Smt. Suman Arora, Kashipur V. ITO, Kashipur

ITA 3021/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9697 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 30-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTI
• Assessee Lawyers: S C AGGARWAL
• Section: 271(1)(c)

Judgement Text

ITA NO. 3021/DEL/2009 A.Y. 2002-03 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3021/DEL/2009 A.Y. 2002-03 MRS. SUMAN ARORA, VS. INCOME TAX OFFICER, W/O SH. MAHENDRA ARORA, KASHIPUR, DISTT. U.S. NAG AR NIWAS NAGAR, KASHIPUR [APPELLANT] (RESPONDENT) APPELLANT BY : SHRI S.C. AGGARWAL, CA RESPONDENT BY : SMT. MONA MOHANTI, DR ORDER PER SHAMIM YAHYA, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDERS OF THE CIT(A) DATED 19.3.2009 AND PERTAINS TO ASSESSMENT YEAR 2002-03. 2. THE ISSUE RAISED IS THAT THE CIT(A) ERRED IN CON FIRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE IT ACT. 3. IN THIS CASE DURING THE COURSE OF ASSESSMENT TH E ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS INTRODUCED A SUM OF RS. 2 LAKHS AS CAPI TAL. THE SAME WAS CLAIMED BY THE ASSESSEE TO BE INCOME FROM EARLIER PERIOD BEING REC EIPT OF SALE OF STOCK & PAST SAVINGS. THE ASSESSEE FURTHER CLAIMED THAT SHE WAS EARLIER D OING SOME READY MADE GARMENTS BUSINESS, SHE ALSO PRODUCED SOME SALE CONFIRMATIONS IN THIS REGARD. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH IT. THE ASSESSEES CONFIRMATIONS WERE FOUND TO ITA NO. 3021/DEL/2009 A.Y. 2002-03 2 BE STEREOTYPED AND TUTORED. THE ASSESSING OFFICER ACCEPTED RS. 30,000/- ONLY AS EXPLAINED AND TREATED RS. 1,70,000/- AS UNEXPLAINED. 4. UPON ASSESSES APPEAL THE LD. CIT(A) CONFIRMED T HE PENALTY. 5. AGAINST THIS ORDER THE ASSESSEE IS AN APPEAL BE FORE US. 6. WE HAVE HEARD THE BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT THE ASSESSEES HAS INTRODUCED CAPITAL IN THE FIRM AS RS . 2 LAKHS AND THIS WAS VERY MUCH DISCLOSED TO THE DEPARTMENT. REGARDING THE SOURCE THEREOF, THE ASSESSEE HAD CLAIMED THAT THE SAME PERTAINED TO HER EARLIER BUSINESS ST OCK AND ITS RELATED SALE. THE ASSESSEES CONFIRMATIONS FROM RELATED PARTIES IN THIS REGARD W AS PRODUCED, BUT THE SAME WAS NOT ACCEPTED BY THE ASSESSING OFFICER, CLAIMING THE SA ME TO BE STEREOTYPED & TUTORED. WE FIND THAT NON-ACCEPTANCE OF ASSESSEES EXPLANATION IN THIS REGARD CAN ONLY LEAD TO ADDITION AS UNEXPLAINED INCOME AND WILL NOT GIVE RI SE TO PENAL ACTION. HAD THE CONFIRMATIONS BEEN ACCEPTED, THAT WOULD NOT GIVE RI SE TO EVEN ANY ADDITION. WE FIND THAT SECTION 271(1)(C) POSTULATES IMPOSITION OF PEN ALTY WHEN ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INADEQUATE P ARTICULARS OF SUCH INCOME. IN OUR CONSIDERED OPINION ON THE FACTS OF THE PRESENT CASE ASSESSEE CANNOT BE SAID TO BE GUILTY OF PENAL ACTION UNDER SECTION 271(1)(C). 7. IN THIS CONNECTION, WE FURTHER FIND THAT THE HON BLE APEX COURT IN THE DECISION RENDERED BY A LARGE BENCH COMPRISING OF THREE OF TH EIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 H ELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS T HE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CO NDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PE NALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHO ULD BE IMPOSED FOR FAILURE TO PERFORM A ITA NO. 3021/DEL/2009 A.Y. 2002-03 3 STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMST ANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE P ENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, IN OUR OPINION THE ASSESSEE CANNOT BE HELD LIABLE FOR PENALTY UNDER SE CTION 271(1)(C) OF THE IT ACT. ACCORDINGLY, WE DELETE THE PENALTY IMPOSED BY THE A SSESSING OFFICER AND CONFIRMED BY THE CIT(A) AND DECIDE THE ISSUE IN FAVOUR OF THE AS SESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH SEPTEMBER, 2009. SD/- SD/- [R.P. TOLANI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 4 TH SEPTEMBER, 2009 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES