MRS. SANDHYA DHANORKAR, Nagpur V. ACIT, CIRCLE- 6, Nagpur

ITA 42/NAG/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9663 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: J M RANADE
• Keywords: Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P.K. BANSAL, VICE PRESIDENT AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 42/NAG./2015 ( ASSESSMENT YEAR : 200910 ) SANDHYA DHANORKAR PROP. MICROWAVE SERVICES 309, VAINGANGA APARTMENT RING ROAD, SHREE NAGAR NAGPUR 440 015 PAN AFVPD3097E APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE6, NAGPUR 440 001 .... RESPONDENT ASSESSEE BY : SHRI J.M. RANADE REVENUE BY : SHRI A.R. NINAWE DATE OF HEARING 28.06.2017 DATE OF ORDER 29.06 .2017 O R D E R PER AMARJIT SINGH, J.M. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 12 TH NOVEMBER 2014, PASSED BY THE LEARNED COMMISSIONER (APPEALS)- II, NAGPUR, RELEVANT TO THE ASSESSMENT YEAR 2009-10 , IN WHICH THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTI ON 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) TO THE TUNE OF ` 13,76,195, WAS CONFIRMED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30 TH SEPTEMBER 2009, 2 SANDHYA DHANORKAR DECLARING TOTAL INCOME TO THE TUNE OF ` 50,70,151. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ORDER UNDE R SECTION 143(3) WAS PASSED ON 30 TH DECEMBER 2011 ASSESSING TOTAL INCOME TO THE TUNE OF ` 84,87,684. THE ASSESSING OFFICER RAISED THE ADDITI ONAL INCOME TO THE TUNE OF ` 24,17,542 AND ACCORDINGLY, PENALTY TO THE TUNE OF ` 8,21,720 WAS LEVIED. THE ASSESSEE FILED AN APPEAL B EFORE THE LEARNED COMMISSIONER (APPEALS) WHO DELETED THE PENALTY UPON THE ADDITION EXCEPT AN AMOUNT OF ` 13,76,195, WHICH WAS CLAIMED BY THE ASSESSEE AS EXPENDITURE BUT SUBSEQUENTLY ISSUED THE DEBIT NO TE. SINCE THE ASSESSEE WAS NOT SATISFIED, THEREFORE, THE PRESENT APPEAL FILED BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE TIME OF ASSESSMENT UNDE R SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER DEMANDED THE EVIDENC E IN SUPPORT OF THE EXPENDITURE TO THE TUNE OF ` 13,76,195. THE ASSESEE HAD ISSUED DEBIT NOTE WITH REGARD TO THE AMOUNT AND EXPLAINED THAT T HE EXPENDITURE WAS CLAIMED WRONGLY. THEREAFTER, THE ASSESSEE HIMSE LF OFFERED THE SAID AMOUNT AS HIS INCOME. THE ASSESSING OFFICER AFTER T HE COMPLETION OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT INITIATE D THE PENALTY PROCEEDINGS ON ACCOUNT OF ADDITION TO THE TUNE OF ` 24,17,542 WHICH INCLUDES THE SAID AMOUNT TO THE TUNE OF ` 1376195. THE LEARNED COMMISSIONER (APPEALS) DELETED THE PENALTY UPON THE OTHER ADDITIONS, 3 SANDHYA DHANORKAR HOWEVER, UPHELD THE PENALTY UPON THE ADDITION THE T UNE OF ` 13,76,195. THE CONTENTION OF THE ASSESSEE IS THAT T HE AMOUNT OF ` 13,76,195 WAS WRONGLY CLAIMED AS EXPENDITURE WHEREA S THE ASSESSEE HAD ISSUED THE DEBIT NOTE OF THIS AMOUNT. FINDING M ISTAKE, THE ASSESSEE CORRECTED THE MISTAKE AND OFFERED THE SAID AMOUNT AS INCOME TO THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESS EE HAS ARGUED THAT THE MISTAKE IN THE ACCOUNTS BOOK IS NOT A CONCEALME NT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE REFORE, IN THE SAID CIRCUMSTANCES, NO PENALTY IS LEVIABLE IN VIEW OF TH E ORDER PASSED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL, MUMBAI BENCH , IN THE CASE OF HERANBA INDUSTRIES LTD. V/S DCIT, ITA NO.2292/MUM./ 2013, ORDER DATED 8 TH APRIL 2015. ON THE OTHER HAND, THE LEARNED DEPARTM ENTAL REPRESENTATIVE STRONGLY RELIED UPON THE ORDER PASSE D BY THE LEARNED COMMISSIONER (APPEALS) IN QUESTION. THE FACTUAL POS ITION IS NOT IN DISPUTE. THE TRIBUNAL IN THE CASE OF HERANBA INDUST RIES LTD. (SUPRA) HAS HELD THAT THE MISTAKE CANNOT BE SAID TO BE DELI BERATE ATTEMPT TO EVADE THE TAX. THE RELEVANT FINDING OF THE SAID LAW IS HEREBY REPRODUCED BELOW:- 4. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBE RATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LOWER AUTHO RITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY LD. DR & AR D URING THE COURSE OF HEARING BEFORE US. FROM THE RECORD WE FOU ND THAT AT THE VERY FIRST INSTANCE SHARE APPLICATION MONEY WAS SUR RENDERED BY ASSESSEE WITH A REQUEST NOT TO INITIATE ANY PENALTY PROCEEDINGS. THE AO PASSED ORDER U/S.143(3) ADDING SURRENDERED A MOUNT 4 SANDHYA DHANORKAR U/S.69A ON THE PLEA THAT ASSESSEE HAS SURRENDERED A MOUNT ONLY AFTER ISSUE OF NOTICE. IT IS NOT DISPUTED BY THE DE PARTMENT THAT SUM WHICH WAS ADDED U/S.69A WAS ONE WHICH WAS SURRE NDERED BY THE ASSESSEE ITSELF. NEITHER THERE WAS ANY DETECTIO N NOR THERE WAS ANY INFORMATION IN THE POSSESSION OF THE DEPARTMENT EXCEPT FOR THE AMOUNT SURRENDERED BY THE ASSESSEE AND IN THESE CIRCUMSTANCES IT CANNOT BE ITA NO.2292/13 SAID THAT THERE WAS ANY CONCEALMENT. IN CASE OF CIT VS. SURESH CHANDRA MITTAL251 ITR 9 (SC), HON'BLE SUPREME COURT OBSERVED THAT IF THE ASSESSEE HAS OFFERED THE ADDITIONAL INCOME TO BUY PEACE OF M IND AND TO AVOID LITIGATION PENALTY U/S.271(1)(C) OF THE ACT C ANNOT BE LEVIED. IN THE INSTANT CASE, THERE WAS NO MALAFIDE INTENTIO N ON THE PART OF THE ASSESSEE AND THE AO HAD NOT BROUGHT ANY EVIDENC E ON RECORD TO PROVE THAT THERE WAS CONCEALMENT OF INCOME. AT T HE TIME OF SURRENDER ITSELF CONTENTION OF NOT INITIATING ANY P ENALTY PROCEEDINGS WAS THERE. NO ADDITIONAL MATTER WAS DIS COVERED TO PROVE THAT THERE WAS CONCEALMENT OF INCOME. THE AO HAS INCLUDED THE AMOUNT OF SHARE CAPITAL IN THE TOTAL INCOME OF ASSESSEE MERELY ON THE BASIS OF ASSESSEE'S DECLARATION/SURRE NDER. THE AO DID NOT POINT OUT OR REFER ANY EVIDENCE OR MATERIAL TO SHOW THAT THE AMOUNT OF SHARE CAPITAL RECEIVED BY THE ASSESSE E WAS BOGUS. IT IS ALSO NOT THE CASE OF THE REVENUE THAT MATERIA L WAS FOUND AT THE ASSESSEE'S PREMISES TO INDICATE THAT SHARE APPL ICATION MONEY RECEIVED WAS AN ARRANGED AFFAIR TO ACCOMMODATE ASSE SSEE'S UNACCOUNTED MONEY. THUS THERE WAS NO DETECTION BY T HE AO THAT SHARE CAPITAL WAS NOT GENUINE. THE SURRENDER OF SHA RE CAPITAL AFTER ISSUE OF THE NOTICE U/S.143(2) COULD NOT LEAD TO ANY INFERENCE THAT IT WAS NOT VOLUNTARY. ADMITTEDLY THE ASSESSEE HAS OFFERED THE AMOUNT OF SHARE CAPITAL FOR TAXATION VO LUNTARILY AND IT WAS NOT THE CASE OF REVENUE THAT THE SAME WAS DONE AFTER ITS DETECTION BY THE DEPARTMENT. IT IS QUITE CLEAR FROM THE RECORD THAT THIS ENTIRE TRANSACTION WAS NOT DETECTION OF THE AO THAT THE SHARE CAPITAL WAS NOT GENUINE AND THAT THE ASSESSEE HAD O FFERED THE AMOUNT WITHOUT ANY SPECIFIC QUERY. EVENITA NO.2292/ 13 SURRENDER OF AMOUNT BY THE ASSESSEE AFTER RECEIPT O F QUESTIONNAIRE COULD NOT BE LEAD TO ANY INFERENCE TH AT IT WAS NOT VOLUNTARY, IN THE ABSENCE OF ANY MATERIAL ON RECORD TO SUGGEST THAT IT WAS BOGUS OR UNTRUE. THE CONTENTION THAT IN EVERY CASE WHERE SURRENDER IS MADE INFERENCE OF CONCEALMENT OF INCOME MUST BE DRAWN UNDER S.58 OF EVIDENCE ACT, CANNOT BE ACCEPTED IN VIEW OF THE DECISION OF PUNJAN & HARYANA HIGH COURT IN THE CASE OF CAREERS EDUCATION & INFOTECH (P) LTD., (2011) 336 I TR 257 (P&H). NOT AN IOTA OF EVIDENCE WAS NARRATED TO SUPPORT THE ADDITION MADE EXCEPT THE SURRENDER MADE BY THE ASSESSEE ITSE LF. WHEN NO CONCEALMENT WAS EVER DETECTED BY THE AO, NO PENALTY WAS IMPOSSIBLE. RECENTLY, HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SIDDHARTH ENTERPRISES VIDE ORDER DT. 14TH J ULY, 2009 HELD AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME C OURT IN THE CASE OF UNION OF INDIA & ORS. VS. DHARAMENDRA TEXTI LE PROCESSORS 5 SANDHYA DHANORKAR & ORS. (2008) 306 ITR (SC) 277 THAT THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES (S UPRA) CANNOT BE READ AS LAYING DOWN THAT IN EVERY CASE WHERE PAR TICULARS OF INCOME ARE INACCURATE, PENALTY MUST FOLLOW. WHAT HA S BEEN LAID DOWN IS THAT QUALITATIVE DIFFERENCE BETWEEN CRIMINA L LIABILITY UNDER S. 276C AND PENALTY UNDER S. 271(1)(C) HAD TO BE KE PT IN MIND AND APPROACH ADOPTED TO THE TRIAL OF A CRIMINAL CAS E NEED NOT BE ADOPTED WHILE CONSIDERING THE LEVY OF PENALTY. EVEN SO, CONCEPT OF PENALTY HAS NOT UNDERGONE CHANGE BY VIRTUE OF THE S AID JUDGMENT. IT WAS CATEGORICALLY OBSERVED THAT PENALTY SHOULD B E IMPOSED ONLY WHEN THERE IS SOME ELEMENT OF DELIBERATE DEFAULT AN D NOT A MERE MISTAKE. THIS BEING THE ITA NO.2292/13 POSITION, TH E FURNISHING OF INACCURATE PARTICULARS WAS SIMPLY A MISTAKE AND NOT A DELIBERATE ATTEMPT TO EVADE TAX. HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL 251 ITR 9 (SC) OBSERVED T HAT WHERE ASSESSEE HAS SURRENDERED THE INCOME AFTER PERSISTEN CE QUERIES BY THE AO AND WHERE REVISED RETURN HAS BEEN REGULARIZE D BY THE REVENUE, EXPLANATION OF THE ASSESSEE THAT HE HAS DE CLARED ADDITIONAL INCOME TO BUY PEACH OF MIND AND TO COME OUT OF WAXED LITIGATION COULD BE TREATED AS BONA FIDE, ACCORDING LY LEVY OF PENALTY UNDER S. 271(1)(C) WAS HELD TO BE NOT JUSTIFIED. 4. IN VIEW OF THE FINDINGS OF THE TRIBUNAL CITED SUPRA , WE ARE OF THE VIEW THAT THE FACTUAL POSITION OF THE PRESENT CASE IS ALSO THE SAME. THE ASSESSEE HAS SHOWN THE EXPENDITURE TO THE TUNE OF ` 13,76,195 IN HIS BOOKS OF ACCOUNT, HOWEVER, HE HAD ISSUED THE DEBIT NOTE IN CONNECTION WITH THE SAID EXPENDITURE. AFTER RAISING THE QUESTI ON, THE ASSESSEE ADMITTED HIS MISTAKE AND OFFERED THE SAID AMOUNT AS HIS INCOME. SHOWING EXPENDITURE IN THE BOOKS OF ACCOUNT IS A MI STAKE, HOWEVER, DEBIT NOTE HAD ALREADY BEEN ISSUED WHICH WAS ON REC ORD AT THAT TIME. THE FINDING OF THE CASE IN HERANBA INDUSTRIES LTD. (SUPRA) IS QUITE APPLICABLE TO THE FACTS OF THE PRESENT CASE, THEREF ORE, IN THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LEARNED COMMISSIONER (APPEALS) HAS WRONGLY CONFIRMED THE PENALTY ON THE AMOUNT OF ` 6 SANDHYA DHANORKAR 13,76,195, WHICH IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. WE SET ASIDE THE FINDING OF THE LEARNED COMMISSIONER ( APPEALS) ON THIS ISSUE AND DELETE THE PENALTY. THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.06.2017 SD/ - P.K. BANSAL VICE PRESIDENT SD/ - AMARJIT SINGH JUDICIAL MEMBER NAGPUR, DATED: COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, NAGPUR