M/s. Sona Agro Seeds, Uttrakhand V. ITO, Uttrakhand

ITA 3087/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5751 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 22-03-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 03-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Bonafide belief

Judgement Text

ITA NO. 3087/DEL/2009 A.Y. 2005-06 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 3087/DEL/2009 A.Y. : 2005-06 M/S SONA AGRO SEEDS, NARAYANPUR, VS. INCOME TA X OFFICER-2, JASPUR, U.S. NAGAR (UTTRAKHAND) KASHIPUR (UTTRAK HAND) [PAN: ABBFS3984R] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH, ADV. DEPARTMENT BY : SHRI T. VASANTHAN, SR. DR O R D E R PER SHAMIM YAHYA : AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A) DATED 26.03.2009 PERTAINING TO ASSESSMENT YEAR 2005 -06. 2. THE ISSUE RAISED IS THAT LD. CIT(A) ERRED IN CO NFIRMING THE IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE IT ACT, 1961 AMOUNTIN G TO RS. 3,70,000/-. 3. IN THIS CASE A.O. OBSERVED THAT ASSESSEE HAD ACC EPTED FRESH UNSECURED LOANS AMOUNTING TO RS. 19.90 LACS FROM 9 PERSONS. THE ASSESSEE WAS ASKED TO JUSTIFY THE GENUINENESS AND CREDITWORTHINESS OF THE DEPOSITORS AND COPIES OF BANK ITA NO. 3087/DEL/2009 A.Y. 2005-06 2 STATEMENTS. THE ASSESSEE FURNISHED THE CONFIRMATI ON LETTERS ALONGWITH THE COPY BANK ACCOUNTS. ON EXAMINATION OF THE SUBMISSION S REGARDING 5 CREDITORS, AO WAS OF THE OPINION THAT THERE WERE DOUBTS REGARDING THE GENUINENESS. THE ASSESSEE WAS ASKED TO REQUIRE TO PRODUCE THE DEPOS ITORS. ASSESSEE COULD NOT PRODUCE THEM. ASSESSEE STATED THAT ALL THE DEPOSITO RS ARE AGRICULTURISTS AND DOCUMENTS RELATING TO LAND HOLDINGS ETC. HAS BEEN SUBMITTED. A.O. OBSERVED THAT THAT ASSESSEE HAS BEEN UNABLE TO SUBSTANTIATE THE GENUINENESS OF THE LOANS AND THAT THE TRANSACTIONS APPEARING IN THE BANK ACC OUNTS OF THE DEPOSITORS HAVE LEFT CIRCUMSTANTIAL EVIDENCES THAT THE MONEY INITIA LLY DEPOSITED IN THE BANK ACCOUNTS OF THE DEPOSITORS REPRESENTED UNACCOUNTED MONEY OF THE ASSESSEE. AO PROCEEDED TO MAKE ADDITION OF THE SAME AMOUNTING TO RS. 10 LACS AND PENALTY WAS ALSO LEVIED AMOUNTING TO RS. 3.70 LACS. 4. UPON ASSESSEES APPEAL LD. CIT(A) SUBSEQUENTLY C ONFIRMED THE LEVY OF PENALTY. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT IN THIS CASE THE ASSESSEE HAS PROVIDED THE NECESSARY DOCUMENTARY EVIDENCES AS CALLED FOR BY THE ASSESSING OFFICER. IT WAS THE AS SESSEES INABILITY TO PRODUCE THE ITA NO. 3087/DEL/2009 A.Y. 2005-06 3 CREDITORS WHICH PRIMARILY LEAD TO THE INFERENCE THA T THE TRANSACTIONS WITH THEM WAS SHAM. IN THIS REGARD, WE FIND THAT IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS PRODUCED THE BOGUS ADDRESSES OR THAT AO HAS ISSUED SUMMONS AND THE DEPOSITORS DID NOT APPEAR. IN THIS BACKGROUND W E HAVE TO SEE WHETHER PENALTY U/S 271(1)(C) IS LEVIABLE OR NOT. 6.1 WE FIND THAT SECTION 271(1)(C) OF THE ACT POSTU LATES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCE ALMENT OF INCOME. IN THIS REGARD, WE FIND THAT THE CONDUCT OF THE ASSESSEE ON THE FACTS AND CIRCUMSTANCES OF THE CASE CANNOT BE SAID TO BE CONTUMACIOUS SO AS T O ENTAIL THE LEVY OF PENALTY U/S. 271(1)(C). WE PLACE RELIANCE FROM THE APEX COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD T HAT 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 IMP OSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF IT S OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. W HETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATI ON IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CO NSIDERATION OF ALL THE RELEVANT ITA NO. 3087/DEL/2009 A.Y. 2005-06 4 CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCR IBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF T HE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIA BLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 7. LD. DR HAD PLACED RELIANCE UPON THE ORDERS OF THE H ONBLE APEX COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS. WE FIND THA T THE SAME IS NOT APPLICABLE IN THE PRESENT CASE. WE FURTHER FIND THAT HONBLE A PEX COURT IN 317 ITR 1 HAS ITSELF EXPLAINED THE RATIO OF THE DECISION AS UNDER:- 23. THE DECISION IN DHARMENDRA TEXTILE MUST, THERE FORE, BE UNDERSTOOD TO MEAN THAT THOUGH THE APPLICATION OF SECTION 11AC WOULD DEPEND UPON THE EXISTENCE OR OTHERWISE OF THE CONDITIONS E XPRESSLY STATED IN THE SECTION, ONCE THE SECTION IS APPLICABLE IN A CA SE THE CONCERNED AUTHORITY WOULD HAVE NOT DISCRETION IN QUANTIFYING THE AMOUNT AND PENALTY MUST BE IMPOSED EQUAL TO THE DUTY DETERMINE D UNDER SUB- SECTION (2) OF SECTION 11A. THAT IS WHAT DHARMENDR A TEXTILE DECIDES. 7.1 WE HAVE ALREADY GIVEN A FINDING THAT THE ASSES SEES CONDUCT HERE DID NOT ATTRACT PROVISIONS OF SECTION 271(1)(C). ITA NO. 3087/DEL/2009 A.Y. 2005-06 5 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENT, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE IT ACT. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/03/2010. SD/- SD/- [A.D. JAIN) [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 26/03/ 2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES