ROHIDAS HARI JATHAR, Thane V. ACIT CIRCLE-4, MUMBAI, Thane

ITA 961/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4089 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 19-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY JAISWAL
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 274; 208

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI , , ' BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER . 961/ /2019 ( . . 2010-11) ITA NO. 961/MUM/2019 (A.Y.2010-11) ROHIDAS HARI JATHAR A-102, MAGDHA CHS LTD. CHANAKYA NAGARI, SAMEL VILLAGE, NALLASOPARA (W) THANE- 401203 ...... $ /APPELLANT PAN: ADIPJ2562M VS. ASST. CIT CIRCLE-4, ROOM NO.2, A WING, ASHAR I.T. PARK, AMBIKA NAGAR WAGLE ESTATE, THANE-400604 ..... % /RESPONDENT $ ' / APPELLANT BY : NONE % ' /RESPONDENT BY : SHRI VIJAY JAISWAL (DR) ( / DATE OF HEARING : 20/10/2020 ( / DATE OF PRONOUNCEMENT : 26/10/2020 / ORDER PER VIKAS AWASTHY, JM: ITA NO. 961 MUM 2019-AY-2010-11 2 THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-3, THANE [IN SHORT THE CIT (A)] DATED 01.11.2018 FOR THE ASSESSMENT YEAR 2010-11, CONFIRMING LEVY OF PEN ALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT]. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS AN INSURANCE COMMISSION AGENT. THE ASSESSEE FILED I TS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 22.09.2011 DECLARING TO TAL INCOME OF RS. 3,42,810/-. IN SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE HAS CLAIMED FICTITIOUS E XPENDITURE OF RS. 1,74,710/- ON SALARY PAYMENT AND RS. 2,20,294/- ON ACCOUNT OF INCENTIVE PAYMENTS. THE AO MADE ADDITION OF THE AFORESAID AMOUNTS. THE AO MADE FURTHER ADDITION OF RS. 19,215/- IN RESPECT OF UNSUBSTANTIATED STAFF WELFAR E EXPENSES. IN RESPECT OF ADDITIONS MADE, THE AO INITIATED PENALTY PROCEEDING UNDER SECTION 271(1)(C). THE AO VIDE ORDER DATED 27.09.2013 LEVIED PENALTY O F RS. 1,11,800/- UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALING THE PAR TICULARS OF INCOME. AGGRIEVED AGAINST PENALTY ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE IMPUGNED ORDER DISMISSED TH E APPEAL OF ASSESSEE AND CONFIRMED LEVY OF PENALTY. HENCE, THE PRESENT APPEA L BY THE ASSESSEE. 3. SHRI VIJAY JAISWAL REPRESENTING THE DEPARTMENT V EHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT AO IN HIS RETURN OF INCOME HAS CLAIMED FICTITIOUS EXPENDITURE, THEREFORE, PENA LTY UNDER SECTION 271(1)(C) WAS INITIATED BY THE AO. 4. WE HAVE HEARD THE SUBMISSION MADE BY LD. DR AND HAVE EXAMINED THE ORDER OF AUTHORITIES BELOW. A PERUSAL OF THE ASSESS MENT ORDER REVEALS THAT AN ADDITION OF RS. 3,95,004/- WAS MADE BY THE AO ON AC COUNT OF FICTITIOUS ITA NO. 961 MUM 2019-AY-2010-11 3 EXPENDITURE AND ADDITION OF RS. 19,215/- WAS MADE O N ACCOUNT OF UNPROVED STAFF WELFARE EXPENSES. THE AO WHILE INITIATING PEN ALTY UNDER SECTION 271(1)(C) IN RESPECT OF FICTITIOUS CLAIM OF EXPENDITURE RECOR DED HIS SATISFACTION BY OBSERVING AS UNDER: 4.2 SUBJECT TO THE DISCUSSION IN FOREGONE PARAS, T HE UNDERSIGNED IS SATISFIED THAT THE ASSESSEE HAS CONCEALED THE INCOME AS IT HA S FURNISHED INACCURATE PARTICULARS AND IS THEREFORE, LIABLE FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) READ WITH SECTION 274 OF THE ACT. PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED ON THIS POINT. 5. SIMILARLY, IN RESPECT OF ADDITION FOR UNSUBSTANT IATED CLAIM OF STAFF WELFARE EXPENSES, THE AO RECORDED SATISFACTION FOR INITIATI NG PENALTY U/S 271(1)(C) OF THE ACT BY OBSERVING AS UNDER: 5.1 SUBJECT TO THE DISCUSSION IN FOREGONE PARAS, T HE UNDERSIGNED IS SATISFIED THAT THE ASSESSEE HAS CONCEALED THE INCOME AS IT HA S FURNISHED INACCURATE PARTICULARS AND IS THEREFORE LIABLE FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) READ WITH SECTION 274 OF THE ACT. PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED ON THIS POINT. 6. WHILE LEVYING PENALTY, THE AO OBSERVED THAT THE PENALTY IS LEVIED FOR CONCEALING PARTICULARS OF INCOME. THE RELEVANT EXTR ACT OF THE ORDER LEVYING PENALTY READS AS UNDER: 3...... I PROCEED TO LEVY PENALTY U/S 271(1)(C) OF THE ACT, 1961 ON RS. 4,14,219/- FOR CONCEALING THE PARTICULARS OF INCOME 7. THE HONBLE SUPREME COURT OF INDIA IN THE CASE O F DILIP N. SHROFF VS. JCIT REPORTED AT 291 ITR 519 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS ARE TWO DIFFERENT EXPRESSIO NS HAVING DIFFERENT ITA NO. 961 MUM 2019-AY-2010-11 4 CONNOTATIONS. THE RELEVANT EXTRACT OF THE ORDER OF THE HONBLE APEX COURT IS REPRODUCED HEREIN BELOW: 53. THE EXPRESSION 'CONCEAL' IS OF GREAT IMPORTANCE . ACCORDING TO LAW LEXICON, THE WORD 'CONCEAL' MEANS : 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS CON +CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION ; TO COVER OR KEEP FROM SIGHT ; TO PREVENT THE DISCOVERY OF ; TO WITHHOLD KNOWLED GE OF. THE OFFENCE OF CONCEALMENT IS, THUS, A DIRECT ATTEMPT TO HIDE AN I TEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHOR ITIES.' 54. IN WEBSTER'S DICTIONARY, 'INACCURATE' HAS BEEN DEFINED AS : 'NOT ACCURATE, NOT EXACT OR CORRECT ; NOT ACCORDING TO TRUTH ; ERRONEOUS ; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT.' 55. IT SIGNIFIES A DELIBERATE ACT OR OMISSION ON TH E PART OF THE ASSESSEE. SUCH DELIBERATE ACT MUST BE EITHER FOR THE PURPOSE OF CO NCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. 8. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. RAJ TRADING COMPANY REPORTED AS 217 ITR 208 HAS ALSO EXPLAINED THE DIFFERENCE BETWEEN THE TWO EXPRESSIONS I.E. FURNISHING INACCURATE PAR TICULARS OF INCOME AND CONCEALMENT OF INCOME. THE RELEVANT EXTRACT OF TH E OBSERVATIONS OF THE HONBLE RAJASTHAN HIGH COURT ARE REPRODUCED HEREIN BELOW: 5. .............. FURNISHING INCORRECT PARTICULARS AND CONCEALING THE PARTICULARS OF INCOME ARE DIFFERENT THINGS. THE WORDS 'FURNISHING INACCURATE PARTICULARS OF INCOME' REFER TO THE PARTICULARS WHICH HAVE BEEN FURNISHED BY AN ASSESSEE OF HIS INCOME AND THE REQUIREMENT OF CONCEALMENT OF INCOME IS THAT IN COME HAS NOT BEEN DECLARED AT ALL OR IS NOT EVEN RECORDED IN THE BOOKS OF ACCOUNT OR IN A PARTICULAR CASE THE CONCEALMENT OF THE PARTICULARS OF INCOME MAY BE FRO M THE BOOKS OF ACCOUNT AS WELL AS FROM THE RETURN FURNISHED AND THUS, AFTER THE IN ITIAL BURDEN WAS DISCHARGED BY THE ASSESSEE THE QUESTION OF APPLICATION OF THE PROVISI ONS OF SECTION 271(1)(C) COULD HAVE BEEN IN THAT LIGHT. 9. FROM THE READING OF ABOVE JUDGMENTS IT IS UNAMBI GUOUSLY CLEAR THAT THE EXPRESSION FURNISH INACCURATE PARTICULARS AND CO NCEALMENT OF INCOME ARE TWO ITA NO. 961 MUM 2019-AY-2010-11 5 DIFFERENT OFFENCES. THESE EXPRESSIONS CANNOT BE USE D INTERCHANGEABLY WHILE RECORDING SATISFACTION FOR INITIATION OF PENALTY U/ S 271(1)(C) OF THE ACT, THE AO HAS TO INVOKE THE CORRECT LIMB OF SECTION 271(1)(C) , DEPENDING UPON THE FACTS OF EACH CASE. 10. IN THE INSTANT CASE, WE OBSERVE THAT THE MANNER IN WHICH THE AO HAS RECORDED SATISFACTION ITSELF SHOWS THAT THE AO WAS NOT ABLE TO DECIPHER WHETHER IT IS A CASE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THERE APPEARS TO BE AMBIGUITY IN THE MIND O F AO AS TO WHICH LIMB OF SECTION 271(1)(C) IS TO BE INVOKED FOR LEVYING PENA LTY. THE ASSESSEE HAS CLAIMED CERTAIN EXPENDITURE WHICH IS DISALLOWED BEING FICTI TIOUS/ UNSUBSTANTIATED EXPENDITURE. IT IS A CASE WHERE THE ASSESSEE HAS MA DE ERRONEOUS/INACCURATE CLAIM. IT IS NOT A CASE OF CONCEALMENT OR AN ATTEMP T TO HIDE INCOME BY NOT DISCLOSING THE INCOME/SOURCE OF INCOME. WE ARE OF C ONSIDERED VIEW THAT THE AO HAS INVOKED WRONG LIMB OF SECTION 271(1)(C) FOR LEV Y OF PENALTY, THEREFORE, THE PENALTY IS LIABLE TO BE DELETED. WE HOLD AND DIRECT ACCORDINGLY. 11. IN THE RESULT, THE IMPUGNED ORDER IS QUASHED AN D THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON MONDAY THE 26 TH DAY OF OCTOBER, 2020. SD/- SD./- S SD/- SD./- (RAJESH KUMAR) (VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, , / DATED: 26/10/2020 S.K., PS % % % % - - - - COPY OF THE ORDER FORWARDED TO : 1. $ / THE APPELLANT , 2. % / THE RESPONDENT. ITA NO. 961 MUM 2019-AY-2010-11 6 3. . ( )/ THE CIT(A)- 4. . CIT 5. % , . . ., / DR, ITAT, MUMBAI 6. 1 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI