ITO, Kishangarh V. MUKESH KUMAR SHARMA, Kishangarh

ITA 1096/JPR/2010

• Counselvise Citation: 109623114 RSA 2010
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MEENA
• Keywords: Corroborative evidences

Judgement Text

1 ITA 1096-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 1096/JP/2010 ASSTT. YEAR : 2007-08. THE INCOME-TAX OFFICER, VS. SHRI MUKESH KUMAR SHA RMA, KISHANGARH. ADITYA MILLS COLONY, MADANGANJ, KISHANGARH. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.C. MEENA RESPONDENT BY : SHRI VINOD GUPTA ORDER DATE OF ORDER : 28/07/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST CANCELLATI ON OF LEVY OF PENALTY UNDER SECTION 271(1)(C) AT RS. 4,08,972/-. 2. THE LD. D/R HAS PLACED RELIANCE ON THE ORDER OF AO AND HAS ALSO FILED WRITTEN SUBMISSION. 3. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE H AS RELIED ON THE ORDER OF LD. CIT (A) AND HAS ALSO FILED WRITTEN SUBMISSIONS. 4. NOW THE APPEAL OF THE DEPARTMENT IS DISPOSED OFF IN THE FOLLOWING MANNER. 5. ASSESSEE IS WORKING AS A COMMISSION AGENT FOR A MULTI LEVEL MARKETING COMPANY. RETURN DECLARING TOTAL INCOME OF RS.2,27,936/- WAS FILED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUNDRY CREDITORS UNDER SECTI ON 41(1) AT RS. 3,06,924/- WAS SURRENDERED AND A FURTHER DISALLOWANCE OF EXPENSES OF RS. 8,99,074/- WAS ALSO ADMITTED. 2 IN THIS WAY TOTAL ADDITION WAS ADMITTED BY ASSESSEE AT RS. 12,05,994/-. THE ASSESSMENT WAS COMPLETED MAKING THE ABOVE ADDITION. NO APPEAL WAS FILED AGAINST THE ASSESSMENT ORDER AS THE ASSESSMENT WAS MADE ON ACCOUNT OF ACCO UNT OF ADMISSION OF ADDITION. THEREAFTER, CONSIDERING THE EXPLANATION OF THE ASSE SSEE THE AO FOUND THAT ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND, THEREFORE, IN HIS VIEW THE PENALTY WAS LEVIABLE. PLACING RELIANCE ON THE DECISIONS IN THE CASES OF D HARMENDRA TEXTILE PROCESSORS, 306 ITR 277 (SC) AND M/S. DASS TRADING & HOLDING PVT. LTD., 226 CTR 533 (DEL.), THE AO LEVIED PENALTY OF RS. 4,08,927/-. 6. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). D ETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT (A). IT WAS SUBMITTED THAT ORDER IMP OSING PENALTY IS QUASI CRIMINAL IN NATURE AND THUS BURDEN LIES ON THE DEPARTMENT TO ES TABLISH THAT ASSESSEE HAS CONCEALED HIS INCOME. ON MERITS, IT WAS SUBMITTED THAT ASSESSEE HAS NOWHERE STATED THAT THE SUNDRY CREDITORS ARE NOT GENUINE OR EXPENSES INCURRED BY A SSESSEE WERE NOT GENUINE AS ASSESSEE WAS NOT ABLE TO LEAD THE EVIDENCES. THEREFORE, TO B UY PEACE THE ADDITION WAS ADMITTED. ALL THE PARTICULARS IN RESPECT OF SUNDRY CREDITORS AS WELL AS EXPENSES WERE FURNISHED ALONG WITH THE RETURN. THEREFORE, ASSESSEE HAS NOT CONCEA LED ANY PARTICULARS OF INCOME. RELIANCE WAS PLACED ON VARIOUS CASE LAWS. THE SUBMISSION OF THE ASSESSEE HAS BEEN DISCUSSED BY LD. CIT (A) IN HIS ORDER AT PAGES 3 TO 9. THEREAFT ER, LD. CIT (A) FOUND THAT DECISIONS RELIED UPON BY AO ARE NOT APPLICABLE AND THE ASSESS EE HAS NOT CONCEALED ANY INCOME. THE LD. CIT (A) HAS NOTED THAT THE ASSESSEE HAS SUR RENDERED AMOUNT IN RESPECT OF EXPENSES CLAIMED BY HIM FOR SUNDRY CREDITORS AS WEL L AS EXPENSES INCURRED WERE NOT FOUND INCORRECT OR INGENUINE. THEREFORE, MERELY ON SURRENDER OF THESE EXPENSES OR SUNDRY CREDITORS, PENALTY IS NOT LEVIABLE. ACCORDINGLY H E DELETED THE PENALTY. 3 7. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (A) AND THE WRITTEN SUBMISSIONS FILED ON BEHALF OF BOTH THE PARTIES, WE FIND THAT LD. CIT (A) WAS JUSTIFIED IN CANCELING THE LEVY OF PENALTY. DURING THE ASSESSME NT PROCEEDINGS THE AO REQUIRED THE ASSESSEE TO FILE DETAILS OF SUNDRY CREDITORS AND DE TAILS OF EXPENSES WHICH WERE FILED BY HIM. THE AO WANTED FURTHER SUPPORTING EVIDENCE IN RESPECT TO CLAIM OF THESE SUNDRY CREDITORS AS WELL AS EXPENSES CLAIMED BY THE ASSESS EE. HOWEVER, ASSESSEE WAS NOT ABLE TO FILE SUPPORTING EVIDENCES, THEREFORE, HE AGREED TO MAKE THE ADDITIONS IN THE TOTAL INCOME OF THE ASSESSEE. ACCORDINGLY AO MADE THE ADDITION AND ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). THEREFORE, DE TAILED REPLY WAS FILED ON BEHALF OF THE ASSESSEE. HOWEVER, AO WAS NOT SATISFIED. ACCORDING LY HE LEVIED THE PENALTY. THE LD. CIT (A) HAS CONSIDERED THE EXPLANATION FILED BEFORE HIM AND FOUND THAT THE EXPLANATION OF THE ASSESSEE IS SATISFACTORY. VARIOUS CASE LAWS WERE RELIED UPON. THE RATIO OF ALL THESE CASE LAWS HAVE BEEN DISCUSSED BY LD. CIT (A). SOM E OF THE CASE LAWS MENTIONED ARE ATMARAM MAHIPAL VS. ITO, ITA NO. 611 (1999) JAIPUR BENCH. IN CASE OF VIRTUAL SOFT SYSTEMS LTD, 289 ITR 83 (SC) WHEREIN IT IS HELD THAT SECTION 271 OF THE ACT IS A PENAL PROVISION AND THERE ARE WELL ESTABLISHED PRINCIPLE S FOR THE INTERPRETATION OF SUCH A PENAL PROVISION. SUCH PROVISION HAS TO BE CONSTRUED STRI CTLY AND NARROWLY AND NOT WIDELY OR WITH THE OBJECT OF ADVANCING THE OBJECT AND INTENTI ON OF THE LEGISLATURE. RELIANCE WAS PLACED IN THE CASE OF REGISTHAN WOOLEN CARPET FACTO RY, ITA NO.292/JP/2001 BY THE JAIPUR BENCH. THE DECISION IN CASE OF DURGA KAMAL RICE MIKLLS,265 ITR 25 (CAL.)AND IN CASE OF HARIGOPAL SINGH, 258 ITR 85 (P&H) WAS ALSO RELIED UPON. IT WAS ALSO SUBMITTED THAT THE DECISION OF DHARMENDRA TEXTILES (SUPRA) HA S TO BE UNDERSTOOD IN THE CORRECT PROSPECTIVE WHICH HAS BEEN CONSIDERED BY THE HONBL E APEX COURT IN THE CASE OF 4 RELIANCE PETRO PRODUCT. AFTER CONSIDERING THESE DE CISIONS INCLUDING THE DECISION OF HONBLE APEX COURT IN THE CASE OF REDLIANCE PETRO P RODUCT, THE LD. CIT (A) HAS CANCELLED THE LEVY OF PENALTY. THE LD. D/R HAS EMPHASIZED T HAT AO HAS DETECTED THE CONCEALED INCOME AND AFTER DETECTION THE ASSESSEE HAS SURREND ERED AND, THEREFORE, IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DASS TRADING & HOLDING PVT. LTD. 226 CTR 533 AND THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS REPORTED IN 306 ITR 277 (SC), PE NALTY IS LEVIABLE. THE ARGUMENT OF LD. D/R IN HIS WRITTEN SUBMISSION ARE THAT THE ASSESSEE HIMSELF HAS SURRENDERED THE INCOME MEANING THEREBY HE HIMSELF ADMITTED THAT THE CLAIMS WERE NOT MADE CORRECT IN THE RETURN FILED, IN OUR VIEW THESE OBSERVATIONS OF LD. D/R AR E NOT CORRECT AS THE ASSESSEE AGREED TO MAKE THE ADDITION FOR WANT OF SUPPORTING EVIDENCE O NLY. NOWHERE IT HAS BEEN ADMITTED BY THE ASSESSEE THAT SUNDRY CREDITORS ARE NOT GEN UINE OR THE EXPENSES CLAIMED BY HIM ARE NOT GENUINE. ONLY HE WAS NOT ABLE TO FILE THE SUPP ORTING EVIDENCE, THEREFORE, HE HAD ADMITTED TO MAKE THE ADDITION. MERELY IN ADMITTING THE ADDITION, LEVY OF PENALTY UNDER SECTION 271(1)(C) IS NOT AUTOMATIC. IT HAS TO BE F OUND OUT THAT THE CLAIM OF THE ASSESSEE WAS WRONG OR MALAFIDE. THIS IS NOT THE CASE OF THE DEPARTMENT AS ASSESSEE AGREED TO MAKE THE ADDITION ONLY FOR WANT OF SUPPORTING VOUCHERS. THE LD. D/R HAS ALSO PLACED RELIANCE ON THE DECISION OF JAIPUR BENCH IN THE CASE OF GOPA L LAL DHAMANI IN ITA NO.275/JP/93DATED 29.2.2000 WHEREIN PENALTY OF RS. 15,140/- HAS BEEN CONFIRMED. 8. AFTER GOING THROUGH THE FINDING OF THE TRIBUNAL, IT WAS FOUND THAT THE TRIBUNAL HAS OBSERVED IN HIS ORDER THAT ASSESSEE HAS NOT FULLY C OOPERATED IN THE ASSESSMENT PROCEEDINGS EVEN FOR THE SUBSEQUENT ASSESSMENT YEAR AND THERE W AS A SPECIFIC QUERY WITH REFERENCE TO BANK ACCOUNT WHERE DEPOSITS WERE MADE. HOWEVER, ASS ESSEE COULD NOT EXPLAIN THE DEPOSIT 5 IN THE BANK AND, THEREFORE, HE AGREED TO MAKE THE A DDITION AND ON THIS BASIS THE PENALTY WAS LEVIED WHICH WAS CONFIRMED BY THE TRIBUNAL. HE RE, IN THE PRESENT CASE THE FACTS ARE TOTALLY DIFFERENT AS THE ASSESSEE HAS NOT ADMITTED THAT THE SUNDRY CREDITORS AND THE EXPENSES CLAIMED ARE NOT GENUINE. THE ASSESSEE WAS NOT ABLE TO FILE SUPPORTING EVIDENCE, THEREFORE, HE AGREED TO MAKE THE ADDITION .. IN OUR HUMBLE VIEW THIS IS NOT A CASE OF CONCEALMENT BUT A CASE OF NOT FILING THE EX PLANATION TO THE SATISFACTION OF THE AO. NO MATERIAL WHATSOEVER HAS BEEN BROUGHT ON RECORD T HAT THE CREDITORS AS WELL AS THE EXPENSES WERE NOT GENUINE. THEREFORE, IN OUR VIEW, THE LD. CIT (A) WHO AFTER CONSIDERING VARIOUS CASE LAWS HAS CANCELLED THE PENALTY. NO AR GUMENTS ARE PLACED BY LD. D/R THAT HOW THE CASE LAWS CONSIDERED BY LD. CIT (A) ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. THE DECISIONS RELIED UPON BY AO HAVE ALSO BE EN TAKEN INTO CONSIDERATION BY LD. CIT (A) AND THEREAFTER TAKING INTO CONSIDERATION T HE VARIOUS CASE LAWS PRONOUNCED ON A LATER STAGE, THE LD. CIT (A) HAS CONCLUDED THAT ON THE FACTS OF THE PRESENT CASE PENALTY IS NOT LEVIABLE. THEREFORE, IN VIEW OF THE ABOVE FACT S AND CIRCUMSTANCES AND IN VIEW OF THE REASONING GIVEN BY LD. CIT (A), WE CONFIRM HIS ORDE R. 9. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 10. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 .7.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- 6 COPY FORWARDED TO :- THE ITO KISHANGARH. SHRI MUKESH KUMAR SHARMA, KISANGARH. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1096/JP/2010) BY ORDER, AR ITAT JAIPUR.