ACIT, Circle-19(2), New Delhi V. PTC Engineering (India) P.Ltd, New Delhi

ITA 4986/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2794 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 03-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect
• Section: 271(1)(c); 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 4986/DEL/2017 : ASSTT. YEAR : 2012-13 ACIT, CIRCLE-19(2), NEW DELHI-110002 VS PTC ENGINEERING (INDIA) P. LTD., C-657, NEW FRIENDS COLONY, NEW DELHI-110025 (APPELLANT) (RESPONDENT) PAN NO. AAFCP2677L ASSESSEE BY : SH. DEEPESH GARG, ADV. REVENUE BY : SH. APOORVA BHARDWAJ, SR. DR DATE OF HEARING: 04.02.2021 DATE OF PRONOUNCEMENT: 25 .02.2021 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER OF THE LD. CIT(A)-36, NEW DELHI DATED 08. 05.2017. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENU E: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS.83,54,588/- IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. THE FACTS RELEVANT TO THE ADJUDICATION OF THE CA SE AS TAKEN FROM THE ORDER OF THE LD. CIT (A) ARE AS UNDER: I. THE ASSESSMENT WAS DONE FROM LOSS OF RS.5,49,14,478 /- TO LOSS OF RS.2,91,64,478/- BY ADDING AN AMOUNT OF RS. ITA NO. 4986/DEL/2017 PTC ENGINEERING (INDIA) P. LTD. 2 2.5 CRORE ON ACCOUNT OF SHARE CAPITAL AND RS. 7.5 L AC AS COMMISSION PAID FOR THE SAME. II. THE COMPANY IS SHOWING A LOSS SINCE THEN WHICH MEAN S THAT IT COULD NOT HAVE BENEFITTED FROM NOT REFLECTI NG RS. 2.5 CRORE AS ITS INCOME. III. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASK ED TO PROVIDE ALL EVIDENCES REGARDING SHARE CAPITAL OF RS. 2.5 CRORE. IN REPLY TO THIS QUERY, THE ASSESSEE HAS PRODUCED ALL DOCUMENTARY EVIDENCES LIKE ITRS, SHARE APPLICANT FORMS, CONFIRMATIONS, BANK ACCOUNTS, BALA NCE SHEETS, BOARD RESOLUTION ETC. HOWEVER, THIS FACT WA S NOT MENTIONED IN THE ASSESSMENT ORDER AT ALL. IN THE RE MAND REPORT, THE CURRENT AO HAS ACCEPTED THAT THE SUBMIS SION MADE BY THE ASSESSEE DATED 12.01.2015, 23.01.2015 AND 09.02.2015 WERE IN THE ASSESSMENT FOLDER. THIS FACT OF SUBMISSIONS OF DOCUMENTS HAS ALSO BEEN MENTIONED IN THE PENALTY ORDER. IV. THE ASSESSEE SURRENDERED RS. 2.5 CRORE WHEN SPECIFICALLY IT WAS ASKED TO PRODUCE THE SHARE APPL ICANTS AS ACCORDING TO THE ASSESSEE THE SHARE APPLICANTS W ERE NOT COOPERATIVE BECAUSE THE COMPANY WAS RUNNING INT O HUGE LOSS AND BUSINESS WAS VERY LOW. FOR THIS REASO N, THE INVESTORS LATER EVEN LEFT THE COMPANY. V. THE AO ACCEPTED THE SURRENDER MADE ON 13.02.2015 AN D FURTHER MADE NO ENQUIRY OR INVESTIGATION BY ISSUING NOTICE U/S. 133(6) OR SUMMONS U/S. 131 TO CALL FOR THE SHARE APPLICANTS, IN CASE HE WAS SUSPECTING THE GENUINENESS OF THE SHARE APPLICANTS. THE IDENTITY A ND THE CREDITWORTHINESS OF THE SHARE APPLICANTS WAS AL READY PROVED BY THE ASSESSEE VIDE THE DOCUMENTARY EVIDENC E. ITA NO. 4986/DEL/2017 PTC ENGINEERING (INDIA) P. LTD. 3 VI. THE ASSESSEE HAS SURRENDERED THE INCOME ON THE CONDITION THAT NO PENALTY WOULD BE LEVIED. IT APPEA RS THAT THE AO HAS BELIEVED THE FIRST PART OF SURRENDE R WITHOUT MAKING ANY INVESTIGATION OR PROVING CONCEALMENT MERELY BY RELYING ON THE SUBMISSION OF THE ASSESSEE BUT IGNORED THE SECOND PART OF THE SUBMISS ION DATED 13.02.2015 REGARDING NON LEVY OF PENALTY. VII. ALTHOUGH THE PENALTY WAS INITIATED FOR FURNISHING O F INACCURATE PARTICULARS OF INCOME AS PER ASSESSMENT ORDER, THE NOTICE DATED 18.02.2015 DID NOT MENTION ANY OF THE LIMBS IN PARTICULAR AND THE PENALTY ORDER HA S BEEN PASSED IMPOSING THE PENALTY FOR CONCEALMENT OF THE INCOME STATING THAT IT IS CLEAR CASE OF CONCEALMENT . VIII. THE ASSESSEE DID NOT FILE APPEAL TO THE CIT(A) AS T HERE WAS NO TAX EFFECT, THE COMPANY BEING ASSESSED AT A LOSS. 4. THE LD. CIT (A) HELD THAT FROM THE ABOVE ANALYSIS, IT IS CLEAR THAT THE AO HAD NOT DETECTED ANY CONCEALMENT OR FURNISHING OF INACCURATE DETAILS ON HIS OWN TILL TH E POINT THAT THE ASSESSEE ITSELF STATED THAT IT IS OFFERING RS. 2.5 CRORE AS ITS INCOME. THIS WAS ACCEPTED BY THE AO AS SUCH WITHOUT ESTABLISHING THAT IT WAS CONCEALMENT OF INCOME. NO FURTHER INVESTIGATION WAS CARRIED OUT BY THE AO. FURTHER AL L RELEVANT DOCUMENTARY EVIDENCES WAS SUBMITTED BY THE ASSESSEE WHICH WAS NOT MENTIONED BY THE AO IN HIS ASSESSMENT ORDER . THUS, IT IS NOT CLEAR AS TO WHAT LEAD HIM TO THINK THAT THE OFFER OF INCOME WAS MADE AFTER DETECTION BY THE DEPARTMENT. THE AO HAS RELIED ON VARIOUS CASE LAWS FOR EXAMPLE MAK DATA PVT. LTD. DECIDED BY HON'BLE SUPREME COURT. HOWEVER, AFTER GOING THROUGH THAT ITA NO. 4986/DEL/2017 PTC ENGINEERING (INDIA) P. LTD. 4 ORDER, IT IS SEEN THAT IN THAT CASE NO DOCUMENTARY EVIDENCE WAS FILED AT ALL BY THE ASSESSEE AND THE AMOUNT WAS OFF ERED BY THE ASSESSEE AFTER DETECTION DURING SEARCH/SURVEY IN TH E SISTER CONCERN. THE FACTS OF THE CASE ARE THEREFORE DIFFER ENT. FURTHER, IT IS ALSO SEEN THAT THE AO IS NOT CLEAR A S TO ON WHICH LIMB THE PENALTY APPLIES, FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. NO INACCURATE OR WRONG INFOR MATION WAS POINTED OUT BY THE AO AND NO DETECTION OF ANY CONCE ALMENT WAS EITHER MADE. IT IS ALSO SEEN THAT APPARENTLY THERE WAS NO INTENTION OF THE ASSESSEE TO AVOID TAX IN THIS CASE , AS EVEN AFTER THE ADDITION, THERE WAS A LOSS. THIS LOSS HAS NOT B EEN ADJUSTED EVEN TILL DATE AS THE COMPANY HAS BEEN FILING A LES S RETURN. THUS, IT IS HELD THAT PENALTY ORDER HAS BEEN PASSED MECHANICALLY WITHOUT CARRYING OUT ANY ENQUIRY, OR CONFRONTING TH E ASSESSEE ON THE SOURCE OF SURRENDERED INCOME OR POSITIVELY R ECORDING A FINDING OF CONCEALMENT WHICH CAN INVITE PENALTY. NE ITHER HAS THE AO GONE INTO THE INTENT OF WHY THE ASSESSEE WOULD C ONCEAL SUCH INCOME WHEN IT COULD HAVE SHOWN IT AS INCOME SINCE THERE WERE HUGE LOSSES. THE PENALTY IMPOSED IS ON CONCEALMENT OF INCOME WHICH IS NOT PROVED. WHEREAS, IT WAS INITIATED FOR FURNISHING INACCURATE DETAIL WHICH WAS NOT PROVED EITHER. THIS ISSUE IS SQUARELY COVERED BY THE RATIO OF HON'BLE SUPREME CO URT ORDER IN CASE OF SSA'S EMERALD MEADOWS DATED 05.08.2016, WHI CH ENDORSED THE EARLIER ORDER BY KARNATAKA HIGH COURT IN CASE OF MANJUNATH COTTON & GINNING FACTORY, 359 ITR 565 (20 13) RELIED UPON BY THE ASSESSEE WHERE IT IS LAID DOWN INTERALI A THAT 'TAKING UP OF PENALTY PROVISION ON ONE LIMB & FINDING THE A SSESSEE GUILTY ON ANOTHER IS BAD IN LAW '. ITA NO. 4986/DEL/2017 PTC ENGINEERING (INDIA) P. LTD. 5 5. IN VIEW OF ABOVE DISCUSSION, THE LD. CIT (A) HEL D THAT THE PENALTY IS NOT SUSTAINABLE EITHER ON TECHNICAL GROU ND OR ON MERIT. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES WHO RELIED ON THE RESPECTIVE ORDERS AND ALSO PERUSED TH E MATERIAL AVAILABLE ON RECORD AND THE NOTICES ISSUED. HAVING GONE THROUGH THE DETAILED ORDER OF THE LD. CIT (A), WE HAVE NO H ESITATION TO HOLD THAT THE LD. CIT (A) HAS RIGHTLY DELETED THE P ENALTY LEVIED BY THE ASSESSING OFFICER. HENCE, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT (A). 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/02/2021. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 25/02/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR