Income-tax Officer, Nashik V. Narendra P. Musale, Nashik

MA 38/PUN/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5610 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 30-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VITTHAL BHOSALE
• Keywords: Principle of natural justice; Set aside
• Section: 271(1)(c); 254(2); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY , JM M.A. NO. 38 /PUN/ 2020 ( ARISING OUT OF ITA NO. 1853 /PUN/ 2016 ) / ASSESSMENT YEAR : 2011 - 12 THE INCOME TAX OFFICER, WARD - 1(4), NASHIK. .. /APPLICANT / V/S. SHRI NARENDRA P. MUSALE 1 ST FLOOR, GANESH APARTMENT, NEAR BUS STAND, SATPUR, NASHIK - 422 007. PAN : AFFPM7810N / RESPONDENT REVENUE BY : SHRI VITTHAL BHOSALE A SSESSEE BY : SHRI SANKET JOSHI / DATE OF HEARING : 0 5 . 02 .202 1 / DATE OF PRONOUNCEMENT : 05 . 02 .2021 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY THE REVENUE ARISING OUT OF ITA NO.1853/PUN/2016 FOR ASSESSMENT YEAR 2011 - 12 U/S . 254(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) SEEKING RECTIFICATION IN THE ORDER OF TRIBUNAL DATED 27.03.2019. 2 M A NO. 38 /PUN/ 2020 A.Y. 2011 - 12 2. THE GRIEVANCE OF THE REVENUE IN THE MISCELLANEOUS APPLICATION AS PER THE RELEVA NT PARAS EXTRACTED AS FOLLOWS: 04. THE HON'BLE TRIBUNAL VIDE INSTANT ORDER DT. 27/03/2019 HAS ALLOWED THE APPEAL OF THE ASSESSEE ON TECHNICAL GROUND AND DELETED THE PENALTY OF RS. 39,77,580/ - LEVIED U/S 271(1)(C) OF THE ACT STATING THAT: ' THAT TAKING G UIDANCE FROM THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (SUPRA)WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS CONSIDERED THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS . MANJUNATH COTTON AND GINNING FAC TORY (SUPRA, THE LE GAL PROPOSITION THAT COMES OUT AND WHICH IS BINDING IN NATURE IS THAT THE ASSESSING OFFICER SHOULD BE CLEAR AS TO WHICH OF THE TWO LIMBS UNDER WHICH PENALTY IS IMPO SABLE, HAS BEEN CONTRAVENED OR INDICATE THAT BOTH HAVE BEEN CONTRAVENED W HILE INIT IATING PENALTY PROCEEDINGS. IT CANNOT BE THAT THE INITIATION WOULD BE ONLY O N ONE LIMB I.E. FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHILE IMPOSITION OF PENALTY ON THE OTHER LIMB I.E. CONCEALMENT OF INCOME ... ' 05. THE DECISION OF THE HO N. ITAT IS NOT ACCEPTABLE RESPECTFULLY AS THE HON'BLE TRIBUNAL HAS NOT APPRECIATED THE FACT THAT MERELY FOR THE REASON OF MISTAKE OR DEFECT OF STRIKING - OFF THE RELEVANT LIMB I.E. FOR CONCEALMENT OF INCOME AND FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, INTER - ALIA, CANNOT BE CONSIDERED AS NON - SUBSTANTIVE TO THE INTENT AND PURPOSE OF THE ACT. THE ISSUE STATED IS TO BE COVERED WITHIN THE MEANING OF SECTION 292B OF THE ACT. THE HON'BLE TRIBUNAL HAS NOT APPRECIATED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD. VS. CIT - II 38 TAXMAN 448(SC) WHEREBY T HE HON'BLE APEX COURT HELD THAT THE AO [HON'BLE CIT(A) - L, NASHIK IN THE INSTANT CA SE] HAS TO SATISFY WHETHER THE PENALTY PROCEEDINGS BE INITIATED OR NOT DURIN G THE COURSE OF THE A SSESSMENT PROCEEDINGS, AND THE AO IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER OR REDUCE IT TO WRITING. THE LD. DR PLACED STRONG RELIANCE ON THE AFORESAID MISCELLANEOUS APPLICATION AND THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD. VS. CIT - II, 38 TAXMAN 448 (SC). 3. THE LD. AR OF THE ASSESSEE WHILE OPENING HIS ARGUMENT AT THE VERY OUTSET SUBMITTED THAT THE LD. DR COULD NOT BRING OUT A CASE THROUGH THEIR MISCELLANEOUS APPLICATION WHICH CAN BE STATED WITH IN THE PURVIEW MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL. THAT WHAT THE REVENUE ESSENTIALLY WANTS TO IS RE - ARGUE THE MATTER SEEKING, THEREFORE, BEFORE THE TRIBUNAL TO REVIEW ITS DECISION WHICH IS NOT PERMISSIBLE WITHIN THE REALM OF THE MI SCELLANEOUS APPLICATION FILED U/S.254(2) OF THE ACT. REFERRING TO THE 3 M A NO. 38 /PUN/ 2020 A.Y. 2011 - 12 DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD. VS. CIT - II (SUPRA.) ON WHICH THE LD. DR HAS PLACED RELIANCE, THE LD. AR SUBMITTED THAT IN THE ORDER OF THE TRIBUNAL , THEY HAVE RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY IN ITA NO.1154 OF 2014 AND THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATH COTTON AND GINNING FACTORY REPORTED AS 359 ITR 565 AND THE TRIBUNAL HAS GIVEN RELIEF TO THE ASSESSEE FOLLOWING THESE DECISIONS WHEREIN PRINCIPLES OF NATURAL JUSTICE HAS BEEN EMPHASIZED AS CORE PILLAR OF JUDICIAL PROCESS. THE TRIBUNAL HAS HELD AND OBSERVED AS FOLLOWS: THAT TAKING GUIDANCE FR OM THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (SUPRA.) WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS CONSIDERED THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATH COTTON AND GINNING FACTORY (SUPRA.), THE LEGAL PROPOSITION THAT COMES OUT AND WHICH IS BINDING IN NATURE IS THAT THE ASSESSING OFFICER SHOULD BE CLEAR AS TO WHICH OF THE TWO LIMBS UNDER WHICH PENALTY IS IMPOSABLE, HAS BEEN CONTRAVENED OR INDICATE THAT BOTH HAVE BEEN CONTRAVENED WHI LE INITIATING PENALTY PROCEEDINGS. IT CANNOT BE THAT THE INITIATION WOULD BE ONLY ON ONE LIMB I.E. FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHILE IMPOSITION OF PENALTY ON THE OTHER LIMB I.E. CONCEALMENT OF INCOME. 21. THE SANCTITY IN TERMS OF NATUR AL JUSTICE WITH REGARD TO THIS PROPOSITION IS THAT THE ASSESSEE UNDER THE SCHEME OF WELFARE LEGISLATION WHICH IS EMBEDDED IN THE INCOME TAX ACT, 1961 SHOULD GET AN OPPORTUNITY TO PREPARE HIMSELF FOR THE DEFENSE AS REGARDS TO THE EXACT CHARGE ON WHICH PENAL TY IS IMPOSED UPON HIM U/S. 271(1)(C) OF THE ACT. IN THE INSTANT CASE, THE CHARGE IS VAGUE AND THEREFORE, LEVY OF PENALTY IS NOT WARRANTED. TAKING TOTALITY OF FACTS AND LEGAL SCENARIO INTO CONSIDERATION, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND D IRECT THE ASSESSING OFFICER TO DELETE THE PENALTY FROM THE HANDS OF THE ASSESSEE. 22. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.1853/PUN/2016 IS ALLOWED. 4. THE LD. AR FURTHER SUBMITTED REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD. VS. CIT - II (SUPRA.) AND THE HONBLE SUPREME COURT THEREIN HAS NOT DISCUSSED THE ISSUE OF NATURAL JUSTICE AND THEREFORE, CONSIDERING THE FAC TS AND CIRCUMSTANCES OF THE PRESENT CASE, PLACING RELIANCE ON THE AFORESAID DECISION OF THE HONBLE SUPREME COURT BY 4 M A NO. 38 /PUN/ 2020 A.Y. 2011 - 12 THE REVENUE IS NOT APPROPRIATE. THE LD. AR OF THE ASSESSEE HAS RELIED ON THE DECISIONS OF THE HONBLE BOMBAY HIGH COURT WHEREIN THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD. VS. CIT - II (SUPRA.) HAS BEEN DISCUSSED VIDE PARA 8 OF ITS ORDER IN THE CASE OF PR. COMMISSIONER OF INCOME TAX (CENTRAL) VS. GOA COASTAL RESORTS AND RECREATION PVT. LTD. (2020) 272 TAXMAN 0157 (BOMBAY). IN THIS CASE, THE HONBLE BOMBAY HIGH COURT FOLLOWING THE PRINCIPLES AS LAID DOWN IN THE CASE OF CIT VS. SAMSON PERINCHERY (SUPRA.) HELD AND OBSERVED THAT THE NOTICE OF PENALTY ISSUED TO THE ASSESSEE MUST INDICATE WHETHER THE ASSESSING OFFICER IS SATISFIED THAT THE CASE OF THE ASSESSEE INVOLVES CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR BOTH, WITH CLARITY. THAT VIDE PARA 8, IT HAS BEEN HELD AS FOLLOWS: 8. THE CONTENTION BASED UPON MAK DATA (P) LTD. (SUPRA) ALSO DOES NOT APPEAL TO US IN THE PECULIAR FACTS OF THE PRESENT CASE. THE NOTICE IN THE PRESENT CASE IS ITSELF IS DEFECTIVE AND FURTHER; THERE IS NO FINDING OR SATISFACTION RECORDED IN RELATION TO THE CONCEALMENT OR FURNISHING OF INACCURATE PARTICU LARS OF INCOME. 5. THAT FURTHER, IN THE MISCELLANEOUS APPLICATION OF THE REVENUE, THEY HAVE STATED THAT THE MATTER IS COVERED WITHIN THE MEANING OF SECTION 292B OF THE ACT. IN THIS REGARD, THE LD. AR HAS PLACED ON RECORD AND RELIED ON THE DECISION OF TH E PUNE BENCH OF THE TRIBUNAL IN MA NO.56/PUN/2017 ARISING OUT OF 532/PUN/2015 DATED 15.05.2018 FOR THE ASSESSMENT YEAR 2009 - 10 AND THE RELEVANT PARAS ARE EXTRACTED AS FOLLOWS: 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND P ERUSED THE RECORD. THE PRESENT MISCELLANEOUS APPLICATION IS AGAINST THE ORDER OF TRIBUNAL DATED 31.01.2017, WHERE THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271 (1 )(C) OF THE ACT WAS DECIDED IN TURN, RELYING ON EARLIER DECISION OF PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT IN ITA NOS.1201 TO 1205/PN/2014, RELATING TO ASSESSMENT YEARS 2003 - 04 TO 2007 - 08, DATED 30.11.2016. THE PERUSAL OF SAID ORDER WOULD REFLECT THAT THE ISSUE WAS DECIDED AFTER TAKING NOTE OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN CIT VS. KAUSHALYA ( SUPRA) AND ALSO TAKING NOTE OF THE DECISION OF HON'BLE SUPREME COURT IN MAK DATA PVT. LTD. VS. CIT (SUPRA). IN OTHER WORDS, ONCE - THE ORDER HAS 5 M A NO. 38 /PUN/ 2020 A.Y. 2011 - 12 BEEN DECIDED AFTER CONSIDERING DIFFERENT DECISIONS, THERE IS NO MERIT IN THE PLEA OF APPLICANT THAT THE SAID DEC ISIONS HAVE NOT BEEN CONSIDERED BY THE TRIBUNAL. FURTHER, IT MAY BE POINTED OUT THAT EVEN THE ISSUE OF APPLICABILITY OF SECTION 271 (1 B) OF THE ACT WAS NOT RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE APPLICANT WHILE ARGUING PENALTY APPEAL AN D THE PROPOSITION RAISED BY WAY OF MISCELLANEOUS APPLICATION AMOUNTS TO RE - ARGUING THE ISSUE WHICH CANNOT BE ALLOWED IN THE GARB OF MISCELLANEOUS APPLICATION FILED UNDER SECTION 254(2) OF THE ACT. BUT THE PROPOSITION OF APPLICANT REVENUE THAT THE MISTAKE I N NON STRIKING OF ONE LIMB IS CURABLE UNDER SECTION 292B OF THE ACT DOES NOT STAND SINCE FOR LEVYING PENALTY UNDER SECTION 271 (1 )(C) OF THE ACT, DICTATE OF SECTION AND VARIOUS COURTS IMPLEMENTING THE SECTION IS THAT THE ASSESSING OFFICER HAS TO RECORD SA TISFACTION AS TO WHICH LIMB OF SAID SECTION HAS NOT BEEN COMPLIED WITH BY THE ASSESSEE AND SHOW CAUSE THE ASSESSEE IN THIS REGARD WHILE INITIATING PENALTY PROCEEDINGS UNDER SECTION 271 (1 )(C) OF THE ACT. THE FAILURE OF THE ASSESSING OFFICER TO RECORD SUCH SATISFACTION MAKES THE ORDER LEVYING PENALTY INVALID AND BAD IN LAW AND SUCH MISTAKE IS NOT CURABLE DEFECT UNDER SECTION 292B OF THE ACT AS IT GOES TO THE JURISDICTION OF LEVY OF PENALTY FOR CONCEALMENT. ACCORDINGLY, THERE IS NO MERIT IN THE PRESENT MISCE LLANEOUS APPLICATION FILED BY THE APPLICANT REVENUE AND THE SAME IS DISMISSED ON ALL COUNTS. 6. HAVING HEARD BOTH THE PARTIES HEREIN AND CONSIDERING RELEVANT DOCUMENTS ON RECORD, WE ARE IN CONFORMITY WITH THE ARGUMENT PLACED BY THE LD. AR OF THE ASSESS EE. THEREFORE, IN VIEW OF THE JUDICIAL PRONOUNCEMENTS REFERRED HEREINABOVE, WE ARE OF THE CONSIDERED VIEW THAT IN THE FINDINGS OF THE TRIBUNAL IN ITA NO.1853/PUN/2016, THERE IS NO MISTAKE APPARENT FROM RECORD WITHIN THE PURVIEW OF SECTION 254(2) OF THE ACT AND HENCE, MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED ON ALL COUNTS. 7. IN THE RESULT, MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED. ORDER PRO NOUNCED ON 05 TH DAY OF FEBRUARY , 20 2 1 . SD/ - SD/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 05 TH FEBRUARY , 202 1 . SB 6 M A NO. 38 /PUN/ 2020 A.Y. 2011 - 12 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 1, NASHIK. 4. THE PR. CIT - 1, NASHIK. 5 . , , , / DR, ITAT, B BENCH, PUNE. 6 . / GUARD FILE. / BY ORDER, // TRUE COPY / / / PRIVATE SECRETARY , / ITAT, PUNE . 7 M A NO. 38 /PUN/ 2020 A.Y. 2011 - 12 DATE 1 DRAFT DICTATED ON 0 5.0 2 .2021 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 05.02 .2021 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER