Parag Yashwant Gadgil, Pune V. Deputy Commissioner of Income-tax,

ITA 940/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9366 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 3 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: 2000-2001
• Appeal Filed On: 06-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE

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 NO.940/PUN/2016 / ASSESSMENT YEAR : 2000-01 PARAG YASHWANT GADGIL, PNG HOUSE, 694, NARAYAN PETH, LAXMI ROAD, PUNE 411 030 PAN : ACWPG2456J . /APPELLANT VS. DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1(2), PUNE . / RESPONDENT / APPELLANT BY : SHRI M.R. BHAGWAT / RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 06.02.2018 / DATE OF PRONOUNCEMENT: 09.02.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-11, PUNE DATED 21-01-2016 FOR THE ASSESSMENT YEAR 2000-01 IN CONNECTION WITH THE LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT, 1961. 2. ASSESSEE RAISED VARIOUS GROUNDS RELATING TO THE MERITS OF LEVY OF PENALTY OF RS.4,97,254/-. DURING THE PROCEEDINGS BEFORE US, A SSESSEE ALSO RAISED AN ADDITIONAL GROUND, UNDISPUTEDLY LEGAL IN NATURE RELATING TO IN CORRECT INITIATION AND CONCLUSION OF THE PENALTY PROCEEDINGS QUA THE AMBIGUITY IN THE MI ND OF THE AO. 3. ON THIS LEGAL ISSUE, LD. COUNSEL FOR THE ASSESS EE BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER AND READ OUT THE CONTENTS OF P ARA NO.2 AND MENTIONED THAT THE PENALTY WAS INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME . FURTHER, HE ITA NO.940/PUN/2016 PARAG YASHWANT GADGIL 2 BROUGHT OUR ATTENTION TO THE PENALTY ORDER DATED 31 -03-2010 AND MENTIONED THAT THE PENALTY WAS LEVIED FOR BOTH THE LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. HE ALSO SUBMITTED THAT THE SHOW CAUSE NOTICE ISSUED BY THE AO U/S.274 OF THE ACT DOES NOT CONTAIN STRIKING OF ANY OF THE TWO LIMBS O F THE SAID CLAUSE (C) OF SECTION 271(1) OF THE ACT. WITH THESE FACTS, LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE PENALTY IN THE PRESENT CASE IS UNSUSTAINABLE AS THE SAID DISCREPANCY UNDERLINES THE AMBIGUITY IN THE MIND OF THE AO WITH REGARD TO THE INITIATION AS WELL AS THE CONCLUSION OF THE PENALTY PROCEEDINGS. IN THIS REG ARD, HE RELIED ON VARIOUS DECISIONS TO DEMONSTRATE THE EXISTENCE OF FAVOURABLE PRECEDEN TS ON THIS ISSUE. 4. LD. DR FOR THE REVENUE DUTIFULLY RELIED ON THE O RDERS OF THE AO AND THE CIT(A) FOR ALL THREE YEARS. 5. WE HEARD BOTH THE PARTIES ON THIS LEGAL ISSUE RE LATING TO THE AMBIGUITY IN THE MIND OF THE AO IN MATTERS RELATING TO THE INITIATIO N AND CONCLUSION OF THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. WE FIND IT R ELEVANT TO EXTRACT RELEVANT LINES FROM THE ASSESSMENT ORDER AS WELL AS THE PENALTY OR DER, AS REFERRED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US. IN THE ASSESSM ENT ORDER DATED 28-12-2007, THE AO HAS RECORDED THE SATISFACTION AT PARA 2 OF H IS ORDER AND THE SAME READS AS UNDER : 2. . . . . . . . . . . . . . SINCE THE ASSESSEE HAS CONCEALED THESE PARTICULARS OF HIS INCOME , I AM SATISFIED THAT HE HAS COMMITTED DEFAULT WITH IN THE MEANING OF SECTION 271(1)(C) OF THE I.T. ACT, 1961. PENALTY PROCEEDIN GS U/S.271(1)(C) OF THE I.T. ACT, 1961 HAS, THEREFORE, BEEN INITIATED SEPARATELY. IN THE PENALTY ORDER DATED 31-03-2010, THE AO LEVIE D PENALTY BY HOLDING AS UNDER (PAGE 7) : ITA NO.940/PUN/2016 PARAG YASHWANT GADGIL 3 AS SUCH THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME TO THE EXTENT OF RS.15,03,250/-. I AM, THEREFORE, SATISFIED THAT THE ASSESSEE HAS COMMITTE D THE DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) AND HAS MADE LIABLE FOR PENAL TY. I LEVY THE PENALTY OF RS.4,97,254/-...... 6. FROM THE ABOVE EXTRACTS, WE FIND IT IS FACTUALLY EVIDENT THAT THE AO DID NOT CONCLUDE THE PENALTY PROCEEDINGS FOR THE REASONS RE CORDED AT THE TIME OF INITIATION OF THE PENALTY PROCEEDINGS, AS EVIDENT IN THE ASSES SMENT ORDER DT. 28-12-2007. 7. FURTHER, WE FIND THERE ARE CATENA OF DECISIONS I N FAVOUR OF THE ASSESSEE ON THIS LEGAL ISSUE. WE FIND THE PUNE BENCH OF THE T RIBUNAL IN THE CASE OF M/S. D.P. JAGTAP VS. ACIT VIDE ITA NO. 418/PUN/2015 FOR THE A .Y. 2010-11, ORDER DATED 15-02-2017 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 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. 8. SIMILAR VIEW WAS TAKEN BY THE TRIBUNAL IN THE CA SE OF SHRI DILIP MOTILAL CHORDIYA VS. DCIT VIDE ITA NO. 762/PUN/2017 FOR THE A.Y. 2008-09, ORDER DATED 29-11-2017. THE OPERATIONAL PARA NO.6 CONTAINS THE FINDING AND THE SAME IS 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 ITA NO.940/PUN/2016 PARAG YASHWANT GADGIL 4 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. 9. FROM THE ABOVE FACTS AND THE LEGAL PRECEDENTS ON THE ISSUE, IT IS EVIDENT THAT THE TRIBUNAL HAS BEEN CONSISTENTLY DISAPPROVING THE PENALTIES 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 T HE ACT COMPOSITELY. THEREFORE, WE ARE OF THE OPINION THAT THE PENALTY LEVIED BY THE A O IN THIS APPEAL IS UNSUSTAINABLE. THUS, THE LEGAL GROUND RAISED BY THE ASSESSEE IS AL LOWED ON TECHNICAL GROUNDS. CONSEQUENTLY, ADJUDICATION OF THE ISSUES RELATING T O MERITS AMOUNTS TO AN ACADEMIC EXERCISE. THEREFORE, THE SAME ARE DISMISSED AS ACA DEMIC. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY 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 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 11 , PUNE 4. / THE CIT - 11 , PUNE 5. , , / DR B, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE