ACIT, New Delhi V. M/s. NavBharat International Ltd., New Delhi

ITA 4982/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96883 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 13-05-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 27-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALISH A GGARWAL; DHARMENDERR FCAS
• Assessee Lawyers: P DAM KANUNJNA
• Keywords: Bogus purchase; Income from undisclosed sources; Search and seizure
• Section: 5(2); 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI INTURI RAMA RAO ITA NO. 4982/DEL/2013 ASSESSMENT YEAR: 2005-06 ASSISTANT CIT, VS. NAV BHARAT INTERNATIONAL LTD. CENTRAL CIRCLE-17, 5192 LAHORI GATE, NEW DELHI. NAYA BAZAR, NEW DELHI. (PAN: AABCN9065G) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SALISH A GGARWAL & SHRI DHARMENDERR, FCAS RESPONDENT BY: SHRI P. DAMKANUN JNA, SR. DR DATE OF HEARING : 13.05.2015 DATE OF PRONOUNCEMENT: 10 :08.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER THE REVENUE ASSESSEE HAS PREFERRED THE PRESENT APP EAL AGAINST THE FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 1. THAT THE CIT(APPEALS) ERRED IN LAW AND ON FACT S OF THE CASE IN DELETING THE PENALTY IMPOSED FOR AN AMOUNT OF RS.1, 03,95,106 BY THE ASSESSING OFFICER ON ACCOUNT OF FURNISHING I N INACCURATE PARTICULARS OF INCOME. 2. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NO T TENABLE IN LAW AND ON FACTS. 3. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILA BLE ON RECORD AND THE DECISIONS RELIED UPON. 2 4. THE ASSESSEE AND ITS ASSOCIATES CONCERNS WERE SU BJECTED TO SEARCH AND SEIZURE OPERATION UNDER SEC. 132 OF THE INCOME-TAX ACT, 1961. THE ASSESSEE COMPANY SURRENDERED A SUM OF RS.4,80,00,000 DURING THE COURSE F SEARCH. AFTER SETTING OFF THE BROUGHT FORWARD LOSSES, THE A SSESSEE FILED ITS RETURN OF INCOME AT RS.3,40,88,850. THE ASSESSING OFFICER MAD E VARIOUS ADDITIONS AND ASSESSED THE INCOME AT RS. 12,51,87,458. THE AS SESSEE WENT IN FIRST APPEAL AND LEARNED CIT(APPEALS) ALLOWED CERTAIN REL IEFS. BOTH DEPARTMENT AND ASSESSEE WENT IN APPEAL BEFORE THE ITAT AND THE ITAT VIDE ITS ORDER DATED 31.1.2011 FURTHER ALLOWED CERTAIN RELIEFS TO THE ASSESSEE. AS A RESULT OF THE ORDER OF THE ITAT, THE ASSESSING OFFICER ASSESS ED THE INCOME AT RS.3,47,40,055. REGARDING THE ADDITION OF RS.42,74, 045 MADE ON ACCOUNT OF UNRECORDED SALES OF BROKEN RICE AND RS.99,29,832 MA DE ON ACCOUNT OF BOGUS PURCHASES THROUGH M/S. BABA KISHORE ENTERISES, THE ASSESSING OFFICER WAS OF THE VIEW THAT THESE ADDITIONS HAVE BEEN CONFIRME D BY THE APPELLATE AUTHORITIES AND, THEREFORE, HE LEVIED PENALTY UNDER SEC. 271(1)(C) OF THE ACT AT THE RATE OF 200% OF THE TAX SOUGHT TO BE EVADED ON THESE TWO ADDITIONS. AGGRIEVED ASSESSEE QUESTIONED THE LEVY OF PENALTY B EFORE THE LEARNED CIT(APPEALS) AND THE LEARNED CIT(APPEALS) HAS DELET ED THE PENALTY, WHICH HAS BEEN QUESTIONED BY THE REVENUE BEFORE US. 3 5. THE LEARNED SENIOR DR HAS PLACED RELIANCE ON THE PENALTY ORDER. HE SUBMITTED THAT THE LEARNED CIT(APPEALS) HAS DELETED THE PENALTY WITHOUT APPRECIATING THAT UNACCOUNTED INCOME WAS REVEALED D URING THE COURSE OF SEARCH, WHICH COMPELLED THE ASSESSEE TO SURRENDER A N INCOME OF RS.4,80,00,000. THE ADDITIONS MADE ON ACCOUNT OF UN RECORDED SALE OF BROKEN RICE AND BOGUS PURCHASES THROUGH M/S. BABA KISHORE ENTERPRISES WERE MADE OUT OF THE SURRENDERED AMOUNT ONLY. THUS, IT IS A C LEAR CASE OF CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURA TE PARTICULARS THEREOF JUSTIFYING THE LEVY OF PENALTY UNDER SEC. 271(1)(C) OF THE ACT. 6. THE LEARNED AR ON THE OTHER HAND TRIED TO JUSTIF Y THE FIRST APPELLATE ORDER DELETING THE PENALTY. HE REITERATED SUBMISSIO NS MADE BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. THE LEARNED AR CONTEN DED THAT BOTH THE ABOVE ADDITIONS WERE DELETED BY THE LEARNED CIT(APPEALS). THE ITAT HELD THAT BENEFIT OF TELESCOPING SHOULD BE ALLOWED TO THE ASS ESSEE AND BOTH THE ADDITIONS ARE COVERED IN THE SURRENDERED INCOME OF RS.4,80,00,000, THEREFORE, THERE WAS NO QUESTION OF ANY CONCEALMENT OF INCOME AS THE ASSESSED INCOME DOES NOT EXCEED THE RETURNED INCOME . HE CONTENDED THAT THE ASSESSEE HAD NEITHER CONCEALED ANY INCOME NOR FURNI SHED ANY INACCURATE PARTICULARS OF INCOME. THE LEARNED AR SUBMITTED THA T THE EXPLANATION 4 RELATING TO THE ABOVE TWO ADDITIONS FURNISHED BY TH E ASSESSEE HAS NOT BEEN FOUND FALSE AND THE ASSESSEE HAS BEEN ABLE TO ESTAB LISH THAT THE ASSESSEE HAD BONA FIDE EXPLANATION AND FURTHER THAT ALL THE FACT S RELATING TO THOSE ADDITIONS HAVE BEEN DISCLOSED. HE ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) CIT VS. METAL PRODUCTS OF INDIA 154 ITR 714 ( P&H); II) CIT VS. AJAY HARI DALMIA 157 ITR 45 (DEL.); III) CIT VS. B.S. BADVE 138 ITR 682 (BOM.); IV ) CIT VS. SANGRUR VANAPATI MILLS LTD. 303 ITR 53 (P&H); V ) HARI GOPAL SINGH VS. CIT 258 ITR 85 (P&H): & VI ) NATIONAL TEXTILES VS. CIT 249 ITR 125 (GUJ. ). 7. WE THUS FIND THAT THE ISSUE INVOLVED IN THE PRES ENT CASE IS AS TO WHETHER SURRENDERED INCOME DURING THE COURSE OF SEA RCH ON WHICH THE ASSESSEE HAS PAID TAX BY FILING ITS RETURN AND THE ADDITIONS MADE ARE HELD COVERED BY THE SURRENDERED INCOME, CAN BE SUBJECTED TO LEVY OF PENALTY UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT, 1961? 8. WE HAVE OCCASIONED TO GO THROUGH A RECENT DECISI ON OF HON'BLE GUJARAT HIGH COURT ON AN IDENTICAL ISSUE IN THE CAS E OF KIRIT DHAYABHAI PATEL VS. ACIT (2015) 121 DTR (GUJ.) 337. IN THAT CASE, THE HON'BLE HIGH COURT HAS BEEN PLEASED TO HOLD THAT IN VIEW OF SPECIFIC P ROVISIONS OF SEC. 153A, THE RETURN FILED IN RESPONSE TO THE NOTICE UNDER THAT S ECTION IS TO BE CONSIDERED AS A RETURN FILED UNDER SEC. 139 AND, THEREFORE, THAT RETURN IS TO BE CONSIDERED FOR 5 THE PURPOSE OF LEVY OF PENALTY UNDER SEC. 271(1)(C) OF THE ACT; ASSESSING OFFICER HAVING ACCEPTED THE ADDITIONAL INCOME DISCL OSED BY THE ASSESSEE IN THE RETURN FILED UNDER SEC. 153A, AND THE ASSESSEE HAVING PAID THE ENTIRE AMOUNT OF TAX WITH INTEREST, HE IS ENTITLED TO BENE FIT OF EXPLANATION 5(2) TO SECTION 271(1)(C) AND, THEREFORE, PENALTY IS NOT LE VIABLE ON THE ADDITIONAL INCOME SHOWN IN THE RETURN FILED UNDER SEC. 153A. 9. IN THE PRESENT CASE BEFORE US, FACTS ARE ALMOST SIMILAR TO THE FACTS OF THE AFORE CITED DECISIONS OF HON'BLE GUJARAT HIGH COURT. IN THE PRESENT CASE AS WELL, THE RETURNED INCOME UNDER SEC. 153A HAS BE EN AS NO FURTHER ADDITION HAS BEEN SUSTAINED. THE ASSESSEE DURING THE COURSE OF SEARCH HAD SURRENDERED A SUM OF RS.4,80,00,000 AND AFTER SETTI NG OFF THE BROUGHT FORWARD LOSSES, IT HAD FILED RETURN OF INCOME AT RS .3,40,88,850 AGAINST WHICH THE ASSESSING OFFICER MADE VARIOUS ADDITIONS AT RS. 12,51,87,458. THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(AP PEALS) WHO HAD GIVEN CERTAIN RELIEF. BOTH THE PARTIES WENT IN APPEAL BEF ORE THE ITAT AND THE ITAT ALLOWED CERTAIN FURTHER RELIEF TO THE ASSESSEE. AS A RESULT OF THE ORDER OF THE ITAT, THE ASSESSING OFFICER ASSESSED THE INCOME AT RS.3,47,40,055. THE PENALTY UNDER SEC. 271(1)(C) OF THE ACT WAS LEVIED AT RS.1,03,95,106 ON THE ADDITION OF RS.42,74,045 ON ACCOUNT OF UNRECORDED S ALE OF BROKEN RICE AND 6 RS.99,29,832 ON ACCOUNT OF BOGUS PURCHASES THROUGH M/S. BABA KISHORE ENTERPRISES. THE ASSESSING OFFICER WAS OF THE VIEW THAT THESE ADDITIONS HAVE BEEN CONFIRMED BY THE APPELLATE AUTHORITIES AND, TH EREFORE, IT WAS A FIT CASE FOR THE LEVY OF PENALTY AT THE RATE OF 200% OF THE TAX SOUGHT TO BE EVADED. WE, HOWEVER, FIND THAT THE ITAT HAS IN THE QUANTUM APPEAL HELD THAT BENEFIT OF TELESCOPING SHOULD BE ALLOWED TO THE ASSESSEE AN D BOTH THESE ADDITIONS ARE COVERED IN THE INCOME OF THE RS.4,80,00,000 SURREND ERED BY THE ASSESSING OFFICER. WE, THUS FIND THAT IN EFFECT THE RETURNED INCOME DECLARED IN RESPONSE TO THE NOTICE ISSUED UNDER SEC. 153A OF THE ACT HAS BEEN ACCEPTED. THUS, IT CANNOT BE SAID THAT IT IS A CASE OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PA RT OF THE ASSESSEE TOWARDS THE ADDITIONS ON WHICH PENALTY HAS BEEN LEVIED.. WE THUS RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE ABOVE CITED DE CISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DHAYA BHAI PATEL VS . ACIT (SUPRA) HOLD THAT THE ASSESSING OFFICER HAVING ACCEPTED THE ADDITIONA L INCOME DISCLOSED BY THE ASSESSEE IN THE RETURN FILED UNDER SEC. 153A, A ND THE ASSESSEE HAVING PAID THE ENTIRE AMOUNT OF TAX, IT IS ENTITLED TO THE BEN EFIT OF EXPLANATION 5(2) TO SEC. 271(1)(C) AND, THEREFORE, THE PENALTY IS NOT L EVIABLE ON THE ADDITIONAL INCOME SHOWN IN THE RETURN FILED UNDER SEC. 153A OF THE ACT. WE, THEREFORE, 7 HOLD THAT THE LEARNED CIT(APPEALS) WAS JUSTIFIED IN DELETING THE PENALTY IN QUESTION. THE SAME IS UPHELD. THE GROUND IS ACCORDI NGLY DISMISSED. 9. IN RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.08.2015 SD/- SD/- (INTURI RAMA RAO ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10 /08/2015 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON COMPUTER 10.08.2015 DRAFT PLACED BEFORE AUTHOR 10 .08.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 17.08.2015 KEPT FOR PRONOUNCEMENT ON 10.08.2015 FILE SENT TO THE BENCH CLERK 18.08.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.