Manohar Lal Thakral, Panipat V. ACIT, Panipat

ITA 3826/DEL/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8191 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 02-02-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 31-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Assessee Lawyers: K L ANEJA
• Keywords: Onus to prove
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E DELHI) BEFORE SHRI A.D. JAIN AND SHRI B.P. JAIN ITA NO.3826(DEL)2008 ASSESSMENT YEAR: 2003-04 MANOHAR LAL THAKRAL PROP: FANCY WOOL ADDL. COMMISSIONER OF I. TAX, ENTERPRISES, 126, MODEL TOWN, PANIPAT. V. PANIP AT RANGE, PANIPAT. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI K.L. ANEJA, ADVOCATE RESPONDENT BY : SHRI G.S. SAHOTA, SR. DR ORDER PER A.D. JAIN, J.M. THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2 003-04 TAKING THE FOLLOWING GROUNDS:- 1. THAT THE PENALTY OF RS. 11,02,600/- IMPOSED FOR THE ALLEGED CONTRAVENTION OF THE PROVISIONS OF SECTION 269 T OF THE ACT, 1961 MAKING THE ASSESSEE LIABLE TO ALLEGED DEFAULT U/S 271 E OF THE ACT IS ILLEGAL AND WRONG. 2. THAT THE PENALTY IMPOSED IS BARRED BY TIME. 3. THAT THE AO/ADDITIONAL COMMISSIONER OF INCOME TAX H AVE NOT VALIDLY DISCHARGED THEIR BURDEN TO PROVE THE REAL F AULT OF THE ASSESSEE AND THE LEARNED CIT(A) ERRED IN CONFIRMING THE PENALTY. 4. THAT THE PENALTY IMPOSED IS ON MERE TECHNICAL CONSI DERATIONS AND NOT VALID IN LAW. ITA 3826(DEL)08 2 THEREFORE, IT IS PRAYED THAT ON THE FACTS AND ON TH E LEGAL ASPECTS PENALTY IMPOSED IS LIABLE TO BE CANCELLED AND MAY P LEASE BE CANCELLED. 2. THE ASSESSEE, MANOHAR LAL THAKRAL, KARTA HUF IS PROPRIETOR OF THE CONCERN M/S. FANCY WOOL ENTERPRISES AND WAS ENJOYIN G RENT, INTEREST AND DIVIDEND INCOME . RETURN DECLARING INCOME OF RS. 1,35,010/- FOR THE FINANCIAL YEAR 2002-03 RELEVANT TO ASSESSMENT YEAR 2003-04 WAS FILED ON 30.11.2003, WHICH WAS PROCESSED U/S 143(1)(A) VIDE ORDER DATED 31.12.2003, D & C.R. NO. 10108/2003-04. 3. THE ASSESSEE, MANOHAR LAL THAKRAL HAD OLD DEPOSI T OF HIS WIFE SMT. KUSUM LATA, BROUGHT FORWARD, AS ON 1.4.2002 RS. 13, 31,999/- IN HER ACCOUNT, WHO FURTHER DEPOSITED RS. 11,66,000/- DURING THE YE AR AND INTEREST OF RS. 34,950/- WAS CREDITED TO HER ACCOUNT AS ON 31.3.200 3. 4. THE ASSESSEE AND HIS WIFE SMT. KUSUM LATA THAKRA L JOINTLY PURCHASED PROPERTY NO. G-1 & UG-1 IN SUSHANT LOK, G URGAON, AGAINST CONSIDERATIONS OF RS. 17,00,000/- AND RS. 15,00,000 /-. BOTH THESE PROPERTIES WERE PURCHASED FROM M/S. ANSAL HOUSING & ESTATE PVT. LTD. AND BABYLON BUILDERS PVT. LTD., A COMPANY INCORPORATED UNDER COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT , 2873 RAM N AGAR, SHAHDRA AND ITS OFFICE AT 13 MADHYA MARG, DLF CITY, PHASE II. M/S . BABYLON BUILDERS PVT. LTD. WERE FURTHER AUTHORIZED AND EMPOWERED BY VIRTU E OF TRIPARTITE ITA 3826(DEL)08 3 AGREEMENT DATED 9.5.2001 TO GET PREPARED THE BUILDI NG PLANS OF RAISING OF CONSTRUCTION OF A COMMERCIAL COMPLEX. 5. FROM THE ACCOUNT OF SMT. KUSUM LATA THAKRAL WITH FANCY WOOL ENTERPRISES PROP: MANOHAR LAL THAKRAL FOLLOWING PAY MENTS WERE MADE TO M/S. BABYLON BUILDERS PVT. LTD., GURGAON, AGAINST C ONSIDERATION, SHARE OF PRICE OF PROPERTIES STATED ABOVE: 21.5.2002 D.D. NO. 370671 UCO BANK TO B.B.P. LTD. GURGAON FOR RS. RS. 3,00,000/- 19.6.2002 370688 -DO- 2,0 0,000/- 19.7.2002 370713 -DO- 3,00,000/- 13.9.2002 370736 -DO- 3,0 0,000/- 29.10.2002 370743 -DO- 3, 00,000/- ------- -------------- TOTAL PAYMENTS MADE AS & SHARE OF PRICE OF PROPER TIES 14,00,000/- -------- -------------- ALL THE ABOVE STATED PAYMENTS MADE THROUGH ACCOUNT PAYEE DEMAND DRAFTS. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN T HE CASE OF SMT. KUSUM LATA THAKRAL FOR THE ASSTT.YEAR 2003-04, THE AO, WARD 3, PANIPAT, EXAMINED AND FOUND HAVING PAYMENTS MADE BY THE ASSE SSEE ON BEHALF OF SMT. KUSUM LATA THAKRAL TO M/S. BABYLON BUILDERS PV T. LTD., GURGAON, FROM 21.5.2002 TO 29.10.2002. THUS IT WAS TAKEN T HAT INSTEAD OF MAKING THE PAYMENTS TO SMT. KUSUM LATA THAKRAL, THE ASSESSEE M ADE PAYMENTS TO M/S. BABYLON BUILDERS PVT. LTD. IN CONTRAVENTION OF T HE PROVISIONS OF SECTION ITA 3826(DEL)08 4 269 T OF THE INCOME TAX ACT, 1961. THE MATTER WAS REFERRED BY THE AO, WARD 3, PANIPAT, TO THE OFFICE OF ADDL. COMMISSIONE R OF INCOME TAX, VIDE HIS LETTER NO. 1097 DT. 6.6.2007. THUS NOTICE U/S 274 READ WITH SECTION 271 E OF THE INCOME TAX ACT, 1961 WAS SERVED UPON THE A SSESSEE ON 18.6.2007. 7. THE ADDL. COMMISSIONER OF INCOME TAX IMPOSED PEN ALTY OF RS. 11,02,600/- FOR THE ALLEGED DEFAULT OF THE PROVISIO NS OF SECTION 269 T, WHICH IS ABSOLUTELY ILLEGAL AND FACTUALLY WRONG AND THE L D. CIT(A) ERRED IN CONFIRMING THE SAME. THEREFORE, APPEAL IS PREFERR ED. 8. CHALLENGING THE ORDER UNDER APPEAL, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED BEFORE US THAT THE IMPUGNED ORDER IS ILLEGAL INASMUCH AS IT HAS WRONGLY CONFIRMED THE PENALTY ORDER; THAT THIS IS SO, BECAUSE THE VERY INITIATION OF THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE WAS ILLEGAL, SINCE THE RETURN OF THE ASSESSEE WAS PROCESSED AS O N 31.12.2003 (COPY AT PAGE 1 OF THE ASSESSEES PAPER BOOK) AND THE NOTICE U/S 274 READ WITH SECTION 271 E OF THE I.T. ACT HAVING BEEN ISSUED ON 12.6.20 07 (COPY AT PAGE 2 OF THE ASSESSEES PAPER BOOK), SUCH NOTICE WAS ISSUED WHEN THERE WAS NO PROCEEDINGS PENDING BEFORE THE AO QUA THE ASSESSEE. FOR THE PROPOSITION THAT ACTION FOR PENALTY MAY BE PERMISSIBLE ONLY AFT ER REGULAR ASSESSMENT, RELIANCE HAS BEEN PLACED ON CIT V. STANDARD BRANDS LTD. [2006] 204 CTR 48 (DEL). ITA 3826(DEL)08 5 9. THE LEARNED DR, ON THE OTHER HAND, HAS STRONGLY RELIED ON THE IMPUGNED ORDER. 10. HAVING HEARD THE PARTIES AND HAVING PERUSED THE MATERIAL ON RECORD, WE FIND THE GRIEVANCE OF THE ASSESSEE TO BE CORRECT . IN THIS CASE, THE RETURN OF THE ASSESSEE WAS PROCESSED U/S 143(1)(A) OF THE INCOME TAX ACT, ON 31.12.2003. NOTICE U/S 274 READ WITH 271 E OF THE ACT WAS ISSUED TO THE ASSESSEE ON 12.6.2007. IT BEING A CASE OF PROCESSI NG THE RETURN OF INCOME, THERE IS NO FINDING IN THE AOS ORDER WITH REGARD T O THE APPLICABILITY OR OTHERWISE OF SECTION 269 T OF THE I.T. ACT TO THE A SSESSEES CASE. IT WAS WITHIN THE PURVIEW OF THE AO TO BRING THE ASSESSEE S CASE TO SCRUTINY AND TO MAKE REGULAR ASSESSMENT U/S 143(3) OF THE ACT. IT WAS ALSO WITHIN THE POWERS OF THE AO TO, AT THE APPROPRIATE STAGE, INIT IATE PROCEEDINGS U/S 147 OF THE ACT AGAINST THE ASSESSEE. NO SUCH ACTION WAS T AKEN. RATHER, THE PENALTY WAS IMPOSED ON THE BASIS OF THE FINDINGS IN THE CAS E OF THE ASSESSEES WIFE. 11. THEREFORE, THE LEARNED CIT(A) CLEARLY ERRED IN UPHOLDING THE PENALTY ORDER. THE SAID ORDER IS, AS SUCH, QUASHED. 12. SINCE THE ORDER UNDER APPEAL STANDS QUASHED AS ABOVE, NOTHING FURTHER REMAINS TO BE ADJUDICATED AT THIS STAGE. ITA 3826(DEL)08 6 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.02.2010. SD/- SD/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 02.02.2010. *RM COPY FORWARDED TO: 1. MANOHAR LAL THAKRAL PROP: FANCY WOOL ENTERPRISES, 126, MODEL TOWN, PANIPAT. 2. ACIT, PANIPAT RANGE, PANIPAT. 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR