Shri Sharad Bachubhai Vyas, Gandhinagar V. The Dy.CIT, Central Circle- 1, Surat

ITSSA 349/AHD/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 1817 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 29-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA NAIR
• Keywords: Unexplained investment; Reasonable cause; Procedural lapse
• Section: 132; 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER IT(SS)A.NO.349/AHD/2014 ASSTT.YEAR : 2005-06 SHARAD BACHUBHAI VYAS PLOT NO.160, SECTOR NO.8 GANDHINAGAR, GUJARAT. PIN: 382 007. PAN : AAKPV 4055 G VS. DCIT, CENT.CIR.1 SURAT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI PRITESH SHAH, CA REVENUE BY : SMT.SMITA NAIR, SR.DR / DATE OF HEARING : 16/11/2018 / DATE OF PRONOUNCEMENT: 16/11/2018 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A)- II, AHMEDABAD DATED 28.7.2014 PASSED FOR THE ASSESSMENT YEAR 2005-06. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.1,80,000/- IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH ACTION UNDER SECTION 132 OF THE INCOME TAX ACT WAS CARRIED OUT AT THE BUSINESS PREMISES AS WELL AS RESIDENTIAL PREMISES OF DOKANIA GROUP. SINCE INCRIMINATING MATERIAL BELONGED TO THE ASSESSEE WAS FOUND, THEREFORE, NOTICE UNDER SECTION 153C WAS ISSUED AND SERVED IT(SS)A NO.349/AHD/2014 2 UPON THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 23.3.2009 DECLARING TOTAL INCOME AT RS.1,46,309/-. THE ASSESSMENT ORDER WAS PASSED ON 24.12.2009 WHEREBY INCOME OF THE ASSESSEE WAS DETERMINED AT RS.8,58,310/-. THE LD.AO HAS MADE ADDITION OF RS.7 LAKHS ON ACCOUNT OF UNEXPLAINED INVESTMENT NOT RECORDED IN THE BOOKS OF ACCOUNTS. ON APPEAL, THE LD.CIT(A) CONFIRMED THIS ADDITION TO THE EXTENT OF RS.6 LAKHS. THEREAFTER, NO FURTHER APPEAL WAS FILED BY THE ASSESSEE. THIS AMOUNT HAS BEEN CONSIDERED BY THE AO FOR VISITING THE ASSESSEE WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE LD.AO HAS IMPOSED PENALTY OF RS.1,80,000/- WHICH HAS BEEN CONFIRMED BY THE CIT(A). 4. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUTSET SUBMITTED THAT THE AO HAS NOT RECORDED A FIRM CONCLUSION IN THE PENALTY ORDER WHETHER IT IS BEING IMPOSED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE LD.AO HAS USED BOTH THE EXPRESSION IN THE PENALTY ORDER, HENCE, ORDER IS NOT SUSTAINABLE. THE LD.COUNSEL FOR THE ASSESSEE RELIED UPON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SNITA TRANSPORT P.LTD. VS. ACIT, 42 TAXMANN.COM 54 AND CONTENDED THAT WHILE IMPOSING PENALTY, THE LD.AO HAS TO RECORD A CATEGORICAL FINDING WHETHER SUCH PENALTY IS BEING IMPOSED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE EMPHASISED THAT THOUGH IN THE SHOW CAUSE NOTICE, THE AO MAY USE LANGUAGE OF AND/OR IN BETWEEN CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, BUT WHILE PASSING FINAL ORDER, HE HAS TO RECORD A CATEGORICAL SATISFACTION WHETHER SUCH PENALTY IS BEING IMPOSED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. IN THE PRESENT CASE, THE LD.AO FAILED TO RECORD THIS CATEGORICAL FINDING. FOR BUTTRESSING HIS CONTENTIONS, HE TOOK US THROUGH PENALTY ORDER AS WELL AS ASSESSMENT ORDER WHEREIN THE LD.AO DID NOT SPELL OUT HIS SPECIFIC THOUGHT PROCESSING, WHETHER HE WISHED TO VISIT ASSESSEE WITH PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. IT(SS)A NO.349/AHD/2014 3 THE LD.DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES, AND SUBMITTED THAT THE AO HAS IMPOSED PENALTY FOR CONCEALMENT OF INCOME. 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. HONBLE GUJARAT HIGH COURT HAS CONSIDERED THIS ASPECT IN THE CASE OF SNITA TRANSPORT (SUPRA). REFERENCE TO PARA 9 OF THIS JUDGMENT IS WORTH TO NOTE. IT READS AS UNDER: 9. REGARDING THE CONTENTION THAT THE ASSESSING OFFICER WAS AMBIVALENT REGARDING UNDER WHICH HEAD THE PENALTY WAS BEING IMPOSED NAMELY FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS, WE MAY RECORD THAT THOUGH IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DID ORDER INITIATION OF PENALTY ON BOTH COUNTS, IN THE ULTIMATE ORDER OF PENALTY THAT HE PASSED, HE CLEARLY HELD THAT LEVY OF PENALTY IS SUSTAINED IN VIEW OF THE FACT THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME. THUS INSOFAR AS FINAL ORDER OF PENALTY WAS CONCERNED, THE ASSESSING OFFICER WAS CLEAR AND PENALTY WAS IMPOSED FOR CONCEALING PARTICULARS OF INCOME. IN LIGHT OF THIS, WE MAY PERUSE THE DECISION OF THIS COURT IN CASE OF MANU ENGINEERING WORKS (SUPRA). IN THE SAID DECISION, THE DIVISION BENCH CAME TO THE CONCLUSION THAT LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE FOR PENALTY, BUT IT WAS INCUMBENT UPON THE ASSESSING AUTHORITY TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THEM. IF NO SUCH CLEAR CUT FINDING IS REACHED BY THE AUTHORITY, PENALTY CANNOT BE LEVIED. IT WAS A CASE IN WHICH IN FINAL CONCLUSION THE AUTHORITY HAD RECORDED THAT 'I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' IT WAS IN THIS RESPECT THE BENCH OBSERVED THAT 'NOW THE LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASICRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR CUT FINDING WAS REACHED BY THE IAC AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS LIABLE TO BE STRUCK DOWN.' IT(SS)A NO.349/AHD/2014 4 6. A PERUSAL OF THE ABOVE PARAGRAPH WOULD INDICATE THAT THE HONBLE HIGH COURT FOUND THAT AS USER OF EXPRESSION AND/OR IN BETWEEN CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS WHILE INVITING EXPLANATION OF THE ASSESSEE, MAY NOT BE ANY PROCEDURAL IRREGULARITY OR FATAL TO THE PROCEEDINGS, BUT IF THE AO FAILED TO RECORD A FINDING, WHILE VISITING THE ASSESSEE WITH PENALTY, THEN THAT WOULD BE FATAL TO THE PROCEEDINGS ITSELF. IN OTHER WORDS, WHILE PASSING FINAL ORDER, THE AO HAS TO RECORD A SPECIFIC FINDING ACCEPTING THE FACT THAT PENALTY IS BEING IMPOSED FOR FURNISHING INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. IN THE LIGHT OF THE ABOVE, LET US TAKE NOTE OF RELEVANT PARA-8 OF THE PENALTY ORDER, WHICH READS AS UNDER: 8. THUS, AFTER CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE COMPANYS CASE, I AM SATISFIED THAT THE ASSESSEE COMPANY HAS COMMITTED THE DEFAULT IN CONCEALING ITS INCOME AND FURNISHING INACCURATE PARTICULARS OF ITS WITHOUT ANY REASONABLE CAUSE AND THEREFORE LIABLE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961. 7. A PERUSAL OF THE ABOVE FINDING WOULD INDICATE THAT, HE WISHED TO IMPOSE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. BOTH THESE SITUATIONS CONTRADICTORY TO EACH OTHER IN THE ABOVE ORDER. THEREFORE, THIS ORDER IS NOT SUSTAINABLE IN VIEW OF DECISION OF HONBLE GUJARAT HIGH COURT CITED SUPRA. IN VIEW OF THE ABOVE DISCUSSION, PENALTY IS NOT SUSTAINABLE. WE ALLOW GROUND OF APPEAL, AND CANCEL PENALTY IMPOSED BY THE AO. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 16 TH NOVEMBER, 2018 AT SURAT. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER SURAT; DATED 16/11/2018