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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 :
There are six appeals filed by the assessee involving A.Yrs. 1999- 2000 to 2004-05. These appeals are filed against separate orders of CIT(A)- 2, Pune, commonly dated 15-03-2016. Penalty levied u/s.271(1)(c) of the Act is the only issue in all these appeals. Grounds raised by the assessee are also identical.
We shall first take up the appeal the assessee for A.Y. 1999-2000 for the sake of reference to facts.
2 ITA Nos.1587 to 1592/PUN/2016 Mrs. Pushpa D. Patil
ITA No.1587/PUN/2016 A.Y. 1999-2000
Grounds raised by the assessee are extracted here as under:
That the Ld. ITO has erred in levying the penalty of Rs.1,35,586/- in the assessment order passed for A.Y. 1999-2000 ignoring the submissions made during the course of hearing. 2. That the Ld. ITO has erred in making the addition of Rs.4,03,762/- on account of loan taken from Sou. Laxmi Pawar, increase in capital balance, recurring deposits owned by D.B. Patil (HUF), unexplained credit in bank account, and drawings without any authenticate/bonafide ground. The AO has not given sufficient time for submitting all the documents/supporting for the assessment. Therefore the assessment order passed by the CIT(A) is not justified and therefore the same is not tenable. 3. Looking to the facts and circumstances of the case, the huge penalty of Rs.1,35,586/- levied on the income by the ITO may please be waived.
The appellant prays to be allowed to add, amend, delete, modify, and rectify any grounds of appeal during the course of hearing.
Briefly stated relevant facts include that the assessee is an
individual. In this case, initially, the assessee has not filed the return of
income. In response to notice u/s.148 of the Act , the assessee filed the
return of income declaring total income of Rs.1,33,833/- and agricultural
income at Rs.23,000/-. During the year under consideration, the assessee
was running a STD booth and earning income from therein besides rental
income from house property, salary from Ayodhya Leasing and Finance Co.
Ltd. and income from other sources. Based on the information gathered by
the ADIT (Investigation), Kolhapur, it was noticed that assessee made
investments during the period A.Y. 1998-99 to 2003-04 totalling to
Rs.68,34,747/-. An amount of Rs.17,67,470/- was stated to have been
invested out of loans taken from various banks including LIC. Balance
amount of Rs.50,67,177/- was treated by him as assessee’s unexplained
investment/unaccounted income. The said income was admitted by the
3 ITA Nos.1587 to 1592/PUN/2016 Mrs. Pushpa D. Patil
husband of the assessee Shri Daulat B. Patil. Assessee submitted Balance
sheet and Capital accounts for the block period mentioned above. At the
end of the assessment u/s.143(3) r.w.s. 147 of the Act, AO made various
additions totaling to Rs.4,28,182/- and determined the total income of the
assessee at Rs.5,65,015/-. AO also initiated penalty proceedings
u/s.271(1)(c) of the Act for filing inaccurate particulars of income and
levied penalty of Rs.1,35,586/-. In the First Appellate proceedings, the
CIT(A) confirmed the penalty u/s.271(1)(c) of the Act to the extent of 100%
of tax sought to be evaded instead of 200% penalty levied by the AO.
In the rest of the assessment years too, AO adopted the same
manner in matters of levying the penalties u/s.271(1)(c) of the Act.
Aggrieved with the order of CIT(A), the assessee filed the present
appeals before the Tribunal with the similar grounds extracted above.
Before us, at the outset, raising a legal issue, Ld. Counsel for the
assessee submitted orally that this is a case where the AO failed to record
valid satisfaction in the assessment orders during which the penalty
proceedings were initiated. 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 orders as well as the penalty
orders highlighting the above legal deficiencies. Further, he submitted that
4 ITA Nos.1587 to 1592/PUN/2016 Mrs. Pushpa D. Patil
if relief is granted on the legal issue, there is no need for adjudicating the
grounds raised on the merits of the penalty.
Per Contra, Ld. DR for the Revenue relied heavily on the order of the
AO.
We heard both the parties and perused the orders of the Revenue on
the legal issue raised orally. Firstly, as argued by the Ld. Counsel, we
would like to adjudicate the issue on the legal issue, i.e. recording of proper
satisfaction by the AO. On perusal of the assessment order dated
29-12-2006, we find the AO made various additions invoking the
provisions of section 68, 69 and 69B etc. While making each of these
additions, AO initiated the penalty proceedings stating that this is a case of
“furnishing of inaccurate particulars of income”. Further, we have
perused the penalty order dated 19-06-2007 and find the AO levied the
penalty for default of furnishing of inaccurate particulars as well as
concealment of income. For the sake of completeness, we proceed the
extract the contents of Para No.5 and the same reads as under :
“5……………….. ……………………..I am therefore, satisfied that this is a fit case for imposing penalty under sec.271(1)(c) of the I.T. Act, 1961. In this case, since the assessee has been reluctant to make any proper reply as to why penalty under sec.271(1)(c) in her case should not be imposed due to concealment of income and assets but also non cooperated with the Department by furnishing proper explanation. Rather, the assessee made false allegations against the Assessing Officer and though tried to dilute and dilate the main issues relating to evasion of tax, thereby making baseless allegation and resorting to illegal action, not in accordance with the provisions of the Income Tax Act. I, accordingly consider it to be a fit case for imposing penalty under sec.271(1)(c) of the Income Tax Act, 1961, of Rs.2,49,360/- being 200% of the tax sought to be evaded on the concealed income, calculated as under ……….”
Although the AO initiated the penalty proceedings for default of
furnishing of inaccurate particulars, eventually in para No.5, the AO levied
5 ITA Nos.1587 to 1592/PUN/2016 Mrs. Pushpa D. Patil
the penalty for concealment of income. It is also evident that AO levied the penalty for each of the addition for “furnishing of inaccurate particulars of income”.
Therefore, it is evident that at the time of initiation of penalty proceedings in the assessment, AO mentioned one limb of clause (c) of section 271(1) of the Act and did not mention any limb while levying the penalty. 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 is unsustainable in law legally. AO is under obligation to specify the correct limb at the time of initiation as well as at the time of levy of penalty. Therefore, we are of the view, that the assessee is entitled to relief on the legal issue. Accordingly, we hold that the grounds of appeal on the merits are dismissed as academic.
There is no change in the material facts and the decision of AO/CIT(A) in the remaining assessment years too. Therefore, with the similar reasoning, we allow all the appeals of the assessee on the legal issue alone and dismiss the grounds on merits.
In the result, all the appeals of the assessee are partly allowed.
Order pronounced on 24th day of August, 2018.
Sd/- Sd/- (िवकास अव�थी िवकास अव�थी /VIKAS AWASTHY) (डी डी. क�णाकरा राव क�णाकरा राव/D. KARUNAKARA RAO) िवकास अव�थी िवकास अव�थी डी डी क�णाकरा राव क�णाकरा राव �याियक सद�य �याियक सद�य/JUDICIAL MEMBER लेखा सद�य �याियक सद�य �याियक सद�य लेखा सद�य लेखा सद�य/ACCOUNTANT MEMBER लेखा सद�य
पुणे / Pune; �दनांक / Dated : 24th August, 2018. Satish
6 ITA Nos.1587 to 1592/PUN/2016 Mrs. Pushpa D. Patil
आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत अपीलाथ� / The Appellant. 1. 2. ��यथ� / The Respondent. 3. The CIT (Appeals)-2, Pune. 4. The Pr. CIT, Central-1, Pune. 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब�च, पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
आदेशानुसार / BY ORDER,
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.