ACIT, Central Circle-26, New Delhi V. Parag Dalmia, New Delhi

ITA 3285/DEL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9298 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 07-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL SENIOR
• Keywords: Set aside
• Section: 271(1)(c); 153A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO.3285/DEL./2018 (ASSESSMENT YEAR : 2012-13) ACIT, CENTRAL CIRCLE 26, VS. SHRI PARAG DALMIA, NEW DELHI. A 238, GROUND FLOOR, OKHLA INDUSTRIAL AREA, PHASE-1, NEW DELHI. (PAN : AAAPD3725B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HIREN MEHTA, CA REVENUE BY : SHRI SURENDER PAL, SENIOR DR DATE OF HEARING : 02.07.2019 DATE OF ORDER : 03.07.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ACIT, CENTRAL CIRCLE 26, NEW DELHI (HERE INAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 21.03.2016 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) - XXVI, NEW DELHI DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (FOR SHO RT THE ACT) QUA THE ASSESSMENT YEAR 2012-13 ON THE GROUNDS INTER ALIA T HAT :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS .2,23,851/- ON ITA NO.3285/DEL./2018 2 THE CONCEALED INCOME OF RS.7,24,438/- WHICH WAS IMP OSED BY THE AD ON ACCOUNT OF UNDISCLOSED INTEREST INCOME IN HSB C GENEVA. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DISREGA RDING THE FACT THAT THE ASSESSEE HAS DELIBERATELY CONCEALED INTERE ST INCOME OF RS.7,24,438/- IN HSBC GENEVA. 3. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ON THE BASIS OF ASSESSMEN T FRAMED UNDER SECTION 153A READ WITH SECITON143(3) OF THE ACT AT THE TOTAL INCOME OF RS.85,24,236/- AGAINST THE RETURNED INCOME OF RS.26 ,55572/- ENTAILING ADDITION OF RS.7,24,438/- ON ACCOUNT OF UNDISCLOSED INTEREST INCOME FROM FOREIGN BANK ACCOUNT U/S 69 OF THE ACT, PENALT Y PROCEEDINGS WERE INITIATED BY WAY OF ISSUANCE OF NOTICE U/S 271(1)(C ) OF THE ACT. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE, A O PROCEEDED TO LEVY THE PENALTY OF RS.2,23,851/- @ 100% OF THE TAX SOUG HT TO BE EVADED FOR CONCEALING HIS INCOME TO THE TUNE OF RS.7,24,438/- BEING THE INTEREST INCOME EARNED FROM UNDISCLOSED FOREIGN BANK ACCOUNT . 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE PENALTY BY ALLOWING THE APPEAL ON THE GROUND THAT THE ADDITION MADE IN THIS CASE HAS SINC E BEEN DELETED. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE T HE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UP ON AND ORDERS PASSED ITA NO.3285/DEL./2018 3 BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 5. AT THE VERY OUTSET, IT IS BROUGHT TO OUR NOTICE BY THE LD. AR FOR THE ASSESSEE THAT ADDITION MADE IN THIS CASE HAS SINCE BEEN DELETED AND AS SUCH, PENALTY LEVIED IS NOT SUSTAINABLE. 6. UNDISPUTEDLY, ADDITIONS ON THE BASIS OF WHICH PE NALTY HAS BEEN LEVIED, HAS SINCE BEEN DELETED BY THE LD. CIT (A) B Y RETURNING FINDINGS AS UNDER :- C. IN RESPECT OF IMPUTED INTEREST; I HAVE CONSIDERED. THE FACTS OF THE CASE, THE BASIS OF ADDITION MADE BY THE AO AND THE ARGUMENTS OF THE AR DURING A SSESSMENT AS WELL AS APPELLATE PROCEEDINGS. IT IS SEEN THAT T HE AO HAS PRESUMED THAT ASSESSEE WOULD HAVE EARNED INTEREST O N THE CREDIT BALANCE IN ITS BANK ACCOUNT AS ON FEBRUARY, 2007. I T IS A FACT THAT NO SUCH INFORMATION IS EVIDENT FROM THE DOCUMENTS R ECEIVED BY THE AO FROM FRENCH GOVERNMENT UNDER INFORMATION EXC HANGE MECHANISM OF DTAC. THE PERUSAL OF SAID DOCUMENTS ON LY SHOWS THAT MONTH END BALANCES HAVE BEEN WRITTEN IN RESPEC T OF THE BANK ACCOUNT OPERATED BY THE APPELLANT AND THERE IS NO M ENTION OF ANY INTEREST EARNED ON THE SAID CREDIT BALANCES. PERUSA L OF INFORMATION AVAILABLE IN RESPECT OF THE SAID BANK A CCOUNT DOES NOT SHOW PAYMENT OF ANY INTEREST CREDITED WITH REGA RD TO THE DEPOSITS. THE PRESUMPTION OF THE AO IS APPARENTLY B ASED ON EXPERIENCE WITH THE INDIAN BANKING SYSTEM WHEREIN T HE SAVING BANK ACCOUNTS GENERALLY EARNS AN INTEREST OF 4% OR SO. THE AO THEREFORE APPLIED THE SAME STANDARDS IN RESPECT OF THE CREDIT BALANCES HELD BY THE ASSESSEE IN ITS FOREIGN BANK A CCOUNT AS WELL. IT IS ALSO A MATTER OF COMMON KNOWLEDGE THAT THE RA TE OF INTEREST ON TIME DEPOSIT/FDRS IN DEVELOPED COUNTRIES BANKING SYSTEM ARE GENERALLY FROM LOW AND NOWHERE IN COMPARISON TO THE INDIAN BANKING SYSTEM. IN FACT, THE RATE OF INTEREST IN TH E CURRENT/SAVING BANK ACCOUNT COULD SOMETIMES BE NEGATIVE IN TERMS O F OPERATIONAL COST OF MAINTAINING SUCH AN ACCOUNT. TH IS ONLY HIGHLIGHTS THE ABSENCE OF CERTAINTY IN AO'S PRESUMP TION BASED UPON INDIAN BANKING SYSTEM. IT CLEARLY SHOWS THAT T HERE IS NO DOCUMENTARY EVIDENCE TO SUPPORT SUCH A PRESUMPTION. IN VIEW OF THESE FACTS THE EARNING OF INTEREST CANNOT BE TAKEN FOR GRANTED SO AS TO BE MADE THE BASIS OF ADDITION OF HAVING EARNE D INCOME. IN THE CIRCUMSTANCES THE ADDITION MADE BY THE AO ON PR ESUMPTIVE BASIS IS DIRECTED TO BE DELETED. ITA NO.3285/DEL./2018 4 7. WE ARE OF THE CONSIDERED VIEW THAT WHEN ADDITION ON THE BASIS OF WHICH PENALTY PROCEEDINGS WERE INITIATED AND PENALT Y HAS BEEN LEVIED IS NO MORE IN EXISTENCE HAVING BEEN DELETED, THE LD. C IT (A) HAS RIGHTLY DELETED THE PENALTY. 8. HONBLE APEX COURT IN CASE CITED AS K.C. BUILDERS & ANR VS. ACIT 265 ITR 562 (SC) HAS LAID DOWN THE PRINCIPLE ON THIS ISSUE BY RETURNING FOLLOWING FINDINGS :- WHEN THE ADDITION MADE IN THE ASSESSMENT ORDER ON THE BASIS OF WHICH PENALTY FOR CONCEALMENT IS LEVIED HA VE BEEN DELETED THERE REMAINS NO BASIS AT ALL FOR LEVYING T HE PENALTY FOR CONCEALMENT AND IN SUCH CASE, NO PENALTY CAN SU RVIVE AND THE PENALTY IS LIABLE TO BE CANCELLED. 9. SO, IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE FIND NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASS ED BY THE LD. CIT (A), HENCE PRESENT APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 3 RD DAY OF JULY, 2019. SD/- SD/- (ANADEE NATH MISSHRA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 3 RD DAY OF JULY, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.