Chetan Gupta, New Delhi V. ACIT, Central Circle-7, New Delhi

ITA 4899/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5292 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 01-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RES
• Assessee Lawyers: AGAINST S DATED PASSED
• Keywords: Unexplained cash credit; Question of law
• Section: 271(1)(c); 250; 274; 73; 147; 68; 27

Judgement Text

1 ITA NOS. 4899 & 4898/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI N. K. BILLAIYA ACCOUNTANT ME MBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 4899/DEL/2017 (A.Y 2007-08) & I.T.A. NO. 4898/DEL/2017 (A.Y 2005-06) (THROUGH VIDEO CONFER ENCING) CHETAN GUPTA 16, KASTURBA GNDHI MARG, NEW DELHI AATPG9580E (APPELLANT) VS ACIT CENTRAL CIRCLE-7 NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS DATED 21/06/2017 PASSED BY CIT(A)-24, NEW DELHI FOR ASS ESSMENT YEAR 2007-08 & 2005-06 RESPECTIVELY. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- I.T.A. NO. 4898/DEL/2017 (A.Y 2005-06) THAT THE ORDER DATED 21-06-2017 PASSED U/S 250 OF T HE INCOME-TAX ACT, 1961 BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-24 , NEW DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE APPELLANT BY SH. ASHWANI KUMAR, CA, SH. RAHUL CHAURASIA, CA & SH. BHAVESH JINDAL, CA RESPONDENT BY SH. MAHINDER KAUR, SR. DR DATE OF HEARING 07.09.2021 DATE OF PRONOUNCEMENT 07.09.2021 2 ITA NOS. 4899 & 4898/DEL/2012 ACTION OF THE LD ASSESSING OFFICER IN LEVYING PENAL TY U/S 271(1 )(C) OF THE INCOME-TAX ACT, 1961 OF RS. 1,66,16,677/- FOR ALLEG ED CONCEALMENT/FURNISHING INACCURATE PARTICULARS OF INCOME, WITHOUT CONSIDERI NG THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LEGAL POSITION IN MUCH AS NO SUCH PENALTY IS EXIGIBLE IN THE FACTS & CIRCUMSTANCES OF THE CASE. I.T.A. NO. 4899/DEL/2017 (A.Y 2007-08) THAT THE ORDER DATED 21-06-2017 PASSED U/S 250 OF T HE INCOME-TAX ACT, 1961 BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-24 , NEW DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LD ASSESSING OFFICER IN LEVYING PENAL TY U/S 271(1 )(C) OF THE INCOME-TAX ACT, 1961 OF RS. 1,40,16,291/- FOR ALLEG ED CONCEALMENT/FURNISHING INACCURATE PARTICULARS OF INCOME, WITHOUT CONSIDERI NG THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LEGAL POSITION IN MUCH AS NO SUCH PENALTY IS EXIGIBLE IN THE FACTS & CIRCUMSTANCES OF THE CASE. 3. BOTH THE APPEALS ARE IDENTICAL, HENCE WE ARE TAK ING UP THE APPEAL FOR A.Y. 2005-06. THE ASSESSMENT WAS COMPLETED U/S 147 READ WITH SECTION 143 (3) OF THE INCOME TAX ACT VIDE ORDER DATED 11/3/2013 AT TO TAL INCOME OF RS.43,71,04,170/- AGAINST THE RETURN INCOME AMOUNTI NG TO RS.3,41,612/-. AFTER MAKING ADDITION OF RS.43,67,62,555/- ON ACCOU NT OF UNEXPLAINED CREDIT ENTRIES U/S 68 OF THE ACT. THE PENALTY U/S 271(1)( C) WAS INITIATED IN THE ASSESSMENT ORDER AND ACCORDINGLY A SHOW CAUSE NOTIC E U/S 271(1)(C) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 16/2/2017 FOR SUBMITT ING EXPLANATION ON THE CONCEALMENT. THE ASSESSEE FILED REPLY ON 27/02/210 7 TO THE SAID PENALTY ORDER. THE ASSESSING OFFICER PASSED PENALTY U/S 27 1(1)(C) READ WITH SECTION 274 OF INCOME TAX ACT, 1961, THEREBY IMPOSING PENAL TY OF RS. 1,66,16,677/-. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE AS SESSEE. 3 ITA NOS. 4899 & 4898/DEL/2012 5. THE LD. AR SUBMITTED THAT THE NOTICE DATED 16.02 .2017 HAS NOT GIVEN A SPECIFIC CHARGE FOR PENALTY. THE LD. AR SUBMITTED THAT THE CIT(A) ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT AS UNDER WHICH LIMB OF SECTION 271(1)(C), THE PENALTY IS LEVIED WAS NOT MENTIONED IN THE NOTICE ISSUED UNDER SECTION 271(1)(C) READ WITH SECTION 274 OF THE ACT. THE LD. AR SUBMITTED THAT WHETHER THE PENALTY IS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WAS NOT EVIDENT FROM THE NOTI CE NOR FROM THE PENALTY ORDER AS WELL. THE LD. AR FURTHER SUBMITTED THAT TH E PENALTY PROVISION BEING QUASI JUDICIAL, UNLESS THERE IS SPECIFIC CHARGE THE RE CANNOT BE LEVY OF PENALTY. THEREFORE, THE ORDER LEVYING PENALTY IS WRONG AND B AD IN LAW. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN C ASE OF CIT VS. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 248 (SC) AND C IT V. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KAR). THE LD AR FURTHER SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN CASE OF PR. CIT VS. M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (ITA NO.475/2019 VIDE ORDER DATED 02.08.2019) HELD THAT NOTICE ISSUED BY THE ASSESSIN G OFFICER WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271 (1)(C) OF THE PENALTY PROCEEDINGS HAD BEEN INITIATED. 6. THE LD. DR SUBMITTED THAT THE PENALTY ORDER IS V ERY CLEAR THAT THE PENALTY IS IMPOSED ON CONCEALMENT OF INCOME AND, TH EREFORE, MERELY NOT MENTIONING THE SPECIFIC LIMB OF SECTION 271(1)(C) W ILL NOT MAKE THE PENALTY ORDER BAD IN LAW. THE LD. DR RELIED UPON THE ASSESS MENT ORDER, PENALTY ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORD. FIRST OF ALL, IN THE NOTICE IS SUED U/S 274 R.W.S 271(1)(C) OF THE INCOME TAX ACT, 1961, THERE WAS NO SPECIFIC CHA RGES AS RELATES TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. FROM THE NOTICE DATED 16.02.2017 PRODUCED BY THE LD . AR DURING THE HEARING, IT CAN BE SEEN THAT THE ASSESSING OFFICER WAS NOT S URE UNDER WHICH LIMB OF 4 ITA NOS. 4899 & 4898/DEL/2012 PROVISIONS OF SECTION 271 OF THE INCOME TAX ACT, 19 61, THE ASSESSEE IS LIABLE FOR PENALTY. BESIDES THAT THE ASSESSMENT ORDER ALSO DID NOT SPECIFY THE CHARGE AS TO WHETHER THERE IS CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS OF INCOME IN ASSESSEES CASE. BESIDES T HIS, THE PRESENT CASE IS RELATING TO SEARCH CONDUCTED BY THE REVENUE IN THE PREMISES OF THE ASSESSEE, WHILE THE DECISION RELIED BY THE ASSESSING OFFICER AS WELL AS CIT (A) THAT OF HONBLE SUPREME COURT IN CASE OF MAK DATA P. LTD. V S. CIT 358 ITR 593 IS RELATING TO SURVEY AND THERE IS NO ISSUE INVOLVED A BOUT THE NOTICE ISSUED U/S 271(1)(C) R.W.S. 274 OF THE ACT. THIS CASE RELIED B Y THE REVENUE IS NOT APPLICABLE IN THE PRESENT CASE DUE TO THE DISTINGUISHING FACTS . THEREFORE WE ARE TAKING UP THE CONTENTION OF THE ASSESSEE THAT THERE IS NO PAR TICULAR LIMB MENTIONED IN THE NOTICE ISSUED UNDER SECTION 271(1)(C) R.W.S. 274 OF THE ACT. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUP REME COURT IN CASE OF M/S SSA EMERALD MEADOW. THE EXTRACT OF THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN M/S SSA EMERALD MEADOWS ARE AS UNDER WHICH WAS CONFIRMED BY THE HONBLE APEX COURT: '3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'T HE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE ITA NO. 4913/DEL/2015 DECISION OF THE DIVISION BENCH OF THI S COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIA L QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE AP PEAL IS ACCORDINGLY DISMISSED.' THUS, ADDITIONAL GROUND NO. (II) OF THE ASSESSEE'S APPEAL IS ALLOWED. SINCE THE INCEPTION OF THE NOTICE ISSUED U/S 271(1)(C) HAS BE COME NULL AND VOID, THERE IS NO NEED TO COMMENT ON MERIT OF THE CASE. THE PENALT Y U/S 271(1)(C) OF THE ACT IS QUASHED. 5 ITA NOS. 4899 & 4898/DEL/2012 SINCE IN THE INSTANT CASE ALSO THE INAPPROPRIATE W ORDS IN THE PENALTY NOTICE HAS NOT BEEN STRUCK OFF AND THE NOTICE DOES NOT SPECIFY AS TO UNDER WHICH LIMB OF THE PROVISIONS, THE PENALTY U/S 271(1 )(C) HAS BEEN INITIATED, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E PENALTY LEVIED U/S 271(1)(C) IS NOT SUSTAINABLE AND HAS TO BE DELETED. ALTHOUGH THE LD. DR SUBMITTED THAT MERE NON-STRIKING OFF OF THE INAPPROPRIATE WORDS WI LL NOT INVALIDATE THE PENALTY PROCEEDINGS, HOWEVER, THE DECISION OF THE HONBLE K ARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) WHERE THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED IS DIRECTLY ON THE ISSUE CONTEST ED HEREIN BY THE ASSESSEE. FURTHER, WHEN THE NOTICE IS NOT MENTIONING THE CONC EALMENT OR THE FURNISHING OF INACCURATE PARTICULARS, THE RATIO LAID DOWN BY T HE HONBLE HIGH COURT IN CASE OF M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (S UPRA) WILL BE APPLICABLE IN THE PRESENT CASE. THE HONBLE DELHI HIGH COURT HELD AS UNDER: 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, WHICH W AS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT I N CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR) AND OBSE RVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIG H COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIO NER OF INCOME TAX V. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 241(KAR) , THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA I N SLP NO. 11485 OF 2016 BY ORDER DATED 5 TH AUGUST, 2016. 22. ON THIS ISSUE AGAIN THIS COURT IS UNABLE TO FIN D ANY ERROR HAVING BEEN COMMITTED BY THE ITAT. NO SUBSTANTIAL QUESTION OF LAW ARISES. THUS, NOTICE UNDER SECTION 271(1)(C) R.W.S. 274 OF THE ACT ITSELF IS BAD IN LAW. THOUGH THE CIT(A) HAS EMPHASIZED IN THE ORDER THAT THE PENALTY WAS LEVIED ON 6 ITA NOS. 4899 & 4898/DEL/2012 THE BASIS OF THE CONCEALMENT OF INCOME, BUT AFTER P ERUSAL OF THE ASSESSMENT ORDER , IT CAN BE SEEN THAT THE PROCEEDINGS U/S 271 (1)(C) HAS NOT BEEN INITIATED ON ANY SPECIFIC LIMB. IN FACT, THERE IS NO SATISFAC TION RECORDED FOR THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT. THE PENALTY ORDER THOUGH STATED THAT IT IS BASED ON CONCEALMENT OF INCOME BUT THE A SSESSING OFFICER HAS NOT GIVEN ANY PROPER FINDINGS AS TO HOW THE CONCEALMENT IS DONE. THE CIT(A) HAS OVERLOOKED THE DECISIONS OF THE HONBLE APEX COURT MAK DATA (P.) LTD. (SUPRA) AND THE HONBLE DELHI HIGH COURT IN CASE OF RELIANC E PETROPRODUCTS LTD. (SUPRA). THUS, IN LIGHT OF THE DECISIONS RELIED UPO N BY THE LD. AR IN CASE OF M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (SUPR A) AND MAK DATA P. LTD. (SUPRA), THE PENALTY ORDER IS NOT PROPER AND JUST. WE, THEREFORE, SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICE R TO CANCEL THE PENALTY SO LEVIED. THUS, APPEAL BEING ITA NO. 4898/DEL/2017 FI LED BY THE ASSESSEE IS ALLOWED. 8. AS REGARDS TO APPEAL BEING ITA NO. 4899/DEL/2017 FILED BY THE ASSESSEE, THE FACTS ARE IDENTICAL TO THAT OF ITA NO. 4898/DE L/2017 AND NO DISTINGUISHING FACTS WERE POINTED OUT BY THE LD. DR DURING THE COU RSE OF HEARING. HENCE, APPEAL BEING ITA NO. 4899/DEL/2017 IS ALLOWED. 9. IN RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07 TH DAY OF SEPTEMBER, 2021 SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED : 07/09/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 7 ITA NOS. 4899 & 4898/DEL/2012 ASSISTANT REGISTRAR ITAT NEW DELHI