M/s. Bengali Sweet Center, New Delhi V. ACIT, New Delhi

ITA 2068/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3545 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-03-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: PN SHASTRI
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER & SHRI K.N. CHARRY, JUDICIAL MEMBER ITA NOS.-2068 & 2069/DEL/2014 ( ASSESSMENT YEARS: 2002-03 & 2005-06) BENGALI SWEET CENTRE G-19, SOUTH EXTENSION PART-1, NEW DELHI. AABFB3097R VS ACIT CENTRAL CIRCLE 12 NEW DELHI. ASSESSEE BY SH. M.P. RASTOGI, ADV. AND SH. P.N. SHASTRI, CA REVENUE BY SH. S.K. JAIN, DR ORDER PER K. NARSIMHA CHARRY, J.M. ISSUE INVOLVED IN BOTH THESE APPEALS IS ONE AND THE SAME AS SUCH IT IS CONVENIENT TO DISPOSE OF THESE TWO APPEA LS BY WAY OF A COMMON ORDER, BY TAKING THE FACTS RELEVANT FOR THE ASSESSMENT YEAR 2002-03. BRIEFLY STATED FACTS ARE THAT THE ASS ESSEE IS A FORM DERIVING ITS INCOME IN THE BUSINESS OF MANUFACTURIN G AND RETAILING OF SWEETS AND NAMKEENS. CONSEQUENT TO THE SURVEY OP ERATIONS DATE OF HEARING 27.03.2017 DATE OF PRONOUNCEMENT 20.04.2017 2 ITA NOS.2068 & 2069/DEL/2014 CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 10/11/2005 AND NOTICE U/S 153C OF THE ACT, THE ASSE SSEE FILED THEIR RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002 -03 ON 16/11/2006 DECLARING A TOTAL INCOME OF RUPEES 6,61, 436/-, AND THE ASSESSMENT WAS COMPLETED ON 27/12/2007 ASSESSIN G THE INCOME AT RS. 28,24,190/- BY ADOPTING NET PROFIT AT THE RATE OF 10% OF THE GROSS SALES AFTER REJECTING THE BOOKS OF ACC OUNT, AND AN ADDITION OF RS. 21,62,754/-WAS MADE. ASSESSING OFF ICER ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)( B) AND (C) OF THE ACT. AGGRIEVED BY THE ADDITIONS TO THE INCOME, ASSE SSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND BY WAY OF AN OR DER DATED 15/12/2009 LD CIT(A) RESTRICTED THE ADDITION TO 1% OF THE SALES. SUBSEQUENTLY, BY WAY OF ORDER DATED 02/09/2011 THE ASSESSING OFFICER LEVIED A PENALTY OF RS.96,494/-. IN APPEAL, BY WAY OF IMPUGNED ORDER, THE LEARNED CIT(A), CONFIRMED THE S AME. HENCE THE ASSESSEE IS BEFORE US IN APPEAL CHALLENGING THE PENALTY ORDER. 2. IT IS THE ARGUMENT OF THE LD. AR IS THAT THE PEN ALTY ORDER IS BAD UNDER LAW BECAUSE ASSESSMENT ORDER WHILE INITIA TING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 R EAD WITH SECTION 3 ITA NOS.2068 & 2069/DEL/2014 271(1)(C) OF THE INCOME TAX ACT, 1961 DID NOT SPECI FY UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY P ROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PAR TICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. SECONDLY CONTENDED THAT IN THE ORDER DATED 15/12/2009 THE LA ND LEARNED CIT(A) WHILE RESTRICTING THE ADDITIONS TO 1% OF THE SALES AGREED WITH THE ASSESSEE THAT NO ADDITION CAN BE MADE TO AN ASS ESSMENT UNDER SECTION 143 (3) OR 143 (1) UNLESS SOME INCRIMINATIN G MATERIAL IN ANY OF THE SIX YEARS INVOLVED DURING THE SEARCH WAS FOUND, BUT IN ORDER TO COVER THE POSSIBLE UNVOUCHED EXPENSES DEBI TED IN ACCOUNTS AND ALSO TO COVER FOR THE BLANK WAGES VOUC HER OBTAINED BY THE ASSESSEE THE SAID ADDITION WAS RETAINED. HE SUBMITS THAT IN THE CIRCUMSTANCES THE ASSESSING OFFICER IS NOT JUST IFIED IN LEVYING THE PENALTY. LASTLY HE SUBMITTED THAT THE PENALTY O RDER IS BARRED BY LIMITATION. LD. ADR VEHEMENTLY RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. 3. NOW COMING TO THE 1 ST ARGUMENT THAT THE PENALTY ORDER IS BAD UNDER LAW FOR NON-SPECIFYING THE CHARGE IN AS MUCH AS IT DOES NOT SPECIFY UNDER WHICH LIMB OF SECTION 271 (1) ( C ) O F THE ACTS THE 4 ITA NOS.2068 & 2069/DEL/2014 ACTION WAS TAKEN, IS CONCERNED RELIANCE IS PLACED O N THE DECISIONS OF HONBLE KARNATAKA HIGH COURT REPORTED IN CIT VS. SSAS EMERALD MEADOWS IN ITA 380/2015 AND COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 . 4. IN ITA 380/2015 THE HONBLE KARNATAKA HIGH COURT CONSIDERED THE QUESTION OF LAW AS TO,- WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICITL Y MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATE D FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABL E FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? AND THE HONBE HIGH COURT RULED ANSWERED THE SAME I N FAVOUR OF THE ASSESSEE OBSERVING THAT: THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)( C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) TO B E BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271 (1)(C) 5 ITA NOS.2068 & 2069/DEL/2014 OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIA TED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INC OME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE , HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THI S COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL Q UESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY T HIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. 5. THE SPECIAL LEAVE PETITION FILED BY THE REVENUE CHALLENGING THE AFORESAID JUDGEMENT OF THE HIGH COURT WAS DISMI SSED BY THE HONBLE SUPREME COURT HOLDING : WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPEC IAL LEAVE PETITION IS, ACCORDINGLY, DISMISSED. 6. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE H OLD THAT OMISSION OF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF I NACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY 6 ITA NOS.2068 & 2069/DEL/2014 ORDER LIABLE FOR CANCELLATION AND ACCORDINGLY PROCE ED TO QUASH THE SAME. 7. SINCE WE QUASHED THE PENALTY PROCEEDINGS ON THE QUESTION OF LAW, WE DO NOT PROPOSE TO DEAL WITH THE OTHER ASPEC TS OF THE ARGUMENTS OF THE LD. AR, SINCE IT WOULD ONLY BE ACA DEMIC. WITH THIS VIEW OF THE MATTER, WE ALLOW THE GROUNDS OF APPEAL. 8. IN THE RESULT, THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.04.2017 SD/- SD/- (S.V. MEHROTRA) (K. NARSIMHA CHARRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20.04.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NOS.2068 & 2069/DEL/2014 DRAFT DICTATED ON 18.04.2017 DRAFT PLACED BEFORE AUTHOR 18.04.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 20.04.2017 KEPT FOR PRONOUNCEMENT ON 20.04.2017 FILE SENT TO THE BENCH CLERK 21.04.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.