DCIT, Faridabad V. Sh. Banarasi Dass Mittal, Faridabad

ITA 110/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4998 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 06-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Additional evidence; Initiation of penalty proceedings; Reasonable cause
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC: NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.110/DEL./2017 ASSESSMENT YEAR 2008-2009 THE DCIT, CIRCLE - 1, BLOCK - B, NEW CGO COMPLEX, FARIDABAD. VS. SHRI BANARSI DASS MITTAL 632, SECTOR-15, FARIDABAD. PAN AEYPM4232Q (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI T. VASANTHAN, SR. D.R. FOR ASSESSEE : SHRI VIJAY GUPTA, C.A. DATE OF HEARING : 17.08.2017 DATE OF PRONOUNCEMENT : 28 .08.2017 ORDER THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(A), FARIDABAD, DATED 8 TH NOVEMBER, 2016 FOR A.Y. 2008-2009, CHALLENGING THE CANCELLATION OF PENALTY UNDER SECTION 271D OF THE I.T. ACT, 1961. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT A.O. NOT ICED THAT ASSESSEE HAD MADE INVESTMENT OF RS.25 LAKHS IN DOON LIQUORS AND RS.15 LAKHS IN M/S. SEVEN SEAS MARKETING. THE A SSESSEE WAS ASKED TO FILE CONFIRMED COPY OF ACCOUNTS OF DOON LI QUORS WITH DOCUMENTARY EVIDENCE IN RESPECT OF SOURCE OF INVEST MENT OF RS.25 LAKHS IN CASH. SIMILARLY, REGARDING INVESTMENT IN M /S. SEVEN SEAS MARKETING AMOUNTING TO RS.15 LAKHS MADE IN CAS H DURING 2 ITA.NO.110/DEL./2017 SHRI BANARSI DASS MITTAL, FARIDABAD. THE YEAR AND ASSESSEE WAS ASKED TO FILE EVIDENCE. T HE ASSESSEE DID NOT FILE EVIDENCE OF SOURCE OF INVESTMENTS IN C ASH. THE ASSESSEE WAS AGAIN REQUESTED TO PRODUCE PRINCIPAL OFFICERS/MEMBERS OF AOPS IN WHICH ASSESSEE WAS ONE OF THE MEMBER WITH THEIR BOOKS OF ACCOUNT. THE A.O. ULTIMA TELY MADE ADDITION OF RS.25 LAKHS AND RS.15 LAKHS AND COMPUTE D THE INCOME OF THE ASSESSEE AT RS.49,85,610. 3. THE ASSESSEE CHALLENGED THE ADDITIONS BEFORE TH E LD. CIT(A). THE ASSESSEE FURNISHED ALL THE DOCUMENTARY EVIDENCES TO SHOW THAT ADDITION IS UNJUSTIFIED. THE LD. CIT(A) A FTER CONSIDERING THE ADDITIONAL EVIDENCE AND MATERIAL ON RECORD, DEL ETED BOTH THE ADDITIONS VIDE ORDER DATED 15 TH JULY, 2014. THE A.O. THEREAFTER, LEVIED THE PENALTY UNDER SECTION 271D VIDE ORDER DA TED 31 ST MARCH, 2015 BECAUSE ASSESSEE FAILED TO EXPLAIN THE EXIGENCY FOR MAKING CASH PAYMENT. 4. THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEF ORE LD. CIT(A) AND IT WAS SUBMITTED THAT ASSESSMENT UNDER S ECTION 143(3) WAS PASSED ON 27 TH DECEMBER, 2010 IN WHICH A.O. DID NOT MENTION IF ASSESSEE CONTRAVENED THE PROVISIONS OF S ECTION 269SS OF THE I.T. ACT. THE LD. CIT(A) DELETED THE ADDITIO N ON MERIT 3 ITA.NO.110/DEL./2017 SHRI BANARSI DASS MITTAL, FARIDABAD. CONSIDERING IT TO BE THE GENUINE TRANSACTION. THE A SSESSEE RELIED UPON THE DECISIONS OF DIFFERENT BENCHES OF THE TRIB UNAL IN SUPPORT OF THE CONTENTION THAT LEVY OF PENALTY IS U NJUSTIFIED. 5. THE LD. CIT(A) REPRODUCED THE FINDING OF FACT R ECORDED IN THE QUANTUM APPEAL ORDER DATED 15 TH JULY, 2014 WHEREBY BOTH THE ADDITIONS HAVE BEEN CANCELLED IN WHICH HE HAS R ECORDED THE FINDING OF FACT THAT DUE TO URGENCY OF THE FUNDS TH E AMOUNT HAVE BEEN TAKEN IN CASH FROM AOP WHICH WAS HAVING SUFFIC IENT FUNDS AND THE SAME WERE LATER ON TRANSFERRED TO THE CAPIT AL ACCOUNT OF THE ASSESSEE ON THE BASIS OF THE ENTRIES IN THE BOO KS OF ACCOUNT. THE ADDITION ON MERIT WAS DELETED. UNDER THESE CIRC UMSTANCES, IT WAS FOUND THAT SINCE IT IS A BUSINESS OF LIQUOR, TH EREFORE, AT THE TIME OF AUCTION IMMEDIATE CASH IS REQUIRED FOR DEPO SITING THE SAME WITH THE GOVERNMENT FOR OBTAINING THE LICENCE. THEREFORE, ASSESSEE WAS HAVING REASONABLE CAUSE FOR TAKING CAS H. ACCORDINGLY, THE PENALTY WAS CANCELLED AND THE APPE AL OF ASSESSEE HAS BEEN ALLOWED. 6. AFTER CONSIDERING THE RIVAL CONTENTIONS I DO NO T FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE HONBLE SUPRE ME COURT IN 4 ITA.NO.110/DEL./2017 SHRI BANARSI DASS MITTAL, FARIDABAD. THE CASE OF CIT VS. JAI LAXMI RICE MILLS (2015) 379 ITR 521(SC) HELD AS UNDER : FOR THE ASSESSMENT YEAR 1992-93 , THE ASSESSMENT ORDER WAS PASSED ON THE ASSESSEE ON FEBRUARY 26, 1996, EX-PAR TE. WHILE FRAMING THE ASSESSMENT , THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 269SS OF THE INCOME-TAX ACT, 1961 , AND BECAUSE OF THIS THE ASSESS ING OFFICER WAS SATISFIED THAT PENALTY PROCEEDINGS UNDER SECTION 27 1D OF THE A C T WERE T O BE INITIATED. ON APPEAL, THE COMMISSIONER (APPEALS) BY ORDER DATED D EC E MBE R 5, 1996, SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO FRAME THE - AS SESSMENT DE NOVO AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. MEANWH ILE PENA LTY UNDER SECTION 271D WAS LEVIED BY ORDER DATED SEPTEMBER 23, 1996, I . E ., BEFO R E THE APPEAL OF THE ASSESSEE AGAINST THE ORIGINAL ASSESSM ENT ORDER WAS HEARD A ND ALLO WED THEREBY SETTING ASIDE THE ASSESSMENT ORDER ITSE LF . AFTER REMAND, TH E ASS ES S I NG OFFICER PASSED A FRESH ASSESSMENT ORDER BUT IN THIS ASSESSMENT ORDER, NO SATISF AC TION REGARDING INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271D OF THE A CT W AS RECORDED. THE TRIBUNAL A S WELL AS THE HIGH COURT HELD THAT THE PENALTY O RDE R PASSED ON THE BASIS OF TH E O RIGINAL ASSESSMENT ORDER COULD NOT STILL SURVIV E W H EN THAT ASSESSMENT ORDER H AD B EE N SET ASIDE BECAUSE THE SATISFACTION RECORDED THEREIN FOR THE PURPOSE OF I N ITIATIO N O F THE PENALTY PROCEEDINGS WOULD ALSO NOT SUR V I VE. ON FURTHER APPEAL S : HELD, DISMISSING T H E APPEALS, THAT IN THE FRESH ASSESSMENT ORDER THERE WAS NO SATISFACTION RECORDED R E GARDING PENALTY PROCEEDINGS UNDER SECTION 271D OF THE ACT THOUGH IN THAT ORDER THE ASSESSING 5 ITA.NO.110/DEL./2017 SHRI BANARSI DASS MITTAL, FARIDABAD. OFFICER WANTED PENALTY PROCEEDING TO BE INITIATED U NDER SECTION 2 71 ( 1 )( C ) OF THE ACT . THUS, THE PENALTY UNDER SECTION 271D WAS WITHOUT ANY SAT IS FA CTI ON A N D , THEREFORE , NO SUCH PENALTY COULD BE LEVIED. 7. IN THE PRESENT CASE, THE A.O. MADE ADDITION OF THE AFORESAID AMOUNTS CONSIDERING IT TO BE UNEXPLAINED INCOME OF THE ASSESSEE. IN THE ASSESSMENT ORDER, THE A.O. DID NOT RECORD ANY SATISFACTION CONTRAVENING THE PROVISIONS OF SECTION 269SS OF THE I.T. ACT. WHEN THE LD. CIT(A) DELETED THE ADDITIONS ON MERIT, THE A.O. INITIATED THE PENALTY PROCEEDINGS UNDER SECTIO N 271D OF THE I.T. ACT AGAINST THE ASSESSEE. THEREFORE, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY JUDGMENT OF THE HONBLE S UPREME COURT IN THE CASE OF CIT VS. JAI LAXMI RICE MILLS (SUPRA) . FURTHER, THE LD. CIT(A) FOUND ON EXAMINATION OF THE MATERIAL ON RECORD THAT ASSESSEE ENTERED INTO THE GENUINE TRANSACTIONS AND FUNDS ARE TRANSFERRED INTER-SE BETWEEN ASSESSEE AND THE AOP WHICH ARE RECORDED IN THE BOOKS OF ACCOUNT. SINCE FOR RENEWAL OF THE LICENCE OF LIQUOR BUSINESS, IMMEDIATE CASH IS REQUIRED FOR OBTAINING THE LICENCE FROM THE GOVERNMENT, ASSESSEE HAD TAKEN CAS H. THEREFORE, LD. CIT(A) FOUND REASONABLE CAUSE FOR FA ILURE TO COMPLY WITH THE ABOVE PROVISION. THEREFORE, PENALTY WAS RI GHTLY CANCELLED 6 ITA.NO.110/DEL./2017 SHRI BANARSI DASS MITTAL, FARIDABAD. IN THE MATTER. I DO NOT FIND ANY MERIT IN THE DEPAR TMENTAL APPEAL AND THE SAME IS ACCORDINGLY DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 28 TH AUGUST, 2017 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH 6. GUARD FILE // BY ORDER // ASST. REGISTRAR ITAT : DELHI BENCHES : DELHI.