M/s. Bon Sales (P) Ltd., New Delhi V. ITO, New Delhi

ITA 2318/DEL/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6571 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-01-2017
• Assessment Year: 1996-1997
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Unexplained cash credit; Question of law
• Section: 143(3); 68

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI KULDIP SINGH , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 2318/ DEL/ 2012 (ASSESSMENT YEAR: 1996 - 97 ) BON SALES (P) LTD, M - 10A, JANGPURA EXTENSION, NEW DELHI PAN:AAACB2226L VS. ITO, WARD - 3(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SALIL AGARWAL, ADV SH. SHAILESH GUPTA, ADV REVENUE BY: SH. SK JAIN, SR DR DATE OF HEARING 09/01/2017 DATE OF PRONOUNCEMENT 20 / 02 / 2017 O R D E R PER PRASHANT MAHARISHI , A . M . 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A), VI, NEW DELHI DATED 30.03.2012 FOR THE ASSESSMENT YEAR 1996 - 97 WHEREIN LEVIED U/S 271(1)(C) OF THE ACT AMOUNTING TO RS. 1366614/ - WAS CONFIRMED. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - VI, NEW DELHI CONFIRMING THE PENALTY U/S 271(L)(C) AMOUNTING TO RS. 13,66,614 / - LEVIED BY THE LD. ASSESSING OFFICER IS GROSSLY INJUDICIOUS AND UNWARRANTED. 2. THE ID. COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS. 13,66,6147 - U/S 271(L)(C) FOR AN ARBITRARY ADDITION OF RS. 29,70,900/ - MADE TO THE RETUNED INCOME U/S 68 OF THE ACT FAILING TO APPRECIATE THE FACT THAT EXPLANATION 1 TO SECTION 271(L)(C) IS NOT ATTRACTED TO THE CASE OF ASSESSEE. 3. THE ID. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN IGNORING THE FACT THAT THE ASSESSEE HAS D ULY OFFERED THE EXPLANATION THAT THE CONTENDED AMOUNT OF RS.29,70,900/ - WERE RECEIVED FROM MR. VINAY KUMAR KEDIA AND MR. NAROTTAM SINGH WHO HAD SENT THE MONEY FOR PURCHASE OF LAND THROUGH M/S PREET TRADING COMPANY AND M/S THAILAND GENERAL COMPANY LTD AND T HE SAID EXPLANATION HAS NOT BEEN FOUND TO BE FALSE BY THE ID. ASSESSING AUTHORITY AND IS ALSO DULY SUBSTANTIATED BY THE ASSESSEE IN THE FORM OF AFFIDAVITS SWORN BY MR. VINAY KUMAR KEDIA, MR. NAROTTAM SINGH AND SMT. ROSNA SINGJIRAKUL. 4. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO GIVE EFFECT TO THE JUDGMENT OF HON. HIGH COURT OFGUJARAT IN THE CASE OF 'NATIONAL TEXTILES VS. COMMISSIONER OF INCOME TAX, [2001] 114 TAXMAN 203 (GUJ.) ' PAGE 2 OF 4 AND HON. HIGH COURT OFKARNATAKA IN THE CASE OF 'COMMISSIONER OF INCOME TAX, BANGALORE V. S.L.N. TRADERS, [2011] 14 TAXMANN.COM 85 (KAR.)' WHEREIN THEIR LORDSHIPS HAVE HELD THAT THE ADDITION MADE ON THE COUNT OF UNEXPLAINED CASH CREDIT U/S 68 WOULD NOT AUTOMATICALLY JUSTIFY IMPOSITION OF PENALTY UNDER SECTION 271(L)(C) BY RECOURSE ONLY TO EXPLANATION 1 BELOW SECTION 271(L)(C) AND THAT THE ABSENCE OF PROOF ACCEPTABLE TO THE DEPARTMENT CANNOT BE EQUATED WITH FRAUD OR WILFUL DEFAULT FOR THE PURPOSE OF LEVY OF PENALTY U/S 271(L)(C) OF THE ACT. 3. THOUGH THE ASSESSEE HAS RAIS ED IN ALL FOUR GROUNDS OF APPEAL HOWEVER, ALL RELATED TO THE PENALTY U/S 1366614/ - U/S 271(1)(C) LEVIED BY THE AO AND CONFIRMED BY THE LD CIT(A). 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A COMPANY WHO FILED ITS RETURN OF INCOME SHOWING LOSS OF RS. 22920/ - AGAINST WHICH ASSESSMENT U/S 143(3) OF THE ACT WAS PASSED ON 04.03.1999 AT INCOME OF RS. 2954738/ - . ADDITION U/S 68 WAS MADE WITH RESPECT TO TWO PERSONS AMOUNTING TO RS. 2970900/ - . THE APPELLANT COMPANY CLAIMED TO HA VE UTLISED THE FUNDS RECEIVED FROM THE ABOVE PERSONS FOR PURCHASE OF LAND ON THEIR BEHALF BY THE APPELLANT. THE ADDITION WAS MADE, INTER ALIA, ON THE GROUND THAT WHILE CREDITS IN THE BOOKS OF ACCOUNT OF THE APPELLANT COMPANY WHERE IN THE NAMES OF THE AFORE SAID INDIVIDUALS, THE COPIES OF FOREIGN INWARD REMITTANCE CERTIFICATE (FIRC IN SHORT) SUBMITTED BY THE APPELLANT COMPANY WHERE IN THE NAMES OF TWO COMPANIES NAMELY :M/S. THAILAND GENERAL COMPANY LTD AND M/S PREET TRADING COMPANY LTD FOR CREDITS IN THE NAME S OF SHRI VIJAY KUMAR KEDIA AND SHRI BAROTTAM SINGH RESPECTIVELY. THE ADDITION MADE BY THE AO WAS CONFIRMED BY THE COORDINATE BENCH VIDE ITS ORDER DATED 18.09.2009 IN ITA NO. 790/DEL/2008. FURTHER , THE ASSESSEE CHALLENGED THE ABOVE ORDER BEFORE THE HON'BLE HIGH COURT WHEREIN IN ITA NO. 142/2013 DATED 20.02.2014 THE ADDITION WAS CONFIRMED. THEREFORE, PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED AND CONFIRMED AS THE COMPANY FAILED TO SUBSTANTIATE ITS EXPLANATION AND TO PROVE THAT IT WAS BONAFID E . AGAINST THE O RDER OF THE LD CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FURNISHED AN EXPLANATION, WHICH WAS SUBSTANTIATED BY AFFIDAVITS, AND MERELY BECAUSE THE EXPLANATION WAS NOT ACCEPTED THE PENALTY C ANNOT BE LEVIED. IT WAS FURTHER SUBMITTED THAT HON'BLE HIGH COURT HAS ADMITTED THE APPEAL OF THE ASSESSEE ADMITTING SUBSTANTIAL QUESTION OF LAW FRAMED FOR ITS CONSIDERATION. PAGE 3 OF 4 THEREFORE, IN CASE OF DEBATABLE ISSUE AND WHERE THE ISSUE HAS BEEN ADMITTED BY HON 'BLE HIGH COURT AS SUBSTANTIAL QUESTION OF LAW FRAMED THE PENALTY U/S 271(1)(C) CANNOT BE LEVIED. HE PLACE D RELIANCE UPON THE ORDER OF THE HON'BLE DELHI HIGH COURT IN ITA NO. 240/2009 . HE FURTHER REFERRED TO THE DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. THOMSON PRESS INDIA LTD. HE FURTHER REFERRED TO THE SHOW CAUSE NOTICE DATED 30.01.2006 WHEREIN NONE OF TWIN CHARGES MENTIONED THEREIN ARE CANCELLED AND HENCE, RELYING ON THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN CASE OF MANJUNATHA COT TON AND WEAVING MILLS LTD HE SUBMITTED THAT PENALTY CANNOT BE LEVIED. IN VIEW OF THIS HE SUBMITTED THAT THE PENALTY CANNOT BE SUSTAINED ON THESE GROUNDS. EVEN ON MERITS HE SUBMITTED THAT THE ASSESSING OFFICER DID NOT CONTROVERT EVIDENCE SUBMITTED BY THE AS SESSEE IN THE FORM OF AFFIDAVIT AND THEREFORE THEY WERE NOT PROVED TO BE FALSE. 6. THE LD DR REFERRED TO THE ORDER OF THE HONBLE HIGH COURT WHEREIN COMPLETE FACTS HAVE BEEN NOTED BY HONBLE HIGH COURT THAT GENUINENESS OF THE TRANSACTION BY THE ASSESSEE WAS NOT SHOWN WHICH IS THE PRIMARY DUTY OF THE ASSESSEE AND HENCE, SUSTAINED QUANTUM ADDITION . HE FURTHER RELIED UPON THE DECISION OF LD CIT(A). 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. ADMITTEDLY IN THIS CASE THE HON'BLE HIGH COURT HAS ADMITTED TH E SUBSTANTIAL QUESTION OF LAW WITH RESPECT TO THE ADDITION OF RS. 2970900/ - AND CONFIRMED VIDE ORDER DATED 20.02.2014. MERELY BECAUSE THE ADDITION IS CONFIRMED BY THE HON'BLE HIGH COURT WILL NOT LEAD TO PENALTY UNLESS ONE OF THE TWIN CHARGES OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS IS SATISFIED. IT IS ALSO AN ESTABLISHED PRINCIPLE THAT ASSESSMENT PROCEEDING S AND PENALTY PROCEEDING S ARE TWO SEPARATE AND INDEPENDENT PROCEEDINGS. MERELY BECAUSE THE ADDITION IS UPHELD PENALTY U/S 271(1) (C) CANNOT BE LEVIED AUTOMATICALLY. HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. THOMSON PRESS LTD AS WELL AS IN ITA NO. 240/2009 IN CASE OF LIQUID INVESTMENT HAS HELD THAT WHEN THE HON'BLE HIGH COURT ADMITS AND FRAMED SUBSTANTIAL QUESTION OF LAW THIS ITSEL F SHOWS THAT THE ISSUE IS DEBATABLE. IT IS ALSO AN ESTABLISHED PRINCIPLE THAT ON DEBATABLE DISALLOWANCES PENALTY U/S 271(1)(C) CANNOT BE LEVIED. FURTHER, THE SHOW CAUSE NOTICE SUBMITTED VIDE PAGE NO. 1 OF THE SHOW CAUSE NOTICE DATED 30.01.2006 SHOWS THAT N ONE OF THE TWIN CHARGES OF CONCEALMENT OF INCOME OR PAGE 4 OF 4 FURNISHING OF INACCURATE PARTICULARS HAS BEEN STRUCK OFF BY THE LD ASSESSING OFFICER . THE HON'BLE KARNATAKA HIGH COURT HAS HELD THAT UNLESS THE CHARGE FRAMED BY THE ASSESSING OFFICER ON ASSESSEE IN THE SH OW CAUSE NOTICE OR WHICH IS DISCERN I BLE FROM THE ORDER OF THE ASSESSMENT IS SPECIFIC PENALTY PROCEEDING ARE NOT VALID. IN THE PRESENT CASE IN THE ASSESSMENT ORDER THE LD ASSESSING OFFICER INITIATED THE PENALTY PROCEEDING FOR FURNISHING INACCURATE PARTICULA RS OF INCOME AND PENALTY HAS ALSO BEEN LEVIED BY ORDER DATED 16.06.2010 HAS ALSO BEEN LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THE RELIANCE PLACED BY THE LD AR ON THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT OF MANJUNATHA COTTON MILLS LTD IS MISPLACED AS CHARGE WAS SPECIFIC AND DISCERNIBLE FROM THE ASSESSMENT ORDER. HOWEVER, AS THE SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED AND DECIDED BY THE HON'BLE HIGH COURT IN THE CASE OF THE ASSESSEE WE RESPECTFULLY FOLLOWING THE D ECISION OF CIT VS. THOMSON PRESS INDIA LTD IN ITA NO. 426/2013 AND CIT VS. LIQUID INVESTMENT LTD IN ITA NO. 240/2009 HOLD THAT THE ISSUE ON WHICH THE PENALTY IS LEVIED IS DEBATABLE AND THEREFORE PENALTY U/S 271(1)(C) CANNOT BE LEVIED ON IT. 8. IN THE RESULT WE REVERSE THE DECISION OF LD CIT(A) IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT OF RS. 136614/ - LEVIED BY THE ASSESSING OFFICER. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 2 0 / 02 / 2017 . - S D / - - S D / - ( KULDIP SINGH ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 0 / 02 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI