Kirloskar Proprietary Ltd., Pune V. Deputy Commissioner of Income-tax, Pune

ITA 896/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7507 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 12-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim; Set aside
• Section: 271(1)(c); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.896/PUN/2017 / ASSESSMENT YEAR : 2008-09 KIRLOSKAR PROPRIETARY LTD. 13A, KIRLOSKAR KISAN COMPOUND, KARVE ROAD, S. NO.52/1, KOTHRUD, PUNE-411 038. PAN : AAACK7506Q .... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(1), PUNE. / RESPONDENT ASSESSEE BY : SHRI C.H. NANIWADEKAR REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 29.04.2019 / DATE OF PRONOUNCEMENT : 30.04.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF T HE LD. CIT(APPEALS)-7, PUNE DATED 10.01.2017 FOR THE ASSESSMENT YEAR 2008-09 AS PER THE GROUNDS OF APPEAL ON RECORD. 2. THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IS WITH RE GARD TO THE PENALTY LEVIED U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS 2 ITA NO. 896/PUN/2017 A.Y.2008-09 THE ACT) AND ALSO THAT THE PENALTY HAS BEEN LEVIED ON DISALLOWANCE MADE U/S.14A OF THE ACT. 3. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE VEH EMENTLY ARGUED THAT BOTH IN THE ASSESSMENT ORDER AS WELL AS PENALTY OR DER, THE LIMB FOR WHICH PENALTY IS BEING IMPOSED, HAS NOT BEEN SPECIFIED. MOREOVER, T HE NOTICE U/S.274 R.W.S. 271(1)(C) OF THE ACT IS ALSO NOT CLEAR AS TO THE LIMB ON WHICH PENALTY HAS TO BE LEVIED ON THE ASSESSEE. THE LD. AR OF THE ASSESSEE RELIED ON THE PRESENT JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS. SAMSON PERINCHERY REPORTED AS 392 ITR 4 (BOM.) WHEREIN T HE HON'BLE BOMBAY HIGH COURT HAS FOLLOWED THE VIEW OF KARNATAKA HIGH COURT I N THE CASE OF CIT VS. MANJUNATH COTTON & GINNING FACTORY REPORTED IN 359 ITR 565(KAR.) WHEREIN IT WAS OBSERVED THAT THE HON'BLE SUPREME COU RT OF INDIA HAD HELD IN T. ASHOK PAI VS. CIT REPORTED AS 292 ITR 11 (SC) THAT AC T OF CONCEALMENT OF INCOME AND ACT OF FURNISHING INACCURATE PARTICULARS ARE TWO DIFFERENT THINGS. SINCE WHERE THE NOTICE DOES NOT SPECIFY FOR WHAT PENALTY IS BEING INITIATED, THE LEVY OF PENALTY WAS HELD TO BE INVALID. 3.1 FURTHERMORE, THE LD. AR CONTENDED THAT IN SO FAR AS DISALLOWANCE MADE U/S.14A OF THE ACT, THERE ARE VARIOUS DECISIONS WHERE IT HAS BEEN HELD THAT PENALTY CANNOT BE IMPOSED. PENALTY IS NOT LEVIABLE ON DISALLO WANCE MADE U/S.14A OF THE ACT. THE LD. AR OF THE ASSESSEE HAS PLAC ED RELIANCE ON THE DECISION IN THE CASE OF M/S. 4A FINANCIAL SECURITIES LIMITED V S. DCIT IN ITA NO.1036/DEL/2018 FOR THE ASSESSMENT YEAR 2013-14 DECIDED ON 26 .07.2018. 4. ON THE OTHER HAND, THE LD. DR CONCEDED TO THE JUDIC IAL PRONOUNCEMENTS PLACED BEFORE US BY THE LD. AR. 3 ITA NO. 896/PUN/2017 A.Y.2008-09 5. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE R IVAL CONTENTIONS AND HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE JUDICIAL PRONOU NCEMENTS ON RECORDS. THAT IN THE PENALTY NOTICE, THE ASSESSING OFFICER IS NOT CLEAR AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT PENALTY TO BE IMPOSE D. THE LD. AR HAS POINTED OUT BEFORE US THAT THE DECISION OF HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (SUPRA.) HA S HELD THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTIC ULARS OF INCOME IN SECTION 271(1)(C) CARRY DIFFERENT MEANINGS/CONNOTATIONS AND T HEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY O NE OF THE TWO BREACHES MENTIONED U/S.271(1)(C) FOR INITIATION OF PENALTY PROC EEDINGS WILL NOT WARRANT/PERMIT PENALTY BEING IMPOSED FOR THE OTHER. 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. THEREFORE, WHERE THE ASSESSING OFFICER INITIATE D PENALTY PROCEEDINGS U/S.271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME, THE ORDER IMPOSING PENALTY FOR CONCEALMENT OF INCOME WAS NOT V ALID. REVERTING TO THE FACTS OF THE CASE THE PENALTY NOTICE IS AMBIGUOUS SO AS IT HAS NOT SPECIFIED AS TO THE CHARGE FOR WHICH PENALTY U/S.271(1)(C) OF THE ACT IS LEVIED. IF THE NOTICE DOES NOT SPECIFY THE LIMB IN WHICH THE PENALTY IS BE ING LEVIED U/S.271(1)(C) OF THE ACT, IN SUCH SCENARIO, THE IMPOSITION OF PEN ALTY SHALL BE VOID AB-INITIO. MEANING THEREBY TO OUR HUMBLE UNDERSTANDING, THE ASSES SEE SHOULD BE READY WITH HIS DEFENSE FOR WHICH PENALTY HAS BEEN LEVIED BY THE REVENUE AUTHORITY. IT COULD NOT BE GENERALLY DONE THAT FOR CONC EALMENT OF INCOME AND ALSO FOR FURNISHING INACCURATE PARTICULARS OF INCOME, PENALTY HAS BEEN LEVIED. THE LIMB FOR WHICH PENALTY IS LEVIED, SHOULD BE SPECIFIC IN THE P ENALTY NOTICE ALLOWING OPPORTUNITY TO THE ASSESSEE TO GET READY WITH H IS DEFENSE. FURTHER, 4 ITA NO. 896/PUN/2017 A.Y.2008-09 THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (SUPRA.) AS STATED BY THE LD. AR IS TH E PRESENT JUDGMENT ON THE ISSUE WHICH IS THEREFORE, RELEVANT. 5.1 REGARDING IMPOSITION OF PENALTY U/S.271(1)(C) OF THE ACT ON DISALLOWANCE MADE U/S.14A OF THE ACT, WE HAVE CONSIDERED THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF M/S.4A FINANCIAL SECURITIES LIMITED VS. DCIT (SUPRA.) WHEREIN THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN DECLARING TOTAL INCOME OF RS.22,66,770/-. THE ASSESSING OFFICER MADE ADDITION OF RS.3,01,220/- UNDER SECTION 14A OF THE ACT READ WITH RU LE 8D. ANOTHER ADDITION OF RS.1,13,790/- WAS MADE TOWARDS CLAIM FOR MEMBERS HIP FEES AMOUNTING TO RS.14,484/- AND INTEREST ON LATE PAYMENT RS .99,306/-. THESE TWO ADDITIONS FORMED THE BEDROCK OF THE EDIFICE OF INSTANT P ENALTY WHICH CAME TO BE AFFIRMED IN THE FIRST APPEAL. THE DELHI BENCH OF THE TRIB UNAL HAS DELETED THE PENALTY IMPOSED ON DISALLOWANCE MADE U/S.14A OF THE AC T BY OBSERVING AS UNDER: 3. I HAVE HEARD BOTH THE SIDES AND PERUSED THE RELE VANT MATERIAL ON RECORD. IT IS EVIDENT FROM THE DISCUSSION MADE ABOV E THAT SUCH PENALTY HAS BEEN IMPOSED ON MAKING DISALLOWANCE OF CERTAIN EXPENSES. BUT FOR THAT, THERE IS NOTHING ON RECORD TO SHOW THAT THE A SSESSEE LODGED BOGUS CLAIMS IN RESPECT OF THESE EXPENSES. THAT APART, TH E EXPENSES WERE CLAIMED BY THE ASSESSEE IN A BONA FIDE MANNER. THE MERE FACT THAT THE ABOVE DISALLOWANCES HAVE BEEN MADE DO NOT BRING A C ASE WITHIN THE PARAMETERS SET OUT IN SECTION 271(1)(C) OF THE ACT. THE HON'BLE SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS PRIVATE LTD. (2010) 322 ITR 158 (SC) HAS HELD THAT A MERE MAKING OF A CLAIM WHICH I S NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT ATTRACT PENALTY 271(1)(C) O F THE INCOME-TAX ACT, WHEN THE ASSESSEE FURNISHES ALL THE RELEVANT PARTICULARS IN HIS RETURN WHICH ARE NOT FOUND TO BE INACCURATE. THERE IS NO DEARTH OF D ECISIONS HOLDING THAT PENALTY UNDER SECTION 271(1)(C) CANNOT BE IMPOSED O N DISALLOWANCE OF EXPENSES, WHICH WERE NOT OTHERWISE BOGUS. I, THEREF ORE, SET ASIDE THE IMPUGNED ORDER AND DIRECT TO DELETE THE PENALTY. RESPECTFULLY, FOLLOWING THE DIRECTIONS AND RULING OF THE HON'BLE JURISDICTIONAL HIGH COURT, IN SAMSON PERINCHERY (SUPRA.) AND D ECISION OF DELHI 5 ITA NO. 896/PUN/2017 A.Y.2008-09 BENCH OF THE TRIBUNAL, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY FROM THE HANDS OF THE ASSESSEE . 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 30 TH DAY OF APRIL, 2019. SD/- SD/- R.S.SYAL PA RTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 30 TH APRIL, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-7, PUNE. 4. THE CIT-6, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 6 ITA NO. 896/PUN/2017 A.Y.2008-09 DATE 1 DRAFT DICTATED ON 29 .0 4 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 30 .04 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER