Rawal Pindi Jewellers Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 1053/DEL/2010

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7217 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 25-07-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 10-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA SENIOR D
• Assessee Lawyers: HARDIPENDER SI NGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1053/DEL./2010 (ASSESSMENT YEAR : 2004-05) M/S. RAWALPINDI JEWELLERS PVT. LTD., VS. ITO, WARD 15 (3), 2298, CLOCK TOWER, SUBZI MANDI, NEW DELHI. DELHI. (PAN : AAACR1571J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HARDIPENDER SINGH, ADVOCATE REVENUE BY : SMT. MEENAKSHI SINGH, CIT DR AND SHRI F.R. MEENA, SENIOR DR DATE OF HEARING : 25.07.2016 DATE OF ORDER : 30.08.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. RAWALPINDI JEWELLERS PVT. LTD. (HE REINAFTER REFERRED TO AS THE ASSESSEE), BY FILING THE PRESE NT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 18.12.2009 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-XVIII, NEW DEL HI, AFFIRMING THE PENALTY ORDER DATED 17.03.2009 PASSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT), QUA THE ASSESSMENT YEAR 2004-05 ON THE GROUNDS INTER ALIA T HAT :- ITA NO.1053/DEL./2010 2 1. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE CASE IN UPHOLDING THE ORDER OF THE LEARNED INCOME T AX OFFICER CONFIRMING THE PENALTY ON INCOME OF RS.2,91,804/- IMPOSED UNDER SECTION 271(1)(C). 2. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE CASE IN DRAWING CONCLUSIONS THAT:- I) THE ACTION OF THE APPELLANT IS REPREHENSIBLE; WHEREAS AS PER APPELLATE ORDER DATED 28-06-2007 A R ELIEF OF RS.46,54,632/- HAS BEEN ALLOWED AGAINST THE TOTA L ADDITION OF RS.50,82,976/- MADE IN THE ASSESSMENT O RDER. (II) THE ACTION ON THE PART OF APPELLANT WAS SHEEP ISH BY NOT PRESSING GROUNDS OF APPEAL RELATING TO DIFFEREN CE IN TRIAL BALANCE(RS.1997/-), PROVIDENT FUND DEMAND (RS.23,144/-), TRAFFIC OFFENCE (RS.700/-) AND EXCES S CASH FOUND DURING SURVEY (RS.30/-); WHEREAS AS PER GROUN DS OF APPEAL IN FORM NO.35 DATED 23-01-2007 THERE WERE TO TAL 38 ISSUES INVOLVED OUT OF WHICH ONLY THESE FOUR GRO UNDS WERE NOT PRESSED DURING APPEAL. THESE CONCLUSIONS HAVE RESULTED INTO CAPRICIOUS ORD ER. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE : ASSE SSEE BY FILING THE RETURN OF INCOME QUA ASSESSMENT YEAR 2004-05 DECLAR ED ITS INCOME AT RS.36,70,360/- AND ON THE BASIS OF SCRUTINY PROC EEDINGS, ASSESSMENT WAS COMPLETED BY MAKING AN ADDITION OF RS.50,82,976/-. ASSESSEE PREFERRED AN APPEAL AGAIN ST THE ASSESSMENT ORDER BEFORE THE LD. CIT (A) WHO HAS DEL ETED THE ADDITION TO THE TUNE OF RS.46,54,632/- AND SET ASID E THE ISSUE OF EXPENSES ON ACCOUNT OF ADVERTISEMENT TO THE TUNE OF RS.1,11,540/- ITA NO.1053/DEL./2010 3 AND CONSEQUENTLY, TOTAL SUSTAINED ADDITIONS CAME TO BE RS.3,16,804/-. 3. PENALTY PROCEEDINGS WERE INITIATED BY ISSUING A NOTICE U/S 271(1)(C) OF THE ACT. ASSESSEE FILED REPLY. FINDI NG THE SUBMISSIONS MADE BY THE ASSESSEE NOT TENABLE PENALT Y TO THE TUNE OF RS.1,13,656/- HAS BEEN IMPOSED BY MAKING FOLLOWING OBSERVATIONS:- THE ADDITION MADE BY THE ASSESSING OFFICER HAS BEE N CONFIRMED AT THE FIRST APPEAL STAGE. THEREFORE, I AM OF CLEA R VIEW THAT THE ASSESSEE HAS CONCEALED INCOME TO THE TUNE OF RS.3,1 6,804/- AND HOLD THE ASSESSEE TO HAVE CONCEALED THE PARTICULARS OF INCOME AND IMPOSE PENALTY U/S 271(1)(C) @ 100% OF TAX SOUGHT T O BE EVADED, WHICH WORKS OUT AS UNDER : PARTICULARS OF INCOME WHICH WAS CONCEALED 3,16,804 /- TAX ON ABOVE 1,13,656/- MINIMUM PENALTY IMPOSABLE BEING 100% OF TAX SOUGHT TO BE EVADED 1,13,656/- MAXIMUM PENALTY IMPOSABLE BEING 300% OF TAX SOUGHT TO BE EVADED 3,40,968/- PENALTY BEING IMPOSED IS @ 100% OF TAX SOUGHT TO BE EVADED WHICH COMES TO RS.1,13,656/-. 3. ASSESSEE CHALLENGED THE PENALTY ORDER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS AFFIRMED THE PENALTY ORDER BY DISMISSING THE APPEAL. FEELING AGGRIEVED, THE ASSE SSEE HAS COME UP BEFORE THE TRIBUNAL BY CHALLENGING THE PENALTY O RDER PASSED U/S 271(1)(C) OF THE ACT. ITA NO.1053/DEL./2010 4 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER CONTENDED INTER ALIA THAT THE PENALTY PROCEEDINGS H AVE BEEN INITIATED JUST ON THE BASIS OF THE FACT THAT DISALL OWANCES TO THE TUNE OF RS.3,16,804/- HAVE BEEN CONFIRMED BY THE LD. CIT (A) WHEREAS THERE WAS NO CONCEALMENT OF INCOME ON THE PART OF T HE ASSESSEE NOR IT WAS A CASE OF FURNISHING OF FALSE PARTICULARS OF INCOME; THAT AO AS WELL AS CIT (A) HAS NOT SATISFIED THEMSELVES BEF ORE INITIATING THE PENALTY PROCEEDINGS RATHER PROCEEDED ON THE BASIS O F FINDINGS RETURNED BY AO IN THE ASSESSMENT ORDER AS WELL AS C IT (A) IN THE QUANTUM APPEAL; THAT THERE IS NO CONCEALMENT OF FAC TS AND FURNISHING OF FALSE FACTS BY THE ASSESSEE DURING TH E PROCEEDINGS AND RELIED UPON THE JUDGMENT CITED AS CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (S.C.), CIT VS BRAHM APUTRA CONSORTIUM LTD. 348 ITR 339 (DEL.), CIT VS MAHANAGA R TELEPHONE NIGAM LTD. I.T.A. NO. 626/2011 (DEL.), VI NOD BHARGAVA VS CIT 367 ITR 122 (A.P.) AND CIT VS HARSH VARHAN CHEMICALS & MINERALS LT. 259 ITR 212 (RAJ.). HOWEVER, ON THE OTHER HAND, LD. DR RELIED UPON THE ASSESSMENT ORDER PASSED BY AO, ITA NO.1053/DEL./2010 5 QUANTUM ORDER PASSED BY CIT (A), PENALTY ORDER AND PENALTY ORDER AFFIRMED BY LD. CIT (A). 6. UNDISPUTEDLY, VIDE ASSESSMENT ORDER DATED 29.12. 2006, ADDITION OF RS.50,82,976/- WAS MADE OUT OF WHICH LD . CIT (A) DELETED THE ADDITION OF RS.46,54,632/-; THAT CIT (A ) ALSO SET ASIDE THE ISSUE OF EXPENSES OF ADVERTISEMENT AMOUNTING TO RS.1,11,540/- MEANING THEREBY TOTAL ADDITION TO THE TUNE OF RS.3, 16,804/- HAS BEEN AFFIRMED BY THE LD. CIT (A). 7. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, THE SOLE QUESTION ARISES FOR DETERMINATIO N IN THIS CASE IS:- AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME DURING ASSESSMENT PROCEEDINGS? 8. HONBLE SUPREME COURT IN A CASE CITED AS RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. OPERATIVE PART OF WHICH IS REPRODUCE D FOR READY REFERENCE AS UNDER :- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF T HE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUS T HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. TH E MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAIL OF THE CLAIM MAD E. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN OR DER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY ITA NO.1053/DEL./2010 6 COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING A N INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCOR RECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN T HE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 9. BARE PERUSAL OF THE PENALTY ORDER, OPERATIVE PAR T OF WHICH HAS BEEN REPRODUCED IN PARA NO.3 ABOVE, APPARENTLY GOES TO PROVE THAT THERE IS NO FINDING WHATSOEVER ON THE PART OF THE R EVENUE AUTHORITIES THAT ANY DETAILS SUPPLIED BY ASSESSEE IN HIS RETURN IS FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, IN CASE THE ASSESS EE HAS CLAIMED ANY DEDUCTION OR EXEMPTION, IT IS FOR THE TAX AUTHORITI ES TO EXAMINE IF THE SAME IS SUSTAINABLE OR NOT. 10. IN THE INSTANT CASE, CIT (A) AFFIRMED THE ADDIT ION ON FOUR ACCOUNT WHICH HAVE BEEN TREATED AS CONCEALED INCOME : (I) AS TO PAYMENT OF RS.30,000/- CLAIMED TO HAVE BEEN MADE TO SHRI ITA NO.1053/DEL./2010 7 RAJINDER SINGH RAWAT TOWARDS RECONCILIATION WORK; ( II) RS.1,20,000/- PAID AS SALARY FOR SERVICES RENDERED BY MS. SONIKA BHASIN, DIRECTOR OF THE COMPANY; (III) PAYMENT OF C ASH ADVANCE OF RS.66,000/- PAID BY SMT. NIDHI; AND (IV) PAYMENT OF JOBWORK EXPENSES TO THE TUNE OF RS.36,000/- OF SHRI VEER SE N CHOPRA. 11. SO FAR AS PAYMENT OF RS.30,000/- CLAIMED BY THE ASSESSEE HAVING BEEN PAID TO MR. RAWAT IS CONCERNED, THE SAM E HAS BEEN DISALLOWED BY THE AO AS WELL AS CIT (A) ON THE SOLE GROUND THAT THERE ARE CONTRADICTION/DISCREPANCY IN THE STATEMEN T OF MR. RAWAT AND AFFIDAVIT FILED BY THE ASSESSEE. SO, IN CASE A NY AMOUNT IS DISALLOWED ON THE BASIS OF DISCREPANCY/CONTRADICTIO N WHICH MIGHT HAVE BEEN CREPT IN DUE TO HUMAN ERROR OR FADING OF MEMORY, THE SAME CANNOT BE CONSIDERED AS FURNISHING OF INACCURA TE PARTICULARS. MOREOVER, NO SUCH FINDINGS HAVE BEEN RETURNED BY TH E CIT (A) THAT THIS IS A RESULT OF FURNISHING OF INACCURATE PARTIC ULARS BY THE ASSESSEE. 12. SO FAR AS QUESTION OF CLAIMING AN AMOUNT OF RS. 1,20,000/- HAVING BEEN PAID AS SALARY TO SONIKA BHASIN, ONE OF THE DIRECTORS OF THE COMPANY IS CONCERNED, AGAIN THIS AMOUNT HAS BEE N DISALLOWED BY THE AO AS WELL AS CIT (A) ON THE BASIS OF STATEM ENT OF RAWAT, ACCOUNTANT OF THE FIRM RECORDED BY THE AO AND HIS S UBSEQUENT AFFIDAVIT FILED BY HIM AND ON THE GROUND THAT THE S AID LADY DIRECTOR ITA NO.1053/DEL./2010 8 HAS NOT BEEN PRODUCED FOR EXAMINATION BEFORE THE AO . FOR THE SAKE OF REPETITION, IT IS AGAIN REITERATED THAT ADD ITION MADE ON THE BASIS OF CONTRADICTIONS/DISCREPANCIES IN THE STATEM ENT OF A WITNESS AND HIS SUBSEQUENT AFFIDAVIT MAY BE DUE TO THE PRES SURE OF CROSS EXAMINATION OR DUE TO HUMAN ERROR CANNOT AND DOES N OT AMOUNT TO CONCEALMENT OF INCOME FOR FURNISHING OF FALSE PARTI CULARS OF INCOME IN ANY MANNER WHATSOEVER. 13. SO FAR AS QUESTION OF CASH ADVANCE OF RS.66,000 /- RECEIVED FROM SMT. NIDHI WHO HAS PURCHASED GOLD ORNAMENTS WO RTH OF RS.1,06,278/- FROM THE ASSESSEE COMPANY FROM SALE B ILL NO.98 DATED 18.04.2004 IS CONCERNED, THIS ADDITION HAS BEEN MAD E BY THE AO ON THE BASIS OF WRITTEN REPLY FILED BY SMT. NIDHI WHER EIN SHE HAS STATED THAT SHE HAS GIVEN OLD GOLD FOR REMAKING THE ORNAMENTS AND SHE WAS NOT ABLE TO PROVE THE CASH PAYMENT OF RS.66 ,000/- AS ADVANCE. WHEN THE AO WAS HAVING AMPLE POWERS THIS PART OF THE STATEMENT OF SMT. NIDHI IN THE FACE OF RECEIPT NO.5 11 DATED 30.03.2004 CANNOT BE USED WITHOUT PROVIDING OPPORTU NITY OF CROSS EXAMINATION TO THE ASSESSEE TO INITIATE THE PROCEED INGS U/S 271(1)(C) OF THE ACT NOR IT AMOUNTS TO CONCEALMENT OF FACTS B Y THE ASSESSEE COMPANY. 14. SO FAR AS PAYMENT OF RS.36,000/- CLAIMED TO HAV E BEEN PAID BY THE ASSESSEE COMPANY TO SHRI VEER SEN CHOPRA ON ACCOUNT OF ITA NO.1053/DEL./2010 9 JOBWORK EXPENSES ARE CONCERNED, THE ADDITION THEREO F HAS ALSO BEEN MADE ON THE STATEMENT OF SHRI CHOPRA WHO WAS PRESEN T DURING THE SURVEY PROCEEDINGS AND STATED THAT HE HAS BEEN WORK ING FOR THE LAST THREE YEARS WITH THE ASSESSEE COMPANY FOR THE SALAR Y OF RS.3,000/- PER MONTH. BUT AO HOWEVER OBSERVED THAT THE ASSESS EE COMPANY HAS CONCOCTED THE STORY WHEN FAILED TO PRODUCE THE DETAILS OF THE SALARIES THAT ASSESSEE COMPANY HAS GIVEN JOBWORK CH ARGES OF ABOUT RS.27,000/- TO ONE SHRI SUSHANT KUMAR WHO IS WORKIN G UNDER SHRI CHOPRA. 15. AGAIN, ADDITION HAS BEEN MADE WHEN THE ASSESSEE HAS FAILED TO PRODUCE SHRI CHOPRA FOR RECORDING HIS STATEMENT WHO HAD ALREADY FILED AFFIDAVIT WITH THE AO. WHEN SHRI CHO PRA ALREADY FILED AFFIDAVIT WITH THE AO, HIS STATEMENT MADE DUR ING SURVEY PROCEEDINGS CANNOT BE USED WITHOUT PROVIDING AN OPP ORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. EVEN OTHERWISE, AO WITHOUT PERUSING THE EMPLOYEES REGISTER, PROVIDENT FUND AN D ESI RECORD PROCEEDED ON THE BASIS OF BALD STATEMENT OF SHRI CH OPRA THAT HE IS NOT EMPLOYEE OF THE ASSESSEE COMPANY. SO, WE ARE O F THE CONSIDERED VIEW THAT APPARENTLY, THIS IS ALSO NOT A CONCEALMENT OF INCOME OR FURNISHING OF FALSE PARTICULARS IN ANY MA NNER. 15. SO, IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, W E ARE OF THE CONSIDERED VIEW THAT AO HAS FAILED TO MAKE OUT THE CASE OF ITA NO.1053/DEL./2010 10 CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF SUCH INCOME BY THE ASSESSEE RATHER IT IS A CASE OF IMPOSING PENALTY ON THE BASIS OF SUBJECTIVE SATISFACTION WITHOUT COM PLETING NECESSARY INGREDIENTS TO INITIATE PENALTY PROCEEDIN GS U/S 271(1)(C) OF THE ACT. CONSEQUENTLY, WE HEREBY DELETE THE PENA LTY AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2016. SD/- SD/- (J.S. REDDY) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH DAY OF AUGUST, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.