M/s. M.G. Portfolio Ltd., New Delhi V. DCIT, New Delhi

ITA 4717/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6712 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 05-10-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 07-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY VERMA
• Assessee Lawyers: R K KAPOOR
• Section: 27; 144; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI L.P. SAHU, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4717/DEL./2013 (ASSESSMENT YEAR : 2000-01) M/S. M.G. PORTFOLIO LTD., VS. DCIT, CIRCLE 6 (1), WZ-447, 3 RD FLOOR, M.S. BLOCK, NEW DELHI. HARI NAGAR, NEW DELHI 110 064. (PAN : AACCM7473N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.K. KAPOOR, CA REVENUE BY : SHRI VIJAY VERMA, CIT DR DATE OF HEARING : 05.10.2016 DATE OF ORDER : 25.10.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. M.G. PORTFOLIO LTD. (HEREINAFTER R EFERRED TO AS THE ASSESSEE), BY FILING THE PRESENT APPEAL SO UGHT TO SET ASIDE THE IMPUGNED ORDER DATED 31.05.2013 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-IX, NEW DELHI QUA THE ASSES SMENT YEAR 2000-01 CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) ON THE GROUNDS INTER ALIA THAT :- ITA NO.4717/DEL./2013 2 1) THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN LA W AND ON FACTS AND CIRCUMSTANCES OF THE ASSESSEE'S CASE IN C ONFIRMING THE PENALTY OF RS.3,10,000/- U/S 271(1)(C) OF THE INCOM E TAX ACT. 2) THAT THE LEARNED CIT (A) HAS GROSSLY ERRED IN LA W IN HOLDING THAT THE ASSESSEE HAS COMMITTED DEFAULT WIT HIN THE MEANING AND CONTEXT OF SECTION 271 (1)(C). 3) THAT THE CIT (A) HAS GROSSLY ERRED IN LAW IN HOL DING THAT THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION EITHER DURING THE ASSESSMENT PROCEEDINGS OR DURING THE PENALTY PROCEE DINGS. 4) THAT THE PROVISIONS OF SECTION 271(1)(C) READ WI TH EXPLANATION 1 HAVE BEEN WRONGLY INVOKED ON THE FACT S AND CIRCUMSTANCES OF THE ASSESSEE'S CASE. 5) THAT THE LEARNED CIT (A) HAS ERRED IN LAW IN CO NFIRMING THE PENALTY MERELY BECAUSE THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE ITS CLAIM WITH REGARD TO THE RECEIPT OF APPLICATION MON EY. 6) THAT THE LD. CIT (A) GROSSLY ERRED IN LAW BY NO T FOLLOWING THE JUDGMENT OF HON'BLE JURISDICTIONAL HC IN THE CA SE OF CIT VS OASIS HOSPITALITIES (I) LTD 238 CTR 402, WHEREIN ON IDENTICAL FACTS, THE HON'BLE COURT HAS HELD NO PENALTY U/S 27 1 (1)(C) IS LEVIABLE. 7) THAT THE ORDER PASSED BY THE AO AND THE CIT(A) U /S 271(1)(C) IS BAD IN LAW. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE : ON T HE BASIS OF ASSESSMENT PROCEEDINGS COMPLETED UNDER SECTION 147/ 144 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) AND MAKI NG ADDITION OF RS.8,00,000/- U/S 68 OF THE ACT CONFIRMED BY THE IT AT VIDE ORDER DATED 10.06.2011, PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED. ASSESSEE PUT IN APPEARANCE THROUGH SHRI I.C. SHARMA , WHO HAS NOT FILED ANY SUBMISSIONS, REQUESTED TO DROP THE PENALT Y PROCEEDINGS. ASSESSING OFFICER CAME TO THE CONCLUSION THAT SINCE THE ASSESSEE HAS FAILED TO OFFER ANY EXPLANATION AS TO THE ADDIT ION MADE U/S 68 OF ITA NO.4717/DEL./2013 3 THE ACT WHO HAS BEEN FOUND TO BE HABITUAL OF TAKING ENTRIES OF CASH CREDITS AND AS SUCH, ASSESSEE HAS CONCEALED THIS IN COME AND THEREBY IMPOSED THE PENALTY OF RS.3,10,000/- . 3. ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT (A) BY WAY OF APPEAL WHO HAS DISMISSED THE SAME. FEELI NG AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LD. AR FOR THE ASSESSEE CHALLENGING THE IMPU GNED ORDER CONTENDED INTER ALIA THAT DUE TO UNAVOIDABLE CIRCUM STANCES, THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF INCOME OF RS.8,00,000/- MADE AS ADDITION BY THE AO; THAT PENALTY PROCEEDING S AS WELL AS ASSESSMENT PROCEEDINGS ARE REQUIRED TO BE DECIDED I NDEPENDENTLY; THAT NONE OF THE INFORMATION FILED BY THE ASSESSEE FOUND TO BE FALSE RATHER ASSESSEE COULD NOT FURNISH THE EXPLANATION N OW BROUGHT ON RECORD. HOWEVER, ON THE OTHER HAND, THE LD. DR REL IED UPON THE ORDERS PASSED BY AO/CIT(A)/ITAT. 6. UNDISPUTED FACTS NECESSARY FOR ADJUDICATING THE CONTROVERSY AT HAND ARE INTER ALIA THAT ADDITION OF RS.8,00,000 /- HAD MADE BY THE ITA NO.4717/DEL./2013 4 AO AND AFFIRMED BY THE CIT (A) AS WELL AS BY THE IT AT DUE TO NON-FURNISHING OF ANY INFORMATION BY THE ASSESSEE O N THE BASIS OF REOPENING MADE U/S 147/144 OF THE ACT ON RECEIVING INFORMATION FROM THE INVESTIGATION WING; THAT THE ASSESSEE HAS EVEN FAILED TO EXPLAIN THE AMOUNT OF RS.8,00,000/- BEFORE APPELLAT E PROCEEDINGS; THAT IN PENALTY PROCEEDINGS AS WELL AS ASSESSMENT P ROCEEDINGS ARE REQUIRED TO BE DECIDED INDEPENDENTLY. 7. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FACT S, ARGUMENTS ADDRESSED BY THE LD. AR AND LD. DR, WE ARE OF THE C ONSIDERED VIEW THAT THE PENALTY ORDER PASSED BY THE AO AND AFFIRME D BY THE LD. CIT (A) IS NOT SUSTAINABLE IN THE EYES OF LAW FOR T HE FOLLOWING REASONS :- I. THAT BARE PERUSAL OF THE PROVISIONS CONTAINED U/S 271(1)(C) OF THE ACT GOES TO PROVE THAT TO IMPOSE PENALTY UPON THE ASSESSEE UNDER THE RELEVANT PROVISIONS OF THE ACT, TWO CONDITIONS ARE REQUIRED TO BE FULFILLED ONE: THAT THE ASSESSEE MUST HAVE FURNI SHED INACCURATE PARTICULARS OF INCOME AND TWO: THE ASSES SEE MUST HAVE CONCEALED PARTICULARS OF INCOME FROM THE TAX AUTHORITIES. II. THAT IN THE CASE CITED AS CIT VS HARSH TALWAR 335 ITR 200 (DEL.) AND CIT VS SAS PHARMACEUTICALS ITA NO.4717/DEL./2013 5 335 ITR 2359 (DEL.) DELIVERED BY HONBLE JURISDICTIONAL HIGH COURT HELD THAT, TO PROCEED WITH THE IMPOSITION OF PENALTY U/S 271(1)(C), THE A.O. H AS TO PROVE THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME . III. THAT THE AO HAD MERELY MADE ADDITION OF RS.8,00,000/- ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EXPLANATION REGARDING ALLEGED UNDISCLOSED INCOME OF RS.8,00,000/- BUT HAS NOT INVESTIGATED AS TO HOW THE AMOUNT OF RS.8,00,000/- IS UNDISCLOSED INCOME; IV. THAT THE ASSESSEE HAS BROUGHT ON RECORD INCOME-TAX RETURN OF SHRUTI FINSTOCK LTD. FOR THE AY 2000-01, COPY OF ASSESSMENT ORDER FOR AY 1998-99, PAN OF SHRUTI FINSTOCK LIMITED, MEMORANDUM OF ARTICLES & ASSOCIATION, CERTIFICATE OF INCORPORATION, COPY OF CERTIFICATE OF REGISTRATION OF SHRUTI FINSTOCK LTD. ISSUED BY RESERVE BANK OF INDIA AS NBFC, COPY OF AUDITED BALANCE SHEET FOR THE SUBSEQUENT AYS, TO WHOM THE ALLEGED ENTRY OF RS.5,00,000/- AS SHARE APPLICATION MONEY WAS TAKEN. ITA NO.4717/DEL./2013 6 V. THAT ASSESSEE HAS ALSO BROUGHT ON RECORD COPY OF BALANCE SHEET AS ON 31.03.2000 (AVAILABLE AT PAGE 4 8 TO 52 OF THE PAPER BOOK), COPY OF BOARDS RESOLUTIO N ALLOTTING SHARES (AVAILABLE AT PAGE 53 & 54 OF THE PAPER BOOK), COPY OF RETURN OF ALLOTMENT FILED WITH ROC AFTER ALLOTTING SHARES (AVAILABLE AT PAGE 55 TO 58 OF THE PAPER BOOK), COPY OF MEMBERS REGISTER EVIDENCING TH AT SHARES WERE TRANSFERRED BY ANTRIKSHA SECURITIES PVT . LTD. IN OCTOBER 2003(AVAILABLE AT PAGE 59 & 60 OF THE PAPER BOOK) AND COPY OF FORM NO.18 & 32 FILED WITH ROC (AVAILABLE AT PAGE 61 TO 65 OF THE PAPER BOOK) TO WHOM SHARE APPLICATION MONEY OF RS.3,00,000/- IN WHOSE CASE AMOUNT OF RS.3,00,000/- HAS BEEN TREATED AS UNDISCLOSED INCOME. VI. THAT THE DOCUMENTS REFERRED ABOVE IN PARA (II) & (I II) APPARENTLY GOES TO PROVE THAT THE ASSESSEE HAS RECE IVED A SUM OF RS.8,00,000/- FROM SHRUTI FINSTOCK LTD. AN D ANTRIKSHA SECURITIES PVT. LTD. AS SHARE APPLICATION MONEY WHOSE IDENTITY, GENUINENESS AND CREDITWORTHINESS IS NOT IN DISPUTE. ASSESSEE CANNO T BE PENALIZED U/S 271(1)(C) ONLY BECAUSE OF THE REASONS THAT DURING QUANTUM PROCEEDINGS, IT HAS FAILED TO P ROVE ITA NO.4717/DEL./2013 7 THE GENUINENESS, CREDITWORTHINESS AS WELL AS IDENTI TY OF THE AFORESAID SHARE INVESTING COMPANIES; BECAUSE THIS FACT WERE REQUIRED TO BE INDEPENDENTLY LOOKED INTO DURING THE ASSESSMENT AS WELL AS PENALTY PROCEEDING S BY THE AO, WITHOUT WHICH IT CANNOT BE CONCLUDED TH AT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME; VII. THAT WHEN IT IS ADMITTED CASE OF THE RESPONDENT THA T THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION WHICH TH E ASSESSEE HAS FURNISHED DURING THE PENALTY PROCEEDIN GS, THE QUESTION OF FURNISHING INACCURATE PARTICULARS O F INCOME IN ORDER TO CONCEAL THE INCOME DOES NOT ARIS E; VIII. THAT THE AMOUNT IN QUESTION IS PROVED TO BE SHARE APPLICATION MONEY FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE AS ON 31.03.2000 AS WELL AS FROM THE AUDIT ED BALANCE SHEET, AVAILABLE AT PAGE 3 OF THE PAPER BOO K; IX. THAT HAD THERE BEEN PROPER INVESTIGATION MADE BY TH E AO, THE DOCUMENTS PERTAINING TO SHRUTI FINSTOCK LTD . AND ANTRIKSHA SECURITIES PVT. LTD. NOW BROUGHT ON RECORD BY THE ASSESSEE VIZ. INCOME-TAX RETURN, ASSESSMENT ORDER, PAN, CERTIFICATE ISSUED BY RBI, WOULD HAVE BEEN PERUSED BY HIM WHICH ARE ENOUGH TO ITA NO.4717/DEL./2013 8 EXPLAIN THE RECEIPT OF RS.8,00,000/- BY THE ASSESSE E AS SHARE APPLICATION MONEY BUT THE AO MERELY IN A MECHANICAL MANNER HAS PROCEEDED TO CONCLUDE THAT SINCE THE ASSESSEE HAS FAILED TO FURNISH ANY EXPLANATION, THIS IS UNDISCLOSED INCOME OF THE ASSE SSEE AND HAS MADE AN ADDITION U/S 68 OF THE ACT; X. THAT EVEN OTHERWISE, WHEN ADMITTEDLY AMOUNT OF RS.5,00,000/- WAS RECEIVED BY ASSESSEE FROM SHRUTI FINSTOCK LTD. BY WAY OF CHEQUE DRAWN IN FAVOUR OF T HE ASSESSEE, THE ENTIRE INFORMATION REGARDING SHARE APPLICATION MONEY WAS WITHIN THE PUBLIC DOMAIN BUT AO HAS NOT PREFERRED TO PERUSE THE SAME FOR THE REA SON BEST KNOWN TO HIM; XI. THAT EVEN DETAIL OF ALLOTMENT OF SHARES STOOD FILED WHEREIN THE CREDITORS NAME ALSO APPEARED AS ALLOTT EES; XII. THAT HONBLE JURISDICTIONAL HIGH COURT IN CASE CITE D AS CIT VS. OASIS HOSPITALITIES (P) LTD . (2011) 238 CTR (DEL) 402 DEALT WITH THE IDENTICAL ISSUE AND HELD THAT WHEN THE ASSESSEE HAS PROVED IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE CREDITOR, PENALTY PROCEEDINGS U/S 271(1)(C) ARE NOT ATTRACTED ; ITA NO.4717/DEL./2013 9 XIII. THAT NO DOUBT FINDINGS RETURNED IN THE QUANTUM PROCEEDINGS AMOUNTS TO COGENT EVIDENCE SO FAR AS ADDITION IS CONCERNED BUT IT IS NOT CONCLUSIVE EVID ENCE TO IMPOSE PENALTY U/S 271(1)(C) WHICH ARE SEPARATE AND INDEPENDENT IN NATURE AND TO BE PROVED BY THE AO BY WAY OF COGENT EVIDENCE; XIV. THAT WITHOUT ANY COGENT EVIDENCE ON RECORD THAT THE ASSESSEE HAS CONCEALED OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME, PROVISIONS CONTAINED U/S 271(1)(C) CANNOT BE INVOKED. 8. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE HER EBY ACCEPT THE PRESENT APPEAL FILED BY THE ASSESSEE AND THE PE NALTY ORDER DATED 30.03.2011, AFFIRMED BY THE LD. CIT (A), IS HEREBY SET ASIDE. ORDER PRONOUNCED IN OPEN COURT ON THIS DAY 25 TH OF OCTOBER, 2016. SD/- SD/- (L.P. SAHU) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 25 TH DAY OF OCTOBER, 2016 TS ITA NO.4717/DEL./2013 10 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-IX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.