Mohd. Shamim Ahmad, Muzaffarnagar V. ITO, Shamli

ITA 3158/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7046 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR SENIOR
• Assessee Lawyers: PREM PRAKASH; ASHISH AGGARWAL S

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3158/DEL./2014 (ASSESSMENT YEAR : 2009-10) MOHD. SHAMIM AHMAD, VS. ITO, WARD 2, C/O PREM PRAKASH, ADVOCATE, SHAMLI. 183/2, NORTH CIVIL LINES, MUZAFFARNAGAR. (PAN : AGPPA3644R) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI PREM PRAKASH AND ASHISH AGGARWAL, ADVOCATES REVENUE BY : SHRI RAJESH KUMAR, SENIOR DR DATE OF HEARING : 06.09.2016 DATE OF ORDER : 21.09.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, MOHD. SHAMIM AHMAD (HEREINAFTER REFERRE D TO AS THE ASSESSEE), BY FILING THE PRESENT APPEAL SOUGH T TO SET ASIDE THE IMPUGNED ORDER DATED 29.01.2014 PASSED BY THE COMMI SSIONER OF INCOME-TAX (APPEALS), MUZAFFARNAGAR, AFFIRMING THE PENALTY ORDER DATED 30.11.2012 PASSED U/S 271(1)(C) OF THE INCOME -TAX ACT, 1961 (FOR SHORT THE ACT), QUA THE ASSESSMENT YEAR 2009 -10 ON THE GROUNDS INTER ALIA THAT :- ITA NO.3158/DEL./2014 2 1. THAT THE ORDER IS AGAINST LAW AND FACT ON THE RECORD. 2. THAT LD. CIT (A) WAS WRONG IN CONFIRMING THE PENALTY WITHOUT BASE. 3. LD. CIT (A) WAS WRONG IN CONFIRMING PENALTY ON INCOME OF RS.3,00,000/- AS THE SAME WAS ENHANCED BY CIT (A) AND NO PENALTY PROCEEDING STARTED BY HIM. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE : ON T HE BASIS OF COMPLETED ASSESSMENT UNDER SECTION 143 (3) OF THE A CT OF THE ASSESSEE QUA ASSESSMENT YEAR 2009-10 AT RS.27,31,75 0/-, THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE I NITIATED. AGGRIEVED WITH THE ORDER PASSED BY THE ASSESSING OF FICER, ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A) WHO HAS PART LY ALLOWED THE APPEAL BY GIVING A RELIEF OF RS.21,43,360/-. SO, T HE AO CAME TO THE CONCLUSION THAT SINCE THE ASSESSEE HAS FURNISHED IN ACCURATE PARTICULARS OF HIS INCOME BY NOT DISCLOSING INCOME FROM BUSINESS TO THE TUNE OF RS.4,15,665/-, PROVISIONS CONTAINED U/S 271(1)(C) READ WITH EXPLANATION 1 ARE ATTRACTED AND SHOW CAUSE NOT ICE WAS ISSUED. ASSESSEE FILED REPLY DATED 19.07.2012 TO THE SHOW C AUSE NOTICE. BUT AO, BEING UNSATISFIED, IMPOSED A PENALTY OF RS. 81,700/- I.E. 100% OF THE TAX EVADED U/S 271(1)(C) OF THE ACT. 3. ASSESSEE CHALLENGED THE PENALTY ORDER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS AFFIRMED THE PENALTY ORDER BY ITA NO.3158/DEL./2014 3 DISMISSING THE APPEAL. FEELING AGGRIEVED, THE ASSE SSEE HAS COME UP BEFORE THE TRIBUNAL BY CHALLENGING THE PENALTY O RDER PASSED U/S 271(1)(C) OF THE ACT. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. AO, AFTER CONSIDERING THE REPLY FILED BY THE ASS ESSEE, LEVIED THE PENALTY TO THE TUNE OF RS.81,700/- BY MAKING FO LLOWING OBSERVATIONS :- 7. AGGRIEVED WITH THE ORDER PASSED BY ME, THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A), MZR, W HO VIDE ORDER DATED 06-06-2012 PARTLY ALLOWED THE APPE AL FILED BY THE ASSESSEE. LD. CIT(A), MZR ADOPTED THE N.P. RATIO OF 6% ON SALES MADE OUT OF BOOKS BY THE ASSES SEE AND GIVEN RELIEF OF RS.21,43,360/-. 8. THE ASSESSEE HAS FURNISHED INACCURATE PARTICULAR S OF HIS INCOME AS HE HAS NOT TAKEN INTO ACCOUNT INCO ME FROM BUSINESS TO THE TUNE OF RS.4,15,665/-. THEREFO RE, PROVISIONS OF SECTION 271 (1)(C) READ WITH EXPLANAT ION 1 ARE ATTRACTABLE IN THE CASE AND HENCE PENALTY PROCE EDINGS U/S 271 (L)(C) WERE INITIATED VIDE SHOW CAUSE NOTIC E U/S 271(1)(C) DATED 23.12.2011 FIXING DATE FOR COMPLIAN CE ON 02.01.2012. IN RESPONSE TO THE NOTICE ON 02.01.201 2 THE COUNSEL OF THE ASSESSEE MOVED ADJOURNMENT APPLICATION ON GROUND THAT THE ASSESSMENT ORDER HAS BEEN RECEIVED ON 30.12.2012 AND THE APPELLANT MANDATORY TIME OF 30 DAYS TO FILE AN APPEAL AGAINST SUCH ORDER AND ACCORDINGLY THE APPEAL WILL BE FILED AND STAY OF PROCEEDING AGAINST PENALTY NOTICES WILL BE TAKEN IN TIME TILL THE DISPOSAL OF FIRST APPEAL. THE COUNSEL OF T HE ASSESSEE VIDE REPLY DATED 19.07.2012 SUBMITTED THAT HE ITA NO.3158/DEL./2014 4 LEI. CIT(A), MZR HAS ASSESSED THE INCOME BY APPLYIN G ADHOC N.P. RATE ON THE ESTIMATED SALE AND ON THIS B ASIS PENALTY U/S 271(1)(C) COULD NOT BE LEVIED. THE PLEA OF THE ASSESSEE IS NOT ACCEPTABLE AS THE ADDITION WAS MADE BY THE A.O. AFTER DETECTION OF SALES MADE OUT OF THE B OOKS. THE CIT(A) HAS ONLY ADOPTED THE N.P. RATIO ON THE UNDISCLOSED SALES MADE OUT OF THE BOOKS BY THE PART Y. 9. IN VIEW OF THE ABOVE FACTS, IT CANNOT BE DENIED THAT THE ASSESSEE HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS WITHIN THE MEANING OF EXPLANATION 1 (B) READ WITH SECTION 271 (1)(C) OF THE I.T. ACT, 1961 BY NO T SHOWING ACCURATE PARTICULARS OF INCOME FOR THE PREV IOUS YEAR UNDER CONSIDERATION TO THE TUNE OF RS.4,15,665 /-. I, THEREFORE, HOLD THE ASSESSEE IN DEFAULT UNDER EXPLA NATION 1(B) READ WITH SECTION 271(L)(C) OF THE I.T. ACT, 1 961 AND THE ASSESSEE IS LIABLE FOR PENALTY U/S 271(1)(C). 10. THE MINIMUM AND MAXIMUM PENALTY WORKS OUT IN THIS CASE AT RS.81,638/- & RS.2,44,914/-. IN THE FA CTS & CIRCUMSTANCES OF THE CASE, IMPOSE A PENALTY OF RS.81,700/- @ 100% OF THE TAX EVADED U/S 271(1)(C) OF THE LT. ACT, 1961, WITH THE PRIOR APPROVAL LD. JCIT , RANGE-L, MUZAFFARNAGAR VIDE HER LETTER DATED 26.11. 2012 BEARING F.NO.PENALTY/JCIT/R-2/MZR/2012-13, WHICH TH E ASSESSEE IS DIRECTED TO PAY . 6. LD. AR FOR THE ASSESSEE CONTENDED THAT ADDITION WAS MADE BY THE AO ON THE PREMISE THAT ASSESSEE HAS NOT RECO RDED THE SALES IN THE BOOKS OF ACCOUNTS AND THAT HE HAS ALSO NOT E XPLAINED THE DISCREPANCIES POINTED OUT IN THE BOOKS OF ACCOUNT A ND MADE THE ADDITION BY TAKING G.P. RATE @ 3%; THAT THE CIT (A) HAS ENHANCED THE NET PROFIT RATE @ 6% ON THE TOTAL UNDISCLOSED S ALES ON WHICH PENALTY CANNOT BE IMPOSED; THAT THE SHOW CAUSE NOTI CE ISSUED BY THE AO FAILS TO SPECIFY AS TO WHETHER THE ASSESSEE HAS CONCEALED THE ITA NO.3158/DEL./2014 5 PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME; THAT AO CANNOT LEVY PENALTY ON THE ENH ANCED AMOUNT OF ADDITION MADE BY THE LD. CIT (A). 7. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVEN UE TO REPEL THE ARGUMENTS ADVANCED BY THE LD. AR FOR THE ASSESS EE CONTENDED THAT SINCE THE QUANTUM IN THIS CASE HAS ALREADY BEE N CONFIRMED, HAVING NOT BEEN CHALLENGED BY THE ASSESSEE, THE REV ENUE IS JUSTIFIED IN IMPOSING HT PENALTY AND RELIED UPON THE PENALTY ORDER. 8. UNDISPUTEDLY, THE AO HAS MADE ADDITION OF RS.20, 95,489/- ON THE PREMISE THAT THE ASSESSEE HAS NOT MAINTAINED HIS BOOKS OF ACCOUNT PROPERLY AND PURCHASES AMOUNTING TO RS.20,9 5,489/- HAD BEEN MADE OUT OF BOOKS; THAT DURING THE APPELLATE P ROCEEDINGS, LD. CIT (A) IN THE QUANTUM PROCEEDINGS EXTENDED THE REL IEF TO THE ASSESSEE BY RETURNING FINDINGS THAT THE AO SHOULD H AVE ESTIMATED AND APPLIED NET PROFIT ON UNDISCLOSED SALES AND DET ERMINE THE CAPITAL DEPLOYED OUTSIDE BOOKS TRANSACTION ON THE S AME AND THEREBY HELD THE ADDITION OF RS.20,95,489/- ON ACCOUNT OF U NDISCLOSED SALES AS UNTENABLE; THAT THE CIT (A) BY APPLYING THE NET PROFIT @ 6% ON THE TOTAL UNDISCLOSED SALES OF RS.20,95,489/- MADE AN ADDITION TO THE TUNE OF RS.1,04,105/-; THAT THE AO LEVIED THE P ENALTY OF RS.81,700/- AT 100% OF THE TAX EVADED. ITA NO.3158/DEL./2014 6 9. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, THE SOLE QUESTION ARISES FOR DETERMINATIO N IN THIS CASE IS:- AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME DURING ASSESSMENT PROCEEDINGS? 10. HONBLE SUPREME COURT IN A CASE CITED AS CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) WHILE INTERPRETING THE PROVISIONS CONTAINED U/S 271(1)(C) DECIDED THE IDEN TICAL ISSUE IN FAVOUR OF THE ASSESSEE. OPERATIVE PART OF WHICH IS REPRODUCED FOR READY REFERENCE AS UNDER :- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF T HE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUS T HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. TH E MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAIL OF THE CLAIM MAD E. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN OR DER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING A N INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCOR RECT OR ITA NO.3158/DEL./2014 7 ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN T HE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 11. BARE PERUSAL OF THE ASSESSMENT ORDER, PENALTY O RDER AND THE ORDER PASSED BY THE LD. CIT (A) IN QUANTUM PROCEEDI NGS APPARENTLY GOES TO PROVE THAT THE AO HAS MADE AN ADDITION ON T HE BASIS OF DISCREPANCIES NOTICED BY HIM IN THE BOOKS OF ACCOUN T, THAT TOO, WITHOUT REJECTING THE BOOKS OF ACCOUNT; THAT CIT (A ) HAS PARTLY ALLOWED THE APPEAL BY ADOPTING THE NET PROFIT RATIO OF 6% OF THE SALES MADE OUT OF BOOKS BY THE ASSESSEE AND GIVEN R ELIEF OF RS.21,43,360/- AND TO OUR MIND, WHEN THE LD. CIT (A ) HAS APPLIED AD HOC NET PROFIT RATE ON THE ESTIMATED SALES, THE ASSESSEE CANNOT BE HELD TO BE GUILTY FOR FURNISHING INACCURATE PARTICU LARS OF INCOME TO ATTRACT THE PROVISIONS CONTAINED U/S 271(1)(C) OF T HE ACT. 12. NOT ONLY THIS, BARE PERUSAL OF THE PENALTY NOTI CE, AVAILABLE AT PAGE 66 OF THE PAPER BOOK, ON THE BASIS OF WHICH PE NALTY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE, IT DOES NOT INDICATE AS TO WHETHER THE ASSESSEE HAS BEEN CALLED UPON TO SHOW CAUSE THAT HE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNI SHED INACCURATE PARTICULARS OF SUCH INCOME. THE PENALTY NOTICE HA S FAILED TO ITA NO.3158/DEL./2014 8 SPECIFY AS TO WHETHER THIS IS A CASE OF CONCEALMENT OF PARTICULARS OF INCOME OR CASE OF FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. SO, THE SHOW CAUSE NOTICE ISSUED U/S 274 IS APPAREN TLY DEFECTIVE AS IT DOES NOT SPECIFY THE GROUNDS ON WHICH THE PENALT Y IS SOUGHT TO BE LEVIED AND IN THESE CIRCUMSTANCES, THE PENALTY ORDE R IS NOT SUSTAINABLE. 13. NOT ONLY THIS, PERUSAL OF THE ASSESSMENT ORDER DATED 23.12.2011 ON THE BASIS OF WHICH PENALTY PROCEEDING S HAVE BEEN INITIATED APPARENTLY SHOWS THAT THE SAME HAS BEEN P ASSED ON THE BASIS OF CONJECTURES AND SURMISES BECAUSE WHEN BOOK S OF ACCOUNT HAVE BEEN PRODUCED BY THE ASSESSEE THE AO MADE AN A DDITION MERELY ON THE GROUND THAT THE ASSESSEE HAS FAILED T O TURN UP TO EXPLAIN THE DISCREPANCIES MEANING THEREBY THE DISCR EPANCIES WERE NOT ENOUGH TO REJECT THE BOOKS OF ACCOUNT. 14. MOREOVER, WHEN THE LD. CIT (A) HAS PARTLY ALLOW ED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 06.06.2012, AVAILABLE AT PAGE 29 OF THE PAPER BOOK, BY EXTENDING THE RELIEF OF RS.21,43,360/- HE HAS NOWHERE DIRECTED THE AO TO I NITIATE THE PENALTY PROCEEDINGS U/S 271(1)(C). HAD THERE BEEN ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME ON THE PART OF THE ASSESSEE, THE LD. CIT (A) WOULD HAVE ITA NO.3158/DEL./2014 9 DIRECTED THE AO TO INITIATE THE PENALTY PROCEEDINGS VIDE/ ORDER 06.06.2012 (SUPRA). 15. SO, IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, W E ARE OF THE CONSIDERED VIEW THAT AO HAS FAILED TO MAKE OUT THE CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF SUCH INCOME BY THE ASSESSEE RATHER IT IS A CASE OF IMPOSING PENALTY ON THE BASIS OF SUBJECTIVE SATISFACTION WITHOUT COM PLETING NECESSARY INGREDIENTS TO INITIATE PENALTY PROCEEDIN GS U/S 271(1)(C) OF THE ACT AS HAS BEEN HELD BY THE HONBLE SUPREME COURT IN RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA). CONSEQU ENTLY, WE HEREBY DELETE THE PENALTY BY ALLOWING THE APPEAL FI LED BY THE ASSESSEE. ORDER PRONOUNCED IN OPEN COURT ON THIS 21 ST DAY OF SEPTEMBER, 2016. SD/- SD/- (J.S. REDDY) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 21 ST DAY OF SEPTEMBER, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MUZAFFARNAGAR. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.