Ankit Garments Manufacturing CO., New Delhi V. DCIT, New Delhi

ITA 4437/DEL/2012

• Counselvise Citation: 443720114 RSA 2012
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 17-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: D P BANSAL
• Section: 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI H.S. SIDHU , JUDICIAL MEMBER ITA NO. 4436/DEL/2012 ASSESSMENT YEAR: 2008 - 09 AMIT MENS WEAR, VS. DCIT, A - 355, GALI NO. 8, CE NT. CIRCLE 9, MOHALLA RAM NAGAR, GANDHI NAGAR, NEW DELHI. NEW DELHI. AAIFA2978H (APPELLANT) (RESPONDENT) & ITA NO . 4437 /DEL/ 2012 ASSESSMENT YEAR : 2008 - 09 ANKIT GARMENTS MANUFACTURING CO., VS. DCIT, 503, FIE, PATPARGANJ, NEW DELHI. CENT. CIR CLE 9, AAJFA9440M NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. D.P. BANSAL, CA RESPONDENT BY: SH. B.R.R. KUMAR, SR. DR ORDER PER S.V. ME HROTRA, A.M. THESE APPEALS ARE FILED BY THE ASSESSEES AND DIRECTED AGAINST THE ORD ER OF LD. CIT(A) DATED 19/07/2012 FOR THE A.Y. 2008 - 09. ITA NOS. 4437 & 4436/D/ 2012 2 2. BOTH THE ASSESSES ARE PART OF SH. DWARKA DAS AGARWAL GROUP (I.E. TNG GROUP) OF CASES. SEARCH TOOK PLACE AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEES OF THIS GROUP AT VARIOUS PLACES IN DELHI. 3. FIRST WE TAKE THE ITA NO. 4436/DEL/2012. THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 7,56,232/ - AS AGAINST THE DECLARED INCOME OF RS. 2,73,900/ - AND PENALTY U/S 271(1)(C) WAS INITIATED. THE AO LEVIED PENALTY OF RS. 1,49,041/ - . BEF ORE LD. CIT(A) THE ASSESSEE HAD, INTER - ALIA, SUBMITTED THAT AS PER PROVISIONS OF SUB - SECTION (3) OF SECTION 271AAA O F INCOME TAX ACT, 1961, WHICH HAD BEEN INSERTED BY FINANCE ACT, 2007, W.E.F. 01.04.2007 FOR CASES WHERE SEARCH HAS BEEN INITIATED ON OR AFTE R 1 ST DAY OF JUNE, 2007, NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SUB - SECTION (1) OF SECTION 271 OF THE INCOME TAX ACT, 1961 COULD BE IMPOSED UPON THE ASSESSEE IN RESPECT OF UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR . THE SPECIFIED PREVI OUS YEAR HAS BEEN DEFINED BY CLAUSE (B) OF THE EXPLANATION TO SECTION 271AAA OF THE INCOME TAX ACT, 1961 WHICH IS REPRODUCED HEREUNDER: (B) SPECIFIED PREVIOUS YEAR MEANS THE PREVIOUS YEAR: (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB - SECTION (1) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDU CTED ON PLAIN READING OF DEFINITION OF SPECIFIED PREVIOUS YEAR , AS REPRODUCED ABOVE, IT IS CRYSTAL CLEAR THAT THE CASE OF THE APPELLANT FALLS IN THE ABOVE CLAUSE (II) AS THE YEAR UNDER APPEAL IS THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED. SINCE THE ITA NOS. 4437 & 4436/D/ 2012 3 SEARCH WAS CONDUCTED ON 16.10.2007 WHICH FALLS IN THE PREVIOUS YEAR 2007 - 08 RELATING TO THE A.Y. 2008 - 09 AND PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 HAS BEEN IMPOSED FOR THE SAME YEAR (SEARCH YEAR) WHICH HAS BEEN AGITATED BY THE APPELLANT IN VIE W OF THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) AND SECTION 271AAA OF THE INCOME TAX ACT, 1961. 4. LD. CIT(A) AFTER CONSIDERING THE ASSESSEE S SUBMISSIONS, INTER - ALIA, OBSERVED THAT THE PENALTY PROCEEDINGS IN SUBSTANCE AND EFFECT WERE IN CONF ORMITY A ND IN ACCORDANCE WITH THE INTENT AND PURPOSE OF THE INCOME TAX ACT AND WERE COVERED BY THE PROVISIONS OF SECTION 292B. HE HELD THAT THE ASSESSEE S CASE WAS SQUARELY COVERED BY SECTION 271AAA AND , ACCORDINGLY , CONFIRMED THE PENALTY @ 10% OF UNDISC LOSED INCOME OF RS. 4,82,332/ - THEREBY REDUCING THE PENALTY FROM RS. 1,49,041/ - TO RS. 48,233/ - . 5. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE US AND HAS, INTER - ALIA, TAKEN FOLLOWING GROUNDS OF APPEAL: 2. THAT ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE THE AO DOES NOT ASSUME JURISDICTION BY ISSUING NOTICE U/S 271(1)(C) OF THE I.T. ACT, 1961 AND IN THE RESULT ORDER PASSED U/S 271(1)(C) OF THE I.T. ACT, 1961 IS NOT VALID IN THE ABSENCE OF JURISDICTION. THE LD. CIT( APPEALS) HAS ERRED BY NOT CONSIDERING THIS LEGAL ISSUE. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BY NOT CANCELLING THE PENALTY U/S 271AAA OF THE INCOME TAX ACT, 1961. THE SAME IS NOT VALID/LEGAL IN VIEW OF THE FACTS THAT PENALTY PROCEEDINGS WERE NEVER INITIATED U/S 271AAA OF THE I.T. ACT, 1961. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(APPEALS) HAS EXCEEDED HIS POWERS BY CONVERTING THE PENALTY WHICH IS NOT PERMISSIBLE UNDER LAW. 6. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF TRIBUNAL IN ONE OF ITS GROUP CASES VIDE ITA NOS. 4437 & 4436/D/ 2012 4 ITA NO. 4439/DEL/2012 DATED 11 TH OCTOBER, 2013 IN THE CA SE OF CARIO INTERNATIONAL VS. DCIT FOR A.Y. 2008 - 09, WHEREIN IT HAS BEEN HELD AS UNDER: 3. WE HAVE HEARD BOTH THE SIDES AND CONSIDERED THE MATERIALS ON RECORD AS WELL AS RELEVANT PROVISIONS OF LAW. WE HAVE ALSO GONE THROUGH THE ORDER OF ASSESSMENT, ORDE R OF PENALTY ALONG WITH THE ORDER OF CIT(A) PASSED IN PENALTY PROCEEDING AND NOTE THAT FOR THE PERIOD UNDER CONSIDERATION, WHEN SEARCH TOOK PLACE, PENALTY PROVISIONS OF SECTION 271AAA WERE APPLICABLE WHEREAS AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) A ND IMPOSED PENALTY UNDER THAT PROVISION AGAINST WHICH THERE IS SPECIFIC BAR FOR LEVYING PENALTY AS PER SUB - SECTION 3 OF SECTION 271AAA OF INCOME TAX ACT SO PENALTY U/S 271(1)(C) CANNOT BE IMPOSED UNDER THE SAID PROVISION. 3.1 SO FAR AS THE ACTION OF LD. CI T(A) IN CONVERTING SUCH PENALTY U/S 271AAA IS CONCERNED, IT WOULD BE APT TO REPRODUCE SUB - SECTION (1) OF SEC. 271AAA, WHICH READS AS UNDER: 271AAA (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIR ECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED U/S 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007 [BUT BEFORE THE 1 ST DAY OF JULY, 2012], THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TE N PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. 3.2 THE ABOVE SAID PROVISION CLEARLY STIPULATES THAT IT IS THE AO WHO MAY DIRECT TO IMPOSE PENALTY AS ENVISAGED, WHEREAS THE PROVISIONS OF SECTION 271(1) STIPULATES THAT AO OR THE COMMI SSIONER (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ASSESSMENT PROCEEDINGS UNDER THIS ACT, IF SATISFIED CAN PROCEED TO IMPOSE PENALTY U/S 271(1)(C). SO, THERE IS CLEAR DISTINCTION BETWEEN THE TWO PROVISIONS BECAUSE U/S 271AAA, IT IS THE AO WHO COULD IN VOKE SUCH PROVISION WHEREAS UNDER THE PROVISIONS OF SECTION 271(1), ANY OF THE THREE AUTHORITIES ITA NOS. 4437 & 4436/D/ 2012 5 INCLUDING COMMISSIONER (APPEALS) COULD INVOKE THE SAID PROVISIONS OF SEC. 271(1)(C) OF THE ACT. THEREFORE, THE ACTION OF LD. CIT(A) CANNOT BE HELD TO BE JUSTI FIED SO FAR AS PROVISIONS RELATABLE TO SEC. 271AAA IS CONCERNED. 3.3 AS SUCH, PENALTY IMPOSED BY THE AO U/S 271(1)(C) AND CONVERTED IT BY LD. CIT(A) INTO SEC. 271AAA EVEN ON REDUCED AMOUNT CANNOT BE HELD TO BE PROPER OR LEGALLY JUSTIFIED AT ALL. AS SUCH, WHILE ACCEPTING THE APPEAL OF THE ASSESSEE, WE VACATE THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) AND TO THE EXTENT REDUCED BY LD. CIT(A) U/S 271AAA OF THE ACT. 7. RESPECTFULLY FOLLOWING THE DECISION OF TRIBUNAL, WE SET ASIDE THE ORDER OF LD. CIT(A) AND C ANCEL THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) AND TO THE EXTENT REDUCED BY THE LD. CIT(A) U/S 271AAA OF THE ACT. 8. IN THE RESULT, THE ASSESSEE S APPEAL IS ALLOWED. ITA NO. 4437/DEL/2012 : 9. THE FACTS ARE IDENTICAL TO ITA NO. 4436/DEL/2012 IN THE CASE OF AMIT MENS WEAR (SUPRA) AND, THEREFORE, FOR THE REASONS GIVEN IN THE SAID APPEAL , THE ASSESSEE S APPEAL IS ALLOWED. 10. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 25/02/2015 SD/ - SD/ - ( H.S. SIDHU ) JUDICIAL MEMBER ( S.V. ME HROTRA ) ACCOUNTANT MEMBER DATED: 25/02/2015 *KAVITA ITA NOS. 4437 & 4436/D/ 2012 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITA NOS. 4437 & 4436/D/ 2012 7 SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 2 0 .02.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 2 3 .02.2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 25.02.2015 4. DRAFT APPROVED BY THE SECOND MEMBER 25.02.2015 5. DATE OF APPROVED ORDER COMES TO THE P.S/ SR. PS 25.02.2015 6. DATE OF PRONOUNCEMENT OF ORDER 25.02.2015 7. DATE OF FILE SENT TO THE BENCH CLERK 26.02.2015 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER