M/s. Kalinga International, New Delhi V. ACIT, New Delhi

ITA 4363/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6957 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 08-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.4363/DEL/2014 ASSESSMENT YEAR: 2004-05 M/S. KALINGA INTERNATIONAL, 5/1, WEST PATEL NAGAR, NEW DELHI. V. ACIT, CIRCLE-33(1), NEW DELHI. TAN/PAN: AAAFK1235H (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI AMIT JAIN, SR.D.R. DATE OF HEARING: 24 07 2018 DATE OF PRONOUNCEMENT: 31 07 2018 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 13.05.2014, PASSED BY LD. CIT (APPEALS)-XXVI, NEW DELHI, IN RELATION TO PENAL TY PROCEEDINGS INITIATED U/S. 271(1)(C) FOR THE ASSESS MENT YEAR 2004-05. THE ASSESSEE IS MAINLY AGGRIEVED BY LEVY O F PENALTY OF RS.1,65,207/- LEVIED ON ACCOUNT OF ADDITION MADE IN RESPECT OF SUNDRY CREDITORS FOR SUMS AGGREGATING TO RS.5,50,690/- AS APPEARING IN THE NAME OF 19 PARTIE S. 2. THE BRIEF FACTS ARE THAT A SURVEY WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 13.02.2014 U/S .133A. DURING THE COURSE OF SURVEY, ASSESSEE HAS VOLUNTARI LY OFFERED I.T.A. NO.4363/DEL/2014 2 FOR TAXATION A SUM OF RS.38,99,935/- BEING SUNDRY C REDITORS WRITTEN OFF. IT WAS FURTHER NOTED BY THE LEARNED AS SESSING OFFICER THAT THE ASSESSEE FIRM HAD OFFERED A SUM OF RS.5,50,690/- ON ACCOUNT OF VARIOUS CREDITORS WHOSE CONFIRMATIONS COULD NOT BE ARRANGED DUE TO PAUCITY OF TIME AND DUE TO TIME LAG AND CLOSURE OF BUSINESS. ASSESS EE TO AVOID LITIGATION, SURRENDERED THE AMOUNT OUTSTANDING IN T HE NAME OF VARIOUS SUNDRY CREDITORS AGGREGATING TO RS.5,50,690 /-, THAT NO PENALTY SHOULD BE LEVIED. THE AMOUNT AND DETAILS OF SUCH SUNDRY CREDITORS WERE AS UNDER:- NAME OF PARTIES R S. I. M/S. INDIA LIGHT 37559.00 II. M/S. DELHI TENT & DECORATOR 16200.00 III. M/S. DESIGN N DETAIL 20871.00 IV. M/S. KRISHNA NAGPAL 15000.00 V. M/S. MAHESHWARI & CO. 25000.00 VI. RAMLAL 13130.00 VII. RAMESH 19960.00 VIII. M/S. RAWAL PINDI ENBROIDERY 25000.00 IX. S. POLO 14928.00 X. SANJAY KUMAR 19960.00 XI SHRI RAM INVESTMENT LTD. 50500.00 XII SHYAM LAL 19940.00 XIII SKY EMPIRE LTD. 66157.00 XIV. SUNDRI APPARESL (I) PVT. LTD. 36220.00 XV. UPPAL BUILDER 29800.00 XVI V. SHONKARON 37156.00 XVII VED POHAJA & ASSOCIATES 11100.00 XVIII VIBHUTI FINANCIAL SERVICES (P) LTD. 44946.00 XIX VIVEK SHARMA 12000.00 TOTAL 550690.00 I.T.A. NO.4363/DEL/2014 3 3. PENALTY U/S 271(1)(C) HAS BEEN LEVIED BY THE ASS ESSING OFFICER ON THE AFORESAID AMOUNT OF THE SUNDRY CREDI TORS OFFERED BY THE ASSESSEE DURING THE COURSE OF THE AS SESSMENT PROCEEDINGS AND PENALTY OF RS.1,65,207/- HAS BEEN L EVIED ON THE GROUND THAT ASSESSEE COULD NOT FILE CONFIRMATIO N TO THE SAID PARTIES. 4. LD. CIT (A) IN THE APPELLATE PROCEEDINGS AGAIN R EQUIRED THE ASSESSEE TO FURNISH COMPLETE ADDRESS OF THE PAR TIES/ SUNDRY CREDITORS. HOWEVER, THE ASSESSEE COULD NOT F URNISH THE SAME. ACCORDINGLY, THE LD. CIT (A) AFTER DETAILED D ISCUSSION AND RELYING UPON THE VARIOUS JUDGMENTS HELD THAT, EXPLANATION - 1 OF SECTION 271(1)(C) IS CLEARLY ATTRACTED AND CONFIRMED THE PENALTY AS LEVIED BY THE ASSESSING OF FICER. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE; THEREFORE, WE ARE PROCEEDING TO DECIDE T HE APPEAL ON MERITS ON THE BASIS OF MATERIAL ON RECORD. 6. AFTER HEARING THE LEARNED DEPARTMENT REPRESENTAT IVE AND ON PERUSAL OF THE IMPUGNED ORDERS, WE FIND THAT THE ASSESSEE HAD OFFERED SUMS AGGREGATING TO RS.5,50,69 0/- STANDING IN THE BALANCE SHEET IN THE NAME OF VARIOU S SUNDRY CREDITORS. THE ASSESSEE HAS OFFERED TO TAX THE OUTS TANDING AMOUNT AGAINST THE SUNDRY CREDITORS ON THE GROUND T HAT THE CONFIRMATIONS COULD NOT BE ARRANGED; FIRSTLY , DUE TO PAUCITY OF TIME; AND SECONDLY , SINCE THEY ARE OLD CREDITORS AND DUE TO CLOSURE OF THE ASSESSEES BUSINESS DUE TO SEALING A CTIVITIES OF THE MCD, THE CURRENT ADDRESSES OF THESE PARTIES WER E NOT I.T.A. NO.4363/DEL/2014 4 AVAILABLE. THUS, THE SAME AMOUNT WAS OFFERED TO BUY PEACE AND TO AVOID LITIGATION ON THE GROUND THAT NO PENAL TY SHOULD BE INITIATED. THE AMOUNTS OUTSTANDING AGAINST VARIO US SUNDRY CREDITORS ARE COMING FROM EARLIER YEARS AND SIMPLY DUE TO LACK OF TIME AND CLOSURE OF BUSINESS, CONFIRMATION COULD NOT BE FILED. NOW, ON SAME GROUND, THE PENALTY HAS BEEN LE VIED BY THE ASSESSING OFFICER AND ALSO CONFIRMED BY THE LD. CIT (A). ONCE, IT IS NOT DISPUTED THAT THESE SUNDRY CREDITOR S ARE COMING FROM THE EARLIER YEARS AND ADDITION WHICH HA S BEEN MADE BY INVOKING THE PROVISIONS OF SECTION 41(1) WI THOUT THERE BEING ACTUAL WRITE OFF OF THE SUNDRY CREDITOR S, THEN, IT CANNOT BE PRESUMED THAT THERE WAS ANY CESSATION OF LIABILITY IN THIS YEAR. UNDER THESE FACTS IT CANNOT BE HELD T HAT ASSESSEE HAD EITHER FURNISHED INACCURATE PARTICULARS OF INCO ME OR CONCEALED ANY PARTS OF ITS INCOME, BECAUSE IT IS NO T A CASE THAT THESE CREDITORS ARE APPEARING FOR THE FIRST TI ME IN THIS YEAR FOR WHICH ASSESSEE COULD NOT OFFER ANY EXPLANA TION. IF THE OLD SUNDRY CREDITORS ARE APPEARING AND THE SAME AMO UNT ARE OUTSTANDING, ONE CANNOT REACH TO AN INFERENCE THAT THERE IS A CESSATION OF LIABILITY IN THIS YEAR, AND THEREFORE, WE ARE OF THE OPINION THAT SUCH AN ADDITION DOES NOT WARRANT ANY PENALTY U/S 271(1)(C). ACCORDINGLY, PENALTY CANNOT BE LEVIE D ON THE GROUND THAT ASSESSEE HAS OFFERED THE SAME FOR TAXAT ION TO AVOID LITIGATION AND TO BUY PEACE, ESPECIALLY WHEN ASSESSEES BUSINESS WAS CLOSED. ACCORDINGLY, THE PENALTY LEVIE D BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (A) IS DIRECTED TO BE DELETED. I.T.A. NO.4363/DEL/2014 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2018. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST JULY, 2018 PKK: