Sh. Arvind Kumar, Muzaffarnagar V. ITO, Muzaffarnagar

ITA 2578/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66026 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 28-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHIM SINGH
• Assessee Lawyers: SHANJUR MITTATL
• Keywords: Bonafide belief

Judgement Text

ITA NO. 2578/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2578/DEL/2012 A.Y. : 2008-09 SH. ARVIND KUMAR, 6-B.S.A. COMPOUND, MUZAFFARNGAR (UP) (PAN/GIR NO. : ADLPK3127A) VS. I.T.O. WARD 1(1), MUZAFFARNAGAR (UP) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. SHANJUR MITTATL, ADV. DEPARTMENT BY : SH. BHIM SINGH, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), MUZAFFARNGAR DATED 18.1.2012 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCO ME TAX (A) ERRED IN CONFIRMING THE LEVY OF PENALTY OF ` 76,200/- IMP OSED U/S. 271(1)(C) OF THE I.T. ACT. 3. IN THIS CASE IT WAS GATHERED BY THE ASSESSING OF FICER THAT DURING THE YEAR ASSESSEE ACCEPTED THE LOANS AS UNDER:- I) SMT. MEENAKSHI GARG - ` 70,000/- II) SMT. RITU GARG - ` 70,000/- III) SMT. SUNITA RANI - ` 80,000/- TOTAL = ` 2,20,000/- ITA NO. 2578/DEL/2012 2 3.1 IN THIS REGARD ASSESSEE FILED CONFIRMATION LET TERS ALONGWITH COPY OF BANK ACCOUNTS OF THE CREDITORS. ASSESSING OFF ICER FURTHER FOUND THAT THESE CREDITORS WERE NOT ASSESSED TO TAX AND WERE FAMILY MEMBERS. FURTHER FROM THE COPY OF THE BANK ACCOUNTS O F THE CREDITORS, IT WAS GATHERED BY THE ASSESSING OFFICER THAT P RIOR TO MAKING OF LOAN TO THE ASSESSEE, EQUAL SUMS WERE DEPOSITED IN CASH I N BANK ACCOUNTS OF THE AFORESAID CREDITORS. ASSESSING OFFICER F URTHER REQUIRED THE ASSESSEE TO PRODUCE THE AFORESAID CREDITORS FOR EXA MINATION. THE ASSESSEE DULY PRODUCED THE PERSONS, BUT ASSESSING OFFICER WAS NOT SATISFIED BY THE CREDITWORTHINESS OF THE CREDITORS. THEREFORE, ASSESSING OFFICER TREATED A SUM OF ` 2,20,000/- AS UNEXPLAIN ED AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE U/S. 68 OF THE A CT. 4. IN THIS CASE PENALTY U/S. 271(1)(C) OF THE ACT W AS ALSO IMPOSED FOR AN AMOUNT OF ` 76,200/-. 5. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) CONFIRMED THE PENALTY. 6. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORDS. WE FIND THAT IN THIS CASE THE ADDITION HAS BEEN MAD E ON ACCOUNT OF ASSESSEE RECEIVING LOANS FROM THREE PERSONS AMOUNTIN G TO ` 2,20,000/- ASSESSEE HAS FURNISHED IN THIS REGARD THE CONFIRMATI ONS AND THE COPY OF THE BANK ACCOUNTS OF THE PERSONS. ASSESSEE HA S ALSO DULY PRODUCED THESE PERSONS FOR EXAMINATION ON OATH BY TH E ASSESSING OFFICER. WE FIND THAT SECTION 271(1)(C) POSTULATE S IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AN D CONCEALMENT OF INCOME. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED O PINION, ASSESSEES CONDUCT IS NOT CONTUMACIOUS TO WARRANT LEVY OF PENAL TY U/S. 271(1)(C). ITA NO. 2578/DEL/2012 3 IT WAS ONLY THE ASSESSING OFFICERS OPINION ABOUT THE CREDITWORTHINESS THAT LEAD TO THE ADDITION IN THIS REGARD. UNDER TH E CIRCUMSTANCES, ON THE FACTS OF THE CASE, IN OUR CONSIDERED OPINION, P ENALTY U/S. 271(1)(C) IS NOT EXIGIBLE. 8. IN THIS REGARD, WE PLACE RELIANCE FROM THE APE X COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF T HEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMIN AL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PA RTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY B ECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAI LURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL T HE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBE D, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. 9. WE FURTHER PLACE RELIANCE UPON THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010. IN THIS CASE VIDE ORDER DATED 17.3.2 010 IT HAS BEEN HELD THAT THE LAW LAID DOWN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEALMENT AND INACCURATE C ONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRULED IN THE DHARMENDE R TEXTILE CASE ITA NO. 2578/DEL/2012 4 WAS ONLY THAT PART IN DILIP SHEROFF CASE WHERE IT WA S HELD THAT MENSREA WAS A ESSENTIAL REQUIREMENT OF PENALTY U/S 271(1)(C ). THE HONBLE APEX COURT ALSO OBSERVED THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CL AIM IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSE SSEE WILL INVITE THE PENALTY U/S 271(1)(C). THIS IS CLEARLY NOT THE INT ENDMENT OF LEGISLATURE. 10. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENTS, WE FIND THAT THE LEVY OF PENALTY IN THIS CASE IS NO T JUSTIFIED. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORI TIES BELOW AND DELETE THE LEVY OF PENALTY. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/12/2012. SD/- SD/- [ [[ [U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 14/12/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES