DCIT, Faridabad V. M/s. Star Wire Ind. Ltd., New Delhi

ITA 1142/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0758 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Application of stay
• Section: 132

Judgement Text

1 ITA NO. 1142/DEL/2015 & C.O NO. 270/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 1142/DEL/2015 ( A.Y 2009-10 ) DCIT CENTRAL CIRCLE-1 NEW CGO COMPLEX, NH-IV FARIDABAD (APPELLANT) VS STAR WIRE IND. LTD. 35, LINK ROAD, 2 ND FLOOR, LAJPAT NAGAR-III NEW DELHI AAECS1124Q (RESPONDENT) C.O NO. 270/DEL/2015 ( A.Y 2009-10 ) STAR WIRE IND. LTD. 35, LINK ROAD, 2 ND FLOOR, LAJPAT NAGAR-III NEW DELHI AAECS1124Q (APPELLANT) VS DCIT CENTRAL CIRCLE-1 NEW CGO COMPLEX, NH-IV FARIDABAD (RESPONDENT) APPELLANT BY SH. S. S. RANA, CIT DR RESPONDENT BY SH. ASHWANI KUMAR, CA ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 31/12/2014 PASSED BY CIT(A)-III, GURGAON FOR ASSESSMENT YEAR 2 009-10 AND THE CROSS OBJECTION IS FILED BY THE ASSESSEE. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- ITA NO. 1142/DEL/2015 DATE OF HEARING 12.09.2018 DATE OF PRONOUNCEMENT 13.09.2018 2 ITA NO. 1142/DEL/2015 & C.O NO. 270/DEL/2015 (I) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE TOTAL PENALTY LEVI ED U/S 271AAA EVEN WHEN THE ASSESSEE WAS GIVEN APPROPRIATE OPPORT UNITY OF BEING HEARD?. (II) WHETHER ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN GRANTING RELIEF TO THE ASSESSEE WHEN EVEN THE BASIC REQUIREMENT OF THE SECTION 271AAA IS NOT FULF ILLED I.E. THE ASSESSEE FAILED TO ELABORATE THE MANNER IN WHICH TH E UNDISCLOSED INCOME WAS DERIVED?.' THE GROUNDS OF APPEAL ARE AS UNDER:- C.O NO. 270/DEL/2015 THAT IN THE PRESENT CASE PENALTY U/S 271 AAA IN RE SPECT OF THE ASSESSMENT YEAR UNDER REFERENCE WAS IMPOSED ON THE RESPONDENT COMPANY AS WELL AS THE TWO DIRECTORS OF THE SAID CO MPANY ON THE SAME FACT AND SAME SEIZED RECORDS. THE PENALTY HAS BEEN DELETED BY THE LEARNED ITAT F BENCH, NEW DELHI IN APPEAL NO.L835 /DEL/2013 AND APPEAL NO.L836/DEL/2013 VIDE ORDER DATED 30-06-2014 IN THE CASE OF BOTH THE DIRECTORS VIZ SHRI SITA RAM GUPTA AND SHRI MOHINDER KUMAR GUPTA. THAT THE INCOME TAX DEPARTMENT HAS NOT BROUGHT ANY FRESH MATERIAL AND THUS THE ORDER ALREADY PASSED BY THE LEARNED ITAT M AY KINDLY BE UPHELD. 3. THE ASSESSEE IS DERIVING INCOME FROM MANUFACTURI NG OF INGOTS OF SPRING STEEL AND SALE PURCHASE OF LAND. A SEARCH AND SEIZU RE OPERATION U/S 132(1) OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 29.01.2009. THE GROUP SURRENDERED A TOTAL SUM OF RS . 22 CRORES OF WHICH RS.7 CRORES WAS IN THE HANDS OF THE ASSESSEE. WHILE PASS ING THE ASSESSMENT ORDER, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271AAA. REJECTING THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER LEVIED PENALTY OF RS. 70,00,000/- 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT (A). THE CIT (A) ALLOWED THE APPEAL OF THE ASS ESSEE. 3 ITA NO. 1142/DEL/2015 & C.O NO. 270/DEL/2015 5. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT S UBSTANTIALLY BROUGHT ANY MATERIAL OR EXPLAINED THE MANNER REGARDING THE UNDISCLOSED INCOME. THE LD. DR SUBMITTED THAT AS PER REQUIREMENT OF SECTION 271AAA OF THE ACT, THE ASSESSE HAS TO EXPLAIN THE SUBSTANTIAL MANNER OF TH E INCOME BEFORE THE ASSESSING OFFICER. THE ASSESSEE FAILED TO DO SO AND , THEREFORE, THE ASSESSING OFFICER RIGHTLY LEVIED PENALTY IN RESPECT OF FAILU RE TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. 6. THE LD. AR SUBMITTED THAT THE ASSESSEE DURING TH E ASSESSMENT PROCEEDINGS HAS EXPLAINED THE MANNER IN WHICH UNDIS CLOSED INCOME WAS DERIVED. IN FACT, THE ASSESSING OFFICER RECORDED TH E STATEMENT OF ONE MR. MOHINDER KUMAR GUPTA, DIRECTOR OF THE COMPANY AND A S REGARDS QUESTION NO. 3, THE DIRECTOR OF THE COMPANY HAS EXPLAINED THE MA NNER IN WHICH THE INCOME WAS DERIVED. THUS, SECTION 271AAA OF THE ACT WILL NOT BE ATTRACTED IN ASSESSEES CASE. THE LD. AR FURTHER RELIED UPON TH E DECISION OF THE TRIBUNAL IN THE CASE OF DIRECTORS OF THE ASSESSEE COMPANY (ITA NO. 1835/DEL/2013 & ITA NO. 1836/DEL/2013, SITA RAM GUPTA VS. ACIT & MOHIN DER KUMAR GUPTA VS. ACIT ORDER DATED 30 TH JUNE, 2014 FOR ASSESSMENT YEAR 2009-10) WHEREIN TH E PENALTY LEVIED U/S 271AAA HAS BEEN DELETED BY THE T RIBUNAL. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL R ELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER HIMSELF HAS RECORDED THE STATEMENT OF SHRI MOHINDER KUMAR G UPTA IN THE ASSESSMENT ORDER, WHEREIN THE DIRECTOR OF THE COMPANY HAS ELAB ORATED THE TRANSACTION WHICH WAS ALSO CONFIRMED BY MR. KAILASH CHANDRA AGA RWAL. THE ASSESSEE COMPANY THROUGH ITS REPLY HAS ALSO EXPLAINED THE MA NNER IN WHICH THE INCOME WAS DERIVED. THUS, THE ASSESSEE IN OUR OPINION HAS EXPLAINED SUBSTANTIALLY THE INCOME WHICH WAS SURRENDERED DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, SECTION 271AAA OF THE INCOME TAX ACT WILL NOT BE AP PLICABLE IN THE PRESENT CASE. THE TRIBUNAL IN THE CASE OF DIRECTOR OF THE ASSESSEE COMPANY DELETED THE 4 ITA NO. 1142/DEL/2015 & C.O NO. 270/DEL/2015 PENALTY LEVIED U/S 271AAA FOR THE SAME ASSESSMENT Y EAR ON WHICH THE SURRENDER TOOK PLACE. THE TRIBUNAL HELD AS UNDER:- 19. THUS, EVIDENTLY, PENALTY U/S 271AAA IS NOT LEV IABLE IF AN ASSESSEE, IN HIS STATEMENT RECORDED DURING THE SEARCH U/S 132 OF THE ACT, ADMITS THE UNDISCLOSED INCOME, SPECIFIES AND SUBSTANTIATES THE MANNER IN WHICH IT HAS BEEN DERIVED AND PAYS THE TAXES DUE THEREON, TOGETH ER WITH INTEREST. HERE, UNDISPUTEDLY, THE ASSESSEE HAS PAID DUE TAX ON THE ADMITTED UNDISCLOSED INCOME. THE QUESTION OF SPECIFYING THE MANNER IN WH ICH THE UNDISCLOSED ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 INCOM E WAS DERIVED, STOOD DULY ANSWERED BY THE ASSESSEE BEFORE THE AUTH ORITIES. THE SAME WAS ACCEPTED BY THE AO, WITHOUT VARIATION, THIS FACT IT SELF EVIDENCING THE ASSESSEE HAVING PASSED THE TEST OF SECTION 271AAA OF THE ACT . THEN, THERE IS NO SPECIFIC FORMAT/PROCEDURE PRESCRIBED IN THE ACT FOR SPECIFYING AND SUBSTANTIATING AN UNDISCLOSED INCOME. THE STATEMENT OF THE ASSESSEE, SPECIFYING THE MANNER IN WHICH THE UNDISCLOSED INCO ME WAS DERIVED AND SUBSTANTIATED, DID NOT FACE ANY REBUTTAL OR REJECTI ON AT THE HANDS OF THE AO. AS PER THE STATEMENT RECORDED (WHICH STATEMENT, THO UGH NOT OF THE ASSESSEE IN ITA NO.1835/DEL/2013, WAS OF HIS SON, I.E., THE ASSESSEE IN ITA NO.1836/DEL/2013 AND WAS RATIFIED BY HIM, AS POINTE D OUT BY THE LD. COUNSEL FOR THE ASSESSEES BEFORE US), IT HAD BEEN A DMITTED THAT THE ASSESSEE HAD ENTERED INTO VARIOUS TRANSACTIONS OF SALE/PURCH ASE OF LAND DURING THE CONCERNED PERIOD. THE INCOME ARISING OUT OF THE SAI D TRANSACTIONS WAS DECLARED. THIS INCLUDED THE UNDISCLOSED AMOUNT. LAT ER, DUE TAXES THEREON WERE ALSO PAID. 20. BESIDES, IN 'MOTHERS PRIDE EDUCATION PERSONNA P VT. LTD.' (SUPRA) (AUTHORED BY ONE OF US - THE LD. AM) (CLPB 16-21), AGAIN, 'RA DHA KISHAN GOEL' (SUPRA) AND 'MAHENDRA C. SHAH' (SUPRA) HAVE BEEN FOLLOWED T O DELETE THE PENALTY LEVIED U/S 271AAA OF THE ACT. 21. 'RADHA KISHAN GOEL' (SUPRA) AND 'MAHENDRA C. SH AH' (SUPRA) HAVE ALSO BEEN FOLLOWED IN 'SMT. RAJ RANI GUPTA' (CLPB 48-53) , 'CONCRETE DEVELOPERS' (SUPRA) (CLPB 54-59) AND 'SMT. SULOCHANADEVI A. AGA RWAL' (SUPRA) (CLPB 23- 29). 22. FOR THE ABOVE DISCUSSION, WE HOLD THAT THE ASSE SSEE HAS SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERI VED AND THAT BEING SO, THE CONDITION LAID DOWN BY SECTION 271AAA (2) (II) HAS BEEN DULY MET. WE 5 ITA NO. 1142/DEL/2015 & C.O NO. 270/DEL/2015 HOLD THAT THEREFORE, THE LD. CIT (A) ERRED IN DECID ING THIS ISSUE AGAINST THE ASSESSEE. 23. CONSEQUENTLY, THE GRIEVANCE OF THE ASSESSEE IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. 24. AS STATED AT THE BEGINNING OF THIS ORDER, THE F ACTS IN ITA NO.1836/DEL/2013 ARE, MUTATIS MUTANDIS, EXACTLY SIM ILAR TO THOSE IN ITA NO.1835/DEL/2013. HENCE, OUR DISCUSSION ON THE MATT ER SHALL APPLY EQUALLY FOR ITA NO.1836/DEL/2013 ALSO. 25. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. THE STAY APPLICATION NO.433/DEL/2013 IN ITA NO.1835/DEL/2013 IS DISMISSED AS HAVING BECOME INFRUCTUOUS. THUS, THE FACTS ARE IDENTICAL IN PRESENT CASE AND T HE CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED U/S 271AAA OF THE ACT. THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED. THE CROSS OBJECTION FILED BY THE ASSESSEE IS MERELY IN SUPPORT OF THE ORDER OF THE CIT(A). SINCE THE APPEA L OF THE REVENUE IS DISMISSED, THE CROSS OBJECTION BECOMES INFRUCTUOUS, HENCE DISMISSED. 8. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH SEPTEMBER, 2018. SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 13/09/2018 *R.N 6 ITA NO. 1142/DEL/2015 & C.O NO. 270/DEL/2015 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 12.09.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.09.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 13.09.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 13.09.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.0 9.2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER