DCIT, New Delhi V. M/s. D.D. Construction Pvt. Ltd., New Delhi

ITA 2726/DEL/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5830 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R MISHRA
• Keywords: Search and seizure; Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: E: NEW DELHI) BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO:- 2726 /DEL/2014 ( ASSESSMENT YEAR: 2010-11) DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-18, ROOM NO. 327, 3 RD FLOOR, ARA CENTRE, E- 2, JHANDEWALAN EXTN., NEW DELHI. VS. M/S D.D. CONSTRUCTION PVT. LTD., A-43,ALLAHABAD APARTMENT, MAYUR VIHAR, NEW DELHI. PAN NO: AAACD4349Q APPELLANT RESPONDENT REVENUE BY : SH. B.R. MISHRA (SR.DR) ASSESSEE BY : SH. RAJAT JAIN (CA) & SH. AKSHAT JAIN (CA) DATE OF HEARING : 24.05.2018. DATE OF PRONOUNCEMENT : 07/06/2018. ORDER PER: KULDIP SINGH, JM THE APPELLANT, DY. COMMISSIONER OF INCOME TAX, CENT RAL CIRCLE-18, NEW DELHI, (HEREINAFTER REFERRED TO AS THE REVENUE ) BY FILING THE PRESENT 2 ITA NO. 2726/DEL/2014. M/ S D.D. CONSTRUCTION PVT. LTD., NEW DELHI. APPEAL BEARING ITA NO. 2726/DEL/2014 SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 19.02.2014 QUA ASSESSMENT YEAR 2010-11 PASSED BY LD. CIT(A)-III, NEW DELHI, DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) O N THE GROUNDS INTER ALIA THAT:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED IN CANCELLING THE PENLTY OF RS. 16 ,76,195/- LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE INC OME TAX ACT, 1961. 2. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F THE HEARING OF THE APPEAL. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE: ON THE BASIS OF ASSESSMENT ORDER FRAMED U/S 153C READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 WHEREBY AO MADE ADDITION OF RS. 49,31,437/- ON ACCOUNT OF D ISCREPANCIES IN THE TRANSACTIONS AND AO ESTIMATED THE ADDITION OF N ET PROFIT @ 0.25% OF THE TOTAL TURNOVER DECLARED BY THE ASSESSE E. ASSESSEE PLEADED DURING THE ASSESSMENT PROCEEDINGS THAT SUCH DISCREPANCIES ARE NATURAL SINCE TRANSACTIONS ARE BEING HANDLED BY THE EMPLOYEES STATIONED AT VARIOUS SITES AND HAS PROPOSED SURREND ER OF RS. 3 ITA NO. 2726/DEL/2014. M/ S D.D. CONSTRUCTION PVT. LTD., NEW DELHI. 20,00,000/- TO THE TOTAL INCOME. THE AO INITIATED T HE PENALTY PROCEEDINGS U/S 271(1)(C). DECLINING THE CONTENTION S RAISED BY ASSESSEE, AO LEVIED THE PENALTY OF RS. 16,76,195/- @ 100% OF THE TAX SOUGHT TO BE EVADED, ON THE GROUND THAT THE ASS ESSEE HAD CONCEALED PART OF ITS INCOME. 3. THE ASSEESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BY WAY OF FILING THE APPEAL, WHO HAS DELETED THE PENALTY BY ACCEPTING THE APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDER PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE . 5. UNDISPUTEDLY, A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE PREMISES OF M/S N.K.G. INFRASTRUCTURE LTD. WH ERE CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE WERE SEIZED AND CONSEQUENTLY PROCEEDING U/S 153C WERE INITIATED AGAINST THE ASSES SEE, TO WHICH THE ASSESSEE FILED ITS RETURN ON 07.09.2011 DECLARI NG INCOME OF RS. 2,57,22,420/-. IT IS ALSO NOT IN DISPUTE THAT THE A SSESSEE HAS 4 ITA NO. 2726/DEL/2014. M/ S D.D. CONSTRUCTION PVT. LTD., NEW DELHI. SURRENDERED AN AMOUNT OF RS 20,00,000/-, OVER AND A BOVE THE RETURN INCOME WHICH WAS NOT ACCEPTED BY THE AO, WHO H AS MADE MINIMUM ADDITION ON ESTIMATED BASIS @ 0.25% OF NET P ROFIT OF TOTAL TURNOVER TO THE TUNE OF RS. 49,31,437/- TO THE TOTA L INCOME OF THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THE PENAL TY PROCEEDINGS HAVE BEEN INITIATED ON NOTICING CERTAIN DISCREPANCIES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IT IS ALSO NOT IN DISPUT E THAT A PENALTY PROCEEDING WERE ALSO INITIATED AGAINST THE M/S N.K.G INFRASTRUCTURE LTD., WHEREIN AO ASSESSED THE ADDITIONAL INCOME AT 0 .25% OF THE TOTAL TURNOVER DECLARED BY THE ASSESSEE. 6. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, ORDER PASSED BY THE LOWER REVENUE AUTHORIT IES, ARGUMENT ADDRESSED BY THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, THE QUESTION ARISES FOR DETERMINATION IN THE CASE IS:- AS TO WHETHER THE ASSESSEE HAS CONCEALED PART OF H IS INCOME BY MAKING DISCREPANCIES IN THE TRANSACTIONS RECORDED I N THE BOOKS OF ACCOUNT AND THE ASSESSING OFFICER IS EMPOWERED TO L EVY THE PENALTY U/S 271(1)(C) ON THE BASIS OF ADDITION MADE ON ESTI MATED BASIS IN THE NET PROFIT TO THE TUNE OF 0.25% OF THE TOTAL TU RNOVER DECLARED BY THE ASSESSEE. 5 ITA NO. 2726/DEL/2014. M/ S D.D. CONSTRUCTION PVT. LTD., NEW DELHI. 7. HONBLE SUPREME COURT IN A CASE CITED AS RELIANCE PETRO PRODUCTS PVT. LTD. DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. OPERATIVE PART OF WHICH IS REPRODUCED FOR READY REFERENCE AS UNDER:- A GLANCE AT THE PROVISIONS OF SECTION 271(L)(C) OF THE L.T. ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF T HE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME . THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(L)(C) WOULD EMBRACE THE DETAIL OF THE CLAIM MAD E. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORD ER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROV ISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRE CT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCOR RECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(L)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN TH E RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 6 ITA NO. 2726/DEL/2014. M/ S D.D. CONSTRUCTION PVT. LTD., NEW DELHI. 8. HONBLE DELHI HIGH COURT IN CASE OF CIT VS. AERO TRADERS (P.) LTD (2010) 322 ITR 316 (DELHI) ALSO DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE COMPANY BY RETURNIN G THE FOLLOWING FINDINGS:- THE ASSESSING OFFICER, OBSERVING THAT THE PROFIT WAS ESTIMATED AFTER REJECTION OF THE BOOKS OF ACCOUNT DUE TO CERTAIN DISCREPANCIES, IMPOSED A PENALTY ON THE ASSESSEE, ON THE GROUND THAT IT WAS A CLEAR CASE OF FURNISHING OF INACCURATE PARTICULAR S OF INCOME. THE TRIBUNAL HELD THAT AS SUBSTANTIAL QUANTUM RELIEF WAS GIVEN BY THE COMMISSIONER (APPEALS) WHICH HAD BEEN CONFIRMED BY THE TRIBUNAL AND THE BALANCE PERTAINED TO ESTIMATED RATE OF PROFIT APPLIED ON THE TURNOVER OF THE ASSESSEE, IT DID NOT AMOUNT TO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. THE TRIBUNAL, THEREFORE, DELETED THE PENALTY. HELD THAT, THE FINDING ARRIVED AT BY THE TRIBUNAL DID NOT WARRANT INTERFERENCE FROM THIS COURT AS IT WAS PURELY A FINDING OF FACT. NO PERVERSITY HAD BEEN POINTED IN SUCH A FINDING. CONSEQUENTLY, NO SUBSTANTIAL QUESTION OF LAW AROSE FOR CONSIDERATION. 9. WE ARE OF THE CONSIDERED VIEW THAT AO MADE THE ADDIT ION MERELY ON THE GROUND THAT THE SURRENDER WAS NOT TO H IS SATISFACTION RATHER PROCEEDED TO ESTIMATE THE NET P ROFIT @ 0.25%. WHEN THE ASSESSEE COMPANY HAS PRODUCED ACCOUNT BOOK S BEFORE 7 ITA NO. 2726/DEL/2014. M/ S D.D. CONSTRUCTION PVT. LTD., NEW DELHI. THE AO DURING ASSESSMENT PROCEEDINGS, AO WAS REQUIRE D TO COMPUTE THE INCOME ON THE BASIS OF DOCUMENTARY EVID ENCE AND NOT ON THE BASIS OF ESTIMATION. MOREOVER THE AO HAS ESTIMATED THE NET PROFIT OF THE TOTAL TURNOVER WITHOUT REJECTI NG THE BOOKS OF ACCOUNT OF THE ASSESSEE WHICH IS NOT PERMISSIBLE UND ER LAW. BUT THE AO PROCEEDED TO GUESSWORK THE ADDITIONAL INCOME ON THE BASIS OF SOME DEFECTS IN THE ACCOUNT BOOKS AND ON T HE GROUND THAT THE INCOME OFFERED IS NOT ADEQUATE. IN THE GIV EN CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THE RE IS NO QUESTION OF CONCEALING PART OF THE INCOME TO ATTRAC T THE PROVISIONS CONTAINED U/S 271(1)(C) OF THE ACT. 10. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE ARE O F THE FURTHER VIEW THAT WHEN ASSESSEE HAS BROUGHT ON RECORD EVERY TRANSACTION IN THE BOOKS OF ACCOUNT, BUT FOR SOME D ISCREPANCIES WHICH THE ASSESSEE CLAIMED TO HAVE ACCURRED AS THE T RANSACTION BEING HANDLED AT DIFFERENT SITES BY ITS EMPLOYEES, AO FAILED TO SPECIFY THE AMOUNT CONCEALED BY THE ASSESSEE DUE TO DISCREPANCIES, BUT PROCEEDED TO ESTIMATE THE INCOME, WHICH IS NOT S UFFICIENT TO ATTRACT SECTION 271(1)(C) OF THE ACT. SO FINDING NO ILLEGALITY OR 8 ITA NO. 2726/DEL/2014. M/ S D.D. CONSTRUCTION PVT. LTD., NEW DELHI. PERVERSITY IN THE IMPUGNED ORDER PASSED BY LD. CIT(A ), HENCE, PRESENT APPEAL FILED BY THE REVENUE IS HEREBY DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7/6/2018 SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL M EMBER DATED: 07.06.2018 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 9 ITA NO. 2726/DEL/2014. M/ S D.D. CONSTRUCTION PVT. LTD., NEW DELHI. DRAFT DICTATED ON 29.05.2018 DRAFT PLACED BEFORE THE AUTHOR 30.05.2018 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/ APPROVED BY SECOND MEMBER APPROVED DRAFT COMES TO THE SR. PS/ PS KEPT FOR PRONOUNCEMENT ON FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK DATE OF DISPATCH OF ORDER. 10 ITA NO. 2726/DEL/2014. M/ S D.D. CONSTRUCTION PVT. LTD., NEW DELHI.