ACIT 15(2), MUMBAI V. JAGNANDAN SINGH & PARTY, MUMBAI

ITA 4942/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83907 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2003-2004
• Appeal Filed On: 28-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Keywords: Reopening of assessment; Unexplained investment; Reassessment proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 4942/MUM/2013 (ASSESSMENT YEAR: 2003-04) A C I T - 15(2) VS. M/S. JAGNANDAN SINGH & PARTY MATRU MANDIR, ROOM NO.113 OPP. GRANT ROAD (W) MUMBAI 400007 1401 IUY 8 TOWER, NAHAR AMRIT SHAKTI, CHANDIVALI, POWAI ANDHERI (E), MUMBAI 400049 PAN - AAAAJ2219H APPELLANT RESPONDENT APPELLANT BY: SHRI VIVEK BATRA RESPONDENT BY: NONE DATE OF HEARING: 21.10.2014 DATE OF PRONOUNCEMENT: 21.10.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 30THE APRIL, 2013 PASSED BY THE CIT(A) 26, MUMBAI A ND IT PERTAINS TO AY 2003-04. 2. THE ONLY GROUND URGED BY THE REVENUE READS AS UNDER : - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) HA ERRED IN DELETING THE PENALT Y OF RS.2,10,73,800/- LEVIED BY THE ASSESSING OFFICER U/ S 271(1)(C) OF THE I.T. ACT, 1961 IN RESPECT OF ADDITION OF RS.6.2 0 CRORE AS UNEXPLAINED INVESTMENT. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A LIQUOR CO NTRACTOR AND IT PAID A SUM OF ` 7.60 CRORES TO EXCISE DEPARTMENT AS EARNEST MONEY. THOUGH IN THE PENALTY ORDER THE STATUS IS SHOWN AS FIRM, IN PARA 2 OF THE ORDER PASSED UNDER SECTION 271(1)(C) IT WAS STATED BY THE AO THAT THE AOP EXPLAINED THE SOURCE OF THIS PAYMENT TO THE EXTENT OF ` 1.40 CRORES AND THE ITA NO. 4942/MUM/2013 M/S. JAGNANDAN SINGH & PARTY 2 BALANCE AMOUNT OF ` 6.20 CRORES WAS NOT EXPLAINED WHICH REQUIRED TO BE ASSESSED AS UNEXPLAINED INCOME OF THE AOP. EVEN THE PAN ALSO SHOWS THAT THE STATUS OF THE ASSESSEE IS THAT OF AOP. AT ANY R ATE, ASSESSMENT WAS MADE BY MAKING AN ADDITION OF ` 6.20 CRORES IN THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. SINCE ADDITIO N IS MADE, PENALTY PROCEEDINGS WERE INITIATED UNDER SECTION 271(1)(C) OF THE ACT AND AFTER HEARING THE ASSESSEE PENALTY OF ` 2.10 CRORES WAS LEVIED. ON AN APPEAL FILED BY THE ASSESSEE THE LEARNED CIT(A) OBSERVED THAT TH E APPEAL FILED BY THE AOP AGAINST THE ASSESSMENT ORDER NO LONGER SURVIVES IN THE LIGHT OF THE ORDER OF THE ITAT DATED 24.08.2012 AND HENCE PENALT Y HAS NO LEGS TO STAND. THE ITAT OBSERVED THAT REOPENING OF ASSESSMENT IS M ECHANICAL WITHOUT ANY MATERIAL IN THE POSSESSION OF THE AO ON THE BASIS O F WHICH THE BELIEF COULD HAVE BEEN FORMED THAT THE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. ACCORDINGLY THE BENCH SET ASIDE THE REO PENING OF ASSESSMENT ON THE GROUND THAT THE AO LACKS JURISDICTION TO REO PEN THE ASSESSMENT. SINCE REASSESSMENT PROCEEDINGS ARE HELD TO BE INVAL ID, THERE REMAINS NO SCOPE FOR SUSTAINING THE PENALTY UNDER SECTION 271( 1)(C) OF THE ACT. THEREFORE THE LEARNED CIT(A) DELETED THE PENALTY. T HE REVENUE, HOWEVER, CHOSE TO PREFER SECOND APPEAL BEFORE THE APPELLATE TRIBUNAL AGAINST DELETION OF PENALTY. 4. THOUGH ACKNOWLEDGEMENT-CUM-NOTICE WAS SENT THOUGH R EGISTERED POST NONE APPEARED ON BEHALF OF THE ASSESSEE. AT TH E TIME OF HEARING THE LEARNED D.R. WAS NOT ABLE TO POINT OUT THE REASONS AS TO WHY THE REVENUE CHOSE TO FILE APPEAL. IT IS NOT KNOWN AS TO WHETHER THE DEPARTMENT CHALLENGED THE ORDER PASSED BY THE ITAT AGAINST THE QUANTUM PROCEEDINGS. EVEN OTHERWISE, THE MECHANICAL MANNER IN WHICH THE AO PASSED THE ORDER UNDER SECTION 271(1)(C) OF THE ACT BY TREATING THE STATUS AS FIRM INDICATES NON-APPLICATION OF MIND OF THE AO. IT IS UNDISPUTED THAT THE ASSESSMENT ORDER, WHICH IS THE BASIS FOR LEVY OF PENALTY NO LO NGER SUBSISTS, IN WHICH EVENT THE PENALTY PROCEEDINGS UNDER SECTION 271(1)( C) DOES NOT SURVIVE. SINCE THE LEARNED CIT(A) HAD DELETED THE PENALTY ON THIS GROUND, WE DO NOT ITA NO. 4942/MUM/2013 M/S. JAGNANDAN SINGH & PARTY 3 FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LEARN ED CIT(A). ACCORDINGLY WE DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER, 2014. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 21 ST OCTOBER, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 26, MUMBAI 4. THE CIT 15, MUMBAI CITY 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.