VINAY SUBHIKHI, NEW DELHI V. ITO, WARD- 72(5), NEW DELHI

ITA 1539/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3293 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Earning of tax free income; Set aside
• Section: 271(1)(c); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI F BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI O.P.KANT, ACCOUNTANT MEMBER ITA NOS.1538 TO 1540/DEL/2018 ASSESSMENT YEARS : 2005-06, 2008-09 & 2010-11 VINAY SUBHIKHI, R-8, NEW PRASAD NAGAR, NEW DELHI-110005. PAN-APOPS0708Q VS ITO, WARD-72(5), NEW DELHI. APPELLANT RESPONDENT APPELLANT BY SH. ROHIT GARG, ADV. RESPONDENT BY SH. ROHIT ANAND, SR.DR DATE OF HEARING 05.10.2021 DATE OF PRONOUNCEMENT 21 .10.2021 ORDER PER KUL BHARAT, JM : THE PRESENT THREE APPEALS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2005-06, 2008-09 & 2010-11 ARE DIRECTED AGAINST THE SEPARATE ORDERS OF LD. CIT(A)-21, NEW DELHI, ALL DATED 14.12.2017. SINCE THE IDENTICAL GROUNDS HAVE BEEN RAISED, ALL THESE THREE APPEALS ARE TAKEN UP T OGETHER AND ARE BEING DISPOSED OFF BY WAY OF THE CONSOLIDATED ORDER. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN ALL THESE THREE APPEALS RESPECTIVELY:- ITA NO.1538/DEL/2018 [ASSESSMENT YEAR : 2005-06] 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED EX-PARTE ORDER DATED 11.03.2015 PASSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT, 1961 (THE ACT), LEVYING PENALTY OF RS.1,31,100/- IS WITHOUT JURISDI CTION, BAD IN LAW AND VOID AB INITIO. ITA NOS.1538 TO 1540/DEL/2018 PAGE | 2 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED PENALTY ORDER PASSED BY THE ASSESSING OFFI CER IS PASSED WITHOUT COMPLYING WITH THE PRINCIPLES OF NATURAL JU STICE. 3. THAT THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS VOID AND ILLEGAL INASMUCH AS THE ASSESSING OFFICER FAILED TO RECORD VALID SATISFACTION IN THE ASSESSMENT ORDER AND FAILED TO SPECIFY SPECIFIC CHARGE IN THE SHOW CAUSE NOTICE FOR LEVYING THE PENALTY. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ERRED IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAD NEITHER CONCEALED INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF ADDITION MADE I N THE ASSESSMENT ORDER QUA RS. 3,86,690/-, SO AS TO WARRANT LEVY OF PENALT Y. 5. THAT THE CIT(APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT NEITHER THE ALLEGED ADDITION OF RS.63,888/- WA S MADE U/S 68 IN THE QUANTUM ASSESSMENT ORDER NOR THE PENALTY WAS ACTUAL LY LEVIED BY THE ASSESSING OFFICER. 6. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WITHOUT APPRECIATING THAT (A) ALL MATERIAL FACTS WERE DULY DISCLOSED BY THE APPELLANT (B) NO PENALTY IS LEVIABLE QUA ADDITIONS OR DISALLOWANCES RELATED TO ISSUES WHICH ARE DEBATABLE (C) CLAIM MADE WERE PROPERLY EXPLAINED AN D EXPLANATION FURNISHED WAS BONAFIDE AND (D) THE ADDITION MADE IN THE ASSESSMENT ORDER WERE PREDICATED ON BONAFIDE DIFFERENCE OF OPI NION BETWEEN THE APPELLANT AND THE ASSESSING OFFICER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. ITA NO.1539/DEL/2018 [ASSESSMENT YEAR : 2008-09] 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE IMPUGNED EX-PARTE ORDER DATED 11.03.2015 PASSED BY THE ASSESSING OFFICER UNDER SECTION 271(L)(C) OF THE INCOME TAX A CT, 1961 (THE ACT), ITA NOS.1538 TO 1540/DEL/2018 PAGE | 3 LEVYING PENALTY OF RS.2,00,931/- IS WITHOUT JURISDI CTION, BAD IN LAW AND VOID AB INITIO. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED PENALTY ORDER PASSED BY THE ASSESSING OFFI CER IS PASSED WITHOUT COMPLYING WITH THE PRINCIPLES OF NATURAL JU STICE. 3. THAT THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS VOID AND ILLEGAL INASMUCH AS THE ASSESSING OFFICER FAILED TO RECORD VALID SATISFACTION IN THE ASSESSMENT ORDER AND FAILED TO SPECIFY SPECIFIC CHARGE ~SHOW CAUSE NOTICE FOR LEVYING THE PENALTY. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ERRED IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAD NEITHER CONCEALED INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF ADDITION MADE I N THE ASSESSMENT ORDER QUA RS. 2,63,202/-, SO AS TO WARRANT LEVY OF PENALT Y. 5. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN IMPOSING PENALTY UNDER SECTION 271(L)(C) OF THE ACT, WITHOUT APPRECIATING THAT (A) ALL MATERIAL FACTS WERE DULY DISCLOSED BY THE APPELLANT (B) NO PENALTY IS LEVIABLE QUA ADDITIONS OR DISALLOWANCES RELATED TO ISSUES WHICH ARE DEBATABLE (C) CLAIM MADE WERE PROPERLY EXPLAINED AN D EXPLANATION FURNISHED WAS BONAFIDE AND (D) THE ADDITION MADE IN THE ASSESSMENT ORDER WERE PREDICATED ON BONAFIDE DIFFERENCE OF OPI NION BETWEEN THE APPELLANT AND THE ASSESSING OFFICER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. ITA NO.1540/DEL/2018 [ASSESSMENT YEAR : 2010-11] 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE IMPUGNED EX-PARTE ORDER DATED 11.03.2015 PASSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT, 1961 (THE ACT), LEVYING PENALTY OF RS.L,40,7401- IS WITHOUT JURISDI CTION, BAD IN LAW AND VOID AB INITIO. ITA NOS.1538 TO 1540/DEL/2018 PAGE | 4 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED PENALTY ORDER PASSED BY THE ASSESSING OFFI CER IS PASSED WITHOUT COMPLYING WITH THE PRINCIPLES OF NATURAL JU STICE. 3. THAT THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS VOID AND ILLEGAL INASMUCH AS THE ASSESSING OFFICER FAILED TO RECORD VALID SATISFACTION IN THE ASSESSMENT ORDER AND FAILED TO SPECIFY SPECIFIC CHARGE IN THE SHOW CAUSE NOTICE FOR LEVYING THE PENALTY. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ERRED IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAD NEITHER CONCEALED INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF ADDITION MADE I N THE ASSESSMENT ORDER QUA RS. 3,37,313/-, SO AS TO WARRANT LEVY OF PENALT Y. 5. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WITHOUT APPRECIATING THAT (A) ALL MATERIAL FACTS WERE DULY DISCLOSED BY THE APPELLANT (B) NO PENALTY IS LEVIABLE QUA ADDITIONS OR DISALLOWANCES RELATED TO ISSUES WHICH ARE DEBATABLE (C) CLAIM MADE WERE PROPERLY EXPLAINED AN D EXPLANATION FURNISHED WAS BONAFIDE AND (D) THE ADDITION MADE IN THE ASSESSMENT ORDER WERE PREDICATED ON BONAFIDE DIFFERENCE OF OPI NION BETWEEN THE APPELLANT AND THE ASSESSING OFFICER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. FIRST, WE TAKE UP ITA NO.1538/DEL/2018 PERTAINING TO ASSESSMENT YEAR 2005-06. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT IN THE QUANTUM PROCEEDINGS, THE TRIBUNAL WAS PLEASED TO SE T ASIDE THE APPEALS OF THE ASSESSEE, THEREFORE, THE PENALTY DOES NOT SURVIVE. 3. LD. SR. DR FAIRLY CONCEDED THAT THE QUANTUM HAS BEEN SET ASIDE. ITA NOS.1538 TO 1540/DEL/2018 PAGE | 5 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. CONSIDERING THE FACT THAT THE QUANTUM H AS BEEN SET ASIDE BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS.7119 TO 7121/DEL/2017 PERTAINING TO ASSESSMENT YEARS 2005-06, 2008-09, 2010-11 VIDE ORDER DATED 14.10.2019 BY HOLDING AS UNDER:- 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED TH E RELEVANT MATERIAL ON RECORD. ON PERUSAL OF THE ASSESSMENT ORDERS, WE FIND THAT THE ASSESSING OFFICER HAS MADE ADDITION OF UNEXPLAINED HOUSEHOLD EXPENDITURE BASED ON THE ENTRIES FOUND RECORDED IN THE SEIZED DIARY. THE RELEVANT FINDING OF THE ASSESSING OFFICER IN ASSESS MENT YEAR 2005-06 IS REPRODUCED AS UNDER: 2.6.3 ON PERUSAL OF THE CAPITAL ACCOUNT OF THE ASS ESSEE IT IS SEEN THAT IT HAS SHOWN TOTAL DRAWINGS OF RS.1,02,932/- D URING THE F.Y. 2004-05. BUT ON THE OTHER HAND THE DETAILS OF HOUSE HOLD EXPENSES/DRAWINGS OF THE ASSESSEE AS PER THE SEIZED PAGE NUMBER 11-12 OF ANNEXURE A-L, PARTY H-9 ARE AS UNDER: S. NO. MONTH AMOUNT (IN RS.) 1. APRIL 2004 43,231 2. . MAY 2004 227,04 - 1 3. JUNE 2004 66,000 4. JULY 2004 91,261 5. AUG 2004 38,419 6. SEP 2004 23,998 7. AUG 2004 42,895 8. NOV 2004 34,470 9. DEC 2004 29,694 10. JAN 2005 51,448 11. FEB 2005 22,336 12. MARCH 2005 23,229 TOTAL 4,94,022 THUS AS PER PAGE NUMBER 11-12 OF ANNEXURE A-L, PART Y H-9, THE ASSESSEE HAS INCURRED HOUSEHOLD EXPENSES OF RS.4,94 ,022/- DURING THE FY 2004-05. THUS THE HOUSEHOLD EXPENSES OF RS.3 ,91,090/- (4,94,022- 1,02,932) HAVE NOT BEEN ACCOUNTED BY THE ASSESSEE I.E. HAVE NOT BEEN SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. ITA NOS.1538 TO 1540/DEL/2018 PAGE | 6 2.7 DESPITE GIVING VARIOUS OPPORTUNITIES, THE ASSES SEE HAS NOT OFFERED ANY EXPLANATION WHATSOEVER REGARDING THE SO URCE OF THESE UNACCOUNTED HOUSEHOLD EXPENSES OF RS.3,91,090/- INC URRED BY HIM DURING THE FY 2004-05. 2.8 TO SUMMARIZE, FOR THE FY 2004-05, THE AMOUNT OF UNEXPLAINED HOUSEHOLD EXPENSES OF THE ASSESSEE IS RS.3,91,090/- AND THE AMOUNT OF UNEXPLAINED CREDITS IN ITS VARIOUS BANK A CCOUNTS OF THE ASSESSEE IS ? 63,888/- (OVER AND ABOVE PROFESSIONAL RECEIPTS) I.E. THE AMOUNT OF UNEXPLAINED HOUSEHOLD EXPENSES IS MORE TH AN THE AMOUNT OF UNEXPLAINED CREDITS IN THE VARIOUS BANK ACCOUNTS OF THE ASSESSEE. 2.9 SUBJECT TO DISCUSSION ABOVE, AS THE AMOUNT OF U NEXPLAINED HOUSEHOLD EXPENSES IS MORE THAN THE AMOUNT OF UNEXP LAINED CREDITS IN THE VARIOUS BANK ACCOUNTS OF THE ASSESSEE, THE A MOUNT OF UNEXPLAINED HOUSEHOLD EXPENSES OF RS.3,91,090/-, TH E SOURCE OF WHICH HAS NOT BEEN EXPLAINED BY THE ASSESSEE, IS TR EATED AS UNDISCLOSED INCOME OF THE ASSESSEE. (ADDITION OF RS.3,91,090/-) 8. IN SECOND ROUND OF PROCEEDINGS BEFORE THE LD. CI T(A), IN ASSESSMENT YEAR 2005-06 THE ASSESSEE FILED COPY OF BANK STATEM ENTS EXPLAINING THE CREDIT ENTRIES AND OTHER DOCUMENTS, THE LD. CIT(A) ADJUDICATED THE ISSUE AS UNDER: ..ON A COMPARATIVE CONSIDERATION OF THE ARGUMENTS FORWARDED BY THE AO AS WELL AS THE APPELLANT, IT WAS INDISPUTABLY FOUND THAT THE APPEL LANT HAD NO EXPLANATION REGARDING THE SOURCE OF HOUSE HOLD EXPE NDITURE FOR THE AMOUNT OF RS.[3,91,090-(3000+1400). IN THIS VIEW OF THE MATTER THE DIFFER5ENTIAL AMOUNT IS HELD AS UNEXPLAINED EXPENDI TURE OF THE APPELLANT. THE ADDITION, THEREFORE, IS REQUIRED TO BE MADE FOR AN AMOUNT OF RS.3,86,690/-. 9. WE NOTE FROM PARA 2.8 OF THE ASSESSMENT ORDER F OR ASSESSMENT YEAR 2005-06, IN THE CASE OF THE ASSESSEE THAT CREDIT AP PEARING IN SOME BANK ACCOUNT WAS ALSO UNEXPLAINED. THE LEARNED ASSESSING OFFICER HAS NOT ITA NOS.1538 TO 1540/DEL/2018 PAGE | 7 GIVEN BENEFIT OF SAID UNEXPLAINED CREDIT AGAINST UN EXPLAINED HOUSE-HOLD WITHDRAWAL AND ADDITION HAS BEEN MADE FOR THE SUM, WHICH IS MAXIMUM OUT OF THE TWO. AS PER LAW, BENEFIT OF ONLY EXPLAIN ED INCOME OR INCOME ON WHICH TAX HAS BEEN PAID (INCLUDING EXEMPT INCOME) C AN BE GIVEN AGAINST UNEXPLAINED HOUSE-HOLD INCOME, WHICH THE AO HAS PAR TLY GIVEN. IF THE UNEXPLAINED CREDITS IN BANK ACCOUNTS, WHICH ARE NOT UTILIZED TOWARDS HOUSE-HOLD EXPENDITURE AND USED SOMEWHERE ELSE, THE N A SEPARATE ADDITION WAS REQUIRED FOR THOSE UNEXPLAINED CREDITS . 10. THE FACTS AND CIRCUMSTANCES ARE IDENTICAL IN OT HER TWO ASSESSMENT YEARS. IN OUR OPINION, THE LD. CIT(A) HAS NOT APPRE CIATED ALL THE EVIDENCES FURNISHED BY THE ASSESSEE AND THEREFORE, WE FEEL IT APPROPRIATE TO SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE THE ISS UE IN DISPUTE INVOLVED IN ALL THE THREE ASSESSMENT YEARS TO THE FILE OF THE A SSESSING OFFICER WITH THE DIRECTION TO THE ASSESSEE TO FILE NECESSARY EVIDENC E IN SUPPORT OF SOURCE OF HOUSEHOLD EXPENDITURE DECLARED IN THE BOOKS OF ACCO UNTS INCLUDING HOUSEHOLD WITHDRAWALS DECLARED IN THE CAPITAL ACCOU NT OF THE FAMILY MEMBERS, WHO CONTRIBUTED HOUSEHOLD EXPENDITURE OF T HE ASSESSEE. THE LD. ASSESSING OFFICER IS DIRECTED TO ADJUDICATE THE ISS UE IN DISPUTE IN ACCORDANCE WITH LAW AFTER ALLOWING ADEQUATE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED IN AL L THE THREE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 5. WE THEREFORE, SET ASIDE THE IMPUGNED PENALTY ORD ERS. HOWEVER, IT IS CLARIFIED THAT IF THE ADDITIONS ARE SUSTAINED, THE ASSESSING OFFICER WOULD BE AT LIBERTY TO DECIDE THE QUESTION OF LEVY OF PENALTY I N ACCORDANCE WITH LAW. THUS, GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE P ARTLY ALLOWED FOR STATISTICAL PURPOSES ONLY. 6. NOW, WE TAKE UP ITA NOS. 1539/DEL/2018 [ASSESSMENT YEAR 2008-09] & 1540/DEL/2018 [ASSESSMENT YEAR 2010-11] OF THE ASSESSEE. 7. THE FACTS AND GROUNDS ARE IDENTICAL IN THESE YEA RS AS WELL IN ITA NO.1538/DEL/2018 RELATING TO ASSESSMENT YEAR 2005-0 6. ITA NOS.1538 TO 1540/DEL/2018 PAGE | 8 8. LD. REPRESENTATIVES OF THE PARTIES HAVE ADOPTED THE SAME ARGUMENTS AS WERE ADDRESSED IN ITA NO.1538/DEL/2018 (ASSESSMENT YEAR 2005-06) [SUPRA]. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE THERE IS N O CHANGE INTO FACTS AND CIRCUMSTANCES HAS BEEN POINTED, WE THEREFORE, TAKI NG THE CONSISTENT VIEW, THE GROUNDS RAISED IN THESE APPEALS ARE ALSO ALLOWED. OUR FINDING IN ITA NO.1538/DEL/2018 FOR ASSESSMENT YEAR 2005-06 WOULD APPLY MUTATIS MUTANDI TO THE IDENTICAL GROUNDS RAISED IN THESE YEARS [I.E . ASSESSMENT YEARS 2008-09 AND 2010-11] AS WELL. THE GROUNDS RAISED IN THESE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES ONLY. 10. IN THE RESULT, ALL APPEALS FILED BY THE ASSESSE E ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES ONLY. ABOVE DECISION WAS PRONOUNCED ON CONCLUSION OF VIRTUAL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 21 ST OCTOBER, 2021. SD/- SD/- /- (O.P.KANT) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIA L MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI