Sh. Vinod Chander Sinha, New Delhi V. ACIT, New Delhi

ITA 3699/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7532 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 13-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 20-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: A K BABBAR
• Keywords: Principle of natural justice
• Section: 143(3); 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO.3699/DEL/2014 A.Y. : 2009-10 SH. VINOD CHANDER SINHA C/O R. CHADHA & ASSOCIATES, E-95/2, NARAINA VIHAR, NEW DELHI 110 028 (PAN: AATPS8334G) VS. ACIT, CIRCLE-2, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AK BABBAR, ADV. DEPARTMENT BY : SH. KK JAISWAL, SR. DR DATE OF HEARING : 13-06-2016 DATE OF ORDER : 13-06-2016 ORDER PER H.S. SIDHU : JM THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 20/3/2014 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS-XXV), NEW DELHI ON THE FOLLOWING GROUNDS:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT ITA NO. 3699/DEL/2014 2 (APPEALS)-XXV HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN IMPOSING PENALTY OF RS. 3,50,000/- U/S. 271AAA OF THE INCOME TAX ACT, 1961. 2. THAT HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, LD CIT(A) HAS RELIED ON INCORRECT FINDING OF LD AO. (NO EXPLANATION OFFERED BY ASSESSEE AND HAS IGNORED THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE LD CIT (APPEAL) AND HAS ACCORDINGLY NOT OBSERVED THE PRINCIPLES OF NATURAL JUSTICE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN OBSERVING THAT NO EVIDENCE WITH REGARD TO UNDISCLOSED INCOME OF RS.3,50,000/- WAS GIVEN. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD AO IN IMPOSING PENALTY U/S 271AAA OF THE ACT AND MORE SO ASSESSEE HAD COMPLIED WITH ALL THE CONDITIONS OF SUB-SECTION 2 OF SECTION 271AAA OF THE ACT. 5. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER ACTION OF LD. AO IN FRAMING THE IMPUGNED PENALTY ORDER IS CONTRARY TO LAW ITA NO. 3699/DEL/2014 3 AND FACTS, VOID AB INITIO, BEYOND JURISDICTION AND SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 6. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WAS C OVERED UNDER SEARCH ACTION U/S. 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) PURSUANT WHERETO IT FILED ITS RETURN OF INCOME FOR THE BLOCK PERIOD AY 2009-10 DE CLARING A TOTAL INCOME OF RS. 41,93,730/- WHICH INCLUDED AN AMO UNT OF RS. 35,00,000/- SURRENDERED BY THE ASSESSEE AS ITS U NDISCLOSED INCOME IN THE COURSE OF SEARCH PROCEEDINGS. SUBSEQUE NTLY, THE CASE WAS PICKED UP FOR COMPULSORY SCRUTINY AND THE ORDER IN THE CASE OF THE ASSESSEE WAS PASSED ACCEPTING THE R ETURN INCOME OF RS. 41,93,730/- DECLARED BY THE ASSESSEE AF TER DETAILED SCRUTINY VIDE THE ASSESSMENT ORDER DATED 2 6.11.2010. IN FURTHERANCE OF THE QUANTUM PROCEEDINGS THE CASE OF THE ASSESSEE WAS IN DUE COURSE OF TIME FOR EXAMINING TH E SCOPE OF LEVIABILITY OF PENALTY U/S. 271AAA OF THE ACT. IN P URSUANCE ITA NO. 3699/DEL/2014 4 THEREOF THE ASSESSEE WAS SERVED WITH NOTICES U/S. 2 71AAA OF THE ACT IN RESPONSE UNDERLYING THE SURRENDER OF RS. 35,00,000/-. AFTER DETAILED HEARING AND DISCUSSIONS T HE AO DISCARDED THE CLARIFICATIONS OFFERED BY THE ASSESSE E RESPECTING THE MANNER IN WHICH THE UNDISCLOSED INCOME OF RS. 35 ,00,000/- WAS EARNED BY THE LATTER. THE AO OBSERVED THAT THE ASSESSEE HAD FAILED TO PROVIDE ANY DETAILS IN RESPECT OF THE MANNER IN WHICH THE UNDISCLOSED INCOME OF RS. 35,00,000/- SURRE NDERED BY THE ASSESSSEE DURING THE COURSE OF SEARCH WAS EA RNED BY IT. ON THIS ACCOUNT ALONE THE AO LEVIED PENALTY @10% OF THE AMOUNT SEIZED, I.E. RS. 3,50,000/- U/S. 271AAA OF THE AC T DESPITE THE FIERCE OBJECTIONS OF THE ASSESSEE VIDE PENALTY ORDER DATED 30.5.2011. 3. BEING AGGRIEVED WITH THE AFORESAID PENALTY ORDE R, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMP UGNED ORDER DATED 20.3.2014 HAS DISMISSED THE APPEAL OF T HE ASSESSEE. 4. NOW THE ASSESSEE IS AGGRIEVED AGAINST THE IMPUGNE D ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIB UNAL. ITA NO. 3699/DEL/2014 5 5. LD. COUNSEL OF THE ASSESSEE STATED THAT THE ASSES SEE WAS APPOINTED AS AN INDEPENDENT DIRECTOR IN M/S KOUTONS RETAIL INDIA LTD. AND THERE WAS A SEARCH IN KOUTONS GROUP U/S 132 OF THE INCOME TAX ACT, 1961 AND ASSESSEE WAS ALSO COVE RED IN THIS SEARCH U/S 132. HE STATED THAT DURING THE SEAR CH, CASH OF RS. 35,00,000/- WAS SEIZED FROM THE LOCKER OF THE AS SESSEE WHICH WAS SURRENDERED AS INCOME FOR THE CURRENT FIN ANCIAL YEAR 2008-09 AS INCOME EARNED FROM ADVANCE RECEIVED AGAI NST SALE OF PROPERTY. THE ASSESSEE DECLARED THIS SUM AS UNDI SCLOSED INCOME IN THE RETURN FILED FOR ASSESSMENT YEAR 2009 -10 WHICH WAS ACCEPTED BY THE AO WHILE PASSING THE ORDER AND RETURNED INCOME IS ACCEPTED AS IT IS WHICH MEANS THAT AO IS SATISFIED ABOUT THE MANNER AND ITS SUBSTANTIATION DURING ASSE SSMENT AND HENCE ASSESSEE SHOULD NOT BE CHARGED PENALTY U/ S. 271AAA OF THE I.T. ACT. HE FURTHER STATED THAT ALL THE DETAILS WITH REGARD TO CASH SEIZED FROM HIS LOCKER WERE GIV EN. BUT AO HAS MENTIONED IN THE ORDER THAT NO EXPLANATION WAS OFFERED IN RESPECT OF UNDISCLOSED INCOME. HE STATED THAT THIS O BSERVATION IS AGAINST THE FACTS OF THE CASE AS MENTIONED ABOVE AS THE ASSESSEE HAD FILED DETAILED REPLY ON 11-04-2011 AND HAS PERSONALLY ATTENDED THE PROCEEDINGS TO EXPLAIN THE TRANSACTION, ITA NO. 3699/DEL/2014 6 WHICH WAS NOT CONSIDERED AT ALL AND AO IGNORED ALL THE ABOVE EXPLANATIONS AND IMPOSED THE PENALTY OF RS. 3,50,000/ - VIDE ORDER DATED 30-05-2011. IT WAS ARGUED BY THE ASSES SEES COUNSEL THAT IT IS DIFFICULT TO COMPREHEND HOW THE ASSESSEE CAN BE PENALIZED FOR NON-DISCLOSURE OF ANY INCOME WHEN THE DUE DATE FOR FILING THE RETURN OF INCOME HAS NOT ARRIV ED. HE STATED THAT IN THE INSTANT CASE THE ASSESSEE FILED HIS INC OME TAX RETURN FOR THE ASSESSMENT YEAR 2009-10 WITHIN THE TIME STI PULATED UNDER SECTION 139 AND HAS DISCLOSED THEREIN ALL TH E INCOME EARNED BY HIM DURING THE PREVIOUS YEAR 2008-09, THER EFORE, THERE IS NO QUESTION OF PENALIZING THE ASSESSEE UND ER SECTION 271AAA OF THE INCOME TAX ACT, 1961 FOR NON DISCLOSU RE OF INCOME. 6. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND STATED THAT THE LOWER AUTHORI TIES HAS RIGHTLY LEVIED THE PENALTY UPON THE ASSESSEE WHICH NEEDS TO BE AFFIRMED. 7. I HAVE HEARD THE BOTH PARTIES, PERUSED AND CONSID ERED THE RELEVANT RECORDS AVAILABLE WITH ME ESPECIALLY THE I MPUGNED ORDER PASSED BY THE LD. CIT(A). I FIND THAT DURING THE SEARCH, ITA NO. 3699/DEL/2014 7 CASH OF RS. 35,00,000/- WAS SEIZED FROM THE LOCKER O F THE ASSESSEE. THE ASSESSEE DECLARED THIS SUM AS UNDISCL OSED INCOME IN THE RETURN FILED FOR ASSESSMENT YEAR 2009 -10.THE ASSESSEE HAD GIVEN STATEMENT U/S 132(4) OF THE ACT WHEREIN THE SOURCE OF THIS UNDISCLOSED INCOME AND SUBSTANTI ATED THE MANNER IN WHICH THIS CASH WAS EARNED. THE ASSESSEE F ILED THE RETURN IN RESPONSE TO NOTICE U/S 153A FOR AY 2009-1 0 RS. 41,93,730/- INCLUDING RS. 35,00,000/- AS UNDISCLOS ED INCOME. THE SAID RETURN WAS ASSESSED U/S 143(3) WHER EIN THE RETURNED INCOME OF RS. 41,93,730/- WAS ACCEPTED AS IT IS BUT AO INITIATED PENALTY PROCEEDINGS U/S 271AAA OF THE ACT IN THE ASSESSMENT ORDER FOR CASH SEIZED FROM LOCKER. THE AS SESSEE WAS SERVED WITH SHOW CAUSE NOTICE FOR IMPOSITION OF PENALTY U/S 271AAA TO WHICH ASSESSEE REPLIED ON 11/04/2011 BUT AO HAS NOT CONSIDERED THE REPLY FILED IN THIS REGARD B Y THE ASSESSEE ON 11-04-2011. FROM THE RECORDS, IT REVEAL S THAT THE ASSESSEE HAD ATTENDED THE PENALTY PROCEEDINGS ON 12 -05-2011 WHEREIN ALL THE DETAILS WITH REGARD TO CASH SEIZED FROM HIS LOCKER WERE GIVEN. BUT AO HAS MENTIONED IN THE ORDER THAT NO EXPLANATION WAS OFFERED IN RESPECT OF UNDISCLOSED I NCOME. IN MY VIEW THIS OBSERVATION OF THE AO IS AGAINST THE F ACTS OF THE ITA NO. 3699/DEL/2014 8 CASE AS MENTIONED ABOVE AS THE ASSESSEE HAD FILED D ETAILED REPLY ON 11-04-2011 AND HAS PERSONALLY ATTENDED THE PROCEEDINGS TO EXPLAIN THE TRANSACTION. BUT AO IGNO RED ALL THE ABOVE EXPLANATIONS AND WRONGLY IMPOSED THE PENALTY OF RS.3,50,000/- VIDE ORDER DATED 30-05-2011. I FIND CON SIDERABLE COGENCY IN THE ASSESSEES COUNSEL CONTENTION THAT D URING THE SEARCH, CASH OF RS. 35,00,000/- WAS SEIZED FROM THE LOCKER OF THE ASSESSEE WHICH WAS SURRENDERED AS INCOME FOR TH E CURRENT FINANCIAL YEAR 2008-09 AS INCOME EARNED FROM ADVANC E RECEIVED AGAINST SALE OF PROPERTY. THE ASSESSEE DE CLARED THIS SUM AS UNDISCLOSED INCOME IN THE RETURN FILED FOR A SSESSMENT YEAR 2009-10 WHICH WAS ACCEPTED BY THE AO WHILE PAS SING THE ORDER AND RETURNED INCOME IS ACCEPTED AS IT IS WHIC H MEANS THAT AO IS SATISFIED ABOUT THE MANNER AND ITS SUBST ANTIATION DURING ASSESSMENT AND HENCE ASSESSEE SHOULD NOT BE CHARGED PENALTY U/S. 271AAA OF THE I.T. ACT. IN MY CONSIDERE D OPINION, IT IS DIFFICULT TO COMPREHEND HOW THE ASSESSEE CAN BE PENALIZED FOR NON-DISCLOSURE OF ANY INCOME WHEN THE DUE DATE FOR FILING THE RETURN OF INCOME HAS NOT ARRIVED. HOWEVER, IN TH E INSTANT CASE THE ASSESSEE FILED HIS INCOME TAX RETURN FOR T HE ASSESSMENT YEAR 2009-10 WITHIN THE TIME STIPULATED UNDER ITA NO. 3699/DEL/2014 9 SECTION 139 AND HAS DISCLOSED THEREIN ALL THE INCO ME EARNED BY HIM DURING THE PREVIOUS YEAR 2008-09, THEREFORE, TH ERE IS NO QUESTION OF PENALIZING THE ASSESSEE UNDER SECTION 2 71AAA OF THE INCOME TAX ACT, 1961 FOR NON DISCLOSURE OF INCOM E. HENCE, THE PENALTY LEVIED BY THE AO AND AFFIRMED BY THE LD . CIT(A) IS NOT SUSTAINABLE IN THE EYES OF LAW. THEREFORE, I DE LETE THE PENALTY OF RS. 3,50,000/- LEVIED U/S. 271AAA OF THE INCOME TAX ACT, 1961 AND ACCORDINGLY, ALLOW THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/06/2016. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 13/06/2016 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 ITA NO. 3699/DEL/2014 10