Palaseem Developers (india) Ltd, New Delhi V. ITO, New Delhi

ITA 2887/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4000 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 27-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 15-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAREON
• Assessee Lawyers: NARESH CHANDRA AGGARWAL
• Keywords: Unexplained cash credit; Bonafide belief; Question of law
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO.2887/DEL/2009 ASSESSMENT YEAR : 2005-06 PALASEEM DEVELOPERS (INDIA) PVT. LTD., INCOME-TAX OFFICER, NOW TECHMAN SHELTERS PVT. LTD., VS. WARD 14(3), NEW DELHI. G-1354 LOWER GROUND FLOOR, C.R. PARK, NEW DELHI. PAN: AACCP7980P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NARESH CHANDRA AGGARWAL, C A RESPONDENT BY : SMT. BANITA DEVI NAREON, SR. DR. O R D E R PER SHAMIM YAHYA, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) DATED 8.04.200 9 AND PERTAINS TO ASSESSMENT YEAR 2005-06. 2. THE ISSUE RAISED IS THAT THE CIT(A) WAS NOT JUST IFIED IN CONFIRMING THE LEVY OF PENALTY UNDER SEC. 271(1)(C ) OF THE INCOME -TAX ACT. 3. IN THIS CASE THE ASSESSING OFFICER OBSERVED THAT DURING THE COURSE OF ASSESSMENT ASSESSEE WAS ASKED TO GIVE DETAILS OF SU NDRY CREDITORS. THE ASSESSEE GAVE THE NECESSARY DETAILS. IN ORDER TO V ERIFY THE GENUINENESS OF THE 2 CREDITORS SHOWN BY THE ASSESSEE COMPANY, THE ASSESS ING OFFICER ISSUED NOTICE UNDER SEC. 133(6) TO 7 PARTIES AND THE NOTIC ES SENT WERE RECEIVED BACK UNDELIVERED. THE SAME WAS BROUGHT TO THE NOTICE OF THE ASSESSEE. THE ASSESSEE SURRENDERED THE AMOUNT ON THIS ACCOUNT. P ENALTY PROCEEDINGS WERE INITIATED IN THIS REGARD AND PENALTY OF RS. 430766/ - WAS LEVIED. 4. BEFORE THE LEARNED CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE COMPANY WAS DOING BUSINESS OF MAKING BUILDINGS ETC. IT HAS PURCHASED MATERIALS FROM THE ABOVE PARTIES. THE ASSESSEE HAD ALSO FILED THE CONFIRMATION FROM THESE PARTIES. THESE PARTIES WERE LOCATED IN DIFFERENT A REAS OF DELHI. THESE PARTIES WERE UNORGANIZED AND USED TO CHANGE THEIR ADDRESS F REQUENTLY. THE ASSESSEE HAD TRIED ITS BEST TO PRODUCE THESE PARTIES BEFORE THE ASSESSING OFFICER BUT COULD NOT PRODUCE THEM AS THEY REFUSED TO APPEAR. IN THESE CIRCUMSTANCES, THE ASSESSEE HAS SURRENDERED THE AMOUNT FOR TAXATIO N BEFORE THE ASSESSING OFFICER WITH THE CONDITION THAT NO PENALTY UNDER SE C. 271(1)( C) WILL BE LEVIED. THE LEARNED CIT(A) DID NOT ACCEPT THIS CON TENTION. HE REFERRED TO THE DECISION OF HONBLE APEX COURT IN THE CASE OF D HARMENDRA TEXTILE PROCESSORS, 306 ITR 277 FOR THE PROPOSITION THAT PE NALTY UNDER SEC. 271(1)(C) IS A CIVIL LIABILITY AND WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY. THE LEARNED CIT(A) FUR THER REFERRED TO THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DINESH KUMAR VS. CIT, 3 254 ITR 240. ACCORDINGLY THE LEARNED CIT(A) HELD T HAT THE ASSESSEE HAD CONCEALED INCOME BY INTRODUCING UNEXPLAINED CREDITS IN ITS ACCOUNTS. HENCE, HE UPHELD THE LEVY OF PENALTY. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORD. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF MAKING BUILDINGS AND IN THIS BUSINESS IT HAS TO PUR CHASE VARIOUS MATERIALS FROM SUNDRY PARTIES IN AND AROUND DELHI. THE ASSES SEE HAS PROVIDED THE CONFIRMATION AND ADDRESSES OF THE CREDITORS IN THIS REGARD WHICH WERE APPEARING AS CLOSING BALANCE. ASSESSING OFFICER H AD ISSUED NOTICES UNDER SECTION 133(6) TO THESE PERSONS. THE NOTICES HAD B EEN RECEIVED BACK UNSERVED. IN THIS REGARD, THE LEARNED COUNSEL REIT ERATED THAT THE PERSONS SUPPLYING THESE MATERIALS BELONG TO UNORGANIZED SEC TOR AND THEY ARE OFTEN CHANGING THEIR ADDRESSES. HE CLAIMED THAT IN SPITE OF ASSESSEES EFFORTS TO PRODUCE THEM BEFORE THE ASSESSING OFFICER, THEY REF USE TO COOPERATE. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAS SURRENDERED AMOUNT TO BUY PEACE FROM THE DEPARTMENT AND IN THESE CIRCU MSTANCES HE CLAIMED THAT PENALTY UNDER SECTION 271(1)( C) NEED TO BE DELETED . THE LEARNED DR ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITI ES BELOW. 4 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORD. WE FIND THAT THE ASSESSING OFFICER IN THIS CASE HAS ISSUED NOTIC E UNDER SECTION 133(6) TO THE FOLLOWING PARTIES REGARDING THE CLOSING BALANCE APPEARING IN ASSESSEE BOOK. S.NO. CREDITORS NAME AMOUNT 1. CH. SHESH NATH RS. 1,78,250/- 2. SH. AJIT KUMAR PANDEY RS. 1,76,025/- 3. SH. R.P. SAXENA RS. 68,680/- 4. CH. PREM CHAND RS. 2,36,800/- 5. SH. AMIT KUMAR RS. 97,700/- 6. SH. SANJAY SAHOO RS. 88,540/- 7. SH. KULDEEP KUMAR RS. 2,65,850/- RS. 11,11,845/- 6.1 THESE NOTICES WERE RECEIVED BACK UNDELIVERED. THOUGH THE ASSESSEE HAD PROVIDED THE CONFIRMATIONS, HE CLAIMED THAT THE SE PARTIES WERE NOT COOPERATING AND THEY KEPT ON CHANGING THEIR ADDRESS ES. HENCE THE ASSESSEE SURRENDERED THE AMOUNT TO BUY PEACE FROM THE LITIGA TION PROCEEDINGS. IN THESE CIRCUMSTANCES, WE HAVE TO EXAMINE WHETHER THE ASSESSEE IS LIABLE TO PENALTY UNDER SEC. 271(1)(C ) OF THE INCOME-TAX ACT . 7. SECTION 271(1)(C ) MANDATES LEVY OF PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS. NOW IN THIS CASE WE FIND THAT THE ASSESSEE HAS DULY GIVEN NAMES , ADDRESSES AND CONFIRMATIONS OF THESE CREDITORS. THESE ARE CREDIT ORS FOR SUPPLY OF BUILDING MATERIALS. IT IS NOT THE CASE THAT THE PURCHASES FR OM THEM HAVE BEEN TREATED AS 5 BOGUS BY THE ASSESSING OFFICER. THE ASSESSING OFFIC ER HAS ISSUED NOTICES UNDER SEC. 133(6) WHICH WERE RECEIVED BACK UNDELIVE RED. THE ASSESSEE IN THIS REGARD SUBMITTED THAT THE CREDITORS WERE SUPPL IERS OF BUILDING MATERIALS AND BELONGED TO AN UNORGANIZED SECTOR. THEY WERE L IVING IN AND AROUND DELHI AND USED TO CHANGE THEIR ADDRESSES. DESPITE THE ASSESSEES EFFORTS, THEY REFUSED TO COME BEFORE THE ASSESSING OFFICER. IN THESE CIRCUMSTANCES, THE ASSESSEE HAD SURRENDERED THE AMOUNT INVOLVED TO BUY PEACE FROM THE DEPARTMENT. EXCEPT FOR ISSUING NOTICES U/S 133(6) H AS NOT DONE ANY FURTHER INQUIRY. IN OUR CONSIDERED OPINION, THE ACT OF THE ASSESSEE IN THIS CASE CANNOT BE SAID TO BE CONTUMACIOUS SO AS TO ATTRACT LEVY OF PENALTY UNDER SEC. 271(1)(C) OF THE ACT. THE ASSESSEE CANNOT BE HELD GUILTY OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS IN THIS CASE. 7.1 THE CASE LAW FROM HONBLE JURISDICTIONAL HIGH C OURT REFERRED BY THE LEARNED CIT(A) IN THE CASE OF DINESH KUMAR AGGARWAL VS. CIT 254 ITR 240 CITED ABOVE IS NOT APPLICABLE TO THE FACTS OF T HE CASE. THE HONBLE HIGH COURT IN THAT CASE HAD HELD THAT NO QUESTION OF LAW AROSE OUT OF TRIBUNALS ORDER. IN THAT CASE THE CASH CREDIT WAS SHOWN BY T HE ASSESSEE FROM HIS WIFE WHICH WAS ADDED TO HIS INCOME FROM UNDISCLOSED SOUR CES. 7.2 IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINI ON THERE IS NO VIOLATION OF SECTION 271(1)(C) WHICH MANDATES OF LEVY OF PENA LTY FOR CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. IN THIS REGAR D, WE FIND THAT HONBLE 6 APEX COURT HAS RECENTLY IN THE CASE OF CIT VS. R ELIANCE PETRO PRODUCTS LTD. HAS HELD THAT THE LAW LAID DOWN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEALMENT AND I NACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRULED IN THE DHA RMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP SHEROFF CASE WHERE IT W AS HELD THAT MENSREA WAS A ESSENTIAL REQUIREMENT OF PENALTY U/S 271(1)(C). TH E HONBLE APEX COURT ALSO OBSERVED THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY TH E AO FOR ANY REASON, THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). TH IS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 7.3 IN THIS REGARD, WE FURTHER PLACE RELIANCE OF TH E HONBLE APEX COURT DECISION IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 BY A BENCH COMPRISING 3 OF THEIR LORDSHIPS, WHEREIN IT W AS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTO RY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PENALTY WILL N OT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACT ED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE I MPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCR ETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHOR ITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A 7 TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS N OT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A). 8. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PR ECEDENT WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE LEVY OF PENALTY. 9. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2010. SD/- SD/- (I.P. BANSAL) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH APRIL, 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.