ITO, New Delhi V. Sh. Lachman Das Bhatia, New Delhi

ITA 1029/DEL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4578 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-06-2017
• Assessment Year: 2000-2001
• Appeal Filed On: 01-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN CHANDR
• Assessee Lawyers: P K MISHRA
• Section: 153A; 69

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1029/DEL/2012 (ASSESSMENT YEAR: 2000 - 01 ) ITO, WARD - 4(3), ROOM NO. 413A, CR BUILDING, IP ESTATE, NEW DELHI VS. LACHMAN DAS BHATIA, 5162, KOLHAPUR ROAD, NEW DELHI PAN:AAFPB3770K (APPELLANT) (RESPONDENT) REVENUE BY : SHRI NAVEEN CHANDR, CIT DR ASSESSEE BY: SHRI PK MISHRA, CA DATE OF HEARING 22/06 / 2017 DATE OF PRONOUNCEMENT 04 / 0 9 / 2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - XXII, NEW DELHI DATED 03.10.2011 FOR THE ASSESSMENT YEAR 2000 - 01 PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 OF RS. 1228080/ - LEVI ED BY THE LD ACIT, CENTRAL CIRCLE - 17, NEW DELHI WAS DELETED. 2. THE BRIEF FACTS OF THE CASE IS THAT ASSESSMENT U/S 153A WAS COMPLETED ON 24.12.2007 ON RS. 24394724/ - AGAINST THE RETURN INCOME OF RS. 393860/ - . THE ADDITION OF RS. 3996951/ - ON ACCOUNT OF BOGUS LIABILITIES OF RS. 70000/ - ON ACCOUNT OF UNACCOUNTED ENTRIES WERE CONFIRMED BY THE LD CIT(A) AND COORDINATE BENCH. THEREFORE, PENALTY U/S 271(1)(C) WAS LEVIED AFTER CONSIDERING THE REPLY OF THE ASSESSEE DATED 10.05.2010 . THE LD CIT(A) DELETED THE PENALTY AND THEREFORE, THE REVENUE IS IN APPEAL BEFORE US. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LD. CIT(APPEALS) IS ERRONEOUS AND CONTRARY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE/CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY AMOUNTING TO RS.12,28,080/ - , WHICH WAS IMPOSED U/S S 271(L)(C) OF THE INCOME TAX ACT, 1961. 3. THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAD SHOWN BOGUS LIABILI TIES AMOUNTING TO RS.39,96,921/ - AS PER THE BALANCE - SHEET AS ON 31.03.2000 AND THE SAID NON - EXISTENT LIABILITIES WERE RIGHTLY TAXED IN A.Y. 2000 - 01 AS UPHELD BY HON'BLE SUPREME COURT AND THEREBY ATTRACT THE IMPOSITION OF PENALTY U/S 271(L)(C) OF THE I.T. A CT, 1961. PAGE 2 OF 5 4. THE LD. CIT(A) WITHOUT ANY COGENT REASON OBSERVED THAT ADDITION ON ACCOUNT OF BOGUS LIABILITIES WAS MADE ON SUSPICION, PARTICULARLY WHEN THE ASSESSEE HAD FAILED TO ESTABLISH GENUINENESS OF SUCH LIABILITIES IN HIS APPEALS IN QUANTUM RIGHT UPTO HON'BLE SUPREME COURT AND THUS DELETION OF PENALTY U/S 271(L)(C) BY LD. CIT(A) WAS NOT JUSTIFIED. 5. THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT OFFER ANY EXPLANATION DURING PENALTY PROCEEDINGS TO PROVE THE GENUINENESS OF CA SH AMOUNTING TO RS.70,000/ - DEPOSITED BY THE ASSESSEE IN HIS BANK ACCOUNT ON 13.11.1999, WHICH WAS ADDED TO HIS INCOME U/S 69 AND UPHELD BY LD. CIT(A) / HON'BLE ITAT AND THUS DELETION OF PENALTY U/ S 271(L)(C) ON THIS ISSUE BY LD. CIT(A) WAS NOT JUSTIFIED. 4. THE LD DR RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES REGARDING THE CONFIRMATION OF ADDITION AND ALSO SUBMITTED THE PAPER BOOK CONTAINING THE TRADING ACCOUNT, BALANCE SHEET AND THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF THE ASSESSEE . IT ALSO SUBMITTED THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF THE APPELLANT DATED 28.03.2011. IT WAS SUBMITTED THAT ADDITION HAVE BEEN CONCURRENTLY UPHELD BY AL THE APPELLATE AUTHORITIES THEREFORE THE PENALTY HAS BEEN LEVIED BY THE AO CORRECTLY. 5. THE LD AR SUBMITTED A WRITTEN NOTE AS UNDER: - 1. A SEARCH OPERATION TOOK PLACE ON 13.12.2005. 2. THE ASSESEE HAD FILED RETURN OF INCOME FOR A.Y. 2003 - 04 ON 27.11.2003 (I.E BEFORE THE DATE OF SEARCH) (APB - 93) WHEREIN OLD UNCLAIMED CREDITORS TO THE TUNE OF RS. 39,96,851/ - WERE WRITTEN OFF AND THE SAME WERE OFFERED AS INCOME IN THE PROFIT & LOSS ACCOUNT. THE RETURN HAD BEEN PROCESSED U/S 143(1) VIDE INTIMATION DATED 30.01.2004 (APB - 92). 3. AFTER SEARCH, ASSESSMENTS OF THE ASSESSEE FOR THE BLOCK PERIOD OF A.Y. 2000 - 01 TO 2006 - 07 WERE COMPLETED U/S 153A VIDE ORDERS DATED 24.12.2007. 4. IN THE ASSESSMENT ORDER FOR A.Y. 2000 - 01 AN ADDITION ON ACCOUNT OF UNCLAIMED CREDITORS OF RS. 39,96,951/ - (OFFERED AS INCOME BY THE ASSE SSEE IN A.Y. 2003 - 04) HAS BEEN MADE ALONG WITH ANOTHER ADDITION OF RS. 70,000/ - FOR CASH DEPOSITED IN BANK ACCOUNT AND PENALTY PROCEEDINGS WERE INITIATED U/S 271(1) (C) WERE INITIATED BY THE ID. AO RECORDING HIS SATISFACTION AS UNDER: I AM SATISFIED THAT THE ASSESSEE HAS DELIBERATELY CONCEALED HIS INCOME AND FURNISHED IN ACCURATE PARTICULARS OF HIS IN RESPECT OF ALL THE ADDITIONS BEING MADE. HENCE PENALTY PROCEEDINGS U/S 271(1)(C) ARE BEING INITIATED SEPARATELY IN RESPECT OF THESE ADDITIONS (PAGE 6 OF THE QUANTUM ORDER) 5. BOTH THE ADDITIONS HAVE BEEN SUSTAINED AND THE ID. AO HAS IMPOSED PENALTY U/S 271(1)(C) AMOUNTING TO RS. 12,28,080/ - VIDE ORDER PASSED U/S 271(1)(C) DATED 25.05.2010 (APB - 91) RECORDING HIS SATISFACTION AS UNDER: PAGE 3 OF 5 .THE ADDITION ON ACCOUNT OF BOGUS LIABILITIES OF RS. 39,96,951/ - AND ON ACCOUNT OF UNACCOUNTED BANK ENTRIES TO THE EXTENT OF RS. 70,000/ - WERE MADE AFTER THEY WERE FOUND TO BE BOGUS. THE ADDITIONS WERE DULY CONSIDERED BY THE LD CIT(A) & ITAT AND WERE CONFIRMED. IN VIEW OF THE ABOV E I AM SATISFIED THAT ASSESSEE HAS DELIBERATELY AND CONSCIOUSLY FILED INACCURATE PARTICULARS AND CONCEALED THE INCOME AS SUCH. ACCORDINGLY I IMPOSE UPON THE ASSESSEE A PENALTY OF RS. 12,28,080/ - BEING 100% OF THE TAX SOUGHT TO BE EVADED ON ACCOUNT OF THE S AID CONCEALEMENT/FURNISHING OF INACCURATE PARTICULARS OF HIS INCOME....) (PAGE 2 OF PENALTY ORDER) 6. PENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS AND THE ASSESSEE CHALLENGED THE PENALTY AND THE ID. CIT (A) HAS DELETED THE PENALTY VIDE HIS ORDER DATED 03.10.2 011 AGAINST WHICH THE DEPARTMENT HAS FILED THE PRESENT APPEAL. ARGUMENTS IN BRIEF: 1. AS PER SECTION 271(1) (C) OF THE INCOME TAX ACT PENALTY CAN BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PE NALTY CAN BE IMPOSED FOR A SPECIFIC CHARGE. 2. THE ID. AO HAS TO RECORD HIS SATISFACTION TO SPECIFY EITHER OF THE CHARGE I.E CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. THE ID. AO HAS NOT RECORDED SPECIFIC SATISFACTION EITHER IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER AND HAS IMPOSED PENALTY ON BOTH THE CHARGES I.E CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ACTION OF THE ID. AO IS BAD IN LAW AND WITHOUT APPLICATION OF MIND AND THE CONSEQUENT PENALTY IMPO SED IS NOT SUSTAINABLE. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS CIT V. SSA'S EMERALD MEADOWS (2016) 73 TAXMANN.COM 248 (SC) CIT V. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KARNATAKA) TRISTAR INTECH (P) LTD. V. ACIT (2015) 43 ITR (TR IB) 279 (ITAT[DEL]) 4. ON THE MERITS OF THE CASE THE PENALTY WAS OTHERWISE ALSO NOT JUSTIFIED IN VIEW OF THE FOLLOWING FACTS: WITH RESPECT TO ADDITION OF RS. 39,96,951/ - : A) THE WRITE OFF OF UNCLAIMED CREDITORS OF RS. 39,96,951/ - WAS DISCLOSED AND OFFER ED AS INCOME IN THE ORIGINAL RETURN OF INCOME FOR A.Y. 2003 - 04 FILED BEFORE THE DATE OF SEARCH HENCE THERE CANNOT BE ANY CONCEALMENT ON THE PART OF THE ASSESSEE IN RESPECT OF THE SAME. THE UNCLAI PAGE 4 OF 5 MED CREDITORS WERE OUTSTANDING SINCE 1982 - 83 (PAGE 2 OF THE ASSESSMENT ORDER) B) THE ID. AO HAS ONLY SHIFTED THIS INCOME TO A.Y. 2000 - 01 (REDUCING THE SAME FROM A.Y. 2003 - 04) HENCE ONLY THE CLAIM OF THE ASSESSEE HAS NOT BEEN ACCEPTED FOR CONSIDERING SUCH INCOME IN A PARTICULAR YEAR WHICH DOES NOT AMOUNT TO CONCEAL MENT OR FURNISHING INACCURATE PARTICULARS OF INCOME. RELIANCE PLACED ON JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (P) LTD 230 CTR 320 (SC) C) FURTHER WHILE SHIFTING THE ADDITION TO A.Y. 2000 - 01 THE ID. AO HAS MADE PRESUMPTIO N THAT THE ASSESSEE MIGHT HAVE SETTLED THE ACCOUNTS OF CREDITORS IN CASH OR THROUGH SOME OTHER ILLEGAL MEANS. MERE PRESUMPTIONS WITHOUT ANY CONCRETE EVIDENCE ON RECORD CANNOT BE A REASON FOR IMPOSING PENALTY U/S 271 (1) (C) . WITH RESPECT TO ADDITION OF RS . 70,000/ - : THE ADDITION WAS SUSTAINED BY THE HON'BLE ITAT IN THE QUANTUM PROCEEDINGS OBSERVING AS UNDER: ' ... HERE THE DRAWINGS WERE ALMOST 4 - 5 MONTHS BEFORE THE DATE OF DEPOSIT AND THE ASSESEE, IN OUR VIEW, HAS NOT PROPERLY EXPLAINED THE SOURCE OF CASH AVAILABLE ON THE DATE OF DEPOSIT. HE COULD HAVE EASILY THE CASH FLOW STATEMENT TO JUSTIFY THE AVAILABILITY OF CASH....' (PARA 5 OF THE ORDER) (DVB - 20) THEREFORE THE ADDITION WAS SUSTAINED DUE TO INSUFFICIENT EXPLANATION ONLY AND NOT DUE TO ANY CONCEA LMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME HENCE NOT LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE LD AR HAS HEAVILY RELIED UPON THE FACT THAT THE CHARGE LEVIED ON THE ASSESSEE IS TWIN CHARGE OF FURNISHING INCORRECT PARTICULARS AS WELL AS CONCEALMENT OF INCOME. FOR THIS THE LD AR HAS PLACED STRONG RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF CIT VS. SSAS EMERALD MEADOWS 73 TAXMANN.COM 248 . 7. WE FULLY AGREE WITH THE ARGUMENTS OF THE LD AR THAT THERE IS NO SPECIFIC CHARGE LEVIED BY THE LD AO AT THE TIME OF INITIATION AND EVEN ALSO AT T HE TIME OF LEVYING OF PENALTY , THEREFORE, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF CIT VS. SASS EMERALD MEADOWS (SUPRA) WHEREIN, THE ORDER OF HONBLE KARNATAKA HIGH COURT REPORTED AT 73 TAXMAAN.COM 241 ( KARNATAKA ) WAS UPHELD RELYING ON THE DECISION OF DIVISION BENCH OF KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565 WHEREIN IT IS HELD THAT AS THE NOTICE ISSUED BY THE LD ASSESSING OFFICER DI D NOT SPECIFY PAGE 5 OF 5 UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THEREFORE, THE ORDER OF LEVY OF PENALTY IS BAD. ON THE SIMI LAR CIRCUMSTANCES IN THE ASSESSMENT ORDER AT PAGE NO.6 THE LD ASSESSING OFFICER HAS MENTIONED BOTH THE LIMBS AND IN THE PENALTY ORDER AT PAGE NO. 2 THE LD ASSESSING OFFICER HAS LEVIED PENALTY ON BOTH THE LIMBS. THEREFORE, IN VIEW OF THE ABOVE JUDICIAL PREC EDENTS , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE ORDER OF THE LD CIT(A) IN D ELETING THE PENALTY U/S 271(1)(C) OF ASSESSING OFFICER OF RS. 1228080/ - . 8. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 0 4 / 0 9 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 4 / 0 9 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI