Deputy Commissioner of Income tax, Pune V. Sai Venkata Construction, Pune

MA 6/PUN/2017

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5748 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 14-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GAURAV GUPTA
• Keywords: Initiation of penalty proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE , , , BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / MA NO. 0 6 /P U N/201 7 (ARISING OUT OF ITA NO. 994 /P U N/20 1 3 ) / ASSESSMENT YEAR : 20 0 8 - 09 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE ....... / APPELLANT / V/S. M/S. SAI VENKATA CONSTRUCTION, SNEH APARTMENT, PUNE MUMBAI ROAD, NIGDI, PUNE 411044 PAN : AAXFS8658K / RESPONDENT ASSESSEE BY : SHRI GAURAV GUPTA REVENUE BY : SHRI ACHAL SHARMA / DATE OF HEARING : 02 - 06 - 2017 / DATE OF PRONOUNCEMENT : 31 - 07 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH IS MISCELLANEOUS APPLICATION HAS BEEN FILED BY THE REVENUE U/S. 254(2) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR RECTIFICATION OF ALLEGED MISTAKE IN THE ORDER OF TRIBUNAL DATED 11 - 03 - 2016 IN ITA NO. 994/PN/2013 FOR ASSESSMENT YEAR 2008 - 09 . 2 MA NO. 06/PUN/2017, A.Y. 2008 - 09 2. SHRI ACHAL SHARMA REPRESENTING THE DEPARTMENT SUBMITTED THAT THE TRIBUNAL HAS ERRED IN ALLOWING THE APPEAL OF ASSESSEE AGAINST LEVY OF PENALTY U/S. 271(1)(C) OF T HE ACT BY MERELY PLACING RELIANCE ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON & GINNING FACTORY REPORTED AS 359 ITR 565 AND THE DECISION OF CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SANJOG TARACHAND LOADHA VS. INCOME TAX OFFICER IN ITA NOS. 688 & 689/PN/2014 DECIDED ON 31 - 08 - 2015. THE LD. DR SUBMITTED THAT THE TRIBUNAL HAS DELETED THE LEVY OF PENALTY ON THE GROUND THAT THE NOTICE ISSUED TO THE ASSESSEE U/S. 274 R.W.S. 271(1)(C) IS D EFECTIVE. THE TRIBUNAL FAILED TO CONSIDER THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SMT. KAU SHALYA & ORS. REPORTED AS 216 ITR 660 , WHEREIN IT HAS BEEN HELD THAT MERE NON - STRIKING OF INACCURATE PORTION CANNOT B Y ITSELF INVALIDATE THE NOTICE. THE LD. DR FURTHER SUBMITTED THAT THE FINANCE ACT, 2008 HAS INSERTED SUB - SECTION (1B) TO MITIGATE THE SITUATION WHERE IT IS ALLEGED THAT THE ASSESSING OFFICER HAS NOT RECORDED SATISFACTION PROPERLY . ACCORDING TO THE PROVISIONS OF S ECTION 271(1B) , IF THE ASSESSMENT ORDER CONTAINS A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C), SUCH OBSERVATIONS BY THE ASSESSING OFFICER SHALL BE DEEMED TO CONSTITUTE VALID SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS. THE LD. DR FURTHER PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. REPORTED AS 305 ITR 227 TO CONTEND THAT WHERE DECISI ON OF JURISDICTIONAL HIGH COURT OR THE SUPREME COURT IS NOT CONSIDERED , IT IS A MISTAKE APPARENT FROM THE RECORD WHICH CAN BE RECTIFIED U/S. 254(2) OF THE ACT. 3 MA NO. 06/PUN/2017, A.Y. 2008 - 09 3. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD. DR AND THE DECISIONS ON WHICH HE HAS PLACED RELIANCE. THE TRIBUNAL DELETED THE PENALTY LEVIED U/S. 271(1)(C) BY FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA). IT IS AN UNDISPUTED FACT THAT THE NOTICE ISSUED TO THE ASSESSEE U/S. 274 R.W.S. 271(1)(C) SUFFERS FROM AMBIGUITY. THE SPECIFIC CHARGE FOR LEVY OF PENALTY IS NOT MENTIONED IN THE NOTICE. 4. THE P ENALTY IS LEVIED IN RESPECT OF DISALLOWANCE OF EXPENDITURE RS.58,40,941/ - . WHILE RECORDING SATISF ACTION FOR INITIATION OF PENALTY THE ASSESSING OFFICER HAS NOT SPECIFIED THE CHARGE FOR LEVYING PENALTY I.E. WHETHER FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREAFTER, WHILE PASSING ORDER U/S. 271(1)(C) LEVYING PENALT Y , THE ASSESSING OFFICER OBSERVED THAT THE PENALTY U/S. 271(1)(C) IS BEING IMPOSED FOR CONCEALMENT OF INCOME , AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF T. ASHOK PAI VS. COMMISSIONER OF INCOME TAX REPORTED AS 292 ITR 11 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS CARRY DIFFERENT CONNOTATIONS. THUS, THE ASSESSING OFFICER WHILE RECORDING SATISFACTION AND WHILE ISSUING NOTICE HAS TO COME TO A DEFINITE CONCLUSION , WHETHER IT IS A CASE OF CONCEALMENT OF INCOME OR IT IS A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. THEREAFTER, AT THE TIME OF PASSING OF THE PENALTY OR DER U/S. 271(1)(C) THE ASSESSING OFFICER HAS TO BE CONSISTENT IN SPECIFYING THE CHARGE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 4 MA NO. 06/PUN/2017, A.Y. 2008 - 09 6. IN THE PRESENT CASE, WE OBSERVE THAT THE ASSESSING OFFICER WAS NOT CLEAR IN HIS MIND AT THE TIME OF RECORDING SATISFAC TION AS TO UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY IS TO BE LEVIED. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SMT. KAUSHALYA & ORS. (SUPRA) HAS HELD THAT WHERE THE ASSESSEE FULLY KNOW THE DETAILS OF EXACT CH ARGE AGAINST HIM, AMBIGUOUS WORDINGS IN THE NOTICE WOULD NOT IMPARE THE RIGHT OF ASSESSEE. AS HAS BEEN POINTED EARLIER EXACT CHARGE WAS NOT MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER . IN THE NOTICE ISSUED U/S. 274 R.W.S. 271(1)(C) BOTH TH E CHARGES ARE MENTIONED WITH CONJUNCTION OR . T HEREFORE, THE ASSESSEE WAS NOT AWARE TILL THE PASSING OF THE ORDER LEVYING PENALTY U/S. 271(1)(C), THE CHARGE FOR LEVY OF PENALTY. UNDER SUCH CIRCUMSTANCES THE TRIBUNAL RIGHTLY HELD THE NOTICE ISSUED U/S. 2 74 R.W.S. 271(1)(C) TO BE DEFECTIVE. 7. THE RECORDING OF SATISFACTION FOR LEVY OF PENALTY AND THE NOTICE ISSUED IN PURSUANCE THEREOF ARE EQUALLY VAGUE. THUS, IN VIEW OF THE FACTS OF PRESENT CASE THE RATIO LAID DOWN IN THE CASE OF COMMISSIONER OF INCOME T AX VS. SMT. KAUSHALYA & ORS. (SUPRA) WOULD NOT APPLY. THE TRIBUNAL HAS NOT TAKEN VIEW CONTRARY TO THE LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT . 8. IN SO FAR AS THE ARGUMENTS OF THE LD. DR WITH REGARD TO MANNER OF RECORDING SATISFACTION AS ENVISAGED U/S. 271(1B) IS CONCERNED, THIS PLEA HAS BEEN TAKEN BY THE REVENUE FOR THE FIRST TIME. THE LD. DR IN PROCEEDINGS U/S. 254(2) FOR RECTIFICATION OF APPARENT MISTAKE IN THE ORDER IS TRYING TO IMPROVE UPON THE CASE OF DEPARTMENT. THIS ARGUMENT WAS NEVER RAISED BY THE LD. DR AT THE TIME OF HEARING OF THE APPEAL. DE HORS THE FACT THAT THIS ARGUMENT IS RAISED BY THE LD. DR FOR THE FIRST 5 MA NO. 06/PUN/2017, A.Y. 2008 - 09 TIME , MENTIONING OF EXACT CHARGE FOR LEVY OF PENALTY AT THE TIME OF RECORDING SATISFACTION IS MUST. THE ASSESSING O FFICER HAS TO CLEARLY SPECIFY THE EXACT CHARGE I.E. WHETHER PENALTY IS BEING LEVIED FOR CONCEALMENT OF INCOME OR/AND FURNISHING OF INACCURATE PARTICULARS OF INCOME . 9. WE DO NOT FIND ANY MERIT IN THE APPLICATION FILED BY THE REVENUE. THE LD. DR HAS NOT BEEN ABLE TO SPECIFY THE MISTAKE APPARENT IN THE ORDER OF TRIBUNAL. ACCORDINGLY, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED ON MONDAY, THE 31 ST DAY OF JULY, 2017 . SD/ - SD/ - ( / ANIL CHATURVEDI ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 31 ST JULY, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT . 2. / THE RESPONDENT . 3. ( ) / THE CIT (A) - V, PUNE 4. / THE CIT - V, PUNE 5 . , , , / DR, ITAT, B BENCH, PUNE . 6 . / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE