PRABHULAL KHIMJI THAKKAR, MUMBAI V. DCIT CIR 3, MUMBAI

ITSSA 32/MUM/2011

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7605 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 21-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J Y WAGH
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Search and seizure; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER IT(SS) NO.32/MUM/2011 BLOCK PERIOD 01.04.1989 TO 28.07.1999 PRABHULAL KHIMJI THAKKAR, 5TH FLOOR, KASHIMA APT., DAMANI ESTATE, THANE (W)- 400 602 ...... APPELLANT VS DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -3, VARDAAN, M.I.D.C., WAGLE, INDL. ESTATE, THANE (W), 400 064 ..... RESPONDENT PAN: AAHPT 0090 N APPELLANT BY: SHRI SUBODH RATNAPARKHI RESPONDENT BY: SHRI J.Y. WAGH DATE OF HEARING: 16.02.2012 DATE OF PRONOUNCEMENT: 29 .02.2012 O R D E R PER R.S. PADVEKAR, JM : IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A)-I, THANE DATED 15.02.2011 CONFIR MING THE PENALTY LEVIED BY THE A.O. U/S.271(1)(C) OF THE ACT. THE A SSESSEE HAS TAKEN THE FOLLOWING GROUNDS: 1A. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE P ENALTY OF ` 1,57,665/- LEVIED U/S.271(1)(C) OF THE I.T. ACT 19 61 IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED UNDER CLAUSE (C) OF SEC.158BC OF THE I.T. ACT. 1B. THE LEARNED CIT (APPEALS) ERRED IN HOLDING THAT REFERENCE TO PENALTY U/S.271(1)(C) IN THE ORDER UNDER APPEAL WAS A SMALL CLERICAL MISTAKE WHEN IN FACT IN THE APPEAL O RDER ALSO THE PENALTY IS STATED BY THE LD CIT (A) TO BE U/S.2 71(1)(C) OF THE I.T. ACT, 1961. IT(SS) 32/M/2011 PRABHULAL KHIMJI THAKKAR 2 1C. THE LEARNED CIT (APPEALS) ERRED IN NOT APPRECIA TING THE PROVISION CONTAINED IN SECTION 158BF THAT NO PENALT Y U/S.271(1)(C) SHOULD BE LEVIED UNDER CHAPTER XIVB O F THE I.T. ACT, 1961. 2. BRIEFLY STATED THE FACTS ARE AS UNDER. THE ASSE SSEE WAS SUBJECTED TO THE SEARCH OPERATION U/S.132 OF THE AC T ON 28.07.1999 AND 08.09.1999. THE A.O. ISSUED THE NOTICES TO THE ASSESSEE U/S.158BC FOR FILING THE RETURN OF INCOME AND ACCOR DINGLY THE ASSESSEE FILED THE RETURN OF INCOME BY ADMITTING AN UNDISCLOSED INCOME OF ` 10 LAKHS. THE A.O. COMPUTED THE BLOCK ASSESSMENT DETERMINING THE TOTAL UNDISCLOSED INCOME AT ` 17,52,927/-. THE A.O. ALSO INITIATED THE PENALTY PROCEEDINGS U/S.158BFA(2 ) OF THE ACT. IT APPEARS THAT SO FAR AS QUANTUM ASSESSMENT IS CONCER NED, THE CIT (A), THANE PARTLY UPHELD ADDITION. THE A.O. LEVIED THE P ENALTY U/S.271(1)(C) OF THE ACT U/S.158BFA(2) OF THE ACT O F ` 1,57,665/-. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD . CIT (A) BY TAKING THE CONTENTION THAT SO FAR AS BLOCK ASSESSMENT IS C ONCERNED, PENALTY CAN ONLY BE LEVIED U/S.158BFA(2) OF THE ACT AND NO PENALTY CAN BE LEVIED U/S.271(1)(C). THE ASSESSEES PLEA WAS REJE CTED BY THE LD. CIT (A). IN HIS VIEW THERE WAS A SMALL CLERICAL ERROR IN RESPECT OF TYPING THE ORDER BY QUOTING U/S.271(1)(C) INSTEAD OF SEC. 158B FA(2) OF THE ACT. THE LD. CIT (A) CONFIRMED THE PENALTY. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. THE MAIN THRUST OF THE ARGUMENT OF TH E LD. COUNSEL IS THAT AS PER THE PENALTY ORDER THE A.O. HAS LEVIED T HE PENALTY U/S.271(1)(C) OF THE ACT. HE SUBMITS THAT AS IT IS A CASE OF THE BLOCK ASSESSMENT THE A.O. CAN ONLY LEVIED THE PENALTY U/S .158BFA(2) OF THE ACT AND HENCE, AS THE PENALTY WAS LEVIED U/S.271(1) (C) IT IS WITHOUT JURISDICTION. PER CONTRA, THE LD. D.R. SUPPORTED T HE ORDERS OF THE AUTHORITIES BELOW SUPPORTING THE VIEW OF THE LD. CI T (A) THAT IT IS A TYPING MISTAKE. THERE IS NO DISPUTE ABOUT THE FACT THAT IT IS A BLOCK ASSESSMENT IN CONSEQUENCE OF SEARCH AND SEIZURE ACT ION AGAINST THE ASSESSEE. IN THE ASSESSMENT ORDER, WE FIND THAT TH E A.O. HAS INITIATED IT(SS) 32/M/2011 PRABHULAL KHIMJI THAKKAR 3 THE PENALTY PROCEEDINGS BY NOTING THAT INITIATE PE NALTY PROCEEDINGS U/S.158BFA(2) OF THE ACT, 1961. AS PER THE PENALTY ORDER DATED 29.05.2007 THE A.O. HAS GIVEN THE HEADING THE ORDE R OF THE PENALTY U/S.271(1)(C) OF THE ACT. THE A.O. ALSO D ISCUSSED HOW THE NOTICE WAS ISSUED TO THE ASSESSEE U/S.158BFA(2) . THE A.O. ALSO GIVES FINDING IN PARA 4 THAT THE ASSESSEE HAS HELD TO BE A DEFAULTER AND HENCE LIABLE FOR PENALTY U/S.158BFA(2). IN THE SUB SEQUENT PARAGRAPH I.E. PARA 5, THE A.O. CONCLUDES AS UNDER: 5. THE MINIMUM AND MAXIMUM PENALTY WORKS OUT RESPE CTIVELY TO ` 1,57,665/- AND ` 472,995/-. THE MINIMUM PENALTY OF ` 1,57,665/- IS HEREBY LEVIED U/S.271(1)(C) OF THE IN COME-TAX ACT. THE PENALTY IS LEVIED AFTER OBTAINING THE NECESSARY APPROVAL FROM THE ADDL. COMMISSIONER OF INCOME-TAX, RANGE-3, THAN E. ISSUE NOTICE OF DEMAND. 4. IN OUR OPINION, IT CANNOT BE SAID THAT IT IS A T YPOGRAPHICAL ERROR SO FAR AS CAPTION OF THE ORDER IS CONCERNED. BUT SO FAR AS CONCLUSION AND FINDING IN PARA 5 ARE CONCERNED, THOUGH, FINALL Y, THE A.O. HAS LEVIED THE PENALTY U/S.271(1)(C) OF THE ACT. THERE IS NO QUARREL ABOUT WELL SETTLED LEGAL POSITION THAT IN CASE OF A BLOCK ASSESSMENT THE A.O. HAS AN AUTHORITY TO LEVY THE PENALTY ONLY U/S.158BF A(2) IF THE SEARCH ACTION U/S.132 IS INITIATED PRIOR TO 01.06.2003 . THE A.O. HIMSELF IS NOT SURE WHETHER THE PENALTY SHOULD BE LEVIED U/S.1 58BFA(2) OR SEC.271(1)(C) OF THE ACT. IN OUR OPINION, PARA-(5) IS DECISIVE AS A.O. HAS FINALLY LEVIED THE PENALTY UNDER SEC. 271(1)(C) OF THE ACT IN CASE OF THE BLOCK ASESSMENT. WE, THEREFORE, HOLD THAT THAT AS THE A.O. HAS PASSED THE PENALTY ORDER U/S.271(1)(C) WHICH IS WI THOUT DUE AUTHORITY OF LAW AND VOID AB INITIO . WE, ACCORDINGLY, CANCEL THE PENALTY ORDER AND DELETE THE PENALTY. THE LD. COUNSEL SUBMITTED THAT HE IS NOT DESIRING TO ARGUE THE CASE ON MERIT. ACCORDINGLY, WE DO NOT CONSIDER TO GO INTO THE MERITS OF THE CASE. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. IT(SS) 32/M/2011 PRABHULAL KHIMJI THAKKAR 4 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 9TH FEBRUARY, 2012. SD/- ( J. SUDHAKAR REDDY ) ACCOUTANT MEMBER SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 29TH FEBRUARY, 2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-I, THANE. 4) THE CIT-II, THANE. 5) THE D.R. C BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN