Ishween Kaur, New Delhi V. ITO, New Delhi

ITA 1836/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98083 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 01-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VED PRAKASH MISHRA
• Keywords: Initiation of penalty proceedings; Capital receipt
• Section: 144

Judgement Text

1 ITA NO. 18 36/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT ME MBER & SMT. BEENA PILLAI, JUDICIAL MEMBER I.T.A .NO.-1836/DE L/2015 (ASSESSMENT YEAR-2007- 08) ISHWEEN KAUR, M-53, 2 ND FLOOR, RAJOURI GARDEN, NEW DELHI. ABDPK5929J VS ITO, WARD 26(1), NEW DELHI. APPELLANT BY SHRI C.S. ANAND, ADV. RESPONDENT BY SH. VED PRAKASH MISHRA, SR. DR ORDER PER BEENA PILLAI, JUDICIAL MEMBER : THE PRESENT PENALTY APPEAL HAS BEEN FILED BY THE A SSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-15, DELHI VIDE HIS ORDER DATED 17/02/2015 FOR A.Y. 2007-08 ON THE FOLLOWING GROUND S: 1. THAT THE ORDER DATED 08.03.2015 PASSED THE LD. C IT(A) IS BAD ON VARIOUS LEGAL AND FACTUAL GROUNDS. 2. THAT THE PENALTY ORDER DESERVES TO QUASHED BECAUSE THE CHARGE IS NOT PRECISE. 3. THAT ON THE FACTS OF THE CASE AND UNDER THE LAW, TH E LD. CIT(A) HAS ERRED IN HOLDING THAT THE LD. ASSESSING OFFICERS ACTION OF IMPOSING PENALTY U/S 271(1)(C) IS FULLY J USTIFIED. DATE OF HEARING 03.12.2015 DATE OF PRONOUNCEMENT 11.12.2015 2 ITA NO. 18 36/DEL/2015 2. THE ASSESSEE HAD FILED ITS RETURN DECLARING A TO TAL INCOME OF RS. 2,72,270/- ON 31/03/2008. THE CASE WAS SELECTED FO R SCRUTINY AND NOTICES WERE ISSUED TO THE ASSESSEE. DURING THE AS SESSMENT THE LD. ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD DE POSITED CERTAIN CASH ON VARIOUS DATES. THE CASE WAS ADJOURNED SEVE RAL TIMES DURING THE ASSESSMENT PROCEEDINGS. ON 17/12/2009 T HE ASSESSEE APPEARED AND STATED THAT THE CASH DEPOSITED IS OUT OF SALE PROCEEDS OF JEWELLERY AMOUNTING TO RS. 5,46,892/- AND BALANC ED CASH WAS DEPOSITED OUT OF UNSECURED LOANS RECEIVED FROM RELA TIVES. IT WAS OBSERVED IN THE ASSESSMENT PROCEEDINGS THAT THE ASS ESSEE HAD NOT FILED ANY DOCUMENTARY EVIDENCE FOR THESE UNSECURED LOANS. THE CASE WAS FURTHER ADJOURNED 2-3 TIMES THEREAFTER. A S THE ASSESSEE FAILED TO FILE THE SOURCES OF CASH DEPOSITED AMOUNT ING TO RS. 13,38,000/- THE LD. ASSESSING OFFICER FINALIZED THE ASSESSMENT U/S 144 AND MADE AN ADDITION AMOUNTING TO RS. 13,38,000 /- TO THE INCOME OF THE ASSESSEE. HE ALSO INITIATED THE PENA LTY PROCEEDINGS. THEREAFTER NOTICE U/S 274 READ WITH 271 WAS ISSUED TO THE ASSESSEE ON 30/12/2009. EVEN AT THE TIME OF PENALTY PROCEED INGS THE ASSESSEE HAS NOT FURNISHED ANY DETAILS REGARDING TH E LOAN TAKEN FROM DIFFERENT PERSONS AS WELL AS ANY CONFIRMATION AFFIDAVITS RELATING TO THE SAME. THE LD. ASSESSING OFFICER, THEREFORE, LEVIED A PENALTY OF RS. 4,37,333/- FOR FILING INACCURATE PARTICULARS OF INCOME. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). IT IS S UBMITTED BY THE LD. AR THAT THE QUANTUM APPEAL FILED BY THE ASSESSEE FO R THE PRESENT 3 ITA NO. 18 36/DEL/2015 ASSESSMENT YEAR HAS BEEN DISPOSED OF BY THIS TRIBUN AL AGAINST WHICH AN MA HAS BEEN PREFERRED BY THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND SUBMISSI ONS BY BOTH THE PARTIES. 5. IT IS SUBMITTED BY THE LD. AR THAT THE NOTICE IS SUED BY THE ASSESSING OFFICER U/S 274 READ WITH SECTION 271 OF THE ACT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS DOES NOT SPECIFY AS TO UNDER WHICH LIMB THE NOTICE HAS BEEN ISSUED. IT IS ALSO NOTED THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS NOT I NITIATED THE PENALTY UNDER ANY PARTICULAR CHARGE. IN THE CASE O F CIT VS. ATUL MOHAN BINDAL REPORTED IN (2009) 9 SCC 589 THE HONB LE SUPREME COURT HAS CONSIDERED A SIMILAR SITUATION. IT HAS B EEN OBSERVED BY THE HONBLE SC THAT THE ASSESSING OFFICER HAS TO BE SATISFIED THAT A PERSON HAS CONCEALED THE PARTICULARS OF INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME. THUS, SATIS FACTION OF THE ASSESSING OFFICER ABOUT THE CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME IS ESSENTIAL BEFORE LEVYING ANY PENALTY U/S 271(1)(C) OF THE ACT . IT IS APPARENT FROM THE PHASE OF THE RECORD BEFORE US THAT THE ASS ESSING OFFICER HAS MERELY INITIATED THE PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER. WITHOUT SPECIFYING UNDER WHICH LIMB THE ASS ESSING OFFICER IS SATISFIED FOR LEVYING THE PENALTY. IT IS NECESSARY U/S 274 OF THE ACT TO ISSUE SUCH NOTICE U/S 271(1)(C) OF THE ACT, WHER EIN IT HAS BEEN MENTIONED AS TO WHETHER THE PENALTY PROCEEDINGS HAS BEEN INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED THE PARTICULARS OF INCOME. 4 ITA NO. 18 36/DEL/2015 6. WE HAVE OBSERVED FROM THE ORDER OF THE LD. CIT(A ) THAT IT IS AN UNDISPUTED FACT THAT THE NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C) DID NOT SPECIFY THE LIMB UNDER WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED. THE LD. CIT(A) IN PARA 6.4 OF HIS ORDER RECORDS AS UNDER: 6.4 THE VIEW OF LD. CIT(A) HAS BEEN AFFIRMED BY T HE HONBLE ITAT. THEREFORE, THERE REMAINS NO SUSPICIO N THAT THE APPELLANT WAS IN POSSESSION OF UNEXPLAINED CASH AMOUNTING TO RS. 13,38,000/- WHICH HAD SURFACED IN HER BANK ACCOUNT AND ULTIMATELY GOT INVESTED TOWARDS PURCHASE OF PROPERTIES. THE APPELLANT DEFINITELY CONCEALED HER UNDISCLOSED INCO ME AND TRIED TO EXPLAIN IT AS CAPITAL RECEIPT IN THE F ORM OF LOAN OR SALE OF JEWELLERY. HOWEVER, SUCH EXPLANATI ON OF THE APPELLANT REMAINED UNSUBSTANTIATED. THE APPELLANTS CASE IS COVERED BY ALL OF THE LIMBS OF SECTION 271(1)(C) OF THE ACT AND, THEREFORE, SPECIF YING ANY PARTICULAR LIMB OF THE SECTION FOR IMPOSING OF PENALTY ON THE PART OF THE ASSESSING OFFICER DOES N OT REMAIN IMPORTANT. THE ASSESSING OFFICER ACTION THE IMPOSING PENALTY U/S 271(1)(C) IS FULLY JUSTIFIED. GROUNDS OF APPEAL ARE THEREFORE, DISMISSED. 7. IT APPEARS FROM THE ABOVE FINDINGS OF THE LD. CI T(A) THAT THE PENALTY PROCEEDINGS WERE CONFIRMED BY THE LD. CIT(A ) AS THE HONBLE ITAT HAD AFFIRMED THE ADDITIONS MADE BY THE LD. ASS ESSING OFFICER IN THE QUANTUM APPEAL. IT IS, THEREFORE, APPARENT FRO M THE RECORD THAT THE ENTIRE PENALTY PROCEEDINGS HAVE BEEN INITIATED ON THE GROUND THAT THE NOTICE ISSUED WAS NOT IN ACCORDANCE WITH L AW. WE, THEREFORE, FOLLOWING THE CASE OF THE HONBLE KARNAT AKA HIGH COURT IN THE CASE OF CIT VS. MANJU NATHA COTTON AND GINNING FACTORY & OTHERS, REPORTED IN (2013) 359 ITR 565 HOLD THAT TH E PENALTY PROCEEDINGS SUFFERS FROM GRAVE ILLEGALITIES. MEREL Y BECAUSE THE 5 ITA NO. 18 36/DEL/2015 ADDITION MADE BY THE LD. ASSESSING OFFICER HAS BEEN CONFIRMED BY THIS TRIBUNAL IS NOT CONCLUSIVE TO LEVY THE PENALTY U/S 271(1)(C) AS BOTH THE PENALTY PROCEEDINGS AS WELL AS THE QUANTUM PROCEEDINGS ARE INDEPENDENT FROM EACH OTHER. WE, THEREFORE, AL LOW THE GROUNDS OF APPEAL FILED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.12.2015 SD/- SD/- (N.K. SAINI) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11.12.2015 *KAVITA, P.S. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO. 18 36/DEL/2015 DATE 1. DRAFT DICTATED ON 08.12.15 2. DRAFT PLACED BEFORE AUTHOR 09.12.15 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 15.12.15 6. KEPT FOR PRONOUNCEMENT ON 11.12.15 7. FILE SENT TO THE BENCH CLERK 15.12.15 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.