Smt. Madhu, Meerut V. ITO, Meerut

ITA 1223/DEL/2015

• Counselvise Citation: 122320114 RSA 2015
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 23-11-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 03-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: V K GOEL; K K GARG
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 1223/DEL/2015 ASSESSMENT YEAR: 2003-04 SMT. MADHU, VS. ITO, WARD 1(4), W/O SH. VIKRAM SINGH, MEERUT C/O VINOD KUMAR GOEL, 282, BOUNDAY ROAD, CIVIL LINES, MEERUT (PAN: AFEPR6648L) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.K. GOEL, ADV. & SH. KK GARG, ADV. REVENUE BY : SHRI P. DAM KANUNJNA, SR. DR DATE OF HEARING ON : 23/11/2015 ORDER PRONOUNCED ON : 04/12/2015 PER H.S. SIDHU, JM ORDER THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER DATED 24.2.2015 PASSED BY THE LD. CIT(A), MEERUT RELATIN G TO ASSESSMENT YEAR 2003-04 ON THE FOLLOWING GROUNDS:- 1. THAT LD. ITO HAS NOT JUSTIFIED IN IMPOSING PENALTY U/S. 271(1)(C) WITHOUT CONSIDERING THE FACTS THAT THE P ENALTY ORDER PASSED BY AO WITHOUT APPROVAL FROM ADDL. CIT - RANGE-I, MEERUT. THE APPROVAL WAS GIVEN BY ADDL. C IT, 2 RANGE-I, MEERUT ON 29.3.2010 U/S. 271A AND AO HAS NOT MENTIONED THE APPROVAL BECAUSE IT WAS DEFECTIVE. 2. THAT LD. AO AND LD. CIT(A) HAS NOT CONSIDERED TH AT UNEXPLAINED DEPOSIT IN RESPECT OF CASH CREDIT OF VA RIOUS PERSONS AND DISALLOWANCE OF SALARY TO PARTNERS WHIC H WAS DEBATABLE AND AO HAS IMPOSED PENALTY ON DEEMED INCO ME, WHICH IS NOT PERMITTED U/S. 271(1)(C) OF I.T. ACT. HENCE, ORDER PASSED BY AO IS BAD IN LAW. 3. THAT THE ASSESSEE HAS RIGHT TO ADD, DELETE OR MO DIFY AND GROUNDS DURING THE APPEAL PROCEEDINGS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED HER RETURN OF INCOME ON 26.3.2004 DECLARING SHARE OF PROFIT IN TH E ALLEGED FIRM M/S MADHU & OTHERS AT RS. 2,521/- AND CLAIMED TO BE EX EMPT. THE ASSESSEE ALSO DECLARED RS. 24,000/- AS SALARY FROM M/S MADHU & OTHERS. DURING THE COURSE OF INQUIRY, IT WAS GATHER ED THAT THE ASSESSEE WAS ALLOTTED COUNTRY LIQUOR SHOP BY THE DISTRICT EX CISE OFFICER, MEERUT IN HER INDIVIDUAL NAME IN FINANCIAL YEAR 2002-03. IN FINANCIAL YEAR 2003-04, THE LICENSE FOR PURCHASE AND SALE OF COUNT RY LIQUOR FOR THE SHOP AT PHATAK ROHTA WAS RENEWED. IN AY 2003-04, T HE ASSESSEE CARRIED ON BUSINESS OF PURCHASE AND SALE OF COUNTRY LIQUOR. IN THE COURSE OF INQUIRY FOR AY 2002-03, THE ASSESSEE SUBM ITTED THAT THE BUSINESS WAS DONE IN THE STATUS OF FIRM AND THE INV ESTMENT IN BUSINESS WAS DECLARED IN THE RETURN OF THE FIRM. T HE ASSESSEE FURTHER SUBMITTED THAT A PARTNERSHIP DEED WAS EXECUTED ON 2 6.3.2002. THE RETURN OF INCOME OF THE FIRM M/S MADHU & OTHERS FOR AY 2003-04 SHOWS THAT TCS CERTIFICATES WERE ISSUED BY THE DIST ILLERIES IN THE NAME OF ASSESSEE (INDIVIDUAL). INQUIRIES FROM THE DEO RE VEALS THAT AFTER THE ISSUE OF COUNTRY LIQUOR LICENSE, NO NAME WAS ADDED. THEREFORE, THE INCOME WHICH HAS BEEN DISCLOSED IN THE HANDS OF THE FIRM REALLY 3 BELONGS TO ASSESSEE SMT. MADHU (INDIVIDUAL). ACCORD INGLY PROTECTIVE ASSESSMENT IN THE CASE OF M/S MADHU & OTHERS WAS CO MPLETED VIDE ORDER DATED 13.3.2006 AT RS. 27,92,190/- BY MAKING VARIOUS ADDITIONS. PENALTY PROCEEDINGS U/S. 271(1)(C) WERE INITIATED BY ISSUING NOTICE DATED 20.3.2006 AND SERVED UPON THE ASSESSEE . IN RESPONSE ASSESSEE FILED ITS REPLY, WHICH WAS NOT ACCEPTED BY THE AO AND THEREFORE, THE AO LEVIED THE PENALTY OF RS. 3,00,93 0/- U/S. 271(1)(C) OF THE I.T. ACT VIDE HIS ORDER DATED 29.3.2010. 3. AGAINST THE ABOVE PENALTY ORDER DATED 29.3.2010 PASSED BY THE ASSESSING OFFICER, ASSESSEE APPEALED BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 24.2.2015 DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGAINST THE ABOVE ORDER OF THE LD. CIT(A) DATED 24.2.2015, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. COUNSEL FOR THE ASSESSEE STATED THE AO WAS N OT JUSTIFIED IN IMPOSING PENALTY U/S. 271(1)(C). HE FURTHER SUBMITT ED THAT THE REVENUE AUTHORITIES HAVE NOT CONSIDERED THE UNEXPLAINED D EPOSIT IN RESPECT OF CASH CREDIT OF VARIOUS PERSONS AND DISALLOWANCE OF SALARY TO PARTNERS WHICH WAS DEBATABLE AND AO HAS IMPOSED PENALTY ON D EEMED INCOME, WHICH IS NOT PERMITTED U/S. 271(1)(C) OF THE I.T. A CT. HENCE, ORDER PASSED BY AO IS BAD IN LAW AND SIMILARLY LD. CIT(A) HAS ALSO WRONGLY UPHELD THE ORDER OF THE AO WHICH DESERVE TO BE CANC ELLED. 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND REQUESTED THAT THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT LD. CIT(A) HAS ADJUDICATED THE PENALTY IN DISPUTE VIDE PARA NO . 4.3 & 5.2 IN HIS IMPUGNED ORDER, WHICH READ AS UNDER:- 4 4.3 I HAVE CONSIDERED 'THE RIVAL SUBMISSIONS AS AB OVE. ONE OF THE MAIN CONTENTIONS OF THE AR IS THAT THE AO HA D PASSED PENALTY ORDER EVEN BEFORE THE ISSUE WAS DECIDED BY THE CIT(A). HOWEVER, THIS ARGUMENT CAN NO LONGER BE RAI SED BECAUSE AS DISCUSSED ABOVE THE APPEAL AGAINST THE ASSESSMENT ORDER PASSED IN THE CASE OF SMT. MADHU H AS BEEN DECIDED BY THE UNDERSIGNED VIDE ORDER DATED 30.01.2015 . IN THE APPEAL ORDER AGAINST THE QUANTU M ADDITION ALL THE ADDITIONS EXCEPT THAT OF RS.24,000 /-- AS SALARY FROM MIS MADHU & OTHERS WAS SUSTAINED. IT IS ALSO SEEN THAT IN THE PENALTY ORDER THE AO HAD NOT CONSI DERED RS.24,000/-- WHILE COMPUTING THE TAX SOUGHT TO BE E VADED. IT IS FURTHER SEEN THAT THE AO HAD ALSO NOT CONSIDERED THE ADDITION OF RS. 16,99,550/- WHICH WAS MADE ON ACCOU NT OF DISALLOWANCE U/S 40A(3) WHILE COMPUTING THE TAX SOU GHT TO BE EVADED BECAUSE THIS ADDITION DOES NOT ESTABLISH CONCEALMENT RATHER IT IS BECAUSE OF A DEEMING PROVI SION OF THE I.T. ACT. THUS THE AO HAS PASSED THE PENALTY OR DER AFTER PROPER APPLICATION OF MIND AND AFTER CONSIDERING TH E RELEVANT FACTS OF THE CASE. FURTHER THE CASE LAW CITED BY T HE AR ARE NOT OF ANY HELP BECAUSE THE FACT OF EACH CASE WHICH HAS BEEN CITED IS UNIQUE TO ITSELF. THE QUESTION OF SUI TABILITY OF IMPOSITION OF PENALTY IS A MATTER OF FACT WHICH IS TP BE DECIDED ON THE FACTS AND CIRCUMSTANCES UNIQUE TO TH IS CASE. AFTER CAREFUL STUDY OF THE ASSESSMENT ORDER AND THE PENALTY ORDER, I HAVE COME TO A CONCLUSION THAT THE AO HAD RIGHTLY IMPOSED PENALTY OF RS. 3,00,9201- U/S 271(L)(C) OF THE IT ACT. THE GROUNDS OF APPEAL NUMBER 1 AND 2 ARE ACCORDINGL Y DISMISSED. 5 5.2 DURING THE COURSE OF APPEAL PROCEEDINGS A LETTE R WAS WRITTEN TO THE AO TO ASCERTAIN WHETHER PRIOR APPROV AL OF THE ADDITIONAL COMMISSIONER WAS OBTAINED BEFORE PASSIN G THE PENALTY ORDER. THE AO HAS INFORMED VIDE HIS LETTER DATED 5 TH FEBRUARY, 2015 THAT APPROVAL FOR IMPOSITION OF PEN ALTY WAS OBTAINED BY THE AO FROM THE ADDL. CIT, RANGE-1, MEE RUT BEFORE PASSING ORDER UNDER ULS 271(1)(C). I HAVE PE RUSED THE APPROVAL GIVEN BY THE ADDL. CIT RANGE-L MEERUT VID E HIS LETTER DATED 29.03.2010. THE AR OF THE APPELLANT IN HIS LETTER DATED 23.02.2015 HAS FURTHER RAISED AN ISSUE THAT I N THE LETTER OF THE ADDL.CIT APPROVAL IS GIVEN TO IMPOSE PENALTY ULS 271A AND THEREFORE THERE IS NO PROPER APPROVAL. HOW EVER, IN THE SUBJECT OF THE LETTER OF ADDL.CIT THE WORDS ' A PPROVAL OF PENALTY U/S 271 (1)( C)' IS CLEARLY MENTIONED. FURT HER, THE APPROVAL IS GIVEN TO IMPOSE PENALTY 'OF RS. 3,00,93 0/- WHICH HAPPENS TO BE THE SAME AMOUNT WHICH HAS BEEN IMPOSE D AS PENALTY BY THE AO. THUS, IT IS CLEAR THAT MENTION O F SECTION 271A IS A TYPOGRAPHICAL MISTAKE. IN VIEW OF SECTION 292B OF THE IT ACT, 1961 THE LETTER OF APPROVAL OF THE ADDL .CIT, RANGE-L, MEERUT IS HELD TO BE PROPER APPROVAL TO IM POSE PENALTY ULS 271(1)(C). THE GROUND OF APPEAL NUMBER 3 IS ACCORDINGLY DISMISSED. 7.1 WE FURTHER FIND THAT SECTION 271(1)(C) POSTULA TES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AN D CONCEALMENT OF INCOME. BUT, NEITHER THE AO IN THE PENALTY ORDER NOR THE LD. CIT(A) HAS DISCUSSED THE ABOVE PROVISIONS AT ALL, WHICH ES TABLISH THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND C ONCEALMENT OF INCOME. IN THIS REGARD, WE DRAW OUR SUPPORT FROM THE DECISION OF THE 6 HON'BLE CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2 010) 322 ITR-158 (SC) WHEREIN THE HON'BLE SUPREME COURT HAS HELD TH AT 'WHERE THERE IS NO FINDINGS THAT ANY DETAILS SUPPLIED BY THE ASSESS EE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE IS NO QUESTION OF INVITING THE PENALTY U/SEC. 271(1)(C) OF THE ACT. A MERE MAKING A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT OF FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING A IN ACCURATE PARTICULARS OF INCOME. AS THE ASSESSEE HAS FURNISHED ALL THE DE TAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COU LD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY, BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WA S NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINI ON, ATTRACT THE PENALTY U/SEC. 271(1)(C). IF WE ACCEPT THE CONTENTION OF TH E REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTE D BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PE NALTY U/SEC. 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLAT URE'. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENT, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HA S NOT FURNISHED INACCURATE PARTICULARS OF INCOME AND THERE ARE NO F INDINGS OF THE ASSESSING OFFICER AND THE CIT (APPEALS) THAT THE DE TAILS FURNISHED BY 7 THE ASSESSEE IN HIS RETURN ARE FOUND TO BE INACCURA TE OR ERRONEOUS OR FALSE. UNDER THESE CIRCUMSTANCES, IN OUR VIEW THE P ENALTY IN DISPUTE IS TOTALLY UNWARRANTED AND DESERVE TO BE DELETED. ACC ORDINGLY, WE DELETE THE PENALTY OF RS. 3,00,930/- MADE U/S. 271(1)(C) O F THE I.T. ACT AND QUASHED THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE IN DISPUTE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/12/2015 . SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 04/12/2015 SRB COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES