M/s Raj Hans Towers Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2324/DEL/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4021 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 18-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Question of law
• Section: 271(1)(c); 143(3); 274; 27

Judgement Text

1 I.T.A NO. 2324/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A NO. 2324/DEL/2017 (A.Y 2008-09) M/S. RAJ HANS TOWERS PVT. LTD. M-33, 2 ND FLOOR, GREATER KAILASH-I, NEW DELHI (AAACR 0019 H) (APPELLANT) VS DCIT, CIRCLE 21(1), NEW DELHI (RESPONDENT) APPELLANT BY SHRI R. S. SINGHVI, C.A. RESPONDENT BY SHRI SURENDRA PAL, SR. D.R ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 07.02.2017 PASSED BY COMMISSIONER OF INCOME TAX (APPEALS) - 36 , NEW DELHI FOR ASSESSMENT YEAR 2008-09. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1(I) THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE VALIDITY OF THE PENALTY ORDER U/S 271(1)(C) EVEN THOUGH THE SAME IS BARRED BY LIMITATION IN TER MS OF PROVISIONS OF SECTION 275 OF THE INCOME TAX ACT, 1961. (II) THAT THE ORDER BEING PASSED AFTER EXPIRY OF SI X MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF APPELLATE TRIBUN AL IS RECEIVED, THE SAME IS ILLEGAL, TIME BARRED AND WITHOUT JURISDICTI ON AS PER THE PROVISIONS OF SECTION 275(1)(A) OF THE ACT. (III) THAT ISSUE OF LIMITATION BEING A LEGAL GROUND, THE LD. CIT(A) SHOULD HAVE ADJUDICATED THE SAME. DATE OF HEARING 11.11.2019 DATE OF PRONOUNCEMENT 11.11.2019 2 I.T.A NO. 2324/DEL/2017 2(I) THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) WAS NOT JUSTIFIED IN CONFIRMING PENALTY U/S 271(1)(C) EVEN THOUGH THERE IS NO CASE OF RECORDING OF PROPER SATISFACTION IN TERMS O F PROVISIONS OF SECTION 271(1)(C) OF THE ACT AND AS SUCH THE PENALT Y ORDER IS ILLEGAL AND WITHOUT JURISDICTION. (II) THAT IN ABSENCE OF RECORDING OF SPECIFIC SATISFACTI ON OR LEVYING OF SPECIFIC CHARGE AS TO CONCEALMENT OF INCOME OR FURN ISHING OF INACCURATE PARTICULARS OF INCOME, THE NOTICE U/S 27 4 AND THE CONSEQUENTIAL ORDER IS INVALID AND VOID-AB-INITIO. 3(I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) WAS NOT JUSTIFIED CONFIRMING PENALTY OF RS. 19,56,977/- ON THE ALLEGED GROUND OF FURNISHING OF INACCURATE PARTICULARS IN T ERMS OF PROVISIONS OF SEC. 271(1)(C) OF THE INCOME TAX ACT, 1961. (II) THAT THE ISSUE OF DISALLOWANCE IS STILL PENDING FOR ADJUDICATION BEFORE HONBLE DELHI HIGH COURT, THERE COULD BE NO PRESUMPTION OF ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICU LARS OF INCOME IN TERMS OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT . (III) THAT MERE ADDITION OR DISALLOWANCE IN ITSELF CANNOT BE A GROUND FOR IMPOSITION OF PENALTY FOR CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS IN THE ABSENCE OF ANY FINDING OR CONCLU SION IN RESPECT OF ALLEGED CONCEALMENT OR FURNISHING OF INACCURATE PAR TICULARS OF INCOME. 4. THAT THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, ALTER OR FORGO ANY OR ALL OF THE GROUNDS AS MAY BE NECESSARY AND IN THE INTE REST OF JUSTICE 5. THAT PENALTY ORDER IS NOT JUSTIFIED ON FACTS AND SA ME IS BAD IN LAW. 3. ASSESSMENT IN THE PRESENT CASE WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 20.12.2010 AT THE ASSESSED INCOME OF RS.15,01,53,020/- AGAINST THE RETURNED LOSS OF RS.32,94,440/- WITH TH E FOLLOWING ADDITIONS: I. ADDITION OF RS.7,10,55,000/- ON ACCOUNT OF ACCOM MODATION ENTRIES TAKEN IN THE SHAPE OF UNSECURED LOAN. II. ADDITION OF RS.6,65,00,000/- ON ACCOUNT OF UNDI SCLOSED CASH RECEIPTS. III. ADDITION OF RS.1,58,92,460/- ON ACCOUNT OF UN EXPLAINED CASH CREDITS IN CASH BOOKS. 3 I.T.A NO. 2324/DEL/2017 PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED O N THE ABOVE ADDITION VIDE PENALTY NOTICE DATED 20.12.2010. THE PENALTY O RDER WAS PASSED ON 30.03.2015 U/S 271(1)(C) OF THE INCOME TAX ACT, 196 1. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESE E FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSE SSEE. 5. THE LD. AR SUBMITTED THAT GROUND NO.1 IS RELATIN G TO LIMITATION WHICH IS NOT PRESSED. AS REGARDS GROUND NO.2, THE LD. AR SUB MITTED THAT NOTICE U/S 271(1) R.W.S. 271(1)(C) OF THE ACT DATED 29.12.2010 DID NOT SPECIFY THE PARTICULAR CHARGE OF CONCEALMENT OR FURNISHING INAC CURATE PARTICULARS OF SUCH INCOME. THE LD AR FURTHER SUBMITTED THAT THE HONBL E DELHI HIGH COURT IN CASE OF PR. CIT VS. M/S. SAHARA INDIA LIFE INSURANCE COM PANY LTD. (ITA NO.475/2019 VIDE ORDER DATED 02.08.2019) HELD THAT NOTICE ISSUED BY THE ASSESSING OFFICER WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE PENALTY PROCEEDINGS HAD BEEN INITI ATED. THE LD. AR ALSO RELIED UPON THE DECISION OF THE HONBLE APEX COURT IN CASE OF CIT VS. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 241 (KAR) CONFIRMING T HE HONBLE KARNATAKA HIGH COURTS DECISION IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 (KAR) . THUS, THE LD. AR SUBMITTED THAT IN ABSENCE OF RECORDING OF SPECIFIC SATISFACTION OR LEVYING OF SPECIFIC CHARGES AS TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME, THE NOTICE U/S 274 AND THE PENALTY ORDER IS INVALID AND VOID-AB-INITIO. THE LD. AR FURTHER SUBMITTED THAT THE ISSUE OF DISALLOWANCE ON ACCOUNT OF UNEXPLAINED CASH CREDITS IN CASH BOOKS IS STILL PENDING FOR ADJ UDICATION BEFORE THE HONBLE DELHI HIGH COURT AND IT IS DEBATABLE ISSUE. THUS, T HUS, THE ASSESSEE DID NOT FILE ANY INACCURATE PARTICULARS OF INCOME OR CONCEA LED INCOME, HENCE, THE PENALTY ORDER DOES NOT SUSTAIN ON MERIT AS WELL. 7. THE LD. DR SUBMITTED THAT THE CIT(A) WAS RIGHT I N CONFIRMING THE PENALTY ORDER AS THERE IS AN ELEMENT OF CONCEALMENT OF INCO ME AS THE TRIBUNAL HAS CONFIRMED THE QUANTUM OF RS.63,33,260/- IN THE QUAN TUM APPEAL, THEREFORE, 4 I.T.A NO. 2324/DEL/2017 PENALTY WAS PROPERLY IMPOSED. THE LD. DR RELIED UPO N THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF SUNDARAM FINANCE L TD. VS. DCIT (2018) 99 TAXMANN.COM 152 (SC) WHICH CONFIRMED THE DECISION O F THE HONBLE MADRAS HIGH COURT IN CASE OF SUNDARAM FINANCE LTD. VS. ACI T 403 ITR 407. THE HONBLE HIGH COURT HELD THAT WHEN THE CASE AGAINST THE ASSESSEE CONCEALED PARTICULARS OF INCOME AND FURNISHED INACCURATE PART ICULARS OF INCOME, THE CONTENTION RAISED BY THE ASSESSEE REGARDING NOTICE ISSUED DID NOT SPECIFY THE LIMB OF SECTION 271(1)(C) DOES NOT SUSTAIN. THE LD. DR ALSO RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. ZOOM COMMUNICATION (P.) LTD. 327 ITR 510. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE MATERIALS AVAILABLE ON RECORD. FROM THE PERUSAL OF THE NOTICE ISSUED U/ S 274 R.W.S. 271 OF THE INCOME TAX ACT, 1961, IT CAN BE SEEN THAT THE NOTIC E DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) HAS BEEN TAKEN INTO ACCOUNT WH ILE PASSING PENALTY ORDER. IN FACT, THE ASSESSING OFFICER PROCEEDED ON THE BASIS OF CONCEALMENT OF INCOME TO THE EXTENT OF RS.63,33,260/- WHICH WAS CONFIRMED BY THE APPELLATE AUTHORITIES I.E. BY THE CIT(A) AS WELL AS BY THE TRIBUNAL IN QU ANTUM APPEAL. BUT THE OVERALL ADDITION OF RS.1,58,92,460/- HAS NOT BEEN TAKEN INT O ACCOUNT AS A CONCEALMENT BY THE REVENUE AUTHORITIES. THE CONCEALMENT CANNOT BE IN PART WHEN THE ADDITION WAS MADE IN TOTALITY WITHOUT ANY SPECIFIC LIMB MENTIONED IN SECTION 271(1)(C) WHICH IS NOW DELETED IN PART BY THE APPEL LATE AUTHORITIES. THEREFORE, THIS ISSUE IS DEBATABLE ISSUE. FURTHER, WHEN THE NO TICE IS NOT MENTIONING THE CONCEALMENT OR THE FURNISHING OF INACCURATE PARTICU LARS, THE RATIO LAID DOWN BY THE HONBLE HIGH COURT IN CASE OF M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. WILL BE APPLICABLE IN THE PRESENT CASE. THE HO NBLE DELHI HIGH COURT HELD AS UNDER: 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, WHICH W AS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT I N CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR) AND OBSE RVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF 5 I.T.A NO. 2324/DEL/2017 SECTION 271(1)(C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIG H COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIO NER OF INCOME TAX V. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 241(KAR) , THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA I N SLP NO. 11485 OF 2016 BY ORDER DATED 5 TH AUGUST, 2016. 22. ON THIS ISSUE AGAIN THIS COURT IS UNABLE TO FIN D ANY ERROR HAVING BEEN COMMITTED BY THE ITAT. NO SUBSTANTIAL QUESTION OF LAW ARISES. IN RESPECT OF DECISION OF THE HONBLE SUPREME COUR T IN CASE OF SUNDARAM FINANCE LTD. (SUPRA) WHILE CONFIRMING THE ORDER OF THE HONBLE MADRAS HIGH COURT, IT IS PERTINENT TO NOTE THAT IN THE SAID DEC ISION BOTH LIMBS OF SECTION 271(1)(C) I.E. CONCEALED PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME WERE PRESENT AND THE FINDING OF THE HONBLE HIGH COURT IS CLEAR THAT WHEN THE PENALTY ORDER IS BASED ON BOTH THE LIMBS OF SECTION, THE NOTICE CANNOT BE HELD AS DEFECTIVE NOTICE. BUT IN T HE PRESENT CASE WHICH LIMB OF SECTION 271(1)(C) HAS BEEN INVOKED BY THE REVENUE A UTHORITIES IS NOT CLEAR. THEREFORE, THE DECISION OF HONBLE MADRAS HIGH COUR T IN CASE OF SUNDARAM FINANCE LTD. (SUPRA) WILL NOT BE APPLICABLE IN THE PRESENT CASE. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH NOV, 2019 . SD/- SD/- (O. P. MEENA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 11/11/2019 PRITI YADAV, SR. PS * 6 I.T.A NO. 2324/DEL/2017 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 11 . 11 .2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 11 .11 .2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK