Shri Nimeshchandra V. Vashi, Surat V. The Dy.CIT,Circle-1, Surat

ITA 2999/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50570 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 09-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Deemed dividend
• Section: 143(3); 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A N PAHUJA, ACCOUNTANT MEMBER ITA NO.2999/AHD/2009 (ASSESSMENT YEAR:-2004-05) NIMESHCHANDRA V VASHI, B/32, ADARSH SOCIETY, ATHWALINES, SURAT V/S DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, AAYAKAR BHAVAN, MAJURA GATE, SURAT PAN: AAMPV 1228 P [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI HARDIK VORA, AR REVENUE BY:- SHRI VINOD TANWANI, DR DATE OF HEARING:- 29-08-2011 DATE OF PRONOUNCEMENT:- 30-08-2011 O R D E R A N PAHUJA: THIS APPEAL BY ASSESSEE AGAINST AN ORDER DATED 23- 09- 2009 OF THE LD. CIT(APPEALS)-I, SURAT, FOR THE ASSE SSMENT YEAR 2004- 05, RAISES THE FOLLOWING GROUNDS:- [1] ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN PARTLY CONFIRMING THE ACTION OF ASSESSING OFFICER IN IMPOS ING PENALTY U/S 271(1)(C) OF THE ACT, BY SUSTAINING THE PENALTY ON THE ADDITION OF RS.1,00,24,329/- ON ACCO UNT OF DEEMED DIVIDEND U/S 2(22)(E) AND ON THE ADDITION OF RS.4,57,754/- ON ACCOUNT OF FOREIGN GIFT. [2] IT IS THEREFORE PRAYED THAT ABOVE PENALTY LEVIE D BY AO AND CONFIRMED BY CIT(A) MAY PLEASE BE DELETED. [3] APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.1,19,73,520/-,BESIDES AGRICULTURAL INC OME OF RS.5,80,053/- FILED ON 26-10-2004 BY THE ASSESSEE, AFTER BEING PROCESSED ON 30.3.2005 U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] WAS TAKEN F OR SCRUTINY WITH THE 2 ITA NO.2999/AHD/2009 ISSUE OF A NOTICE U/S 143(2) OF THE ACT ON 1.8.2005 .SUBSEQUENTLY, ASSESSMENT WAS COMPLETED ON 29-11-2006 U/S 143(3) O F THE ACT, DETERMINING TOTAL INCOME OF RS.3,46,11,330/- . INTE R ALIA, AN AMOUNT OF RS. 2,12,00,000/- U/S 2(22)(E) OF THE ACT AND AN AMOUNT OF RS. 4,57,754/- U/S 68 OF THE ACT ON A/C OF FOREIGN GIFT S WAS ADDED BESIDES AMOUNT ON ACCOUNT OF AGRICULTURAL INCOME A ND HOUSEHOLD EXPENSES AND DONATION. PENALTY PROCEEDINGS U/S 271( 1)(C) OF THE ACT WERE ALS INITIATED FOR FURNISHING INACCURATE PARTIC ULARS OF INCOME. ON APPEAL, THE LEARNED CIT(A) VIDE ORDER DATED 26-03- 2007 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. THE STATUS OF V ARIOUS ADDITIONS MADE BY THE AO AND UPHELD/REDUCED BY THE LD. CIT(A ) REVEAL AS UNDER::- PARTICULARS AMOUNT AS PER THE ASSESSMENT ORDER (RS.) AMOUNTS SUSTAINED BY THE LD. CIT(A) (RS.) STATUS (I) ON A/C OF DISALLOWANCE MADE OUT OF AGRICULTURAL INCOME 3,80,053 96,728 PARTLY CONFIRMED (II) ON A/C OF HOUSEHOLD EXPENSES 2,00,000 2,00,000 TOTALLY CONFIRMED (III) ON A/C OF DONATION U/S 80G OF THE IT ACT, 1961 4,00,000 0 DELETED (IV) ON A/C OF PROVISIONS OF SEC. 2(22)(E) OF THE IT ACT, 1961 2,12,00,000 1,00,24,329 PARTLY CONFIRMED (V) ON A/C OF FOREIGN GIFT 4,57,754 4,57,754 TOTALLY CONFIRMED 2,26,37,807 1,07,78,811 2.1 AFTER, THE RECEIPT OF ORDER OF THE LD. CIT( A) , THE AO IMPOSED A PENALTY OF RS. 35,57,007/- @100% OF THE TAX SOUGHT TO BE EVADED ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OF RS. 1,07,78,811/- ,COMPRISING RS.1,00,24,329/- ON ACCO UNT OF DEEMED DIVIDEND ASSESSED U/S 2(22)(E) OF THE ACT, RS.4,57, 754/- ON ACCOUNT OF FOREIGN GIFTS, RS. 96,728/ IN RESPECT OF CLAIM O F AGRICULTURAL INCOME AND RS. 2 LACS ON ACCOUNT OF HOUSE HOLD EXPENSES. 3 ITA NO.2999/AHD/2009 3 ON APPEAL, THE LEARNED CIT(A) UPHELD THE LEVY OF PENALTY IN RELATION TO AMOUNT OF DIVIDEND INCOME AND FOREIGN G IFTS WHILE CANCELLING THE PENALTY IN RESPECT OF OTHER TWO ADDI TIONS UPHELD BY THE LD. CIT(A) . 4 THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE WHILE REFERRING TO THE DECISION DATED 12-0 2-2010 OF THE ITAT IN THE QUANTUM APPEAL IN ITA NOS.1610& 2358/AH D/2007, CONTENDED THAT BOTH THE AFORESAID ADDITIONS ON ACCO UNT OF DEEMED DIVIDEND AND FOREIGN GIFTS HAVING BEEN DELETED BY T HE ITAT, PENALTY COULD NOT BE IMPOSED. THE LEARNED DR, ON THE OTHER HAND, DID NOT OPPOSE THESE SUBMISSIONS OF THE LD. AR. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISION OF THE ITAT . WE FIND THAT THE TRIBUNAL IN THEIR AFORESAID DECISION DATED 12-02-20 10 IN THE QUANTUM APPEAL IN ITA NOS.1610& 2358/AHD/2007 DELETED BOT H THE ADDITIONS IN PARA 10.1 & 20.2 OF THEIR ORDER IN THESE CIRCUM STANCES, PENALTY IMPOSED U/S 271(1)(C) OF THE ACT DOES NOT SURVIVE. HONBLE SUPREME COURT IN THE CASE OF K.C.BUILDERS VS. ACIT ,265 ITR 562(SC) HELD THAT ORDINARILY PENALTY CANNOT STAND I F THE ASSESSMENT ITSELF IS SET ASIDE. WHERE AN ORDER OF ASSESSMENT O R REASSESSMENT ON THE BASIS OF WHICH PENALTY HAS BEEN LEVIED ON TH E ASSESSEE, HAS ITSELF BEEN FINALLY SET ASIDE OR CANCELLED BY THE T RIBUNAL OR OTHERWISE, THE PENALTY CANNOT STAND BY ITSELF AND T HE SAME IS LIABLE TO BE CANCELLED. HONBLE DELHI HIGH COURT IN THE CA SE 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 PENALTY. SIMILAR VIEW WAS TAKEN IN ADDL. COMMISSIONER OF INC OME-TAX V. BADRI KASHI PRASAD (1993] 200 ITR 206 (ALL) AND PRABHAT O IL TRADERS V. INCOME-TAX OFFICER (NO. 3) (1996) 218 ITR (A.T.) 39 (ITAT, 4 ITA NO.2999/AHD/2009 AHMEDABAD),CITY DRY FISH COMPANY V. COMMISSIONER OF INCOME-TAX (1999) 238 ITR 63 (A.P.) , CIT VS. MOHD. BUX SOKAT ALI (2004) 265 ITR 326 (RAJ)AND ACIT VS. VIP INDUSTRIES (2009) 122 TTJ 289 (MUM). 5.1 SINCE THE VERY BASIS UPON WHICH THE PENALTY HAS BEEN IMPOSED DOES NOT EXIST IN VIEW OF AFORESAID ORDER DATED 12 -02-2010 OF THE TRIBUNAL IN QUANTUM APPEAL IN THE ASSESSEES OWN C ASE IN ITA NOS.1610& 2358/AHD/2007 , WE ARE OF THE OPINION TH AT PENALTY DOES NOT SURVIVE. CONSEQUENTLY, GROUND NO. 1 IN THE A PPEAL IS ALLOWED. 6. GROUND NO.2 BEING MERE PRAYER NOR ANY SUBMISSION S HAVING BEEN MADE ON THIS GROUND, DOES NOT REQUIRE ANY SEPA RATE ADJUDICATION WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.3 IN THE APPEAL, AC CORDINGLY, THESE GROUNDS ARE DISMISSED. 7. IN THE RESULT, APPEAL IS ALLOWED ORDER PRONOUNCED IN THE COURT TODAY ON 30 -08-2011 SD/- SD/- ( BHAVNESH SAINI ) JUDICIAL MEMBER ( A N PAHUJA ) ACCOUNTANT MEMBER DATED : 30-08-2011 COPY OF THE ORDER FORWARDED TO: 1. NIMESHCHANDRA V VASHI, B/32, ADARSH SOCIETY, ATH WALINES, SURAT 2. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, SUR AT 3. CIT CONCERNED 4. CIT(A)-I, SURAT 5. DR, ITAT, AHMEDABAD BENCH-C, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD