DCIT, New Delhi V. M/s. Vipul Ltd., New Delhi

ITA 4973/DEL/2013

• Counselvise Citation: 497320114 RSA 2013
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 04-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 27-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDREKAR
• Assessee Lawyers: VINOD BANSAL
• Keywords: Business income; Documents seized
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH H HH H : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA, VICE , VICE , VICE , VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI J. SUDHAKAR REDDY J. SUDHAKAR REDDY J. SUDHAKAR REDDY J. SUDHAKAR REDDY, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO S SS S . .. . 4972/DEL/2013 & 4973/DEL/2013 4972/DEL/2013 & 4973/DEL/2013 4972/DEL/2013 & 4973/DEL/2013 4972/DEL/2013 & 4973/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR S SS S : : : : 2005 2005 2005 2005 - -- - 06 & 2006 06 & 2006 06 & 2006 06 & 2006 - -- - 07 0707 07 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -17(1), 17(1), 17(1), 17(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S VIPUL LIMITED, M/S VIPUL LIMITED, M/S VIPUL LIMITED, M/S VIPUL LIMITED, REGUS RECTANGLE 1, REGUS RECTANGLE 1, REGUS RECTANGLE 1, REGUS RECTANGLE 1, LEVEL 4D, LEVEL 4D, LEVEL 4D, LEVEL 4D, COMMERCIAL COMPLEX, COMMERCIAL COMPLEX, COMMERCIAL COMPLEX, COMMERCIAL COMPLEX, SAKET, SAKET, SAKET, SAKET, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 017. 110 017. 110 017. 110 017. PAN : AAACA5396C. PAN : AAACA5396C. PAN : AAACA5396C. PAN : AAACA5396C. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.P. CHANDREKAR, SR.DR. RESPONDENT BY : SHRI VINOD BANSAL, FCA. DATE OF HEARING : 04.08.2015 04.08.2015 04.08.2015 04.08.2015 DATE OF PRONOUNCEMENT : 08.09.2015 08.09.2015 08.09.2015 08.09.2015 ORDER ORDER ORDER ORDER PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA, VP , VP , VP , VP : :: : THESE TWO APPEALS BY THE REVENUE FOR THE ASSESSMENT YEA R 2005-06 & 2006-07 ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-III, NEW DELHI DATED 24 TH JUNE, 2013. THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.4972/DEL/2013 ITA NO.4972/DEL/2013 ITA NO.4972/DEL/2013 ITA NO.4972/DEL/2013 U/S 271(1)(C) U/S 271(1)(C) U/S 271(1)(C) U/S 271(1)(C) AY 2005 AY 2005 AY 2005 AY 2005- -- -06 : 06 : 06 : 06 :- -- - 2. THE ONLY GROUND OF APPEAL OF THE REVENUE IS AS UND ER:- LD.CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN CANCELLING THE PENALTY OF RS.17,88,33,325/- IMPOSED B Y THE AO U/S 271(1)(C) OF THE I.T. ACT. ITA-4972 & 4973/D/2013 2 3. LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUBMI TTED THAT THE PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 196 1 WAS LEVIED BY THE DEPARTMENT ON THREE ISSUES, I.E., THE ADDITION MADE ON THE BASIS OF INCRIMINATING DOCUMENTS SEIZED DURING THE SEARCH, SECO NDLY, ON ADDITION ON ACCOUNT OF REDEMPTION OF MUTUAL FUNDS TR EATED AS BUSINESS INCOME AND THIRDLY, THE DISALLOWANCE OF EXPENDITURE U/S 14A READ WITH RULE 8D AT `2,49,800/-. HE SUBMITTED THAT THE ADDIT ION ITSELF ON THE FIRST TWO ISSUES WAS DELETED BY THE TRIBUNAL AND, THERE FORE, NO PENALTY U/S 271(1)(C) OF THE ACT COULD BE SUSTAINED ON THESE T WO ISSUES. WITH REGARD TO THE THIRD ISSUE OF DISALLOWANCE U/S 14A, HE SU BMITTED THAT ALL THE FACTS WERE DISCLOSED TO THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT ITSELF AND THE ISSUE, BEING DEBATABLE, NO PENAL TY COULD BE LEVIED AS HELD BY HON'BLE SUPREME COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. [2010] 322 ITR 158 (SC). 4. LEARNED DR COULD NOT CONTROVERT THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE TWO MAJOR ADDITIONS ON THE FIRST TWO ISSUES OF THE ADDITION MADE ON ACCOUNT OF INCRIMINATIN G DOCUMENTS AND ON ACCOUNT OF REDEMPTION OF MUTUAL FUNDS TREATED AS B USINESS INCOME WERE DELETED BY THE TRIBUNAL IN THE APPEAL OF THE A SSESSEE. HOWEVER, WITH REGARD TO THE THIRD ISSUE OF DISALLOWANCE U/S 14A , LEARNED DR SUBMITTED THAT THE PENALTY WAS RIGHTLY IMPOSED BY THE ASSESSING OFFICER AS THE ASSESSEE HAS FAILED TO COMPLY WITH THE STAT UTORY PROVISION OF SECTION 14A OF THE ACT. HE RELIED ON T HE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PER USED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). THERE IS NO DISPUTE ON THE FACT THAT TWO MAJOR ADDITIONS, FIRSTLY ON THE BASIS OF INCRIMINATING DOCUMENTS SEIZED DURING THE SEARCH AND SE CONDLY, ON TREATING THE SUM ON REDEMPTION OF MUTUAL FUNDS AS BUSIN ESS INCOME OF ITA-4972 & 4973/D/2013 3 THE ASSESSEE WERE DELETED IN APPEAL OF THE ASSESSEE BY THE TRIBUNAL AND, THEREFORE, THERE REMAINS NO BASIS TO SUSTAIN THE PE NALTY AND THE CIT(A) WAS RIGHT IN DELETING THE SAME. HOWEVER, WITH REGARD TO THE THIRD ISSUE OF DISALLOWANCE OF `2,49,800/- U/S 14A, WE FIND THAT ALL MATERIAL FACTS RELEVANT FOR ASSESSMENT WERE DISCLOSED BY T HE ASSESSEE BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT ITSEL F. THE ISSUE IS DEBATABLE IN NATURE. WE ARE OF THE VIEW THAT THE CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY IMPOSED ON DISALLOWANCE U/S 1 4A BY FOLLOWING THE RATIO OF THE DECISION OF HONBLE APEX COURT IN T HE CASE OF RELIANCE PETROPRODUCTS PVT.LTD. (SUPRA). IN THIS VIEW OF THE MATTER, WE HOLD THAT THE LEARNED CIT(A) HAS RIGHTLY CANCELLED THE PENALT Y IMPOSED U/S 271(1)(C) OF THE ACT AND THERE IS NO MERIT IN THE GR OUND OF APPEAL OF THE REVENUE, WHICH IS ACCORDINGLY, DISMISSED. ITA NO.497 ITA NO.497 ITA NO.497 ITA NO.4973 33 3/DE /DE /DE /DEL/2013 L/2013 L/2013 L/2013 U/S 271(1)(C) U/S 271(1)(C) U/S 271(1)(C) U/S 271(1)(C) AY 2006 AY 2006 AY 2006 AY 2006- -- -07 0707 07 : :: :- -- - 6. THE ONLY GROUND OF APPEAL OF THE REVENUE IS AS UND ER:- LD.CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN CANCELLING THE PENALTY OF RS.3,70,26,000/- IMPOSED BY THE AO U/S 271(1)(C) OF THE I.T. ACT. 7. LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUBMI TTED THAT THE ADDITIONS MADE IN THIS CASE HAVE ALREADY BEEN DELE TED BY THE TRIBUNAL VIDE ITS ORDER DATED 24.05.2013 AND, THEREF ORE, THERE REMAINS NO BASIS FOR IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. 8. LEARNED DR COULD NOT CONTROVERT THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PER USED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT THE ADDITIONS IN QUESTION WERE DELETED BY THE TRIBUNAL VI DE ITS ORDER DATED ITA-4972 & 4973/D/2013 4 24.05.2013 AND, THEREFORE, THERE REMAINS NO BASIS FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, WHICH WAS RIGHTLY CANCELLED BY THE LEARNED CIT(A) AND, ACCORDINGLY, THERE BEING NO MERIT IN TH E GROUND OF APPEAL OF THE REVENUE, THE SAME IS DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AR E DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 8 TH SEPTEMBER, 2015. SD/- SD/- ( (( ( J. SUDHAKAR REDDY J. SUDHAKAR REDDY J. SUDHAKAR REDDY J. SUDHAKAR REDDY ) )) ) (G. (G. (G. (G. C. GUPTA C. GUPTA C. GUPTA C. GUPTA ) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : DEPUTY COMMISSIONER OF INCOME TAX , DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -17(1), NEW DELHI. 17(1), NEW DELHI. 17(1), NEW DELHI. 17(1), NEW DELHI. 2. RESPONDENT : M/S VIPUL LIMITE M/S VIPUL LIMITE M/S VIPUL LIMITE M/S VIPUL LIMITED, D,D, D, REGUS RECTANGLE 1, LEVEL 4D, REGUS RECTANGLE 1, LEVEL 4D, REGUS RECTANGLE 1, LEVEL 4D, REGUS RECTANGLE 1, LEVEL 4D, COMMERCIAL COMPLEX, SAKET, NEW DELHI COMMERCIAL COMPLEX, SAKET, NEW DELHI COMMERCIAL COMPLEX, SAKET, NEW DELHI COMMERCIAL COMPLEX, SAKET, NEW DELHI 110 017. 110 017. 110 017. 110 017. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR