Sh. Mahavir Singh, Meerut V. ITO, Meerut

ITA 3234/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3649 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 21-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Initiation of penalty proceedings
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 3234/DEL/2015 A.Y. : 2003-04 SH. MAHAVIR SINGH, VS. ITO, WARD 1(4), C/O M/S MALIK & CO., ADV., AAYAKAR BHAWAN, 305/7, THAPAR NAGAR, BHANSALI GROUND, MEERUT CITY MEERUT MEERUT (PAN: AXEPS2723C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SANJAY MALIK, ADV. DEPARTMENT BY : SH. ARUN KUMAR YADAV, SR. DR O R D E R PER H.S. SIDHU, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), MEERUT DATED 31 .3.2015 PERTAINING TO ASSESSMENT YEAR 2003-04. 2. THE GROUNDS OF APPEAL RAISED IN THE ASSESSEES APPEAL READ AS UNDER:- 1. THAT THE DOCUMENTARY EVIDENCE AVAILABLE ON T RECOR D OF THE CASE FULLY ESTABLISHED THAT THE ANCESTRAL PROPERTY W AS JOINTLY / OWNED BY TWO PERSONS NAMELY SH.MAHAVLR SING H & SH.SUKHBIR SINGH. THUS ON FACTS AND IN LAW TWO PERSONS 2 EITHER CONSTITUTED A JOINT FAMILY OR ASSOCIATION OF PERSON/BODY OF INDIVIDUAL. 2. THAT THE DEPOSIT IN THE BANK ACCOUNT WAS IN THE JOIN T MAHAVIR SINGH AND SAHANSAR PAL. THE ASSUMPTION THAT TH E DEPOSIT IN THE BANK ACCOUNT CONSTITUTED UNEXPLAINED DEPOSIT OF MAHAVIR SINGH INDIVIDUAL WAS ERRONEOUS ,ILL EGAL AND UNTENABLE ON FACTS AND IN LAW. 3. THAT THE APPELLANT IN INDIVIDUAL STATUS NEITHER CO NCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THERE WAS NO LEGAL WARRANT TO INITIATE PROCEEDINGS U/S 271 (1)(C ) OF THE INCOME TAX ACT, 1961. THE INITIATION OF PROCEEDING S IN THE NAME OF MAHAVIR SINGH INDIVIDUAL BEING ILLEGAL, VOID AND WITHOUT JURISDICTION DESERVES TO BE QUASHED. 4. THAT LEVY OF PENALTY OF RS.4,47,900/- IN THE NAME OF SH.MAHAVIR SINGH (INDIVIDUAL) SUSTAINED BY THE LD. C IT(A) ON THE GROUNDS TAKEN AND BASIS ADOPTED AND WITHOUT CONSIDERING THE FACTUAL AND LEGAL ASPECTS DESERVES TO. BE DELETED BEING VOID, ILLEGAL AND UNTENABLE ON FACTS AN D IN LAW. 3 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT ORDER U/ S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) WAS PASSED BY THE AO IN THIS CASE ON 06.6.2005. IN THE ASSESSMENT, A DDITIONS OF RS. 14,93,000/- WAS MADE BY CONSIDERING CASH DEPOSIT OF RS. 1 4,93,000/- AS UNEXPLAINED. THE AO INITIATED PENALTY PROCEEDINGS F OR CONCEALMENT OF INCOME ON ACCOUNT OF THE ABOVE MENTIONED ADDITION. T HE ASSESSEE APPEALED BEFORE THE LD. CIT(A), MEERUT AGAINST THE Q UANTUM ADDITION. THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSE VIDE HIS OR DER DATED 18.9.2006 AND CONFIRMED THE ADDITION OF RS. 14,93,000 /-. THE AO THEREAFTER REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY P ENALTY NOT BE IMPOSED IN HIS CASE. THE ASSESSEE DID NOT SUBMIT ANY ARG UMENT AND DETAIL REGARDING THE MERIT OF THE CASE. THE AO THEREAFTER P ASSED THE PENALTY ORDER U/S. 271(1)(C) OF THE ACT AND IMPOSED A PENALTY OF RS. 4 ,47,900/- VIDE ORDER DATED 06.02.2007. 4. AGAINST THE PENALTY ORDER THE ASSESSEE APPEALED BEFOR E THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 31.3.2015 HAS DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED PENALTY IN DISPUTE. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSEE HAS STATED THAT ASSESSEE IS INDIVIDUAL AND NEITHER CONCEALED ANY INCOME NO R FURNISHED INACCURATE PARTICULARS OF INCOME. HE FURTHER STATED THAT O N FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THERE WAS NO LEGAL WARRANT TO IN ITIATE PROCEEDINGS U/S. 271(1) OF THE INCOME TAX ACT, 1961 AND THE INIT IATION OF PROCEEDINGS 4 IN THE NAME OF MAHAVIR SINGH INDIVIDUAL BEING ILLEG AL, VOID AND WITHOUT JURISDICTION DESERVES TO BE QUASHED. HE FURTHER STATED T HAT AO WHILE PASSING THE ASSESSMENT ORDER DATED 6.6.2005 HAS STATED THAT NOTICE U/S. 271(1) FOR THE ADDITIONS HAVE BEEN ISSUED SEPARATELY, WITHOU T RECORDING THE SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS. HE FURTHER STATED THAT IN THE PENALTY ORDER DATED 6.2.2007 THE AO MENTIONED THAT SUBSEQUENTLY A SHOW CAUSE NOTICE U/S. 271(1) HAS BEEN ISSUED DATED 29.11. 2006 FIXING DATE OF HEARING 14.12.2006, BUT ASSESSEE FAILED TO MAKE THE COMPLIANCE THE SAID NOTICE. IT IS THEREFORE PRESUMED THAT ASSESSEE HAS NO THING TO SAY IN THIS REGARD. IN MY OPINION IT IS FIT CASE FOR IMPOSITION OF PENALTY U/S. 271(1) OF THE I.T. ACT. MINIMUM AND MAXIMUM IMPOSABLE PENALTY COMES TO RS. 4,47,900/- AND RS. 14,13,700/-. I IMPOSED THE MINIMU M PENALTY OF RS. 4,47,900/- WITH THE APPROVAL OF ADDL. CIT, RANGE-I, MEERUT., WHICH SHOWS THAT PENALTY PROCEEDINGS OUGHT TO FAIL, AMBIGUOUS AND VAGUE IN AS MUCH AS IT IS NOWHERE STATED THAT THE PENALTY WAS IMPOSED ON WHICH ACCOUNT I.E. CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS. IN VIEW OF THE ABOVE, HE STATED THAT ENTIRE PENALTY PROCEEDINGS STAND VITIATED AS THE SAME IS NOT IN ACCORDANCE WITH LAW AND W ITHOUT RECORDING OF SATISFACTION. IN ORDER TO SUPPORT HIS CONTENTION, HE P LACED THE RELIANCE ON THE FOLLOWING DECISIONS, BY FILING THE COPIES THEREOF . - CIT VS. RAMPUR ENGG. CO. LTD. (2009) 176 TAXMAN 21 1 (DELHI) (FB) OF DELHI HIGH COURT. 5 - CIT VS. JAI BHARAT MARUTI LTD. (2007) 165 TAXMAN 2 40 (HONBLE DELHI HIGH COURT). IN VIEW OF ABOVE, HE REQUESTED THAT THE PENALTY IN D ISPUTE MAY BE CANCELLED AND APPEAL OF THE ASSESSEE MAY BE ALLOWED. 6. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORD ERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH THE RELEVANT RECORDS AVA ILABLE WITH US. WE FIND THAT THE AO WHILE PASSING THE ASSESSMENT ORDER DATE D 6.6.2005 HAS STATED THAT NOTICE U/S. 271(1) FOR THE ADDITIONS HAVE BEEN ISSUED SEPARATELY, WITHOUT RECORDING THE SATISFACTION FOR INI TIATION OF PENALTY PROCEEDINGS. WE FURTHER FIND THAT IN THE PENALTY O RDER DATED 6.2.2007 THE AO MENTIONED THAT SUBSEQUENTLY A SHOW CAUSE NOTICE U/S. 271(1) HAS BEEN ISSUED DATED 29.11.2006 FIXING DATE OF HEARING 1 4.12.2006, BUT ASSESSEE FAILED TO MAKE THE COMPLIANCE THE SAID NOTICE. IT IS THEREFORE PRESUMED THAT ASSESSEE HAS NOTHING TO SAY IN THIS REGARD. IN MY OPINION IT IS FIT CASE FOR IMPOSITION OF PENALTY U/S. 271(1) OF TH E I.T. ACT. MINIMUM AND MAXIMUM IMPOSABLE PENALTY COMES TO RS. 4,47,900/- AND RS. 14,13,700/-. I IMPOSED THE MINIMUM PENALTY OF RS. 4, 47,900/- WITH THE APPROVAL OF ADDL. CIT, RANGE-I, MEERUT., WHICH SHOWS THAT PENALTY PROCEEDINGS OUGHT TO FAIL, AMBIGUOUS AND VAGUE IN AS MUCH AS IN THE PENALTY ORDER IT IS NOWHERE STATED THAT THE PENALTY WAS IMPOSED ON WHICH 6 ACCOUNT I.E. CONCEALMENT OF PARTICULARS OF INCOME OR FUR NISHING OF INACCURATE PARTICULARS. IN VIEW OF THE ABOVE, WE ARE OF THE CONSI DERED VIEW THAT THE ENTIRE PENALTY PROCEEDINGS STAND VITIATED AS THE SAME IS NOT IN ACCORDANCE WITH LAW AND WITHOUT RECORDING OF SATISFACTION. OUR AFO RESAID VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS:- - CIT VS. RAMPUR ENGG. CO. LTD. (2009) 176 TAXMAN 21 1 (DELHI) (FB) OF DELHI HIGH COURT WHEREIN IT HAS BEEN HELD THAT IN OUR OPINION, THE LEGAL POSITION IS WELL SETT LED IN VIEW OF THE HOLNBLE SUPREME COURT DECISION IN CIT & ANR. V S. SV ANGIDI CHETTIAR AND DM MANASVI, THAT POWER TO IMP OSE PENALTY UNDER SECTION 271 OF THE ACT DEPENDS UPON THE SATISFACTION OF THE ITO IN THE COURSE OF PROCEEDINGS UNDE R THE ACT. IT CANNOT BE EXERCISED IF HE IS NOT SATISFIED AND HAS NOT RECORDED HIS SATISFACTION ABOUT THE EXISTENCE OF THE CONDITIONS SPECIFIED IN CLS. (A), (B) AND (C) BEFORE PROCEEDINGS ARE CONCLUDED. IT IS TRUE THAT MERE ABSENCE OF WORDS I AM SATISFIED MAY NOT BE FATAL BUT SUCH A SATISFACTION MUST BE SPELT OUT FROM THE ORDER OF THE ASSESSING AUTHORITY AS TO THE CONCEALMENT OF INCOME OR DELIBERATELY FURNISHING INACCURATE PARTICULARS. IN THE ABSENCE OF A CLEAR FINDING AS TO THE CONCEALMENT OF INCOME OR DELIBERATELY FURNISHING INACCURATE PARTICULARS, THE 7 INITIATION OF PENALTY PROCEEDINGS WILL BE WITHOUT JURISDICTION. IN OUR OPINION, THE LAW IS CORRECTLY LAI D DOWN IN THE CIT VS. RAM COMMERCIAL ENTERPRISE LTD. (2001) 167 CTR (DEL) 321 AND WE ARE IN RESPECTFUL AGREEMENT WITH THE SAME. THIS REFERENCE IS ANSWERED ACCORDINGLY. - CIT VS. JAI BHARAT MARUTI LTD. (2007) 165 TAXMAN 2 40 (HONBLE DELHI HIGH COURT) WHEREIN IT HAS BEEN HELD THAT THERE CAN BE NO DOUBT FROM A READING OF SECTION 271(1 ) THAT THE AO HAS TO BE SATISFIED THAT THE ASSESSEE HAS EITHE R CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME BEFORE PENALTY PROCEEDINGS CAN BE INITIATED. THE RECORDING OF THE SATISFACTION OF THE AO IS SINE QUA NON FOR THE PURPOSES O F INITIATING PENALTY PROCEEDINGS U/S. 271(1)(C). ON A RE ADING OF THE ASSESSMENT ORDER IT CANNOT BE DISCERNED THAT THE AO WAS SATISFIED, EVEN PRIMA FACIE, THAT A CASE FOR INITIATING PENALTY PROCEEDINGS WAS MADE OUT. NOWHERE HAS THE AO OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESEE HAS EITHER CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED ACCURATE PARTICULARS OF SUCH TIME. THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE IN THE INSTANT CASE CANNOT BE SUSTAINED IN LAW : - CIT VS. RAM COMMERCIAL 8 ENTERPRISES LTD, (2001) 167 CTR (DEL) 321: (2000) 246 ITR 568 (DEL) FOLLOWED, JAY BHARAT MARUTI LTD., VS. DY. CIT (2006) 100 TTJ (DEL) 400 AFFIRMED. 7.1 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESP ECTFULLY FOLLOWING THE PRECEDENTS, AS AFORESAID, WE DELETE THE PENALTY IN DISPUTE AND DECIDE THE ISSUE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/11/2017. SD/- SD/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 16/11/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR , ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES