Sh. Puran Chand, Delhi V. ACIT, New Delhi

ITA 4098/DEL/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8896 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 22-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 03-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAI
• Keywords: Unexplained investment
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI N.K. SAINI AND SHRI I.C. SUDHIR ITA NO. 4098/DEL/2013 ASSESSMENT YEAR: 2006-07 PURAN CHAND, VS. ASSISTANT CIT, A-3, SARAI PIPAL THALA EXTN., CIRCLE 19(1), ADARSH NAGAR, NEW DELHI. DELHI. (PAN: AADPC5641A) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ANIL JA IN, CA RESPONDENT BY: SHRI VIKRAM SAHA I, SR. DR DATE OF HEARING : 17.12.2014 DATE OF PRONOUNCEMENT: :02.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER O N SEVERAL GROUNDS WHEREBY THE LEARNED CIT(APPEALS) HAS UPHELD THE PEN ALTY OF RS.1,68,643 LEVIED BY THE ASSESSING OFFICER UNDER SEC. 271(1)(C ) OF THE INCOME-TAX ACT, 1961. 2. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILA BLE ON RECORD AND THE DECISIONS RELIED UPON. 2 3. THE ASSESSING OFFICER HAS NOTED THE FACTS AND RE PLY OF THE ASSESSEE IN THE PENALTY PROCEEDINGS AS UNDER : IN THIS CASE THE ASSESSEE FILED RETURN SHOWING AN INCOME OF RS.5,73,570. A SURVEY U/S. 133A OF THE INCOME-TAX A CT, 1961 WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSE E ON 13.01.2006 AT A-3, SARAI PIPAL THALA EXTN., ADARSH NAGAR, DELHI I N THE CASES OF M/S. SANJAY SALT SUPPLIERS AND M/S. HOTEL SEVEN SEAS, BO TH OF WHICH ARE THE PROPRIETARY CONCERN OF THE ASSESSEE. DURING THE COU RSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER, ON T HE BASIS OF THE RESULT OF THE SURVEY OPERATION, FOUND THAT AS AGAIN ST THE STOCK OF SALT CLAIMED AT RS.92,48,540, THE ACTUAL STOCK ON THE DA TE OF SURVEY WAS RS.93,61,797. HENCE EXCESS STOCK AMOUNTING TO RS.1, 13,257 WAS AVAILABLE WITH THE ASSESSEE AS ON THAT DAY FOR WHIC H THE ASSESSEE COULD NOT FURNISH ANY SATISFACTORY EXPLANATION. CONSEQUE NTLY, THE SAME WAS ADDED ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S.69 O F THE ACT. BESIDES THIS, EXCESS CASH AMOUNTING TO RS.456 WAS ALSO FOUN D FOR WHICH THE ASSESSEE COULD NOT FURNISH SATISFACTORY EXPLANATION , AND HENCE THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE THIRD DISCREPANCY WAS IN RESPECT OF THE SUPPRESSION OF ROOM CHARGES R ECEIPTS. SINCE THE ASSESSEE COULD NOT FURNISH SATISFACTORY EXPLANATION , 20% OF THESE RECEIPTS OF RS.19,36,535 AMOUNTING TO RS.3,87,807 W AS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ON THIS ADDITION OF RS.5,01,020, PENALTY PROCEEDINGS U/S. 271(1)(C) WER E INITIATED. SHOW- CAUSE NOTICE IN RESPECT OF THESE PROCEEDINGS WERE ISSUED TO THE ASSESSEE ON 24.06.2010. IN REPLY THERETO, THE ASSES SEE SUBMITTED AS FOLLOWS: 3 1. IN RESPECT OF EXCESS STOCK, THE DIFFERENCE IS VE RY MINOR AND THERE MAY BE MISTAKE AT THE TIME OF PHYSICAL STOCK TAKING, NO RESPONSIBLE PERSONS WAS PRESENT FROM THE SIDE OF TH E ASSESSEE AND STOCK TAKING WAS DONE IN A VERY HAPHAZARD MANNER. 2. IN RESPECT OF EXCESS STOCK, THE DISCREPANCY IS V ERY SMALL. 3. IN RESPECT OF RENT RECEIPT, THE DISALLOWANCES WE RE MADE ON ASSUMPTION BASIS. 4. IN RESPECT OF RENT RECEIPT, THE DISALLOWANCES WE RE MADE ON ASSUMPTION BASIS. 4. THE ASSESSING OFFICER DID NOT FIND THE REPLY OF THE ASSESSEE SATISFACTORY AND LEVIED PENALTY OF RS.1,68,643 UNDE R SEC. 271(1)(C) OF THE ACT WITH THIS FINDING THE ASSESSEE HAS DELIBERATELY AND FRAUDULENTLY FURNISHED INACCURATE PARTICULARS OF INCOME IN TERMS OF EXPLAN ATION THE SECTION. THE LEARNED CIT(APPEALS) HAS ALSO UPHELD THE PENALTY RE JECTING THE CONTENTION OF THE ASSESSEE THAT THE ASSESSING OFFICER IN THE A SSESSMENT ORDER HAS NOT RECORDED HIS SATISFACTION FOR INITIATION OF PENALTY UNDER SEC. 271(1)(C) AGAINST THE ADDITION MADE BY HIM. 5. IN SUPPORT OF THE GROUND, THE LEARNED AR REITERA TED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND CONTENDED FUR THER THAT ADDITION MADE ON ACCOUNT OF SUPPRESSION OF ROOM CHARGES RECEIPTS HAS BEEN MADE ON 4 ESTIMATION BASIS AND HENCE PENALTY CANNOT BE LEVIED ON THIS ADDITION. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) CIT VS. AERO TRADERS (P) LTD. 322 ITR 316 (DE L.); II) HARIGOPAL SINGH VS. CIT 358 ITR 85 ( P & H); III) JUMA BHAI PREM CHAND (HUF) VS. CIT 243 ITR 812 (GUJ.); IV) GLOBAL GREEN CO. LTD. VS. DCIT ITA NO. 1390/ DEL/2011 (A.Y. 2001-02) ORDER DATED 13.07.2012; & V ) MADHUSHREE GUPTA & BRITISH AIRWAYS PLC. VS. UNI ON OF INDIA- 317 ITR 107 (DEL.). 6. THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDER OF THE AUTHORITIES BELOW. 7. WE HAVE NOTICED SOME UNDISPUTED FACTS ABOUT THE ADDITION THAT IS SUBJECT MATTER OF THE PENALTY PROCEEDINGS THAT THE ASSESSEE WAS NOT ABLE TO EXPLAIN, THE EXCESS STOCK AMOUNTING TO RS.1,13,257 FOUND DURING THE COURSE OF SURVEY. HE ALSO FAILED TO EXPLAIN EXCESS CASH AM OUNTING TO RS.456 FOUND DURING THE COURSE OF SURVEY. HOWEVER, THERE IS NO D ISPUTE THAT AN ADDITION OF RS.3,87,807 ON ACCOUNT OF ROOM CHARGES HAS BEEN MAD E ON ESTIMATE BASIS. WE THUS RESTRICT THE PENALTY LEVIED UNDER SEC. 271( 1)(C) OF THE ACT ON THE ADDITION OF RS.1,13,257 AND RS456 WHICH THE ASSESSE E FAILED TO EXPLAIN. SO FAR LEVY OF PENALTY ON ESTIMATED INCOME IS CONCERNE D, IT IS WELL ESTABLISHED POSITION OF LAW THAT PENALTY CANNOT BE LEVIED SINCE IN A CASE OF ESTIMATED 5 INCOME, IT CANNOT BE HELD BEYOND DOUBT THAT THERE W AS CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE TO ATTRACT THE PENAL PROVISIONS. THE PENAL TY LEVIED ON THE ADDITION OF RS.3,87,807 IS THUS DIRECTED TO BE DELETED. 8. SO FAR AS THE PLEA OF THE LEARNED AR THAT THE AS SESSING OFFICER WHILE INITIATING THE PENAL PROCEEDINGS HAS NOT RECORDED H IS SATISFACTION IN THIS REGARD IS CONCERNED, WE DO NOT FIND SUBSTANCE THERE IN SINCE THE SATISFACTION OF THE ASSESSING OFFICER THAT THERE WAS CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME WAS VERY MUCH DISCERNIBLE FROM THE ASSESSMENT ORDER WHICH IS REQUIRED TO JUSTIFY THE I NITIATION OF PENAL PROVISIONS UNDER SEC. 271(1)(C) OF THE INCOME-TAX A CT, 1961. 9. IN RESULT, THE APPEAL IS PARTLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON .0 2.2015 ( N.K. SAINI ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: /02/2015 MOHAN LAL 6 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR