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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER आदेश आदेश आदेश
PER D. KARUNAKARA RAO, AM :
This appeal is filed by the Assessee against the order of CIT(A)-2, Pune, dated 04-05-2016 for the Assessment Year 2009-10.
Grounds raised by the assessee read as under :
The Appellant most respectfully states that each Ground of Appeal herein below is without prejudice to each other. 1. On the facts and in the circumstances of the case and in law, the Order levying penalty u/s.271 (1)( c) as confirmed by the learned CIT(A), is bad in law as the show cause notice issued u/s. 274 of the Act is defective, invalid, and bad in law for it does not specify as to whether penalty proceeding is being initiated for concealing particulars of income or furnishing inaccurate particulars of income. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the penalty order passed by the learned AO without recording the requisite satisfaction regarding
ITA No.2087/PUN/2016 Nilesh Subhash Chopda
concealment of particulars of income or furnishing of inaccurate particulars as required by the provisions of section 271(1)( c) and therefore the levy of penalty is not justified/not tenable.
On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in conforming the Penalty Order passed by the AO, without appreciating that the learned AO has passed the Assessment Order on the basis of his own judgement and that additions under Sec.69 are not sustainable in case of assessment being best judgement Assessment.
On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in conforming the Penalty Order passed by the AO, without appreciating that:
[a] The Appellant has voluntarily come forward and accepted addition subject to non levy of penalty u/s. 271(1)(c) so as to purchase peace of mind and avoid protracted litigation.
(b) The learned AO has passed order levying Penalty without appreciating the submissions of the appellant.
The appellant craves leave to add, amend, alter, vary and/or withdraw any or all the above grounds of appeal and/or to adduce and rely upon such further evidence/additional evidence and/or documents as may be required at any time during the appeal proceedings.
PRAYER:
The Appellant most respectfully prays as under:
The impugned order may kindly be quashed and set aside. 2. The Penalty levied u/s.271(1)(c) may kindly be deleted. 3. Any further Order in the interest of justice and equity may kindly be passed.”
Briefly stated relevant facts include that the assessee is an individual
and is engaged the business of manufacturing of wooden boxes. Assessee
filed the return of income on 30-09-2009 declaring total income of
Rs.17,79,568/-. In the assessment, the issue relating to purchase of plot of
land situated at Sy.No.265/2, Ahmednagar for a consideration of Rs.12
lakhs was under scrutiny. The assessee’s share is 50% in the said
property. The said transaction is not entered in the books of account. The
expenditure incurred thereof in respect of stamp duty and registration
charges are also not recorded in the books of accounts. AO proceeded to
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add Rs.6 lakhs as unexplained income u/s.69 of the Act and unexplained
expenditure u/s.69C of the Act amounting to Rs. 1,38,485/-. AO also
made other addition of Rs.2 lakhs on account of excess consumption of raw
material and Rs.2 lakhs on account of commission paid to Mrs. Priya
Punamchand Munot/Mrs. Rajeshri Jitendra Munot. Penalty proceedings
u/s.271(1)(c) of the I.T. Act were initiated for “furnishing inaccurate
particulars of income”. Eventually, the AO levied penalty of Rs.2,51,011/-.
In the First Appellate proceedings, the CIT(A) relying on the judgment
of Hon’ble Delhi High Court in the case of Durga Timber Works Vs. CIT 79
ITR 63 and judgment of Hon’ble Allahabad High Court in the case of
Banaras Chemical Factory Vs. CIT 108 ITR 96 confirmed the levy of
penalty. Aggrieved with the order of CIT(A), the assessee is in appeal before
the Tribunal with the aforesaid grounds.
Ld. DR for the Revenue relied heavily on the orders of AO and the
CIT(A) and prayed for confirming the same.
Assessee filed an adjournment application dated 05-10-2018 stating
that the tax consultant who is looking after the tax matters of the assessee
was not coming to duty on account of demise of his younger brother.
However, on going through the facts of the case, we find the present appeal
can be disposed on technical grounds. AO did not mention the satisfaction
validly qua the limb of clause (c) of section 271(1) of the Act. We find
identical cases were heard and allowed by us in many cases. Therefore, we
proceed to decide the appeal on the basis of material available on record
after hearing the Ld. DR for the Revenue.
Heard the Ld. DR for the Revenue and perused the orders of the
Revenue. Assessee raised the grounds relating to recording of proper
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satisfaction by the AO. In this connection, we perused the assessment
order dated 20-12-2011 and find the satisfaction recorded by the AO for
initiating the penalty proceedings u/s.271(1)(c) of the Act is relevant for
extraction. Therefore, the same is reproduced as under :
“7. Assessed u/s.143(3). Issue DN/Challan accordingly. Issue notice u/s.271(1)(c) for furnishing inaccurate particular of income.”
7.1 We also perused the penalty order dated 08-06-2012 and find the
satisfaction recorded by the AO for levying the penalty u/s.271(1)(c) of the
Act is relevant for extraction. The said satisfaction reads as under:
“................... ........................... Thus the assessee has concealed the particulars of his income within the meaning of section 271(1)(c) of the I.T. Act, 1961.”
From the above, it is evident that at the time of initiation of penalty
proceedings in the assessment, AO mentioned the limb “furnishing
inaccurate particulars of income” whereas while levying the penalty, AO
mentioned both limbs “Concealed the particulars of income”. This
manner of recording of satisfaction suggests the existence of ambiguity with
reference to applicability of specific limb. It is a settled legal proposition
that the AO is under obligation to specify the correct limb 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. Our decision is fortified by the 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. Accordingly,
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relevant grounds on the issue of satisfaction are allowed in favour of the
assessee.
Since we have allowed the legal grounds No.1 and 2 raised by the
assessee in the appeal, in our view, the adjudication of other grounds
raised by the assessee on merits in the appeal, becomes an academic
exercise. Therefore, the said grounds are dismissed as academic.
In the result, appeal of the assessee is partly allowed on
technicalities.
Order pronounced on this 12th day of October, 2018.
Sd/- Sd/- (िवकास अव�थी /VIKAS AWASTHY) (डी. क�णाकरा राव/D. KARUNAKARA RAO) �ाियक सद�/JUDICIAL MEMBER लेखा सद�/ACCOUNTANT MEMBER
पुणे / Pune; िदनांक / Dated : 12th October, 2018. Satish
आदेश क� आदेश क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-2, Pune. 3. आयकर आयु� / The Pr.CIT-1, Pune. 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “ए” / DR ‘A’, 5. ITAT, Pune; गाड� फाईल / Guard file. 6. आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune.