GAHOI BUILDWELL PVT. LTD., NEW DELHI V. ACIT, CENTRAL CIRLCE- 32, NEW DELHI

ITA 2915/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3825 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 25-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Principle of natural justice; Question of law; Accommodation entries
• Section: 271(1)(c); 153A; 274; 73; 147; 68; 148

Judgement Text

1 ITA NO. 2915/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 2915/DEL/20 18 (A.Y 2004-05) (THROUGH VIDEO CON FERENCING) GAHOI BUILDWELL PVT. LTD. V35, INFRATECH LTD. A-20, NARAINA INDUSTRIAL AREA, PHASE-1, NARAINA, NEW DELHI-110028 AABCG9474A (APPELLANT) VS ACIT CENTRAL CIRCLE-32, NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 26/02/2108 PASSED BY CIT (A)-30, NEW DELHI FOR ASSESSMENT YEAR 2004-05. 2. THE GROUNDS OF APPEAL ARE AS UNDER: GROUNDS OF APPEAL IN THE CASE OF GAHOI BUILDWELL PVT. LTD. (NOW KNOWN AS V3S INFRATECH LTD.), A-20, NARAINA INDL. AREA, PHASE-I, NARAINA, NEW DELHI-110028 HEREINAFTER REFERRED TO A S APPELLANT, AGAINST THE ORDER DATED 26.02.2018 PASSED BY THE CO MMISSIONER OF INCOME-TAX (APPEALS)-30, NEW DELHI HEREINAFTER REFE RRED TO AS CIT(A), AGAINST THE PENALTY ORDER U/S 271(L)(C) OF THE INCO ME-TAX ACT, 1961, HEREINAFTER REFERRED TO AS ACT PASSED BY THE A.C.I.T., CENTRAL CIRCLE-32, APPELLANT BY SH. SANJAY KUMAR, CA RESPONDENT BY SH. VIVEK VARDHAN, SR. DR DATE OF HEARING 04.10.2021 DATE OF PRONOUNCEMENT 11.10.2021 2 ITA NO. 2915/DEL/2018 NEW DELHI FOR THE ASSESSMENT YEAR 2004-05. 1. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE LEVY OF PENALTY DESPITE THE FACT THAT ASSESSING OFFICER HAS NOT RECORDED SATISFACTION AS TO WHETHER THE PENALTY IS INITIATED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 2. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE PENALTY ORDER PARTICULARLY WHEN THE NOTICE ISSUED UNDER SECTION 274 OF THE ACT DID NOT SPECIFY THE CHARGE F OR WHICH PENALTY WAS TO BE IMPOSED. 3. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY DESPITE THE FACT THAT ADDITI ON MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN ASSES SMENT FRAMED UNDER SECTION 153A OF THE ACT. 4. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE IMPOSITION OF PENALTY OF RS. 7,17,50 0- ON ACCOUNT OF ADDITION OF RS. 20 LAKH UNDER SECTION 68, WHEN THE ONUS WHICH LIED UPON THE ASSESSEE STOOD FULLY DISCHARGED, PARTICULA RLY IN PENALTY PROCEEDINGS. 5. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE IMPOSITION OF PENALTY FOR CONCEALING THE INCOME AS WELL AS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 6. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. RETURN OF INCOME WAS FILED ON 16/2/2010 DECLARIN G INCOME AT RS. 29,041/-. SUBSEQUENTLY, INCOME WAS ASSESSED AT RS .4,31,76,291/- U/S 153A/143(3) OF THE INCOME TAX ACT VIDE ORDER DATED 31/12/2010. ON THE BASIS OF FRESH INFORMATION RECEIVED FROM ACIT, CENTRAL CI RCLE, 19, NEW DELHI IN MARCH, 2011, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAS RECEIVED ACCOMMODATION ENTRIES OF RS. 20,00,000/- FROM THE F EDERAL BANK ACCOUNT M/S 3 ITA NO. 2915/DEL/2018 CHANDER PRABHU FINANCIAL SERVICES WHICH IS A SHELL COMPANY FLOATED/CONTROLLED BY SHRI S. K. GUPTA, DURING THE FINANCIAL YEAR 2003-04 RELEVANT TO THE ASSESSMENT YEAR 2004-05. THEREFORE , TO REASSESS THE INCOME WHICH ESCAPED ASSESSMENT WITHIN THE MEANING OF SECT ION 147 OF THE ACT, NOTICE U/S 148 OF THE ACT WAS ISSUED ON 30/3/2011. IN RES PONSE TO THE SAID NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASS ESSMENT YEAR 2004-05 ON 2/5/2011 DECLARING TOTAL INCOME OF RS. 29,041/-. T HE ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3)/153A/147 OF THE ACT ON 29/ 12/2011 AT A TOTAL INCOME OF RS.4,51,76,290/-. PENALTY PROCEEDINGS IN PROVISIONS OF SECTION 271(1)(C) OF THE ACT WERE INITIATED. NOTICE U/S 274 SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 29/12/2011. AGG RIEVED WITH THE ADDITIONS AMOUNTING TO RS. 20,00,000/- ON ACCOUNT O F DEEM/UNDISCLOSED INCOME U/S 68 OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE ORDER DATED 6/1/2015 CONFIRMED THE ADD ITIONS MADE BY THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. SHOW CAUSE NOTICE DATED 28/11/2016 WAS ISSUED TO THE ASSESSEE U/S 271(1)(C) OF THE ACT. VIDE ORDER DATED 31/3/2016, THE ASSESSING OFFICER I MPOSED PENALTY OF RS. 7,17,500/- U/S 271(1)(C) OF THE ACT. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT (A) DISMISSED THE APPEAL OF THE AS SESSEE. 5. THE LD. AR SUBMITTED THAT THE NOTICE DATED 29/12 /2011 HAS NOT GIVEN A SPECIFIC CHARGE FOR PENALTY. THE LD. AR SUBMITTED THAT THE CIT(A) ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT AS UNDER WHICH LIMB OF SECTION 271(1)(C), THE PENALTY IS LEVIED WAS NOT MENTIONED IN THE NOTICE ISSUED UNDER SECTION 271(1)(C) READ WITH SECTION 274 OF THE ACT. THE LD. AR SUBMITTED THAT WHETHER THE PENALTY IS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WAS NOT EVIDENT FROM THE NOTI CE NOR FROM THE PENALTY ORDER AS WELL. THE LD. AR FURTHER SUBMITTED THAT TH E PENALTY PROVISION BEING QUASI JUDICIAL, UNLESS THERE IS SPECIFIC CHARGE THE RE CANNOT BE LEVY OF PENALTY. 4 ITA NO. 2915/DEL/2018 THEREFORE, THE ORDER LEVYING PENALTY IS WRONG AND B AD IN LAW. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN C ASE OF CIT VS. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 248 (SC) AND C IT V. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KAR). THE LD AR FURTHER SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN CASE OF PR. CIT VS. M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (ITA NO.475/2019 VIDE ORDER DATED 02.08.2019) HELD THAT NOTICE ISSUED BY THE ASSESSIN G OFFICER WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271 (1)(C) OF THE PENALTY PROCEEDINGS HAD BEEN INITIATED. 6. THE LD. DR SUBMITTED THAT THE PENALTY ORDER IS V ERY CLEAR THAT THE PENALTY IS IMPOSED ON CONCEALMENT OF INCOME AND, TH EREFORE, MERELY NOT MENTIONING THE SPECIFIC LIMB OF SECTION 271(1)(C) W ILL NOT MAKE THE PENALTY ORDER BAD IN LAW. THE LD. DR RELIED UPON THE ASSESS MENT ORDER, PENALTY ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORD. FIRST OF ALL, IN THE NOTICE IS SUED U/S 274 R.W.S 271(1)(C) OF THE INCOME TAX ACT, 1961, THERE WAS NO SPECIFIC CHA RGES AS RELATES TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. FROM THE NOTICE DATED 29/12/2011 PRODUCED BY THE LD . AR DURING THE HEARING, IT CAN BE SEEN THAT THE ASSESSING OFFICER WAS NOT S URE UNDER WHICH LIMB OF PROVISIONS OF SECTION 271 OF THE INCOME TAX ACT, 19 61, THE ASSESSEE IS LIABLE FOR PENALTY. BESIDES THAT THE ASSESSMENT ORDER ALSO DID NOT SPECIFY THE CHARGE AS TO WHETHER THERE IS CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS OF INCOME IN ASSESSEES CASE. THERE IS NO PARTICULAR LIMB MENTIONED IN THE NOTICE ISSUED UNDER SECTION 271(1)(C) R.W.S. 274 OF THE ACT. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUP REME COURT IN CASE OF M/S SSA EMERALD MEADOW. THE EXTRACT OF THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN M/S SSA EMERALD MEADOWS ARE AS UNDER WHICH WAS CONFIRMED BY THE HONBLE APEX COURT: 5 ITA NO. 2915/DEL/2018 '3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'T HE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE ITA NO. 4913/DEL/2015 DECISION OF THE DIVISION BENCH OF THI S COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIA L QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE AP PEAL IS ACCORDINGLY DISMISSED.' THUS, ADDITIONAL GROUND NO. (II) OF THE ASSESSEE'S APPEAL IS ALLOWED. SINCE THE INCEPTION OF THE NOTICE ISSUED U/S 271(1)(C) HAS BE COME NULL AND VOID, THERE IS NO NEED TO COMMENT ON MERIT OF THE CASE. THE PENALT Y U/S 271(1)(C) OF THE ACT IS QUASHED. SINCE IN THE INSTANT CASE ALSO THE INAPPROPRIATE W ORDS IN THE PENALTY NOTICE HAS NOT BEEN STRUCK OFF AND THE NOTICE DOES NOT SPECIFY AS TO UNDER WHICH LIMB OF THE PROVISIONS, THE PENALTY U/S 271(1 )(C) HAS BEEN INITIATED, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E PENALTY LEVIED U/S 271(1)(C) IS NOT SUSTAINABLE AND HAS TO BE DELETED. ALTHOUGH THE LD. DR SUBMITTED THAT MERE NON-STRIKING OFF OF THE INAPPROPRIATE WORDS WI LL NOT INVALIDATE THE PENALTY PROCEEDINGS, HOWEVER, THE DECISION OF THE HONBLE K ARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) WHERE THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED IS DIRECTLY ON THE ISSUE CONTEST ED HEREIN BY THE ASSESSEE. FURTHER, WHEN THE NOTICE IS NOT MENTIONING THE CONC EALMENT OR THE FURNISHING OF INACCURATE PARTICULARS, THE RATIO LAID DOWN BY T HE HONBLE HIGH COURT IN CASE OF M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (S UPRA) WILL BE APPLICABLE IN THE PRESENT CASE. THE HONBLE DELHI HIGH COURT HELD AS UNDER: 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, WHICH W AS ACCEPTED BY THE ITAT. IT 6 ITA NO. 2915/DEL/2018 FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT I N CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR) AND OBSE RVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIG H COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIO NER OF INCOME TAX V. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 241(KAR) , THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA I N SLP NO. 11485 OF 2016 BY ORDER DATED 5 TH AUGUST, 2016. 22. ON THIS ISSUE AGAIN THIS COURT IS UNABLE TO FIN D ANY ERROR HAVING BEEN COMMITTED BY THE ITAT. NO SUBSTANTIAL QUESTION OF LAW ARISES. THUS, NOTICE UNDER SECTION 271(1)(C) R.W.S. 274 OF THE ACT ITSELF IS BAD IN LAW. WE, THEREFORE, SET-ASIDE THE ORDER OF THE CIT(A) AN D DIRECT THE ASSESSING OFFICER TO CANCEL THE PENALTY SO LEVIED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF OCTOBER, 2021 SD/- SD/- (PRASHANT MAHARISHI) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 11/10/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NO. 2915/DEL/2018