RAMESH KUMAR JAIN, MUMBAI V. ACIT CEN CIR 1(2), MUMBAI

ITA 4670/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5415 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 01-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT JHAVERI LD
• Assessee Lawyers: V K TULSIANLD
• Keywords: Opportunity of being heard; Accommodation entries
• Section: 271(1)(c); 143(3); 153A; 132

Judgement Text

ITA NO.4670-73/MUM/2018 ASSESSMENT YEARS :2006-07 TO 2009-10 RAMESH KUMAR JAIN 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.4670/MUM/2018 ( / ASSESSMENT YEAR : 2006-07 ) & ./ I.T.A. NO.4671/MUM/2018 ( / ASSESSMENT YEAR : 2007-08 ) & ./ I.T.A. NO.4672/MUM/2018 ( / ASSESSMENT YEAR : 2008-09 ) & ./ I.T.A. NO.4673/MUM/2018 ( / ASSESSMENT YEAR : 2009-10 ) RAMESH KUMAR JAIN FLAT NO.702, 13A JAI SIDDHI VINAYAK BUILDING ADESHAR DADY STREET CROSS LANE, C.P. TANK ROAD MUMBAI- 400 004. / VS. A CIT - CENTRAL CIRCLE 1(2) OLD CGO BUILDING ANNEXURE 7 TH FLOOR M.K.MARG MUMBAI- 400 020. &' ./ ./PAN/GIR NO. ADAPJ-5347-C ( ') /APPELLANT ) : ( *+') / RESPONDENT ) ASSESSEE BY : SHRI V.K. TULSIAN-LD.AR REVENUE BY : SHRI JAYANT JHAVERI- LD. CIT- DR / DATE OF HEARING : 06/02/2020 / DATE OF PRONOUNCEMENT : 19/02/2020 ITA NO.4670-73/MUM/2018 ASSESSMENT YEARS :2006-07 TO 2009-10 RAMESH KUMAR JAIN 2 / O R D E R PER BENCH 1.1 AFORESAID APPEALS BY ASSESSEE FOR ASSESSMENT YE ARS [IN SHORT REFERRED TO AS AY] 2006-07 TO 2009-10 CONTEST COM MON ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-47, MUMBAI, [I N SHORT REFERRED TO AS CIT(A)] QUA CONFIRMATION OF PENALTY U/S 271(1)(C). SINCE IMPUGN ED ORDER IS COMMON ORDER FOR ALL THE YEARS, THE APPEAL S WERE HEARD TOGETHER AND ARE NOW BEING DISPOSED-OFF BY WAY OF THIS COMMO N ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. IT IS ADMITTED POS ITION THAT ADJUDICATION IN ANY ONE YEAR SHALL APPLY TO OTHER YEARS ALSO. 1.2 IN THE ABOVE BACKGROUND, THE GROUNDS RAISED BY THE ASSESSEE IN AY 2006-07 READ AS UNDER: - 1. WHETHER THE CIT(A) WAS JUSTIFIED BY DECIDING THE APPEAL WITHOUT AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD. 2. WHETHER THE CIT(A) WAS JUSTIFIED BY UPHOLDING TH E PENALTY ORDER PASSED U/S 271(L)(C) WHICH IS NEITHER ONLY CONTRARY TO LAW BUT ALSO BEYOND THE ORDER OF HON'BLE ITAT ON THE QUANTUM APPEAL, VOID AB-INITIO BECAUSE IT WAS BEYOND THE JURISDICTION. 3. WHETHER THE CIT(A) WAS JUSTIFIED BY UPHOLDING TH E A.O. EXERCISE OF ASSUMPTION OF JURISDICTION U/S 271(L)(C) WHICH ALL ARE BASED UPON PRESUMPTION OF PETTY COMMISSION INCOME AT ADHOC BASIS. 4. WHETHER THE CIT(A) WAS JUSTIFIED BY UPHOLDING TH E PENALTY ORDER DESPITE THE FACTS THAT DECISION ON QUANTUM BY ITAT HAS CLEARLY DISREG ARD THE NATURE OF ADDITIONS MADE WHICH IS ON SURMISES BASIS EVEN WITHOUT ANY AD VERSE MATERIAL CONTRARY TO EVIDENCES ALREADY FILED BEFORE A.O. 5. WHETHER THE CIT(A) WAS JUSTIFIED BY UPHOLDING TH E PENALTY ORDER WHICH IS BASED ON ADHOC BASIS COMMISSION INCOME EVEN WITHOUT EITHE R COLLECTING ANY EVIDENCE OR EXAMINING THE NATURE OF EVIDENCE AND ITS VERIFICATI ON IN TERMS OF SETTLED LAW. 6. THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY O RDER WITHOUT APPRECIATING TO THAT MERITS THAT THE APPELLANT HAD DULY DISCHARGED HIS P RIMARY ONUS AS CALLED. 2. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. OUR ADJUDICATION TO TH E SUBJECT MATTER OF THE APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. ITA NO.4670-73/MUM/2018 ASSESSMENT YEARS :2006-07 TO 2009-10 RAMESH KUMAR JAIN 3 3.1 FACTS LEADING TO IMPOSITION OF PENALTY ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL WAS ASSESSED FOR YEAR UNDER CON SIDERATION U/S 153A R.W.S. 143(3) ON 26/12/2011 WHEREIN IT WAS, INTER-ALIA, SADDLED WITH ESTIMATED ADDITION OF 1.5% AMOUNTING TO RS.1,49,250 /- AGAINST ACCOMMODATION ENTRIES BEING PROVIDED TO THE OTHER E NTITIES. IT SO HAPPENED THAT THE ASSESSEE WAS SUBJECTED TO SEARCH ACTION U/S 132 ON 07/10/2009 WHEREIN CERTAIN CASH AND JEWELLERY WAS F OUND AND INVENTORIZED. IT ALSO TRANSPIRED THAT THE ASSESSEE ACTUALLY MANAGED AND CONTROLLED THE AFFAIRS OF AN ENTITY NAMELY M/S AKRUTI METALS AND ALLOYS LTD. FOR PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PER SONS INCLUDING M/S ABG SHIPYARD LTD. AFTER CONSIDERING THE FACTUAL MATRIX, LD.AO ESTIMATED COMMISSION INCOME AGAINST ACCOMMODATION E NTRIES @1.5% WHICH RESULTED INTO AN ADDITION OF RS.1,49,250/- IN THE HANDS OF THE ASSESSEE. CONSEQUENTLY, PENALTY PROCEEDINGS U/S 271 (1)(C) WERE INITIATED IN THE ASSESSMENT ORDER. 3.2 IN THE MEANTIME, THE MATTER OF ESTIMATION OF CO MMISSION INCOME REACHED UP-TO THE LEVEL OF THIS TRIBUNAL VIDE ITA N OS. 3512/MUM/2013 & ORS. DATED 22/04/2015 WHICH IS COMMON ORDER FOR AYS 2004-05 TO 2010- 11. THE NET COMMISSION INCOME WAS ESTIMATED BY THE TRIBUNAL @0.10% WHICH REDUCED THE ADDITIONS TO RS.9,950/-. THE LD. AO, AFTER CONSIDERING THIS DECISION, LEVIED PENALTY U/S 271(1)(C) FOR RS. 3,045/- VIDE PENALTY ORDER DATED 30/12/2015. THE LD. CIT(A), OBSERVING T HAT THE ASSESSEE COULD NOT DISCHARGE THE ONUS TO ESTABLISH THAT IT A CTED IN A BONA-FIDE MANNER IN TERMS OF SECTION 271(1)(C) READ WITH CLAU SE (B) OF ITA NO.4670-73/MUM/2018 ASSESSMENT YEARS :2006-07 TO 2009-10 RAMESH KUMAR JAIN 4 EXPLANATION-1, CONFIRMED THE PENALTY. AGGRIEVED, TH E ASSESSEE IS UNDER FURTHER APPEAL BEFORE US. 4. FROM THE FACTS AS ENUMERATED HEREINABOVE, IT EME RGES THAT LD. AO MADE ESTIMATED ADDITION OF 1.5% IN THE HANDS OF THE ASSESSEE WHICH WAS SUBSTANTIALLY REDUCED TO 0.10% BY THE TRIBUNAL. THE RANGE OF ESTIMATION WOULD REVEAL THAT THE ADDITIONS WERE MER ELY ESTIMATED ADDITIONS. HOWEVER, THE LEVY OF PENALTY, IN OUR OPI NION, WOULD NOT BE AUTOMATIC AND THERE SHOULD BE SOME COGENT MATERIAL ON RECORD TO ESTABLISH THAT THE ASSESSEE INDULGED IN DELIBERATE CONCEALMENT OF INCOME. FURTHER, THE ESTIMATIONS WERE PRIMARILY MAD E ON THE BASIS OF STATEMENT GIVEN BY THE PARTIES DURING SEARCH PROCEE DINGS. ANOTHER FACTOR WHICH LEAD US TO STRIKE DOWN THE IMPUGNED PENALTY W OULD BE THE FACT THAT LD. AO, WHILE PASSING PENALTY ORDER, HAS INVOKED BO TH THE LIMBS OF SECTION 271(1)(C) WHICH IS EVIDENT FROM FOLLOWING O BSERVATIONS GIVEN IN THE PENALTY ORDER: - ..THE ASSESSEE HAS WILLFULLY REDUCED ITS INCIDENC E OF TAXATION AND HAS THEREBY CONCEALED ITS INCOME AS WELL AS FURNISHED INACCURAT E PARTICULARS THEREOF.. BOTH THE STATED LIMBS, AS PER SETTLED LEGAL POSITIO N, CARRY DIFFERENT CONNOTATIONS AND OPERATE DIFFERENTLY. IT WAS OBLIGA TORY ON THE PART OF LD. AO TO FRAME SPECIFIC CHARGE AGAINST THE ASSESSEE BE FORE LEVYING PENALTY. THE FAILURE TO DO THE SAME WOULD RENDER THE PENALTY NULL AND VOID IN THE EYES OF LAW. THEREFORE, THE FACTUAL MATRIX DOES NOT CONVINCE US TO CONFIRM THE IMPUGNED PENALTY. BY DELETING THE SAME, WE ALLOW THE APPEAL. ITA NO.4670-73/MUM/2018 ASSESSMENT YEARS :2006-07 TO 2009-10 RAMESH KUMAR JAIN 5 ITA NO.4671-73/MUM/2018, AYS 2007-08 TO 2009-10 5. FACTS ARE PARI-MATERIA THE SAME IN THESE YEARS. THE ASSESSEE HAS BEEN SADDLED WITH PENALTY OF RS.1.46 LACS FOR AY 20 07-08, RS.2.55 LACS FOR AY 2008-09 & RS.0.10 LACS FOR AY 2009-10, ON SI MILAR FACTUAL MATRIX. THE PENALTY ORDER AS WELL AS IMPUGNED ORDER IS, MOR E OR LESS, ON SIMILAR LINES. THEREFORE, FOLLOWING THE VIEW TAKEN IN AY 20 06-07, WE DELETE THE PENALTY FOR ALL THESE YEARS. CONCLUSION 6. ALL THE APPEAL STANDS ALLOWED IN TERMS OF OUR AB OVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY, 2020. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 19/02/2020 SR.PS, JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT 3. 2 ( ) / THE CIT(A) 4. 2 / CIT CONCERNED 5. 34*-5 , 5 , / DR, ITAT, MUMBAI 6. 4678 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.