THE ITO, - 5(1), Indore V. SHRI MITHOOLAL BANSAL, Indore

ITA 354/IND/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5791 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 22-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Assessee Lawyers: S S SOLANKI
• Keywords: Question of law
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 354/IND/2015 A.Y. : 2008-09. INCOME-TAX OFFICER, SHRI MITHOOLAL BANSAL, INDORE. 5(1), VS. INDORE APPELLANT RESPONDENT PAN NO. ACFPB4573J APPELLANTS BY : SHRI R.R.MEENA, DR RESPONDENT BY : SHRI S.S.SOLANKI, CA O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, INDORE, DATED 30.01.2015 FOR THE ASSE SSMENT YEAR 2008-09. DATE OF HEARING : 04 .01.2016 DATE OF PRONOUNCEMENT : 09 .0 2 .2016 ITO ,5(1), INDORE VS. SHRI MITHOOLAL BANSAL, INDORE , I.T.A.NO. 354/IND/2015 A.Y. 2008-09 2 2 2. THE REVENUE HAS TAKEN FOLLOWING GROUND OF APPEAL :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. OF RS. 11,00,000/- RIGHTLY IMPOSED BY THE ASSESSING OFFICER IN THE INSTANT CASE EVEN WHEN THE QUANTUM ADDITION WAS CONFIRMED BY THE I.T.A.T. 3. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN ADVOCATE AND IS DOING CIVIL PRACTICE FOR MORE THAN 50 YEARS. THE ASSESSEE IS LEADING CASES OF HIS CLIENT IN INDO RE AND OUTSIDE INDORE ALSO. THE ASSESSEE HAS MAINTAINED SE PARATE BANK ACCOUNT IN BANK OF BARODA IN WHICH RECOVERY OF CLIENTS ARE DEPOSITED AND LATER ON PAID TO THEM. DURING THE YEAR, THE ASSESSEE HAS DEPOSITED RS. 11 LAKHS IN SAVING BANK ACCOUNT IN BANK OF BARODA, INDORE. THE ASSESSEE EXPLAINED THAT THIS AMOUNT WAS COLLECTED AND RECEIVED FROM SETTLEMENT O F A CASE OF ONE OF THE CLIENTS SHRI ANIL PAL FROM M/S. NEELAM E NTERPRISES. THE CLIENT OF THE ASSESSEE ANIL PAL HAS TO RECOVER RS. 12,02,340/-, WHICH WAS ADMITTED BY THE CUSTOM3ER OF CLIENT M/S. NEELAM ENTERPRISES AND AMOUNT OF RS. 11 LAKHS WAS ITO ,5(1), INDORE VS. SHRI MITHOOLAL BANSAL, INDORE , I.T.A.NO. 354/IND/2015 A.Y. 2008-09 3 3 RECOVERED BY LEGAL PROCEEDINGS AND THROUGH PERSUASI ON AND THE SAME WAS DEPOSITED IN BANK OF BARODA IN THE ASS ESSEES ACCOUNT INITIALLY. THE AMOUNT WAS PAID BACK TO THE CLIENT THROUGH ITS PERSONS. THE LD. AO DISBELIEVED THE ASS ESSEES EXPLANATION AND ADDED RS. 11 LAKHS IN ITS TOTAL INC OME. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING A S UNDER :- 3.2 I HAVE GONE THROUGH THE FACTS OF THE CASE FROM RELEVANT ASSESSMENT ORDER, PENALTY ORDER, SUBMISSIONS OF THE APPELLANT AND THE CASE LAWS CITE D BY THE APPELLANT. I FIND SUFFICIENT FORCE IN THE CONTENTION OF THE APPELLANT THAT THE ISSUE UNDER CONSIDERATION IS HIGHLY DEBATABLE PARTICULARLY IN V IEW OF FACT THAT THE CIT(A) HAD DELETED THE ENTIRE ADDI TION ON WHICH THE PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER ON THE BASIS OF I.T.A.T. ORDER. I N VIEW OF A NUMBER OF JUDICIAL PRECEDENTS, SINCE A SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED, THE ISSUE BECOMES DEBATABLE AND THUS NO PENALTY CAN BE LEVIED. MORE SO WHEN ITO ,5(1), INDORE VS. SHRI MITHOOLAL BANSAL, INDORE , I.T.A.NO. 354/IND/2015 A.Y. 2008-09 4 4 THE JURISDICTIONAL ITAT HAS DECIDED SUCH ISSUE IN FAVOR OF THE ASSESSEE. THE COUNSEL ALSO STATED THAT THE ORDER OF THE ITAT INDORE BENCH HAS A BINDING PRECEDENCE IN VIEW OF THE DECISION OF HON'BLE MP HIGH COURT IN THE CASE OF AGRAWAL WAREHOUSING CORPORATION, 257 ITR 235. 3.3 IN VIEW OF THE ABOVE DISCUSSION, I FIND SUFFICIENT MERIT IN THE ARGUMENT PUT FORTH BY THE APPELLANT. IT IS UNDISPUTED FACT THAT IN THE APPELLANT'S OWN CASE, THE HON'BLE M.P. HIGH COURT HAS ADMITTED A SUBSTANTIAL QUESTION OF LAW ON THE ISSUE OF ADDITION ON ACCOUNT OF DEPOSITS IN SAVING BANK ACCOUNT MAKING THE ISSUE DEBATABLE. IT IS NOW A SETTLED POSITION OF LAW THAT ONCE THE ISSUE BECOMES DEBATABLE, PENALTY CANNOT BE LEVIED. THE JURISDICTIONAL ITAT JUDGMENT IN THE CASE OF KUSUM OSWAL HAS UPHELD THIS VIEW AND IT HAS BEEN HELD ITO ,5(1), INDORE VS. SHRI MITHOOLAL BANSAL, INDORE , I.T.A.NO. 354/IND/2015 A.Y. 2008-09 5 5 THAT WHEN A SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED, PENALTY CANNOT BE LEVIED SINCE THE ISSUE HAS BECOME DEBATABLE. 3.4 IN THE CASE OF RUPAM MERCANTILES LTD. VS. DCIT (ITAT AHMEDABAD BENCH) 91 ITD 273, IT HAS BEEN HELD THAT THE HON'BLE HIGH COURT HAVING ADMITTED APPEAL OF THE ASSESSEE FINDING A SUBSTANTIAL QUESTION OF LAW INVOLVED IN THE MATTER, THE CLAIM OF ASSESSEE WAS NOT FOUND MALA FIDE AND PENALTY U/S 271(1)(C) WAS NOT ATTRACTED. SIMILARLY IN CIT VS. LIQUID INVESTMENT LTD. (DELHI HIGH COURT) (ITA 240/2009 DATED 05.10.2010) IT HAS BEEN HELD THAT WHERE THE HIGH COURT HAS ACCEPTED SUBSTANTIAL QUESTION OF LAW U/S 260A THIS ITSELF SHOWS THAT THE ISSUE IS DEBATABLE AND ACCORDINGLY IT WAS HELD THAT NO PENALTY WAS IMPOSABLE U/S 271(1)(C) OF THE INCOME TAX ACT 1961. ITO ,5(1), INDORE VS. SHRI MITHOOLAL BANSAL, INDORE , I.T.A.NO. 354/IND/2015 A.Y. 2008-09 6 6 3.5 HON'BLE BOMBAY HIGH COURT VIDE ORDER DATED 8 JULY 2014 IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS HAS DISMISSED THE APPEAL OF REVENUE UPHOLDING THE ORDER OF TRIBUNAL HOLDING THAT THE APPEAL CANNOT BE ENTERTAINED AS IT DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. THE IMPOSITION OF PENALTY WAS FOUND NOT TO BE JUSTIFIED AND THE APPEAL WAS ALLOWED AND HELD THAT AS A PROOF THAT THE PENALTY WAS DEBATABLE AND ARGUABLE ISSUE, THE TRIBUNAL REFERRED TO THE ORDER ON ASSESSEES APPEAL IN QUANTUM PROCEEDINGS AND THE SUBSTANTIAL QUESTIONS OF LAW WHICH HAVE BEEN FRAMED THEREIN. 3.6 KEEPING IN VIEW THE PROPOSITIONS LAID DOWN NOT ONLY BY JURISDICTIONAL I.T.A.T. BUT ALSO BY THE HON'BLE HIGH COURTS OF MUMBAI AND DELHI, IT IS SETTLED POSITION OF LAW THAT PENALTY CANNOT BE LEVIED IN THE CASES WHERE ITO ,5(1), INDORE VS. SHRI MITHOOLAL BANSAL, INDORE , I.T.A.NO. 354/IND/2015 A.Y. 2008-09 7 7 SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY THE HIGH COURT. THEREFORE, PENALTY OF RS. 11 LACS LEVIED BY AO IS HEREBY DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. 5. THE LD. DR RELIED UPON THE ORDER OF AO. 6. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THE WRITTEN SUBMISSION WHICH READS AS UNDER:- MR. M.L. BANSAL BY PROFESSION A LAWYER PRACTICING SINCE 50 YEARS RESIDING IN INDORE. HE WAS FIGHTING CASE O N BEHALF OF ANIL KUMAR LIVING IN INDORE. THE DISPUTED PARTY RESIDING AT MUMBAI NAMED NEELAM CHAUHAN PROPRIETOR OF NEELAM ENTERPRISES. DISPUTED AMOUNT APPROX. 12 LAKH S WAS GIVEN TO MR. BANSAL TO BE PAID TO ANIL KUMAR AS FULL SETTLEMENT. THE AMOUNT WAS GIVEN IN CASH WHICH WAS DEPOSITED IN BANK BY M.L BANSAL. SUCH BANK AMOUNT N OT DISCLOSED IN RETURN. THE CASE WAS SELECTED FOR SCRU TINY AND AMOUNT OF 11 LAKHS FOUND IN BANK A/C OF M.L BAN SAL WAS ADDED TO INCOME AS UNDISCLOSED INCOME BY A.O. A O ITO ,5(1), INDORE VS. SHRI MITHOOLAL BANSAL, INDORE , I.T.A.NO. 354/IND/2015 A.Y. 2008-09 8 8 CONTENDED THAT MERE AFFIDAVIT CANNOT BE REGARDED AS SUFFICIENT EVIDENCE AS NO FURTHER DOCUMENTS WERE FURNISHED TO PROVE THE CORRECTNESS OF AFFIDAVIT. AL SO AO CONTENDED THAT NO AMOUNT WAS GIVEN TO ANIL KUMAR DIRECTLY AS SETTLEMENT. NO DOCUMENTS REGARDING SUCH SETTLEMENT CONTRACT BETWEEN THE PARTIES ARE AVAILAB LE. HENCE THE SAME WAS ADDED AS UNDISCLOSED INCOME. THE CASE MOVED TO CIT, CIT REVERSED AO ORDER. BASIS OF SUCH REVERSAL.- AMOUNT WAS RECEIVED IN CASH AS AMOUNT DUE FROM NEELAM CHAUHAN AS DECLARED IN AFFIDAVIT WAS RECOVERED FROM HER HUSBAND AFTER HER DEATH. HENCE NO BANKING TRANSACTION WAS MADE & THE AMOUNT WAS IN CASH. A COPY OF NOTICE WAS ISSUED BY M. L BANSAL TO NEELAM DATED 02/09/2003 AND 16/10/2004 IN CONNECTION WITH ABOVE DISPUTE. A COPY OF INLAND LETTER WAS RECEIVED BY AN IL KUMAR WRITTEN BY NEELAM ON 02/03/2005. THIS ESTABLISHES THE FACT THAT RELATIONSHIP EXISTED AMONG ALL THREE PARTIES. HENCE BOTH AFFIDAVITS WERE SUPPORTED BY EVIDENCE. T HUS CIT REVERSED ORDER OF AO THAT AO HAD NO VALID REASO N TO DISBELIEVE ASSESSEE'S CONTENTION AND EXPLANATION. I T HELD ITO ,5(1), INDORE VS. SHRI MITHOOLAL BANSAL, INDORE , I.T.A.NO. 354/IND/2015 A.Y. 2008-09 9 9 THAT THE AMOUNT WAS HELD ON BEHALF OF CLIENT HENCE IT IS NOT ASSESSEE'S UNDISCLOSED MONEY. HON'BLE ITAT REVERSED ORDER OF LEARNED CIT ORDER AND ADDED IT BACK AS UNDISCLOSED INCOME. AGGRIEVED, THE ASSESSEE PREFERR ED AN APPEAL U/S 260A BEFORE HON'BLE M.P. HIGH COURT. HON 'BLE M.P. HIGH COURT VIDE ORDER DATED 14.05.2013 ADMITTE D THE APPEAL OF THE ASSESSEE. FURTHER HON'BLE ITAT INDORE BENCH IN THE CASE OF YUGAL KISHORE JAJOO V. D.C. TH E ASSESSING OFFICER DIRECTED THE AO TO CANCEL THE PEN ALTY IMPOSED U/S 271(1)(C) WITH RESPECT TO THE ADDITIONS SO MADE BY ASSESSING OFFICER WHICH WERE DELETED BY CIT (A), AND FOR WHICH SUBSTANTIAL QUESTION FOR LAW HAS BEEN ACCEPTED BY HON'BLE HIGH COURT. HON'BLE MUMBAI HIGH COURT IN THE CASE OF M/S NAYAN BUILDERS & DEVELOPERS P. LTD. V. ITO. HELD THAT SINCE THE ADDITIONS, IN RESP ECT OF WHICH PENALTY HAS BEEN UPHELD IN THE PRESENT PROCEEDINGS, HAVE BEEN HELD BY THE HON'BLE HIGH COU RT TO BE INVOLVING A SUBSTANTIAL QUESTION OF LAW, IN OUR CONSIDERED OPINION, THE PENALTY IS NOT ELIGIBLE UND ER THIS SECTION. WE, THEREFORE, ORDER FOR THE DELETION OF P ENALTY. ITO ,5(1), INDORE VS. SHRI MITHOOLAL BANSAL, INDORE , I.T.A.NO. 354/IND/2015 A.Y. 2008-09 10 10 HON'BLE MUMBAI HIGH COURT DISMISSED THE APPEAL OF T HE DEPARTMENT ON THIS ISSUE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT THE ASSESSEE IS A PRACTICING ADVOCATE FOR THE LAST MORE THAN 50 YEARS AND HE RECEIVED RS. 11 LACS ON BEHALF OF HIS ONE OF THE CLIENTS SHRI ANIL PAL FROM M/S. NEELAM ENTERPRISES. THE CLIENT OF THE ASSESSEE HAD TO RECO VER THE AMOUNT OF RS. 12,02,340/- FROM ONE OF THE CUSTOMERS AND RS. 11 LACS WAS RECOVERED THROUGH PERSUASION AND LEGAL PROCEEDINGS AND THE SAME WAS DEPOSITED IN THE BANK ACCOUNT. WE FURTHER FIND THAT PENALTY @ 300% HAS BEEN LEVIE D ALTHOUGH MINIMUM PENALTY WOULD HAVE BEEN RS. 3.66 LACS. WE ALSO FIND THAT THE BANK ACCOUNT WAS MAINTAINED ON BEHALF OF T HE CLIENT AND AFFIDAVIT FROM THE CLIENT WAS FILED BEFORE THE AO. THE ASSESSEE ALSO RELIED ON THE DECISION OF I.T.A.T., MUMBAI BENCH IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS PVT.LT D. VS. ITO, I.T.A.NO. 2379/MU/2009. WE FIND THAT THE LD. CIT(A) KEEPING IN VIEW THE PROPOSITIONS LAID DOWN NOT ONLY BY JURI SDICTIONAL ITO ,5(1), INDORE VS. SHRI MITHOOLAL BANSAL, INDORE , I.T.A.NO. 354/IND/2015 A.Y. 2008-09 11 11 I.T.A.T. BUT ALSO BY THE HON'BLE HIGH COURTS OF MUM BAI AND DELHI (SUPRA) DELETED THE PENALTY OF RS. 11 LACS HO LDING THAT IT IS A SETTLED POSITION OF LAW THAT PENALTY CANNOT BE LEVIED IN THE CASES WHERE SUBSTANTIAL QUESTION OF LAW HAS BEEN AD MITTED BY THE HIGH COURT. WE UPHOLD THE ACTION OF THE LD. CI T(A). OUR INTERFERENCE IS NOT CALLED FOR. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 9 TH FEBRUARY, 2016. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 9 TH FEBRUARY, 2016. CPU*