Income Tax Appellate Tribunal - Pune
Construction Portal Pvt.Ltd,, Pune vs Income Tax Officer,, Pune on 6 September, 2019
आयकर अपील य अ धकरण] पण
ु े यायपीठ "बी" पण
ु े म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE MS. SUSHMA CHOWLA, JM AND
SHRI ANIL CHATURVEDI, AM
आयकर अपील सं
. / ITA Nos.592 & 593/PUN/2017
नधा रण वष / Assessment years : 2005-06 & 2006-07
Construction Portal Pvt. Limited, .......... अपीलाथ /
C/o.Khandelwal Jain & Associates,
Appellant
Chartered Accountants,
Level 3, Riverside Business Bay,
Plot No.84, Wellesley Road,
Near RTO, Pune- 411 001.
PAN: AACCC4302N.
बनाम v/s
The Income Tax Officer, .......... यथ /
Ward 1(2), Pune
Respondent.
Assessee by : Shri Neelesh Khandelwal.
Revenue by : Shri Sudhendu Das.
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 02.08.2019 Date of Pronouncement: 06.09.2019
आदे श / ORDER
PER ANIL CHATURVEDI, AM :
1. These two appeals filed by the assessee are emanating out of the separate orders of Commissioner of Income Tax (Appeals), 1 - Pune dated 09.12.2016 for A.Ys. 2005-06 and 2006-07.
2. Before us, at the outset, both the parties submitted that though the appeals filed by the assessee are for two different assessment years but the facts and issues involved in both the appeals are identical except for the assessment year and the amounts involved and therefore the submissions made by them while arguing one appeal would be equally applicable to the 2 other appeal also and thus both the appeals can be heard together. In view of the aforesaid submissions of both the parties, we, for the sake of convenience, proceed to dispose of both the appeals by a consolidated order. We, however, proceed with the facts in ITA No.592/PUN/2017 for A.Y. 2005-06.
3. The relevant facts as culled out from the material on record are as under :-
Assessee is a Private Limited Company engaged in the business of development of properties. Assessee company filed its return of income for A.Y. 2005-06 on 31.10.2005 declaring Nil income by claiming set off of brought forward losses and further claiming loss of Rs.1,26,14,888/- to be carried forward to the next year. In this case, a survey operation u/s 133A of the Act was conducted on 24.01.2007 wherein assessee disclosed additional income of Rs.58,00,000/- for A.Y. 2005-06 by revising its return on 07.03.2007. The case was taken up for scrutiny and thereafter assessment was framed u/s 143(3) r.w.s. 147 of the Act vide order dt.29.12.2008 wherein the revised return of income filed by the assessee which includes the additional income of Rs.58,00,000/- on account of unexplained money u/s 69A of the Act was accepted by the Department. On the aforesaid addition of Rs.58,00,000/-, AO vide order dt.18.03.2016 passed u/s 271(1)(c) of the Act levied penalty of Rs.20,70,600/- u/s 271(1)(c) of the Act.
4. For A.Y. 2006-07 the details of income offered by the assessee, additional income and the penalty levied are as under : 3
A.Y. Business income / Total income Penalty levied loss as per original assessed u/s 143(3) return of income in Rs.
in Rs.
2006-07 (-) 9,14,350/- 73,00,000/- Rs.22,33,800/-.
(unexplained money u/s 69 of the Act) Aggrieved by the orders of AO, assessee carried the matter before Ld.CIT(A), who vide separate orders for A.Ys. 2005-06 and 2006-07 dt.18.03.2016 upheld the levy of penalty. Aggrieved by the orders of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds :
"1. On facts and circumstances prevailing in the case and as per the provisions of law, it be held that the notice issued by the Ld. AO is inappropriate and not in compliance with the requirement of the section 274 read with section 271(1)(c) of the Act and therefore, is a vague notice. Consequently, the penalty order passed by the Ld. AO under section 271(1)(c) of the Act and confirmed by the Hon'ble CIT(A) is not sustainable in the eyes of law and hence, the penalty imposed by the Ld. AO and confirmed by the Hon'ble C!T(A) be deleted.
2. Without prejudice to the ground 1 raised above, on facts and circumstances prevailing in the case and as per provisions & scheme of the Act, the learned AO and the Hon'ble CIT(A) erred in holding that the penalty proceedings would be time barred on 31.03.2016 u/s 275(1)(a). It be held that the proceedings have been time barred as on 30.06.2009 u/s 275(1)(c) and the order passed by the Ld. AO and confirmed by the Hon'ble CIT(A) be held as invalid in law and set aside. The appellant be granted just and proper relief in this respect.
3. Without prejudice to ground 1 and 2 already raised, on facts & circumstances prevailing in the case and as per the provisions and scheme of the Act it be held that the penalty imposed u/s. 271(1)(c) is unjustified, improper and contrary to provisions of the Act and facts prevailing in the case. It be held that, the case of the appellant is not covered by mischief of provisions of sec.271(1)(c) justifying levy of penalty in terms of the said section. The penalty imposed by the Ld. AO and confirmed by the Hon'ble CIT(A) be deleted. The appellant be granted just and proper relied in this respect.
4. On facts and circumstances prevailing in the case and as per provisions & Scheme of the Act it be held that, penalty proceedings finalized by the Ld. AO without granting proper and adequate opportunity and in violation of rules of natural justice is bad in law. The penalty imposed by the Ld. AO and confirmed by the Hon'ble CIT(A) as such deserves to be deleted. The appellant be granted just and proper relief in this respect."
5. Subsequently, assessee has raised additional grounds which reads as under :
4
1. On facts & circumstances prevailing in the case & as per provisions of law, it be held that the assessment framed by the Learned Assessing Officer u/s. 148 r.w.s. 143(3) of the Act is invalid and bad in law. Penalty levied in pursuance of such assessment order be deleted. The Appellant be granted just and proper relief in this respect.
2. Without prejudice to Original Ground No. 1 and additional ground no. 1 and on facts & circumstances prevailing in the case & as per provisions of law, it be held that the penalty levied by the Learned Assessing Officer and upheld by the first Appellate Authority under section 271(1)(c) of the Act without specifying the charge against which the penalty has been initiated in the assessment order is unjustified, improper and contrary to the provisions of the Act. Penalty levied in pursuance of such notice be deleted.
The Appellant be granted just and proper relief in this respect."
6. Similar grounds, so also additional grounds have been raised in ITA No.593/PUN/2017 for A.Y. 2006-07.
6.1. Before us, at the outset, Ld.A.R. submitted that though assessee has raised various grounds but the sole controversy is with respect to the levy of penalty u/s 271(1)(c) of the Act.
7. On the issue of levy of penalty, Ld.A.R. submitted that while passing the assessment order and while recording satisfaction, AO was not clear as to whether the assessee had furnished inaccurate particulars of income or concealment of income. In support of his contention he pointed to para 2.3 of the assessment order. Thereafter, he submitted that in the penalty order, AO had levied the penalty for concealing the income. He therefore, relying on the decision of Hon'ble Bombay High Court in the case of CIT Vs. Samson Perinchery reported in (2017) 392 ITR 4 (Bom) submitted that in the absence of proper show cause notice to assessee, penalty u/s 271(1)(c) cannot be levied and therefore urged that penalty levied by AO be deleted. Ld.D.R. on the other hand, supported the order of lower authorities.
8. We have heard the rival submissions and perused the material on record. The issue in the present cases are with respect to levy of penalty 5 u/s 271(1)(c) of the Act. For A.Y. 2005-06, penalty of Rs.20,70,600/- u/s 271(1)(c) of the Act has been levied on amount of Rs.58,00,000/- being the addition made u/s 69A of the Act. The perusal of assessment order passed u/s 143(3) r.w.s. 147 of the Act reveals that in the assessment order AO had not recorded clear satisfaction as to whether assessee had furnished inaccurate particulars of income or has concealed particulars of income. Thereafter, in the penalty order passed u/s 271(1)(c) of the Act, AO had levied penalty for concealment of income. It is a settled law that while levying penalty, the AO has to record clear satisfaction and thereafter come to a finding in respect of one of the limbs, which is specified under section 271(1)(c) of the Act. The first step is to record satisfaction while completing the assessment as to whether the assessee had furnished inaccurate particulars of income or concealed his income. Thereafter, notice u/s 274 read with Section 271(1)(c) of the Act is to be issued to the assessee. The Assessing Officer thereafter has to levy penalty under Section 271(1)(c) of the Act for non-satisfaction of either of the limbs. While completing the assessment, the Assessing Officer has to come to a finding as to whether the assessee has concealed its income or furnished inaccurate particulars of income. The Hon'ble Bombay High Court in CIT Vs. Shri Samson Perinchery (supra) held that where initiation of penalty is one limb and the levy of penalty is on other limb, then in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty.
9. Considering the facts of the present case in the light of the decision of Hon'ble Bombay High Court in the case of Samson Perinchery (supra), we are of the view that in the present case, the basic condition for levy of penalty has not been fulfilled and that the penalty order suffers from non- exercising of jurisdiction power and therefore penalty order cannot be 6 upheld. We accordingly set aside the penalty order passed by AO. Thus, the ground of assessee is allowed.
10. In the result, the appeal of assessee in ITA No.592/PUN/2017 for A.Y. 2005-06 is allowed.
11. Now, we take up assessee's appeal in ITA No.593/PUN/2017 for A.Y. 2006-07.
11.1. As far as the grounds raised in appeal in ITA No.593/PUN/2017 for A.Y. 2006-07 is concerned, in view of the submission of both the parties that the facts of the case in the year being identical to the facts and issue of the case in ITA No.592/PUN/2017 for A.Y. 2005-06, we therefore for the reasons stated herein while disposing of the appeal in ITA No.592/PUN/2017 for A.Y. 2005-06 and for similar reasons allow the grounds of assessee. Thus, the grounds of assessee are allowed.
12. In the result, the appeal of assessee in ITA No.593/PUN/2017 for A.Y. 2006-07 is allowed.
13. To sum up, both the appeals of assessee are allowed.
Order pronounced on 6th day of September, 2019.
Sd/- Sd/-
(SUSHMA CHOWLA) (ANIL CHATURVEDI)
या यक सद!य / JUDICIAL MEMBER लेखा सद!य / ACCOUNTANT MEMBER
पुणे Pune; दनांक Dated : 6th September, 2019.
Yamini
7
आदे श क# $ त&ल'प अ(े'षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. CIT(A)-1, Pune.
4. Pr. CIT-1, Pune.
5 "वभागीय %त%न&ध, आयकर अपील य अ&धकरण, "बी" / DR, ITAT, "B" Pune;
6. गाड+ फाईल / Guard file.
आदे शानस ु ार/ BY ORDER // True Copy // // True Copy // व-र.ठ %नजी स&चव / Sr. Private Secretary आयकर अपील य अ&धकरण ,पण ु े / ITAT, Pune.