Loading judgment…
No AI summary yet for this case.
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
आदेश/ ORDER
PER D. KARUNAKARA RAO, AM :
There are bunch of three assessees under consideration involving seven appeals by the respective assessees. These 7 appeals relates to the assessment years 1998-99 in the case of Navinchandra P. Choksi, assessment year 2003-04 in the case of Prakash P. Choksi and assessment years 2000-01 to 2004-05 in the case of Pravinchandra P. Chokshi. Considering the commonality of the issues, the facts, the arguments of the AR/DR, etc, we proceed to adjudicate all these 7 appeals in this composite order.
Before us, at the outset, ld. Counsel for the assessee submitted that the common issue of levy of penalty u/s 271(1)(c) of the Act. As per ld. AR, the penalty proceedings, initiated by the Assessing Officer in all these appeals, suffer from ambiguity in the mind of the Assessing Officer while recording the satisfaction at the time of initiating the penalty proceedings u/s 271(1)(c) of the Act. We shall take up assessee-wise appals in the following paragraphs.
ITA No.2080/PUN/2016 (A.Y. 2000-01) (Pravinchandra P. Chokshi)
First, we shall take up the bunch of five appeals. The lead appeal ITA No.2080/PUN/2016 in the case of Pravinchandra P. Chokshi relates to the
ITA Nos.2078 to 2084/PUN/2016
assessment year 2000-01. The finding on this appeal has bearing on the
rest of the four appeals.
According to the ld. AR, the appeal shall have to be allowed in favour
of assessee on the legal issue. Deviating from the grounds on the merits of
penalty and referring to the assessment order, ld. Counsel for the assessee
brought our attention to the contents of para 5.8 and submitted that both
the limbs of clause (c) of section 271(1) of the act were referred to while
initiating the penalty proceedings u/s 271(1)(c) of the Act. Further,
referring to penalty order, ld. Counsel for the assessee submitted that no
reference is made in limb of clause (c) of section 271(1) of the Act while
levying the penalty. He brought our attention to the contents of para 7 of
the penalty order. Highlighting the legal requirement of making a specific
reference to the specific limb of clause (c) of section 271(1) of the Act and
relying on various binding judgments in the case CIT Vs. Shri Samson relying on various binding judgments in the case CIT Vs. Shri Samson
Perinchery (2017) 392 ITR 4 (Bom.) as well as the judgment of Hon’ble
Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and
Ginning Factory 359 ITR 565, Ld. Counsel demonstrated that the penalty
levied by the AO is unsustainable in law.
On the other hand, ld. DR for the Revenue heavily relied on the
orders of the Assessing Officer and the CIT(A).
Without going to the merit, we focus our attention on the said
satisfaction recorded for initiating the penalty proceedings by the Assessing
Officer and find relevant to extract para 5.8 of the assessment order and
para 7 of the penalty order in the following paragraphs :-
Assessment Order :
“5.8 .......... For concealing the income and furnishing the inaccurate particulars of income the penalty proceedings us 271(1)(c) are separately initiated.”
ITA Nos.2078 to 2084/PUN/2016
Penalty Order :
“7. ......... I am satisfied that this is a fit case for levy of penalty u/s 271(1)(c) of the Act.”
The legal requirement of making a clear cut reference to the
applicable limb of clause (c) of section 271(1) of the Act is not met by the
Assessing Officer. Considering the above facts, we are of the opinion that
this is a case where the AO invoked both the limbs at the time of initiation
and none is cited while levying the penalty u/s 271(1)(c) of the Act. Thus,
the satisfaction suffers from ambiguity in the mind of the AO.
Therefore, we are of the opinion that, considering the above referred
binding judgments, such penalty order is unsustainable in law legally. It is
a settled legal proposition that the AO is under obligation to specify the
appropriate limb of clause (c) of section 271(1) of the Act at the time of
initiation as well as at the time of levy of penalty. In view of the above initiation as well as at the time of levy of penalty. In view of the above
deliberation on this issue, without going into the merits of the penalty, we
are of the opinion that the penalty order is liable to be quashed on this legal
issue. Thus, the order of CIT(A) is set-aside and direct the AO to delete the
penalty on technical grounds.
Since we have allowed the oral ground raised by the assessee, in our
view, adjudication of grounds raised by the assessee in the appeal on
merits becomes an academic exercise. Therefore, the said ground is
dismissed as academic.
ITA Nos.2081 to 2084/PUN/2016 (Four Appeals : A.Ys. 2001-02 to 2004-05) (Pravinchandra P. Chokshi)
Regarding the other four appeals of the assessee for the assessment
years (A.Y. 2001-02 to 2004-05), we are of the opinion that the assessee
ITA Nos.2078 to 2084/PUN/2016
validly made similar ambiguity-linked allegation qua the satisfaction
recorded by the Assessing Officer in the assessment orders/penalty orders.
Thus, we are of the opinion that the assessee is entitled to relief on the
technical grounds. Accordingly, on technical issue the grounds raised by
the assessee in all the four appeals of the assessee are dismissed.
Considering the relief granted by us on the technical ground, we are
of the opinion that the grounds raised on merits of the levy of penalty need
to be dismissed as academic. Hence, they are dismissed as academic in all
the four years.
In the result, the all the five appeals of the assessee are partly
allowed.
ITA No.2079/PUN/2016 (A.Y. 2003-04) (Prakash P. Choksi)
Sri Prakash P. Choksi filed a solitary appeal for the A.Y. 2003-04 on
the issue of levy of penalty u/s 271(1)(c) of the Act. Referring to the
assessment order, ld. Counsel for the assessee brought our attention to the
contents of para 7.1 and submitted that no limb was referred to in the
assessment order while “initiating” the penalty proceedings u/s 271(1)(c)
of the Act. Further, referring to penalty order, ld. Counsel for the assessee
submitted that no reference is made at all to any limb of clause (c) of
section 271(1) of the Act while levying the penalty. He brought our
attention to the contents of para 4 of the penalty order.
Without going to the merit on hearing both counsels, we focused our
attention on the said satisfaction recorded by the Assessing Officer and find
relevant to extract para 7.1 of the assessment order and para 7 of the
penalty order in in the following paragraphs :-
ITA Nos.2078 to 2084/PUN/2016
Assessment Order :
“7.1 .......... Since the assessee has not shown the interest income of Rs.46,233/- for taxation in the return of income, the penalty proceedings u/s 271(1)(c) is being initiated separately.”
Penalty Order :
“7. ......... I am satisfied that it is a fit case for levy of penalty u/s 271(1)(c).”
From the above, it’s obvious that the requirement of making specific
reference to specific limb was not met by the Assessing Officer in this case.
Considering the above facts, we are of the opinion that this is a case where
the AO invoked both the limbs at the time of initiation as well as levying the
penalty. Thus, the satisfaction suffers from ambiguity in the mind of the
AO.
Highlighting the legal requirement of making a specific reference to
the specific limb of clause (c) of section 271(1) of the Act and relying on
various binding judgments in the case CIT Vs. Shri Samson Perinchery
(2017) 392 ITR 4 (Bom.) as well as the judgment of Hon’ble Karnataka High
Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory 359
ITR 565, ld. Counsel demonstrated that the penalty levied by the AO is
unsustainable in law.
Therefore, we are of the opinion that, considering the above referred
binding judgments, such penalty order is unsustainable in law legally. It is
a settled legal proposition that the AO is under obligation to specify the
appropriate limb of clause (c) of section 271(1) of the Act at the time of
initiation as well as at the time of levy of penalty. In view of the above
deliberation on this issue, without going into the merits of the penalty, we
are of the opinion that the penalty order is liable to be quashed on this legal
ITA Nos.2078 to 2084/PUN/2016
issue. Thus, the order of CIT(A) is set-aside and direct the AO to delete the
penalty on technical grounds.
Since we have allowed the oral ground raised by the assessee, in our
view, adjudication of grounds raised by the assessee in the appeal on
merits becomes an academic exercise. Therefore, the said ground is
dismissed as academic.
In the result, the appeal of the assessee is partly allowed.
ITA No.2078/PUN/2016 (A.Y. 1998-99) (Navinchandra P. Choksi)
Sri Navinchandra P. Choksi filed a solitary appeal for the A.Y.
1998-99 on the issue of levy of penalty u/s 271(1)(c) of the Act. Referring
to the assessment order, ld. Counsel for the assessee brought our attention
to the contents of para 5.12 & 6 and submitted that no limb was referred to to the contents of para 5.12 & 6 and submitted that no limb was referred to
in the assessment order while “initiating” the penalty proceedings u/s
271(1)(c) of the Act. Further, referring to penalty order, ld. Counsel for the
assessee submitted that no reference is made at all to any limb of clause (c)
of section 271(1) of the Act while levying the penalty. He brought our
attention to the contents of para 5 of the penalty order.
Without going to the merit on hearing both counsels, we focused our
attention on the said satisfaction recorded by the Assessing Officer and find
relevant to extract para 5.12 & 6 of the assessment order and para 5 of the
penalty order in the following paragraphs :-
Assessment Order :
“5.12 .......... For concealing the income and furnishing the inaccurate particulars of income the penalty proceedings under section 271(1)(c) is being initiated separately.” “6. ......... For concealing the income and furnishing inaccurate particulars of income penalty proceedings u/s 271(1)(c) is being initiated separately.”
ITA Nos.2078 to 2084/PUN/2016
Penalty Order :
“5. ......... ......... On carefully considering the above facts and the details available on record, I am satisfied that this is fit case for levy of penalty u/s 271(1)(c) of the Act.”
From the above, it’s obvious that the requirement of making specific
reference to specific limb was not met by the Assessing Officer in this case.
Considering the above facts, we are of the opinion that this is a case where
the AO invoked both the limbs at the time of initiation as well as levying the
penalty. Thus, the satisfaction suffers from ambiguity in the mind of the
AO.
Highlighting the legal requirement of making a specific reference to
the specific limb of clause (c) of section 271(1) of the Act and relying on
various binding judgments in the case CIT Vs. Shri Samson Perinchery
(2017) 392 ITR 4 (Bom.) as well as the judgment of Hon’ble Karnataka High
Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory 359
ITR 565, ld. Counsel demonstrated that the penalty levied by the AO is
unsustainable in law.
Therefore, we are of the opinion that, considering the above referred
binding judgments, such penalty order is unsustainable in law legally. It is
a settled legal proposition that the AO is under obligation to specify the
appropriate limb of clause (c) of section 271(1) of the Act at the time of
initiation as well as at the time of levy of penalty. In view of the above
deliberation on this issue, without going into the merits of the penalty, we
are of the opinion that the penalty order is liable to be quashed on this legal
issue. Thus, the order of CIT(A) is set-aside and direct the AO to delete the
penalty on technical grounds.
9 ITA Nos.2078 to 2084/PUN/2016
Since we have allowed the oral ground raised by the assessee, in our view, adjudication of grounds raised by the assessee in the appeal on merits becomes an academic exercise. Therefore, the said ground is dismissed as academic.
In the result, the appeal of the assessee is partly allowed.
Resultantly, all the appeals filed by the respective assessees are partly allowed.
Order pronounced on this 02nd day of November, 2018.
Sd/- Sd/- (SUSHMA CHOWLA) (D.KARUNAKARA RAO) �या�यकसद�य/ JUDICIAL MEMBER लेखासद�य/ ACCOUNTANT MEMBER पुणे/ Pune; �दनांकDated : 02nd November, 2018. Sujeet आदेशक���त�ल�पअ�े�षत/Copy of the Order is forwarded to : अपीलाथ�/ The Appellant; 1. ��यथ�/ The Respondent; 2. आयकरआयु�त(अपील) / The CIT(A)-12, Pune; 3. आयकरआयु�त/ The Pr. CIT, Central, Nagpur 4. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण, पुणे“A” / DR ‘A’, 5. ITAT, Pune; गाड�फाईल/ Guard file. 6.
// True Copy // आदेशानुसार/ BY ORDER,
स�या�पत ��त//True Copy// Senior Private Secretary आयकरअपील�यअ�धकरण ,पुणे/ ITAT, Pune