Vijender Kumar Jindal, Gurgaon V. ITO, Gurgaon

ITA 1090/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8479 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-07-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 24-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Keywords: Revised return
• Section: 271(1)(c); 251; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 1090/DEL/2009 ASSESSMENT YEAR : 2005-06 VIJENDER KUMAR JINDAL, 506/16, CIVIL LINES, GURGAON (HARYANA). PAN: ADFPJ7199F VS. THE INCOME TAX OFFICER, WARD-5, GURGAON. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SAURAV ROHATGI, CA REVENUE BY : SMT. NANDITA KANCHAN, DR O R D E R PER I.P. BANSAL, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER OF THE CIT (A) DATED 5 TH JANUARY, 2009 FOR ASSESSMENT YEAR 2005-06. GROUNDS OF APPEAL READ AS UNDER:- 1. THAT THE ORDER PASSED BY THE LD. CIT (A) IS ILLE GAL, BAD IN LAW, ARBITRARY AND AGAINST THE FACTS OF THE CASE. 2. THAT THE LD. CIT (A) WHILE CONFIRMING THE PENALT Y HAS CONCLUDED THAT AS PER EXPLANATION 1 BELOW SECTION 2 71(1)(C) WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPU TATION OF TOTAL INCOME OF AN ASSESSEE, HE FAILS TO OFFER AN E XPLANATION WHICH IS FOUND TO BE FALSE OR WHICH HE IS NOT ABLE TO SUBSTANTIATE, THAT THE AMOUNT ADDED OR DISALLOWED S HALL BE DEEMED TO BE THE CONCEALED INCOME FOR THE PURPOSE OF SECTION 271(1)(C) AND THE EXPLANATION SHIFTS THE ON US ON THE ASSESSEE TO SHOW THAT THE EXPLANATION, WHICH HE HAS FURNISHED, IS CORRECT. THE LD. CIT (A) HAS ERRED I N HOLDING THAT THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIAT E THE AMOUNT THAT HAS BEEN RECEIVED BY HIM WHEREAS THE AP PELLANT ITA NO.1090/DEL/2009 2 DISCHARGED HIS ONUS PLACED ON HIM BY FURNISHING THE DETAIL REGARDING PAYMENTS/PAYEES. 3. THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND O R DELETE ANY OF THE GROUNDS OF APPEAL AT OR BEFORE TH E TIME OF HEARING. 2. A PENALTY OF RS.1,36,436/- HAS BEEN IMPOSED U/S 271(1)(C) ON THE ASSESSEE ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN O F RS.4,50,000/-. THE ASSESSING OFFICER FOUND THAT TWO UNSECURED LOANS WE RE OUTSTANDING IN THE BOOKS OF THE ASSESSEE; FIRST, IN THE NAME OF SHRI VIJAY K UMAR AMOUNTING TO RS.2 LAC AND, SECOND, IN THE NAME OF SHRI JAGDEEP KUMAR OF RS.2, 50,000/-. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE GENUINENESS OF THESE LO ANS. IN RESPONSE, THE ASSESSEE HAS FILED THE AFFIDAVIT IN WHICH IT WAS ST ATED THAT HE HAS TRIED HIS LEVEL BEST TO GET THE CONFIRMATIONS FROM THE ABOVE CREDIT ORS, BUT BOTH OF THE CREDITORS ARE LINGERING ON THE ISSUE AND ARE PRESSURIZING ME TO GET SETTLED OLD ISSUE AMONGST THE FAMILY MEMBERS. TO AVOID PROLONGED LIT IGATION AND TO WIN PEACE OF MIND THE AMOUNT OF BOTH THE CREDITORS IS SURRENDERE D TO BE ADDED TO THE INCOME SUBJECT TO THE CONDITION THAT NO PENALTY SHALL BE I MPOSED U/S 271(1)(C) OR UNDER ANY OTHER PROVISIONS OF THE ACT. THE ASSESSING OFF ICER MADE ADDITION ACCORDINGLY. ACCORDING TO THE ASSESSING OFFICER, T HE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE UNSECURED LOANS IN TRODUCED IN HIS BOOKS OF ACCOUNT. ACCORDING TO THE ASSESSING OFFICER, THE A SSESSEE HAD MADE A SEEMINGLY VOLUNTARY DISCLOSURE ONLY AFTER WHEN HE W AS SPECIFICALLY ASKED TO FURNISH DETAILS OF UNSECURED LOANS AND, THEREFORE, THE PRESENT CASE PRIMA FACIE IS OF MENS REA . THAT IS HOW THE PENALTY PROCEEDINGS WERE INITIAT ED AGAINST THE ASSESSEE. IN THE PENALTY ORDER IT HAS BEEN MENTION ED THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE UNSECURE D LOANS AND A SEEMINGLY VOLUNTARY DISCLOSURE WAS MADE. THE STAND TAKEN EAR LIER WAS REITERATED AND THE DECISIONS RELIED UPON BY THE ASSESSEE WERE NOT SUPP ORTING THE CASE OF THE ASSESSEE AS ON FACTS THEY WERE QUITE DIFFERENT FROM THE FACTS OF THE PRESENT CASE. ACCORDINGLY, PENALTY OF RS.1,36,463/- WAS IMPOSED. LD. CIT (A) HAS CONFIRMED THE PENALTY. ACCORDING TO THE LD. CIT (A) AS PER E XPLANATION 1 BELOW SECTION ITA NO.1090/DEL/2009 3 271(1)(C) WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME OF AN ASSESSEE, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE OR WHICH HE IS NOT ABLE TO SUBSTANTIATE, THEN THE AMOUNT ADDED OR DISALLOWED SHALL BE DEEMED TO BE CONCEALED INCOME FOR THE PURPOSE OF SECTION 271(1)(C). THE SAID EXP LANATION HAS SHIFTED THE ONUS ON THE ASSESSEE AND THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE SAME. THEREFORE, PENALTY HAS RIGHTLY BEEN IMPOSED BY THE ASSESSING OFFICER. THE ASSESSEE IS AGGRIEVED WITH SUCH FINDINGS OF THE LD. CIT (A) AND HAS FILED THIS APPEAL. 3. IT WAS PLEADED BY LD. AR THAT THE PENALTY HAS WR ONGLY BEEN CONFIRMED BY THE LD. CIT (A). IT WAS STATED THAT DUE TO THE DIF FERENCE AND DISPUTE GOING ON WITH THE CREDITORS THEY DID NOT APPEAR BEFORE THE ASSESS ING OFFICER AND THEY DID NOT GIVE CONFIRMATION AND THIS FACT WAS BROUGHT TO THE NOTICE OF ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AS WELL AS DURING THE PENALTY PROCEEDINGS. IT WAS SUBMITTED THAT THE ASSESSEE HAD OFFERED THE SAI D UNSECURED LOANS WHICH IS TO BUY PEACE OF MIND AND TO AVOID PROLONGED PROCEED INGS. IT WAS SUBMITTED THAT THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F CIT VS. SURESH CHAND MITTAL 251 ITR 9 WAS SQUARELY APPLICABLE IN WHICH I T WAS HELD THAT THE ADDITION ACCEPTED BY THE ASSESSEE BY FILING REVISED RETURN S HOWING HIGHER INCOME TO BUY PEACE OF MIND AND TO AVOID LITIGATION WAS NOT WARRA NTING PENALTY. THUS, IT WAS PLEADED BY LD. AR THAT IT IS NOT A CASE WHERE LD. C IT (A) CAN BE HELD TO BE JUSTIFIED CONFIRMING THE PENALTY. 4. LD. DR RELYING ON THE DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF UNION OF INDIA VS. DHARMENDER TEXTILE PROCESSOR 306 ITR 277, PLEADED THAT MENS REA IS NO MORE REQUIREMENT FOR LEVY OF PENALTY AND PEN ALTY IS A CIVIL LIABILITY. THIS DECISION HAS ALSO BEEN REFERRED BY THE LD. CIT (A) IN HIS ORDER. IN THIS VIEW OF THE SITUATION, LD. DR PLEADED THAT PENALTY HAS R IGHTLY BEEN CONFIRMED BY THE LD. CIT (A) AND HIS ORDER SHOULD BE UPHELD. ITA NO.1090/DEL/2009 4 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE CREDITORS WERE NOT KNOWN TO HIM. THE CONTENTS OF T HE AFFIDAVIT FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER DURING THE QU ANTUM PROCEEDINGS IN WHICH THE REASON FOR SURRENDERING WAS GIVEN ARE REPRODUCE D IN PARA 8 OF THE ORDER OF THE LD. CIT (A). IN THE SAID AFFIDAVIT, AFTER STAT ING THE FACTS AND THE NAMES AND ADDRESSES OF THE CREDITORS IT WAS STATED BY THE ASS ESSEE THAT HE HAS TRIED HIS LEVEL BEST TO GET THE CONFIRMATIONS FROM ABOVE CRED ITORS WHICH THEY WERE LINGERING ON AND PRESSURIZING THE ASSESSEE TO GET SETTLED OLD ISSUES AMONGST HIS FAMILY MEMBERS. THUS, IT HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE THAT THE CONFIRMATIONS WERE NOT BEING GIVEN BY THE CREDITORS DUE TO SOME DISPUTE. IN SUCH A SITUATION, IF THE ADDITION WAS BEING MADE, THE AS SESSING OFFICER WAS REQUIRED TO CALL FOR THE PARTIES TO VERIFY THE CONTENTIONS OF T HE ASSESSEE PUT FORTH THROUGH THE AFFIDAVIT. IN THE ABSENCE OF ANY SUCH MATERIAL OR RECORD, IT HAS TO BE PRESUMED THAT WHAT WAS STATED BY THE ASSESSEE IN THE AFFIDAV IT WAS CORRECT. IF THE SAID FACT IS TAKEN AS CORRECT, THEN THE ASSESSEE WAS PREVENTE D BY REASONABLE AND SUFFICIENT CAUSE FOR NOT SUBMITTING THE CONFIRMATIO NS AND FOR THAT REASON ONLY HE SURRENDERED THE SAID AMOUNT AND HAS AGREED TO PAY T HE TAXES. BUT THAT DOES NOT MEAN THAT THE SAID AMOUNT REPRESENTED THE CONCEALED INCOME OF THE ASSESSEE. THE ASSESSING OFFICER COULD VERIFY FROM THOSE CREDI TORS ABOUT THE ACTUAL STATE OF AFFAIRS. THERE IS NO MATERIAL ON RECORD TO ESTABLI SH THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM THOSE CREDITORS REPRESENTED THE C ONCEALED INCOME OF THE ASSESSEE. KEEPING IN VIEW ALL THESE FACTS AND KEE PING IN VIEW THE ENTIRETY OF THE CIRCUMSTANCES, WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE WHERE LEVY OF CONCEALMENT PENALTY CAN BE HELD TO BE JUSTIFIED. W E DELETE THE SAME. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. . 7. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.07. 2009. [R.C. SHARMA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO.1090/DEL/2009 5 DATED, 16.07.2009. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES