Shri Rajiv Jain, Delhi V. ACIT, New Delhi

ITA 187/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5788 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 09-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Question of law
• Section: 68; 6

Judgement Text

1 ITA NO. 18 7/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE MS. SUCHITRA KAMBLE, JUDICI AL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTAN T MEMBER ITA NO. 187/DEL/2015 ( ASSESSMENT YEAR: 2008-09) RAJIV JAIN, 107, VARDHMAN CITY CENTRE, NEAR SHAKTI NAGAR SUBWAY, DELHI. PAN NO. ACHPJ9294L VS ACIT CIRCLE 20(1) NEW DELHI. APPELLANT RESPONDENT APPELLANT/ASSESSEE BY SH. LALIT MOHAN, CA RESPONDENT/REVENUE BY SH. ATIQ AHMAD, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 25.09.2014 PASSED BY THE LD. CIT(APPEALS)-XXII, NEW DELHI FOR AY 2008-09. 2. THE GROUNDS OF APPEAL ARE AS UNDER: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE LEVY OF PENALTY O F RS. 6,15,679/- UNDER SECTION 271(1 )(C) OF THE ACT. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS FAILED TO APPRECIATE THAT IN ABSENCE OF VALID SATISFACTION HA VING BEEN RECORDED IN THE ORDER OF ASSESSMENT, LEVY OF PENALTY WAS NOT IN ACC ORDANCE WITH LAW. 2.1 THAT FURTHERMORE, THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) HAS ALSO FAILED TO APPRECIATE THAT IN ABS ENCE OF SPECIFIC CHARGE HAVING BEEN LEVIED IN THE ORDER OF ASSESSMENT, PENA LTY LEVIED EVEN ON THIS GROUND WAS NOT IN ACCORDANCE WITH LAW. DATE OF HEARING 14.06.2018 DATE OF PRONOUNCEMENT 28.06.2018 2 ITA NO. 187/DEL/2015 3. THAT FURTHER, THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) HAS FAILED TO APPRECIATE THAT SUM OF RS. 18,11,352/- REPRESENTED THE PEAK AMOUNT OF DEPOSITS IN THE BANK ACCOUNT WITH AXIS BANK AND SUC H SUM BROUGHT TO TAX UNDER SECTION 68 OF THE ACT UNDER A CONDITIONAL SUR RENDER COULD NOT BE HELD TO BE A SUM FOR WHICH, ASSESSEE INTENTIONALLY AND K NOWINGLY HAS CONCEALED PARTICULARS OF INCOME THEREBY FURNISHED INACCURATE PARTICULARS OF HIS INCOME. 3.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS FAILED TO APPRECIATE THAT THE AMOUNT BROUGHT TO TAX HAD BE EN OFFERED BY THE ASSESSEE TO BUY PEACE OF MIND AND VOLUNTARILY DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS AND THEREFORE, SUCH DECLARAT ION BY THE ASSESSEE COULD NOT BE MADE A BASIS TO LEVY PENALTY UNDER SEC TION 271 (L)(C) OF THE ACT. IT IS, THEREFORE, PRAYED THAT THE PENALTY LEVIED AN D SUSTAINED MAY KINDLY BE DELETED AND APPEAL OF THE APPELLANT MAY KINDLY BE A LLOWED. 4. THE ASSESSEE DERIVED THE INCOME FROM COMMISSION UND ER THE NAME AND STYLE OF M/S JAIN FINANCIAL SERVICES. DURING THE YE AR UNDER REFERENCE TOTAL RECEIPTS FROM LIFE INSURANCE COMMISSION DISCLOSED A T RS.33,09,638/- AND COMMISSION FROM MUTUAL FUND WAS AT RS.24,719/- AND COMMISSION FROM SHARE WAS RS. 4,84,344/-. AFTER CLAIMING VARIOUS EX PENSES NET INCOME WAS DISCLOSED AT RS. 11,48,867/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE OPENED A BANK ACCOUNT IN AXIS BANK, A/C NO. 054010100126687. FROM THE BANK RECORD, THE ASSESSING OFFICER OBSERVED THAT THERE WAS AN OPENIN G BALANCE OF RS.84,881/- AND DURING THE YEAR UNDER REFERENCE THE ASSESSEE DE POSITED HUGE CASH IN THIS BANK ACCOUNT. ACCORDINGLY THE ASSESSEE WAS REQUIRED TO SHOW CAUSE AS TO 3.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT DURING THE COURSE OF PENALTY PROCEE DINGS, THE ASSESSEE HAD SUBMITTED THAT THE ENTIRE EVIDENCE MAY KINDLY BE EX AMINED AFRESH AND LEARNED ASSESSING OFFICER SHOULD NOT HAVE MECHANICA LLY PROCEEDED TO RELY UPON THE FINDINGS OF THE ORDER OF ASSESSMENT SO AS TO IMPOSE PENALTY. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ALSO FAILED TO APPRECIATE NO PENALTY WAS IMPOSABLE ON THE FOLLOWIN G SUMS DISALLOWED IN THE ORDER OF ASSESSMENT: S.NO. PARTICULARS AMOUNT (RS.) 1. DISALLOWANCE OUT OF TRAVEL EXPENSES 1,43,670/ - 2. DISALLOWANCE OF REFERRAL CHARGES 2,03,098/ - 3. DISALLOWANCE OUT OF TELEPHONE EXPENSES 15,974/ - TOTAL 3,62,742/- 3 ITA NO. 187/DEL/2015 WHY THIS CASH DEPOSIT IN THE BANK ACCOUNT BE NOT AD DED AS HIS INCOME FROM UNDISCLOSED SOURCES WITHIN THE MEANING OF SECTION 6 8 OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER HELD THAT THE ASSESSEE DEPOSITED CASH IN THE BANK ACCOUNT ON VARIOUS DATES AND ALSO WITHDRAWN RE GULARLY WHICH MEANS THE ASSESSEE ROTATED A CERTAIN AMOUNT OF CASH FROM HIS INCOME FROM UNDISCLOSED SOURCES. THE PEAK OF THIS AMOUNT WAS WO RKED OUT AND AS ON 13.02.2008, THE MAXIMUM PEAK AMOUNT WAS AT RS.18,11 ,352/- WHICH THE ASSESSEE ADMITTED AS HIS INCOME FROM UNDISCLOSED SO URCES. THEREFORE, THE PEAK OF CASH DEPOSIT OF RS.18,11,352/- WAS ADDED IN THE TOTAL INCOME AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES WITHIN T HE MEANING OF SECTION 68 OF THE ACT. THE ASSESSING OFFICER SUBSEQUENTLY INIT IATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND ISSUED NOT ICE U/S 274 OF THE ACT ON 29.12.2010. THE ASSESSEE FILED REPLY. THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT FOR CONCEALMENT AS WELL AS FUR NISHING INACCURATE PARTICULARS OF THE INCOME AT RS.6,15,679/-. 5. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 6. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER DISREGARDED THE SUBMISSIONS MADE BY THE ASSESSEE AND IMPOSED PENALT Y BY HOLDING THAT ASSESSEE HAD KNOWINGLY AND INTENTIONALLY CONCEALED PARTICULARS OF INCOME REGARDING UNEXPLAINED DEPOSITS IN HIS BANK ACCOUNT. WITH REGARD TO DISALLOWANCE OF EXPENDITURE THE ASSESSING OFFICER H AS NOT SAID ANYTHING AT ALL IN THE ORDER TO THE EFFECT THAT THERE WAS CONCEALME NT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. AR FUR THER SUBMITTED THAT THE ENTIRE ORDER IS SILENT REGARDING THE DISALLOWANCE O F EXPENDITURE AMOUNTS TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME INVITING PENALTY U/271(1)(C) OF THE ACT. IN FACT, W HILE COMPUTING THE PENALTY, THE DISALLOWANCE OF EXPENDITURE WAS ALSO TAKEN INTO ACCOUNT TREATING IT AS CONCEALED INCOME AND ON WHICH ALSO PENALTY WAS IMPO SED. THUS, THE PENALTY 4 ITA NO. 187/DEL/2015 ORDER ITSELF IS BAD. THE LD. AR FURTHER SUBMITTED T HAT THE CIT(A) FAILED TO APPRECIATE THAT IN ABSENCE OF SPECIFIC CHARGE HAVIN G BEEN LEVIED IN THE ORDER OF ASSESSMENT, PENALTY LEVIED EVEN ON THIS GROUND WAS NOT IN ACCORDANCE WITH LAW. THE LD. AR SUBMITTED THAT SUM OF RS. 18,11,352 /- REPRESENTED THE PEAK AMOUNT OF DEPOSITS IN THE BANK ACCOUNT WITH AXIS BA NK AND SUCH SUM BROUGHT TO TAX UNDER SECTION 68 OF THE ACT UNDER A CONDITIONAL SURRENDER COULD NOT BE HELD TO BE A SUM FOR WHICH ASSESSEE IN TENTIONALLY AND KNOWINGLY HAS CONCEALED PARTICULARS OF INCOME THEREBY FURNISH ED INACCURATE PARTICULARS OF HIS INCOME. 7. THE LD. DR RELIED UPON THE PENALTY ORDER AND THE ORDER OF THE CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT RECORDS INCLUDING THE ORDERS OF THE LOWER AUTHORITIES WITH RESPECT TO THE QUANTUM PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS. WE FIRS T COME TO THE QUANTUM PROCEEDINGS WHEREIN THE ASSESSING OFFICER VIDE ORDE R DATED 29.12.2010 MADE ADDITION OF RS. 18,11,352/- STATING THAT PENALTY PR OCEEDINGS INITIATED SEPARATELY FOR CONCEALMENT/FURNISHING OF INACCURAT E PARTICULARS OF INCOME. SIMILARLY IN THE END OF THE SAID ORDER, THE ASSESSI NG OFFICER ALSO RECORDED THESE TWIN CHARGES. IN THE PENALTY ORDER DATED 23.0 6.2011 WHEREIN THE ASSESSING OFFICER HAS LEVIED PENALTY ON TWIN CHARGE S. THE CIT(A) VIDE ORDER DATED 25.09.2014 IN PARA 8.13 HAS ALSO CONFIRMED TH E PENALTY ON THESE TWIN CHARGES. IN VIEW OF THE ABOVE FACTS, IT IS APPARENT THAT THERE IS NO SPECIFIC CHARGE RAISED AGAINST THE ASSESSEE EITHER FURNISHIN G OF INACCURATE PARTICULARS OF INCOME OR THAT OF CONCEALMENT OF INCOME. FURTHER , THE NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT DATED 29 .12.2010 ALSO SHOWS THAT NONE OF THE SPECIFIC CHARGES OUT OF TWIN CHARGES AR E CANCELLED BY THE ASSESSING OFFICER. IN VIEW OF THIS, THE ISSUE IS SQUARELY COV ERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF M/S SSA EMERALD M EADOWS ORDER DATED 23.11.2015. THE HONBLE APEX COURT HELD AS UNDER ME NTIONING THE HONBLE 5 ITA NO. 187/DEL/2015 KARNATAKA HIGH COURT DECISION IN CASE OF CIT VS. MA NJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565: 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SE CTION 274 READ WITH SECTION 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 BEEN INITIATED I.E., WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSE SSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDER ED IN THE CASE OF COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON A ND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBS TANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COU RT. THE APPEAL IS ACCORDINGLY DISMISSED. IN VIEW OF THIS PENALTY LEVIED BY THE ASSESSING OFF ICER OF RS. 6,15,679/- IS NOT SUSTAINABLE. THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.06.2018 SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28.06.2018 *KAVITA ARORA 6 ITA NO. 187/DEL/2015 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 27.6.18 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.6.18 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 28.6.18 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 28.6.18 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 28.6.18 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 28.6.18 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28.6 .18 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER