ACIT, Faridabad V. M/s. Subhag Textiles P. Ltd., Faridabad

ITA 145/DEL/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65549 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 08-08-2012
• Assessment Year: 1996-1997
• Appeal Filed On: 14-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURJANI MOHANTY
• Keywords: Difference of opinion
• Section: 143(3); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.145/DEL/2009 ASSESSMENT YEAR : 1996-97 ACIT, M/S SUBHAG TEXTILE P. LTD., INCOME TAX RANGE-II, PLOT NO.155, SECTOR-24, FARIDABAD. V. FARIDABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. SURJANI MOHANTY, SR. DR. RESPONDENT BY : NONE. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE OR DER OF LD CIT(A) DATED 4.11.2008. THE GROUNDS RAISED BY THE REVENUE AR E AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE PENALTY OF ` .26,01,420/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)( C) OF THE INCOME TAX ACT, 1961 DISREGARDING THE FACT THAT THE PENALTY IMPOSED ON THE ADDITION CONCERNED HAS ALREADY BEEN CO NFIRMED BY LD CIT(A) AS WELL AS THE HON'BLE ITAT WHICH CLEARL Y ESTABLISHED THAT ASSESSEE ACTED IN TOTAL DISREGARD OF PROVISIONS OF L AW AND FURNISHED PARTICULARS OF INCOME WHICH WERE NOT CORREC T AND TRUE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE PENALTY OF ITA NO145/DEL/2009 2 ` .26,01,420/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)( C) OF THE INCOME TAX ACT, 1961 IN CONTRAVENTION OF JUDGMENT O F HON'BLE SUPREME COURT DATED 29.9.2008 IN THE CASE OF UNION O F INDIA V. DHARMENDRA TEXTILE PROCESSORS AND OTHERS (2008) 219 CTR (SC) 617. 3. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD, D ELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THAT APPELLAN T COMPANY FILED ITS RETURN DECLARING LOSS OF ` .1,27,39,479/- ON 29.11.1996. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S 143( 3)/250(6) OF THE INCOME TAX ACT, 1961 AT AN INCOME OF ` .1,51,000/- ON 28.3.2002 MAKING INTER ALIA THE ADDITION ON ACCOUNT OF UNSECUR ED LOAN OF ` .51,08,938/- AND DISALLOWANCE OF MISC. EXPENSES OF ` .5,46,310/-. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271( 1)( C) OF THE ACT. THE ASSESSING OFFICER FOUND THAT LD CIT(A), FARIDA BAD DISMISSED THE APPELLANTS APPEAL AND HON'BLE TRIBUNAL HAD ALSO DISMISSED THE APPEAL OF APPELLANT. THEREFORE, THE CASE WAS FIXED F OR HEARING ON 25.7.2006 FOR LEVY OF PENALTY BUT NONE ATTENDED THE PROCEEDINGS NOR ANY WRITTEN REPLY WAS RECEIVED. THEREFORE, THE ASSESSIN G OFFICER PROCEEDED TO LEVY THE PENALTY ON THE ADDITIONS OF ` .56,55,248/- AND IMPOSED A PENALTY OF ` .26,01,420/- U/S 271(1)( C) OF THE ACT. 3. DISSATISFIED WITH THE ORDER OF ASSESSING OFFICER, THE ASSESSEE FILED APPEAL WITH LD CIT(A) AND SUBMITTED THE FOLLOWING:- A) THAT THE PENALTY U/S 271(1)(C ) HAS BEEN IMPOSED ON TH E BASIS OF ADDITION OF ` .51,08,938/- ON ACCOUNT OF UNEXPLAINED LOAN & ON DISALLOWANCE OF ` .5,46,310/- RELATING TO MISC. EXPENSES. ITA NO145/DEL/2009 3 B) THAT THE CONFIRMATION OF AMOUNTS HAVING BEEN RECEIVE D FROM DEPOSITORS ALONG WITH THEIR ADDRESSES AND INCOME TAX PAR TICULARS WERE DULY SUBMITTED AT THE TIME OF ASSESSMENT PROCEEDING S. THUS, THE ASSESSING OFFICER HAD THE COMPLETE DETAIL OF L OAN CREDITORS AND ASSESSEE HAD SPECIFICALLY REQUESTED THE ASSE SSING OFFICER TO SUMMON THE LOAN CREDITORS BUT THE ASSESSING OF FICER HAD CHOSEN NOT TO DO AND HAD PROCEEDED TO MAKE THE A DDITION. C) THAT ADDITION OF ` .5,46,310/- HAS BEEN MADE EVEN WHEN THE COMPLETE DETAILS OF EXPENSES INCURRED WERE PART OF BAL ANCE SHEET WHICH HAS BEEN RELIED UPON BY THE ASSESSING OFFICER TO MAKE THE ASSESSMENT AND STILL THE ALLEGATION HAS BEEN THAT THE A SSESSEE DID NOT DISCLOSE THE DETAIL OF SUCH EXPENSES. D) THAT PENALTY PROCEEDINGS ARE PLACED ON A DIFFERENT F OOTING AS COMPARED TO THE ASSESSMENT PROCEEDINGS. IN ASSESSMENT PROCEEDINGS, THE ADDITIONS WERE MADE AND CONFIRMED B Y LD CIT(A) BECAUSE THE ASSESSEE DID NOT PRODUCE THE LOAN CRE DITORS. THE ASSESSEES APPEAL BEFORE ITAT WAS DISMISSED FOR NON APPEARANCE WAS NOT DECIDED ON MERITS. 4. THUS, IN VIEW OF ABOVE, THE LD AR SUBMITTED BEFOR E LD CIT(A) THAT IT CANNOT BE SAID THAT LOAN AMOUNTS AND INTEREST THERE ON ADDED IN ASSESSMENT ORDER PROCEEDING WAS UNDISCLOSED INCOME OF THE ASSESSEE ON WHICH PENALTY U/S 271(1)( C) CAN BE LEVIED EVEN T HOUGH THE ADDITIONS WERE CONFIRMED IN THE APPELLATE PROCEEDING S. FURTHER THERE WAS NO FURNISHING OF INACCURATE PARTICULARS AS HAS BE EN MADE OUT IN THE PENALTY ORDER. 5. SIMILARLY, LD AR EXPLAINED BEFORE LD CIT(A) THAT THE ASSESSEE INCURRED ` .5,46,310/- ON ACCOUNT OF EXPENSES ON CERTAIN ITEMS, T HE DETAIL OF WHICH WAS PART OF NOTES TO ACCOUNT FORMING PART OF BALANCE ITA NO145/DEL/2009 4 SHEET OF THE ASSESSEE AS ON 31.3.1996. THUS IT CANNOT BE SAID THAT THE ASSESSEE CONCEALED THE PARTICULARS OF SAID EXPENSES. IN T HE ASSESSMENT PROCEEDINGS THE ADDITION WAS MADE ON ACCOUNT O F THE FACT THAT NO DETAIL WAS FURNISHED FOR THIS AD HOC EXPENSES EVEN WHEN IT WAS A PART OF THE BALANCE SHEET ON THE BASIS OF WHICH ASSESSM ENT WAS COMPLETED. IN THE PENALTY PROCEEDINGS, IT WAS HELD TH AT THE EXPENSES PERTAINED TO PUBLIC ISSUE EXPENSES. THUS IT WAS CLEAR THA T THE DETAILS OF THE EXPENSES WERE KNOWN AND IT CANNOT BE SAID THAT ASSES SEE DID NOT DISCLOSE THE DETAIL OF EXPENSES. THE PENALTY ON THIS AMO UNT HAS BEEN LEVIED FOR FURNISHING INACCURATE PARTICULARS AS THE ASSE SSING OFFICER PASSING THE PENALTY ORDER HAS DEEMED IT TO BE EXPENSES C OVERED U/S 35D OF THE ACT. RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. B ALBIR SINGH REPORTED IN 304 ITR 125 (P&H). THE LD CIT(A) AFTER GOING THROUGH THE SUBMISSIONS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. T HE RELEVANT PORTION OF LD CIT(A)S ORDER IS REPRODUCED BELOW:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD A R AND PERUSED THE ORDER OF IMPUGNED PENALTY. THE BARE/ PLAIN READING OF THE PENALTY ORDER REVEALS THAT THE ASSESSING OFFICER HAD MERELY PROCEEDED ON THE FINALITY/CONFIR MATIONS OF THE TWO AFOREMENTIONED ADDITIONS, WITHOUT BRINGIN G ANYTHING ON RECORD FROM WHICH THE PENALTY INFERENCE COULD BE WITHDRAWN AS PER THE PROVISIONS OF SECTIONS 271(1)( C) OF THE INCOME TAX ACT, 1961 . AS THE PENALTY PROCEEDING S ARE NOT AUTOMATIC YET THE ASSESSING OFFICER SEEMS TO HAVE WORKED OUT THE PENALTY IN A VERY CASUAL AND ROUTINE MANNER. AS THE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT V. AJAIB SINGH AND CO.(2002) 253 ITR 630 (P&H) HAS H ELD THAT MERE DISALLOWANCE OF EXPENDITURE DOES NOT MEAN T HAT ITA NO145/DEL/2009 5 INACCURATE PARTICULARS OF INCOME HAVE BEEN FURNISHED. THE ABOVE ADDITIONS/DISALLOWANCES DO NO IPSO FACTO POINT T O FURNISHING OF INACCURATE PARTICULARS OF INCOME AS ENVI SAGED IN SEC. 271(1)( C). AS THE LD AR HAS CONTENDED ABOVE, ON MERITS ALSO, THE PENALTY IS NOT LEVIABLE AS EVERYTHING WAS DISCLOSED IN THE BOOKS OF ACCOUNT AND ALL MATTER SATISFACTORILY EXAMINED BEFORE THE ASSESSING OFFICER AND NOTHING WAS CONCEALED. IT WAS A DIFFERENT THING THAT THE CREDITORS COULD NOT BE SOME HOW COME TO THE SATISFACT ION OF THE ASSESSING OFFICER WHOSE ACTION IN ASSESSING THE LOAN CREDITORS U/S 68 DOES NOT LEAD IN ANY WAY TO PENALTY PROVISIONS AS PER THE RATIO OF DECISION BY THE APEX COU RT IN THE CASE OF SIR SHADI LAL SUGAR & GENERAL MILLS V. CI T (1987) 64 CTR (SC) 199. MOREOVER, THE VERY FACT THE EXPEN SES HAVE BEEN TREATED AS CAPITAL OR REVENUE IS A MATTER O F OPINION ONLY, OR A LEGAL ISSUE ON WHICH THERE CAN BE DIFFERENCE AND THEREFORE ON WHICH NO PENALTY IS CONCEIVABLE. FURTHER IT IS NOW RULED BY ALMOST ALL TH E JUDICIAL PRONOUNCEMENTS THAT SINCE PENALTY PROCEEDING S ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS, BEING QUASI CRIMINAL IN NATURE, THE ULTIMATE ONUS REMAINS ON THE ASSESSING OFFICER TO BRING MATERIAL ON RECORD, THEREBY THE CONCEALMENT OF PARTICULARS OR FURNISHING OF INACCUR ATE PARTICULARS OF INCOME HAVE TO BE ESTABLISHED. THE ASSESSING OFFICER HAS DONE NOTHING OF THE SORT HERE. THEREFORE, FROM ALL POINTS OF VIEW, THE PRESENT CASE I S NOT A FIT CASE FOR PENALTY U/S 271(1)( C). HENCE THE PENALT Y IMPOSED AT ` .26,01,420/- STANDS CANCELLED. 6. AGGRIEVED THE REVENUE HAS FILED APPEAL BEFORE THI S TRIBUNAL. ITA NO145/DEL/2009 6 7. AT THE OUTSET, THE LD DR SUBMITTED THAT IN THE QU ANTUM PROCEEDINGS NO ONE HAD APPEARED BEFORE LD CIT(A) AND NOBODY HAD APPEARED IN THE PENALTY PROCEEDINGS. HE FURTHER ARGU ED THAT ADDITIONS HAD ATTAINED ITS FINALITY AS THE ASSESSEE HAD LOST ITS AP PEAL BEFORE LD CIT(A) AND HON'BLE ITAT. THEREFORE, HE ARGUED THAT PENALTY WAS RIGHTLY LEVIED AND LD CIT(A)S ORDER BE REVERSED AND THAT OF ASSESSING OFFICER BE UPHELD. 8. NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE. 9. WE HAVE HEARD THE ARGUMENTS OF LD DR AND HAVE GO NE THROUGH THE MATERIAL PLACED BEFORE US. WE OBSERVE FROM THE M ATERIAL THAT INITIALLY THE ASSESSMENT WAS COMPLETED U/S 144 WHICH WAS SET ASIDE BY LD CIT(A) AND THEN ASSESSMENT WAS COMPLETED U/S 143(3) A GAINST WHICH THE ASSESSEE HAD FILED APPEAL UP TO HON'BLE ITAT BUT DID NOT APPEAR FOR PLEADING ITS CASE. FROM THE FACTS & CIRCUMST ANCES OF THE CASE, WE NOTE THAT TWO ADDITIONS MADE WERE ON ACCOUNT OF ADDITION U/S 68 OF THE ACT FOR NON PRODUCTION OF CREDITORS AND FO R DISALLOWANCE OF A PART OF MISC. EXPENSES. WE FURTHER NOTE THAT ASSESSEE HAD PROVIDED COMPLETE DETAIL WITH RESPECT TO LOAN CREDITORS AS WELL AS COMPLETE DETAIL WAS FURNISHED IN RESPECT OF MISC. EXPENSES INCURRE D BY THE ASSESSEE. THE ASSESSEE LOST ITS APPEAL AGAINST ADDITION BEFO RE ITAT DUE TO NON PROSECUTION AND APPEAL WAS NOT DECIDED ON MERITS. WE DO NOT FIND THAT ONLY THIS REASON THAT THE ADDITION HAD ATTAINED ITS FINALITY IS SUFFICIENT TO IMPOSE PENALTY. THE FACT OF THE MATTE R IS THAT ASSESSEE HAD FURNISHED COMPLETE DETAILS ALONG WITH ADDRESSES AND INCOME TAX RETURNS OF DEPOSITORS AND COMPLETE DETAILS OF MISC. EXPE NSES WERE FURNISHED. THE ADDITIONS WERE MADE BY THE ASSESSING OFFIC ER ON ACCOUNT OF NON PRODUCTION OF CREDITOR AND ON ACCOUN T OF DIFFERENCE OF OPINION WITH RESPECT TO ALLOWANCE OF MISC. EXPENSES. TH E ASSESSEE HAD NOT FURNISHED INACCURATE PARTICULARS OF INCOME. THERE FORE, IN OUR ITA NO145/DEL/2009 7 CONSIDERED OPINION, THE PENALTY WAS NOT LEVIABLE. IN VIEW OF THE ABOVE, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH DAY OF SEPTEMBER, 2012. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 28.9.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 8.8.2012 DATE OF DICTATION 21.9.2012 DATE OF TYPING 24.9.2012 DATE OF ORDER SIGNED BY 28.9.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 28.9.2012 & SENT TO THE BENCH CONCERNED.