Vineet Sharma, Delhi V. CIT-XII, New Delhi

ITA 4110/DEL/2011

• Counselvise Citation: 411020114 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 29-10-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 09-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S MEENA
• Assessee Lawyers: SANJAY MEHRA
• Keywords: Income from undisclosed sources; Principle of natural justice; Condonation of delay
• Section: 143(3); 153A; 263; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH H HH H : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NOS SS S. .. .4109/DEL/2011 & 4110/DEL/2011 4109/DEL/2011 & 4110/DEL/2011 4109/DEL/2011 & 4110/DEL/2011 4109/DEL/2011 & 4110/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEARS SS S : : : : 2005 2005 2005 2005- -- -06 & 2006 06 & 2006 06 & 2006 06 & 2006- -- -07 0707 07 SHRI VINEET SHARMA, SHRI VINEET SHARMA, SHRI VINEET SHARMA, SHRI VINEET SHARMA, 144, 144, 144, 144, SAVITA VIHAR, SAVITA VIHAR, SAVITA VIHAR, SAVITA VIHAR, DELHI DELHI DELHI DELHI 110 092. 110 092. 110 092. 110 092. PAN : ABJPS1169C. PAN : ABJPS1169C. PAN : ABJPS1169C. PAN : ABJPS1169C. VS. VS. VS. VS. COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX (CENTRAL) (CENTRAL) (CENTRAL) (CENTRAL)- -- -II, NEW DELHI II, NEW DELHI II, NEW DELHI II, NEW DELHI (PRESENTLY (PRESENTLY (PRESENTLY (PRESENTLY JURISDICTION JURISDICTION JURISDICTION JURISDICTION OF OF OF OF COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX- -- -XII, XII, XII, XII, NEW DELHI). NEW DELHI). NEW DELHI). NEW DELHI). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY MEHRA, FCA. RESPONDENT BY : SHRI R.S. MEENA, CIT-DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX, CENTRAL- II, NEW DELHI DATED 10 TH MARCH, 2011 FOR THE AY 2005-06 & 2006-07. 2. THERE IS A DELAY OF 118 DAYS IN FILING THE APPEALS. THE ASSESSEE HAS FILED APPLICATIONS FOR CONDONATION OF DELAY IN WH ICH HE HAS SUBMITTED THAT HE HAS BEEN SUFFERING FROM HEART AILMEN TS AND, IN THE PAST, HAS UNDERGONE SURGERY. THAT SINCE APRIL, 2011, H E IS NOT KEEPING GOOD HEALTH AND WAS ADVISED TO TAKE BED REST AND AVOID STRESS. THAT THE ORDER FRAMED UNDER SECTION 263 WAS RECEIVED BY H IS SON WHO DID NOT COMMUNICATE THE SAME TO THE ASSESSEE FOR THE ABOVE R EASONS. LATER ON, UPON RECEIPT OF THE NOTICE DATED 23.08.20 11, THE ASSESSEE CAME TO KNOW ABOUT IT FOR THE FIRST TIME. THEREFORE , THE APPEALS COULD NOT BE FILED WITHIN THE SPECIFIED LIMIT. IN SUPPORT OF THE ABOVE ITA-4109 & 4110/D/2011 2 CONTENTIONS, THE ASSESSEE HAS PLACED ON RECORD THE DOCUM ENTS IN THE FORM OF MEDICAL CERTIFICATES PLACED AT PAPER BOOK PA GE NOS. D-5 TO D- 16. IT WAS, THEREFORE, REQUESTED THAT THE DELAY IN F ILING THE APPEALS MAY BE CONDONED. 3. LEARNED DR OBJECTED TO THE CONDONATION OF DELAY. 4. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE SIDES AND KEEPING IN VIEW THE JUDGMENT OF HON'BLE SUPREME COURT IN TH E CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI AND OTHER S [1987] 167 ITR 471, WE ARE SATISFIED THAT THE ASSESSEE WAS PREVENTED BY SU FFICIENT CAUSE IN FILING THE APPEALS IN TIME. THE ASSESSEE HAS FI LED AMPLE DOCUMENTARY EVIDENCE IN THE FORM OF MEDICAL CERTIFI CATES, PRESCRIPTION ETC. IN SUPPORT OF ITS CLAIM THAT HE IS NOT KEEPING GO OD HEALTH FOR THE PAST FEW YEARS. ACCORDINGLY, WE CONDONE THE DELAY I N FILING THE APPEALS. 5. IN THESE TWO APPEALS, COMMON GROUNDS ARE RAISED BY THE ASSESSEE WHICH READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE COMMISSIONER OF INCOME-TAX, CENTRAL- II, NEW DELHI (HEREINAFTER REFERRED TO AS THE HONBLE C IT) ERRED IN INITIATING PROCEEDINGS UNDER SECTION 263 OF THE A CT AND HENCE, THE ORDER PASSED BY THE HONBLE CIT UNDER SECTI ON 263 OF ACT IS BAD IN LAW AND VOID AB INITIO. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE COMMISSIONER OF INCOME TAX (CENTRA L)-II, DELHI ERRED IN UTILIZING INFORMATION FURNISHED BY T HE APPELLANT DURING PROCEEDING UNDER SECTION 264 OF THE ACT TO INFER THAT PENALTY ORDER DATED 26.06.2009 FRAMED U/S 271(1)(C) OF INCOME TAX ACT, 1961 BY ASSISTANT COMMISSIONER OF INCOME TAX, (HEREINAFTER REFERRED TO AS THE LD. ASSESSING OFFICER) IS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE. ITA-4109 & 4110/D/2011 3 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT ERRED IN HOLDING THAT SINCE THE QUANTUM AMOUNT FOR LEVY OF PENALTY HAS BEEN WRONGLY TAKEN BY THE ASSESSING OFFICER AND HENCE, HAS ERRED IN REMANDING THE MATTER BACK TO THE LD. ASSESSING OFFICER. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT ERRED IN INITIATING PROCEEDINGS UNDER SE CTION 263 ARISING OUT OF SAME ORDER DATED 271(1)(C) PENDING ADJUDICATING BEFORE HIM IN PROCEEDINGS UNDER SECTION 264 OF THE ACT IN APPELLANTS OWN CASE. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE COMMISSIONER OF INCOME TAX (CENTRA L)-II, DELHI ERRED IN CONCLUDING THAT THE PENALTY ORDER DA TED 26.06.2009 FRAMED U/S 271(1)(C) OF INCOME TAX ACT, 1 961 BY LD. A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF REVENUE. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE COMMISSIONER OF INCOME TAX (CENTRA L)-II, DELHI ERRED IN INITIATING AND CONCLUDING PROCEEDING S UNDER SECTION 263 DURING THE PENDENCY OF PROCEEDINGS U/S 264 OF THE INCOME TAX ACT. 7. THAT THE GROUNDS OF APPEAL AS HEREIN ARE WITHOUT PREJUDICE TO EACH OTHER. 6. AT THE TIME OF HEARING BEFORE US, IT IS STATED BY T HE LEARNED COUNSEL THAT SEARCH UNDER SECTION 132 OF THE INCOME-T AX ACT, 1961 WAS CONDUCTED AT THE BUSINESS/RESIDENTIAL PREMISES OF THE ASSESSE E ON 10/11.01.2007. THAT IN RESPONSE TO NOTICE UNDER SECT ION 153A, THE ASSESSEE FILED THE RETURN OF INCOME DISCLOSING THE INCOM E OF ` 20,32,637/- AND ` 3,17,01,205/- FOR AY 2005-06 AND 2006-07 RESPECTIVELY. THE SAME WAS ACCEPTED UNDER SECTION 14 3(3) READ WITH SECTION 153A OF THE IT ACT. THE ASSESSING OFFICER, VID E ORDER DATED 26.06.2009, LEVIED PENALTY UNDER SECTION 271(1)(C) AMOUNTING TO ` 2,69,280/- AND ` 1,04,73,075/- FOR AY 2005-06 AND 2006-07 RESPECTIVELY. THE PENALTY WAS LEVIED ON THE INCOME O F ` 8,00,000/- AND ITA-4109 & 4110/D/2011 4 ` 3,11,67,633/- FOR AY 2005-06 AND 2006-07 RESPECTIVEL Y BECAUSE THAT WAS THE TOTAL CONCEALED INCOME WORKED OUT BY THE ASSESSI NG OFFICER AS PER PENALTY ORDER. AGAINST THE PENALTY ORDER, THE A SSESSEE FILED APPLICATION UNDER SECTION 264 ON 06.08.2009 BEFORE THE CIT, CENTRAL-II FOR QUASHING THE PENALTY ORDER. ON THE OTHER HAND, THE CIT, CENTRAL-II INITIATED PROCEEDINGS UNDER SECTION 263 OF THE ACT V IDE NOTICE DATED 03.03.2011. THE ASSESSEE FURNISHED THE REPLY BEFORE THE CIT ON 09.03.2011. HOWEVER, THE CIT PASSED ORDER UNDER SECT ION 263 ON 10.03.2011 IN WHICH HE SET ASIDE THE PENALTY ORDER AN D DIRECTED THE ASSESSING OFFICER TO DISPOSE OF THE MATTER IN ACCORDANCE WITH THE PROVISIONS OF THE IT ACT. THAT THE CIT TREATED THE ASSESSEES APPLICATION UNDER SECTION 264 AS INFRUCTUOUS VIDE ORD ER DATED 10.03.2011 ON THE GROUND THAT THE PENALTY ORDER HAS ALREADY BEEN SET ASIDE IN PROCEEDINGS UNDER SECTION 263. THE ASSESSEE, AG GRIEVED WITH THE ACTION OF THE ASSESSING OFFICER, IS IN APPEAL BEFOR E THE ITAT. 7. AT THE TIME OF HEARING BEFORE US, THE LEARNED COU NSEL FOR THE ASSESSEE ARGUED AT LENGTH. HIS ARGUMENTS WERE TWO-FOLD : - (I) (I)(I) (I) THAT THE JURISDICTION UNDER SECTION 263 CAN BE E XERCISED BY THE CIT ONLY IF THE ORDER OF THE ASSESSING OFFICER IS ERRONE OUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THAT UN DER SECTION 271(1)(C), THE ASSESSING OFFICER IS VESTED WITH THE DISCR ETION TO LEVY PENALTY UNDER SECTION 271(1)(C) IN RESPECT OF THE IN COME WHICH IS CONCEALED BY THE ASSESSEE OR THE INCOME IN RESPECT OF WH ICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. THE ASSESSI NG OFFICER HAS BEEN VESTED WITH THE DISCRETION TO LEVY THE PENALTY A T THE RATE OF 100% TO 300% OF THE TAX SOUGHT TO BE EVADED. NOW, IN THE CASE OF THE ASSESSEE, THE ASSESSEE OFFERED THE ADDITIONAL INCOME OF ` 18,20,505/- AND ` 3,13,85,360/- IN AY 2005-06 AND 2006-07 RESPECTIVELY . THAT THE INCOME RETURNED IN RESPONSE TO NOTICE UNDER SECTION 1 53A IN WHICH ITA-4109 & 4110/D/2011 5 THESE ADDITIONAL INCOMES WERE INCLUDED WAS DULY ACCEPT ED BY THE ASSESSING OFFICER IN THE ORDER PASSED UNDER SECTION 143(3 ). THAT IN THE PENALTY ORDER, THE ASSESSING OFFICER WORKED OUT THE CON CEALED INCOME AT ` 8,00,000/- FOR AY 2005-06 AND ` 3,11,67,633/- FOR AY 2006-07. THAT THE ONLY BASIS OF PASSING THE ORDER UNDER SECTION 263 I S THAT THE ASSESSING OFFICER HAS NOT LEVIED THE PENALTY ON THE ENTI RE ADDITIONAL INCOME DISCLOSED IN THE RETURN FURNISHED IN RESPONSE TO NOTICE UNDER SECTION 153A. IT IS VEHEMENTLY CONTENDED BY THE LEA RNED COUNSEL THAT THE PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE ONL Y IN RESPECT OF THE CONCEALED INCOME AND NOT IN RESPECT OF EVERY INCOME. THAT THE ASSESSING OFFICER HAS BEEN GIVEN DISCRETION UNDER SECTION 271(1)(C) TO LEVY THE PENALTY IN RESPECT OF THE INCOME CONCEALED. THAT IN THE PENALTY ORDER, THE ASSESSING OFFICER HAS CLEARLY MENTION ED THE TOTAL CONCEALMENT WORKS OUT TO RS.8,00,000/-. IN AY 2005-0 6 AND THE TOTAL CONCEALMENT WORKS OUT TO RS.3,11,67,633/-. IN AY 20 06-07. THUS, WHEN IN THE OPINION OF THE ASSESSING OFFICER THE ENTIRE ADDITIONAL INCOME IS NOT THE CONCEALED INCOME AND HE HAS LEVIED THE PENALTY ON SUBSTANTIAL PORTION OF THE ADDITIONAL INCOME DISCLOSED, IT CANNOT BE SAID THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AS WE LL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF THE VIEW OF THE ASSESSING OFFICER IS ACCEPTED, THEN LEVY OF PENALTY WOULD BE A UTOMATIC IN RESPECT OF THE ENTIRE ADDITIONAL INCOME DISCLOSED BY THE ASSESSEE AFTER THE SEARCH. IN THE CASE UNDER CONSIDERATION, IF WE READ T HE PENALTY ORDER, IT WOULD BE EVIDENT THAT IN PARAGRAPH 1 ITSELF, THE ASSESSING OFFICER HAS GIVEN THE DETAILS WITH REGARD TO INCOME ASSESSED BY HIM AND THE SEARCH CONDUCTED AT THE ASSESSEES PREMISES. HE ALSO MENTIO NS ABOUT THE TOTAL UNDISCLOSED INCOME DECLARED DURING THE COUR SE OF SEARCH BY THE GROUP. THEREAFTER, AT PAGE 2, HE HAS DISCUSSED THE LEGAL POSITION WITH REGARD TO LEVY OF PENALTY AND THEN HE FINALLY WORKS OUT THE PENALTY ON THE TOTAL CONCEALED INCOME AS WORKED OUT BY HIM. THAT MERELY BECAUSE THE ASSESSING OFFICER HAS NOT GIVEN THE WORKING O F CONCEALED ITA-4109 & 4110/D/2011 6 INCOME BY HIM, IT CANNOT BE SAID THAT HIS ORDER IS EIT HER ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN SUPPO RT OF THIS CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS:- (A) CIT VS. MAX INDIA LTD. [2007] 295 ITR 282 (SC). (B) CIT VS. GABRIEL INDIA LTD. [1993] 203 ITR 108 (BOM BAY). (II) (II)(II) (II) THAT AGAINST THE PENALTY ORDER IN BOTH THE YEA RS, THE ASSESSEE HAD FILED THE PETITION UNDER SECTION 264 BEFORE THE CIT. THAT THE CIT, INSTEAD OF DISPOSING THE APPLICATION OF THE ASSESSEE UNDE R SECTION 264, KEPT IT PENDING WITH HIM, THEREAFTER INITIATED PROC EEDINGS UNDER SECTION 263, PASSED THE ORDER UNDER SECTION 263 IN WH ICH GAVE DIRECTION TO THE ASSESSING OFFICER TO ENHANCE THE PENA LTY AND THEN DISMISSED THE ASSESSEES APPLICATION UNDER SECTION 264 HOLD ING THE SAME TO BE INFRUCTUOUS. THE SAME IS NOT AS PER THE SPIRI T OF SECTION 264. HE ALSO FURNISHED BEFORE US THE FRESH PENALTY ORD ER PASSED IN PURSUANCE TO THE ORDER UNDER SECTION 263 WHEREIN THE PENALTY HAS BEEN ENHANCED AND LEVIED ON THE INCOME OF ` 18,18,429/- FOR AY 2005- 06 & ` 3,13,69,743/- FOR AY 2006-07. HE, THEREFORE, SUBMIT TED THAT THE ORDER OF LEARNED CIT PASSED UNDER SECTION 263 IN BOT H THE YEARS MAY BE QUASHED. 8. LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORD ER OF THE LEARNED CIT PASSED UNDER SECTION 263. HE SUBMITTED TH AT IF WE READ THE ASSESSMENT ORDER AS WELL AS PENALTY ORDER, IT IS OBVIO US THAT THE ASSESSING OFFICER INTENDED TO LEVY THE PENALTY ON THE E NTIRE UNACCOUNTED INCOME UNEARTHED AS A RESULT OF SEARCH. H E REFERRED TO PAGE 2 OF THE ASSESSMENT ORDER FOR AY 2005-06 WHEREIN THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE GROUP HAD OFFERED AN INCOME OF ` 16 CRORES AS UNACCOUNTED INCOME. HOWEVER, AS THE DISCL OSURE IS THE CONSEQUENCE OF SEARCH, THE ASSESSING OFFICER FORMED AN OP INION THAT ITA-4109 & 4110/D/2011 7 THE ASSESSEE HAD CONCEALED THE INCOME AND ACCORDINGLY, HE INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). SIMILA RLY, IN THE PENALTY ORDER ALSO, ON LAST PAGE, THE ASSESSING OFFICER HAS RECORD ED THE FINDING IF A PENALTY CANNOT BE LEVIED SUBSEQUENT TO UNEARTHI NG OF ADDITIONAL INCOME DETECTED DURING A SEARCH, IT WOULD BE AN OPEN INCENTIVE TO ALL TO CONCEAL THEIR INCOME TILL SUCH TIME IT IS DETECTED BY THE DEPARTMENT AND GET AWAY WITH JUST THE TAX LIABILITY AND NIL P ENALTY. HE STATED THAT FROM THE COMBINED READING OF THE FINDING IN TH E ASSESSMENT ORDER AS WELL AS IN PENALTY ORDER, IT IS OBVIOUS THAT THE ASSESSI NG OFFICER INTENDED TO LEVY THE PENALTY ON THE ENTIRE INCOME U NEARTHED AS A RESULT OF SEARCH. THEREFORE, THE LEVY OF PENALTY UND ER SECTION 271(1)(C) ON THE INCOME WHICH WAS LESS THAN THE INCOME UNEARTHED AS A RESULT OF SEARCH AND WHICH WAS OFFERED AS AN ADDITIONAL INCOME I N THE RETURNED INCOME UNDER SECTION 153A WAS A PATENT MISTAKE COMMIT TED BY THE ASSESSING OFFICER. THIS WAS A FACTUAL MISTAKE WHICH CAME TO THE KNOWLEDGE OF THE CIT WHEN HE CALLED FOR THE RECORD. THAT THE CIT MAY CALL FOR THE RECORD SUO MOTU OR DURING SOME OTHER PROCEEDINGS. THAT WHEN HE EXAMINED THE RECORD, HE FOUND THAT THE PENA LTY ORDER OF THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE IN TERESTS OF THE REVENUE AND, THEREFORE, HE SET ASIDE THE SAME TO THE F ILE OF THE ASSESSING OFFICER FOR PASSING FRESH PENALTY ORDER IN ACCOR DANCE WITH LAW. THE SAME SHOULD BE SUSTAINED. 9. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THERE IS N O DISPUTE THAT AGAINST THE PENALTY ORDERS PASSED UNDER SECTION 271( 1)(C), THE ASSESSEE DID NOT FILE ANY APPEAL BUT FILED REVISION PETI TION UNDER SECTION 264. DURING THE PENDENCY OF THE REVISION PE TITION WITH HIM, THE CIT INITIATED PROCEEDINGS UNDER SECTION 263. IN THE ORDER UNDER SECTION 263, HE SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER AND THEN HE DISMISSED THE ASSESSEES PETITION FILED UNDER SECTION 264 ITA-4109 & 4110/D/2011 8 HOLDING THE SAME TO BE INFRUCTUOUS. HE HELD THE PENA LTY ORDER UNDER SECTION 271(1)(C) TO BE ERRONEOUS ON THE GROUND THAT THE ASSESSING OFFICER HAD NOT LEVIED THE PENALTY IN RESPECT OF THE ENTIRE ADDITIONAL INCOME OFFERED IN THE RETURN FILED IN RESPONSE TO NOT ICE UNDER SECTION 153A. IN THE FRESH PENALTY ORDER PASSED IN PURSUANCE T O ORDER UNDER SECTION 263, THE ASSESSING OFFICER LEVIED THE PENALTY O N THE ENTIRE ADDITIONAL INCOME DISCLOSED IN THE RETURN FILED IN RE SPONSE TO NOTICE UNDER SECTION 153A. THESE FACTS HAVE ALSO BEEN RECORD ED BY THE ASSESSING OFFICER IN THE FRESH PENALTY ORDER PASSED UNDER SECTION 271(1)(C) ON 30 TH SEPTEMBER, 2011. FOR READY REFERENCE, THE SAME IS REPRODUCED BELOW:- THE ASSESSEE MOVED REVISION PETITION UNDER SECTION 264 ON 06/08/2009 BEFORE THE CIT CENTRAL-II FOR QUASHING THE PENALTY ORDER. ON THE OTHER HAND, CIT, CENTRAL-II INITIATED PROCEEDINGS U/S 263 OF THE ACT OBSERVING THAT IN THE PENALTY ORDER, THE A.O. HAD ERRONEOUSLY TAKEN THE FI GURE OF CONCEALED INCOME AT RS.8,00,000/- AS AGAINST ADDITIO NAL UNDISCLOSED INCOME OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME AT RS.17,88,427/-. LD.CIT, CENTRAL-II, NE W DELHI CONCLUDED THE PROCEEDINGS UNDER SECTION 263 OF THE A CT VIDE ORDER DT. 10-03-2011 THEREBY SETTING ASIDE THE O RDER DT. 26.06.2009 OF THE AO AND RESTORING BACK THE MATT ER TO THE FILE OF THE AO. ASSESSEES PETITION UNDER SECTION 2 64 OF THE ACT WAS ALSO DISPOSED OFF ON THE SAME DATE WHEREIN IT WAS OBSERVED: IN THE INTEREST OF NATURAL JUSTICE THE PENALTY ORDER IS SET- ASIDE AND THE PROCEEDINGS ARE RESTORED BACK TO THE FIL E OF THE A.O. WITH THE DIRECTIONS TO DISPOSE OFF THE MATTE R IN ACCORDANCE WITH THE PROVISIONS OF INCOME TAX ACT, VI S-A-VIZ JUDICIAL PRONOUNCEMENTS ON THE ISSUE AFTER AFFORDING P ROPER OPPORTUNITY TO THE ASSESSEE. 10. THAT SECTION 264 OF THE ACT READS AS UNDER:- 264. (1) IN THE CASE OF ANY ORDER OTHER THAN AN OR DER TO WHICH SECTION 263 APPLIES PASSED BY AN AUTHORITY ITA-4109 & 4110/D/2011 9 SUBORDINATE TO HIM, THE COMMISSIONER MAY, EITHER OF HI S OWN MOTION OR ON AN APPLICATION BY THE ASSESSEE FOR REVISION, CALL FOR THE RECORD OF ANY PROCEEDING UNDE R THIS ACT IN WHICH ANY SUCH ORDER HAS BEEN PASSED AND MAY MAKE SUCH INQUIRY OR CAUSE SUCH INQUIRY TO BE MADE AND , SUBJECT TO THE PROVISIONS OF THIS ACT, MAY PASS SUCH ORDE R THEREON, NOT BEING AN ORDER PREJUDICIAL TO THE ASSESSEE , AS HE THINKS FIT. 11. FROM THE ABOVE, IT IS EVIDENT THAT UNDER SECTION 264, THE CIT CAN REVISE ANY ORDER PASSED BY ANY AUTHORITY SUBORDINATE TO HIM ON HIS OWN MOTION OR ON THE APPLICATION MADE BY THE ASSESSEE. HE CAN PASS THE ORDER AS HE THINKS FIT NOT BEING AN ORDER PREJUDI CIAL TO THE ASSESSEE. THUS, IT IS VERY CLEAR THAT UNDER SECTION 264, THE CI T CANNOT PASS ANY ORDER WHICH IS PREJUDICIAL TO THE ASSESSEE. NOW, IN THE CASE UNDER APPEAL BEFORE US, IT IS EVIDENT THAT THE ASSESSEE MOVED R EVISION PETITION UNDER SECTION 264 BEFORE THE CIT, CENTRAL- II FOR QUASHING THE PENALTY ORDER. ON THE OTHER HAND, THE CIT, CENTRAL -II INITIATED PROCEEDINGS UNDER SECTION 263 OF THE INCOME-TAX ACT AND PASSED ORDER THEREON WHICH WAS PREJUDICIAL TO THE INTERESTS OF THE ASSESSEE. THAT SECTION 264 OF THE INCOME-TAX ACT DEBARS THE CIT FRO M PASSING ANY ORDER WHICH IS PREJUDICIAL TO THE ASSESSEE. THEREFORE, IN OUR OPINION, WHEN THE CIT CANNOT PASS THE ORDER PREJUDICIAL TO THE ASSESSEE UNDER SECTION 264, ONCE THE ASSESSEE APPROACHED HIM FOR GETTI NG RELIEF UNDER SECTION 264, IF HE IS ALLOWED TO PASS ORDER UNDER SECT ION 263 PREJUDICIAL TO THE ASSESSEE, IT WOULD MAKE PROHIBITION UNDER SECTION 264 THAT THE CIT CANNOT PASS THE ORDER PREJUDICIAL TO THE ASSESSEE AS NULLITY. THEREFORE, IN OUR OPINION, ON THE FACTS OF THE ASSESSEES CASE, THE ORDER UNDER SECTION 263 CANNOT BE SUSTAINED. 12. THAT EVEN ON FACTS, IN OUR OPINION, THE ORDER UN DER SECTION 263 IS NOT LIABLE TO BE SUSTAINED BECAUSE IT IS A SETTLED POSITI ON THAT PENALTY UNDER SECTION 271(1)(C) IS NOT TO BE LEVIED ON EVERY INCOME. THE ITA-4109 & 4110/D/2011 10 PENALTY IS TO BE LEVIED ONLY WHEN THE CONDITIONS PRE SCRIBED UNDER SECTION 271(1)(C) ARE SATISFIED. EVEN WHEN WE SEE THE LANGUAGE OF SECTION 271(1)(C), EVEN ON CONCEALED INCOME, THE LE VY OF PENALTY IS NOT AUTOMATIC BECAUSE DISCRETION HAS BEEN GIVEN TO THE ASSESSI NG OFFICER TO LEVY OR NOT TO LEVY THE PENALTY WHICH WOULD BE C LEAR FROM THE USE OF THE WORDS MAY IN SECTION 271(1)(C). MOREOVER, HE HAS ALSO BEEN GIVEN DISCRETION TO LEVY THE PENALTY AT THE RATE RAN GING BETWEEN 100% TO 300% OF THE TAX SOUGHT TO BE EVADED. THEREFORE, IF THE ASSESSING OFFICER HAD LEVIED THE PENALTY UNDER SECTION 271(1) (C) ON THE PART OF THE ADDITIONAL INCOME, IT CANNOT BE SAID THAT THE OR DER OF THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTE RESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263. IF WE L OOK AT THE FACTS OF THE CASE, WE FIND THAT ON THE SUBSTANTIAL PORTION OF THE ADDITIONAL INCOME, THE PENALTY HAS ALREADY BEEN LEVIED. IN AY 2006-07, THE INCOME DISCLOSED IN RESPONSE TO NOTICE UNDER SECTION 15 3A AND WHICH WAS ACCEPTED ALSO UNDER SECTION 143(3) WAS ` 3,17,01,205/-, OUT OF WHICH, THE ASSESSING OFFICER HAS ALREADY LEVIED THE PENA LTY FOR CONCEALMENT ON THE INCOME OF ` 3,11,67,633/-. THAT IN AY 2005-06, THE INCOME RETURNED IN RESPONSE TO NOTICE UNDER SECTION 1 53A WAS ` 20,32,637/- WHICH WAS ASSESSED ALSO AND, OUT OF WHICH, PE NALTY HAS BEEN LEVIED ON THE INCOME OF ` 8,00,000/-. THUS, WE FIND THAT ON THE SUBSTANTIAL PORTION OF THE INCOME ASSESSED, PENALTY UNDE R SECTION 271(1)(C) HAS BEEN LEVIED. IN THE PENALTY ORDER, TH E ASSESSING OFFICER HAS DISCUSSED EACH AND EVERY FACT AS WELL AS LEGAL POSITIO N IN DETAIL AND, AT THE END, HE HAS ALSO MENTIONED THE AMOUNT OF CONCEALMENT WORKED OUT BY HIM AND THEN CALCULATED PENALTY THERE ON. THAT MERELY BECAUSE IN THE OPINION OF THE CIT, THE PENALTY WOULD HAVE BEEN LEVIED ON THE ENTIRE RETURNED/ASSESSED INCOME, IT CANNOT BE SAI D THAT THE ASSESSMENT ORDER WAS EITHER ERRONEOUS OR PREJUDICIAL TO T HE INTERESTS OF THE REVENUE. ITA-4109 & 4110/D/2011 11 13. THAT HONBLE APEX COURT IN THE CASE OF MAX INDIA LTD. (SUPRA) HELD AS UNDER:- THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REVE NUE IN SECTION 263 OF THE INCOME-TAX ACT, 1961, HAS TO BE RE AD IN CONJUNCTION WITH THE EXPRESSION ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENU E. FOR EXAMPLE, WHEN THE ASSESSING OFFICER ADOPTS ONE OF TWO COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. 14. THAT HON'BLE BOMBAY HIGH COURT IN THE CASE OF GA BRIEL INDIA LTD. (SUPRA) AT PAGES 114 & 115 OF 203 ITR OBSERVED AS UNDER :- FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN OR DER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN ITO ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALI SE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONE R FOR THAT OF THE ITO, WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE ITO WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACT S AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER, HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE ITO. T HAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EXAMI NE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HI GHER ITA-4109 & 4110/D/2011 12 FIGURE. IT IS BECAUSE THE ITO HAS EXERCISED THE QUASI-J UDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIV ED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTERESTS OF THE REVENU E. BUT THAT BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIO NER WITH THE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, VIZ., THAT THE ORDER IS ERRONEOUS, IS ABSE NT. 15. IN OUR OPINION, ON THE FACTS OF THE ASSESSEES CASE, THE RATIO OF BOTH THE DECISIONS OF HONBLE APEX COURT AND HON'BLE BOMBAY HIGH COURT WOULD BE SQUARELY APPLICABLE. THE ASSESSING OFFIC ER HAD LEVIED THE PENALTY ON SUBSTANTIAL PORTION OF THE INCOME ASSESSED . MERELY BECAUSE THE COMMISSIONER IS OF THE OPINION THAT THE PEN ALTY LEVIED BY THE ASSESSING OFFICER IS ON THE LOWER SIDE AND LEFT TO TH E COMMISSIONER HE WOULD HAVE LEVIED THE PENALTY ON THE ENTIRE INCO ME ASSESSED WOULD NOT VEST THE COMMISSIONER WITH THE POWER OF SUO MOTU REVISION UNDER SECTION 263. IN VIEW OF THE ABOVE, WE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE APEX COURT AS WELL AS HON'BLE BOMB AY HIGH COURT CITED SUPRA, QUASH THE ORDERS PASSED UNDER SECTION 263. 16. THE ASSESSEE HAS ALSO FILED AN APPLICATION FOR ADMISSI ON OF FOLLOWING ADDITIONAL GROUNDS:- THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHI LE DISPOSING OF THE PRESENT APPEAL AGAINST THE ORDER PASSED U/S 263, DIRECTIONS MAY BE GIVEN FOR CONSEQUENTIAL REL IEF IN RESPECT OF ORDER PASSED U/S 264 WHICH HAS BEEN DISPOSED OFF ON THE GROUND THAT THE PENALTY PROCEEDINGS HAVE BEEN RESTORED TO THE AO BY WAY OF ORDER PASSED U/S 263 UNDER CHALLENGE BEFORE THIS HONBLE TRIBUNAL, THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, DIRECTIONS MAY BE GIVEN TO RESTORE THE REVISIONS PETITI ON U/S 264 WHICH IS DISMISSED AS INFRUCTUOUS IN CONSEQUENCE ITA-4109 & 4110/D/2011 13 OF THE ORDER PASSED U/S 263 OF THE INCOME TAX ACT UNDE R CHALLENGE IN THIS APPEAL. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, SUCH OTHER RELIEF AND DIRECTIONS MAY BE GIVEN PERTAINING TO THE CITS ORDERS UNDER SECTIONS 264 OF THE ACT AS MAY BE DEEMED APPROPRIATE BY THIS HONBLE TRIBUNAL. 17. AT THE TIME OF HEARING BEFORE US, IT IS STATED BY THE LEARNED COUNSEL THAT THE ADDITIONAL GROUNDS ARE IN THE NATURE OF CONSEQUENTIAL RELIEF AND THESE GROUNDS SHOULD ARISE ONLY WHEN THE ORD ERS UNDER SECTION 263 ARE QUASHED. HE SUBMITTED THAT SINCE THE ASSESSING OFFICER PASSED THE ORDER UNDER SECTION 263 SETTING ASID E THE PENALTY ORDER, HE DISMISSED THE ASSESSEES APPLICATION FILED UNDER SECTION 264 HOLDING THE SAME TO BE INFRUCTUOUS. IT IS SUBMITTED BY THE LEARNED COUNSEL THAT IF THE ORDERS UNDER SECTION 263 ARE QUASH ED, THEN AS A CONSEQUENCE, THE ASSESSEES APPLICATION UNDER SECTION 264 SHOULD BE DIRECTED TO BE REVIVED AND DISPOSED OF ON MERITS IN AC CORDANCE WITH LAW. 18. LEARNED DR, ON THE OTHER HAND, STATED THAT THIS A PPEAL BEFORE THE ITAT IS AGAINST THE ORDER UNDER SECTION 263. THE RE IS NO APPEAL PENDING BEFORE THE ITAT AGAINST THE ORDER UNDER SECT ION 264 AND, THEREFORE, THE ITAT IS NOT COMPETENT TO ISSUE ANY DIRE CTION WITH REGARD TO ORDER UNDER SECTION 264. 19. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIAL PLACED BEFORE US. WE FIND THAT IN THE ADDITIONAL GROUNDS, T HE ASSESSEE IS CLAIMING THE RELIEF AGAINST THE DISMISSAL OF ORDER PASSED UNDER SECTION 264. THOUGH THE RELIEF CLAIMED IS ONLY CONSEQUENTIA L IN NATURE BUT, AS RIGHTLY POINTED OUT BY THE LEARNED DR THAT WE DO NO T HAVE ANY JURISDICTION TO GIVE ANY DIRECTION WITH REGARD TO OR DER PASSED UNDER SECTION 264, THEREFORE, WE REFRAIN OURSELVES FROM GI VING ANY DIRECTION ITA-4109 & 4110/D/2011 14 WITH REGARD TO ORDER PASSED UNDER SECTION 264. HOWEV ER, SUFFICE IT TO SAY THAT ALL NATURAL CONSEQUENCES OF QUASHING OF THE O RDER UNDER SECTION 263 WOULD FOLLOW. WITH THESE OBSERVATIONS, WE DISPOSE OF THE ADDITIONAL GROUNDS OF THE ASSESSEE. 20. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWE D PRO TANTO . DECISION PRONOUNCED IN THE OPEN COURT ON 8 TH NOVEMBER, 2013. SD/- SD/- ( (( (CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 08.11.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : SHRI VINEET SHARMA, SHRI VINEET SHARMA, SHRI VINEET SHARMA, SHRI VINEET SHARMA, 144, SAVITA VIHAR, DELHI 144, SAVITA VIHAR, DELHI 144, SAVITA VIHAR, DELHI 144, SAVITA VIHAR, DELHI 110 09 110 09 110 09 110 092. 2.2. 2. 2. RESPONDENT : COMMISSIONER OF INCOME TAX (CENTRAL) COMMISSIONER OF INCOME TAX (CENTRAL) COMMISSIONER OF INCOME TAX (CENTRAL) COMMISSIONER OF INCOME TAX (CENTRAL)- -- -II, II, II, II, NEW DELHI (PRESENTLY JURISDICTION OF NEW DELHI (PRESENTLY JURISDICTION OF NEW DELHI (PRESENTLY JURISDICTION OF NEW DELHI (PRESENTLY JURISDICTION OF COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX- -- -XII, NEW DELHI). XII, NEW DELHI). XII, NEW DELHI). XII, NEW DELHI). 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR