Sh Gaurav Mehra C/o. Modern Woollen Mills, Amritsar. V. The Asstt.Commissioner of Income-tax, Amritsar.

ITA 266/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0728 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-05-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 01-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISHRA
• Assessee Lawyers: SSH K R JAIN; SUDHIR MEHRA S
• Keywords: Accommodation entries; Reassessment proceedings
• Section: 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS.266, 267 & 268(ASR)/2014 ASSESSMENT YEARS:2001-02, 2002-03 & 2004-05 PAN: ABQPM1295A MR. GAURAV MEHRA VS. ASSTT. COMMR. OF INCOME TAX, C/O SH. SUDHIR MEHTRA (ADVOCATE) CIRCLE-3, 12, PARK LANE, AMRITSAR. RANI KA BAGH, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: S/SH. K. R. JAIN & SUDHIR MEHRA, ADV OCATES RESPONDENT BY: SH. A.N. MISHRA, DR DATE OF HEARING: 24/05/2016 DATE OF PRONOUNCEMENT: 27/05/2016 ORDER PER A.D. JAIN, JM: THESE ARE THE ASSESSEES APPEALS FOR THE ASSESSMEN T YEARS 2001- 02, 2002-03 & 2004-05, AGAINST THE ACTION OF THE L D. CIT(A), IN CONFIRMING THE CONCEALMENT PENALTIES OF RS. 3,55,9 00, RS.6,25,291 AND RS.49,678/-, RESPECTIVELY. THESE APPEALS WERE HEARD TOGETHER AS SIMILAR FACTS AND ISSUES ARE INVOLVED AND ARE BEING DISPOSE D OF BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF EMBROIDERY OF TEXTILES ON JOB WORK BASI S. BESIDES A DERIVES INCOME FROM HOUSE PROPERTY, SHARE OF PROFIT FROM, I NTEREST INCOME AND ITA NOS. 266 TO 268(ASR)/2014 A.YS. 2001-02, 2002-03 & 2004-05 2 PROFIT & LOSS FROM SHARES. THE ASSESSEE DECLARED SH ORT TERM CAPITAL LOSS FROM SHARES AND FURNISHED RELEVANT DETAILS OF SHARE S AND BANK ACCOUNT ALONGWITH THE ORIGINAL RETURN OF INCOME, WHICH WAS ACCEPTED AS PER INTIMATION U/S 143(1) DATED 28.02.2003 BY THE AO. HOWEVER, THE AO ISSUED A NOTICE U/S 148 AND IN RESPONSE THE ASSESSE E, FILED THE RETURN OF INCOME AS PER THE ORIGINAL RETURN FURNISHED ON 27.0 4.2009. DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED TH E REQUISITE EVIDENCE TO SHOW THE GENUINENESS OF CAPITAL GAIN ON THE DEAL S IN SHARES THROUGH REGD. SHARE BROKER M/S. MKM FINSEC PVT. LTD. AGAIN NOTICES U/S 143(2)/142(1) WERE ISSUED AND SERVED ON THE ASSESSE E ALONG WITH COPY OF STATEMENT OF SH. MAHESH BATRA RECORDED ON 23.01.200 4, IN WHICH, IT WAS ADMITTED THAT THE ASSESSEE WAS PROVIDED WITH ACCOM MODATION ENTRIES ON THE PAYMENT OF COMMISSION. IN RESPONSE, THE ASSESSE E SUBMITTED THAT MR. MAHESH BATRAS STATEMENT WAS ABSOLUTELY INCORRE CT AND CONTRARY TO THE FACTS AND REQUESTED THAT SUMMONS U/S 131 MAY B E ISSUED TO SH. MAHESH BATRA, SO THAT HE COULD BE CROSS-EXAMINED. HOWEVER, THE LETTER WAS RECEIVED BACK UN-SERVED FROM THE POSTAL AUTHORI TIES WITH THE REMARKS NO SUCH PERSON ON GIVEN ADDRESS. ACCORD INGLY, THE AO ASKED THE ASSESSEE TO PRODUCE SH. MAHESH BATRA TO SUBSTAN TIATE HIS CLAIM THAT THE ASSESSEE HAD EARNED THE AMOUNT FROM GENUINE DEALING IN SHARES AND NOT THROUGH ACCOMMODATION ENTRIES AND IN RESPO NSE TO THE SAME, AFTER A LONG DRAWN PROCESS, THE ASSESSEE SURRENDERE D THE ABOVE ENTRIES. ITA NOS. 266 TO 268(ASR)/2014 A.YS. 2001-02, 2002-03 & 2004-05 3 THE AO ACCORDINGLY, LEVIED PENALTY OF RS.3,55,900/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO IMPOSED PENALTY IN A MECHANICAL MANNER WITHOUT DUE APPLICAT ION OF MIND. HE SUBMITTED THAT THE AO HAS NOT RECORDED A CLEAR CUT FINDING IN THE ASSESSMENT ORDER FOR IMPOSING THE PENALTY, AS TO WH ETHER THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME, OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THE LD. COUNSEL FOR THE ASSE SSEE DREW OUR ATTENTION TO THE NOTICE DATED 17.12.2002 ISSUED TO THE ASSESS EE UNDER SECTION 274 READ WITH SECTION 271(1)(C) BY THE AO, WHERE THE AO HAS MENTIONED HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNIS HED INACCURATE PARTICULARS OF SUCH INCOME. HE FURTHER SUBMITTED THAT THE AO IS NOT SURE WHETHER THE ASSESSEE IS LIABLE TO PENALTY FO R CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. HE FURTHER DREW OUR ATTENTION TO THE ASSESSMENT ORDER, WHERE THE AO HAS STATED THAT PENALTY HAS BEEN INITIATED U/S 271(1)( C). ACCORDING TO HIM, THIS SHOWS THAT THE AO WAS NOT SURE ABOUT THE SPEC IFIC DEFAULT/CHARGE OF THE ASSESSEE. RELIANCE BY THE ASSESSEES COUNSEL HAS BEEN PLACED ON THE FOLLOWING DECISIONS IN SUPPORT HIS CASE: I) CIT VS. MUNISH IRON STORE, 263 ITR 484 (P&H) ITA NOS. 266 TO 268(ASR)/2014 A.YS. 2001-02, 2002-03 & 2004-05 4 II) CIT VS. RAM COMMERCIAL ENTERPRISES LTD. 246 ITR 5 68 III) CIT VS. M/S. SHERE PUNJAB AGRICULTURAL WORKS, BHAG LA, ITA NO. 210/2007 (P&H) IV) VISHAL FILLING STATION VS. AO, WD-1(3), BATHINDA, IN ITA NO.66/ASR/2007 (ITAT, AMRITSAR BENCH.) V) DCIT VS. M/S. RAM PARTAP OIL EXTRACTIONS (P) LTD. IN ITA NO.514 & 5159ASR)/1999 (ITAT, AMRITSAR BENCH). VI) CIT VS. MANUJUNATHA COTTON & GINNING FACTORY, 92 DTR 2011 (KARNATAKA) VII) DCIT VS. NEPA LIMITED IN ITA NO.683/IND/2013 (ITA T, INDORE BENCH) VIII) TRISTAR INTECH (P) LTD. VS. ACIT, IN ITA NO. 1457 /DEL/2010 (ITAT, DELHI BENCH) IX) SUVAPRASANNA BHATACHARYA VS. ACIT, IN ITA NO.1303/KOL/2010 ( ITAT, KOLKATA BENCH) 5. THE LD. COUNSEL FURTHER PLEADED THAT IN VIEW OF THE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT DECISIONS IN THE CASE O F CIT VS. MUNISH IRON STORE (SUPRA) AND CIT VS. SHERE PUNJAB AGRIC ULTURAL WORKS, BHAGTA BHAI KA (RAMPURA PHUL) DATED 18 TH MAY, 2007 IN ITA NO. 210 OF 1997 (COPIES PLACED ON RECORD BEFORE THE BENCH), WHICH H AVE BEEN FOLLOWED IN A NUMBER OF CASES BY THIS BENCH, INCLUDING VISHAL F ILLING STATION VS. A.O. IN ITA NO.66(ASR)/2007, WHERE ON IDENTICAL FACTS P ENALTY HAS BEEN CANCELLED, THE IMPUGNED PENALTY MAY BE CANCELLED. 6. THE LD. DR, ON THE OTHER HAND, RELIED ON THE IMP UGNED ORDER. 7. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THR OUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS DISCUS SED ABOVE, IT IS ITA NOS. 266 TO 268(ASR)/2014 A.YS. 2001-02, 2002-03 & 2004-05 5 OBVIOUS THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO HAS NOT RECORDED SATISFACTION ABOUT CONCEALMENT OF INCOME O R FURNISHING INACCURATE PARTICULARS, AS APPARENT FROM THE BODY O F THE ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION. IN THE NOT ICE DATED 17.12.2002, THE AO OBSERVED: . HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. T HUS, THE AO HAS FAILED TO POINT OUT THE SPECIFIC FAULT/CHARGE DUE T O WHICH PENALTY HAS BEEN IMPOSED. IN THE ABSENCE OF SPECIFIC FAULT/CHA RGE, PENALTY CANNOT BE LEVIED. RELIANCE PLACED BY THE LD. COUNSEL FOR THE ASSESSEE ON THE VARIOUS DECISIONS, CITED HEREINABOVE, FULLY SUPPORTS THE CA SE OF THE ASSESSEE. THE FACTS OF THE CASES RELIED ON BY THE LD. COUNSEL ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE AT HAND. 8. FOR THE ABOVE DISCUSSION, THE PENALTY IS NOT IMP OSABLE UNDER SECTION 271(1)(C) OF THE ACT FOR YEAR UNDER CONS IDERATION AND IS LIABLE TO BE QUASHED ON THE GROUND THAT THE AO HAS FAILED TO APPLY HIS MIND BEFORE INITIATING THE PENALTY PROCEEDINGS AND, THER EFORE, THE PROCEEDINGS INITIATED ARE BAD IN LAW. AS SUCH, THE LD. CIT(A) W AS NOT JUSTIFIED IN SUSTAINING THE PENALTY IMPOSED BY THE AO. ACCORDING LY, THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND PENALTY LEVIED BY THE AO IS CANCELLED. 9. AS REGARDS THE PENALTIES FOR THE ASSESSMENT YEAR S 2002-03 & 2004- 05, SUSTAINED BY THE LD. CIT(A) AND IMPOSED BY THE AO, THE SAME ARE ITA NOS. 266 TO 268(ASR)/2014 A.YS. 2001-02, 2002-03 & 2004-05 6 ALSO CANCELLED AND THE FINDINGS GIVEN HEREINABOVE F OR THE ASSESSMENT YEAR 2001-02, WILL APPLY MUTATIS MUTANDIS TO THESE APPEALS. 10. IN THE RESULT, ALL THE THREE APPEALS OF THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/05/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 27/05/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SH. GAURAV MEHRA, AMRITSAR. 2. THE CIT, CIRCLE-3, AMRITSAR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.