Sri Raffi Baig, Bangalore v. ACIT, Bangalore

ITA 7/BANG/2010 | 2004-2005
Pronouncement Date: 21-05-2010 | Result: Allowed

Appeal Details

RSA Number 721114 RSA 2010
Bench Bangalore
Appeal Number ITA 7/BANG/2010
Duration Of Justice 4 month(s) 17 day(s)
Appellant Sri Raffi Baig, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 21-05-2010
Date Of Final Hearing 29-04-2010
Next Hearing Date 29-04-2010
Assessment Year 2004-2005
Appeal Filed On 04-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO. 7/BANG/2010 ASSESSMENT YEAR : 2004-05 SRI RAFFI BAIG 198/1 KHWAJA MANSION DAS COMPOUND BASAVANGUDI BANGALORE. : APPELLANT VS. THE ASST. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 2(2) BANGALORE. : RESPONDENT APPELLANT BY : SHRI S. VENKATESAN C.A. RESPONDENT BY : SHRI JAYARAM RAIPURA ADDL. CIT(DR ) O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT (A)-VI BANGALORE IN ITA NO:177/ACIT C C 2(2)/CIT(A)-VI/07- 08 DATED 2.12.2009 FOR THE ASSESSMENT YEAR 2004-05 SUSTAINING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ITA NO.7 /BANG/10 PAGE 2 OF 6 2. THE ASSESSEE AN INDIVIDUAL HAS RAISED SIX GRO UNDS IN AN EXHAUSTIVE AND ILLUSTRATIVE MANNER. ON A PERUSAL THE SUBSTANCE AND ESSENCE OF THE GROUNDS RAISED IS CONFINED TO LEVYING OF PENALTY U/S 271(1)(C) OF THE ACT WAS B AD IN LAW AS THE AO HAD NEITHER REACHED ANY SATISFACTION NOR HAD SUCH S ATISFACTION BEEN RECORDED IN THE ASSESSMENT AND CONSEQUENTLY THE VE RY INITIATION OF PROCEEDINGS U/S 271(1) (C) WAS NOT IN ACCORDANCE WI TH THE REQUIREMENTS OF S.271 (1) OF THE ACT; & - WITHOUT PREJUDICE THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN LEVYING A PENALTY OF RS.7.5 LAKHS U/S 271(1) (C) OF THE AC T. 3. THE ISSUE IN BRIEF THAT THE ASSESSEE WAS A FL ORIST BESIDES IN RECEIPT OF INCOME FROM REAL ESTATE AND AGRICULTURE. THE RETURN OF INCOME ADMITTING AN INCOME OF RS.1 82 000/- FURNISHED WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY THE CASE WAS SLATED FOR SCRUTINY. AS THERE WAS NO PROPER COMPLIANCE THE AO WENT AHEAD WITH IN CON CLUDING THE ASSESSMENT U/S 144 OF THE ACT ON THE BASIS OF MATER IALS AVAILABLE ON RECORD. WHILE DOING SO IN THE ABSENCE OF ANY DETA ILS THE AO ALSO BROUGHT TO TAX RS.23.5 LAKHS FOR HAVING REPAID THE LIABILIT IES DURING THE PERIOD UNDER DISPUTE BESIDES LOAN AMOUNT OF RS.1.5 LAKH PURPORT ED TO HAVE BEEN TAKEN FROM ONE RAJU AND AGRICULTURAL INCOME OF RS.1.25 LA KHS. CONSEQUENTLY PENAL PROCEEDINGS U/S 271(1) (C) OF THE ACT WERE IN ITIATED. 4. DURING THE COURSE OF PENAL PROCEEDINGS ACCORDI NG TO THE AO THERE WAS NO PROPER COMPLIANCE ON THE PART OF THE A SSESSEE. ON THE BASIS OF THE MATERIALS AVAILABLE ON RECORD THE AO IMPOSE D A PENALTY OF RS.7.5 LAKHS U/S 271(1) (C) OF THE ACT. 5. BEFORE THE FIRST APPELLATE AUTHORITY IT WAS AG ITATED THAT ITA NO.7 /BANG/10 PAGE 3 OF 6 (I) THE ORDER OF LEVY OF PENALTY U/S 271(1)(C) OF THE A CT WAS OPPOSED TO LAW EQUITY AND FACTS AND CIRCUMSTANCES OF THE I SSUE; (II) LEVY OF PENALTY WAS BAD IN LAW AS THE AO HAD NEITHE R REACHED ANY SATISFACTION NOR RECORDED SATISFACTION AND VERY INI TIATION OF PENAL PROCEEDINGS WERE NOT IN ACCORDANCE WITH THE REQUIRE MENTS OF THE SAID SECTION AND THUS LIABLE TO BE CANCELLED; & (III) THE AO WAS NOT JUSTIFIED IN LEVYING OF PENALTY OF RS.7.5 LAKHS ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 5.1. AFTER CONSIDERING THE WELL CONTENTED SUBMISSI ONS OF THE ASSESSEE THE LD. CIT (A) NEGATED THE ARGUMENTS OF THE ASSESSEE ON THE GROUNDS THAT (I) THE ASSESSEE FAILED TO SUBSTANTIATE THAT THE ORDER WAS NOT PASSED ACCORDING TO THE PROVISIONS OF LAW AND BEING GENERA L IN NATURE; (II) THE AO HAD INITIATED THE PENALTY PROCEEDINGS U/S 2 71(1)(C) BY MENTIONING ACTION U/S 271(1)(C) IS INITIATED SEPAR ATELY BEFORE SIGNING THE ASSESSMENT ORDER; - AS PER S.271(1)(C) THE AO IN THE COURSE OF ANY PRO CEEDING UNDER THIS ACT IS SATISFIED THAT ANY PERSON HAD CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS O F SUCH INCOME HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY AS PRESCRIBED IN CLAUSE (III) OF SUB-SECTION (1) OF S. 271. THE ONLY CONDITION FOR INITIATING THE PENALTY WAS THE SATISF ACTION OF THE AO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS; - IN THE PRESENT CASE THE AO WAS SATISFIED IN REGARD TO THE DEFAULT COMMITTED BY THE ASSESSEE UNDER CLAUSE (C) OF SUB-S EC.(1) OF S.271. THUS HE ISSUED THE NOTICE FOR THE DEFAULT ALONG WI TH THE ASSESSMENT ORDER; - IN THE PRESENT CASE THE ASSESSEE HAD FAILED TO PRO VE THE SOURCE FOR THE REPAYMENT OF RS.23.5 LAKHS APPEARING IN HIS BOO KS NO CONFIRMATION LETTER WAS PRODUCED WITH REGARD TO CRE DIT OF RS.1.5 LAKHS. THE AOS ACTION WAS CLEARLY IN CONFORMITY O F THE INSERTED SUB-SECTION OF (IB) TO S.271; - ISSUANCE OF NOTICE U/S 271(1)(C) WAS IN CONFORMITY WITH THE PROVISIONS OF THE ACT AND ALSO THE FINDING OF THE H ONBLE ITAT LUCKNOW BENCH IN THE CASE OF ACIT V. DEEPAK AGARWAL (2009) 17 DTR (LUCK-TRIB)220. ITA NO.7 /BANG/10 PAGE 4 OF 6 (III) IN SPITE OF SEVERAL OPPORTUNITIES AFFORDED DURING T HE ASSESSMENT AS WELL AS PENAL PROCEEDINGS THE ASSESSEE HAD FAILED TO FURNISH ANY EXPLANATION TO PROVE HIS METTLE; THUS THE ASSESSEE S CONTENTION THAT HE HAD NEITHER CONCEALED THE PARTICULARS OF IN COME NOR HAD FURNISHED INACCURATE PARTICULARS OF INCOME WAS FALS E AND CANNOT BE ACCEPTABLE. - RELIES ON THE FINDING OF THE HONBLE APEX COURT IN THE CASE OF UNION OF INDIA AND OTHERS V. DHARMENDRA TEXTILES PR OCESSORS AND OTHERS (2007) 295 ITR 244. 6. DISILLUSIONED WITH THE FINDING OF THE LOWER AUT HORITIES THE ASSESSEE HAS COME UP WITH THE PRESENT APPEAL. THE FORCEFUL CONTENTIONS OF THE LD. AR ARE SUMMARIZED AS UNDER: (I) THE ORDER IMPOSING PENALTY U/S 271(1)(C) OF THE ACT WAS BAD IN LAW AS THE AO HAD NEITHER REACHED ANY SATISFACTION NOR HAD SUCH SATISFACTION BEEN RECORDED IN THE ASSESSMENT ORDER AND CONSEQUENTLY THE VERY INITIATION OF PROCEEDINGS U/ S 271(1)(C) OF THE ACT AS NOT IN ACCORDANCE WITH THE REQUIREMENTS OF S. 271(1) OF THE ACT AND CONSEQUENTLY THE ORDER OF PENALTY FOU NDED ON THE INVALID INITIATION OF PENALTY PROCEEDINGS WAS LIABL E TO BE CANCELLED; (II) WITHOUT PREJUDICE THE AUTHORITIES BELOW WERE NOT J USTIFIED IN LEVYING A PENALTY OF RS.7.5 LAKHS UNDER THE FACTS A ND IN THE CIRCUMSTANCES OF THE ASSESSEES CASE; - THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE ASSESSEE HAD NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURA TE PARTICULARS OF INCOME TO WARRANT LEVY OF PENALTY AN D THEREFORE THE PENALTY LEVIED U/S 271)(1)(C) OF THE ACT REQUIR ES TO BE CANCELLED. 6.1. ON THE OTHER HAND THE LD D R WAS VERY EMPHAT IC IN HIS URGE THAT THE ASSESSEE HAS BEEN INDIFFERENT DURING THE ASSESS MENT AS WELL AS THE PENALTY PROCEEDINGS EITHER IN FURNISHING THE REQUIRED DETAI LS OR TO COMPLY WITH THE STATUTORY NOTICES. THE AO AFTER TAKING INTO ACCOUNT ALL THE RELEVANT MATERIALS WHICH HE HAD GATHERED AND AFTER GIVING THE ASSESSEE AN OPPORTUNI TY OF BEING HEARD BY ISSUANCE ITA NO.7 /BANG/10 PAGE 5 OF 6 OF STATUTORY NOTICE MADE THE ASSESSMENT OF THE TOT AL INCOME OF THE ASSESSEE TO THE BEST OF HIS JUDGMENT AND DETERMINED THE SUM PAY ABLE BY THE ASSESSEE. WHILE DOING SO THE AO IN THE COURSE OF ASSESSMENT PROCE EDINGS WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOM E AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AND THUS HE WAS WITHIN HIS DOMAIN FOR INITIATION OF PENAL PROCEEDINGS AND ISSUANCE OF NOTICE U/S 271(1) (C) OF THE ACT. THE ORDER IMPOSING PENALTY U/S 271(1)(C) OF THE ACT WAS CONC LUDED AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEA RD. THE ORDER OF THE AO HAS ALSO BEEN SUSTAINED IN A JUDICIOUS MANNER BY THE FI RST APPELLATE AUTHORITY. IT WAS THEREFORE PLEADED THAT THE ASSESSEE SHOULD HAVE NO GRIEVANCE ON THE ISSUE AND THAT THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW R EQUIRE TO BE SUSTAINED. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS SCRUPULOUSLY GONE THROUGH THE RELEVANT RECORDS. 7.1. DURING THE COURSE OF HEARING THE LD. A R FU RNISHED A COPY OF THE FINDING OF THE HONBLE TRIBUNAL IN THE ASSESSEES O WN CASE FOR THE ASSESSMENT YEAR UNDER DISPUTE (IN QUANTUM APPEAL) IN ITA NOS. 1157/BANG/09 DATED: 26.4.2010. THE HONBLE TRIBUNAL AFTER DUE CONSIDERATION OF RIVAL SUBMISSIONS HAD REMITTED BACK THE ENTIRE ISSUE ON THE FILE OF THE CIT(A) WITH AN OBSERVATION THAT 5..WE SET ASIDE THE ORDER OF THE CIT (A) AND REMIT BACK THE FILE TO THE ROLLS OF THE CIT(A) TO CONDONE THE DELA Y AND ADMIT THE APPEAL FOR HEARING AND DISPOSAL ON THE MERITS OF THE CASE.. 7.2. IN VIEW OF THE ABOVE FACTS THAT THE QUA NTUM APPEAL AGAINST THE IMPUGNED ORDER OF THE AO HAS NOT REACHED ITS FINALI TY AT THE FIRST APPELLATE AUTHORITY LEVEL WHICH HAS A BEARING ON THE QUANTUM OF PENALTY WERE TO BE IMPOSED WE ARE OF THE CONSIDERED VIEW THAT THIS IS SUE SHOULD ALSO BE ITA NO.7 /BANG/10 PAGE 6 OF 6 RESTORED ON THE FILE OF THE LD. CIT (A) WITH A SPEC IFIC DIRECTION TO PASS AN APPROPRIATE ORDER ON THE ISSUE KEEPING IN VIEW THE OUTCOME OF THE QUANTUM APPEAL WHICH HAS BEEN REFERRED BACK TO THE CIT (A) BY THE HONBLE TRIBUNAL CITED SUPRA. IT IS ORDERED ACCORDINGLY. WHILE DOIN G SO THE CIT (A) SHALL AFFORD A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. 8. IN THE RESULT THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF MAY 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 21 ST MAY 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.