Harmeet Singh, New Delhi V. CIT- VII, New Delhi

ITA 3717/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5108 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 24-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NAVIN CHANDRA
• Assessee Lawyers: S C MATTA
• Keywords: Business income; Opportunity of being heard; Initiation of penalty proceedings; Prejudicial to interest; Tax effect
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3717/DEL./2014 (ASSESSMENT YEAR : 2009-10) SHRI HARMEET SINGH, VS. CIT, DELHI VII, C/O SINGHAL MATTA & CO., NEW DELHI. CHARTERED ACCOUNTANTS, B-21, IIND FLOOR, LAJPAT NAGAR-1, NEW DELHI 110 024. (PAN : AUVPS4115M) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.C. MATTA, CA REVENUE BY : SHRI NAVIN CHANDRA, CIT DR DATE OF HEARING : 03.08.2017 DATE OF ORDER : 08.08.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, SHRI HARMEET SINGH (HEREINAFTER REFERRE D TO AS THE ASSESSEE), BY FILING THE PRESENT APPEAL SOUGH T TO SET ASIDE THE IMPUGNED ORDER DATED 31.03.2014 PASSED BY THE COMMI SSIONER OF INCOME-TAX, DELHI-VII, NEW DELHI, FOR THE ASSESSMEN T YEAR 2008- 09 ON THE GROUNDS INTER ALIA THAT :- 1. THAT THE INVOCATION OF SECTION 263 BY THE LEARNED COMMISSIONER OF THE INCOME TAX ACT,1961 IS NOT GOOD BY LAW AS THE LEARNED INCOME ITA NO.3717/DEL./2014 2 TAX OFFICER WHILE FRAMING HIS ORDER U/S 143(3) OF THE ACT MUST HAVE APPLIED HIS MIND AND THE ACT ALLOWS THE ASSESSING OFFICER TO USE HIS DISCRETION WHETHER TO IMPOSE PENALTY U/S 271(1) ( C) OF THE INCOME TAX ACT, 1961. 2. BY NOT IMPOSITION OF PENALTY IN HIS ASSESSMENT ORDER THE ORDER OF THE ASSESSING OFFICER DOES NOT BECOME ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. THESE FACTS WERE RETREATED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESS~ WHILE SUBMITTING HIS SUBMISSION AGAINST SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE BY THE LEARNED COMMISSIONER OF THE INCOME TAX WHICH WERE NOT AT ALL CONSIDERED BY THE LEARNED INCOME TAX COMMISSIONER WHILE FRAMING HER ORDER U/S 263 OF THE ACT AND NO VIEW WERE GIVEN BY HER ON SUCH SUBMISSIONS SUBMITTED TO HER WHICH CLEARLY DISPLAY THAT THE ORDER OF THE COMMISSIONER OF THE INCOME TAX IS NOT A SPEAKING ORDER AS THE MERITS OF THE SUBMISSIONS ARE NOT COMMENTED UPON BY THE LEARNED COMMISSIONER OF INCOME TAX AND EVEN IF SHE HAS TO REJECT THE SUBMISSIONS OF THE ASSESSEE THE SAME SHOULD HAVE BEEN COMMENTED UPON BY THE LEARNED COMMISSIONER OF INCOME TAX AND GIVEN HER VIEW ON THOSE SUBMISSIONS. 3. AS REGARDS APPLICABILITY OF THE SECTION 263 OF THE ACT THE PROVISIONS OF THIS SECTION ARE AS UNDER: 'SECTION 263 OF THE INCOME TAX ACT CONFERS THE POWER UPON THE COMMISSIONER TO CALL FOR AND EXAMINE THE RECORDS FOR ANY PROCEEDINGS UNDER THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REV ENUE HE MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES AS THE CASE JUSTIFY INCLUDING AN ORDER ENHANCING OR ITA NO.3717/DEL./2014 3 MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT'. THESE PROVISIONS OF THE ACT CLEARLY STATE THAT FOR INVOKING THE PROVISIONS OF THE SECTION 263 THE TWO PREREQUISITES NEED TO BE PRESENT: A. ORDER MUST BE ERRONOUS AND B. ORDER MUST BE PREJUDICIAL TO THE INTEREST OF REVENUE THIS VIEW IS FURTHER STRENGTHENED WITH THE CASE LAWS STATED HEREUNDER: IN MALABAR INDUSTRIAL CO. LIMITED V. CIT [2000] 243 ITR 83 (SC), CIT V. VIKASH POLYMERS [2010] 194 TAXMAN 57 (DELHI) (HC) RECOURSE TO SECTION 263(1) CANNOT BE TAKEN IF THE IMPUGNED ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE; OR IF IT IS PREJUDICIA L TO THE INTEREST OF THE REVENUE BUT NOT ERRONEOUS. IN S. MURUGAN V. ITO [2012] 135 ITD 527 (CHENNAI) (TRIB.), 1. K. CONSTRUCTION CO. V. ITO [2007] 162 TAXMAN 46 (JODHPUR) (TRIB.) THE COMMISSIONER GETS POWER OF REVISION UNDER SECTION 263 WHERE THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE TWIN CONDITIONS ARE REQUIRED TO BE SATISFIED SIMULTANEOUSLY. IN CIT V. JAWAHAR BHATTACHARJEE [2012] 3411TR 434 (GAUHATI) (HC) (FB) THE MEANING OF THE TERM 'ERRONEOUS' IS EXPLAINED AS UNDER NON APPLICATION OF MIND TO RELEVANT MATERIAL OR AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF ORDER BEING ERRONEOUS. ITA NO.3717/DEL./2014 4 MEANING OF THE TERM 'PREJUDICIAL TO THE INTEREST OF THE REVENUE' THE TERM 'PREJUDICE' CONTEMPLATED UNDER SECTION 263 IS PREJUDICE TO THE INCOME-TAX ADMINISTRATION AS A WHOLE. TAX EFFECT IN CIT V. G. R. THANGAMALIGAI [2003] 2591TR 129 (MAD.) (HC) THE TERM TAX EFFECT IS EXPLAINED AS IN ABSENCE OF ANY FINDING THAT THERE IS LOSS OF REVENUE, INTERFERENCE UNDER SECTION 263 IS NOT JUSTIFIED. IN PUNJAB WOOL SYNDICATE V. ITO [2012] 17 ITR 439 (CHANDIGARH) (TRIB.) WHERE THE TAX EFFECT BECAUSE OF AN ORDER PASSED BY THE ASSESSING OFFICER IS NIL, SUCH ORDER EVEN IF ERRONEOUS BEING PREJUDICIAL TO THE INTEREST OF THE REVENUE, IS NOT OPEN TO REVISION UNDER SECTION 263 OF THE ACT. IN MASTER VIJAY R OSWCLL V. ITO [2003] 871TD 98 (RAJKOT)(TRIB.):NON-INITIATION OF PENALTY PROCEEDINGS BY THE ASSESSING OFFICER WAS HELD TO BE NOT GOOD GROUND TO INVOKE SECTION 263. ON FACTS OF THE CASE, BASED ON AN UNDERSTANDING BETWEEN THE DEPARTMENT AND THE ASSESSEE, THE ASSESSING OFFICER HAD ACTED TO HONOUR ASSURANCE GIVEN TO ASSESSEE TO NOT LEVY PENALTY, AND THEREBY TO SAFEGUARD FAIR NAME OF THE DEPARTMENT AND, HENCE, HIS ACTION COULD NOT BE CONDONED AS PREJUDICIAL TO INTEREST OF REVENUE. IT WAS HELD THA T THE COMMISSIONER COULD NOT DIRECT ASSESSING OFFICER TO INITIATE PENALTY PROCEEDINGS. AMBICA CHEMICAL PRODUCTS (REGD.) V. ACIT [2003J86 ITD 1 (VISAKHAPATNAM) (TRIB.) 4. THAT COMING ON TO THE MERITS OF THIS CASE WE FURTHER SUBMIT AS UNDER: ITA NO.3717/DEL./2014 5 A. THAT THE HONORABLE COMMISSIONER OF INCOME TAX IS NOT JUSTIFIED IN CANCELLING THE ASSESSMENT ORDER PASSED BY LEARNED INCOME TAX OFFICER WARD-20(3), NEW DELHI, UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. B. THAT THE HONORABLE COMMISSIONER OF INCOME TAX HAD ERRED IN HOLDING THAT THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX ACT ON 23-12-2011 IS ERRONEOUS AND IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AGAINST THE FACTS OF THE CASE THAT THE LEARNED INCOME TAX OFFICER HAS CONSIDERED AIR INFORMATION AVAILABLE WITH HIM AND MADE ADDITION OF RS. 340115/- IN THE DECLARED INCOME OF ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE HAS SUBMITTED THAT THE CREDIT CARD PAYMENTS OF RS.3061032/- RELATES TO DIESEL EXPENSES AND PURCHASE OF TYRES WHICH ARE NOT RELATING TO HIS BUSINESS AND IT WAS JUST AN ACCOMMODATION TO THE VARIOUS TRUCKERS WITH RESPECT TO REFUELING OF THEIR DIESEL TANKS AND PURCHASE OF TYRES. C. THAT LEARNED INCOME TAX OFFICER, ON THE PRESUMPTIVE BASIS HAS TREATED THE AMOUNT OF RS.3061032/- AS EXPENDITURE AND CALCULATED TURNOVER OF RS. 3401147/- AND ASSUMED PROFIT @ 10% ON THIS AMOUNT AND MADE THE ADDITION OF RS.340115/-. THE HONORABLE COMMISSIONER OF INCOME TAX HAS IGNORED THE FACT THAT THE ADDITION OF RS.340115/- WAS JUST ON PRESUMPTIVE BASIS AND THE LEARNED INCOME TAX OFFICER HAS JUST USED HIS DISCRETION IN FAVOUR OF THE ASSESSEE TO AVOID UNDUE HARDSHIP WHICH MIGHT HAVE CAUSED TO HIM FOR INITIATION OF ANY PENALTY. D. AS THE INCOME OF THE ASSESSEE IS CALCULATED BY THE LEARNED INCOME TAX OFFICER ON PRESUMPTIVE BASIS THE PRESUMPTION DOES NOT BECOMES SOUND GROUND FOR INITIATION OF PENALTY U/S 271 (1) (C ) OF THE ACT. ITA NO.3717/DEL./2014 6 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : LD. CIT INVOKED THE PROVI SIONS CONTAINED UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) BY TAKING INTO CONSIDERATION ASSESSMENT ORDER COMPL ETED UNDER SECTION 143 (3) OF THE ACT AT AN INCOME OF RS.4,75, 565/- BY MAKING ADDITION AMOUNTING TO RS.3,40,115/- ON ACCOUNT OF U NDISCLOSED INCOME, BUT PENALTY U/S 271(1)(C) OF THE ACT HAS NO T SOUGHT TO BE INITIATED IN THE ASSESSMENT ORDER NOR ANY NOTICE TO THAT EFFECT HAS BEEN ISSUED. ASSESSING OFFICER HAS ALSO NOT RECORD ED HIS SATISFACTION ABOUT CONCEALMENT OF INCOME AND FURNIS HING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE AN D THEREBY CANCELLED THE ASSESSMENT ORDER. 3. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFO RE THE TRIBUNAL BY WAY OF CHALLENGING THE IMPUGNED ORDER P ASSED BY LD. CIT. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. IN THE FACE OF THE UNDISPUTED FACT THAT THE ASSE SSMENT HAS BEEN COMPLETED U/S 143(3) OF THE ACT, WHICH HAS NOT BEEN QUESTIONED IN ANY MANNER BY THE LD. CIT, WHO HAS OR DERED AS TO THE ITA NO.3717/DEL./2014 7 INITIATION OF THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, THE PRESENT APPEAL IS NOT MAINTAINABLE BECAUSE WHEN UND ISPUTEDLY ADDITION OF RS.3,40,115/- HAVING BEEN MADE BY THE A O ON ACCOUNT OF UNDISCLOSED BUSINESS INCOME HAS NOT BEEN QUESTIO NED EITHER BY THE ASSESSEE OR BY THE REVENUE, PRIMA FACIE CASE OF THE REVENUE U/S 271(1)(C) IS MADE OUT. SO, IN THE GIVEN CIRCUMSTAN CES, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY LD. CIT, HENCE APPEAL FILED BY THE ASSESSEE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 8 TH DAY OF AUGUST, 2017. SD/- SD/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 8 TH DAY OF AUGUST, 2017 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), DELHI-VII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.