M/s. Omega Nirman Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 1362/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3338 (ITAT-DELHI)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Revised return
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE MR. BHAVNESH SAINI , JUDICIAL MEMBER AND MR. WASEEM AHMED, ACCOUNTANT MEMBER ITA N O. 1362 /DEL/201 5 A SSESSMENT YEAR: 20 08 - 09 OMEGA NIRMAN PVT. LTD. H - 54, 3 RD FLOOR, DDA FLATS, ASHOK VIHAR, PHASE - 1, NEW DELHI VS. ITO WARD - 14(3) NEW DELHI PAN: AAACO7994C (APPELLANT) (RESPONDENT) O R D E R PER WASEEM AHMED, AM.: THIS APPEAL OF THE ASSESSEE FOR AY 200 8 - 0 9 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) D ATED 19 TH DECEMBER , 201 4 . THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE PENALTY ORDER D ATED 18 TH MARCH, 20 13 PASSED UNDER S ECTION 27L(L)(C) OF THE IT ACT, 1961 ('THE ACT' FOR SHORT). 2. BRIEFLY STATED, THE FACTS LEADING TO THIS APPEAL ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF LAND DEVELOPMENT WORK. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME OF RS. NIL AFTER SETTING OFF THE BROUGHT FORWARD LOSSES . APPELLANT BY R AJIV SAXENA, ADVOCATE & MR. SHYAM SUNDAR, AR RESPONDENT BY SH. S.R. SENAPATI, SR. DR DATE OF HEARING 08 .03.2018 DATE OF PRONOUNCEMENT 09 .03.2018 HOWEVER THE ASSESSME NT UNDER SECTION 143(3) OF THE ACT WAS MADE AT A TOTAL INCOME OF RS. 18 , 57 ,66 5 . 00 ONLY AFTER MAKING CERTAIN ADDITION & DISALLOWANCES TO THE TOTAL INCOME OF THE ASSESSEE . 3. THE ASSESSEE DURING THE YEAR HAS SHOWN A RECEIPT OF RS. 1,82,00,000.00 FROM M/S PA CT INDIA LIMITED AGAINST THE LAND DEVELOPMENT WORK. THE PACT INDIA LIMITED DEDUCTED TDS ON SUCH PAYMENT FOR RS. 4,12,412.00 WHICH WAS CLAIMED AS REFUND BY THE ASSESSEE IN ITS ITR. 4. HOWEVER THE AO TREATED THE ENTIRE TRANSACTION AS BOGUS AND CONCLUDED TH AT IT IS AN ARRANGEMENT BETWEEN THE ASSESSEE AND PACT INDIA LIMITED FOR THE BENEFIT OF PACT INDIA LIMITED. ACCORDINGLY THE AO HELD THAT THE AMOUNT OF TDS FOR RS. 4,12,412.00 REPRESENTS THE INCOME OF THE ASSESSEE AND THUS THE ADDITION WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. 5. THE AO DURING THE ASSESSMENT PROCEEDINGS TREATED THE IMPUGNED ADDITION AS CONCEALED INCOME OF THE ASSESSEE FOR THE YEAR ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME . ACCORDINGLY THE AO INITIATED THE PENALTY PROCEEDINGS UNDER S ECTION 27 1 ( 1 )(C) OF THE ACT . A FTER GIVING THE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER LAW, A PENALTY OF RS. 1,2 5, 973 .00 HAS BEEN IMPOSED UNDER SECTIO N 271(1)(C) OF THE ACT . 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO LD. CIT - A WHO CONFIRMED THE SAME. 7. BEING AGGRIEVED BY THE LD. CIT - A, THE ASSESSEE FILED THE 2 ND APPEAL BEFORE US . 8. THE LD. AR BEFORE US SUBMITTED THAT THE PENALTY UNDER SECTION 271(1 )(C) OF THE ACT CANNOT BE SUSTAINED IN CASE OF THE ADDITION BASED ON ESTIMATION. THE LD. AR RELIED ON THE ORDER OF THIS TRIBUNAL IN THE CASE OF P.P. BUILDMART P LTD. VS. ITO IN ITA NO. 1059/DEL/2017. 9. ON THE OTHER HAND THE LD. DR RELIED ON THE JUDGMENTS OF HON BLE HIGH COURT OF MADRAS IN THE CASE OF RAVI & CO. VS. ACIT REPORTED IN 271 ITR 286 AND HON BLE HIGH COURT OF KERALA IN THE CASE OF THE CIT VS. HAJI P MOHAMMED REPORTED IN 132 ITR 623 . T HE LD. DR RELIED ON THE ORDER OF AUTHORITIES BELOW. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFULLY CONSIDERED MATERIALS AVAILABLE ON RECORD. IT IS UNDISPUTED FACT THAT THE IMPUGNED PENALTY IS BASED ONLY ON ESTIMATED ADDITIONS. IN OUR CONSIDERED VIEW THE ADDITION BASED ON ESTIMATION CANNOT NOT BE THE BASIS F OR THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT . THE LEGAL POSITION IN THIS REGARD HAS BEEN SUCCINCTLY GIVEN IN THE DECISION IN THE CASE OF DR. HAKEEM S.A. SAJED SATTAR V. ASSTT. CIT [2009] 120 ITD 1 (CHENNAI) . IT HAS BEEN OBSERVED THAT THE PENALTY UNDER S ECTION 271(1)(C) OF THE ACT ON ESTIMATED ADDITION CANNOT BE IMPOSED . IT IS DUE TO THE FACT THAT THE RE CAN NEITHER BE CONCEALMENT OF INCOME , NOR IT CAN BE HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE ESTIMAT ION OF INCOME IS BASED ON OPINION WHICH CAN BE SUBJECT TO DISPUTES. THUS IN OUR CONSIDERED VIEW THE BASIS OF ADDITION C AN VARY DEPENDING UPON THE OPINION. THEREFORE SUCH ADDITION CANNOT GIVE RISE TO THE PENALTY UNDER S ECTION 271(L)(C) OF THE ACT. 11. IN HOLDING SO WE RELY ON THE JUDGMENT OF SHIV LAL TAK V. CIT [2001] 251 ITR 373 WHERE THE HON'BLE RAJASTHAN HIGH COURT HAS HELD AS UNDER : IN THIS CONNECTION, THE LANGUAGE OF THE STATUTE SUGGESTS THAT RECOURSE TO EXPLANATION CAN BE HAD ON SPECIFIC ADDITION OF INCOME OF ANY PARTICULAR SUM OR DISALLOWANCE OF ANY PARTICULAR DEDUCTION ON ACCOUNT OF EXPENSES CLAIMED AGAINST GROSS INCOME. THE LANGUAGE OF EXPLANATION USES TWO EXPRESSIONS AS INDEPENDENT ANY AMOUNT ADDED OR DISALLOWED . IT POSTULATES ADDITION OF SPECIFIC AMOUNT IN THE INCOME AS INCOME NOT DISCLOSED OR A SPECIFIC AMOUNT CLAIMED AS DEDUCTIONS HAS BEEN DISALLOWED. IN MAKING COMPUTATION OF TOTAL INCOME WHERE INCOME RETURNED HAS BEEN REJECTED BY REJECTING THE TRADING RESULTS, FINDING SOME DISCREPANCY IN THE BOOKS OF ACCOUNT AND SUBSTI TUTING THE SAME BY ESTIMATED FIGURE, IN STRICT SENSE, CAN NEITHER BE SAID TO BE ADDITION OF ANY AMOUNT IN THE RETURNED INCOME OR DISALLOWANCE OF ANY AMOUNT AS DEDUCTIONS CLAIMED. THE WORD AMOUNT OF WHICH ADDITIONS MADE OR DEDUCTIONS DISALLOWED ALSO DENOT ES REFERENCE TO SPECIFIC ITEM OF AMOUNT ADDED OR DISALLOWED AS DEDUCTION IN CONTRAST TO SUBSTITUTION OF ALTOGETHER A NEW ESTIMATED SUM IN PLACE OF INCOME RETURNED. IT IS A CASE NEITHER OF ADDITION OR DISALLOWANCE BUT A CASE OF SUBSTITUTION. FOR THE AFORESA ID REASONS, WE ARE OF THE OPINION THAT THE QUESTION REFERRED TO US SHOULD BE ANSWERED IN NEGATIVE, THAT IS TO SAY, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 12. WE ALSO NOTE THAT T HE CASE LAWS RELIED UPON BY THE LD. DR ARE NOT APPLICABLE TO THE INSTANT FACTS OF THE CASE AS THOSE RELATES TO THE CLAIM MADE WITHOUT FILING THE REVISED RETURN OF INCOME. 13. IN VIEW OF ABOVE THERE REMAINS NO DOUBT THAT AS THE ADDITION MADE BY THE AO IS BASED ON ESTIMATION OF INCOME. ACCORDINGLY, BY RESPECTFULLY FOLLOW ING THE ABOVE JUDGMENTS WE ARE INCLINED TO DELETE THE PENALTY IMPOSED BY THE LOWER AUTHORITIES . 14. IN THE RESULT, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - ( BHAVNESH SAINI ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT . 09 .03.2018 SH COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR , ITAT NEW DELHI DATE 1. DRAFT DICTATED ON PS 2. DRAFT PLACED BEFORE AUTHOR 3.2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 3. 201 8 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 3.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.