Shri Vinodbhai S.Pawar, Surat V. The Income tax Officer,Ward-2(1), Surat

ITA 2801/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1759 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2002-2003
• Appeal Filed On: 13-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Keywords: Unexplained cash credit; Unexplained expenditure; Gift; Set aside
• Section: 271(1)(c); 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH , JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ITA NO.2801/AHD/2009 ASSESSMENT YEAR:2002-03 SHRI VINODKUMAR S PAWAR,312,HARINAGAR- 2,UDHNA ,SURAT. VS. THE INCOME TAX OFFICER, WARD 2(1), SURAT. PAN:AAZPP9538P (APPELLANT) .. (RESPONDENT) ASSESSEE BY : SHRI HARDIK VORA, AR REVENUE BY : SHRI C.K.MISHRA, DR O R D E R A N PAHUJA :. THIS IS AN APPEAL AGAINST AN ORDER DATED 21.7.2009 OF THE LD. CIT(A)-II,SURAT, UPHOLDING THE PENALTY OF RS.5, 57,333/- LEVIED U/S U/S 271(1)(C) OF THE INCOME-TAX ACT,1961[HEREINAFTER RE FERRED TO AS THE ACT]. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS AR E THAT THE RETURN DECLARING INCOME OF RS. 95,125/- FILED ON 12-3-2003 BY THE A SSESSEE, CARRYING ON BUSINESS OF DALALI IN DIAMONDS, AFTER BEING PROCESS ED U/S 143(1) OF THE ACT, WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 22.10.2003. THE ASSESSMENT WAS COMPLETED ON AN INCO ME OF RS.19,45,640/- VIDE ORDER DATED 28.3.2005 WITH THE ADDITIONS OF UN EXPLAINED CASH CREDITS OF RS. 13,38,207/-,UNEXPLAINED GIFTS OF RS.1,62,000/- AND UNEXPLAINED EXPENDITURE OF RS. 3,34,000 BESIDES DISALLOWANCE OF EXPENSES OF RS. 16,305/- INTER ALIA, PENALTY PROCEEDINGS U/S 271(1)(C) OF TH E ACT WERE ALSO INITIATED.ON APPEAL, THE AFORESAID ADDITIONS WERE UPHELD BY THE LD. CIT(A) VIDE HIS ORDER DATED 11.5.2006. SUBSEQUENTLY PENALTY OF RS. 5,57,3 33/- WAS IMPOSED U/S 271(1)(C) OF THE ACT VIDE ORDER DATED 28.3.2008 ON ACCOUNT OF ADDITIONS OF UNEXPLAINED CASH CREDITS OF RS. 13,38,207/-,UNEXPLA INED GIFTS OF RS.1,62,000/- AND UNEXPLAINED EXPENDITURE OF RS. 3,34,000. ON APP EAL, THE LD. CIT(A) UPHELD THE LEVY OF PENALTY VIDE HIS IMPUGNED ORDER. 2 ITA NO.2801/AHD/200 9 3. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAI NST THE AFORESAID ORDER OF THE LD. CIT(A), UPHOLDING LEVY OF PENALTY. AT THE O UTSET, THE LD. AR ON BEHALF OF THE ASSESSEE WHILE INVITING OUR ATTENTION TO AN ORD ER DATED 28.10.2009OF THE ITAT IN QUANTUM APPEAL IN ITA NO.1667/AHD./2006 SU BMITTED THAT ADDITIONS FORMING THE BASIS OF PENALTY HAVING BEEN DELETED BY THE ITAT, PENALTY NO LONGER SURVIVES. THE LD. DR DID NOT DISPUTE THESE S UBMISSIONS ON BEHALF OF THE ASSESSEE. 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISION OF THE ITAT. WE FIND THAT THE ITAT VIDE THEIR ORDER DATED 28-10-2009 OF THE ITAT IN ITA NO. 1667/AHD/2006 IN QUANTUM APPEAL HAVE DELETED THE AFORESAID ADDITIONS OF UNEX PLAINED CASH CREDITS OF RS. 13,38,207/-,UNEXPLAINED GIFTS OF RS.1,62,000/- AND UNEXPLAINED EXPENDITURE OF RS. 3,34,000.. SINCE THE ADDITIONS FORMING THE BA SIS FOR LEVY OF PENALTY, HAVE BEEN DELETED BY THE ITAT VIDE THEIR AFORESAID ORDER , PENALTY LEVIED BY THE AO DOES NOT SURVIVE. HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. R.DALMIA,(1992)107 TAXATION 107, HELD THAT NO PENAL TY SURVIVES AFTER DELETION OF ADDITIONS, FORMING THE BASIS FOR THE LEVY OF PEN ALTY. HONBLE SUPREME COURT IN THE CASE OF K.C.BUILDERS VS. ACIT,265 ITR 562(S C) HELD THAT ORDINARILY, PENALTY CANNOT STAND IF THE ASSESSMENT ITSELF IS SE T ASIDE. WHERE AN ORDER OF ASSESSMENT OR REASSESSMENT ON THE BASIS OF WHICH PE NALTY HAS BEEN LEVIED ON THE ASSESSEE, HAS ITSELF BEEN FINALLY SET ASIDE OR CANCELLED BY THE TRIBUNAL OR OTHERWISE, THE PENALTY CANNOT STAND BY ITSELF AND T HE SAME IS LIABLE TO BE CANCELLED. SINCE THE VERY BASIS UPON WHICH THE PENA LTY HAS BEEN IMPOSED DOES NOT EXIST IN VIEW OF ORDER DATED 28.10.2009 OF THE ITAT IN ITA NO.1667/AHD./2006 IN THE ASSESSEES CASE, WE HAVE NO ALTERNATIVE BUT TO SET ASIDE THE IMPUGNED ORDER AND QUASH THE PENALTY OF R S. 5,57,333/- LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 3 ITA NO.2801/AHD/200 9 5. IN THE RESULT, APPEAL IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 16 TH DECEMBER, 2009. SD/- SD/- SSS (MAHAVIR SINGH) (A.N. PAHUJA) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD; DATED: 16/12/2009 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE 2.THE INCOME TAX OFFICER,WARD -2(1), SURAT 3. CIT(A)-II, SURAT 4. THE CIT, CONCERNED 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.