Assistant Commissioner of Income-tax, V. Shoukat Allabaksh Bagwan, Kolhapur

ITA 947/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7274 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-10-2017
• Assessment Year: 2000-2001
• Appeal Filed On: 18-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY MODI SHRI M K KULKARNI
• Assessee Lawyers: PBE
• Keywords: Initiation of penalty proceedings; Tax effect

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.946 TO 955/PUN/2015 / ASSESSMENT YEARS : 1999-2000 TO 2009-10 ACIT, ICHALKARANJI CIRCLE, ICHALKARANJI . /APPELLANT VS. SHOUKAT ALLABAKSH BAGWAN, 6/464, NEAR JAYSHREE SIZING, SANGLI ROAD, ICHALKARANJI, DIST. KOLHAPUR PAN : ABYPB5124E . / RESPONDENT / APPELLANT BY : SHRI AJAY MODI / RESPONDENT BY : SHRI M.K. KULKARNI / DATE OF HEARING : 16.10.2017 / DATE OF PRONOUNCEMENT: 30.10.2017 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE 10 APPEALS UNDER CONSIDERATION FILED BY T HE REVENUE AGAINST THE COMMON ORDER OF CIT(A)-1 & 2, KOLHAPUR DATED 2 3-03-2015 FOR THE A.YRS. 1999-2000 TO 2009-10 IN CONNECTION WITH THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT. ITA NO.946/PUN/2015 (A.Y. 1999-2000) 2. TO START WITH, WE SHALL TAKE UP THE APPEAL FOR A .Y. 1999-2000. GROUNDS RAISED BY THE REVENUE READ AS UNDER : 1. THE APPELLAN T PRAYS THAT MONETARY LIMITS SPECIFIED IN PARA 3 OF INSTRUC T IONS NO.5 OF 2014 D ATED 10-07 - 2014 MAY NOT BE APPLIED TO THE PRESENT CASE, AS THE APPEAL IN THIS CASE I S C O V E R ED IN E X CEPTION GIVEN IN PARA 5 OF THE SAID INSTRUCTION HAVING ORDER OF THE CIT (APPEALS ) IS A COMPOSITE ORDER INVOLVING MORE THAN ONE ASSESSMENT YEAR AND THE TAX EFFECT IN SOME ASSESSMENT YEARS I S ABOVE THE MONETARY LIMIT PRESCRIBED I N PARA 3 OF THE INSTRUCT I ON NO . 5 OF 2014. ITA NOS.946 TO 955/PUN/2015 SHOUKAT ALLABAKSH BAGWAN 2 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) HAS ERRED IN DELETING THE PENALTY OF RS.3,47 , 671/- LEVIED U/S.271( 1 )(C) OF THE ACT ON THE SUSTAINED AMOUNT OF ADD I TION OF EXCESS AGRICULTURAL INCOME DETERMINED BY ERSTWHILE CIT(A ) . 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW , THE CIT(APPEALS) HAS ERRED IN DELETING THE PENALTY LEVIED BY THE A.O. OBSERVING THAT NO PENALTY IS ATTRACTED ON ESTIMATED INCOME WI THOUT A PPRECIATING THE FACT THAT ASSESSEE HAD NOT MAINTAINED THE RECORDS OF AGR ICULTURAL EXPENSES ON VARIOUS ITEMS AND THE ERSTWHILE CIT(A) ADOPTED RATI ONAL METHOD IN DERIVING AGRICULTURAL INCOME ON REVEALING DISCREPANCIES AND IRREGULARITIES I N EXPENSES INCURRED BY THE ASSESSEE . 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ORDER DATED 23/03/20 1 5 PASSED BY THE CIT(APPEALS) KOLHAPUR IS OTHERWISE BAD IN LAW AND NOT MAINTAINABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE . 5. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) , KOLHAPUR BE VACATED AND THAT OF THE AO BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, RAISE ANY OF THE ABOVE OR ANY OTHER GROUNDS RAISED. 3. BRIEFLY STATED RELEVANT FACTS FOR THE A.Y. 1999- 2000 ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE AGRICULTURAL AC TIVITY. SEARCH ACTION U/S.132 OF THE ACT WAS CONDUCTED AS BAGWAN GROUP CASES ON 1 8-05-2005. ASSESSEE FILED RETURN OF INCOME ON 31-03-2006 DECLARING TOTA L INCOME OF RS.2,71,928/-. AO MADE ADDITIONS ON ACCOUNT OF AGRICULTURAL INCOME /EXPENDITURE. RE- ASSESSMENT WAS COMPLETED U/S.143(3) R.W.S.147 OF TH E ACT ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.16,21,123/- AND AGRICU LTURAL INCOME OF RS. 1,61,155/- AGAINST THE CLAIM OF AGRICULTURAL INCOME OF RS.15,10,350/-. AO HELD THAT THE AGRICULTURAL EXPENSES ARE UNDERSTATED AND THEREFORE, AO ESTIMATED THE SAID EXPENSES AND EVENTUALLY MADE ADDITIONS ON ESTI MATION BASIS. FOR A.Y. 1999-2000, THE CONFIRMED ADDITION WORKS OUT TO RS.1 0,12,902/-. AO LEVIED PENALTY OF RS.3,47,671/- ON THE SAID UNDISCLOSED IN COME OF RS.10,12,902/-. SIMILAR ADDITIONS WERE MADE BY THE AO IN OTHER ASSE SSMENT YEARS UPTO 2009-10 ALSO. CIT(A) VIDE HIS CONSOLIDATED ORDER DATED 19- 11-2002, GAVE PART RELIEF AGAIN ON ESTIMATION BASIS FOR A.Y. 1999-2000, THE A SSESSED UNDISCLOSED INCOME OF RS.10,12,902/-. CIT(A) CONFIRMED SAID ADDITIONS IN A.YRS 2000-01 TO 2009-10 TOO. DETAILS ARE TABULATED AS UNDER : ITA NOS.946 TO 955/PUN/2015 SHOUKAT ALLABAKSH BAGWAN 3 A.Y. UNDISCLOSED INCOME ASSESSED BY ITO RELIEF GIVEN BY CIT(A) ADDITION SUSTAINED 1999 - 00 13 , 49 , 195 3 , 36 , 293 10 , 12 , 902 2000 - 01 10 , 93 , 133 4 , 61 , 708 6 , 31 , 425 2001 - 02 14 , 13 , 351 9 , 61 , 119 4 , 52 , 23 2 2002 - 03 42 , 20 , 490 13 , 01 , 628 29 , 18 , 862 2003 - 04 36 , 64 , 228 1 , 13 , 27 , 21 25 , 31 , 507 2004 - 05 3 , 88 , 87 , 349 3 , 22 , 42 , 326 66 , 45 , 023 2005 - 06 1 , 25 , 41 , 512 94 , 58 , 886 30 , 82 , 626 2006 - 07 24 , 91 , 086 24 , 91 , 086 0 2007 - 08 26 , 00 , 936 10 , 95 , 384 15 , 05 , 552 2008 - 09 23 , 38 , 428 12 , 15 , 636 11 , 22 , 792 2009 - 10 23 , 31 , 735 11 , 21 , 718 12 , 10 , 017 TOTAL 7 , 23 , 91 , 443 5 , 18 , 18 , 505 2 , 11 , 12 , 938 4. AO LEVIED PENALTY U/S.271(1)(C) OF THE ACT ON TH E SAID SUSTAINED ADDITIONS MADE ON ESTIMATION BASIS. CIT(A) DELETED THE PENALTY AS PER DISCUSSION GIVEN IN PARA NO.11 OF HIS ORDER. THE S AID PARA IS EXTRACTED AND PLACED IN THIS ORDER. THE ESSENTIAL CORE REASONING GIVEN BY THE CIT(A) WHILE DELETING THE PENALTY IS THE BASIS OF ESTIMATION RES ORTED BY THE AO AND THE CIT(A). AGGRIEVED WITH THE SAID RELIEF GIVEN BY TH E CIT(A) TO THE ASSESSEE IN ALL THESE ASSESSMENT YEARS UNDER CONSIDERATION, THE REV ENUE IS IN APPEAL FOR A.Y. 1999-2000 AND OTHERS. 5. BEFORE US, LD. DR FOR THE REVENUE SUBMITTED THAT THE CONSOLIDATED ORDER OF THE CIT(A) DELETING THE PENALTY IS REQUIRED TO B E REVERSED AND RELIED HEAVILY ON THE PENALTY ORDERS OF THE AO. LD. DR SUBMITTED THAT THE CASE OF THE AO FOR INITIATION OF PENALTY PROCEEDINGS IS A SECOND LIMB OF CLAUSE (C) RELATING TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AND RELIED ON THE AOS ORDERS AND THE WRITTEN SUBMISSIONS. LD. DR FAIRLY ADMITTE D THAT THE AO ERRONEOUSLY MENTIONED IN PARA NO.2 OF THE PENALTY ORDER THAT TH E SATISFACTION IS WITH REGARD TO THE FIRST LIMB RELATING TO CONCEALMENT OF INCOME . HOWEVER, HE DID NOT DISPUTE THE FACT THAT THE ADDITION IS MADE IN THE A SSESSMENT ON THE BASIS OF ESTIMATIONS. ITA NOS.946 TO 955/PUN/2015 SHOUKAT ALLABAKSH BAGWAN 4 6. PER CONTRA, LD. COUNSEL FOR THE ASSESSEE QUESTIO NED THE SATISFACTION OF AO AND DESCRIBED THE SAME AS AMBIGUOUS ONE FOR THE PURPOSE OF SECTION 271(1)(C) OF THE ACT. HOWEVER, THE PENALTY WAS LEV IED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME DESPITE THE FACT OF ALLEGATION OF CONCEALMENT OF INCOME . THUS, AS PER THE LD. COUNSEL FOR THE ASSESSEE, I T IS A CASE OF AMBIGUITY IN THE MIND OF THE AO WHILE INITIATING A ND LEVYING THE PENALTY PROCEEDINGS IN ALL THESE APPEALS. THEREFORE, THE P ENALTY LEVIED IS UNSUSTAINABLE TECHNICALLY IN VIEW OF THE BINDING JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. SHRI SAMSON PERINCHERY DATED 05-01- 2017 AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565. FURTHER, REFERRING TO THE MANNER OF ARRIVING AT THE ADDITIONS MADE IN THE ASSESSMENT ON ONE HAND, THE ORDERS OF CIT(A) ON THE OTHER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT PENALTY LEVIED BY THE AO IS RELATABLE TO THE ADDITION MADE TO THE TOTAL INCOME BASED ON THE ESTIMATIONS. CONTENTS OF PARA 11 OF THE ORDER OF THE CIT(A) ARE RELEVANT IN THIS REGARD. L D. DR FOR THE REVENUE HAS ALSO CONCURRED FAIRLY WITH THE LD. AR ON THIS ASPECT. 7. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS O F THE REVENUE AUTHORITIES. IT IS THE CASE OF THE LD. AR THAT THE PENALTY IS NOT SUSTAINABLE BOTH ON THE BASIS OF AMBIGUITY AND ON THE BASIS OF ESTIMATED ADDITIONS. 8. FIRST, WE SHALL TAKE UP THE ARGUMENTS RELATING T O AMBIGUITY IN THE MIND OF AO WHILE INITIATING THE PENALTY PROCEEDINGS AND WHILE LEVYING THE PENALTY. FOR THIS, WE HAVE CONSIDERED THE FINDING GIVEN BY THE AO IN THE ASSESSMENT AS WELL AS PENALTY ORDER AT PARA NOS. 2 AND 6 OF THE PENALTY ORDER FOR A.Y.1999-2000 AND WE PROCEED TO EXTRACT THE SAM E AS UNDER : ITA NOS.946 TO 955/PUN/2015 SHOUKAT ALLABAKSH BAGWAN 5 2. . . . . . . . IN VIEW OF THESE FACTS, PENALTY P ROCEEDINGS U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 WERE INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME. 6. IN VIEW OF THE FACTS AND LEGAL ASPECT OF THE CAS E DISCUSSED AS ABOVE, I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY WAY OF DISCLOSING INACCURATE PARTICULARS OF INCOME OF RS.10,12,902/- ON ACCOUNT OF AGRICULTURAL INCOME AN D ON RS.1,46,000/- WHICH IS OFFERED FOR TAXATION COURSE OF ACTION U/S.132 AND I S INCORPORATED IN THE RETURN OF INCOME. I AM SATISFIED THAT IT IS A FIT CASE FOR I MPOSING PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961.. . . . . . 9. IT IS A WEIRD CASE WHERE AO IN THE ASSESSMENT OR DER REFERRED TO THE LIMB RELATING TO FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT ORDER AND CONTRADICTINGLY REFERRED TO THE LIMB RELA TING TO CONCEALMENT OF INCOME IN THE PENALTY ORDERS. THERE IS CONFUSION IN THE MIND OF THE AO THAT LED TO THE CREATION OF AMBIGUITY IN HIS MIND. TH US, IN THE PENALTY ORDER, THE CONCEALMENT OF INCOME READ WITH FURNISHING OF INACCURATE PARTICULARS OF INCOME IS THE ALLEGATION OF THE AO WHILE INITIATING THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT. FURTHER, WHILE LEVY ING THE PENALTY, AS HELD IN PARA NO.6, AO LEVIED THE PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . SIMILARLY, THE ABOVE FACTS ARE COMMON FOR ALL THE APPEALS UNDER CONSIDERATION. 10. FURTHER, ON THE ISSUE OF LEVY OF CONCEALMENT PE NALTY QUA THE ESTIMATED ADDITIONS, WE FIND THE CIT(A) DELETED THE ENTIRE PENALTY HOLDI NG THAT IT IS THE CASE OF ADDITIONS BY ESTIMATION. FOR THIS, WE HAVE ALSO GONE THROUGH THE REASONING GIVEN BY THE CIT(A) AT PARA 11 OF HIS ORD ER DELETING THE PENALTY LEVIED BY THE AO AND WE PROCEED TO EXTRACT THE SAME FOR THE SAKE OF COMPLETENESS : 11. ON PERUSAL OF ASSESSMENT ORDER I FIND THAT ASSE SSING OFFICER HAS IMPOSED THE PENALTY WITHOUT CONSIDERING OR DISCUSSING MERIT OF ADDITION. AS PER EXPLANATION 5 TO SECTION 271(1)(C) APPLICABLE IN RE SPECT OF SEARCHES CONDUCTED BEFORE 1 S T DAY OF JUNE , 2007, PEN A LTY HAS TO BE IMPOSED ON THE ADDITIONAL INCOME UTILIZED ON ANY MONEY , BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OWNED BY THE ASSESSEE AND FOUND DURING THE SE ARCH . IN THE PRESENT CASE , INCOME FROM SUGARCANE HAS BEEN ESTIMATED BY ACCEPTING THE SALE FIGURES RETURNED BY THE ASSESSEE AND TAKING ESTIMATED EXPEN SES @ 40 %. INCOME FROM OTHER CROPS WAS ESTIMATED BY ADOPTING THE FIGURE OF AVERAGE YIELD PER ACRE. IN APPEAL ALSO, THE INCOME HAS BEEN DETERMINED BY ESTI MATION . REGARDING THE ADDITION ON INVESTMENT IN AGRICULTUR A L DEVELOPMENT, ESTIMATION BY DVO IS ITA NOS.946 TO 955/PUN/2015 SHOUKAT ALLABAKSH BAGWAN 6 THE BASIS OF ADDITION . THERE IS NO CONCEALMENT OF ANY INFORMATION BY APPELLANT. HE HAS CLAIMED CERTAIN EXPENSES FOR EARN ING OF AGRICULTUR A L INCOME WHICH WAS PARTLY REJECTED . IN RESPECT OF OTHER CROPS , ASSESSEE HAS RETURNED AGRICULTURAL INCOME WHICH WAS REPLACED BY THE ASSESSING OFFICER ' S OWN ESTIMATION . ALSO, IN CASE OF INVESTMENT IN MANKAPUR SITE , THERE IS NOTHING ON RECORD WHICH SHOWS THAT THERE WAS AN Y CONCE A LMENT OF ANY FACT. IN THE CASE OF CIT VS RANAIL SINGH & CO . 254 ITR 191 AND HAN GOPAL SINGH VIS CIT 258 ITR 85 THE HONORABLE HIGH COURT , PUNJAB AND HARYANA HAS HELD THAT IN ORDER TO ATTRACT CLAUSE (C) OF SECTION 271 (1) OF THE ACT, I T IS NECESSARY THAT THERE MUST BE CONCE A LMENT BY THE ASSESSEE OF THE PARTICULARS OF HIS INC OME FOR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME . PROVISIONS OF SECTION 271 (1)( C) OF THE ACT ARE NOT ATTRACTED TO CASES WHERE INCOME OF AN ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND ADDITIONS ARE MADE T HEREIN. WHEN THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF ESTIMATE A ND NOT ON ACCOUNT OF ANY CONCRETE EVIDENCE OF CONCEALMENT, THEN PENALTY WAS NOT LEVIABLE. SIMILAR VIEW WAS TAKEN IN THE CASE OF CIT VS. DHILLON RICE MILLS 256 ITR 447. ACCORDINGLY, IN VIEW OF THE ABOVE FACTS, I HEREBY HOLD THAT NO PENA LTY IS LEVIABLE IN THE PRESENT CASE. ACCORDINGLY, THE SAME IS CANCELLED. 11. THEREFORE, ON THE ISSUE OF AMBIGUITY IN THE MIN D OF THE AO, WE FIND THERE ARE PROBLEMS WITH THE WAY PENALTY ORDERS ARE PASSED BY THE AO. BEFORE DECIDING THIS PART OF ARGUMENT OF THE LD. AR FOR TH E ASSESSEE, WE SHALL EXAMINE IF THE PENALTY IS SUSTAINABLE, WHEN THE PENALTY LIN KED TO THE ESTIMATION-BASED ADDITIONS MADE BY THE AO. 12. ON THIS ASPECT OF UNSUSTAINABILITY OF LEVY OF P ENALTY ON THE ESTIMATION BASED ADDITIONS, WE FIND, NO CASE IS MADE OUT BY TH E LD. DR FOR THE REVENUE THAT THE ADDITIONS IN QUANTUM ARE NOT ESTIMATION-BA SED ONES. ON FACTS, WE FIND THAT THE AO MADE ADDITIONS BASED ON ESTIMATION OF A GRICULTURAL EXPENSES, THE DVOS FIGURES, ETC., WHICH ARE PURELY A CASE OF ESTI MATIONS. LD. DR FOR THE REVENUE DID NOT CONTROVERT THE FACT THAT ALL THE AD DITIONS ARE PRODUCTS OF ESTIMATION BY THE AO. THEREFORE, ON THIS REASONING ALONE, WE FIND THE ORDER OF THE CIT(A) IN DELETING THE PENALTY LEVIED BY THE AO , IS FAIR AND REASONABLE. HENCE, THE OTHER ARGUMENTS LINKED TO THE AMBIGUITY AND THEIR ADJUDICATION BECOMES AN ACADEMIC EXERCISE. THEREFORE, FOR THE S AID REASON, THE ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDI NGLY, ALL THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NOS.946 TO 955/PUN/2015 SHOUKAT ALLABAKSH BAGWAN 7 ITA NO.947 TO 955/PUN/2015 (A.Y. 2000-01 TO 2009-10 ) 13. WITHOUT GOING INTO THE SATISFACTION RELATED ARG UMENTS, WE FIND THE PENALTY LEVIED BY THE AO DELETED BY THE CIT(A) IN A LL THESE APPEALS UNDER CONSIDERATION, ARE NOT LEGALLY SUSTAINABLE AS THEY ARE LINKED TO THE ESTIMATION BASED ADDITIONS. SINCE THE FACTS, GROUNDS, ARGUMENT S, THE FINDINGS BY REVENUE AUTHORITIES ARE IDENTICAL TO THE FACTS IN A.Y.1999 -2000, OUR DECISION UPHOLDING THE ORDER OF CIT(A) DELETING THE PENALTY IN THE SAI D ASSESSMENT YEAR SHALL APPLY TO THESE ASSESSMENT YEARS TOO. 14. IN THE RESULT, ALL THE TEN APPEALS OF THE REVEN UE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF OCTOBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 30 TH OCTOBER, 2017. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A)-1 & 2, KOLHAPUR CIT-1 & 2, KOLHAPUR , , A BENCH PUNE; / GUARD FILE.