M/s. Capital Power Infrastructure Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 2257/DEL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2863 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 13-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KR JIWANI
• Assessee Lawyers: HIMANI AGRAWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO.2257/DEL/2017 ASSESSMENT YEAR : 2012-13 CAPITAL POWER INFRASTRUCTURE PVT. LTD., A- 156, LOWER GROUND FLOOR, NEW FRIENDS COLONY, NEW DELHI. VS. ACIT, CIRCLE- 5(2), NEW DELHI. PAN : AADCC2365E (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. HIMANI AGRAWAL, CA DEPARTMENT BY : SHRI VIJAY KR. JIWANI, SR.DR DATE OF HEARING : 02-08-2018 DATE OF PRONOUNCEMENT : 29-08-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 30.12.2016 OF CIT(A)- 2, NEW DELHI RELATING TO ASSE SSMENT YEAR 2012-13. 2. GROUNDS OF APPEAL BY THE ASSESSEE ARE AS UNDER : - 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS IN F ACTS BY UPHOLDING THE PENALTY ORDER DATED 25.09.2015 PASSED BY LD. AO IMPOSING TH E PENALTY U/S 271(1)(C) AMOUNTING TO RS1,69,497/- OF THE INCOME TAX ACT, 19 61. 2. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS IN FA CTS BY UPHOLDING THE PENALTY ORDER DATED 25.09.2015 WITHOUT CONSIDERING THE NEW INSERTION IN SECTION 270AA. 3. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS IN FA CTS BY NOT PROVIDING REASONABLE OPPORTUNITY IF BEING HEARD TO THE ASSESS EE. HENCE, THE PENALTY LEVIED BY THE A.O. IS UNJUSTIFIED AND BAD IN LAW. 4. THE ASSESSEE PRAYS LEAVE TO ADD, ALTER, AMEND, M ODIFY OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEAR ING OF APPEAL. 2 ITA NO.2257/DEL/2017 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING AND INST ALLATION OF INFRASTRUCTURE PROJECT. IT FILED ITS RETURN OF INCOME ON 28.09.20 12 DECLARING TOTAL INCOME OF RS.2,45,80,480/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED FROM THE LEDGER ACCOUNT OF DIWALI EXPENSES THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.5,48,534/- ON ACCOUNT O F PURCHASE OF PURE GOLD (GINNI). HE ASKED THE ASSESSEE TO FURNISH ITS JUST IFICATION ALONG WITH BUSINESS EXIGENCY FOR THE SAME. HOWEVER, THE ASSESSEE FAILE D TO FURNISH ANY REPLY ON THIS ISSUE AND AGREED TO SURRENDER THE SAME AS UNEXPLAIN ED EXPENDITURE. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER MADE ADDITION OF R S.5,48,534/- TO THE TOTAL INCOME OF THE ASSESSEE. SUBSEQUENTLY, THE ASSESSIN G OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C). REJECTING THE EXPLANATI ON GIVEN BY THE ASSESSEE, THE ASSESSING OFFICER LEVIED PENALTY OF RS.1,69,497/- U /S 271(1)(C) OF THE I.T. ACT, 1961. 4. IN APPEAL, THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 5. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, REFERRED TO THE COPY OF THE NOTICE U/S 274 R.W.S. 271 DATED 18.03.2015 WHICH IS PLACED AT PAGE 15 OF THE PAPER BOOK. REFERRING TO THE ASSESSMENT ORDER, HE SUBMITTED THAT THE ASSESSING OFFICER IN THE SAID ORDER HAS MENTIONED THAT PENALT Y PROCEEDINGS ARE BEING 3 ITA NO.2257/DEL/2017 INITIATED U/S 271(1)(C) SEPARATELY FOR FURNISHING O F INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. REFERRING TO THE NOTICE, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SHOW CAUSE NOTICE ISSUE D U/S 274 R.W.S. 271 DID NOT DEFINE THE NATURE OF DEFAULT I.E. WHETHER THE PENAL TY IS LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. REFERRING TO THE PENALTY ORDER, HE SUBMITTED THAT THE ASSESSING OFFI CER IMPOSED THE PENALTY U/S 271(1)(C) IN THIS CASE ON THE GROUND THAT THE ASSES SEE HAS CONCEALED HIS INCOME/ FURNISHED INACCURATE PARTICULARS OF INCOME. 7. REFERRING TO THE DECISION OF THE HONBLE KARNATA KA HIGH COURT IN THE CASE OF CIT VS. M/S SSAS EMERALD MEADOWS VIDE ITA NO.38 0 OF 2015 ORDER DATED 23.11.2015, HE SUBMITTED THAT THE HON'BLE HIGH COUR T IN THE SAID DECISION, FOLLOWING THE DECISION IN THE CASE OF MANJUNATH COT TON AND GINNING FACTORY REPORTED IN 359 ITR 565, HAS UPHELD THE DECISION OF THE TRIBUNAL CANCELLING THE PENALTY AND DISMISSED THE APPEAL FILED BY THE REVEN UE ON THE GROUND THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 274 R.W. S. 271 IS BAD IN LAW SINCE IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)( C) PENALTY PROCEEDINGS HAVE BEEN INITIATED. HE SUBMITTED THAT THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. REFERRING TO VARIOUS OTHER DECISIONS FILED IN THE PAPER BOOK, HE SUBMITTED THAT UNDER ID ENTICAL CIRCUMSTANCES VARIOUS BENCHES OF THE TRIBUNAL ARE CANCELLING THE PENALTY SO LEVIED WHERE THE INAPPROPRIATE WORDS ARE NOT STRUCK OFF FROM THE NOT ICE ISSUED U/S 274 R.W.S. 271 OF THE ACT. HE ACCORDINGLY SUBMITTED THAT ON THIS PRELIMINARILY GROUND ITSELF THE 4 ITA NO.2257/DEL/2017 ORDER OF THE LD. CIT(A) SUSTAINING THE PENALTY LEVI ED BY THE ASSESSING OFFICER SHOULD BE SET-ASIDE AND THE PENALTY SHOULD BE CANCE LLED. 8. THE LD. DR ON THE OTHER HAND WHILE SUPPORTING TH E ORDER OF LD. CIT(A) RELIED ON THE FOLLOWING DECISIONS :- (I) UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSO RS, 295 ITR 244. (II) R. L. TRADERS VS. ITO, 2017-TIOL-2583-HC-DEL- IT. (III) CIT VS. ZOOM COMMUNICATION (P.) LTD., 327 IT R 510. (IV) CIT VS. MOSER BAER INDIA LTD., 315 ITR 460. (V) CIT VS. GOLD COIN HEALTH FOOD (P.) LTD., 304 I TR 308. (VI) MAK DATA P. LTD. VS. CIT, 358 ITR 593. (VII) B.A. BALASUBRAMANIAM & BROS. CO. VS. CIT, 23 6 ITR 977. (VIII) CIT VS. GATES FOAM & RUBBER CO., 91 ITR 467 . (IX) STEEL INGOTS LTD. VS. CIT, 296 ITR 228. (X) CIT VS. ESCORTS FINANCE LTD., 328 ITR 44. (XI) CIT VS. R.M.P. PLASTO (P.) LTD., 313 ITR 397. (XII) K.P. MADHUSUDHANAN VS. CIT, 251 ITR 99. (XIII) CIT VS. SPLENDER CONSTRUCTION, 208 TAXMANN. COM 302. 9. HE SUBMITTED THAT SINCE THE ASSESSEE IN THE INST ANT CASE COULD NOT JUSTIFY THE EXPENSES CLAIMED BY IT IN THE PROFIT & LOSS ACC OUNT AND HAS SURRENDERED THE INCOME DURING THE COURSE OF ASSESSMENT PROCEEDING, THEREFORE, THE ASSESSEE HAS CONCEALED ITS PARTICULARS OF INCOME AND FURNISHED I NACCURATE PARTICULARS AND, THEREFORE, PENALTY LEVIED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) IS FULLY JUSTIFIED. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND PENALTY OF RS.1,69,497/- HAS BEEN LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) ON THE GROUND THAT THE ASSESSEE COULD NOT JUSTIFY THE BUSINESS EXIGENCY OF INCURRING OF THE EXPENDITURE 5 ITA NO.2257/DEL/2017 OF RS.5,48,534/- ON ACCOUNT OF DIWALI EXPENSES. WE FIND LD. CIT(A) UPHELD THE PENALTY SO LEVIED BY THE ASSESSING OFFICER. WE FIN D FROM PAGE 2 OF THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER, WHILE INITIATING THE PENALTY PROCEEDINGS U/S 271(1)(C), HAS MENTIONED AS UNDER : - FOR THE ABOVEMENTIONED REASONS, I AM SATISFIED THA T THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME/CONCEALED ITS INCO ME BY FILING INACCURATE PARTICULARS OF INCOME. THEREFORE, PENALTY PROCEEDINGS U/S 271( 1)(C) ARE BEING INITIATED SEPARATELY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME. 11. A PERUSAL OF THE NOTICE ISSUED U/S 274 R.W.S. 2 71 DATED 18.03.2015 SHOWS THAT THE INAPPROPRIATE WORDS IN THE SAID NOTICE HAS NOT BEEN STRUCK OFF I.E. THE NOTICE DOES NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) THE PENALTY PROCEEDINGS HAS BEEN INITIATED I.E. WHETHER FOR CON CEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS. WE FIND THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF M/S SSAS EMERALD MEADOWS (SUPRA) HA S OBSERVED AS UNDER :- 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 R EAD WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) TO BE BA D IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY P ROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME 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 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 SUBSTANTIAL Q UESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCO RDINGLY DISMISSED. 12. WE FIND THE SLP FILED BY THE REVENUE HAS BEEN D ISMISSED BY THE HONBLE APEX COURT. FURTHER, THE VARIOUS BENCHES OF THE TR IBUNAL, FOLLOWING THE ABOVE 6 ITA NO.2257/DEL/2017 DECISIONS, ARE CANCELLING THE PENALTY SO LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF NON-STRIK ING OF THE INAPPROPRIATE WORDS FROM THE NOTICE ISSUED U/S 274 R.W.S. 271 OF THE ACT. SINCE IN THE INSTANT CASE, THE ASSESSING OFFICER HAS NOT STRUCK OFF THE INAPPROPRIATE WORDS IN THE NOTICES ISSUED U/S 274 R.W.S. 271, THEREFORE, THE N OTICE DOES NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) THE PENALTY PROCEED INGS HAS BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THE PENALTY PROCEEDINGS BECOME BAD IN LAW. WE, THEREFORE, SET-ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT TH E ASSESSING OFFICER TO CANCEL THE PENALTY SO LEVIED. THE APPEAL FILED BY THE ASS ESSEE IS ACCORDINGLY ALLOWED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH AUGUST, 2018. SD/- SD/- (BEENA A. PILLAI) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29-08-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI