Sh. Munish Jain, Ludhiana V. DCIT, Ludhiana

MA 188/CHANDI/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 1728 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 07-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: NONEAPPLICATION
• Keywords: Principle of natural justice; Initiation of penalty proceedings
• Section: 271(1)(c); 274; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , !' # $ % &' , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER / MA NOS.188 & 189/CHD/2018 IN . / ITA NOS.254 & 255/CHD/2017 / ASSESSMENT YEARS :2010-11 & 2011-12 SH.MUNISH JAIN, B - 121, PUSHAP VIHAR, CANAL ROAD, LUDHIANA. THE D.C.I.T., CENTRAL CIRCLE-III, LUDHIANA. ./ PAN: ABNPJ4747M /APPELLANT /RESPONDENT !' /ASSESSEE BY : NONE(APPLICATION) ' / REVENUE BY : SMT.CHANDERKANTA, SR.DR # $! % /DATE OF HEARING : 18.01.2019 &'()! % /DATE OF PRONOUNCEMENT: 08.03.2019 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THESE MISCELLANEOUS APPLICAT IONS SEEKING RECTIFICATION IN THE CONSOLIDATED ORDER PAS SED BY THE I.T.A.T. IN ITA NO.254 & 255/CHD/2017 DATED 19.3.20 18. 2. THE MISCELLANEOUS APPLICATIONS WERE FIXED FOR HE ARING ON SEVERAL DATES, 07.12.2018, 21.12.2018, 04.01.201 9 & 17.01.2019 BUT ON ALL OCCASIONS THE LD. COUNSEL FOR ASSESSEE DID NOT APPEAR FOR HEARING BUT SOUGHT ADJOURNMENT, WHICH WAS GRANTED TO DATES AS REQUESTED BY HIM. FINALLY ON 17.1.2019 WHEN THE MISCELLANEOUS APPLICATIONS WERE FIXED MA NOS .188 & 189/CHD/2018 A.Y. 2010-11 & 2011-12 2 FOR HEARING AND NONE APPEARED ON BEHALF OF THE ASS ESSEE, THE HEARING WAS ADJOURNED TO 18.1.2019 GIVING LAST OPPORTUNITY TO THE ASSESSEE. ON THE SAID DATE, I.E 18.01.2019, THE LD.COUNSEL FOR THE ASSESSEE FILED A LETTER STATING THEREIN THAT THE ISSUES ELABORATED IN THE MISCELLANEOUS APPLICATIONS BE TREATED AS THEIR WRIT TEN SUBMISSIONS FOR DECIDING THE MISCELLANEOUS APPLICAT IONS. ACCORDINGLY, THE MISCELLANEOUS APPLICATIONS WERE TH EREAFTER HEARD. AS PER THE MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEE IT HAS BEEN CONTENDED THAT CERTAIN FACTS/A RGUMENTS REMAINED UNADJUDICATED. THE SAME WERE POINTED OUT I N THE APPLICATIONS AS UNDER: RESPECTFULLY SUBMITTED THAT WHILE PRONOUNCING THE OR DER DATED 19.03.2018 IN RESPECT OF ITA NOS. 254/CHANDI/2 017 BY YOUR HONOR'S. THE FOLLOWING FACTS/ARGUMENTS REMAINS UNADJUDICATED, HENCE THIS MA HAS BEEN FILED. A. MA IN RESPECT OF ADDITIONAL GROUNDS OF APPEAL I. E. 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE & IN LAW, THE PENALTY PROCEEDINGS INITIATED VIDE NOTICE U/S 274 READ WITH SECTION 271 OF THE I.T.ACT,1961., DA TED 29.11.2013 ARE INVALID AND BAD IN LAW. 2. ON THE FACTS AND ARE THE CIRCUMSTANCES OF THE CASE AND IN LAW, THEP ENALTY ORDER DATED 30.05.2014 PASSED U/S 271(L)(C) IS INVALID AND BAD IN LAW. I. PENALTY U/S 271(L)(C ) OF THE ACT CANNOT BE INI TIATED ON BOTH THE LIMB SIMULTANEOUSLY I.E. FOR CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. SINCE BOTH THE LIMBS HAVE DIFFERENT CONNOTATIONS IN T HE EYES OF LAW. ON THIS ARGUMENT APPELLANT HAD RELIED UPON T HE JUDGEMENT OF HONORABLE MUMBAI 'B' BENCH IN THE CASE OF MANGALAM DRUGS & ORGANICS LTD. VS DCIT (ITA NO.5454/MUM/2011), COPY OF THIS JUDGEMENT IS PLACED AT SR. NO.6 OF PAPER BOOK OF CASE LAWS RELIED UPON. RE LEVANT PARA HAS BEEN REPRODUCED AS UNDER: MA NOS .188 & 189/CHD/2018 A.Y. 2010-11 & 2011-12 3 '(IV ...... THE ASSESSEE CANNOT BE FASTENED WITH THE LIABIL ITY OF PENALTY WITHOUT THERE BEING A CLEAR OR SPECIFIC CHA RGE. FIXING A CHARGE IN A VAGUE AND CASUAL MANNER IS NOT PERMITT ED UNDER THE LAW. FIXING THE TWIN CHARGES IS ALSO NOT PE RMITTED UNDER THE LAW. WE DRIVE SUPPORT FROM THE JUDGMENT O F HON'BLE GUJRAT HIGH COURT IN' THE CASE OF NEW SORATHIA ENGI NEERING CO VS CIT 282 ITR 642 (GUJ)).' II. INITIATION OF PENALTY PROCEEDING ON ONE LIMB AND IMPOSITION OF PENALTY ON ANOTHER LIMB. IN THIS CASE AS PER PARA 2 OF THE PENALTY ORDER DAT ED 30.05.2014 'PENALTY PROCEEDINGS U/S 271(L)(C ) OF THE I. T. ACT,19 61 WERE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INC OME.' WHILE IN PARA 5 OF THIS PENALTY ORDER PENALTY IMPOS ED ON THE BASIS OF ASSESSEE CONCEALED THE PARTICULARS OF INCOME BY STATING: 'AS SUCH, I AM SATISFIED THAT THE ASSESSEE HAS WILL FULLY CONCEALED THE PARTICULARS OF INCOME. HENCE, IT IS A FI T CASE FOR IMPOSING PENALTY U/S 271(L)(C ) OF THE I.T.ACT, 1961. T OTAL CONCEALED INCOME COMES TO RS.41,00,000/- ' HENCE THE INITIATION OF PENALTY PROCEEDING ON ONE L IMB AND IMPOSITION OF PENALTY ON OTHER LIMB IS BAD IN L AW AND NOT SUSTAINABLE. ON THIS ARGUMENT APPELLANT HAD RELIED UPON THE JUDGEMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. VS. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KARN.), COPY OF THIS JUDGEMENT IS PLACED AT SR. NO.2 OF PAPER BOOK OF CAS E LAWS RELIED UPON. RELEVANT PARA HAS BEEN REPRODUCED AS UN DER: '60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, TH AT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CA SES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE M AY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES T HE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR F INDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUS TAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF TH E EXISTENCE OF THE GROUNDS MENTIONED AN SECTION 27L(L)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PRO CEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAI D GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLAC ES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PE NALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUND S ON WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO TH E AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY MA NOS .188 & 189/CHD/2018 A.Y. 2010-11 & 2011-12 4 PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS AR E INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE I MPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIAL S IN THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE T IME THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUB SEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER O F PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. ' ON THIS ARGUMENT APPELLANT ALSO HAD RELIED UPON THE JUDGEMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS. SHRI SAMSON PERINCHERY (ITA NOS 1154, 953,1097,1226 OF 2014), COPY OF THIS JUDGEMENT IS PLA CED AT SR. NO.4 OF PAPER BOOK OF CASE LAWS RELIED UPON. RE LEVANT PARA HAS BEEN REPRODUCED AS UNDER: '3 THE IMPUGNED ORDER OF THE TRIBUNAL DELETED THE PENA LTY IMPOSED UPON THE RESPONDENT ASSESSEE. THIS BY HOLDIN G THAT THE INITIATION OF PENALTY UNDER SECTION 271 (L)(C) OF THE ACT BY ASSESSING OFFICER WAS FOR FURNISHING INACCURATE PAR TICULARS OF INCOME WHILE THE ORDER IMPOSING PENALTY IS FOR CONCEAL MENT OF INCOME. THE IMPUGNED ORDER HOLDS THAT THE CONCEALMEN T OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCO ME CARRY DIFFERENT CONNOTATIONS. THEREFORE, THE ASSESSING OFFI CER SHOULD BE CLEAR AS TO WHICH OF THE TWO LIMBS UNDER WHICH PE NALTY IS IMPOSABLE, HAS BEEN CONTRAVENED OR INDICATE THAT BOTH HAVE BEEN CONTRAVENED WHILE INITIATING PENALTY PROCEEDINGS . IT CANNOT BE THAT THE INITIATION WOULD BE ONLY ON ONE L IMB I.E. FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHILE IMP OSITION OF PENALTY ON THE OTHER LIMB I.E. CONCEALMENT OF INCOME. F URTHER, THE TRIBUNAL ALSO NOTED THAT NOTICE ISSUED UNDER SE CTION 274 OF THE ACT IS IN A STANDARD PROFORMA, WITHOUT HAVING S TRIKED OUT IRRELEVANT CLAUSES THEREIN. THIS INDICATES NONAPPLICA TION OF MIND ON THE PART OF THE ASSESSING OFFICER WHILE ISS UING THE PENALTY NOTICE. ' III. WORTHY CIT(A) CONFIRMED THE PENALTY ON THE LI MB, ON WHICH NEVER IMPOSED BY THE AO. WORTHY CIT(A) UPHELD THE AO'S ORDER ON THE BASIS OF T HAT AO HAD INITIATED PENALTY PROCEEDINGS FOR FURNISHING INA CCURATE PARTICULARS OF INCOME. HENCE CIT(A) HAS DECIDED THE A PPEAL ON THE DIFFERENT LIMB OF SECTION 271(L)(C ) OF THE I. T.ACT,1961 ON WHICH PENALTY NEVER IMPOSED BY AO. WHICH IS BAD IN L AW AND ALSO IS NULL AND VOID. RELEVANT PARAS OF THE ORD ER OF WORTHY CIT(A) HAS BEEN REPRODUCED AS UNDER: '3. IN THE LIGHT OF THE ABOVE SUBMISSIONS THE VARIO US GROUNDS OF APPEAL ARE ADJUDICATED AS BELOW: MA NOS .188 & 189/CHD/2018 A.Y. 2010-11 & 2011-12 5 3.1 GROUND OF APPEAL NO.L:- ....................... THEREFORE THE PENALTY PROCEEDINGS U/S 271(L)(C ) OF THE I.T.ACT,1 961 WERE INITIATED BY THE AO FOR FURNISHING INACCURATE PARTICU LARS OF INCOME.' IV. THERE IS SERIES OF ACTIVITIES, WHICH ESTABLISH THE NON APPLICATION OF MIND BY THE LD.AO AS WELL AS WORTHY CIT(A). WHICH ARE AS UNDER: (I). ONLY CONCEALMENT MENTIONED BY LD.AO IN ASSESSMEN T ORDER (PARA 1.1 PAGE 2 OF AO'S ASSESSMENT ORDER) (II). NOTICE U/S 274 READ WITH SECTION 271(L)(C ) O F THE I.T.ACT/1961., DATED 29.11.2013 WAS IN STANDARD FOR MAT, WITHOUT STRIKING OFF IRRELEVANT PORTIONS, ALSO MENTIONE D BOTH THE LIMBS ON THIS NOTICE. (III). AS PER PENALTY ORDER DATED 30.05.2014, PENALTY PROCEEDINGS WERE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME (PARA 2 PAGE 1 OF THE PENALTY ORDER) AND FOUND THE ASSESSEE GUILTY OF ANOTHER LIMB I.E. ASSESS EE HAS CONCEALED THE PARTICULARS OF INCOME (PARA 5 PAGE 3 O F THE PENALTY ORDER) (IV). WORTHY CIT(A) CONFIRMED THE PENALTY ON THE LI MB, ON WHICH NEVER IMPOSED BY THE AO (PARA 3.1 PAGE 9, OF CIT(A) ORDER DATED 25.11.2016) B. MA IN RESPECT OF GROUNDS OF APPEAL I.E. THAT THE LEARNED CIT (A) HAS ERRED IN CONFIRMING TH E PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 IMPOSED BY THE ASSESSING OFFICER AGAINST THE FACTS AND CIRCUMS TANCES OF THE CASE. SINCE THE HON'BLE ITAT IS FINAL FACT FINDING AUTHOR ITY. THE FOLLOWING VITAL FACTS HAS NOT BEEN CONSIDERED WHILE PASSING THE ORDER ARE AS UNDER: 1. APPELLANT HAD SUBMITTED A CHART BEFORE YOUR HONOR SHOWING THE DATE OF SEARCH IN VARIOUS CASE LAWS, ON WHICH RELIANCE HAD BEEN PLACED BEFORE WORTHY CIT(A). IN THIS CHART 12 JUDGEMENTS WERE TABULATED SHOWING THERE WERE ONLY 4 JUDGEMENTS OUT OF 12 JUDGEMENTS IN WHICH DATE OF SEARCH WAS BEFORE 01.06.2007. SINCE THE WORTHY CIT(A) FINDINGS ARE THAT CASE LAWS QUOTED BY THE COUNSEL FOR THE ASSESSEE RELATES TO CASES WHERE T HE SEARCH U/S 132 WAS CONDUCTED BEFORE 1 ST JUNE 2007 (PAGE 11, 2 ND LINE ONWARD OF CIT(A) ORDER) IS NOT CORRECT AND MISLE ADS TO THE FACTS OF THE CASE. 2. DURING THE COURSE OF ACTION U/S 132 OF THE I.T.ACT, 1961 NEITHER ANY INCRIMINATING DOCUMENTS WERE FOUND OR SEIZED FROM THE PREMISES OF THE ASSESSEE NOR ANY MA NOS .188 & 189/CHD/2018 A.Y. 2010-11 & 2011-12 6 ADVERSE STATEMENT RECORDED BY THE DEPARTMENT IS ON RECORD. THE CASE LAW RELIED UPON BY THE BY THE WORTHY CIT(A) (I.E JUDGEMENT OF THE HON'BLE CHANDIGARH BENCH IN THE CAS E OF SH. RAJNISH VOHRA VS. DCIT, CC-I, CHANDIGARH), (PARA 5 P AGE 8 & 9) (ITA NO. 516/CHD/2012). IN THIS CASE SOME INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED, BY VIR TUE OF WHICH SURRENDER WAS MADE. 3. APPELLANT, IF DOES NOT DECLARE THIS INCOME SUO MOTO, T HIS EXTRA INCOME NEVER CAN BE BROUGHT TO TAX. 4. WORTHY CIT(A) UPHELD THE AO'S ORDER BY FINDING THAT PENALTY PROCEEDINGS U/S 271(L)(C ) OF THE I.T.ACT, 1961 WERE INITIATED BY THE AO FOR FURNISHING INACCURATE PARTICULARS OF INCOME. (7 TH LINE, PAGE NO.9 OF CIT(A) ORDER). FOR WHICH PENALTY NEVER IMPOSED BY THE LD.AO. 3. THE LD.DR POINTED OUT THAT THE ABOVE WERE ARGUME NTS EXTRACTED FROM THE ORDER OF THE CIT(A) AND NO SUCH ARGUMENTS WERE MADE DURING THE COURSE OF HEARING TH E IMPUGNED APPEALS. 4. WE HAVE GONE THROUGH THE CONTENTIONS OF THE LD. COUNSEL FOR ASSESSEE AND HAVE ALSO TAKEN NOTE OF TH E ARGUMENTS OF THE LD. DR. WE FIND THAT THE CONTENTIO NS OF THE LD.COUNSEL FOR THE ASSESSEE IS THAT VIS--VIS THE ADDITIONAL GROUNDS RAISED BY IT AND THE MAIN GROUN D OF APPEAL, THERE WERE CERTAIN ARGUMENTS WHICH WERE NOT CONSIDERED WHILE DECIDING THE APPEAL. WE HAVE GONE CAREFULLY GONE THROUGH THE WRITTEN SUBMISSIONS OF T HE LD. COUNSEL FOR ASSESSEE IN THE MISCELLANEOUS APPLICATI ONS AND FIND THAT THE LD. COUNSEL FOR ASSESSEE HAS ONLY REFERRED TO CERTAIN CASE LAWS WHICH WERE PART OF TH E PAPER BOOK OF CASE LAWS FILED BEFORE US AND WERE ALLEGEDL Y REFERRED TO WITH RESPECT TO VARIOUS ISSUES RAISED B EFORE US. THE LD. COUNSEL FOR ASSESSEE HAS FAILED TO POINT OU T HOW MA NOS .188 & 189/CHD/2018 A.Y. 2010-11 & 2011-12 7 AND WHEN THESE ISSUES WERE RAISED BEFORE US. IN THE ABSENCE OF THE SAME, THERE IS NO CASE OF THE ASSESS EE ESTABLISHING THAT IT HAD RAISED CERTAIN ARGUMENTS B EFORE THE I.T.A.T. WHICH WERE NOT DEALT WITH BY IT. MEREL Y FILING OF PAPER BOOK CONSISTING OF VARIOUS CASE LAWS DOES NOT ESTABLISH THAT THE ISSUES REFERRED TO IN THOSE CASE LAWS WERE RAISED ALSO DURING THE COURSE OF HEARING BEFOR E THE I.T.A.T. THE ASSESSEE HAS FAILED TO POINT OUT WITH COGENT EVIDENCE THAT THE ABOVE ISSUES WERE INADVERTENTLY L EFT TO BE DEALT WITH BY THE I.T.A.T. IN ITS ORDER. IN VIEW OF THE ABOVE WE DO NOT FIND ANY MERIT IN THE IMPUGNED MISCELLANEOUS APPLICATIONS AND THE SAME ARE, THEREF ORE, DISMISSED. 5. IN THE RESULT, BOTH THE MISCELLANEOUS APPLICATIO NS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- # $ % &' (SANJAY GARG) (ANNAPURNA GUPTA) /JUDICIAL MEMBER '( /ACCOUNTANT MEMBER *# /DATED:8 TH MARCH, 2019 * ' * '*!+,-,! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # .! / CIT 4. # .! ( )/ THE CIT(A) 5. ,/0 !1 , % 1 , 23405 / DR, ITAT, CHANDIGARH 6. 046$ / GUARD FILE '* # / BY ORDER, / ASSISTANT REGISTRAR