ACIT, New Delhi V. Sh. Preet Singh Chauhan, New Delhi

ITA 1400/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8236 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 13-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN GOTRU
• Assessee Lawyers: ARUNA MITTA
• Keywords: Business income
• Section: 68

Judgement Text

ITA NO. 1400/DEL/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 1400/DEL/2014 A.Y. : 2008-09 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-35(1), ROOM NO. 219, D BLOCK, 2 ND FLOOR, VIKAS BHAWAN, IP ESTATE, NEW DELHI 2 VS. SH. PREET SINGH CHAUHAN, 64, PUSHPANJALI, ANAND VIHAR, DELHI 92 (PAN: ADGPC5355B) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. SHRAVAN GOTRU, SR. DR ASSESSEE BY : MS. ARUNA MITTA, CA DATE OF HEARING : 13-04-2016 DATE OF ORDER : 02-05-2016 ORDER PER H.S. SIDHU, JM REVENUE HAS FILED THE APPEAL AGAINST THE ORDER DAT ED 31.12.2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXV II, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2008-2009 ON THE FOLL OWING GROUNDS:- I) THAT THE ORDER OF THE LD. CIT(A) IS BAD IN LAW AND NOT IN CONSONANCE WITH FACTS OF THE CASE. II) THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS IN DE LETING THE PENALTY AMOUNTING IN RS. 31,35,300/- MADE BY THE A O U/S. 271(1)(C) OF THE ACT, 1961. ITA NO. 1400/DEL/2014 2 III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAD ERRED IN APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT VOLUNTARY DISCLOSED THE AMOUNT ADDED AS DEEMED INCO ME U/S. 68 OF THE ACT IN RESPECT OF WHICH PENALTY WAS LEVIED BY T HE AO. IV) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE, HAS TREATED BUSINESS INCOME WHICH HAS TO BE TAXED AT RA TE OF 30% AS SHORT TERM CAPITAL GAIN THEREBY BRINGING HIS TAX LI ABILITY TO LOWER RATES. V) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY ON THE RAT IO OF THE JUDGMENT IN THE CASE OF RELIANCE PETRO PRODUCTS REPORTED IN 322 ITR 158 AND CALCUTTA DISCOUNT CO. LTD. VS. ITO WHE N FACTS AND CIRCUMSTANCES OF THE INSTANT CASE WERE QUITE DIFFER ENT. VI) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE APPELLANT CRAVES LEAVE TO ADD, ALLOW OR AMEND ANY O R ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THE APPEAL. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED, THEREFORE, THE SAME ARE NOT REPEATED HERE FOR THE SAKE OF CONV ENIENCE. 3. AT THE TIME OF HEARING, MS. ARUNA MITTAL, CA/AU THORISED REPRESENTATIVE OF THE ASSESSEE STATED THAT THE QUANTUM ON WHICH TH E PENALTY HAS BEEN IMPOSED, HAS ALREADY BEEN DELETED BY THE ITAT. SHE REQUESTE D THAT THE PENALTY IN DISPUTE MAY KINDLY BE DELETED. SHE HAS ALSO FILED THE COPY OF THE ORDER DATED 11.7.2014 PASSED BY THE ITAT, DELHI BENCH F IN ITA NO. 3282 /DEL/2012 (AY 2008-09) IN ASSESSEES OWN CASE. THEREFORE, SH E REQUESTED THAT THE PENALTY IN DISPUTE MAY BE DELETED. 4. LD. DR RELIED UPON THE ORDER OF THE AO, BUT COUL D NOT CONTROVERT THE SUBMISSION MADE BY THE ASSESSEES COUNSEL. ITA NO. 1400/DEL/2014 3 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT IN ASSESSEES OWN CASE IN ITA NO. 3282 /DEL/2012 FOR A.Y. 2008-09 VIDE ORDER DATED 11.7.21014, THE TRIBUNAL H AD DELETED THE ADDITION IN THIS REGARD. THE TRIBUNAL HAS HELD AS UNDER:- 6. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROU GH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESS EE HAD RECEIVED CONSIDERATION FOR SALE OF SHARES THROUGH CHEQUE WHI CH IS APPARENT FROM THE BANK STATEMENT PLACED AT PAPER BOOK PAGES 47-49. THE ASSESSING OFFICER HAD RECORDED THE STATEMENTS OF TH E ASSESSEE AND ALSO THE DIRECTOR OF BROKER COMPANY AND BOTH OF THE M I.E., THE ASSESSEE AND THE DIRECTOR OF BROKING COMPANY HAD AC CEPTED THAT TRANSACTION HAD ACTUALLY HAPPENED BETWEEN THE ASSES SEE AND THE BROKING COMPANY. THE ASSESSING OFFICER ARRIVED AT THE CONCLUSION THAT MONEY WAS UNEXPLAINED ON THE BASIS THAT THE BR OKING COMPANY HAD PURCHASED THE SHARES ON BEHALF OF THE ASSESSEE WORTH RS.65 LACS WITHOUT EVEN GETTING ANY PAYMENT FROM THE ASSE SSEE. THEREFORE HE ARRIVED AT THE CONCLUSION THAT NO PRUD ENT MAN WOULD HAVE EXTENDED THAT CREDIT FACILITY TO ANY PERSON. THEREFORE, THE ASSESSING OFFICER MADE THE ADDITION U/S 68 AS UNEXP LAINED MONEY WITHOUT DOUBTING THE CREDITWORTHINESS OF PAYER OF C HEQUES. IF THE ASSESSING OFFICER WAS TO MAKE ADDITION U/S 68, IT W AS TO BE PROVED THAT ISSUER OF CHQEUS TO ASSESSEE WAS NOT CREDITWOR THY. NOWHERE IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DOUBTED THE CREDITWORTHINESS. WE OBSERVE THAT SHARES WERE RECE IVED IN D-MAT ACCOUNT OF THE ASSESSEE AS IS APPARENT FROM THE STA TEMENT OF DEMAT ACCOUNT PLACED AT PAGE 32 OF THE PAPER BOOK. MOREO VER, WE FIND THAT SALE BILLS PLACED AT PAPER BOOK PAGES 12-24, C LEARLY MENTION THE NAME OF THE ASSESSEE AS PURCHASER OF THE SHARES . THE ITA NO. 1400/DEL/2014 4 TRANSACTION MIGHT HAVE BEEN ILLEGAL IN NATURE AS AL LEGED BY THE ASSESSING OFFICER AND LD. CIT(A) AS IT IS THE MAIN BROKER ONLY WHO IS ENTITLED TO ENTER INTO TRANSACTIONS WITH THE INV ESTOR, BUT THE AMOUNT EARNED BY THE ASSESSEE CANNOT BE SAID TO BE AN UNEXPLAINED MONEY U/S 68 OF THE ACT AS THE IDENTITY AND CREDITW ORTHINESS OF THE PAYER OF MONEY WAS NOT QUESTIONED AND NEITHER IT WA S HELD THAT BROKERS WAS NOT CREDITWORTHY TO PAY MONEY TO THE AS SESSEE. THE AMOUNT EARNED BY ASSESSEE HAS NECESSARY FLOWED FROM THE BANK ACCOUNT OF BROKER. THEREFORE, ASSESSEE WAS ABLE TO EXPLAIN THE SOURCE OF MONEY AND THEREFORE, ADDITION U/S 68 CANN OT BE MADE. MOREOVER, WE FIND THAT ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS AS IS APPARENT FROM WRITTEN SUBMISSIONS MA DE TO THE CIT(A) ON 27.03.2011 PLACED IN PAPER BOOK AT PAGE 3 -10 AND THEREFORE ALSO ADDITION U/S 68 CANNOT BE MADE. THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF ANAND RAM RAITANI VS CIT AS RELIED UPON BY LD. A.R. HAS HELD AS UNDER: HELD, (I) THAT THE ASSESSING OFFICER, BEFORE INVOK ING THE POWER UNDER SECTION 68 OF THE ACT MUST BE SATISFIED THAT THERE ARE BOOKS OF ACCOUNT MAINTAINED BY HT ASSESSEE AND THE CASH CREDIT IS RECORDED IN THE SAID BOOKS OF ACCOUNT AND IF THE ASSESSEE FAILS TO SATISFY THE ASSESSING OFFICER, TH E SAID SUM SO CREDITED HAS TO BE CHARGED TO INCOME-TAX AS THE INC OME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE EXISTENCE OF BOOKS OF ACCOUNT IS A CONDITION PRECEDENT FOR INVOKING THE P OWER. DISCHARGING THE BURDEN IS A SUBSEQUENT CONDITION. IN ORDER TO JUSTIFY THE ADDITION, IT WAS THE DUTY OF THE TRI BUNAL TO LOOK TO SECTION 68 OF THE ACT, WHICH REQUIRED THAT MAINT ENANCE OF BOOKS OF ACCOUNT WAS NECESSARY. THE TRIBUNAL HAD N O ITA NO. 1400/DEL/2014 5 JURISDICTION TO AFFIRM THE ORDER PASSED BY THE ASSE SSING OFFICER WITHOUT FIRST CONSIDERING WHETHER THE CONDI TIONS NECESSARY WERE FULFILLED. THE QUESTION AROSE OUT O F THE TRIBUNALS ORDER. 6.1 IN VIEW OF THE ABOVE, WE ARE IN AGREEMENT WITH THE ARGUMENTS OF LD. A.R. THAT ADDITION CANNOT BE MADE U/S 68 AND THEREFORE, WE ALLOW GROUNDS NO.1-5 OF APPEAL OF TH E ASSESSEE. 6. AS IN QUANTUM PROCEEDINGS, THE ADDITION HAS BEEN DELETED, AS AFORESAID, WE FIND THAT THE PENALTY WILL NOT SURVIVE. ACCORDI NGLY, WE CONFIRM THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THI S CASE IN DELETING THE LEVY OF PENALTY. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/05/2016. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 02/05/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES