARE HELD BAD IN LAW , HENCE, THE IMPUGNED ORDER IS SET ASIDE. ITA NO. 87 9 /PUN/2017 (A.Y. 201 2 - 13 ) 7. THE LD. AR SUBMITTED THAT IN THE ASSESSMENT YEAR 2012 - 13 , THE MANNER OF RECORDING SATISFACTION FOR INITIATING PENALTY PROCEEDINGS U/S. 271(1)(C) IS IDENTICAL TO THE ONE AS WERE IN ASSESSMENT YEAR 2011 - 12. IN ORDER LEVYING PENALTY , THE ASSESSING OFFICER HAS L EVIED PENALTY FOR CONCEALMENT OF INCOME. TH E FACTS IN THE ASSESSMENT YEAR 2012 - 13 ARE IDENTICAL TO ASSESSMENT YEAR 2011 - 12. THEREFORE, THE SUBMISSIONS MADE IN RESPECT OF ASSESSMENT YEAR 2011 - 12 WOULD EQUALLY APPLY TO ASSESSMENT YEAR 2012 - 13. 8. ON THE O THER HAND LD. DR DEFENDED THE PENALTY PROCEEDINGS AS WELL AS THE IMPUGNED ORDER . 9. BOTH SIDES HEARD. IT IS AN ADMITTED FACT THAT THE PENALTY PROCEEDINGS IN THE ASSESSMENT YEAR 2012 - 13 ARE O N THE SAME LINES AS THAT OF ASSESSMENT YEAR 2011 - 12. THE MANN ER OF RECORDING SATISFACTION AND 5 ITA NO S.878 & 879/PUN/2017, A.YS. 2011 - 12 & 2012 - 13 CHARGE FOR LEV Y OF PENALTY U/S. 271(1)(C) IN THE PENALTY ORDER ARE ALSO IDENTICAL. WE HAVE HELD THE PENALTY PROCEEDINGS IN ASSESSMENT YEAR 2011 - 12 BAD IN LAW ON TECHNICAL GROUNDS. SINCE, THE MANNER OF RECORDING SATISFAC TION IS SAME , THE FINDINGS GIVEN BY US IN ASSESSMENT YEAR 2011 - 12 WOULD MUTATIS MUTANDIS APPLY TO ASSESSMENT YEAR 2012 - 13 AS WELL. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED FOR THE SIMILAR REASONS. 10. IN THE RE SULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 13 TH DAY OF JUNE, 2019. SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 13 TH JUNE, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 13, PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 5 , PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE