Income Tax Appellate Tribunal - Pune
Mohan Pralhad Patil,, Jalgaon vs Deputy Commissioner Of Income-Tax,, on 9 March, 2017
आयकर अपील य अ धकरण] पण
ु े यायपीठ "बी" पण
ु े म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE SHRI ANIL CHATURVEDI, AM
AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No.202/PUN/2015
नधा रण वष / Assessment Year : 2005-06
Mohan Pralhad Patil, .......... अपीलाथ /
House No.1931, Patilpura at Post
Appellant
Savda, Taluka Raver, District
Jalgaon - 425502,
Maharashtra.
PAN No.AVIPP4106B.
बनाम v/s
Dy.Commissioner of Income Tax, .......... यथ /
Circle - 2, Jalgaon.
Respondent
अपीलाथ क ओर से / Appellant by : Shri Sunil Ganoo
यथ क ओर से / Respondent by : Shri Ravi Prakash
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 02.03.2017 Date of Pronouncement: 09.03.2017
आदे श / ORDER
PER ANIL CHATURVEDI, AM :
This appeal of the assessee is emanating out of the order of Commissioner of Income Tax (A) - 2, Nashik dated 18.04.2012 for the assessment year 2005-06.
2. The relevant facts as culled out from the material on record are as under :-
2.1 For the year under consideration, assessee had not filed original return of income for A.Y. 2005-06. In the present case, notice u/s 148 2 ITA No.202/PUN/2015 AY.No.2005-06 was issued on 03.04.2007 and in response to which assessee filed his return of income for A.Y. 2005-06 on 31.03.2008 declaring total income of Rs.15,11,040/- under the head "Capital Gains". 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.17.12.2008 and the total long term capital gains was determined at Rs.45,31,040/-. On the long term capital gains that was determined by AO, AO vide order dt.22.03.2012 that was passed u/s 271(1)(c) of the Act held that assessee had furnished inaccurate particulars of income and thereby concealed his income and accordingly assessee was liable for penalty.
He therefore levied penalty of Rs.33,570/- u/s 271(1)(c) of the Act. Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A), who vide order dt.18.04.2012 (in appeal No.Nsk/CIT(A)- 2/17/12-13) confirmed the levy of penalty by holding as under :
"5.2 The main contention of the appellant is that the appellant had paid compensation of Rs.21,00,000/- to the protected tenant Shri Tikaram S Waghulde under agreement to sale the said land in question. But the appellant could not substantiate his claim. The appellant had not produced any supporting evidence to prove that he had paid Rs.21,00,000/- as compensation to the protected tenant. In the written submission dated 08/12/2008, Shri Tikaram S Waghulde denied having received any money/compensation from the appellant on account of sale of the property in question. The appellant had narrated the sequence of events leading to the final sale of the said land to claim that he had paid compensation to Shri Tikaram S Waghulde for the surrender of his tenancy rights without producing any concrete evidence. The appellant had also claimed to have paid Rs.3 Lakhs to Shri Shekhar Ingale (a prospective buyer) as commission / brokerage. But the appellant did not produce any evidence of payment of Rs.3 Lakhs to Shri Shekhar Ingale who denied having received the said amount in cash in his statement given to the A.O. It is not disputed that he had sold the said land for Rs.42 Lakhs to five persons. Any claim without supporting evidence can not be admitted. Now the appellant's A. R. has informed that Shri Tikaram S Waghulde is no more. It appears that what he had stated in his written submission to the A.O. has become final. On the other hand, the A.O. had made all necessary enquires to find out the truth and had established that the sale consideration of Rs.42 Lakhs was received by him and no payments were made to Late Shri Tikaram S Waghulde by way of compensation for surrendering the tenancy rights.3 ITA No.202/PUN/2015
AY.No.2005-06 5.3 In view of the above discussions, I am of the considered view that the penalty imposed by the A.O. u/s 271(1)(c) of the I.T. Act for furnishing inaccurate particulars of income is justified and the same is upheld. In this case, the A.O. had passed an order dated 30/10/2010 to give effect to the order of the CIT(A) dated 18/11/2010 wherein the revised long term capital gain had been taken at Rs.40,02,040/-. The A.O. is directed to take the revised income and re-work the penalty accordingly."
Aggrieved by the order of Ld. CIT(A), assessee is now in appeal before us and has raised the following ground :
"In the facts circumstances and position of law learned Commissioner of Income Tax Appellate-II, Nashik erred in confirming the penalty levied by Dy.Commissioner of Income Tax Circle-2, Jalgaon U/s.271(1)(c) at Rs.5,38,570/-"
3. Before us, Ld.A.R. reiterated the submissions made before lower authorities and further submitted that the penalty was imposed on incomplete inquiry conducted by AO. He further submitted that merely because the additions have been confirmed, cannot lead to levy of penalty u/s 271(1)(c) of the Act because penalty and assessment proceedings are distinct and different from assessment proceedings. Ld.A.R. further submitted that the penalty order levied by AO is bad- in-law, as there was ambiguity and non-application of mind by the AO in initiation and completion of penalty proceedings. He submitted that in the assessment order, AO had recorded the satisfaction to the effect that assessee had furnished inaccurate particulars of income and thereby concealed the income. Ld.A.R. referring to the notice u/s 274 r.w.s 271(1)(c) submitted that while issuing the notice dt.17.12.2008, the AO has failed to give satisfaction as to which limb of section has not been complied with by the assessee as the relevant part of the proforma notice has not been struck off. He pointed to the relevant portion of the notice, which is placed at paper book. He therefore 4 ITA No.202/PUN/2015 AY.No.2005-06 submitted that since the AO has failed to give satisfaction as to which limb of Sec.271(1)(c) has not been complied with by the assessee, the proceedings initiated in the case by issue of notice and in which appropriate portion has not been struck off are vitiated and therefore the penalty order passed is invalid and for this proposition, he relied on the decision of Hon'ble Bombay High Court in the case of CIT Vs. Samson Perinchery in ITA No.1154/2014 dt.05.01.2017 and the decisions of Pune Tribunal in the case of Kanhaiyalal Jain Vs. ACIT in ITA No.1201 to 1205/PN/2014 order dt.30.11.2016 and in the case of Nandkishore Tulasidas Katore Vs. ACIT in ITA No.2174 to 2180/PN/2014 dt.14.12.2016. He further submitted that the Hon'ble Karnataka High Court in the case of CIT Vs. Manjunadha Cotton and Ginning Factory reported in 359 ITR 565 has held that "when the AO proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income." He submitted that the High Court has further held that the standard proforma without striking of the relevant clauses will lead to inference for non-application of mind by the AO. He therefore submitted that the penalty proceedings are initiated without application of mind by AO and therefore the penalty order levied by the AO is bad and therefore the penalty levied be deleted. Ld. D.R. on the other hand supported the order of AO and Ld. CIT(A).
4. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to the levying of penalty u/s 271(1)(c) of the Act.
5ITA No.202/PUN/2015
AY.No.2005-06
5. It is an undisputed fact that while passing the assessment order u/s 143(3) r.w.s. 147 of the Act, AO has recorded the finding that assessee has furnished inaccurate particulars of income and thereby concealed the income. In the notice dt.17.12.2008 issued u/s 274 of the Act, AO has not struck off the inapplicable portion i.e., as to whether it was the case of concealment of particulars of income or furnishing of inaccurate particulars of income. Thus from the perusal of notice issued u/s 274 r.w.s 271(1)(c) it is seen that AO is not clear as to under what charge penalty has to be levied u/s 271(1)(c) of the Act as the notice is vague as it fails to clearly spell out the charge of levy of penalty. We find that on identical facts in the case of Goldie Jogendersingh Anand in ITA No.188/PUN/2016 (order dt.22.02.2017) the Co-ordinate Bench of the Tribunal has deleted the penalty by holding as under :
" 5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The assessee has assailed levy of penalty u/s. 271(1)(c) of the Act on account of defective notice. The ld. AR of the assessee has pointed that the notice issued u/s. 274 r.w.s. 271(1)(c) is defective as irrelevant parts of the proforma notice have not been struck off. The Hon'ble Karnataka High Court in the case of Commissioner of Income Tax Vs. Manjunatha Cotton and Ginning Factory reported as 359 ITR 565 has held that, "when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind". In the present case we find that at the time of initiating penalty proceedings the Assessing Officer while recording satisfaction has observed that, "the assessee has concealed the income and has also furnished inaccurate particulars of income within the meaning of section 271(1)(c) of the Act." While issuing notice the Assessing Officer has not struck off irrelevant part in the show cause notice issued u/s. 274 and thus, the relevant extract of notice indicating charge for levy of penalty reads as under : "have concealed the particulars of your income or furnished inaccurate particulars of such income."
6. It is clearly evident from the perusal of notice that the Assessing Officer is not clear as to under what charge penalty has to be levied u/s. 271(1)(c) of the Act. The notice is vague as it fails to clearly spell out the charge for levy of penalty. A further examination of the records show that the observations of the 6 ITA No.202/PUN/2015 AY.No.2005-06 Assessing Officer are inconsistent while recording satisfaction and at the time of passing of the penalty order. The Assessing Officer has levied penalty for furnishing inaccurate particulars of income. The Assessing Officer is incoherent in reasoning for recording satisfaction and in passing the order levying penalty.
7. The Hon'ble Bombay High Court in the case of Commissioner of Income Tax Vs. Samson Perinchery (supra) reiterating the view of Hon'ble Karnataka High Court in the case of Commissioner of Income Tax Vs. Manjunatha Cotton and Ginning Factory (supra) has held that ITA No. 188/PUN/2016, A.Y. 2006-07 failure by the Assessing Officer to unambiguously specify in notice issued u/s. 274 the charge for levy of penalty i.e. whether the penalty is being initiated for furnishing of inaccurate particulars of income or for concealment of income is fatal. It reflects non-application of mind and renders the levy of penalty invalid.
8. Thus, in the light of above decisions and the facts of the case, we direct the Assessing Officer to cancel the penalty. The impugned order is set aside and the appeal of the assessee is allowed."
6. We therefore find that the facts in the present case are identical to that of in the case of Goldie Jogendersingh Anand (supra). In view of the aforesaid facts and in the absence of any contrary binding decision pointed out by Revenue in its support, we are of the view that since the notice issued u/s 274 r.w.s. 271(1)(c) of the Act is invalid and therefore the proceedings arising herefrom are vitiated and therefore cannot be upheld and the penalty order needs to be set aside. We accordingly, set aside the penalty order passed and allow the appeal of the assessee.
7. In the result, the appeal of the assessee is allowed.
Order pronounced on the 9th day of March, 2017.
Sd/- Sd/-
(VIKAS AWASTHY) (ANIL CHATURVEDI)
या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER पण ु े Pune; दनांक Dated : 09th March, 2017.
Yamini 7 ITA No.202/PUN/2015 AY.No.2005-06 आदे श क" # त%ल&प अ'े&षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. CIT(Central), Pune.
4. CIT(A)-12, 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,स // True Copy // सहायक रिज12ार/ Assistant Registrar, आयकर अपील य अ'धकरण ,पुणे / ITAT, Pune.