The ITO, Ward-7(2), Ahmedabad V. Shri Rajen Manilal Shah, Ahmedabad

ITA 1043/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9314 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-02-2016
• Assessment Year: 1996-1997
• Appeal Filed On: 08-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR BHARDAWAJ
• Assessee Lawyers: S N SOPARKAR
• Keywords: Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI S. S. GOD ARA, J.M.) ( , !'# ' $' $%& , ! '( ) ITA NO: 1043/AHD/2011 & C. O. NO. 124/AHD/2011 (ASSESSMENT YEAR: 1996-97) ITO, WARD 7(2), AHMEDABAD SHRI RAJEN MANILAL SHAH 23, VASUPUJYA BUNGLOWS, NR. RAMDEVNAGAR, SATELLITE, AHMEDABAD VS. & VS. SHRI RAJEN MANILAL SHAH 23, VASUPUJYA BUNGLOWS, NR. RAMDEVNAGAR, SATELLITE, AHMEDABAD ITO, WARD 7(2), AHMEDABAD PAN: AFBPS1829K (APPELLANT) (RESPONDENT) / BY REVENUE: SHRI ANIL KUMAR BHARDAWAJ, SR. D.R. / BY ASSESSEE: SHRI S. N. SOPARKAR, A.R. DATE OF HEARING : 11-02-201 6 DATE OF PRONOUNCEMENT : 16-02-2016 ( )/ ORDER ITA NO .1043/AHD/ 2011 & C.O. NO.124/AHD/11 . A.Y. 1996-97 2 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THESE TWO APPEALS OF WHICH ONE IS FILED BY REVENUE AND THE OTHER I.E. CROSS OBJECTION BY ASSESSEE ARE AGAINST THE ORDER OF CIT( A)-XIV, AHMEDABAD, DATED 29.11.2010 FOR THE ASSESSMENT YEAR 1996-97. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: 3. THE ASSESSEE IS AN INDIVIDUAL STATED TO BE DERIV ING INCOME FROM BUSINESS IN THE NAME OF SOFT NET COMPUTER AND IS ALSO A PARTNER IN VIRMATI BANKING MASTER SERVICES FROM WHICH HE DERIVES SALARY. ASSESSEE FILED HIS R ETURN OF INCOME FOR A.Y. 1996-97 ON 31.10.1996 SHOWING TOTAL INCOME OF RS.2,66,848/- . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S.1 43(3) R.W.S. 144A OF THE ACT VIDE ORDER DATED 23.03.1999 AND THE TOTAL INCOME WAS DET ERMINED AT RS.82,67,450/- INTER ALIA BY MAKING ADDITION OF RS.80 LACS ON ACCOUNT OF RECEIPT FROM VIRMATI BANKING MASTER SERVICES AS REVENUE RECEIPTS AS AGAINST THE SAME BEING CONSIDERED AS CAPITAL RECEIPT BY THE ASSESSEE. AGAINST THE ORDER OF A.O. , ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHO ALLOWED THE APPEAL OF THE ASSESS EE BY TREATING THE RECEIPTS AS BEING OF CAPITAL NATURE, AGAINST WHICH REVENUE PREFERRED APPEAL BEFORE THE HONBLE ITAT. HONBLE ITAT VIDE ORDER DATED 20.06.2008 IN ITA NO. 36/AHD/2000 ALLOWED THE APPEAL OF REVENUE BY UPHOLDING THE ORDER OF A.O. AN D REVERSING THE ORDER OF LD. CIT(A). ON THE AFORESAID ADDITION OF RS.80LACS THA T WAS UPHELD BY HONBLE ITAT, A.O. VIDE ORDER DATED 17.04.2009 CONCLUDED THAT ASS ESSEE HAD MADE A WRONGFUL CLAIM OF INCOME AND HAD COMMITTED DEFAULT OF CONCEALING O F INCOME AND THEREFORE, PROVISIONS OF SECTION 271(1)(C) OF THE ACT WERE ATT RACTED. HE, ACCORDINGLY, LEVIED THE PENALTY OF RS.32,00,240/-. ITA NO .1043/AHD/ 2011 & C.O. NO.124/AHD/11 . A.Y. 1996-97 3 4. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASS ESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 29.11.20 10 DELETED THE PENALTY LEVIED BY A.O. BY OBSERVING AS UNDER: 2.2. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A.R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER. THE PENALTY WAS LEVIED PRIMARILY ON THE BASIS THAT DISALLOWANCE WAS CONFIR MED BY THE ITAT ON WHICH THE ASSESSING OFFICER HAD LEVIED IMPUGNED PENALTY U/S. 271(1)(C) OF THE ACT. THE LEARNED A.R. CONTENDED THAT THE RECEIPT OF RS. 80,00,000/- FROM VBCS WHICH WAS TREATED BY THE A.O. AS REVENUE RECEIPT IN THE HANDS OF THE APPELLANT WAS HIGHLIGHTED IN THE F OOT NOTE TO THE COMPUTATION OF INCOME ENCLOSED WITH ROI. THEREFORE IT CAN NOT BE SAID THA T INACCURATE PARTICULARS WERE FURNISHED. RELIANCE IS PLACED ON THE DECISION OF SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC). 2.2.1. HAVING CONSIDERED THE FACTS OF THE CASE, I A M INCLINED TO AGREE WITH THE APPELLANTS CONTENTIONS. PENALTY PROCEEDINGS ARE DISTINCT FROM ASSESSMENT PROCEEDINGS. A.O. HAS NOT MADE OUT ANY CASE THAT THERE WAS CONCEALMENT OF INC OME OR THAT INACCURATE PARTICULARS WERE FURNISHED. IN VIEW OF THE CASE-LAW RELIED ON, A ME RE REJECTION OF A CLAIM MADE DOES NOT ATTRACT LEVY OF PENALTY. THEREFORE, THE IMPUGNED P ENALTY IS CANCELLED. 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING EFFECTIVE GROUND: 1. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRE D IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.32,00,240/- LEVIED U/S.271(1)(C). 6. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. LD. A.R., ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. AND LD. CIT(A) AND FURTHER SUBMITTED THAT THE ISSUE THAT WHETHER THE AMOUNT RECEIVED BY THE ASSESSEE IS CAPITAL OR REVENUE RECEIPT WAS OF A DEBATABLE NATURE AS COULD BE SEEN FROM THE FACT THAT LD. CIT(A) IN QUANTUM PROCEEDINGS HAD DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY TREATING THE RECEIPTS TO BE OF CAPITAL IN NATURE, BUT HONBLE IT AT HAD DECIDED THE ISSUE IN FAVOUR OF REVENUE BY TREATING THE RECEIPT TO BE TAXABLE. HE FURTHER SUBMITTED THAT ASSESSEE HAD NOT FURNISHED ANY INACCURATE PARTICULARS IN THE RET URN OF INCOME AND THEREFORE, THERE WAS NO QUESTION OF LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. HE, THUS, SUPPORTED THE ORDER OF LD. CIT(A). ITA NO .1043/AHD/ 2011 & C.O. NO.124/AHD/11 . A.Y. 1996-97 4 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY O F PENALTY U/S.271(1)(C) OF THE ACT ON THE RECEIPT OF RS.80LACS THAT WAS CONSIDERED AS CAP ITAL RECEIPT BY THE ASSESSEE AS AGAINST IT BEING TREATED AS REVENUE RECEIPT BY THE DEPARTMENT. IT IS AN UNDISPUTED FACT THAT ASSESSEE IN THE FOOTNOTE TO THE COMPUTATION OF INCOME THAT WAS FILED ALONGWITH THE RETURN OF INCOME HAD HIGHLIGHTED THE TREATMENT GIVE N BY HIM AND HAD DISCLOSED THE FULL FACTS AND THUS IT CANNOT BE SAID THAT ASSESSEE HAD NOT DISCLOSED THE FACTS OF THE RECEIPTS. FURTHER FOR LEVY OF PENALTY U/S.271(1)(C) OF THE AC T, APART FROM THE FALSITY OF THE EXPLANATION GIVEN BY THE ASSESSEE, THE DEPARTMENT M UST HAVE BEFORE IT BEFORE LEVYING THE PENALTY, COGENT MATERIAL OR EVIDENCE FROM WHICH IT COULD BE INFERRED THAT ASSESSEE HAS CONSCIOUSLY CONCEALED THE PARTICULARS OF HIS IN COME OR HAD DELIBERATELY FURNISHED INACCURATE PARTICULARS OF INCOME. IT IS WELL SETTLE D THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITION MADE IN THE ASSESSMENT C ASE OF THE ASSSESSEE IS DIFFERENT FROM THE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF IN COME OR FILING INACCURATE PARTICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE /ADDITION COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROBABILITIES BUT NO PENALTY COULD BE IMPOSED U/S. 271(1)(C) OF THE ACT ON THE PREPOND ERANCE OF PROBABILITIES. FURTHER MERELY BECAUSE ADDITIONS HAVE CONFIRMED IN APPEAL C ANNOT BE THE SOLE GROUND FOR COMING TO THE CONCLUSION THAT ASSESSEE HAS CONCEALE D ANY INCOME. IT IS SETTLED LAW THAT PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE TWO INDEPENDENT PROCEEDINGS AND THE PENALTY ORDER CANNOT BE SOLELY BASED ON THE REA SONS GIVEN IN THE ORIGINAL ORDER OF ASSESSMENT. WE FURTHER FIND THAT LD. CIT(A) WHILE DELETING THE PENALTY HAS GIVEN A FINDING THAT A.O. HAS NOT MADE OUT A CASE THAT THER E WAS CONCEALMENT OF INCOME OR THAT INACCURATE PARTICULARS WAS FURNISHED BY ASSESS EE. BEFORE US, REVENUE HAS ALSO NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FI NDINGS OF LD. CIT(A). IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS, THE GROUND OF REVENUE IS DISMISSED. 8. THUS, THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO .1043/AHD/ 2011 & C.O. NO.124/AHD/11 . A.Y. 1996-97 5 NOW, WE TAKE C.O. NO.124/AHD/2011 9. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE W ANTS TO WITHDRAW THE C.O. IN VIEW OF THE SUBMISSIONS OF LD. A.R., THE CROSS OBJE CTION OF THE ASSESSEE IS DISMISSED AS WITHDRAWN. 10. IN THE RESULT, THE APPEAL OF THE REVENUE AND C.O. OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 16 -02- 2016. SD/- SD/- (S. S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED. 16 /02/2016 TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD