M/s Singhal Strips Ltd., Delhi V. DCIT, New Delhi

ITA 2325/DEL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0999 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2000-2001
• Appeal Filed On: 18-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Unexplained cash credit; Unexplained expenditure; Question of law; Initiation of penalty proceedings; Set aside
• Section: 271(1)(c); 274; 73; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AN D SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2325/DEL./2017, A.Y. 2000-01 SINGHAL STRIPS LTD. VS. DCIT , 440/1, BHOLANATH NAGAR, CIRCLE 8(1) WARD- SHADHARA, NEW DELHI DELHI -32 PAN : AAACS0344J (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI S.S.RANA, CIT(DR) DATE OF HEARING : 02.12.2019 DATE OF ORDER : 17.12.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT SINGHAL STRIPS LTD., DELHI (HERE INAFTER REFERRED TO AS 'THE ASSESSEE) BY FILING THE AFORES AID APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 01/02/2017 PASSED BY LD. COMMISSIONER OF INCOME TAX(APPEALS)-15, NEW DELHI QUA THE ASSESSMENT YEAR 2000-01 ON THE GROUNDS INTER ALIA THAT : ITA NO. 2325/DEL./2017 2 L(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 RECORDIN G OF PROPER SATISFACTION IN TERMS OF PROVISIONS OF SECTI ON 271(L)(C) OF THE ACT AND AS SUCH THE PENALTY ORDER IS ILLEGAL AND WITHOUT JURISDICTION. II) THAT IN ABSENCE OF RECORDING OF SPECIFIC SATISF ACTION OR LEVYING OF SPECIFIC CHARGE AS TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE NOTICE U/S 274 AND THE CONSEQUENTIAL ORDER IS INVAL ID AND VOID-AB-INITIO. 2(I) THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING PENALTY OF R S. 6,19,080/- ON THE ALLEGED GROUND OF CONCEALMENT AN D FURNISHING OF INACCURATE PARTICULARS OF INCOME EVEN THOUGH THE FACT OF SHARE APPLICATION MONEY IS APPAR ENT FROM THE FACE OF FINANCIAL STATEMENTS AND AS SUCH T HERE IS NO CASE OF ANY PENALTY IN TERMS OF PROVISIONS OF SE CTION 271(1 )(C) OF THE ACT. (II) THAT EVEN ON MERITS, THE ADDITION U/S 68 BEING ON TECHNICAL GROUNDS, THERE IS NO CASE OF ANY CONCEALM ENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME U/S 271(1 )(C) OF THE ACT. 3(I) THAT MERELY ON THE BASIS OF ADDITION IN THE ASSESSMENT ORDER, THERE CANNOT BE ANY PRESUMPTION A BOUT CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS WHEN ALL THE RELEVANT FACTS WERE PART OF RECORD. 3(II) APPLICATION MONEY U/S 68 HAS BEEN MADE ON THE BASIS OF PRESUMPTION AND THERE IS NO FINDING REGARDING CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND AS SUCH PENALTY IS NOT SUSTAINABLE. 4. THAT THIS IS A CASE OF LOSS AND PRESUMPTION ABOU T CONCEALMENT IS ILLEGAL, ARBITRARY AND MISCONCEIVED. 5. THAT THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, A LTER OR FORGO ANY OR ALL OF THE GROUNDS AS MAY BE NECES SARY AND IN THE INTEREST OF JUSTICE. 6. THAT PENALTY ORDER IS NOT JUSTIFIED ON FACTS AND SAME IS BAD IN LAW. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE: ON THE BASIS OF ASSESSMENT FRAMED U/S 147/143(3) OF THE ACT MAKING ADDITION OF RS. 16,00, 000/- AND RS. 8,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND U NEXPLAINED ITA NO. 2325/DEL./2017 3 EXPENDITURE RESPECTIVELY, AO PROCEEDED TO INITIATE THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE U/S 271(1)(C) OF T HE ACT. REJECTING THE SUBMISSIONS MADE BY ASSESSEE AO PROCEEDED TO LE VY THE PENALTY OF RS. 6,19,080/- AT THE RATE OF 100% OF TH E TAX SOUGHT TO BE EVADED I.E. 6,19,080/- FOR FURNISHING INACCURATE PA RTICULARS OF INCOME. 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A ) WHO HAS CONFIRMED THE PENALTY BY DISMISSING THE APPEAL OF T HE ASSESSEE. FEELING AGGRIEVED THE ASSESSEE HAS COME UP BEFORE T HE TRIBUNAL BY WAY OF PRESENT APPEAL. 4. ASSESSEE HAS FAILED TO TURN UP TO PURSUE THE PRE SENT APPEAL DESPITE NOTICE AND CONSEQUENTLY BENCH PROCEEDED TO DECIDE THE APPEAL WITH THE ASSISTANCE OF LD. DR FOR THE REVENU E EX PARTE ON MERIT. 5. UNDISPUTEDLY ADDITION MADE BY THE AO TO THE TUNE OF RS. 16,00,000/- AND RS. 8000/- ON ACCOUNT OF UNEXPLAINE D CASH CREDIT AND UNEXPLAINED EXPENDITURE RESPECTIVELY HAS BEEN C ONFIRMED BY CIT(A). IT IS ALSO NOT IN DISPUTE THAT ASSESSEE COM PANY IS A SICK COMPANY AND PROCEEDINGS ON ITS BEHALF ARE NOT BEING ATTENDED TOO. IT IS ALSO NOT IN DISPUTE THAT AFTER REMAND OF THE CASE BY THE TRIBUNAL TO AO NONE APPEARED ON BEHALF OF THE ASSE SSEE BEFORE THE ITA NO. 2325/DEL./2017 4 ASSESSING OFFICER WHO HAS FRAMED THE ASSESSMENT ON ACCOUNT OF NON-FURNISHING OF THE DETAILS BY THE ASSESSEE. 6. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FA CTS & CIRCUMSTANCES OF THE CASE, ORDER PASSED BY THE LOWE R REVENUE AUTHORITIES AND ARGUMENTS ADDRESSED BY THE LD. AUTH ORIZED 4 ITA NO.1232/DEL./2016 REPRESENTATIVES OF THE PARTIES TO THE APPEAL, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS:- AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF S UCH INCOME DURING ASSESSMENT PROCEEDINGS? 7. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGN ED ORDER CONTENDED INTER ALIA THAT AO IN ORDER TO INITIATE T HE PENALTY PROCEEDINGS HAS PRIMA FACIE FAILED TO SATISFY HIMSE LF THAT AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAVE FURNISHED INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT ORDER AS WELL AS IN THE SHOW CAUSE NOTIC E ISSUED UNDER SECTION 271(1)(C) / 274 OF THE ACT AND RELIED UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY-359ITR 565 AN D CIT VS. SSAS EMERALA MEADOWS -73 TAXMANN.COM 241 (KAR. ) (REVENUES SLP DISMISSED IN 242 TAXMAN 180). ITA NO. 2325/DEL./2017 5 8. FROM THE PERUSAL OF ASSESSMENT ORDER ON THE BASI S OF WHICH PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WAS INITIATED APPARENTLY GOES TO PROVE THAT ASSESSING O FFICER HAS FAILED TO RECORD VALID SATISFACTION SO AS TO INITIA TE THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AS TO UNDER W HICH LIMB OF THE SECTION 271(1)(C) I.E. AS TO WHETHER ASSESSEE H AS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME, THE PENALTY PROCEEDINGS HAS BEEN I NITIATED. EVEN PERUSAL OF THE PENALTY ORDER GOES TO SHOW THAT THE PENALTY HAS BEEN LEVIED MERELY ON THE BASIS OF ADDITION MAD E BY THE AO AND CONFIRMED BY THE LD. CIT(A) AND INDEPENDENT CAS E HAS NOT BEEN MADE OUT BY THE AO TO LEVY THE PENALTY U/S 271 (1)(C) OF THE ACT. 9. FOR READY PERUSAL PARA 5 OF THE ASSESSMENT ORDER CONTAINING SATISFACTION OF THEN AO TO INITIATE THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IS EXTRACTED A S UNDER :- 5. IN VIEW OF THE ABOVE, I AM SATISFIED THAT IT IS A FIT CASE FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, THEREFORE, PENALTY PROCEEDINGS U/S 271(1)(C) ARE IN ITIATED SEPARATELY. 10. SO, PERUSAL OF THE AFORESAID SATISFACTION RECOR DED BY THE AO SHOWS THAT AT THE TIME OF INITIATING PENALTY AO HIM SELF WAS NOT AWARE ENOUGH IF HE HAS INITIATED THE PENALTY PROCEE DINGS ON ITA NO. 2325/DEL./2017 6 ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR FOR CONCEALMENT OF INCOME BY THE ASSESSEE RATHER MECHAN ICALLY SOUGHT TO INITIATE THE PENALTY PROCEEDINGS U/S 271(1)(C) O F THE ACT. WHEN INITIATION OF THE PENALTY ITSELF IS NOT VALID, IT D OES NOT PROVIDE ANY CAUSE OF ACTION AS REQUIRED U/S 271(1)(C) OF THE AC T TO LEVY THE PENALTY ON THE ASSESSEE. 11. MOREOVER WHEN AO HAS NOT RECORDED VALID SATISFACTI ON REQUIRED U/S 271(1)(C) NOTICE ISSUED U/S 274 READ W ITH SECTION 271(1)(C) TO INITIATE THE PENALTY PROCEEDING IS NOT SPECIFIED ONE SO AS TO MAKE OUT IF THE ASSESSEE HAS CONCEALED PARTIC ULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INC OME. HONBLE APEX COURT IN CASE OF CIT VS. M/S SSAS EMERALD MEADOWS (2016) 73 TAXMANN.COM 248 (SC) WHILE DISMISSING THE SLP FILED BY THE REVENUE QUASHING THE PENALTY BY THE TR IBUNAL AS WELL AS HONBLE HIGH COURT ON GROUND OF UNSPECIFIED NOT ICE U/S 274 OF THE ACT HAS HELD AS UNDER : SECTION 274, READ WITH SECTION 271(1)(C), OF THE I NCOME-TAX ACT, 1961 - PENALTY - PROCEDURE FOR IMPOSITION OF (CONDI TIONS PRECEDENT) - ASSESSMENT YEAR 2009-10 - TRIBUNAL, RE LYING ON DECISION OF DIVISION BENCH OF KARNATAKA HIGH COURT RENDERED IN CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTO RY [2013] 359 1TR 565/218 TAXMAN 423/35 TAXMANN.COM 250, ALLO WED APPEAL OF ASSESSEE HOLDING THAT NOTICE ISSUED BY AS SESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271 (1 )(C) WAS BAD ITA NO. 2325/DEL./2017 7 IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF S ECTION 271(1 )(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E., WHETH ER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME - HIGH COURT HELD THAT MATTER WAS COVERED BY AFORESAID DECISION OF DIVISION BENCH AND, THEREFORE, THERE WAS NO SUBSTANTIAL QUESTION OF LAW ARISING FOR DETERMINATION - WHETHER SINCE THERE WAS NO MERIT I N SLP FILED BY REVENUE, SAME WAS LIABLE TO BE DISMISSED - HELD, YES [PARA 2] [IN FAVOUR OF ASSESSEE] 12. RATIO OF CIT VS. SSAS EMERALD MEADOWS (2016) 73 TAXMANN.COM 248 (SC) IS APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE BECAUSE WHEN AT T HE TIME OF INITIATING THE PENALTY PROCEEDINGS AO WAS NOT CLEA R ENOUGH AS TO WHETHER PENALTY PROCEEDINGS HAVE BEEN INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE P ARTICULARS OF INCOME, PENALTY CANNOT BE LEVIED. 13. MOREOVER, PENALTY ORDER HAS BEEN PASSED BY THE AO MERELY ON THE BASIS OF ADDITIONS MADE BY AO AND CONFIRMED BY LD. CIT(A) AND HAS FAILED TO INDEPENDENTLY PROVE AS TO HOW AND UNDER WHAT CIRCUMSTANCES, THE ASSESSEE HAS FURNISHED INAC CURATE PARTICULARS OF INCOME. AGAIN FOR FACILITY OF REFERE NCE OPERATIVE PART OF THE PENALTY ORDER IS EXTRACTED AS UNDER :- THE ADDITION MADE U/S 68 HAS BEEN CLEARLY CONFIRME D BY THE CIT(A) AS THE IDENTITY, CREDITWORTHINESS AND GENUIN ENESS OF TRANSACTION RELATING TO SHARE APPLICATION MONEY HAD NOT BEEN PROVEN BOTH DURING THE ASSESSMENT AND APPELLATE PRO CEEDINGS. IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME WITH A VIEW TO EVADE TAXES. THE ITA NO. 2325/DEL./2017 8 PENALTY FOR INACCURATE PARTICULARS U/S 271(1)(C), R ANGE FROM MINIMUM OF 100% OF TAX SOUGHT TO HAVE EVADED AND GO ES UPTO 300% WHICH IS WORKED OUT AS UNDER: INCOME IN RESPECT OF WHICH INACCURATE : RS. 16,0 8,000/- PARTICULARS WERE FURNISHED : RS. 6,19,080/- TAX SOUGHT TO BE EVADED : RS. 6,19,080/- MINIMUM PENALTY (100% OF THE TAX SOUGHT TO HAVE EVADED) MAXIMUM PENALTY (300% OF THE TAX : RS. 6,19,080/- SOUGHT TO HAVE EVADED) 14. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT AO HAS MISERABLY FAILED TO REC ORD VALID SATISFACTION SO AS TO INITIATE THE PENALTY PROCEEDI NGS U/S 271(1)(C) AND CONSEQUENTLY FURTHER PROCEEDINGS FOR LEVYING TH E PENALTIES ARE NOT SUSTAINABLE IN THE EYES OF LAW, HENCE PENALTY L EVIED BY THE AO AND CONFIRMED BY LD. CIT(A) IS ORDER TO BE DELETED. 15. RESULTANTLY, APPEAL FILED BY THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 17 TH DECEMBER, 2019. SD/- SD/- (R.K.PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER D ATED : 17/12/ 2019 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-19, NEW DELHI. 5. CIT(ITAT), NEW DELHI. ITA NO. 2325/DEL./2017 9 AR, ITAT NEW DELHI DATE OF DICTATION 4/12/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 06/12/2019 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 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER