Smt Anita Kumar, New Delhi V. ITO, New Delhi

ITA 1081/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86893 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: S R WADHWA
• Keywords: Income from undisclosed sources; Additional evidence
• Section: 143(3)

Judgement Text

ITA NO.1081/DEL/2013 ASSTT.YEAR: 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.1081/DEL/2013 ASSESSMENT YEAR : 2008-09 SMT. ANITA KUMAR, VS INCOME TA X OFFICER, PROP. OF OMEX INDUSTRIES, WARD-33(3), 1/7, WEST PATEL NAGAR, NEW DELHI. NEW DELHI. (PAN: AAIPK9784B)) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.R. WADHWA, ADV. RESPONDENT BY : MS Y. KAKKAR, DR DATE OF HEARING: 23.2.2015 DATE OF PRONOUNCEMENT: 04.03.2015 O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THE ABOVE APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-XXVI, NEW DELHI DATED 17.12.2012 PERTAINING TO AY 2008-09 BY WHICH PENALTY ORDER DATED 20.12.2010 PASSED U/S 271 (1)( C) OF THE INCOME TAX ACT, 1961 HAS BEEN UPHELD AND PENALTY HAS BEEN CONF IRMED. 2. THE SOLE GROUND RAISED BY THE ASSESSEE IN THIS A PPEAL READS AS UNDER:- ITA NO.1081/DEL/2013 ASSTT.YEAR: 2008-09 2 1. THAT THE HON.CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE AO OF LEVYING PENALT Y OF RS.4,69,125/- U/S 271(1)( C) OF THE INCOME TAX ACT. 3. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APP EAL AS RECORDED BY THE CIT(A) ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF MANUFACTURING AND TRADING OF ELECTRICAL HOME APPLIANCES. SINCE THE B USINESS IS BEING CARRIED ON IN THE BACKWARD STATE OF HIMACHAL PRADESH IN BADDI, DI STRICT SOLAN, THE ASSESSEE IS CLAIMING DEDUCTION U/S 80IC OF THE ACT EQUAL TO THE NET 100% OF THE PROFIT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT IN THE MISCELLANEOUS INCOME, THE ASSESSEE HAD SHOWN A SUM OF RS.16,28,174/- ON ACCOUNT OF SALE OF SCRAP AND A SUM OF RS. 33,674/- ON ACCOUNT OF INTEREST. THE AO ASKED THE ASSESSEE TO PRODUCE THE BILLS IN RESPE CT OF SCRAP SALES BUT THE ASSESSEE FAILED TO PRODUCE THE SAME TO SUPPORT HIS CLAIM. THEREFORE, THE AO HELD THAT THE ASSESSEE HAD ROUTED HER UNDISCLOSED I NCOME IN THE GARB OF SCRAP SALES AND HAD ALSO MADE INCORRECT CLAIM OF DEDUCTIO N IN RESPECT OF THE AMOUNT OF ALLEGED SCRAP SALES. THE AO THEREFORE TREATED THE AMOUNT OF SCRAP SALE AS UNDISCLOSED INCOME OF THE ASSESSEE AND ADDED THE SA ME TO THE RETURNED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE AO ALSO RESTRICTED THE DEDUCTION U/S 80IC OF THE ACT DEDUCTING THE AFORESA ID TWO AMOUNTS PERTAINING TO SALE OF SCRAP AND INTEREST. 4. SUBSEQUENTLY, THE AO INITIATED PENALTY PROCEEDIN GS AND AFTER AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE, THE AO CONCLUDED THAT THE ITA NO.1081/DEL/2013 ASSTT.YEAR: 2008-09 3 EXPLANATION AND CITATIONS RELIED BY THE ASSESSEE AR E NOT ACCEPTABLE AND HE IS SATISFIED THAT THE ASSESSEE HAS CONCEALED TRUE PART ICULARS OF HER INCOME AND HAS FURNISHED INACCURATE PARTICULARS OF HER INCOME AND, THEREFORE, THE ASSESSEE IS LIABLE TO PENALTY U/S 271(1)( C) OF THE ACT R/W EXP LANATION (1) THERETO. 5. BEING AGGRIEVED BY THE ABOVE PENALTY ORDER, THE ASSESSEE CARRIED THE MATTER TO THE FIRST APPELLATE AUTHORITY I.E. CIT(A) BUT REMAINED EMPTY HANDED AS THE CIT(A) ALSO DISMISSED THE APPEAL OF THE ASSESSE E UPHOLDING AND CONFIRMING THE PENALTY ORDER. NOW THE ASSESSEE IS BEFORE THIS TRIBUNAL IN THIS SECOND APPEAL BEFORE THE SOLE GROUND AS REPRODUCED HEREINA BOVE. 6. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT AS PER DECISION OF HONBLE HIGH COURT OF MADRAS IN THE CASE OF FENNER (INDIA) LTD. VS CIT (2000) 241 ITR 803 (MAD) , THE PROFIT FROM SALE OF SCRAP IS ELIGIBLE FOR DEDUCTION U/S 80HH OF THE ACT, THER EFORE, IN THE SIMILAR SET OF FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE AM OUNT EARNED FROM SALE OF SCRAP SHOULD HAVE BEEN ALLOWED AS DEDUCTION U/S 80I C OF THE ACT WHICH IS SIMILAR TO THE PROVISIONS OF SECTION 80HH OF THE AC T. LD. COUNSEL FURTHER PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. (2010) 189 TAXM AN 322 AND SUBMITTED THAT IF THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED OR WAS NOT FOUND TO BE ACCEPTABLE BY THE REVENUE, THEN PENALTY IS NOT LEVI ABLE ONLY BECAUSE THE CLAIM OF ITA NO.1081/DEL/2013 ASSTT.YEAR: 2008-09 4 THE ASSESSEE WAS REJECTED BY THE DEPARTMENT. LD. C OUNSEL FURTHER SUBMITTED THAT WHERE TWO VIEWS ARE POSSIBLE AND THE ISSUE IS DEBAT ABLE, EVEN IF CLAIM OF ASSESSEE FOR DEDUCTION IS DISALLOWED, THEN ALSO PEN ALTY IS NOT LEVIABLE U/S 271(1)(C) OF THE ACT. LD. COUNSEL FURTHER POINTED OUT THAT IN THE PRECEDING ASSESSMENT YEAR I.E. AY 2007-08 IN THE ASSESSMENT O RDER DATED 143(3) OF THE ACT DATED 11.12.2009, THE AO ACCEPTED AND ALLOWED A MOUNT OF SALE OF SCRAP WHICH IS INCIDENTAL HAVING DIRECT NEXUS WITH THE AC TIVITIES OF THE INDUSTRIAL UNDERTAKING. 7. LD. COUNSEL HAS FURTHER DRAWN OUR ATTENTION TOWA RDS ASSESSEES PAPER BOOK PAGE NO. 47 TO 53 AND SUBMITTED THAT DURING TH E QUANTUM PROCEEDINGS, THE AO OBSERVED THAT AS THE ASSESSEE FAILED TO PRODUCE THE SCRAP BILLS IN SUPPORT OF HIS CLAIM AND CONCLUDED THAT THE ASSESSEE HAD ROUTE D HIS INCOME FROM UNDISCLOSED SOURCES IN THE GARB OF SCRAP SALE AND H AS CLAIMED THE DEDUCTION U/S 80IC OF THE ACT ON THAT AMOUNT WHICH IS NOT LEVIABL E. LD. COUNSEL POINTED OUT THAT THESE OBSERVATIONS OF THE AO ARE FACTUALLY INC ORRECT AS THE ASSESSEE WAS NOT AFFORDED DUE OPPORTUNITY OF HEARING DURING ASSESSME NT PROCEEDINGS AND THEREFORE DURING FIRST APPELLATE PROCEEDINGS BEFORE THE CIT(A), THE ASSESSEE SUBMITTED AN APPLICATION UNDER RULE 46AOF THE INCOM E TAX RULES 1962 WITH ADDITIONAL EVIDENCE WHEREIN THE ASSESSEE SUBMITTED WRITTEN SUBMISSIONS ALONG WITH LEDGER ACCOUNT OF MISCELLANEOUS INCOME AND BIL LS OF SCRAP SALE TO M/S ATUL CASTING PVT. LTD., NALAGARH. LD. COUNSEL HAS FURTH ER DRAWN OUR ATTENTION ITA NO.1081/DEL/2013 ASSTT.YEAR: 2008-09 5 TOWARDS PAPER BOOK PAGE NO. 55 AND SUBMITTED THAT T HIS ADDITIONAL EVIDENCE WAS ALSO CONFRONTED TO THE AO WHO DID NOT RAISE ANY SER IOUS OBJECTION OR ADVERSE MATERIAL, THEREFORE, IT CANNOT BE HELD THAT THE ASS ESSEE DID NOT SUBMIT RELEVANT DETAILS, BILLS AND VOUCHERS SUPPORTING THE SALE OF SCRAP BY THE ASSESSEE DURING THE FINANCIAL YEAR UNDER CONSIDERATION. LD. COUNSE L FINALLY SUBMITTED THAT THE PENALTY IMPOSED WITHOUT ANY JUSTIFIED AND COGENT RE ASON AND UPHELD BY THE CIT(A) DOES NOT SURVIVE AND THEREFORE, THE SAME MAY BE DIRECTED TO BE DELETED. 8. REPLYING TO THE ABOVE, LD. DR SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SINCE DESPITE SUFFICIENT O PPORTUNITY, THE ASSESSEE COULD NOT PRODUCE RELEVANT BILLS AND VOUCHERS SUPPORTING THE AMOUNT OF SALE OF SCRAP, THEREFORE, THE AO WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAS ROUTED HER OWN INCOME FROM UNDISCLOSED SOURCES IN THE GARB OF SALE OF SCRAP AND, THEREFORE, PENALTY IS LEVIABLE ON THE ASSESSEE. LD. DR FURTHE R CONTENDED THAT EVEN DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE COULD NOT GET EXEMPTION U/S 80IC OF THE ACT ON THE AMOUNT OF SALE OF SCRAP, THEREFORE, IT CAN SAFELY BE PRESUMED THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS O F HER INCOME AND HAS CONCEALED TRUE PARTICULARS OF HER INCOME AND, THERE FORE, UNDER EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT, THE PENALTY WAS RIGHT LY IMPOSED BY THE AO AND THE CIT(A) WAS QUITE JUSTIFIED IN CONFIRMING THE SAME. 9. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, A T THE VERY OUTSET, WE NOTE THAT ALTHOUGH THE ASSESSEE COULD NOT PRODUCE B ILLS AND VOUCHERS PERTAINING ITA NO.1081/DEL/2013 ASSTT.YEAR: 2008-09 6 TO THE SALE OF SCRAP BUT THE SAME DETAILS WAS SUBMI TTED BY THE ASSESSEE BEFORE THE CIT(A) WHICH WAS ALSO CONFRONTED TO THE AO AND THE AO IN HIS REMAND REPORT DATED 23.10.2012 OBJECTED TO THE ADMISSION O F ADDITIONAL EVIDENCE BUT COULD NOT BRING ANY ADVERSE MATERIAL TO CONTROVERT OR TO DEMOLISH THE EVIDENCE SUBMITTED BY THE ASSESSEE IN SUPPORT OF GENUINENESS OF THE AMOUNT RECEIVED FROM SALE OF SCRAP. WE ALSO NOTE THAT SIMILAR KIND OF AMOUNT RECEIVED BY THE ASSESSEE DURING AY 2007-08 WHICH WAS OF RS. 5 LAKH WAS ALSO ACCEPTED BY THE AO IN THE ORDER DATED 11.12.2009 PASSED U/S 143(3) OF THE ACT, THEREFORE, SIMILAR KIND OF CLAIM WHICH COULD NOT BE SUPPORTED BY WAY OF BILLS AND VOUCHERS DURING THE SUBSEQUENT YEAR CANNOT BE HELD AS CONCEA LMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME OF THE ASSESSEE, SPECIALLY WHEN THE REQUIRED EXPLANATION/BILLS AND V OUCHERS WERE SUBMITTED SUBSEQUENTLY BEFORE THE CIT(A) DURING FIRST APPELL ATE PROCEEDINGS. 10. WE ALSO NOTE THAT THE HONBLE HIGH COURT OF MAD RAS IN THE CASE OF FENNER INDIA LTD. HAS HELD THAT THE PROFIT FROM SALE OF SC RAP IS ELIGIBLE FOR DEDUCTION U/S 80HH OF THE ACT AS THE SALE OF SCRAP HAS NO DIRECT LINK OR NEXUS WITH THE ACTIVITIES OF INDUSTRIAL UNDERTAKING WHICH IS ELIGI BLE FOR DEDUCTION U/S 80HH OF THE ACT. IN THE PRESENT CASE WE ARE NOT DEALING WI TH THE ALLOWABILITY OF DEDUCTION OF SECTION 80IC OF THE ACT TOWARDS THE PR OFITS FROM SALE OF SCRAP EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSID ERATION, THEREFORE, THIS ISSUE IS ACADEMIC TO THE PRESENT CASE. AT THE SAME TIME, FROM THE ASSESSMENT ORDER ITA NO.1081/DEL/2013 ASSTT.YEAR: 2008-09 7 FOR AY 2007-08, WE NOTE THAT THE AO HAS NOT DISPUTE D THE AMOUNT OF RS. 5 LAKH WHICH WAS EARNED BY THE ASSESSEE FROM SALE OF SCRAP AND ALTHOUGH THE AO HAS DENIED DEDUCTION U/S 80IC OF THE ACT TO THE ASSESSE E FOR THIS AMOUNT FOR AY 2007-08 FOR THE YEAR UNDER CONSIDERATION, IT CANNOT BE SAID THAT THE ASSESSEE FURNISHED EITHER INACCURATE PARTICULARS OF ITS INCO ME OR HAS CONCEALED PARTICULARS OF ITS TRUE INCOME. AT THIS JUNCTURE, WE RESPECTFU LLY TAKE COGNIZANCE OF DECISION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS LTD. WHERE THEIR LORDSHIPS HELD THAT MERELY BECAUSE THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED OR WAS NOT FOUND TO BE ACCEPTABLE BY THE REVENUE AU THORITIES, ONLY ON THIS BASIS PENALTY U/S 271(1)(C) IS NOT LEVIABLE. THE FACTS A ND CIRCUMSTANCES OF THE PRESENT CASE ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AS IN THE PRESENT CASE ALSO, THE ASSESSEE SUBMITTED SUPPORTIVE BILLS AND VOUCHER S TO JUSTIFY THE RECEIPT OF AMOUNT FROM SALE OF SCRAP BEFORE THE CIT(A) ALTHOUG H THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IC OF THE ACT HAS BEEN DECLINED BY THE REVENUE AUTHORITY BUT REJECTION OF THE CLAIM DOES NOT AUTOMATICALLY ATTRA CT PENALTY. THEREFORE, WE REACH TO A LOGICAL CONCLUSION THAT THE AO LEVIED PE NALTY IN A HASTY MANNER WITHOUT ASSIGNING ANY JUSTIFIED AND REASONABLE CAUS E WHICH WAS UPHELD BY THE CIT(A) IN A MECHANICAL MANNER WITHOUT GOING INTO TH E FACTS AND CIRCUMSTANCES OF THE CASE AND IGNORING THIS IMPORTANT FACT THAT T HE ASSESSEE SUBMITTED DETAILS OF LEDGER ACCOUNT, BILLS AND VOUCHERS DURING QUANTUM A PPELLATE PROCEEDINGS WHICH CANNOT BE IGNORED. THEREFORE, CONCLUSION OF THE AO THAT THE ASSESSEE ROUTED HER OWN MONEY EARNED FROM UNDISCLOSED SOURCES IN THE GA RB OF SALE OF SCRAP FOR ITA NO.1081/DEL/2013 ASSTT.YEAR: 2008-09 8 LEVY OF PENALTY U/S 271(1)(C) IS NOT SUSTAINABLE. FINALLY, WE HOLD THAT THE PENALTY WAS IMPOSED ON THE ASSESSEE WITHOUT ANY JUS TIFIED REASON AND THE SAME IS NOT SUSTAINABLE IN VIEW OF OUR FOREGOING DISCUSS ION AND, THEREFORE WE DIRECT THE AO TO DELETE THE PENALTY. ACCORDINGLY, SOLE GR OUND OF THE AASSESSEE IS ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 04.03.2015. SD/- SD/- (N.K. SAINI) (CHANDRAMOHAN G ARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 04 TH MARCH 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR