M/s. Xeraphin Finvest Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 2249/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2692 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-11-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 11-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: RAJIV GAWRI
• Keywords: Income from undisclosed sources; Accommodation entries
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC: NEW DELHI) BEFORE SHRI G. D. AGRAWAL, VICE PRESIDENT AND SHRI I. C. SUDHIR, JUDICIAL MEMBER ITA NO.2249/DEL/ 2012 (ASSESSMENT YEAR: 2002-03) XERAPHIN FINVEST PVT. LTD. VS. ITO 308, LUSA TOWER, A-2/3, 3 RD FLOOR, WARD-18(4) COMMERCIAL COMPLEX, AZADPUR NEW DELHI NEW DELHI AAACX0047R (APPELLANT) (RESPONDENT) ASSESSEE BY :SHRI RAJIV GAWRI FCA & SH . VIJAY KUMAR, FCA REVENUE BY : SMT. Y. KAKKAR, SR. D.R ORDER PER I. C. SUDHIR, JUDICIAL MEMBER: THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER O N THE GROUND THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER IN IMPOSING THE PENALTY OF RS.71,400/- U/S 271(1)(C) O F THE ACT AT THE RATE OF 100% OF THE TAX ALLEGED TO BE SOUGHT TO ESCAPE. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS AD VANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW AND DECISIONS RELIED ITA NO- 2249/DEL/2012 A.Y 2002-03 2 UPON. THE RELEVANT FACTS ARE THAT ON THE BASIS OF I NFORMATION RECEIVED THE AO ISSUED NOTICE U/S 148 OF THE ACT THAT THE AS SESSEE HAD TAKEN ACCOMMODATION ENTRIES OF RS.2,00,000/- FROM M/S BAN SAL TRADING COMPANY DRAWN ON JAI LAXMI CO-OPERATIVE BANK AND CR EDITED INTO ASSESSEES BANK ACCOUNT. IN COMPLIANCE THE ASSESSE E REQUESTED TO CONSIDER THE RETURN FILED U/S 139(1) AS RETURN FILE D IN RESPONSE TO NOTICE ISSUED U/S 148 OF THE ACT. DURING THE COURSE OF AS SESSMENT, THE ASSESSEE SUBMITTED THAT THEY HAD RECEIVED A CHEQUE OF RS.2, 00,000/- FROM M/S BANSAL TRADING COMPANY ON 2/1/2001. THE ASSESSEE W AS HAVING EQUITY SHARES OF M/S UTTAM POLYRUB INDIA PVT. LTD AS ON 1/ 04/2001 AS STOCK OF SHARES. DURING THE RELEVANT PERIOD THE ASSESSEE HAD SOLD 1600/- SHARES OF THE ABOVE COMPANY AT THE RATE OF RS.125 PER SHAR ES AMOUNTING TO RS.2,00,000/- TO M/S BANSAL TRADING COMPANY, D-4 77 , GALI NO-11, BHAJANPURA, DELHI-53 HAVING PAN- AGFB5505L. IT WAS STATED THAT THE CONSIDERATION WAS RECEIVED FROM THE SAID PARTY VIDE CHEQUE NO- 374536. HOWEVER, SINCE MORE THAN 7 YEARS HAD PASSE D FROM THE RELEVANT TRANSACTION AND POSSIBILITY WAS THERE THAT THE PERSON COULD NOT BE PRODUCED FOR THE VERIFICATION PURPOSE AND THAT T HE ASSESSEE WAS NOT HAVING ANY REGULAR DEALING WITH M/S BANSAL TRADING COMPANY, THE ASSESSEE TO AVOID LONG DRAWN LEGAL PROCEEDING AND E ARN PEACE OF MIND, ITA NO- 2249/DEL/2012 A.Y 2002-03 3 VOLUNTARILY SURRENDERED A SUM OF RS.2,00,000/- AS T HEIR INCOME SUBJECT TO THIS REQUEST THAT PENALTY PROCEEDINGS U/S271 (1) (C) SHOULD NOT BE INITIATED. THE AO DID NOT AGREE WITH THE EXPLANATI ON OF THE ASSESSEE AND ADDED THE CREDIT OF RS.2,00,000/- AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES ON THE BASIS THAT M/S BANSAL TR ADING COMPANY WAS AN ENTRY PROVIDER AND THE ASSESSEE WAS THE BENEFICI ARY. THE AO HAS ALSO MENTIONED THAT THE ASSESSEE HAD ALREADY SURREN DERED THIS AMOUNT FOR TAXATION. THE AO ALSO INITIATED PENALTY PROCEE DINGS AND HAS LEVIED PENALTY U/S 271 (1) (C) AT RS.71, 400/- ON THE BASI S THAT THE ASSESSEE HAD INTENTIONALLY FURNISHED THE INACCURATE PARTICULARS OF INCOME TO DE-FRAUD TAX. THE LD. CIT (A) HAS UPHELD THE SAME. 3. THE LD. A.R HAS REITERATED SUBMISSION MADE BEFORE THE AUTHORITIES BELOW. HE SUBMITTED THAT NOTICE U/S 14 8 WAS ISSUED ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WI NG OF THE DEPARTMENT. THE AUTHORITIES BELOW HAVE MADE AND SU STAINED THE PENALTY ONLY ON PRESUMPTIONS THAT THE AMOUNT OF RS.2,00,000 /- WAS ACCOMMODATION ENTRY TAKEN FROM BANSAL TRADING COMPA NY, WHO WAS FOUND INVOLVE IN PROVIDING ACCOMMODATION ENTRY IN S OME OTHER CASES. HE SUBMITTED THAT THE AMOUNT WAS PAID THROUGH CHEQU E AND THE PROFIT EARNED WAS NOT EXORBITANT AS THE SHARES WERE BROUGH T FOR RS.1,60,000/- ITA NO- 2249/DEL/2012 A.Y 2002-03 4 AND WERE SOLD AT RS.2,00,000/- ONLY. SINCE THE TRA NSACTION WAS SEVEN YEARS OLD AND THE ASSESSEE WAS NOT IN A POSITION TO PRODUCE THE CREDITOR WITH WHOM THE ASSESSEE WAS NOT HAVING REGULAR DEALI NG, THE ASSESSEE TO AVOID LONG LITIGATION AND TO PURCHASE PEACE OF MIND HAD VOLUNTARILY SURRENDERED THE SUM OF RS. 2,00,000/- FOR THE PAYME NT OF TAX. HE SUBMITTED THAT EXPLANATION FURNISHED BY THE ASSESSE E REGARDING THE TRANSACTION IN QUESTION WAS NOT FOUND FALSE BY THE AO TO ATTRACT THE PENAL PROVISION U/S 271 (1)(C) OF THE ACT. 4. THE LD. DR ON THE OTHER HAND, TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT ONLY AFTER RE CEIPT OF INFORMATION FROM THE INVESTIGATION WING OF THE DEPARTMENT AND I SSUANCE OF NOTICE U/S 148 OF THE ACT, THE ASSESSEE CAME FORWARD AND S URRENDERED THE AMOUNT IN QUESTION. SUCH SURRENDER CANNOT BE TREAT ED AS A VOLUNTARY ACTION ON THE PART OF THE ASSESSEE NOR CAN SUCH SUR RENDER MADE ON THE BASIS OF PEACE PURCHASING BE MADE A BASIS FOR DELET ION OF THE PENALTY. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- SHVETA NANDA VS. CIT336 ITR 298 (P&H). PREMPAL GANDHI VS. CIT 335 ITR 23(P&H ) CIT VS. HARPRASHAD & CO. LTD.328 ITR 53 ( DEL). ITA NO- 2249/DEL/2012 A.Y 2002-03 5 5. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THERE IS NO DISPUTE THAT THE EXPLANATION FURNISHED BY THE ASSES SEE REGARDING THE TRANSACTION OF RS.2,00,000/- IN QUESTION WAS NOT FO UND FALSE. THE AMOUNT WAS RECEIVED THROUGH BANKING CHANNEL AND THE CREDITOR WAS ALSO HOLDING PAN AND THEIR ADDRESS WAS ALSO FURNISHED BY THE ASSESSEE. THE AO DID NOT VERIFY THESE DETAILS. THERE IS ALSO NO REASON TO DOUBT THE EXPLANATION OF THE ASSESSEE SHOWN FOR MAKING THE SU RRENDER THAT AFTER PASSING OF 7 YEARS FROM THE DATE OF TRANSACTION, IT WAS NOT POSSIBLE FOR THEM TO PRODUCE THE CREDITOR. IGNORING THESE MATER IAL FACTS, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW WERE NOT JUSTIF IED IN COMING TO THE CONCLUSION BEYOND DOUBT THAT ASSESSEE HAD FURNISHED THE INACCURATE PARTICULARS OF INCOME REGARDING THE SAID TRANSACTIO N IN QUESTION. THE ADDITION OF RS.2,00,000/- HAS BEEN MADE ON THE BASI S OF SURRENDER MADE BY THE ASSESSEE, WHEREIN THE AMOUNT IN QUESTION WAS OFFERED FOR TAXATION. THERE IS NO DISPUTE ON THE RATIO LAID DO WN IN THE ABOVE CITED DECISION BUT FACTS OF EACH CASE ARE MATERIAL TO DEC IDE THE ISSUE. BONAFIDE OF EXPLANATION OF THE ASSESSEE IS AN IMPOR TANT FACTOR TO DECIDE THE APPLICABILITY OF THE PENAL PROVISION U/S 271(1) (C) OF THE ACT. ITA NO- 2249/DEL/2012 A.Y 2002-03 6 TAKING ALL THESE FACTS INTO ACCOUNT IN TOTALITY, WE ARE OF THE VIEW THAT THERE WAS NO REASON FOR INVOCATION OF PENAL PROVISI ON U/S 271 (1) (C) OF THE ACT, IN THE PRESENT CASE ON THE ADDITION OF RS. 2,00,000/- MADE BY THE AO BASED ON THE SURRENDER OF THE ASSESSEE AND IN AB SENCE OF AN SPECIFIC FINDING THAT THE EXPLANATION FURNISHED BY THE ASSES SEE WAS FOUND FALSE. WE THUS WHILE SETTING ASIDE THE ORDERS OF THE AUTHO RITIES BELOW IN THIS REGARD DIRECT THE AO TO DELETE THE PENALTY OF RS.71 , 400/- QUESTIONED IN THE GROUND. 6. THE GROUND IS ACCORDINGLY ALLOWED. 7. CONSEQUENTLY, APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 APRIL/ 2013. SD/- SD/- (G. D. AGRAWAL) (I. C. SUDHIR) VICE PRESIDENT JUDICIAL MEMBER DATED THE 30 TH DAY OF APRIL, 2013 R. NAHEED COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), NEW DELHI. AR, ITAT NEW DELHI . ITA NO- 2249/DEL/2012 A.Y 2002-03 7