DCIT, Chandigarh V. M/s Karan Empire Pvt. Ltd., Mohali

ITA 409/CHANDI/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8281 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 20-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Keywords: Search and seizure; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 153A; 271D; 271E

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.409 /CHD/2011 (ASSESSMENT YEAR : 2007-08) THE D.C.I.T., VS. M/S KARAN EMPIRE PVT. LTD., CENTRAL CIRCLE-I, # 123, PHASE 3BI, CHANDIGARH. MOHALI. PAN: AACCK7646P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAVI SARANGAL, CIT DR RESPONDENT BY : SHRI PARIKSHIT AGGARWAL DATE OF HEARING : 13.02.2017 DATE OF PRONOUNCEMENT : 16.02.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, LUDHIANA DATED 28.1.2011 RELATING TO ASSESSMENT YEAR 2007-08, PASSED AGAINST THE ORDER O F THE ASSESSING OFFICER LEVYING PENALTY U/S 271D OF THE I NCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 2 1. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN DELETING THE PENALTY U/S 271D OF RS.6,95,60,000/- ON THE GROUND THAT THE ASSESSEE COMPANY HAD NOT TAKEN ANY LOAN FROM ANY PERSON RATHER THOSE PERSONS HAD THEMSELVES MADE PAYMENTS TO THE SELLER AND LAND/SHARES WERE TRANSFERRED IN T HEIR NAMES, BUT THIS NOT BEING THE FACTS, THERE WAS AN AGREEMENT EXECUTED BETWEEN THE PARTIES OF WHICH THE ASSESSEE IS ONE OF THE PARTY AND CASH PAYMENT WAS MADE BY THE ASSESSEE TO THE OTHER PARTY TO THE TUNE OF RS.6,95,60,000/-THE ASSESSEE TO MEET THIS EXPENDITURE RAISED LOANS AND ACCEPTED THE SAME IN CASH. IT IS IMMATERIAL WHETHER THE MONEY WAS ROUTED THROUGH THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY OR MADE DIRECTLY BY THE DIRECTORS OR RELATI VES ON BEHALF OF THE COMPANY. 2. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL ON OR BEFORE THE APPEAL IS HEARD AN D DISPOSED OFF. 3. IT IS PRAYED THAT THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) BE SET-ASIDE AND THAT OF THE A.O. BE RESTORED. 3. THE BRIEF FACTS RELATING TO THE CASE ARE THAT SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CARRIED OUT AT THE ASSESSEES PREMISES ON 10.8.2006 . THEREAFTER THE ASSESSMENT WAS COMPLETED FOR THE IMPUGNED YEAR U/S 153A R.W.S. 143(3) OF THE ACT VID E ORDER DATED 21.8.2009. IN THE SAID ORDER, THE ASSE SSING OFFICER INITIATED PENALTY U/S 271D OF THE ACT BY IN VOKING THE PROVISIONS OF SECTION 269SS ON ALLEGED ACCEPT ANCE OF 3 CASH DEPOSITS OF RS.6,95,60,000/-. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT (APPEALS) WHO DELETED THE PENALTY LEVIED BY HOLDING THAT THE ASSESSEE HAD NOT ACCEPTED ANY LOAN OR DEPOSIT AND, THEREFORE, PROVIS IONS SOF SECTION 269SS OF THE ACT WERE NOT APPLICABLE. 4. AGAINST THE AFORESAID ORDER OF THE LD. CIT (APPEALS), THE REVENUE HAS NOW COME UP IN APPEAL BE FORE US. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT (APPEAL S) AND FURTHER BROUGHT TO OUR NOTICE THAT THE ORIGINAL ASS ESSMENT ORDER IN WHICH THE PENALTY U/S 271D HAD BEEN INITIA TED, HAD BEEN HELD INVALID BY THE I.T.A.T., CHANDIGARH B ENCH IN ITS ORDER IN THE CROSS OBJECTION FILED BY THE AS SESSEE IN C.O.NO.13/CHD/2011 VIDE ORDER DATED 22.12.2016. TH E LD. COUNSEL FOR THE ASSESSEE THEREAFTER CONTENDED T HAT SINCE THE ORDER IN WHICH PENALTY PROCEEDINGS HAD BE EN INITIATED, HAD BEEN HELD TO BE INVALID AND NO FURTH ER SATISFACTION RECORDED BY THE ASSESSING OFFICER FOR INITIATING PENALTY PROCEEDINGS, THE SAID ORDER LEVY ING PENALTY PASSED U/S 271D OF THE ACT COULD NOT HAVE B EEN PASSED IN THE ABSENCE OF ANY SATISFACTION BY THE AS SESSING OFFICER BEFORE LEVYING THE SAME. THE LD. COUNSEL F OR THE ASSESSEE RELIED UPON THE ORDER OF THE HON'BLE APEX COURT IN THE CASE OF CIT, PANCHKULA VS. JAI LUXMI RICE M ILLS, AMBALA CITY, (2015) 379 ITR 521(SC). 4 5. THE LD. DR, ON THE OTHER HAND, ARGUED THAT THE SAID DECISION OF THE HON'BLE APEX COURT DID NOT APP LY IN THE PRESENT SET OF FACTS AND CIRCUMSTANCES SINCE IN THAT CASE, AS OBSERVED BY THE HON'BLE APEX COURT, THE IN ITIAL ASSESSMENT ORDER IN WHICH THE PENALTY HAD BEEN INIT IATED HAD BEEN SET ASIDE TO THE ASSESSING OFFICER TO FRAM E ASSESSMENT DE-NOVO AFTER GIVING ADEQUATE OPPORTUNIT Y TO THE ASSESSEE AND THE ASSESSING OFFICER IN THE FRESH ASSESSMENT FRAMED HAD FAILED TO RECORD ANY SATISFAC TION OR FOR THAT MATTER INITIATE THE LEVY OF PENALTY U/S 27 1D OF THE ACT. THE LD. DR STATED THAT THE FACTS IN THE PRESE NT CASE ARE TOTALLY DISTINGUISHABLE, SINCE IN THE PRESENT C ASE THE ORDER HAD NOT BEEN SET ASIDE FOR FRAMING FRESH ASSE SSMENT BUT HAD BEEN RENDERED INVALID AND, THEREFORE, THE ASSESSING OFFICER IN THE PRESENT SET OF FACTS AND CIRCUMSTANCES HAD NO OPPORTUNITY TO RECORD SATISFAC TION BEFORE LEVY OF PENALTY AND COULD, THEREFORE, HAVE P ASSED ASSESSMENT ORDER ON THE BASIS OF PENALTY INITIATED IN THE ORIGINAL ASSESSMENT ORDER. 6. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE DOCUMENTS PLACED BEFORE US. WE HAVE ALSO GONE THROUGH THE ORDER OF THE HON'BLE APE X COURT RELIED UPON BY THE LD. COUNSEL FOR THE ASSESS EE. ON GOING THROUGH THE AFOREMENTIONED ORDER WE FIND THAT THE HON'BLE APEX COURT, ON THE QUESTION FRAMED BEFORE I T WHETHER PENALTY PROCEEDINGS UNDER SECTION 271D OF THE 5 INCOME TAX ACT WERE INDEPENDENT OF ASSESSMENT PROCEEDINGS, NEGATIVED THE SAME BY CATEGORICALLY HO LDING THAT WHEN THE ORIGINAL ASSESSMENT ORDER HAD BEEN SE T ASIDE, THE SATISFACTION RECORDED THEREIN FOR THE PU RPOSE OF INITIATION OF THE PENALTY PROCEEDINGS U/S 271E WOUL D ALSO NOT SURVIVE AND SINCE THERE WAS NO SATISFACTION REC ORDED IN THE FRESH ASSESSMENT ORDER PASSED REGARDING PENA LTY PROCEEDINGS U/S 271E OF THE ACT, PENALTY COULD NOT BE LEVIED IN THE ABSENCE OF SATISFACTION FOR THE SAME. THE QUESTION BEFORE THE APEX COURT AND THE RELEVANT FIN DINGS OF THE HON'BLE APEX COURT ARE AS FOLLOWS: IN THESE APPEALS, WE ARE CONCERNED WITH THE QUESTION AS TO WHETHER PENALTY PROCEEDING UNDER SECTION 271D OF THE INCOME TAX ACT(HEREINAFTER REFERRED TO AS THE ACT) IS INDEPENDENT OF THE ASSESSMENT PROCEEDING. THE FINDINGS ARE AS FOLLOWS: THE TRIBUNAL AS WELL AS THE HIGH COURT HAS HELD THA T IT COULD NOT BE SO FOR THE SIMPLE REASON THAT WHEN THE ORIGINAL ASSESSMENT ORDER ITSELF WAS SET ASIDE, THE SATISFAC TION RECORDED THEREIN FOR THE PURPOSE OF INITIATION OF T HE PENALTY PROCEEDING UNDER SECTION 271E WOULD ALSO NOT SURVIVE . THIS ACCORDING TO US IS THE CORRECT PROPOSITION OF LAW S TATED BY THE HIGH COURT IN THE IMPUGNED ORDER. AS POINTED OUT ABOVE, INSOFAR AS, FRESH ASSESSMENT ORDER IS CONCERNED, THERE WAS NO SATISFACTION RECORDED RE GARDING PENALTY PROCEEDING UNDER SECTION 271E OF THE ACT, TH OUGH IN THAT 6 ORDER THE ASSESSING OFFICER WANTED PENALTY PROCEEDI NG TO BE INITIATED UNDER SECTION 271(1)(C) OF THE ACT. THUS, INSOFAR AS PENALTY UNDER SECTION 27IE IS CONCERNED, IT WAS WIT HOUT ANY SATISFACTION AND, THEREFORE, NO SUCH PENALTY COULD BE LEVIED. 7. IN THE PRESENT CASE, IT IS NOT DISPUTED THAT TH E PENALTY WAS INITIATED IN THE ASSESSMENT ORDER WHICH WAS PASSED U/S 153A R.W.S.143(3) DATED 21.8.2009. IT I S ALSO NOT DISPUTED THAT THE SAID ORDER HAS BEEN ANNULLED AND RENDERED INVALID BY THE HON'BLE I.T.A.T. IN ITS ORD ER PASSED IN THE CASE OF THE ASSESSEE IN C.O.NO.13/CHJD/2011 DATED 22.12.2016. THE RELEVANT FINDINGS OF THE I.T.A.T. AT PARA 12 OF THE ORDER AR E AS FOLLOWS : 12. IN CROSS OBJECTION NO. 13/CHD./20I1 PERTAINING TO M/S KARAN EMPIRE PVT. LTD. AND IN ITA NO. 1327/CHD./2010 FILED BY THE ASSESSEE SH. S. L. ARORA FOR THE ASSESSMENT YEAR 2007-08, AN IDENTICAL ISSUE AS WAS INVOLVED IN THE CASE OF SH. RAJIV KUMAR, MOHALI (SUPRA) HAS BEEN RAISED. THEREFORE, OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER IN ITA NO. 41/CHD./2011 IN THE CASE OF RAJIV KUMAR, MOHA LI VS ACIT, CENTRAL CIRCLE-1, CHANDIGARH SHALL APPLY MUTAT IS MUTANDIS. ACCORDINGLY, THE CROSS OBJECTION OF THE ASSE SSEE M/S KARAN EMPIRE PVT. LTD., MOHALI, IN CO NO. 13/CHD./2011 AND THE APPEAL APPEAL IN ITA NO. 1327/CHD./2010 FOR THE ASSESSMENT YEAR 2007-08 IN RES PECT OF SH. SOHAN LAI ARORA, MOHALI VS ACIT, CENTRAL CIRCL E-1, CHANDIGARH ARE ALLOWED, THEREFORE, THE RESPECTIVE ASSESSMENT FRAMED U/S 153A OF THE ACT IN THESE CASE S ARE HELD TO BE INVALID. SINCE, THE LEGAL ISSUE RAIS ED BY 7 THE ASSESSEE IS ALLOWED, THEREFORE, NO FINDINGS ARE GIVEN IN RESPECT OF THE OTHER ISSUES RAISED BY THE ASSESS EE AND WE DO NOT SEE ANY MERIT IN THE APPEALS OF THE DEPARTMENT. 8. IN THE BACKDROP OF THE ABOVE FACTS WE FIND THAT THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN TH E CASE OF JAI LAXMI RICE MILLS (SUPRA) SQUARELY APPLIES A ND WITH THE ANNULLING OF THE INITIAL ASSESSMENT ORDER PASSE D IN THE CASE OF THE ASSESSEE BY THE I.T.A.T., THE PENALTY I NITIATED THEREIN U/S 271D ALSO DID NOT SURVIVE. FURTHER IN THE ABSENCE OF ANY FURTHER SATISFACTION FOR LEVY OF PEN ALTY THE SAID ORDER LEVYING PENALTY U/S 271D COULD NOT HAVE BEEN PASSED. 9. WE FIND NO MERIT IN THE CONTENTION OF THE LD. D R THAT THE FACTS OF THE CASE ARE DISTINGUISHABLE WITH THE FACTS OF THE CASE BEFORE THE HON'BLE APEX COURT AND , THEREFORE, THE RATIO PROPOUNDED THEREIN WOULD NOT A PPLY IN THE PRESENT CASE. THOUGH UNDENIABLY, THERE IS A DIFFERENCE IN THE FACTS OF BOTH THE CASES AS IN THE CASE BEFORE THE HON'BLE APEX COURT THE ASSESSMENT HAD BE EN SET ASIDE WITH THE DIRECTION TO FRAME AFRESH ASSESS MENT WHILE IN THE PRESENT CASE BEFORE US, THE ASSESSMENT ORDER PASSED HAS BEEN HELD TO BE INVALID,THE PROPOSITION LAID DOWN BY THE HON'BLE APEX COURT STILL APPLIES SINCE THE ULTIMATE EFFECT OF THE FACTS IN BOTH THE CASES STIL L RESULTS IN THE ORIGINAL ASSESSMENT ORDER NOT SURVIVING, AS ALSO THE SATISFACTION RECORDED THEREIN FOR THE PURPOSE OF IN ITIATION 8 OF PENALTY PROCEEDINGS U/S 271E/271D OF THE ACT. THEREFORE, THE PROPOSITION LAID DOWN BY THE HON'BLE APEX COURT SQUARELY APPLIES IN THE PRESENT CASE FOLLOWIN G WHICH WE UPHOLD THE ORDER OF THE LD. CIT (APPEALS) DELETI NG THE LEVY OF PENALTY U/S 271D OF THE ACT AMOUNTING TO RS.6,95,60,000/-. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH FEBRUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH