DCIT, CHENNAI V. Dr. Dharmambal Namasivyam Trust, CHENNAI

ITA 321/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68623 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-08-2013
• Assessment Year: 1996-1997
• Appeal Filed On: 19-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI JT
• Keywords: Question of law
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER] I.T.A.NO.321/MDS/2013 ASSESSMENT YEAR : 1996-97 THE DY. CIT CENTRAL CIRCLE II(4) CHENNAI VS M/S DR. DHARMAMBAL NAMASIVAYAM TRUST NO.9, WATER WORKS COLONY KILPAUK, CHENNAI 600 010 [PAN AAATD 0425 G ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N.BETGIRI, JT.CIT RESPONDENT BY : NONE DATE OF HEARING : 06-08-2013 DATE OF PRONOUNCEMENT : 14-08-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE RE VENUE AGAINST THE ORDER OF THE LD. CIT(A)-II, CHENNAI, DATED 23.11.2012. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPE AL: 1 .A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) HAS ERRED IN CANCELLING THE PENALTY U/S 27I(1)(C) AMOUNTING TO RS.40,55,170. I.T.A.NO. 321/13 :- 2 -: 1.B THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THE ORDER OF THE HON'BLE HIGH COURT OF MADRAS IN TCA NO .317 OF2006 DT 18-07-2012 HAS NOT BECOME FINAL. 2. THE APPELLANT CRAVES LEAVE TO, ADD TO AMEND O R ALTER THE ABOVE GROUNDS OF APPEAL AS MAY BE DEEMED NECESSARY. 3. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF ` 40,55,170/- LEVIED U/S 271(1)(C) OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE- TRUST FILED RETURN OF INCOME SHOWING NIL INCOME AND CLAIMED EXE MPTION U/S 11 OF THE ACT. THE ASSESSING OFFICER, IN THE ASSESSME NT MADE, DENIED THE EXEMPTION TO THE ASSESSEE-TRUST SINCE THE NAME OF THE TRUST WAS USED FOR THE BENEFIT OF PERSONS REFERRED TO IN SECTION 1 3(3) OF THE ACT. THE ASSESSMENT WAS COMPLETED DETERMINING THE TOTAL INCO ME AT ` 67,58,650/-. THEREAFTER, PENALTY PROCEEDINGS U/S 2 71(1)(C) OF THE ACT WERE INITIATED. IN RESPONSE TO THE PENALTY NOTICE, THE ASSESSEE STATED THAT THOUGH THE TRUSTS NAME WAS USED FOR BOOKING K ALYANA MANDAPAM AND HIRING OF LOCKER IN IOB, KILPAUK BRNAC H, CHENNAI, FOR THE BENEFIT OF THE TRUSTEES, THE TRUST HAD NOT INCU RRED ANY EXPENSES FROM ITS FUND FOR THE RENT OF THE KALYANA MANDAPAM OR FOR THE HIRE I.T.A.NO. 321/13 :- 3 -: CHARGES OF THE BANK LOCKER. IT WAS ALSO SUBMITTED THAT THE LD. CIT(A)- I, CHENNAI, VIDE HIS ORDER IN I.T.A.NO.1/99-2000 DA TED 29.10.1999, HAD ALLOWED THE APPEAL OF THE ASSESSEE. HOWEVER, ON FU RTHER APPEAL, THE TRIBUNAL IN I.T.A.NO.107/MDS/2000 DATED 12.9.2005, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORED THE ORDER OF T HE ASSESSING OFFICER. SINCE THE TRIBUNAL HAD CONFIRMED THE ORDER OF THE A SSESSING OFFICER AND THERE WAS CLEAR CUT VIOLATION OF THE PROVISIONS OF SECTION 13(1)(C)(II) ON TWO OCCASIONS, THE ASSESSING OFFICE R HELD THAT THE ASSESSEE USED THE PROPERTY OF THE TRUST FOR THE BEN EFIT OF THE TRUSTEES. HE ALSO OBSERVED THAT THE ASSESSEE HAD FULL KNOWLED GE OF VIOLATION OF PROVISIONS OF SECTION 13(1)(C)(II), YET IT CLAIMED EXEMPTION U/S 11 AND FURNISHED INACCURATE PARTICULARS OF INCOME. HE ALS O FOUND THAT IT WAS A FIT CASE FOR LEVY OF PENALTY AND THEREFORE, HE LEVI ED PENALTY @ 150% OF THE TAX SOUGHT TO BE EVADED AMOUNTING TO ` 40,55,190/-. 5. BEING AGGRIEVED BY THE SAID ORDER, THE ASSESSEE FI LED APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE STRONGLY CONTESTED THE LEVY OF PENALTY U/S 271(1)(C) OF TH E ACT. THE ASSESSEE STATED THAT IT HAS NEITHER CONCEALED THE PARTICULAR S OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. T HE ASSESSEE FILED BEFORE THE LD. CIT(A) COPY OF ORDER OF THE HON'BLE MADRAS HIGH COURT I.T.A.NO. 321/13 :- 4 -: IN TC(A) NO.137 OF 2006 DATED 18.7.2012 AND SUBMITT ED THAT THE ORDER OF THE TRIBUNAL HAS BEEN SET ASIDE AND THE APPEAL H AS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE HIGH COURT. HENCE, THE ASSESSEE REQUESTED TO CANCEL THE PENALTY. 6. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE, DELETED THE PENALTY BY OBSERVING AS UNDER : 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND THE SUBMISSIONS MADE BY THE ID. AR. I HAVE ALSO GONE TH ROUGH THE DECISIONS RELIED ON BY THE ID.AR. THE HON'BLE ITAT IN ITA NO.107/MDS/2000 (SUPRA) HELD THAT THE APPELLANT TRU ST HAD CLEARLY VIOLATED PROVISIONS OF SECTION 13(1)(C)(II) OF THE ACT. THE ASSESSEE PREFERRED APPEAL AGAINST THE ABOVE ORDER B EFORE THE HON'BLE MADRAS HIGH COURT. THE HON'BLE MADRAS HIGH COURT VIDE ITS ORDER IN TC(A) NO.317 OF 2006 DATED 18.07.2012 HAS ALLOWED THE APPEAL. IT HAS HELD AS UNDER: '6. WE DO NOT AGREE WITH THE SAID FINDING. AS WE HA VE EXPRESSED EARLIER BASED ON THE FACTS NARRATED ABOVE , THERE IS NO VIOLATION OF SECTION 13(1 )(C)(II) OF THE INCOME TAX ACT BY THE APPELLANT TRUST. IT IS ALSO TO BE NO TED THAT BY BOOKING A MARRIAGE HALL AND THE OPENING OF THE BANK LOCKER IN THE NAME OF THE TRUST, WE DO NOT FIND THA T ANY PROPERTY OF THE TRUST OR INCOME IS DIRECTLY OR INDI RECTLY USED FOR THE BENEFIT OF ANY PERSON REFERRED TO UNDER SEC TION 13(1)(C)(II) OF THE ACT, ESPECIALLY IN THE ABSENCE OF DEBITING OF MONEY FROM THE ACCOUNT OF THE TRUST FOR SUCH PUR POSES. 7. IN VIEW OF THE ABOVE FINDING, WE HOLD THAT THE O RDER OF THE TRIBUNAL IS UNSUSTAINABLE IN LAW AND ACCORDINGL Y, THE SAME IS SET ASIDE. THE TAX CASE (APPEAL) IS ALLOWED AND THE QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE AS SESSEE. NO COSTS. I.T.A.NO. 321/13 :- 5 -: IT IS THUS CLEAR THAT THE ORDER OF ASSESSMENT ON TH E BASIS ON WHICH PENALTY HAS BEEN LEVIED ON THE ASSESSEE HAS I TSELF BEEN SET ASIDE BY THE HON'BLE MADRAS HIGH COURT. THEREFO RE, THE PENALTY ORDER CANNOT STAND BY ITSELF AND IS LIABLE TO BE CANCELLED. RELIANCE IS ALSO PLACED ON THE DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF K.C. BUILDERS V. ACIT, 265 ITR 562 (SC). HENCE, THE AO IS DIRECTED TO CANCEL THE PENALTY. A CCORDINGLY, THE GROUND IS ALLOWED. 2. NOTICE OF HEARING WAS SENT TO THE RESPONDENT-ASSES SEE BY REGISTERED AD POST AND THE SAME HAS BEEN RETURNED B Y THE POSTAL AUTHORITIES WITH THE REMARK LEFT. THE BENCH WAS OF THE VIEW THAT THE APPEAL CAN BE DISPOSED OF WITHOUT THE PRESENCE OF T HE ASSESSEE, THEREFORE, THE APPEAL WAS HEARD EX-PARTE QUA THE RE SPONDENT- ASSESSEE AND DISPOSED OF AFTER CONSIDERING THE SUBM ISSIONS OF THE LD. DR AND THE MATERIALS AVAILABLE ON RECORD. 3. THE LD. DR VERY FAIRLY CONCEDED THAT WHEN THE HON'B LE HIGH COURT HAS SET ASIDE THE ORDER OF ASSESSMENT ON THE BASIS OF WHICH PENALTY WAS LEVIED, THE PENALTY ORDER CANNOT STAND AND THEREFORE, THE LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY. 4. IN VIEW OF THE ABOVE SUBMISSIONS OF THE LD. DR, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. I.T.A.NO. 321/13 :- 6 -: 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON WEDNESDAY, THE 14 TH OF AUGUST, 2013, AT CHENNAI. SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 14 TH AUGUST, 2013, RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR