Mr. Alok B. Mathur Prop., New Delhi V. ITO, New Delhi

CO 24/DEL/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8509 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 05-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR RAM SAMUJH
• Assessee Lawyers: BHIM SINGH
• Keywords: Period of limitation; Source of fund; Procedural lapse; Time period of passing order; Reassessment proceedings
• Section: 148; 154

Judgement Text

ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.4705/DEL/2011 ASSESSMENT YEAR : 2001-02 INCOME TAX OFFICER, VS SHRI AL OK B. MATHUR, WARD-37(1), ROOM NO.409, M/S ABM FINA NCIAL SERVICES, VIKASH BHAWAN, B-2/2 061, VASANT KUNJ, I.P. ESTATE,. NEW DELHI. NEW DELHI. (PAN: AAHPM8919K) C.O.NO.24/DEL/2013 (IN I.T.A.NO.4705/DEL/2011) ASSESSMENT YEAR : 2001-02 SHRI ALOK B. MATHUR, VS INCOME TAX OFFICER, NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI BHIM SINGH, SR.DR RESPONDENT BY : DR. RAM SAMUJH O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAINS T THE ORDER OF COMMISSIONER OF INCOME TAX(A)-XXVIII, NEW DELHI DAT ED 10.08.2011 IN APPEAL NO.268/09-10 FOR AY 2001-02 BY WHICH THE COM MISSIONER OF INCOME TAX(A) CANCELLED THE PENALTY LEVIED U/S 271( 1) (C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). SINCE THE ASSES SEE HAS ALSO FILED CROSS ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 2 OBJECTION OUT OF THE SAME IMPUGNED ORDER, THEREFORE , WE ARE ADJUDICATING THE APPEAL OF THE REVENUE AS WELL AS C.O. OF THE ASSESS EE BY THIS CONSOLIDATED ORDER. 2. SOLE GROUND RAISED BY THE REVENUE READS AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A)-XXVIII, NEW DELHI HAS ERRED IN DELETING TH E PENALTY U/S 271(1)( C) AS THE ASSESSEE OFFERED THE ABOVE IN COME ONLY AFTER THE RECEIPT OF NOTICE U/S 148 OF THE I.T.ACT AND HENCE IT CANNOT BE SAID THAT THE ASSESSEE HAD VOLUNTARILY OF FERED THE ABOVE INCOME FOR TAXATION. 3. BRIEFLY STATED, THE FACTS GIVING RISE TO THIS AP PEAL ARE THAT THE ASSESSEE DID NOT FILE THE INCOME TAX RETURNS FOR THE YEAR UN DER CONSIDERATION, CONSIDERING THE FACT THAT HIS INCOME WAS BELOW TAXA BLE LIMIT. SUBSEQUENTLY DURING THE INVESTIGATION BY THE REVENUE DEPARTMENT, THIS FACT WAS NOTICED THAT THE ASSESSEE HAS NOT FILED INCOME TAX RETURN, HOWEV ER, IN AY 2004-05, THE ASSESSEE FILED RETURN OF HIS INCOME BUT UNSECURED L OAN OF RS. 35 LAKH PROVIDED TO SHRI RAJESH DUGGAL WAS NOT SHOWN IN THE RETURN. THE ASSESSING OFFICER RECEIVED VARIOUS INFORMATION AND RECORDED H IS SATISFACTION THAT THE ASSESSEE HAS ESCAPED ASSESSMENT AND AFTER PRIOR APP ROVAL OF THE HIGHER AUTHORITIES, THE CASE WAS RE-OPENED U/S 147/148 OF THE ACT AND NOTICE U/S 148 DATED 10.12.2007 WAS SERVED ON THE ASSESSEE. DURIN G THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A RETU RN SHOWING LOAN AMOUNT OF RS. 35 LAKH TO SHRI RAJESH DUGGAL BY SHOWING THE SAME AS INCOME UNDER ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 3 THE HEAD INCOME FROM OTHER SOURCES. SUBSEQUENTLY , THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(A) BY TAKING THE ADDITIONAL GROUND CHALLENGING THE VALIDITY OF THE NOTICE U/S 1 48 OF THE ACT. THE APPELLANT ON MERITS ALSO CHALLENGED THE ADDITION OF RS. 35 LAKH ON THE BASIS OF ALLEGED SURRENDER ON THE REASON THAT THE APPELLA NT ASSESSEE ADVANCED THE SAID AMOUNT OF RS. 35 LAKH TO SHRI RAJESH DUGGAL BY ISSUING FIVE CHEQUES ON DIFFERENT DATES DURING MAY 2000 OUT OF WHICH CURREN T ACCOUNT NO. 315-CD IS WITH INDIAN OVERSEAS BANK, NEW DELHI. BEFORE THE C OMMISSIONER OF INCOME TAX(A) THE ASSESSEE ALSO CONTENDED THAT SINC E THE SAID CHEQUES WERE ISSUED AGAINST THE BALANCE OF RS. 36 LAKH IN THE SA ID ACCOUNT AND THE LOAN GIVEN TO SHRI RAJESH DUGGAL WAS NOT UNEXPLAINED INC OME BECAUSE SOURCE OF DEPOSITS IN THE ASSESSEES ACCOUNT PRIOR TO THE DIS BURSEMENT OF LOAN IS CLEARLY SUBSTANTIATED. 4. THE COMMISSIONER OF INCOME TAX(A) DISALLOWED THE APPEAL OF THE ASSESSEE ON THE GROUND PERTAINING TO THE ADDITION O F RS. 35 LAKH WITH AN OBSERVATION THAT THE ASSESSEE HAD VOLUNTARILY FILED HIS RETURN DECLARING INCOME OF RS. 35,45,980 AND THE RETURN HAS BEEN ACC EPTED ON THE SAME INCOME, THEREFORE, ASSESSEE CANNOT AGITATE THE ISSU E AGAIN BEFORE THE FIRST APPELLATE AUTHORITY. THE AGGRIEVED ASSESSEE FILED SECOND APPEAL BEFORE THE ITAT A BENCH DELHI AS ITA NO.3220/DEL/2009 WHICH WAS ALSO DISALLOWED ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 4 WITH AN OBSERVATION THAT THE ASSESSEE WAS REQUIRED TO DISCLOSE THE SOURCE OF MONEY GIVEN AS LOAN TO SHRI RAJESH DUGGAL BUT INSTE AD OF DISCLOSING THE SOURCE, THE ASSESSEE VOLUNTARILY OFFERED THE MONEY FOR TAXATION, THEREFORE, THE APPEAL OF THE ASSESSEE WAS ALSO REJECTED BY ITAT, D ELHI BENCHES. 5. THE ASSESSING OFFICER PASSED REASSESSMENT ORDER ON 17.12.2009 AND MEANWHILE, PENALTY PROCEEDINGS ALSO STARTED AGAINST THE ASSESSEE AND THE SAME WERE FINALIZED BY PASSING PENALTY ORDER DATED 27.1.2010 LEVYING PENALTY OF RS.12,14,219 ON THE ASSESSEE U/S 271(1)( C) OF THE ACT. BEING AGGRIEVED WITH THE ABOVE PENALTY ORDER, THE ASSESSE E FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(A) WHICH WAS ALLOWED BY THE IMPUGNED ORDER DATED 10.02.2011. NOW, THE REVENUE HAS FILED THIS APPEAL IN HAND AND AT THE SAME TIME, THE ASSESSEE HAS ALSO FILED C.O. ON THE IMPUGNED ORDER. 6. LD. DR SUBMITTED THAT THE ASSESSING OFFICER RIGH TLY HELD THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF ITS INCOME AN D HAD FURNISHED INACCURATE PARTICULARS OF HIS INCOME IN THE RETURN FILED BY HIM WHICH WAS LATER CORRECTED DURING THE REASSESSMENT PROCEEDINGS BY FILING ANOTHER RETURN. THE DR ALSO POINTED OUT THAT THE ASSESSEES FIRST A PPEAL BY THE COMMISSIONER OF INCOME TAX(A) AND THE SECOND APPEAL BY ITAT, DELHI HAD BEEN DISMISSED AND THE ADDITION HAD BEEN UPHELD AND CONFIRMED BY TWO APPELLATE AUTHORITIES. THEREFORE, PENALTY PROCEEDI NG AGAINST THE ASSESSEE WAS ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 5 OBVIOUS AND ASSESSING OFFICER RIGHTLY LEVIED PENALT Y ON THE ASSESSEE. THE DR VEHEMENTLY CONTENDED THAT THE COMMISSIONER OF IN COME TAX(A) HAS TAKEN NOTICE OF THE FACT AND SUBMISSIONS WHICH WERE NOT SUBMITTED BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER WAS NOT CONFRONTED WITH THE FACTS THAT THE ASSESSEE HAS EXPLAINED SOURCE OF FUN DS WHICH WERE ADVANCED TO SHRI RAJESH DUGGAL. THE DR FURTHER POINTED OUT THA T THE ASSESSEE HAS RAISED NEW GROUNDS AND SUBMISSIONS BEFORE THE COMMISSIONER OF INCOME TAX(A) WHICH WERE ACCEPTED BY THE COMMISSIONER OF INCOME T AX(A) WITHOUT CONFRONTING THE SAME TO THE ASSESSING OFFICER. THE REFORE, ORDER OF DELETING PENALTY IS NOT SUSTAINABLE. THE DR SUBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE PENALTY ORDER . 7. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY CONSIDERED THE RECORD PLACED BEFORE US, ORDERS OF A UTHORITIES BELOW AND ITAT IN QUANTUM PROCEEDINGS, PENALTY ORDER AND IMPU GNED ORDER. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E OFFERED RS. 35 LAKH FOR TAX TO BUY PEACE OF MIND AND VOLUNTARILY SURRENDERE D BEFORE THE TAX AUTHORITIES WHICH DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BECAUSE THE ASS ESSEE FILED ITS RETURN OF INCOME DURING THE REASSESSMENT PROCEEDINGS VOLUNTAR ILY AND HAD SHOWN AN AMOUNT OF RS. 35 LAKH AS INCOME FROM OTHER SOURCES. THE COUNSEL FURTHER ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 6 SUBMITTED THAT THE ASSESSEE ACCEPTED THIS FACT ON A DVICE OF A LEGAL PRACTITIONER WHICH WAS MISCONCEIVED AND MISLEADING. THE ACTUAL POSITION WAS THAT THE ASSESSEE HAS TAKEN ADVANCE OF RS. 36 L AKH THROUGH CHEQUES ON DIFFERENT DATES FROM PRINTWELL GRAPHICS, A-7/15, SE CTOR 15, ROHINI, DELHI AND OUT OF THIS AMOUNT, THE ASSESSEE ADVANCED LOAN OF RS. 35 LAKH THROUGH CHEQUES TO MR. RAJESH DUGGAL. THEREFORE, PENALTY C ANNOT BE LEVIED ON THE VOLUNTARY SURRENDER OF THE ASSESSEE. LD. COUNSEL S UBMITTED THAT THE ASSESSING OFFICER IGNORED THESE FACTS WHICH WERE RI GHTLY OBSERVED AND NOTICED BY THE COMMISSIONER OF INCOME TAX(A) AND TH E COMMISSIONER OF INCOME TAX(A) RIGHTLY DELETED THE PENALTY WHICH WAS LEVIED ON ERRONEOUS AND UNJUSTIFIED GROUNDS. LD. COUNSEL OF THE ASSESS EE SUPPORTED IMPUGNED ORDER AND FINALLY SUBMITTED THAT THE APPEAL OF THE REVENUE IS DEVOID OF MERITS. 8. AFTER CAREFUL CONSIDERATION OF RIVAL PARTIES AND CONTENTIONS OF THE PARTIES, WE OBSERVE THAT DURING THE ASSESSMENT PROC EEDINGS, THE ASSESSEE VOLUNTARILY SURRENDERED TO THE TAX AUTHORITIES AND DECLARED RS.35 LAKH AS INCOME FROM OTHER SOURCES PERTAINING TO THE AMOUNT OF LOAN GIVEN TO SHRI RAJESH DUGGAL DURING THE YEAR UNDER CONSIDERATION. WE ALSO OBSERVE THAT THE SAME ADDITION HAS BEEN CONFIRMED BY THE COMMISS IONER OF INCOME TAX(A) AND SUBSEQUENTLY BY ITAT, DELHI. ALTHOUGH T HE COUNSEL OF THE ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 7 ASSESSEE HAS SUBMITTED THAT THE APPEAL OF THE ASSES SEE AGAINST THE ORDER OF ITAT IS PENDING BEFORE HONBLE HIGH COURT, BUT UNLE SS AND UNTIL THE ORDER OF THE TRIBUNAL IS SET ASIDE OR MODIFIED BY HIGHER APPELLATE AUTHORITY, WE ARE BOUND TO ACCEPT THE SAME. FROM THE PENALTY ORDER, WE OBSERVE THAT THE ASSESSING OFFICER HAS IMPOSED PENALTY WITH FOLLOWIN G OBSERVATIONS:- IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD ADVANCED RS. 35 LACS TO SHRI RAJESH DUGGAL AND THE SAME WAS NOT OFFERED FOR TAXATION BY FILING AN INCOME TA X RETURN FOR THE ASSEESSMENT YEAR 2001-02. THE DEPARTMENT HAD TO ISSUE NOTICE U/S 148 AS INCOME OF THE ASSESSEE ESCAPED ASSESSMENT. ONLY AFTER ISSUE OF TH E NOTICE U/S 148, THE ASSESSEE OFFERED RS.35,45,980/- FOR TAXATION BY FILING A LETTER AND ALSO FILING AN INCO ME TAX RETURN BEFORE THE A.O. IN THE PRESCRIBED FORM. IN O THER WORDS, THE ASSESSEE HIMSELF HAS ACCEPTED THAT HE FA ILED TO OFFER INCOME OF RS. 35,45,980/- FOR TAXATION VOLUNT ARILY I.E. BEFORE ISSUING A NOTICE UNDER 148 OF THE INCOM E TAX ACT, 1961. THE ASSESSEE COULD NOT FILE ANY EXPLANAT ION IN RESPONSE TO THE PENALTY NOTICE ALSO AS TO WHY PENAL TY U/S 271 (I )(C) SHOULD NOT BE IMPOSED FOR CONCEALMENT T HE INCOME TO THE TUNE OF RS. 35 LACS. I AM THEREFORE SATISFIED THAT THE ASSESSEE HAS CONCEALED INCOME TO THE TUNE OF RS. 35,45,980/- DUR ING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2001- 02 AND MADE HIMSELF LIABLE FOR PENALTY U/S 271(1)(C ) READ WITH EXPLANATION 1 TO SECTION 271(1) AND EXPLANATIO N 3 TO SECTION 271 (1). PENALTY OF RS. 12,14,219/- IS THER EFORE IMPOSED U/S 271(1)(C) 9. ON BARE READING OF THE IMPUGNED ORDER, WE OBSERV E THAT THE COMMISSIONER OF INCOME TAX(A) HAS CONSIDERED WRITTE N SUBMISSIONS OF THE ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 8 ASSESSEE DATED 24.06.2011 AND 27.07.2011 AND HAS HE LD AS UNDER WHILE CANCELLING THE PENALTY LEVIED BY THE ASSESSING OFFI CER:- 7.1 ON GOING THROUGH PENALTY ORDER, I FIND THAT T HE ASSESSING OFFICER HAS LEVIED PENALTY OF RS.12,14,21 9/- BEING 100% OF TAX SOUGHT TO BE EVADED U1S 271(1) (C ) ON THE TOTAL INCOME OF RS.35,45,980/- WHICH WAS DISCLO SED IN THE RETURN FILED IN THE COMPLIANCE OF NOTICE ISSUED U1S 148 OF THE IT ACT, 1961. THE RETURN INCOME OF RS.35,45,980/- HAS TWO COMPONENTS, FIRST, RS.45,980 /- AS REGULAR INCOME FOR THE YEAR AND SECONDLY, RS.35,00, 0001- IS RELATING TO LOAN AMOUNT GIVEN BY THE APPELLANT T O ONE SHRI RAJESH DUGGAL. IN RESPECT OF SURRENDER OF RS.35,00,000/- IN THE RETURN, I FIND THAT THE APPEL LANT IS AGITATING FROM THE VERY BEGINNING AT DIFFERENT STAG E OF APPEALS ON THE GROUNDS THAT THE SURRENDER WAS WRONG LY MADE DUE TO MISCONCEPTION AND WRONG ADVICE OF THE COUNSEL. IN THIS REGARD, THE APPELLANT FILED THE AP PEAL BEFORE THE CIT(A) WITHIN THE LIMITATION PERIOD AND AFTER DISMISSAL OF SAID APPEAL, THE APPELLANT PROMPTLY FI LED THE PETITION U/S 154 BEFORE THE CIT(A) AND HE ALSO FILE D THE SECOND APPEAL BEFORE THE ITA T. THOUGH THE ITAT HAS DISMISSED THE ASSESSEE'S APPEAL ON THE GROUND THAT THE ASSESSEE HAS SURRENDERED THE SUM OF RS.35,00,000/- IN THE RETURN VOLUNTARILY YET AFTER RECEIPT OF THE ORDER, THE ASSESSEE AGAIN FILED THE APPEAL BEFORE THE HIGH COU RT, WHICH IS STILL PENDING. 7.2 IN RESPECT OF SURRENDERING OF LOAN AMOUNT OF RS.35,00,000/-, AR DURING APPELLATE PROCEEDING HAS FILED THE WRITTEN SUBMISSION ENCLOSING THE COPY OF BANK STATEMENT OF THE APPELLANT AND BANK STATEMENT WITH CONFIRMATORY LETTER OF M/S PRINTWEL GRAPHICS. I FIN D THAT THESE EVIDENCES WERE ALSO FILED BEFORE MY PREDECESS OR DURING COURSE OF HEARING OF QUANTUM APPEAL. ON GOIN G THROUGH, THE BANK STATEMENT OF BOTH THE PARTIES, I FIND THAT THE APPELLANT RECEIVED RS.36,00,000/- ON DIFFE RENT DATES THROUGH CHEQUES IN HIS PROPRIETARY FIRM M/S A BM FINANCIAL SERVICE, BANK ACCOUNT NO. 315-CD STANDING IN ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 9 THE INDIAN OVERSEAS BANK, R.K. PURAM, NEW DELHI. I FURTHER FIND THE SAID CHEQUES WERE ISSUED BY M/S PR INTWEL GRAPHICS IN FAVOUR OF THE APPELLANT. IN THIS REGARD , SHRI VIPUL NARANG, PROPRIETOR OF M/S PRINTWE1 GRAPHICS H AS FILED A CONFIRMATORY LETTER HAVING PAN ABDPN2917P. HE HAS ALSO EXPLAINED THAT THESE PAYMENTS WERE MADE OUT TO THE APPELLANT OUT OF RECEIPT OF RS.70,50,000/- F ROM THE ASSOCIATES, ON VERIFICATION OF BANK STATEMENT, I FI ND THAT THE SAID SUM OF RS.70,50,000/- WAS CREDITED IN HIS BANK ACCOUNT ON 29.04.2000. IN SUBSTANCE, M/S PRINTWEL GRAPHICS RECEIVED RS.70,50,000/- FROM THE ASSOCIATE S AND OUT OF SAID RECEIPT, IT PAID RS. 36,00,000/- TO THE APPELLANT AND IN TURN, THE APPELLANT HAD GIVEN LOAN OF RS.35,00,000/- TO SHRI RAJESH DUGGAL. IN THIS SITUA TION, I FIND THAT THE LOAN OF RS.35,00,000/- GIVEN TO SHRI RAJESH DUGGAL WAS EXPLAINED AND THE SAME WAS NOT REQUIRED TO BE SHOWN AS INCOME IN THE RETURN. 7.3 ON GOING THROUGH THE APPELLATE ORDERS AGAINST T HE QUANTUM APPEALS, I FIND THAT THE SURRENDER OF RS.35,00,000/- IN THE RETURN HAS BEEN CONFIRMED BY THE APPELLATE AUTHORITIES ONLY ON THE TECHNICAL REASON OF SHOWING THE INCOME IN THE RETURN VOLUNTARILY. HOWEV ER, THE APPELLATE AUTHORITIES NEITHER MADE ANY COMMENT ABOUT THE AVAILABILITY OF FUND OF RS.35,00,000/- NO R ANY FINDING ABOUT UNDISCLOSED INCOME WAS GIVEN. IN THIS SITUATION, THE DISMISSAL OF QUANTUM APPEAL DOES NOT MAKE ANY DIFFERENCE TO THE PRESENT APPEAL AGAINST THE PE NALTY ORDER. MOREOVER, THE APPEAL AGAINST THE QUANTUM AND AGAINST THE PENALTY ARE TWO DIFFERENT AND INDEPENDE NT PROCEEDINGS. IN THE LIGHT OF HON'BLE DELHI HIGH COU RT DECISION IN THE CASE OF CIT V S. JK SYNTHETIC LTD. 219 ITR 267 DEL. AND HON'BLE SUPREME COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (2 010) 322 ITR 158 SC PENALTY BASED ONLY ON FINDING GIVEN IN ASSESSMENT ORDER IS NOT VALID. 7.4 IN THE LIGHT OF THE FACTS AVAILABLE ON THE REC ORD, I HOLD THAT THE APPELLANT HAS ADVANCED A SUM OF RS.35,00,000/- TO SHRI RAJESH DUGGAL OUT OF FUND OF RS. ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 10 36,00,000/- RECEIVED FROM M/S PRINTWEL GRAPHICS. IN THIS CASE I FIND THAT NOT ONLY THE SOURCE OF ADVANCE OF RS.35,00,000/- IS PROVED BUT THE SOURCE OF SOURCES, I.E. THE RECEIPT OF RS.36,00,0001- BY M/S PRINTWEL GRAPH ICS FROM THE ASSOCIATES IS ALSO PROVED. IN THIS SITUATI ON, THE SUM OF RS.35,00,000/- CAN NOT BE TREATED AS CONCEAL ED INCOME. SINCE, THE AO DID NOT INVOKE THE SECOND LIM B OF THE PROVISION, I.E. 'DELIBERATE FURNISHING OF INACC URATE PARTICULARS OF SUCH INCOME.', THERE IS NO NEED TO G IVE ANY FINDING IN THIS REGARD. HOWEVER, THERE IS NO EVIDEN CE FOR HOLDING THE ASSESSEE LIABLE FOR DELIBERATE FURNISHI NG OF THE INACCURATE PARTICULARS , ONCE RS.35,00,000/- IS FOUND AS EXPLAINED, THE REMAINING INCOME OF RS.45,980/- S HOWN IN THE RETURN HAS BECOME BELOW THE TAXABLE LIMIT AS THE TAX LIMIT FOR THAT YEAR WAS FIXED AT RS.50,000/-. T HUS, I FIND THAT NO PENALTY U/S 271(1)(C) WAS LEVIABLE ON MERIT AGAINST THE APPELLANT. HENCE, THE PENALTY LEVIED AT RS.12,14,219/- IS DELETED ON MERITS OF THE CASE. 7.5 SINCE THE PENALTY LEVIED U/S 271 (1)(C) HAS BEE N CANCELLED ON MERIT, THE GROUNDS ON PROCEDURAL LAPSE S AS RAISED BY AR HAS BEEOME ACADEMIC IN NATURE. (I) I FURTHER FIND THAT THE PENALTY IN THE EASE OF APPELLANT IS PURELY BASED ON THE ASSESSMENT ORDER A ND ON THE APPELLATE ORDER, WHICH IS NOT JUSTIFIED IN T HE LIGHT OF HON'BLE DELHI HIGH COURT JUDGMENT IN THE CASE OF CIT VS. JK SYNTHETIC LTD.. 219 ITR 267 (DEL) AND ALSO HON'BLE APEX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 322 ITR 15 8 (SC). IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE , LEGAL PROVISIONS AND JUDICIAL PRONOUNCEMENTS I HOLD THAT NO PENALTY U/S 271(1)(C) WAS LEVIABLE ON MERIT IN T HIS CASE BECAUSE OF THE REASON THAT THE APPELLANT ADVAN CED RS.35,00,000/-TO SHRI RAJESH DUGGAL OUT OF HIS KNOW N AND EXPLAINED SOURCE. I CANCEL THE PENALTY OF RS.12,14,219/- LEVIED U/S 271(1)(C) VIDE ORDER DATE D 27.01.2010. ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 11 10. IN THE LIGHT OF ABOVE FACTUAL MATRIX AND ORDERS OF THE AUTHORITIES BELOW, WE CLEARLY OBSERVE THAT THE ASSESSEE HAS NOT SUBMITTED CONTENTIONS PERTAINING TO THE SOURCE OF FUNDS WHICH WERE EXTEND ED TO SHRI RAJESH DUGGAL AND ASSESSEE HIMSELF VOLUNTARILY OFFERED THE SAME A MOUNT FOR TAXATION. BUT DURING THE APPELLATE PROCEEDINGS BEFORE THE COMMISS IONER OF INCOME TAX(A) AGAINST THE PENALTY ORDER IN WRITTEN SUBMISS IONS DATED 24.06.2011 AND 27.7.2011, THE ASSESSEE BROUGHT OUT AND PLACED NEW FACTS BY SUBMITTING SOURCE AND MODE OF ADVANCING LOAN TO SHRI RAJESH DU GGAL. THESE SUBMISSIONS HAVE BEEN CONSIDERED BY THE COMMISSIONE R OF INCOME TAX(A) WITHOUT CONFRONTING THE SAME TO THE ASSESSING OFFIC ER WHICH IS NOT PERMISSIBLE AS PER WELL-ACCEPTED PRINCIPLES OF LAW. 11. UNDISPUTEDLY, THE PENALTY PROCEEDINGS ARE SEPAR ATE FROM THE QUANTUM PROCEEDINGS AND FOR LEVYING PENALTY US/ 271(1)(C) O F THE ACT, THE REVENUE AUTHORITIES ARE BOUND TO ESTABLISH THE FACT THAT EI THER THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR HAS FURNISHED IN ACCURATE PARTICULARS OF INCOME. DURING PENALTY PROCEEDINGS THE TAX AUTHORI TIES ARE BOUND TO AFFORD REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE B UT IN OUR CONSIDERED OPINION, IT IS NOT OPEN TO THE ASSESSEE TO CREATE A NEW CASE BEFORE THE COMMISSIONER OF INCOME TAX(A) BY SUBMITTING NEW FAC TS AND EXPLANATIONS WHICH WERE NOT SUBMITTED BEFORE THE ASSESSING OFFIC ER. FROM THE BARE ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 12 READING OF THE APPELLATE ORDER PERTAINING TO THE PE NALTY, IT REVEALS THAT THE CIT(A) HAS CONSIDERED NEW FACTS AND EXPLANATION OFF ERED BY THE ASSESSEE WHICH WERE NOT CONSIDERED BY THE ASSESSING OFFICER AND WERE ALSO NOT CONFRONTED BY THE COMMISSIONER OF INCOME TAX(A) TO THE ASSESSING OFFICER. IN THIS SITUATION, THE IMPUGNED ORDER SETTING ASIDE THE PENALTY IS NOT SUSTAINABLE AND WE FIND IT APPROPRIATE THAT THE ISS UE OF PENALTY SHALL BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR D E NOVO ADJUDICATION. NEEDLESS TO SAY THAT THE ASSESSING OFFICER WILL ADJ UDICATE THE ISSUE AFRESH WITHOUT GETTING PREJUDICED WITH THE OBSERVATIONS MA DE IN THIS ORDER AND AFTER AFFORDING DUE OPPORTUNITY OF HEARING TO THE ASSESSE E. THE APPEAL OF THE REVENUE IS DECIDED IN THE MANNER AS INDICATED ABOVE BY RESTORING THE ISSUE TO THE FILE OF THE ASSESSING OFFICER AND MAY BE TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. C.O. NO.24/DEL/2013 12. THE ASSESSEE HAS ALSO RAISED CROSS OBJECTIONS W HICH READ AS UNDER:- 1. THAT THE LD CIT ( APPEAL) ERRED IN LAW AND ON FA CTS IN NOT DECIDING THE FOLLOWING ISSUES BY HOLDING IN PARA 7.5 OF THE ORDER, D5INCE THE PENALTY U/S 271(L)(C) HAS BEE N CANCELLED ON MERIT, THE GROUNDS ON PROCEDURAL LAPSES AS RAISE D BY AR HAS BECOME ACADEMIC IN NATURE';- I. NON APPLICATION OF MIND AND NON RECORDING OF SATISFACTION BY THE A.O. II. VAGUENESS. AND AMBIGUITY IN SHOW CAUSE NOTICE, ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 13 III. NON APPLICATION OF EXPLANATION 1 &. 3 OF S ECTION 271(1)(C) OF THE I.T.ACT, 1961, IV. WRONG ADVISE BY THE COUNSEL MAY BE ACCEPTED AS BONAFIDE EXCUSE, V. NO PENALTY U/ S 271 (1) (C) ON DEBATABLE ISSUE VI. NO PENALTY U/ S 271(1 )(C) AGAINST THE ADDITIO N ON TECHNICAL REASON. 2. THAT THE LD. CIT(A) ERRED IN LAW &. FACTS BY HOL DING THE PROCEDURAL LAPSES HAS BECOME AS ACADEMIC IN NAT URE THOUGH SHE DISCUSSED THESE ISSUES IN DETAIL IN PARA 6.2 OF THE APPELLATE ORDER. SINCE THESE PROCEDURAL LAPSE GOES TO ROOT OF THE APPEAL, A SPECIFIC FINDING ON EACH OF THE PROCE DURAL LAPSES WAS REQUIRED TO BE GIVEN. 13. SINCE THE IMPUGNED ISSUE OF THE LEVY OF PENALTY HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER, WE HAVE SET ASID E THE IMPUGNED ORDER THROUGH FIRST PART OF THIS ORDER, THEREFORE, CROSS OBJECTIONS RAISED BY THE ASSESSEE DO NOT SURVIVE AND DESERVE NO ADJUDICATION ON MERITS. THEREFORE, CROSS OBJECTIONS OF THE ASSESSEE ARE ALSO DISMISSED WITH A DIRECTION TO THE ASSESSING OFFICER THAT DURING THE FRESH PENALTY PRO CEEDINGS, THE ASSESSING OFFICER WOULD PROVIDE REASONABLE OPPORTUNITY OF HEA RING TO THE ASSESSEE AND SHALL DECIDE THE CONTENTIONS OF THE ASSESSEE IN A J UDICIOUS AND REASONABLE MANNER. ITA NO. 4705/D/11 & CO 24/D/13 ASSTT.YEAR: 2001-02 14 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DEC IDED AND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES AND CO OF THE A SESSEE IS DISMISSED WITH THE DIRECTION TO THE ASSESSING OFFICER AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 10.5.2013. SD/- SD/- (SHAMIM YAHYA) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 10TH MAY 2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. COMMISSIONER OF INCOME TAX(A) 4. CIT 5. DR TRUE COPY BY ORDER ASSTT.REGISTRAR