Raj Pal Katyal, V. ACIT Circle 34 (1),

ITA 426/DEL/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9917 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 13-08-2009
• Assessment Year: 1997-1998
• Appeal Filed On: 29-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: S KRISHNAN
• Keywords: Question of law
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI RAJPAL YADAV, JM AND SHRI R.C.SHARMA, A M ITA NO.426/DEL/2007 ASSESSMENT YEAR : 1997-98 SHRI RAJ PAL KATYAL, C-5/190, YAMUNA VIHAR, DELHI. PAN NO.AANPK2673E. VS. ASSTT.COMMISSIONER OF INCOME TAX, CIRCLE-34(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.KRISHNAN, CA. RESPONDENT BY : SHRI MANISH GUPTA, SR.DR. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 27.10.2006 FOR THE AY 1997-98, IN THE MATTER OF IMP OSITION OF PENALTY U/S 271(1)(C). 2. FACTS IN BRIEF ARE THAT IN THE FIRST ROUND OF AP PEAL FILED BEFORE THE TRIBUNAL BY THE ASSESSEE, IMPOSITION OF PENALTY WAS HELD TO BE NOT JUSTIFIED VIDE AN ORDER DATED 26.10.2007 BY OBSERVING THAT NO SATISFACTION WAS RECORDED BY THE AO. IN AN APPEAL FILED BY THE REVENUE BEFORE THE HONBLE HIGH COURT, THE MATTER WAS RESTORED BACK TO THE TRIBUNAL FOR DECIDING AFRESH O N MERITS VIDE ORDER DATED 4.11.2008. NOW, IT IS THE SECOND ROUND BEFORE US A ND WE ARE IN SESSION OF THE MATTER FOR DECIDING THE IMPOSITION OF PENALTY ON ME RITS. 3. AT THE OUTSET, LEARNED AR INVITED OUR ATTENTION TO THE ORDER OF HON'BLE DELHI HIGH COURT DATED 16 TH MAY, 2006 WHEREIN SUBSTANTIAL QUESTION OF LAW WAS ADMITTED BY THE HON'BLE DELHI HIGH COURT AGAINST TH E QUANTUM APPEAL FILED BEFORE THE HONBLE HIGH COURT, WITH REFERENCE TO WHICH THI S PENALTY WAS IMPOSED. THE HONBLE HIGH COURT HAS ACCEPTED THE SUBSTANTIAL QUE STION OF LAW AS TO WHETHER THE ITA-426/D/2007 2 FINDING RECORDED BY THE ITAT THAT THE APPELLANT ASS ESSEE HAD NOT PROVED CREDITWORTHINESS OF THE CREDITOR IS PERVERSE. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM THE RECORD T HAT PENALTY HAS BEEN IMPOSED WITH REFERENCE TO THE CASH CREDIT TAKEN BY THE ASSE SSEE DURING THE YEAR. A DEPOSIT OF RS.50,000/- WAS TAKEN FROM PAWAN KUMAR, SISTERS HUSBANDS BROTHER. SHRI PAWAN KUMAR APPEARED BEFORE THE AO AND THE LOAN CON FIRMATION WAS FILED. HIS STATEMENT WAS RECORDED. WHILE RECORDING THE STATEM ENT, THE AO ASKED FOR BANK STATEMENT AND THE PARTY UNDERTOOK TO PRODUCE THE LE TTER, THEN THE AR FILED A LETTER ASKING THE AO TO OBTAIN DIRECTLY FROM THE BANK, HOW EVER, THE AO DID NOT DO THE SAME. THE SECOND LOAN OF RS.4,50,000/- WAS TAKEN F ROM SANTOSH RANI ALLEGED TO BE HUSBANDS SISTERS SON. HER STATEMENT WAS RECOR DED BY THE AO. ON AOS ASKING, SHE CATEGORICALLY DENIED IF ANY MONEY HAD C OME FROM THE ASSESSEE. THIRD LOAN WAS TAKEN FROM VIMLA ARORA AMOUNTING TO RS.1 L AKH ALLEGED TO BE SON-IN-LAW OF THE ASSESSEE. THE SOURCE OF MONEY WAS CLAIMED F ROM THE RETIREMENT BENEFITS, SHE HAS RETIRED ON 31.3.1996. AFFIDAVIT WAS ALSO F ILED AND STATEMENT WAS ALSO RECORDED ON 17.1.2000. AS THE AO WAS NOT SATISFIED WITH THE EXPLANATION FURNISHED BY ASSESSEE, ADDITIONS WERE MADE AND PENA LTY WAS IMPOSED. NEXT WAS LOAN FROM SHRI S.L.MAGO AMOUNTING TO RS.1 LAKHS, AL LEGED TO BE SON-IN-LAWS BROTHER. PASS BOOK WAS PRODUCED. BEING NOT SATISF IED, THE AO MADE THE ADDITION AND LEVIED PENALTY U/S 271(1)(C) WITH RESPECT TO AL L THESE CREDITS. THE TRIBUNAL CONFIRMED THE ADDITION, IN AN APPEAL FILED AGAINST THE QUANTUM ADDITION. THE HIGH COURT VIDE ITS ORDER DATED 16.5.2006 ACCEPTED SUBST ANTIAL QUESTION OF LAW AS TO WHETHER THE FINDING OF TRIBUNAL WHILE CONFIRMING TH E ADDITION WAS PERVERSE. THE CONTENTION OF THE LEARNED AR BEFORE US WAS THAT IN VIEW OF THE DECISION OF THE ITAT AHMEDABAD BENCH IN THE CASE OF ROOPAM MERCANTI LE 91 ITD 273 FOR CONCEALMENT OF INCOME, WHERE A PLEA OR CLAIM WHICH IS HELD BY THE HIGH COURT TO HAVE GIVEN RISE TO A SUBSTANTIAL QUESTION OF LAW, C ANNOT BE TREATED TO BE FRIVOLOUS OR MALA-FIDE AS TO ATTRACT LEVY OF PENALTY U/S 271(1)( C). IN VIEW OF THE ORDER OF THE ITA-426/D/2007 3 HON'BLE DELHI HIGH COURT DATED 16.5.2006, WHEREIN S UBSTANTIAL QUESTION OF LAW HAD BEEN ADMITTED BY THE HONBLE HIGH COURT, APPLYI NG THE PROPOSITION OF LAW LAID DOWN BY THE ITAT AHMEDABAD BENCH, HE CONTENDED THAT PENALTY IS NOT LEVIABLE U/S 271(1)(C). RESPECTFULLY FOLLOWING THE PROPOSIT ION OF LAW LAID DOWN BY THE COORDINATE BENCH AS DISCUSSED HEREINABOVE, WHERE A PLEA OR CLAIM WHICH IS HELD BY THE HIGH COURT TO HAVE GIVEN RISE TO A SUBSTANTI AL QUESTION OF LAW, CANNOT BE TREATED TO BE FRIVOLOUS OR MALA-FIDE SO AS TO ATTRA CT LEVY OF PENALTY U/S 271(1)(C). ACCORDINGLY, WE CANCEL THE PENALTY ORDER PASSED BY THE LOWER AUTHORITIES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2009. SD/- SD/- (RAJPAL YADAV) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31.08.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR