Mohan Exports (India) Pvt. Ltd, New Delhi V. ACIT, New Delhi

ITA 2018/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2171 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2002-2003
• Appeal Filed On: 07-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N K GUPTA
• Keywords: Competent authority; Reassessment proceedings
• Section: 14A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO. 2018/DEL/2015 ASSESSMENT YEA R: 2002-03 M/S MOHAN EXPORTS (I) PVT. LTD. VS. ACIT, CIRCLE 5 (1) MOHAN HOUSE, 8-9, ZAMRUDPUR NEW DELHI COMMUNITY CENTRE, KAILASH COLONY EXTN., NEW DELHI 48 (PAN: AAACM4168J) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. N.K. GUPTA, CA RESPONDENT BY : SH. GAURAV SHARMA, SR. DR DATE OF HEARING: 30.08.2018 DATE OF PRONOUNCEMENT: 31.08.2018 ORDER PER SUDHANSHU SRIVASTAVA, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 27.1.2015 OF THE LD. CIT(A)-6, DELHI RELATING TO AS SESSMENT YEAR 2002-03 ON THE FOLLOWING GROUND:- THAT WITHOUT APPRECIATING THE FACTS OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE LEV Y OF PENALTY OF RS. 74,23,475/- AND THE SAME BE DELETED. 2 2. THE FACTS IN BRIEF ARE THAT ASSESSMENT IN THIS C ASE WAS COMPLETED U/S. 147/143(3) OF THE I.T. ACT, 1961 ON 18.12.2009 AT TOTAL INCOME OF RS. 12,04,65,870/- AS AGAINST RETURNED INCOME OF RS . 98136620/- WHICH WAS PROCESSED U/S. 143(1)(A). SUBSEQUENTLY, A NOTIC E U/S. 148 OF THE ACT WAS ISSUED, IN RESPONSE TO WHICH THE ASSESSEE FILED RETURN ON 21.4.2009 DECLARING INCOME OF RS. 134051840/- BY MAKING TWO A DDITIONS NAMELY RS. 2,07,96,847/- ON ACCOUNT OF PAYMENT IN THE NATURE O F ILLEGAL GRATIFICATION IN IRAQ AND RS. 15,32,406/- ON ACCOUNT OF DISALLOWA NCE U/S. 14A OF THE ACT. AO OBSERVED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND INITIATED PENALTY PROCEEDINGS U/ S. 271(1)(C) OF THE ACT AND ISSUED PENALTY NOTICE U/S. 274 R.W.S 271(1)(C) OF THE ACT DATED 18.12.2009. HOWEVER AGAINST THE ASSESSMENT ORDER, T HE ASSESSEE COMPANY FILED AN APPEAL BEFORE THE LD. CIT(A) AND O N ITS REQUEST THE PENALTY PROCEEDINGS U/S. 271(1)(C) WERE KEPT IN ABE YANCE TILL DISPOSAL OF APPEAL FILED BEFORE THE LD. CIT(A). FURTHER A SHOW CAUSE NOTICE U/S. 271(1)(C) OF THE ACT WAS ISSUED ON 20.3.2013 AND DU LY SERVED UPON THE ASSESSEE REQUIRING TO SHOW CAUSE AS TO WHY PENALTY U/S. 271(1)(C) OF THE ACT SHOULD NOT BE IMPOSED UPON IN LIGHT OF THE FACT S AND CIRCUMSTANCES OF THE CASE. IN RESPONSE, A LETTER DATED 25.3.2013 WA S FILED BY THE ASSESSEE BEFORE THE AO CLAIMING THEREIN THAT IT HAS PREFERRE D AN APPEAL BEFORE THE ITAT, DELHI AGAINST THE QUANTUM ADDITIONS CONFIRMED BY THE LD. CIT(A) AND REQUESTED THAT PENALTY PROCEEDINGS MAY BE KEPT IN ABEYANCE TILL THE DISPOSAL OF THE APPEAL BY THE ITAT. AO OBSERVED THA T THERE IS NO CONTRADICTION TO SAY THAT THE ASSESSEE HAS DELIBERA TELY FURNISHED 3 INACCURATE PARTICULARS OF ITS INCOME TO THE TUNE O F RS. 2,17,90,646/- (RS. 2,07,96,847/- + 9,93,799/-) AND WAS NOT ABLE TO BRI NG ON RECORD BONAFIDE REASONS THAT THE ADDITION/DISALLOWANCE WAS NOT RELA TING TO FURNISHING INACCURATE PARTICULARS AND FOR CONCEALMENT OF INCOM E. ACCORDINGLY, THE AO IMPOSED THE PENALTY OF RS. 77,79,262/- U/S. 271( 1)(C) OF THE ACT BEING 100% OF THE TAX ON THE INCOME SOUGHT TO BE EV ADED BY FURNISHING INACCURATE PARTICULARS OF INCOME VIDE ORDER DATED 3 0.3.213 PASSED U/S. 271(1)(C) OF THE ACT. AGAINST THE AFORESAID PENALT Y ORDER, THE ASSESSEE APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 27.01.2015 HAS PARTLY ALLOWED THE APPEAL OF THE AS SESSEE BY CONFIRMING THE ACTION OF AO IN IMPOSING THE PENALTY ON ACCOUNT OF DISALLOWANCE OF ILLEGAL GRATIFICATION OF RS. 2,07,96,847/- AND DELE TED THE PENALTY ON ACCOUNT OF DISALLOWANCE MADE U/S. 14A AMOUNTING TO RS. 9,93,799/-. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL. 3. AT THE TIME OF HEARING, LD. A.R. FOR THE ASSESSE E, STATED THAT THE REASSESSMENT PROCEEDINGS ON WHICH THE PENALTY HAS BEEN IMPOSED, HAS ALREADY BEEN QUASHED BY THE ITAT, NEW DELHI COORDI NATE BENCH IN ITA NO. 3049/DEL/2011 (AY 2002-03) VIDE ORDER DATED 30 .11.2016. IN THIS BEHALF HE FILED THE COPY OF THE TRIBUNALS ORDER DA TED 30.11.2016 IN ASSESSEES OWN CASE AND HE REQUESTED THAT PENALTY I N DISPUTE MAY BE DELETED. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT IN ASSESSEES OWN CASE IN ITA NO. 3049/DE L/2011 (AY 2002-03) VIDE ORDER DATED 30.11.2016, THE COORDINATE BENCH O F DELHI TRIBUNAL HAD QUASHED THE REASSESSMENT PROCEEDINGS VIDE PARA NO. 5 AT PAGES 14 TO 17. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUC ING THE RELEVANT PORTION OF THE TRIBUNAL ORDER DATED 30.11.2016 AS UNDER:- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PR ESENT CASE, SINCE THE NOTICE WAS ISSUED BEYOND FOUR YEAR S FROM THE END OF THE ASSESSMENT YEAR, THE AO SHOULD HAVE OBTAINED THE PERMISSION FROM THE JCIT IN TERMS OF SECTION 151. ADMITTEDLY, THE LD. CIT HAS GRANTED T HE APPROVAL AND NOT THE JCIT AS HAS BEEN CONTEMPLATED IN THE ACT. THE HONBLE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT VS. SPLS SIDDHARTHA LTD. (SUPRA) HAS H ELD AS UNDER:- SECTION 116 ALSO DEFINES THE INCOME TAX AUTHORI TIES AS DIFFERENT AND DISTINCT AUTHORITIES. SUCH DIFFERENT AND DISTINCT AUTHORITIES HAVE TO EXERCISE THEIR POWERS IN ACCORDANCE WITH LAW AS PER THE POWERS GIVEN TO THEM IN THE SPECIFIED CIRCUMSTANCES. IF POWERS CONFERRED ON A PARTICULAR AUTHORITY ARE ARROGATED BY OTHER AUTHORI TY WITHOUT MANDATE OF LAW, IT WILL CREATE CHAOS IN THE 5 ADMINISTRATION OF LAW AND HIERARCHY OF ADMINISTRATI ON WILL MEAN NOTHING. SATISFACTION OF ONE AUTHORITY CANNOT BE SUBSTITUTED BY THE SATISFACTION OF THE OTHER AUTHOR ITY. IT IS TRITE THAT WHEN A STATUTE REQUIRES, A THING TO BE DONE IN A CERTAIN MANNER, IT SHALL BE DONE IN THAT MANNE R ALONE AND THE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME OTHER MANNER. THUS, IF AUTHORITY IS GIVEN EXPRESSLY BY AFFIRMATI VE WORDS UPON A DEFINED CONDITION, THE EXPRESSION OF THAT CONDITION EXCLUDES THE DOING OF THE ACT AUTHORIZED UNDER OTHER CIRCUMSTANCES THAN THOSE AS DEFINED. IT IS A LSO ESTABLISHED PRINCIPLE OF LAW THAT IF A PARTICULAR A UTHORITY HAS BEEN DESIGNATED TO RECORD HIS / HER SATISFACTI ON ON ANY PARTICULAR ISSUE, THEN IT IS THAT AUTHORITY AL ONE WHO SHOULD APPLY HIS / HER INDEPENDENT MIND TO RECORD H IS /HER SATISFACTION AND FURTHER MANDATORY CONDITION I S THAT THE SATISFACTION RECORDED SHOULD BE INDEPENDENT A ND NOT BORROWED OR DICTATED SATISFACTION. LAW IN T HIS REGARD IS NOW WELL SETTLED. THE APEX COURT IN THE CASE OF ANIRUDHSINHJI KARANS INHJI JADEJA VS. STATE OF GUJARAT (1995) 5 SCC 302 HAS HE LD THAT IF A STATUTORY AUTHORITY HAS BEEN VESTED WIT H JURISDICTION, HE HAS TO EXERCISE IT ACCORDING TO IT S OWN 6 DISCRETION. IF DISCRETION IS EXERCISED UNDER THE D IRECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORITIES INSTRUCTION, THEN IT WILL BE A CASE OF FAILURE TO EXERCISE DISCRETION ALTOGETHER. THEREFORE, THE TRIBUNAL HAS RIGHTLY DECIDED THE LEG AL ASPECT, KEEPING IN VIEW WELL ESTABLISHED PRINCIPLE S OF LAW LAID DOWN IN CATENA OF JUDGEMENTS INCLUDING THAT O F THE SUPREME COURT. 5.1 THE HONBLE DELHI HIGH COURT HAS LAID DOWN TH E DICTUM THAT IF A STATUTE REQUIRES A THING TO BE DONE IN A CERTAIN MANNER, IT SHALL BE DONE IN THAT MANNER ALONE AND T HE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME OTHER MANN ER. IF A STATUTORY AUTHORITY HAS BEEN VESTED WITH JURISDICTI ON, IT HAS TO EXERCISE IT ACCORDING TO ITS OWN DISCRETION AND IF THE DISCRETION IF EXERCISED UNDER THE DIRECTION OR IN COMPLIANCE W ITH SOME HIGHER AUTHORITYS INSTRUCTION, THEN IT WILL BE A C ASE OF FAILURE TO EXERCISE DISCRETION ALTOGETHER. THE HONBLE DELH I HIGH COURT HELD THAT IF THE APPROVAL WAS NOT GRANTED BY THE J OINT COMMISSIONER BUT BY THE LD. COMMISSIONER OF INCOME TAX, IT WAS NOT AN IRREGULARITY CURABLE U/S. 292B AND THE N OTICE WAS NOT VALID. IN THE PRESENT CASE ALSO, THE JCIT HAS NOT GRANTED THE APPROVAL AND THE SAME HAS BEEN GRANTED BY THE L D. CIT AND, THEREFORE, THE REASSESSMENT FRAMED WITHOUT PR OPER 7 APPROVAL FROM THE COMPETENT AUTHORITY DESERVES TO B E QUASHED. WE, ACCORDINGLY, QUASH THE REASSESSMENT PROCEEDINGS AND ALLOW THE APPEAL OF THE ASSESSEE. 6. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCE S OF THE CASE, WE FIND THAT THE REASSESSMENT PROCEEDINGS ON WHICH THE PENA LTY IN DISPUTE WAS IMPOSED, HAS ALREADY BEEN QUASHED IN ASSESSEES OW N CASE IN ITA NO. 3049/DEL/2011 (AY 2002-03) VIDE ORDER DATED 30.11.2 016, AS AFORESAID, BY THE COORDINATE BENCH OF DELHI TRIBUNAL, HENCE, THE PENALTY IN DISPUTE WILL NOT SURVIVE. ACCORDINGLY, WE CANCEL THE ORDER S OF THE AUTHORITIES BELOW AND DELETE THE PENALTY IN DISPUTE BY ALLOWING THE APPEAL FILED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/08/2018. SD/- SD/- (O.P. KANT) (SUDHANSHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31.08.2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT(A) 4. DR, ITAT BY ORDER ASSTT. REGISTRAR 8