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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश आदेश / ORDER आदेश आदेश
PER D. KARUNAKARA RAO, AM :
This appeal is filed by the Assessee against the order of CIT(A)-2, Pune, dated 11-08-2017 for the Assessment Year 2008-09.
Condonation of Delay : There is delay of 78 days in filing this appeal before the Tribunal. In this connection, Ld. Counsel for the assessee drew our attention to the affidavit given by the assessee dated 26-12-2017 and demonstrated the delay. The contents of the affidavit read as under :
“This order was delivered to my consultant for further action of filing an appeal, however, due to heavy pressure of statutory obligation in the month of October and November, 2017, he could not file the appeal documents in time, which has resulted into the delay in filing the appeal before the Hon’ble Tribunal Due to this reason there is a delay of approximate 78 days.
ITA No.3087/PUN/2017 M/s. Shivaji Yashwant Karpe
With this affidavit I most humbly pray before your honours to condone the delay and admit the appeal.”
After hearing the Ld. Counsel for the assessee and perusing the
contents of the affidavit, we are of the opinion that there was a reasonable
cause for the assessee to file the appeal before the ITAT with delay of 78
days. The lapse on the Tax Consultant should not make the assessee
helpless. Therefore, we condone the delay and admit the appeal for
adjudication.
Penalty – Limbs related issue
Briefly stated relevant facts of the assessee include that the assessee
is engaged in Medical profession and also derives income from Agriculture.
During the impugned assessment year, assessee filed the return of income
declaring total income of Rs.1,20,000/-. As per the AIR information, AO
came to know that the assessee is maintaining Savings Bank account with
Dena Bank, Sangamner and the same was not disclosed in the return of
income. In the assessment proceedings u/s.143(3) of the Act, AO made of
addition of Rs.19,82,640/- on account of unexplained cash deposits made
in Dena Bank, Sangamner and rejected the explanation of the assessee that
the said deposits pertain to the Agricultural income of the HUF. Penalty
proceedings u/s.271(1)(c) r.w.s. 274 of the I.T. Act are also initiated on the
assessee for concealing the particulars of income and eventually levied
penalty of Rs.6,03,143/-. The CIT(A), in the quantum proceedings,
confirmed the addition made by the AO. Aggrieved with said order of
CIT(A), the assessee preferred an appeal before the Tribunal and the
Tribunal vide its order dated 12-08-2016 dismissed the appeal of the
assessee.
ITA No.3087/PUN/2017 M/s. Shivaji Yashwant Karpe
Against the penalty proceedings u/s.271(1)(c) of the Act also, the
assessee filed an appeal before the CIT(A). The CIT(A) relying on the
judgment of Allahabad High Court in the case of Shanti Swarup Bhatnagar
Vs. CIT 279 ITR 451 as well as the judgment of Hon’ble Madras High Court
in the case of K.Pillai Vs. CIT 108 ITR 612 confirmed the penalty levied by
the AO by holding as under :
“4.5 In the light of aforesaid facts of the case and decisions cited, it is held that the appellant is liable for concealing the particulars of income with regard to cash deposits of Rs.19,82,640/ in the undisclosed bank account maintained with Dena Bank. The addition made by the AO was confirmed by CIT(A) as well as by the ITAT, Pune Bench. I therefore uphold the order of the AO in levying penalty u/s.271(1)(c) at Rs.6,03,143/-.”
Now the assessee filed the appeal challenging the penalty levied by
the AO and upheld by the CIT(A) with the following solitary ground :
“1. On the facts and in the circumstances of the case and in law the Lower authorities have erred in levying the penalty u/s.271(1)(c) a sum of Rs.6,03,143/- by rejecting appellants contention in this regard.”
At the outset, in the proceedings before us, Ld. Counsel for the
assessee raising the oral ground relating to recording of satisfaction by the
AO submitted that this is a case where the AO failed to record valid
satisfaction in the assessment order as well as during the penalty
proceedings. 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. In this regard, he brought our
attention to the assessment order as well as the penalty order highlighting
the above legal deficiencies.
ITA No.3087/PUN/2017 M/s. Shivaji Yashwant Karpe
Per Contra, Ld. DR for the Revenue relied on the orders of AO/CIT(A).
We heard both the parties and perused the orders of the Revenue.
Before proceeding to adjudicate the solitary issue raised by the assessee,
we proceed to admit the oral ground (legal in nature) raised by the assessee
regarding the recording of proper satisfaction by the AO. In this
connection, we perused the assessment order dated 09-12-2010 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 :
“.............Issue show cause notice u/s.271(1)(c) r.w.s. 274 of the I.T. Act, 1961 for concealing the particulars of income of Rs.19,86,561/- and agriculture income of Rs.30,000/-...............”
9.1 We also perused the penalty order dated 30-03-2016 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:
“8. .................... ........................... I am therefore satisfied the inaccurate particulars of cash deposited in bank account. Assessee furnished inaccurate particulars of income and thereby concealed the income of Rs.19,82,640/-, being undisclosed cash deposit.”
From the above, it is evident that at the time of initiation of penalty
proceedings in the assessment, AO mentioned the limb “concealed the
particulars of income” whereas while levying the penalty, AO mentioned
both limbs (“furnished inaccurate particulars of income and thereby
concealed the income) of clause (c) of section 271(1) of the Act. This
manner of recording of satisfaction suggests the existence of ambiguity with
reference to applicability of specific limb. Therefore, we are of the opinion
that considering the above referred binding judgments such penalty order
ITA No.3087/PUN/2017 M/s. Shivaji Yashwant Karpe
is unsustainable in law legally. 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.
Thus, the order of CIT(A) is set-aside and direct the AO to delete the
penalty on technical grounds without going into merits of the case.
Since we have allowed the oral ground raised by the assessee, in our
view, adjudication of ground raised by the assessee in the appeal becomes
an academic exercise. Therefore, the said ground is dismissed as academic.
In the result, appeal of the assessee is partly allowed on
technicalities.
Order pronounced on this 03rd 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 : 03rd October, 2018. Satish
आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : 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 “बी बी” / DR ‘B’, 5. बी बी 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.