Tripat Kaur, New Delhi V. ACIT, New Delhi

ITA 1829/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5508 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Assessee Lawyers: VED JAIN ADV SH ASHISH GOEL
• Keywords: Search and seizure; Principle of natural justice; Question of law; Initiation of penalty proceedings; Revised return
• Section: 143(3); 153A; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NOS.-1829 TO 1833/DEL/2015 ( ASSESSMENT YEARS: 2006-07 TO 2010-11) TRIPAT KAUR A-29, FRIENDS COLONY EAST, NEW DELHI. PAN NO. AAAPK8020A VS ACIT CENTRAL CIRCLE 15, NEW DELHI. ASSESSEE BY SH. VED JAIN, ADV. SH. ASHISH GOEL REVENUE BY SH. RAVI KANT GUPTA, SR. DR ORDER PER BENCH ALL THESE APPEALS ARE FILED BY THE ASSESSEE CHALLENGING THE ORDERS DATED 26.02.2015 IN APPEAL N OS. 409 TO 413/2014-15 PASSED BY THE LD. COMMISSIONER OF INCOM E TAX (APPEALS)-XXVI, NEW DELHI (HEREINAFTER FOR SHORT CA LLED AS THE LD. CIT (A)). SINCE THE QUESTIONS OF FACTS AND L AW INVOLVED IN ALL THESE MATTERS ARE IDENTICAL, WE DEEM IT JUST AN D CONVENIENT TO DISPOSE THEM BY WAY OF A COMMON ORDER. DATE OF HEARING 07.05.2018 DATE OF PRONOUNCEMENT 08.05.2018 2 ITA NOS. 1829 TO 1833/DEL/2015 2. THERE WAS A SEARCH CARRIED OUT AT THE PREMISES O F THE ASSESSEE ON 28.07.2011, NO INCRIMINATING MATERIAL W AS FOUND DURING THE COURSE OF SEARCH. PURSUANT TO THE NOTIC E DATED 21.11.2012 U/S 153A OF THE INCOME TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) THE ASSESSEE FILED HER RE TURN OF INCOME, ADDING SOME AMOUNTS BY WAY OF ABUNDANT CAUTION, AND EXPLAINED THE SAME TO THE ASSESSING OFFICER. LD. ASSESSING O FFICER (FOR SHORT AS THE LD. AO) ACCEPTED THE WRITTEN AN AMOUNT U/S 153A RETURN OF INCOME AND PASSED THE ORDER U/S 143(3) OF THE AC T READ WITH SECTION 153A OF THE ACT. HOWEVER, LD. AO INITIATED THE PENALTY PROCEEDINGS AND CONCLUDED THEM BY LEVYING THE PENAL TY IN RESPECT OF THE AMOUNT WHICH WAS ADDED BY THE ASSESSEE BY WA Y OF ABUNDANT CAUTION AND IN THE ABSENCE OF ANY INCRIMIN ATING MATERIAL, AS FOLLOWS: A.Y. AMOUNT ON WHICH PENALTY IS LEVIED AMOUNT OF PENALTY 2006-07 10,00,000/- 3,09,000/- 2007-08 23,17,680/- 7,16,163/- 2008-09 10,00,000/- 3,09,000/- 2009-10 20,00,000/- 6,18,000/- 2010-11 10,00,000/- 3,09,000/- 3. APPEALS PREFERRED BY THE ASSESSEE WERE DISMISSE D BY THE LD. CIT(A). HENCE, THESE APPEALS BY THE ASSESSEE. 4. ASSESSEE IS CHALLENGING THE PENALTY IN THESE APP EALS MAINLY ON TWO GROUNDS FIRSTLY, CONTENDING THAT WHEN THE AS SESSEE FILED REVISED RETURN AND THE RETURN FILED BY THE ASSESSEE U/S 153A OF THE ACT WAS ACCEPTED AS SUCH BY THE LD. AO AND THAT INC OME DISCLOSED BY THE ASSESSEE U/S 153A OF THE ACT WAS HIGHER THAN THE INCOME IN THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT, TH EN IN VIEW OF THE 3 ITA NOS. 1829 TO 1833/DEL/2015 DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N PCIT VS NEERAJ JINDAL (2017) 393 ITR 1 (DEL) SUCH DISCLOSURE OF AD DITIONAL INCOME WILL NOT AUTOMATICALLY LEAD TO THE PENALTY. THE NEXT POINT URGED ON BEHALF OF THE ASSESSEE IS THAT INASMUCH AS THE NOTICE ISSUED U/S 274 READ WITH SECTION 271 OF THE ACT HAS NOT SPECIFIED AS TO UNDER WHICH LIMB OF THE ACT, THE PENALTY IS P ROPOSED TO BE LEVIED, IN VIEW OF THE DECISION OF THE HONBLE KARN ATAKA HIGH COURT IN THE CASE OF CIT VS. M/S MANJUNATHA COTTON & GINN ING FACTORY & ORS. [2013] 359 ITR 565 AND CIT VS. M/S SSAS EME RALD MEADOWS, THE PROCEEDINGS ARE CONTRARY TO THE LAW AN D ARE LIABLE TO BE QUASHED. 5. LD. DR PLACED RELIANCE ON THE DECISIONS RELIED U PON BY THE LD. CIT (A) IN HIS ORDER AND MORE PARTICULARLY MAK DATA PVT. LTD. 352 ITR 1 (DEL.). 6. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS ON EITHER SIDE. THERE IS NO DISPUTE AS TO THE FACTS SUBMITTED BY THE ASSESSEE TO THE EFFECT THAT IN THE SEARCH THAT WAS CONDUCTED ON 28.07.2011 NOTHING INCRIMINATORY COULD BE FOUND AGAINST THE ASSESSEE. IT IS ALSO AN ADMITTED FACT THAT WHEN THE ASSESSEE ADDED CERTAIN AMOUNTS STATING IT TO BE BY WAY OF ABUNDANT CAUTION, THE AUTHORITIES BELOW HAVE NOT ID ENTIFIED THE NATURE OF INCOME THAT WAS ADDED BY THE ASSESSEE BY WAY OF ABUNDANT CAUTION. LD. AO DID NOT RAISE ANY QUESTIO N OR QUERY AND ACCEPTED THE SAME WHILE PASSING THE ORDER U/S 153A/ 143(3) OF THE ACT. 4 ITA NOS. 1829 TO 1833/DEL/2015 7. HONBLE JURISDICTIONAL HIGH COURT IN PCIT VS NEE RAJ JINDAL (2017) 393 ITR 1 (DEL) HELD AS FOLLOWS: 13. AT THE OUTSET, IT MUST BE NOTED THAT P URSUANT TO THE SEARCH AND SEIZURE OPERATION CONDUCTED UNDER SECTION 132(4) OF THE ACT , THE ASSESSEE WAS GIVEN NOTICE UNDER SECTION 153A TO FILE FRESH RETURN OF H IS INCOME. THEREAFTER, THE ASSESSEE FILED REVISED RETURNS AND THE RETURN FILED BY THE ASSESSEE UNDER SECTION 153A WAS ACCEPTED AS SUCH BY THE A.O. HOWEVER, THE A.O. WAS OF THE OPINION THAT INASMUCH THAT THE INCOME DISCLOSED BY THE ASSE SSEE UNDER SECTION 153A WAS HIGHER THAN THE INCOME IN THE ORIGINAL RETURN FILED UNDER SECTION 139(1) AND SINCE IN HI S VIEW, SUCH DISCLOSURE OF INCOME WAS A CONSEQUENCE OF THE SEARCH CONDUCTED ON THE ASSESSEE, THERE WAS CONCEALMENT O F INCOME WHICH ATTRACTED SECTION 271(1)(C) OF THE ACT. THEREFORE, THE QUEST ION THAT NEEDS TO BE ANSWERED IS WHETHER PENALTY IS TO BE LEVIED AUTOMATICALLY W HENEVER THE ASSESSEE DECLARES A HIGHER INCOME IN HIS RETURN FILED UNDER SECTION 15 3A IN COMPARISON TO THE ORIGINAL RETURN FILED UNDER SECTION 139(1). XXX XXX XXX XXX XXX XXX 17. IN THIS CASE, THE A.O. IN HIS ORDER NOTED THAT THE DISCLOSURE OF HIGHER INCOME IN THE RETURN FILED BY THE ASSESSEE WAS A CONSEQUEN CE OF THE SEARCH CONDUCTED AND HENCE, SUCH DISCLOSURE CANNOT BE SAID TO BE VO LUNTARY. HENCE, IN THE A.O.S OPINION, THE ASSE SSEE HAD CONCEALED HIS I NCOME. HOWEVER, THE MERE FACT THAT THE ASSESSEE HAS FILED REVISED RETURNS DI SCLOSING HIGHER INCOME THAN IN THE ORIGINAL RETURN, IN THE ABSENCE OF ANY OTHER I NCRIMINATING EVIDENCE, DOES NOT SHOW THAT THE ASSESSEE HAS CONCEALED HIS INCOME FOR THE RELEVANT ASSESSMENT YEARS. ON THIS POINT, SEVERAL HIGH COURTS HAVE ALS O OPINED THAT THE MERE INCREASE IN THE AMOUNT OF INCOME SHOWN IN THE REVISED RETUR N IS NOT SUFFICIENT TO JUSTIFY A LEVY OF PENALTY. XXX XXX XXX XXX XXX XXX 20. THEREFORE, THE POSITION THAT EMERGES FROM THE A BOVE - MENTIONED PROVISION IS THAT ONCE THE ASSESSEE FILES A REVISED RETURN UNDE R SECTION 153A, FOR ALL OTHER PROVISIONS OF THE ACT, THE REVISED RETURN WILL BE T REATED AS THE ORIGINAL RETURN FILED UNDER SECTION 139. ON SIMILAR LINES, THE GUJA RAT HIGH COURT IN THE CASE OF KIRIT DAHYABHAI PATEL V. ASS ISTANT COMMISSIONER OF INCOME TAX, (2015) 280 CTR (GUJ) 216 , HELD THAT: IN VIEW OF SPECIFIC P ROVISION OF S. 153A OF THE I.T. ACT. THE RETURN OF INCOME FILED IN RESPONSE TO NOT ICE UNDER S. 153A OF THE I.T. ACT IS TO BE CONSIDERED AS RETURN FILED UNDER S. 1 39 OF THE ACT, AS THE AO HAS MADE ASSESSMENT ON THE SAID RETURN AND THEREFORE, THE RETURN IS TO BE CONSIDERED FOR THE PURPOSE OF PENALTY UNDER S. 271(1)(C) OF T HE I.T. ACT AND THE PENALTY IS TO 5 ITA NOS. 1829 TO 1833/DEL/2015 BE LEVIED ON THE INCOME ASSESSED OVER AND ABOVE TH E INCOME RET URNED UNDER S. 153A, IF ANY. 8. THE ABOVE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IS APPLICABLE TO THE FACTS OF THE CASE ON ALL FORCE . 9. NOW COMING TO THE SECOND CONTENTION OF THE ASSES SEE THAT THE NOTICE ISSUED U/S 274 READ WITH SECTION 271 OF THE ACT IS BAD UND ER LAW IN THE CASE OF CIT VS. M/S MANJUNATHA COTTON & GINNING FACTORY & ORS. (SUP RA), WE HAVE CAREFULLY PERUSED THE MATERIAL PAPERS ON RECORD IN THE LIGHT OF THE STATEMENTS MADE ON BEHALF OF THE ASSESSEE INCLUDING THE JUDGMENT RELIE D UPON BY HIM. IN THIS CASE PAGE NO 8 OF THE PAPER BOOK IS THE COPY OF THE NOTI CE ISSUED UNDER SECTION 274 OF THE ACT AND IT DOES NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, PENALTY IS PROPOSED. 10. IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNI NG FACTORY, 359 ITR 565 (KAR), VIDE PARAGRAPH 60, THE HONBLE KARNATAKA HIG H COURT HAS HELD THAT :- 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, T HAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENC ES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFEN CES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSE E GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTH ER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXI STENCE OF THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOS E GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO A NSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOS E PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. O THERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE 6 ITA NOS. 1829 TO 1833/DEL/2015 SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE TH E BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUN D ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. TH E VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE IN FORMATION, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING TH E PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUB SEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 11. IN ITA 380/2015 THE HONBLE KARNATAKA HIGH COUR T CONSIDERED THE QUESTION OF LAW AS TO,- WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITL Y MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PA RTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLAT ION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCE ALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? 12. AND THE HONBE HIGH COURT RULED ANSWERED THE SA ME IN FAVOUR OF THE ASSESSEE OBSERVING THAT: THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE AS SESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH S ECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD B EEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSE SSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CA SE OF COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (201 3) 359 ITR 565. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGMENT OF TH E DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDIN GLY DISMISSED. 13. THE SPECIAL LEAVE PETITION FILED BY THE REVENUE CHALLENGING THE AFORESAID JUDGEMENT OF THE HIGH COURT WAS DISMISSED BY THE HO NBLE SUPREME COURT HOLDING : 7 ITA NOS. 1829 TO 1833/DEL/2015 WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPEC IAL LEAVE PETITION IS, ACCORDINGLY, DISMISSED. 14. IN VIEW OF THIS FACTUAL AND LEGAL POSITION, VIE WING FROM ANY ANGLE, THE PENALTY CANNOT BE SUSTAINED. WE, THEREF ORE, WHILE RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, HOLD TH AT THE PENALTY NEEDS BE DELETED AND ACCORDINGLY DIRECT THE LD. AO TO DO SO. GROUNDS ARE ANSWERED ACCORDINGLY IN FAVOUR OF THE A SSESSEE. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.05.2018 SD/- SD/- (G.D. AGRAWAL) (K. NARSIMHA C HARY) PRESIDENT JUDICIAL MEMB ER DATED: 08.05.2018 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 07.05.2018 DRAFT PLACED BEFORE AUTHOR 07.05.2018 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 08.5.18 KEPT FOR PRONOUNCEMENT ON 08.5.18 FILE SENT TO THE BENCH CLERK 08.5.18 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.