Dattatraya Shivaji Bandal, Satara V. Deputy Commissioner of Income-tax,

ITA 917/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9375 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Initiation of penalty proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NOS.916 TO 918/PUN/2016 / ASSESSMENT YEARS : 2007-08 TO 2009-10 SHRI DATTATRAYA SHIVAJI BANDAL, PROP. KAILASH FOOD INDUSTRIES, AT AMRUTWADI, POST PACHWAD, TALUKA-WAI, DIST. SATARA PAN : AABPB8740K . /APPELLANT VS. DY. COMMISSIONER OF INCOME-TAX, SATARA CIRCLE, SATARA . / RESPONDENT / APPELLANT BY : SHRI M.K. KULKARNI / RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 05.02.2018 / DATE OF PRONOUNCEMENT: 09.02.2018 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE 3 APPEALS FILED BY THE ASSESSEE UNDER CON SIDERATION INVOLVING THE ASSESSMENT YEARS 2007-08 TO 2009-10. ALL THESE APP EALS RELATE TO THE COMMON ISSUE OF LEVY OF PENALTY BY THE AO U/S.271(1)(C) OF THE INCOME TAX ACT, 1961. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO IN AL L THE YEARS UNDER CONSIDERATION. AGGRIEVED WITH THE SAME, THE ASSESSEE RAISED THE CO MMON GROUND IN THESE APPEALS AND THE SAID GROUND FROM A.Y. 2007-08 IS EXTRACTED HERE AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A)-4, PUNE WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S.271(1)(C) OF THE ACT TO THE EXTENT OF INCOME DECLARED IN THE ORIGINAL RE TURN OF INCOME. THE PENALTY BEING NOT EXIGIBLE BE QUASHED. 2. AT THE OUTSET, BEFORE US, LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE SAID PENALTIES IN ALL THE YEARS UNDER CONSIDERATION ARE UNSUSTAINABLE ON THE ITA NOS.916 TO 918/PUN/2016 DATTATRAYA SHIVAJI BANDAL 2 TECHNICAL GROUND PERTAINING TO THE ISSUE OF SATISFA CTION IN INITIATING AND CONCLUDING OF THE PENALTY PROCEEDINGS. LD. COUNSEL MENTIONED THAT THE AO SUFFERED FROM THE AMBIGUITY IN HIS MIND QUA THE LIMBS OF CLAUSE (C) O F SECTION 271(1) OF THE ACT. TO DEMONSTRATE THE SAME, LD. COUNSEL BROUGHT OUR ATTEN TION TO THE ASSESSMENT ORDERS AND READ OUT THE RELEVANT LINES/PARA NO.7 WHICH CON TAINS THE SATISFACTION OF THE AO IN INITIATING THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. HE SUBMITTED THAT THE AO INITIATED THE PENALTY PROCEEDINGS FOR THE OFFENC E OF CONCEALING THE PARTICULARS OF INCOME. FURTHER, BRINGING OUR ATTENTION TO THE PENALTY ORD ER DATED 26-06-2012 FOR THE A.Y. 2007-08, LD. COUNSEL SUBMITTED THAT THE AO MENTIONED BOTH THE LIMBS, I.E. FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND CONCEALED HIS INCOME. FURTHER ALSO, HE SUBMITTED THAT THE NOTICES ISSUED U/S.274 OF THE ACT DO NOT CONTAIN ST RIKING OFF/MARK TO ANY LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT (COPY OF NO TICES ISSUED U/S.274 OF THE ACT ARE PLACED AT PAGES 21 TO 23 OF THE PAPER BOOK). LD. C OUNSEL FOR THE ASSESSEE RELIED ON VARIOUS DECISIONS IN SUPPORT OF HIS CONTENTION ON T HE UNSUSTAINABILITY OF THE PENALTY ORDERS. IN SUPPORT OF HIS ARGUMENT, LD. COUNSEL FI LED COPIES OF THE ORDERS OF THE TRIBUNAL IN THE CASE OF M/S. D.P. JAGTAP VS. ACIT ITA NO. 418/PUN/2015 FOR THE A.Y. 2010-11, ORDER DATED 15-02-2017 AND SHRI DILIP MOTILAL CHORDIYA VS. DCIT ITA NO. 762/PUN/2017 FOR THE A.Y. 2008-09, ORDER DA TED 29-11-2017. 3. LD. DR FOR THE REVENUE DUTIFULLY RELIED ON THE O RDERS OF THE AO AND THE CIT(A) FOR ALL THREE YEARS. 4. WE HAVE HEARD BOTH THE PARTIES ON THE LEGAL ISSU E RELATING TO THE TECHNICALITIES IN INITIATING AND CONCLUDING THE PEN ALTY PROCEEDINGS. THE ARGUMENTS OF THE PARTIES ARE COMMON TO ALL THE THREE APPEALS. TO BEGIN WITH, THE RECORDING OF SATISFACTION OF THE AO AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS FOR THE A.Y. ITA NOS.916 TO 918/PUN/2016 DATTATRAYA SHIVAJI BANDAL 3 2007-08 (AS GIVEN IN PAGE 5 OF THE ASSESSMENT ORDER (PARA 7) IS EXTRACTED HERE AS UNDER : 7. . . . . .THE ASSESSEE IS HELD TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME AND THEREFORE, PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT, ARE SEPARATELY INITIATED IN THIS CASE. FURTHER, RELEVANT EXTRACT FROM THE PENALTY ORDER DA TED 26-06-2012 FOR THE A.Y. 2007-08 IS ALSO EXTRACTED AS UNDER : 7. IN VIEW OF THE ABOVE FACTS, I AM SATISFIED THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND HAS CONCEALED HIS INCOME FOR A.Y. 2007-08. THEREFORE, I CONSIDER THIS TO BE A FIT CASE FOR IMP OSING PENALTY U/S.271(1)(C) OF THE I.T. ACT, 1961. . . . . FURTHER ALSO, WE HAVE PERUSED THE SHOW CAUSE NOTIC ES ISSUED U/S.274 OF THE ACT WHICH ARE PLACED AT PAGES 21 TO 23 OF THE PAPER BOOK AND FIND THAT THE AO TICKED () BOTH THE LIMBS IN THE NOTICE AND THE SAM E IS EVIDENT ON THE FACE OF IT. 5. FROM THE ABOVE EXTRACTS FROM THE ASSESSMENT ORDE RS AND PENALTY ORDERS AS WELL AS THE NOTINGS ON THE SHOW CAUSE NOTICE ISSUED U/S.274 OF THE ACT, WE FIND THAT THE ARGUMENTS OF LD. COUNSEL MERITS FAVOURABLE CONS IDERATION. 6. FURTHER, WE ALSO PERUSED THE ORDERS OF PUNE BENC H OF THE TRIBUNAL RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE. COPIES O F THE SAME ARE PLACED AT PAGES 24 TO 38 OF THE PAPER BOOK. IN THE CASE OF M/S. D. P. JAGTAP VS. ACIT (SUPRA), THE TRIBUNAL AT PARA NOS. 10 AND 11 HELD AS UNDER : 10. THUS, IT IS CLEARLY EVIDENT THAT THE ASSESSING OFFICER IS NOT CLEAR AS TO UNDER WHAT CHARGE PENALTY HAS TO BE LEVIED U/S. 271(1)(C) OF THE ACT. THE OBSERVATIONS OF THE ASSESSING OFFICER ARE INCONSISTENT WHILE RECORD ING SATISFACTION, THEREAFTER AT THE TIME OF ISSUING NOTICE AND FINALLY AT THE TIME OF P ASSING OF THE ORDER. THERE IS TOTAL NON- APPLICATION OF MIND BY THE ASSESSING OFFICER W HILE PASSING PENALTY ORDER. RECENTLY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SAMSON PERINCHERY IN INCOME TAX APPE AL NO. 1154 OF 2014 DECIDED ON 05-01-2017 HAS HELD THAT FAILURE BY THE ASSESSIN G OFFICER TO SPECIFY IN NOTICE ISSUED U/S. 274 WHETHER ITA NO. 418/PUN/2015, A.Y. 2010-11 THE PENALTY IS BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR FOR CONCEALMENT OF ITA NOS.916 TO 918/PUN/2016 DATTATRAYA SHIVAJI BANDAL 4 INCOME IS FATAL. IT REFLECTS NON-APPLICATION OF MIN D AND RENDERS THE LEVY OF PENALTY INVALID. 11. THUS, IN THE LIGHT OF ABOVE DECISIONS AND THE F ACTS OF THE CASE, WE DIRECT THE ASSESSING OFFICER TO CANCEL THE PENALTY. THE IMPUGN ED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. 7. SIMILAR VIEW WAS TAKEN BY THE TRIBUNAL IN THE CA SE OF SHRI DILIP MOTILAL CHORDIYA VS. DCIT (SUPRA). CONTENTS OF PARA NO. 5 A ND 6 ARE RELEVANT. PARA NO.6 CONTAINS THE FINDING OF THE TRIBUNAL AND THE SAME I S EXTRACTED AS UNDER : 6. IN THE PRESENT CASE, AS NOTED HEREINABOVE, IT I S SEEN THAT THE AO HAS NOT RECORDED ANY SATISFACTION FOR LEVY OF PENALTY IN TH E ASSESSMENT ORDER BUT HAD LEVIED PENALTY ON BOTH THE LIMBS I.E., FOR CONCEALMENT OF INCOME AND FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME WHILE PASSING THE PENALTY ORDER. CONSIDERING THE AFORESAID FACTS IN THE LIGHT OF THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF SAMSON PERINCHERY (SUPRA), WE ARE OF THE VIEW TH AT IN THE PRESENT CASE THE BASIC CONDITION FOR LEVY OF PENALTY HAS NOT BEEN FULFILLE D AND THAT THE PENALTY ORDER SUFFERS FROM NON-EXERCISING OF JURISDICTION POWER OF AO AND THEREFORE PENALTY ORDER CANNOT BE UPHELD. WE ACCORDINGLY SET ASIDE THE PENALTY ORD ER PASSED BY AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 8. FROM THE ABOVE FACTS AS WELL AS THE LEGAL PROPOS ITIONS, IT IS EVIDENT THAT THE TRIBUNAL HAS BEEN CONSISTENTLY DISAPPROVING THE PEN ALTIES LEVIED BY THE AO WHEN THE (1) INITIATION IS DONE FOR ONE OF THE TWO LIMBS AND (2) PENALTY IS LEVIED FOR BOTH THE LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE AC T COMPOSITELY. THEREFORE, WE ARE OF THE OPINION THAT THE PENALTIES LEVIED BY THE AO IN ALL THESE THREE APPEALS ARE UNSUSTAINABLE. THUS, THE LEGAL GROUND RAISED BY TH E ASSESSEE FOR THE A.YS. 2007-08 TO 2009-10 IS ALLOWED ON TECHNICAL GROUNDS. CONSEQ UENTLY, ADJUDICATION OF THE ISSUES RELATING TO MERITS AMOUNTS TO AN ACADEMIC EX ERCISE. THEREFORE, THE SAME ARE DISMISSED AS ACADEMIC. 9. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSE SSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 09 TH DAY OF FEBRUARY, 2018. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 09 TH FEBRUARY, 2018. SATISH ITA NOS.916 TO 918/PUN/2016 DATTATRAYA SHIVAJI BANDAL 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 4 , PUNE 4. / THE CIT - 4 , PUNE 5. , , / DR B, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE