Rahul Cables Private Limited, Pune V. Deputy Commissioner of Income tax, Pune

ITA 986/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7656 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-10-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 20-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT HALDAR; D GHOSH
• Assessee Lawyers: SHANTHU PARANJAPE
• Keywords: Principle of natural justice; Set aside
• Section: 271(1)(c); 143(3); 274; 147

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI S.S. VISWANETHRA RAVI, JM . / ITA NOS.985 & 986/PUN/2017 / ASSESSMENT YEARS : 2009-10 & 2010-11 RAHUL CABLES PRIVATE LIMITED, OFFICE NO.114/115, AURORA TOWERS, M.G. ROAD, CAMP, PUNE 411 001. MAHARASHTRA. PAN : AABCR4218B. . / APPELLANT V/S THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 5, PUNE. . / RESPONDENT ASSESSEE BY : SHRI SHANTHU PARANJAPE REVENUE BY : SHRI D.GHOSH AND SHRI ABHIJIT HALDAR / ORDER PER ANIL CHATURVEDI, AM : 1. THESE APPEALS FILED BY THE ASSESSEE ARE EMANATING OUT OF THE SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (A) 8, P UNE DT.12.01.2017 FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11. 2. BEFORE US, AT THE OUTSET, BOTH THE PARTIES SUBMITTED THAT THOUGH THE APPEALS ARE FOR TWO DIFFERENT ASSESSMENT YEARS BUT THE FA CTS AND ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL EXCEPT FOR THE A SSESSMENT YEAR AND THE AMOUNTS INVOLVED AND THEREFORE THE SUBMISSIONS M ADE BY THEM WHILE ARGUING ONE APPEAL WOULD BE EQUALLY APPLICABLE TO THE OTHER APPEAL ALSO AND THUS, BOTH THE APPEALS CAN BE HEARD TOGETHER . IN VIEW OF THE AFORESAID SUBMISSIONS OF BOTH THE PARTIES, WE, FOR THE SAKE OF CONVENIENCE, / DATE OF HEARING : 16.10.2019 / DATE OF PRONOUNCEMENT: 30.10.2019 2 PROCEED TO DISPOSE OF BOTH THE APPEALS BY A CONSOLIDATED ORDER BUT HOWEVER, PROCEED WITH NARRATING THE FACTS FOR ASSESSMENT YEAR 2 009-10. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS A PRIVATE LIMITED COMPANY STATED TO BE ENGAG ED IN THE BUSINESS OF TRADING OF WIRES AND CABLES. ASSESSEE FILED ITS RET URN OF INCOME FOR A.Y. 2009-10 ON 31.10.2009 DECLARING TOTAL INCOME AT RS.2,51,15,300/-. IN THIS CASE ASSESSMENT WAS RE-OPENED U/S 147 OF THE ACT. SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE ACT VID E ORDER DATED 06.06.2014 AND THE TOTAL INCOME WAS DETERMINED AT RS.3,20,7 1,009/- INTER-ALIA BY MAKING ADDITION OF RS.69,55,709/- ON ACCOUNT O F HAWALA PURCHASES. ON THE AFORESAID ADDITION OF HAWALA PURCHASES , AO VIDE ORDER DT.25.03.2015 LEVIED PENALTY OF RS.23,64,244/- U/S 271(1)(C) OF THE ACT. FOR A.Y. 2010-11 THE DETAILS OF INCOME OFFERED BY THE ASSES SEE, ADDITION MADE AND PENALTY LEVIED ARE AS UNDER : A.Y. RETURNED INCOME ADDITION TOTAL INCOME ASSESSED U/S 143(3) PENALTY LEVIED 2010-11 RS.2,14,14,700/- RS.42,09,223/- ON ACCOUNT OF HAWALA PURCHASES RS.2,56,23,933/- RS.14,30,714/- AGGRIEVED BY THE ORDERS OF AO LEVYING PENALTY U/S 271(1)(C) OF THE ACT, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VID E SEPARATE ORDERS DT.12.01.2017 (IN APPEAL NO.PN/CIT(A)-8/DCIT, CIRCLE-5, PUNE /146 & 147/2016-17) DISMISSED THE APPEALS OF THE ASSESSEE. AGGRIEVED BY THE ORDERS OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 3 1 THE LEARNED DY. COMMISSIONER OF INCOME CIRCLE-S, PUNE HAS ERRED IN LEVYING PENALTY OF RS. 23,64,240/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961EVEN THOUGH WE HAVE DISCLOSED ALL THE RELATED F ACTS, SUBMITTED ALL THE RELATED DOCUMENTS AND DETAILS WITH EXPLANATIONS AND THE COMMISSIONER OF INCOME TAX (APPEALS)- 8, PUNE HAS ERRED IN CONFIRMI NG THE SAME. 2. THE LEARNED DY. COMMISSIONER OF INCOME CIRCLE-S, PUNE AND THE COMMISSIONER OF INCOME TAX (APPEALS)- 8, PUNE HAVE N OT FOLLOWED THE PRINCIPAL OF NATURAL JUSTICE, HENCE THEIR RESPECTIV E ORDERS ARE BAD IN LAW. 4. SIMILAR GROUNDS HAVE BEEN RAISED IN ITA NO.986/PUN/2017 FOR A.Y. 2010-11. 4.1. BOTH THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGE THER. 5 . BEFORE US, LD.A.R SUBMITTED THAT WHILE PASSING THE ASSESSMENT ORDER, AO WITH RESPECT TO ADDITION ON ACCOUNT OF HAWALA PURCHASES HAS RECORDED THAT ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME TO THE EXTENT OF RS.69,55,709/- BUT WHILE PASSING THE PENALTY OR DER U/S 271(1)(C) OF THE ACT ON 25.03.2015 AO HAD LEVIED PENALTY FOR BOTH TH E LIMBS I.E., FOR FURNISHING INACCURATE PARTICULARS OF INCOME AS WELL AS FOR C ONCEALMENT OF INCOME. HE THEREFORE RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY REPORTE D IN (2017) 392 ITR 4 (BOM) SUBMITTED THAT IN THE ABSENCE OF PROPER SHO W CAUSE NOTICE TO ASSESSEE, PENALTY U/S 271(1)(C) CANNOT BE LEVIED AND THEREFO RE URGED THAT PENALTY LEVIED BY AO BE DELETED. LD.D.R. ON THE OTHER HAN D, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT T O LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE IN A.Y. 2009-10, P ENALTY OF RS.23,64,244/- U/S 271(1)(C) OF THE ACT HAS BEEN LEVIED ON A MOUNT OF 4 RS.69,55,709/- BEING THE ADDITION ON ACCOUNT OF HAWALA PUR CHASES. IN A.Y. 2010-11, PENALTY OF RS.14,30,714/- U/S 271(1)(C) OF THE ACT HAS BEEN LEVIED ON AMOUNT OF RS.42,09,223/- BEING THE ADDITION ON ACC OUNT OF HAWALA PURCHASES. THE PERUSAL OF ASSESSMENT ORDERS PASSED U/S 143(3) R.W.S. 147 OF THE ACT REVEALS THAT IN THE ASSESSMENT OR DERS AO HAD RECORDED SATISFACTION FOR CONCEALMENT OF INCOME AND TH EREAFTER, IN THE PENALTY ORDERS PASSED U/S 271(1)(C) OF THE ACT, AO HAD LEVIE D PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS WELL AS FOR CONCEALMENT OF INCOME I.E., FOR BOTH THE LIMBS. IT IS A S ETTLED LAW THAT WHILE LEVYING PENALTY, THE AO HAS TO RECORD SATISFACTION AN D THEREAFTER COME TO A FINDING IN RESPECT OF ONE OF THE LIMBS, WHICH IS SPE CIFIED UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SA TISFACTION WHILE COMPLETING THE ASSESSMENT AS TO WHETHER THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED HIS INCOME. THEREAFTER, NOTICE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER THEREAFTER HAS TO LEVY PE NALTY UNDER SECTION 271(1)(C) OF THE ACT FOR NON-SATISFACTION OF EITHER OF T HE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAS T O COME TO A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INC OME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE HONBLE BOMBAY HIGH C OURT IN CIT VS. SHRI SAMSON PERINCHERY (SUPRA) HELD THAT WHERE INITIATIO N OF PENALTY IS ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 7. CONSIDERING THE FACTS OF THE PRESENT CASE IN THE LIGHT O F THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSON PERINC HERY (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASES, THE BASIC CONDITION FOR LEVY OF PENALTY HAS NOT BEEN FULFILLED AND THAT THE PENALTY ORDERS SUFFERS FROM 5 NON-EXERCISING OF JURISDICTION POWER AND THEREFORE PENALTY ORDERS CANNOT BE UPHELD. WE ACCORDINGLY SET ASIDE THE PENALTY ORDERS P ASSED BY AO. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 30 TH DAY OF OCTOBER, 2019. SD/- SD /- ( S.S. VISWANETHRA RAVI) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 30 TH OCTOBER, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-11, PUNE. PR. CIT(CENTRAL), PUNE. '#$ %%&',) &', / DR, ITAT, A PUNE; $,-./ GUARD FILE. / BY ORDER // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.