Smt. Preeti Lamba, New Delhi V. DCIT, Faridabad

ITA 4444/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5196 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 17-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Business income; Search and seizure; Salary income; Set aside
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. H.S.SIDHU, JUDICIAL MEMBER AND SH. R. K. PANDA, ACCOUNTANT MEMBER ITA NO.4444/DEL/2016 ASSESSMENT YEAR: 2010-11 SMT. PREETI LAMBA C/O. M/S. RRA TAXINDIA D-28, SOUTH EXTENSION, PART-I, NEW DELHI-110049 VS DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE I FARIDABAD (APPELLANT) (RESPONDENT) APPELLANT BY DR. RAKESH GUPTA, ADVOCATE RESPONDENT BY SH. SURENDER PAL, SR DR DATE OF HEARING: 28/05/2019 DATE OF PRONOUNCEMENT: 29/05/2019 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 24.06.2016 OF THE CIT(A), GURGAON RELAT ING TO A. Y. 2010-11. 2. LEVY OF PENALTY OF RS.2,50,000/- BY THE ASSESSIN G OFFICE U/S. 271 AAA WHICH HAS BEEN UPHELD BY THE CIT(A) IS THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE VARIOUS GROUNDS OF AP PEAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESE E IS AN INDIVIDUAL AND DRIVES INCOME FROM SALARY FROM M/S. IMPERIAL AUTO PAGE | 2 INDUSTRIES LIMITED, FARIDABAD. THE ASSESSEE ALSO DE RIVES INCOME FROM HOUSE PROPERTY, BUSINESS INCOME, CAPITAL GAIN AND INCOME FROM OTHER SOURCES. A SEARCH AND SEIZURE OPERATION U/S. 132 (1) OF THE IT ACT WAS CONDUCTED IN THE GROUP CASES OF M/S. IMPERIAL AUTO INDUSTRIES LIMITED DURING WHICH THE RESIDENTIA L PREMISES AS WELL AS OFFICE PREMISES OF THE ASSESSEE WAS ALSO CO VERED. THE ASSESSEE FILED RETURN OF INCOME ON 27.10.2010 DECLA RING INCOME OF RS.26,33,760/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 143 (3) R/W SECTION 143 (3) / 153 A(1) (B) OF THE ACT ON 28.12.2011 AT AN INCOME OF RS.26,33,760/-. WHILE C OMPLETING THE ASSESSMENT, PENALTY PROCEEDINGS U/S 271 AAA OF THE ACT WERE INITIATED IN RESPECT OF SURRENDERED INCOME MADE BY THE ASSESSEE ON ACCOUNT OF THE FOLLOWING :- 1. VOLUNTARY DISCLOSURE ON ACCOUNT OF JEWELERY OF RS.5,00,000/- 2. VOLUNTARY DISCLOSURE ON AFTER OF INCOME RELATING TO PROPERTY TRANSACTION /ADVANCE FROM PROPERTY GIVEN O F RS.20,00,000/- 4. THE ASSESSING OFFICER AFTER REJECTING THE VARIOU S EXPLANATION GIVEN BY THE ASSESSEE LEVIED PENALTY OF RS.2,50,000 /- BEING 10% OF THE SURRENDERED INCOME TO RS.25 LACS ON THE GROU ND THAT THE ASSESSEE FAILED TO SPECIFY AND SUBSTANTIATE THE MAN NER IN WHICH UNDISCLOSED INCOME HAS BEEN EARNED. 5. IN APPEAL THE LD. CIT(A) CONFIRMED THE PENALTY S O LEVIED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESS EE HAS NOT PAID THE TAXES DUE IN RESPECT OF THE UNDISCLOSED IN COME IN THIS PAGE | 3 CASE IN DUE TIME AND THEREFORE, THE CONDITION FOR N ON LEVY OF PENALTY U/S. 271 AAA OF THE ACT HAS NOT BEEN FULFIL LED WITH REGARD TO THE PAYMENT OF TAXES BY THE ASSESSEE. HE, HOWEV ER, HELD THAT THE ASSESSEE HAS SUBSTANTIATED THE MANNER OF EARNIN G OF THE INCOME SO SURRENDERED. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE HEAVILY CHALLEN GED THE ORDER OF THE CT(A) IN UPHOLDING THE PENALTY LEVIED BY THE ASSESSING OFFICER ON ALL TOGETHER A DIFFERENT GROUN D. HE SUBMITTED THAT THE ASSESEE HAS SURRENDERED THE INCOME OF RS. 25 LAKHS DURING THE YEAR UNDER CONSIDERATION AND FILED RETUR N OF INCOME DISCLOSING THE SAME. ASSESSEE HAS SUBSTANTIATED TH E MANNER OF EARNING OF SUCH INCOME AND PAID THE TAXES DUE ON SU CH SURRENDERED INCOME. HE SUBMITTED THAT WHILE THE AS SESSING OFFICER LEVIED PENALTY ON THE GROUND THAT ASSESSEE COULD NOT SUBSTANTIATE THE MANNER OF EARNING OF SUCH INCOME, THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE ASESSEE HAS SUBSTANTIATED THE MANNER IN WHICH UNDISCLOSED I NCOME WAS DERIVED. HOWEVER, HE HAD WRONGLY MENTIONED THAT AS SESSEE HAS NOT PAID THE TAXES DUE ON SUCH SURRENDERED INCOME I N DUE TIME. REFERRING TO THE COPY OF FORM NO.26AS HE SUBMITTED THAT THE ASSESSEE HAS DEPOSITED THE AMOUNT OF RS.7,72,500/- ON 04.01.2010 WHICH IS EVIDENT FROM THE SAID FORM NO.2 6AS. HE SUBMITTED THAT THE LD. CIT(A) WITHOUT CONSIDERING T HIS ENTRY HAS CONSIDERED THE OTHER ENTRIES WHICH WERE PAID /DEPOS ITED ON PAGE | 4 VARIOUS OTHER DATES. HE ACCORDINGLY SUBMITTED THAT SINCE THE MANNER OF SATISFACTION OF INCOME HAS BEEN ACCEPTED BY THE CIT(A) AND SINCE THE ASSESSEE HAS DEPOSITED THE TAX DUE ON THE SURRENDERED INCOME PRIOR TO THE DATE OF FILING OF R ETURN, THEREFORE, PENALTY U/S. 271 AAA CANNOT BE LEVIED. 8. THE LD. DR ON THE OTHER HAND SUBMITTED THAT IT I S APPARENT FROM THE FORM NO.26AS THAT THE ASSESSEE HAS DEPOSIT ED THE TAXES OF RS.7,72,500/- ON 04.01.2010. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BEL OW. WE FIND THE ASSESSING OFFICER LEVIED PENALTY OF RS.2,50,000 /- BEING 10% OF THE SURRENDERED INCOME OF RS.25 LACS ON THE GROUND THAT ASSESSEE COULD NOT SUBSTANTIATE THE MANNER IN WHICH THE UNDI SCLOSED INCOME HAS BEEN EARNED. WE FIND THE CIT(A) AT PAGE 12 OF THE ORDER HAS ACCEPTED THE CONTENTION OF THE ASSESSEE R EGARDING THE SUBSTANTIATION OF INCOME BY OBSERVING AS UNDER :- IN VIEW OF THE FACTS OF THE CASE, SUBMISSIONS MADE BY THE APPELLANT AND FOLLOWING THE JUDICIAL PRONOUNCEMENT ON THIS ISSUE INCLUDING THE ABOVE DECISION OF HONBLE ITAT CHANDI ARH BENCH, THE CONTENTIONS OF THE APPELLANT WITH REGARD TO THE SEC OND CONDITION OF SUBSTANTIATING THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED IS ACCEPTED. 10. THE REVENUE IS NOT IN APPEAL AGAINST THE ABOVE FINDINGS OF THE CIT(A) AND THEREFORE, THE REASON FOR WHICH THE ASSESSING OFFICER HAS LEVIED PENALTY DOES NOT SURVIVE. PAGE | 5 11. SO FAR AS THE OBSERVATION OF THE CIT(A) THAT AS SESSEE HAS NOT PAID THE TAXES IN RESPECT OF UNDISCLOSED INCOME IN DUE TIME IS CONCERNED, WE FIND FROM THE COPY OF FORM NO. 26 AS THAT THE ASSESSEE HAS DEPOSITED THE TAX DUE THERE ON AMOUNTI NG TO RS.7,72,500/- ON 04.01.2010. THE LD. DR ALSO FAIRLY CONCEDED THAT THE AMOUNT HAS BEEN PAID ON 04.01.2010 WHICH I S MUCH PRIOR TO THE FILING OF THE RETURN OF INCOME AS PER THE ENTRY IN FORM NO.26AS. WE, THEREFORE, FIND MERIT IN THE SUBMISSI ON OF THE LD. COUNSEL FOR THE ASSESSEE THAT PENALTY U/S. 271 AAA CANNOT BE LEVIED IN THE INSTANT CASE SINCE THE ASSESSEE HAS P AID THE TAXES DUE ON THE SURRENDERED INCOME MUCH PRIOR TO THE FIL ING OF THE RETURN OF THE INCOME. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO CANCEL T HE PENALTY SO LEVIED U/S 271 AAA OF THE IT ACT, 1961. 12. HOWEVER, IF THE REVENUE AT ANY POINT OF TIME FI NDS THAT THE ASSESSEE HAS NOT DEPOSITED THE TAXES DUE BEFORE THE DUE DATE THEN THE REVENUE IS AT LIBERTY TO MOVE APPROPRIATE APPLI CATION FOR RECALLING OF THIS ORDER AS PER LAW. WE HOLD AND DIR ECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.05.2019. SD/- SD/- (H. S. SIDHU) (R.K PANDA ) JUDICIAL MEMBER ACCOUNTANT MEM BER *NEHA* DATE:- 29.05.2019 COPY FORWARDED TO: PAGE | 6 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 28.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28.05.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 29.05.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER