DCIT, New Delhi V. Shri P.D. Agarwal, New Delhi

ITA 4115/DEL/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6781 (ITAT-DELHI)
• Duration Of Justice: 40 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2010
• Appeal Filed By: Department
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: K R MANJANI
• Keywords: Agreed addition

Judgement Text

ITA 4115/DEL/09 P.D. AGARWAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.D. RANJAN ITA NO. 4115/DEL/09 A.Y.: 2004-05 DCIT, CIRCLE 13(1), VS. P.D. AGARWAL, NEW DELHI. A-62, MAYFAIR GARDEN, NEW DELHI-110016. PAN/ GIR NO. ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI H.K. LAL SR. DR RESPONDENT BY : SHRI K.R. MANJANI ADV. O R D E R PER R.P. TOLANI, J.M : THIS IS REVENUES APPEAL AGAINST THE ORDER OF CIT(A )-XVI, NEW DELHI DATED 23-7-2009 RELATING TO A.Y. 2004-05. FOLLOWING GROUNDS ARE RAISED: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENAL TY OF RS. 14,20,000/- LEVIED U/S 271(1)(C OF THE INCOME T AX ACT WITHOUT APPRECIATING THE FACT THAT THE SUBMISSI ONS FOR THE CASH OF RS. 42.70 LAC SEIZED IN DECEMBER, 2003 WERE FILED AS LATE AS ON 26-11-2006 IN THE HANDS OF TEN FAMILY MEMBERS AND IT WAS ONLY WHEN THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO ESTABLISH THAT THE SOURCES OF CASH IN HANDS OF FAMILY MEMBERS WERE EXPLAINED THAT THE ASSESSEE SURRENDERED THE SUM OF RS. 42.70 LACS. 2. THE CIT(A) HAS MERELY ACCEPTED THE ASSESSEES EXPLANATION THAT THE CASH IN HANDS OF VARIOUS FAMIL Y MEMBERS WAS EXPLAINED, ON THE FACE OF IT WITHOUT HI MSELF VERIFYING ITS VERACITY AS THE APPELLATE ORDER DOES NOT 2 INDICATE ANY SUCH EXAMINATION/ VERIFICATION BY THE CIT(A). 2. LEARNED DR CONTENDS THAT THE ADDITION IN QUESTIO N WAS SURRENDERED BY ASSESSEE HIMSELF WHICH BECOMES A PROPER ADMISSION O F A FACT. SINCE PENALTY HAS BEEN LEVIED ON THIS AGREED ADDITION, CIT(A) HAS ERRED IN DELETING THE PENALTY. RELIANCE IS PLACED ON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF POLO SINGH & CO. VS. CIT 98 ITR 564, F OR THE PROPOSITION THAT THE ADDITION MADE ON THE BASIS OF SURRENDER CAN BE BASIS FOR LEVY OF PENALTY U/S 271(1)(C). 3. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, VEHEMENTLY ARGUES THAT AO FAILED TO APPRECIATE A VITAL FACT TH AT PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE. DURING THE COURSE OF ASSESSM ENT ITSELF ASSESSEE FILED A LETTER DATED 20-11-2006 BEFORE AO IN WHICH COMPLETE DETAILS OF CASH AVAILABLE WITH OTHER FAMILY MEMBERS ALONG WITH THEI R COPIES OF RETURNS, PAN NOS., STATEMENT OF AFFAIRS AND EVIDENCE WERE SUBMIT TED. SINCE AO WAS INSISTING FOR ADDITION, TO AVOID LITIGATION AND LOO KING AT 65 YEARS OLD AGE OF ASSESSEE, THE AMOUNT WAS OFFERED FOR TAXATION PURPO SES. ASSESSEE WHILE SURRENDERING THE ABOVE INCOME HAD SPECIFICALLY PUT A CONDITION THAT SINCE SURRENDER WAS TO AVOID LITIGATION AND TO BUY PEACE OF MIND, NO PENALTY PROCEEDINGS SHOULD BE INITIATED. IT IS PLEADED THAT PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE AND ASSESSEE CAN RAISE EVEN A NEW PLEA TO AVOID THE PENALTY. IN THIS CASE ASSESSEE, DURING THE COURSE O F ASSESSMENT ITSELF AND CIT(A), HAS RELIED ON CATENA OF JUDGMENTS INCLUDING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ASHOK TAKE R (2007) 170 TAXMANN 471 (DEL.), AND VARIOUS OTHER JUDGMENTS HOLDING THA T THE ASSESSEE HAVING 3 EXPLAINED THE SOURCE OF CASH SEIZED WITH SUFFICIENT EVIDENCE, BEFORE INVESTIGATING WIND AS WELL AS AO, MERELY BECAUSE VO LUNTARY SURRENDER WAS MADE BY THE ASSESSEE, PENALTY SHOULD NOT BE IMPOSED . 3.1. LEARNED COUNSEL FURTHER CONTENDS THAT ASSESSEE S EXPLANATION IS NEITHER FOUND TO BE INCORRECT NOR IMPROPER, THE ASSESSEES VALID EXPLANATION WHICH IS ON RECORD AND WHICH HAS NOT BEEN CONTROVERTED IN AN Y MANNER, PENALTY CANNOT BE LEVIED MERELY BECAUSE ASSESSEE DESPITE TH IS EXPLANATION ULTIMATELY AGREED FOR SURRENDER OF CASH FOUND DURING THE COURS E OF SEARCH IN HIS OWN HANDS. FURTHER RELIANCE IS PLACED ON THE RATIO OF D ECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. VASANT K. HANDIGUND 327 ITR 233 (KAR.), FOR THE PROPOSITION THAT IF THE ASSESSE E HAS GIVEN A PROPER EXPLANATION, PENALTY CANNOT BE IMPOSED MERELY BECAU SE THE ASSESSEE HAD VOLUNTARILY OFFERED THE INCOME TO TAX. IT IS POINT ED OUT THAT COMPLETE DETAILS ABOUT EXPLANATION OF CASH IN HAND RELATABLE TO VARI OUS FAMILY MEMBERS OF THE ASSESSEE ARE INCORPORATED IN CIT(A)S ORDER. ORDER OF CIAT(A) RELIED ON. 4. WE HAVE HEARD RIVAL CONTENTIONS. IT IS SETTLED L AW THAT PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE IN NATURE AND ASSESSEE CAN RAISE A PLEA IN PENALTY PROCEEDINGS EVEN THOUGH THE SAME WAS NOT RAISED BEFORE AO. IN THIS CASE DISTINCTLY THERE IS NO ALLEGATION THAT NE W PLEA IS BEING RAISED BY THE ASSESSEE. COMPLETE DETAILS WERE FILED BY THE ASSESS EE BEFORE ADIT AND AO DURING THE COURSE OF ASSESSMENT. ASSESSEE THEREAFTE R SURRENDERED THE INCOME, WHICH ACCORDING TO HIM, IS DUE TO THE ADAMANTS OF T HE AO TO AVOID LITIGATION. WE FIND MERIT IN THE ARGUMENT OF LEARNED COUNSEL TH AT WHILE IMPOSING PENALTY, THE CORRECTNESS OF THE ASSESSEES EXPLANAT ION SHOULD HAVE BEEN CONSIDERED. THERE IS NO ALLEGATION THAT DETAILS ABO UT FAMILY MEMBERS, THEIR 4 RETURNS, STATEMENT OF AFFAIRS WERE INCORRECT OR NOT AVAILABLE ON RECORD. IN THESE CIRCUMSTANCES, CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED U/S 271(1)(C). OUR VIEW IS FORTIFIED BY THE RATIO OF DE CISION IN THE CASE OF VASANT K. HANDIGUND (SUPRA). WE UPHOLD THE ORDER OF CIT(A) . 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 12 TH NOV. 2010. SD/- SD/- (K.D. RANJAN ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12-11-2010. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR