Smt. Usha Aggarwal, Delhi V. ITO, New Delhi

ITA 4386/DEL/2015

• Counselvise Citation: 438620114 RSA 2015
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 21-10-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 06-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K JAIN
• Keywords: Gift; Income from undisclosed sources; Principle of natural justice; Question of law; Initiation of penalty proceedings; Onus to prove
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 1 , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 4386 /DEL/2015 AY: 200 2 - 03 USHA AGGARWAL VS. ITO, WARD 36(2) A 59, WAZIPUR INDL. AREA ERSTWHILE WARD 19(4) WAZIPUR NEW DELHI DELHI 110 052 PAN: AEIPA 6448 Q (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SH. M.K.JAIN, SR.D.R. ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER DT. 2 5.02.2 015 OF LD.CIT(A) - 12 , NEW DELHI FOR ASSESSMENT YEAR 200 2 - 03 . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE ISSUAL OF NOTICE. THERE IS NO REQUEST FOR ADJOURNMENT EITHER. . UNDER THESE CIRCUMSTANCES I DISPOSE OF THE CASE EX PARTE ON MERITS QUA THE ASSESSEE, AFTER HEARING THE LD.SR.D.R. AS IN MY VIEW NO USEFUL PU RPOSE WILL BE SERVED IN ADJOURNING THE MATTER. 3. HEARD SHRI M.K.JAIN, LD.SR.D.R. 4. FACTS IN BRIEF: - THE ASSESSEE IS AN INDIVI DUAL. THE ASSESSEE FILED HIS RETURN OF INCOME ON 30.7.2002 DECLARING TOTAL INCOME OF RS.77,370/ - . THERE WAS NO COOPERATION B Y THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE A.O. RECORDS THAT DESPITE REPEATED OPPORTUNITIES, THE ASSESSEE FAILED TO FURNISH THE REQUISITE DETAILS AS PER THE QUESTIONNAIRE. HENCE HE MADE AN ADDITION OF RS.1,42,000/ - UNDER THE HEAD INCOME FROM UNDISCLOSED SOURCES . THIS ORDER OF THE A.O. WAS CONFIRMED BY THE ITAT. THEREAFTER ITA NO. 4386/DEL/2015 A.Y. 2002 - 03 USHA AGGARWAL 2 PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) WAS LEVIED BY THE A.O. THIS ORDER WAS CHALLENGED BEFORE THE LD.CIT(A) WITHOUT SUCCESS. AGGRIEVED THE ASSESSE E IS BEFORE US. 5. AFTER HEARING THE LD.SR.D.R. I FIND THAT, THE LD.CIT(A) - 22 NEW DELHI VIDE HIS ORDER NO. 1/2006 DATED 13.12.2005 ALLOWED RELIEF TO THE TUNE OF RS.11,51,000/ - ON THE ABOVE ADDITION. ONLY ONE GIFT TO THE TUNE OF RS.2,50,600/ - WAS TREATED AS UNDISCLOSED INCOME. THIS GIFT WAS RECEIVED FROM ONE MR. RAJ KUMAR. ON REVENUE S APPEAL, THE ORDER OF THE FIRST APPELLATE AUTHORITY WAS REVERSED AND THE ADDITION MADE BY THE A.O. WAS RESTORED BY THE ITAT. THE ASSESSEE CARRIED THE MATTER BEFORE HON BLE DELHI HIGH COURT. THE HON BLE DELHI HIGH COURT HAS ADM ITTED THE APPEAL ON THE GROUND THAT THERE IS SUBSTANTIAL QUESTION OF LAW. 6. THIS CLAIM OF THE ASSESSEE THAT THE HON BLE DELHI HIGH COURT HAD ADMITTED THE APPEAL, IS DISPUTED BY THE LD.CIT(A) AT PARA 8.3 OF HIS ORDER. ON THESE FACTS, THE ISSUE IS , WH ETHER THE LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT CAN BE UPHELD OR NOT. 7. A PERUSAL OF THE ABOVE EVENTS DEMONSTRATE THAT THERE IS A CLEAVAGE OF OPINION IN THE APPELLATE BODIES ON THE GENUINENESS OF GIFTS . W HILE THE LD.CIT(A) WAS OF THE OPINION THAT THE GIFTS WERE GENUINE, THE ITAT IN ITS ORDER, ACKNOWLEDGED THAT THE IDENTITY OF THE DONORS HAVE BEEN ESTABLISHED AND REVERSED THE ORDER OF LD.CIT(A) ON THE SOLE GROUND THAT THE CAPACITY OF THE DONOR WAS NOT PROVED. THE MATTER IS NOW BEFORE THE HON BLE DELHI HIGH COURT. ON THESE FACTS I AM OF THE CONSIDERED OPINION THAT LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IS NOT CALLED FOR, FOR THE REASON THAT THE EXPLANATIO N OF THE ASSESSEE IS BONAFIDE AND AS THE ASSESSEE COULD NOT DISCHARGE HER BURDEN OF PROOF, THE AD DITION WAS CONFIRMED. THE LD.A.O. HAS NOT SPECIFIED THE CHARGE UNDER WHICH THE PENALTY U/S 271(1)(C) IS LEVIED I.E. WHETHER IT WAS FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF ITA NO. 4386/DEL/2015 A.Y. 2002 - 03 USHA AGGARWAL 3 INCOME . THE LD.CIT(A) HAS ALSO HELD THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 8. THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MAN JUNATHA COTTON AND GINNING FACTORY (2013) 218 TAXMANN.COM 250 HAS HELD THAT : (A) PENALTY UNDE R SECTION 271(1)(C) IS A CIVIL LIABILITY. (B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSING PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. (C) WILFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY. (D) EXISTEN CE OF CONDITIONS STIPULATED IN SECTION 271(1) (C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. (E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REVI SIONAL AUTHORITY. (F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 27 1(1) (C), AT LEAST THE FACTS SET OUT IN EXPLANATION L 1(A) AND (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BECAUSE OF DEEMING PROVISION. (G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASSESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDE R SECTION 271(1)( C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTION 1 ( B ). (H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEA LS AND THE COMMISSIONER. (I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. (J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. (K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORDER OF ASSESSMENT LEVYING TAX AND I NTEREST AND HAS PAID TAX AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUI RY CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED AND IF NOT IT ITA NO. 4386/DEL/2015 A.Y. 2002 - 03 USHA AGGARWAL 4 WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. (L) ONLY WHEN NO EXPLANATION IS OF FERED OR THE EXPLANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT 'BON A FIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. (M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUBSTANTIATED BY THE ASSES SEE, BUT IS FOUND TO BE BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. (N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECTION 271 OF THE ACT SHO ULD BE CLEAR AND WITHOUT ANY AMBIGUITY. ( O ) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PROCEEDIN GS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY. (P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISH ING OF INCORRECT PARTICULARS OF INCOME (Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW . (R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRI NCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE . (S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. (T) THE PENALTY PROCE EDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. (U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDING S INSOFAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORRECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR RE ASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE AS7ESSMEN OR REASSESSMENT CANNOT BE DECLARED AS INVALID IN THE PENALTY PROCEEDINGS. ITA NO. 4386/DEL/2015 A.Y. 2002 - 03 USHA AGGARWAL 5 9. APPLYING THE PROPOSITIONS LAID DOWN TO THE FACTS OF THE CASE I DELETE THIS PENALTY AND A LLOW THE APPEAL OF THE ASSESSEE AS THE SPECIFIC GROUND ON WHICH PENALTY IS LEVIED IS NOT MENTIONED AND ALSO FOR THE REASON THAT THE EXPLANATION FURNISHED BY THE ASSESSEE IS BONAFIDE AND JUST BECAUSE AN ASSESSEE IS NOT ABLE T O PROVE A CLAIM, NO PENALTY U/S 271(1)(C ) OF THE ACT CAN BE LEVIED. 10. IN THE RESULT ASSESSEE S APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER,2015. SD/ - (J.SUDHAKAR REDDY) ACCOUNTANT MEMBER DAT ED: THE 18 TH DECEMBER, 2015 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR