Eric Mario Rajiv Fonseca, Pune V. Income-tax Officer, (IT) -4, Pune

ITA 947/PUN/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7624 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 28-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Assessee Lawyers: GAJANAN SHINDE
• Keywords: Opportunity of being heard; Principle of natural justice; Initiation of penalty proceedings
• Section: 271(1)(c); 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . / ITA NO.947/PUN/2019 / ASSESSMENT YEAR : 2014-15 ERIC MARIO RAJIV FONSECA, C/O.S.K. KULKARNI, 5, PARASHURAM APTS., 1616, SADASHIV PETH, PUNE. PAN : AAKPF8692B. . / APPELLANT V/S THE INCOME TAX OFFICER (IT) - 4, PUNE. . / RESPONDENT ASSESSEE BY : SHRI GAJANAN SHINDE. REVENUE BY : SHRI VISHWAS MUNDHE. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS) 13, PUNE DATED 29 .04.2019 FOR A.Y. 2014-15. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL AND STATED TO BE ENGAGED IN SHA RE TRADING BUSINESS. ASSESSEE ELECTRONICALLY FILED HIS RETURN OF INCOME FOR A.Y. 2014-15 ON 28.08.2015 DECLARING TOTAL INCOME AT RS.61,090 /-. THE CASE / DATE OF HEARING : 26.08.2019 / DATE OF PRONOUNCEMENT: 17.10.2019 2 WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.27.12.2016 AND THE TOTA L INCOME WAS DETERMINED AT RS.61,090/-, BEING THE AMOUNT RETURNED B Y ASSESSEE. IN THIS CASE, AO INITIATED PENALTY PROCEEDINGS U/S 271A, 271(1)(C ), 271B OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIE D THE MATTER BEFORE LD.CIT(A), WHO VIDE EX-PARTE ORDER DT.29.04.2019 (IN APPEAL NO.PN/CIT(A)-13/ITO(IT)-4, PUNE/465/2016-17) DISMISSED TH E APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSES SEE IS NOW IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED CIT (A) ERRED IN CONFIRMING THE INI TIATION OF THE PENALTY PROCEEDINGS UPON THE ASSESSEE U/S 271A, 271B AND SE CTION 271(1) (C) OF THE I.T. ACT 1961 . 2. THE LEARNED CIT (A) ERRED IN DISMISSING THE APPE AL ON THE GROUNDS OF NON-ATTENDANCE BY THE ASSESSEE OR REPRESENTATIVE, I N SPITE OF SUBMISSION ON A DAY BEFORE THE HEARING DATE AND SUBMITTING THE APPLICATION OF ADJOURNMENT ON THE SAID DAY. 3. THE LEARNED CIT (A) ERRED IN NOT GIVING THE ENOUGH OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND HENCE DENYING THE NATURAL JUSTICE, WHICH IS FUNDAMENTAL RIGHT OF THE ASSESSEE. 4. THE LEARNED CIT (A) ERRED IN CONFIRMING THE STAN D TAKEN BY THE LD. ASSESSING OFFICER WHILE STATING THAT 'THIS ENTIRE I SSUE OF THE APPELLANT BEING UNAWARE OF THE SAID HIGH VALUE SHARE TRADING TRANSACTIONS CAME INTO LIGHT ONLY AFTER HE WAS CONFRONTED BY THE AO . HAD THE AO NOT ENQUIRED INTO THE SAID TRANSACTIONS, THE APPELLANT WOULD HAVE MOVED CAUGHT FREE' AND THAT 'SINCE THE APPELLANT IS AN EDUCATED NRI INDIVIDUAL RENDERING HIS SERVICES IN A FOREIGN COUN TRY , HENCE, THERE CANNOT BE A DOUBT ON THE FACT THAT THE APPELLANT WA S UNAWARE OF SUCH TRANSACTIONS' 5. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE FA CT THAT THE FIR WAS LAUNCHED ON 23/07/2016, I.E. WELL BEFORE THE INITIATION OF THE SCRUTINY. ALSO AS THE TRANSACTIONS WERE MADE FRAUDULENTLY THE RE WAS NO QUESTION OF REVISING THE EARLIER FILED RETURNS, HENCE HON. C IT (A) HAS CLEARLY MISUNDERSTOOD THE INTENTION OF THE ASSESSEE. 6. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE FACT THAT FUTURES & OPTIONS TRADING IS THE ACTIVITY WHICH IS NOT UNDERS TOOD BY MAJORITY OF THE WELL-EDUCATED INVESTORS. ALSO, HE FURTHER ERRED IN NOT CONSIDERING THE FACT THAT A FRAUD WAS CONSPIRED AGAINST THE ASSESSEE AND IN THESE CASES THE QUESTION OF BEING EDUCATED OR UN-EDUCATED DOES NOT MATTER. 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHE R. 3 4. DURING THE COURSE OF ASSESSMENT AND ON THE BASIS OF SUBMISSIONS OF ASSESSEE; AO NOTED THAT ASSESSEE WAS ENGAGED IN SHA RE TRADING BUSINESS AND HIS TOTAL TURNOVER FROM SHARE TRADING BUSINE SS AND FUTURE AND OPTION TRANSACTIONS WAS TO THE EXTENT OF RS.31.96 CR ORES (ROUNDED OFF). ASSESSEE WAS ASKED TO EXPLAIN THE TRANSACTIONS AND ALSO PRODUCE THE BOOKS OF ACCOUNTS. TO THE QUERY OF AO, ASSESSEE SUB MITTED THAT HE WAS UNAWARE ABOUT THE TRANSACTIONS DONE IN HIS ACCOUNT AND TO THAT EFFECT ASSESSEE HAD FILED A POLICE COMPLIANT AND THE INVESTIG ATION WAS IN PROGRESS. THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUN D ACCEPTABLE TO AO. AO NOTED THAT IN THE RETURN OF INCOME SINCE ASSESSE E HAS FAILED TO DISCLOSE THE TRANSACTIONS OF RS.31.96 CRORES AND THUS IT W AS A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME AND FOR WHICH ASSESSEE WAS LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT. AO ALSO NOTE D THAT SINCE THE TURNOVER OF THE ASSESSEE WAS RS.31.96 CRORES AND AS THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS AND HAD NOT GOT I T AUDITED AS REQUIRED U/S 44AB OF THE ACT, ASSESSEE WAS ALSO LIABLE FOR PENALTY U/S 271A AND 271B OF THE ACT. HE THUS LEVIED PENALTY U/S 2 71(1)(C), 271A AND 271B OF THE ACT. AGGRIEVED BY THE ASSESSMENT ORD ER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE EX-PARTE ORD ER DISMISSED THE APPEAL OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL. 5. ON INITIATION OF PENALTY PROCEEDINGS, LD.A.R. SUBMITTED THAT ASSESSEE WAS NOT HAVING KNOWLEDGE ABOUT THE TRANSACT IONS DONE IN HIS ACCOUNT AND TO THAT EFFECT HE HAD REGISTERED F.I.R., THE SAME WAS ALSO ON THE FILE OF AO. LD.A.R. FURTHER SUBMITTED THAT ASSESSEE WAS NON-RESIDENT OF INDIA FOR THE PERIOD UNDER CONSIDERATION. HE FURTHER S UBMITTED THAT 4 ASSESSEE COULD NOT APPEAR BEFORE THE LOWER AUTHORITIES A ND DID NOT PRODUCE THE REQUIRED DOCUMENTS I.E., BOOK OF ACCOUNTS ETC ., TO PROVE HIS CASE AND THAT IF GIVEN A CHANCE, ASSESSEE UNDERTAKES TO APPEAR BEFORE LOWER AUTHORITIES AND FURNISH ALL THE REQUIRED DETAILS TO SUB STANTIATE HIS CASE. HE THEREFORE SUBMITTED THAT ASSESSEE BE GRANTED ONE MORE OPPORTUNITY TO EXPLAIN HIS CASE. LD.D.R. ON THE OTHER HA ND SUPPORTED THE ORDER OF AO AND LD.CIT(A) AND OBJECTED TO LD.A.R.S PR AYER FOR 2 ND INNINGS. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO THE LEVY OF PENALTY BY AO AND WHICH WAS CONFIRMED BY LD.CIT(A). BEFORE M E, IT IS ASSESSEES CONTENTION THAT HE COULD NOT APPEAR BEFORE THE LOWER AUTHORITIES TO PROVE HIS CASE BY FILING REQUIRED DOCUMENTS AND THAT LD.CIT(A) HAS PASSED EX-PARTE ORDER AND NOT DECIDED THE ISSUE ON MERITS. I N VIEW OF THE WELL SETTLED PRINCIPLE OF NATURAL JUSTICE THAT SUFFICIENT OPPORTUNITY OF HEARING SHOULD BE AFFORDED TO THE PARTIES AND NO PARTY SHOULD BE CONDEMNED UNHEARD, I AM OF THE VIEW THAT ONE MORE OPPORTUNITY BE GRANTED TO THE ASSESSEE TO PRESENT HIS CASE BEFORE THE LOWER AUTHORITIES. I THEREFORE RESTORE THE MATTER BACK TO THE FILE OF LD.CIT(A) TO DECIDE THE ISSUE ON MERITS IN ACCORDANCE WITH LAW. NEED LESS TO STATE THAT LD.CIT(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. ASSESSEE IS ALSO DIRECTED TO PROMPT LY FURNISH ALL THE DETAILS CALLED FOR BY THE AUTHORITIES. IN VIEW OF MY DECISION TO RESTORE THE ISSUE TO THE FILE OF LD.CIT(A), I AM NOT ADJUDICATING ON MER ITS THE GROUNDS OF THE APPEAL RAISED BY THE ASSESSEE. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 17 TH DAY OF OCTOBER, 2019. SD/- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 17 TH OCTOBER, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-13, PUNE. THE PCCIT, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &' , / ITAT, PUNE.