Sh. Manoj Kumar Ray, New Delhi V. DCIT, New Delhi

ITA 5046/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2679 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 19-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 12-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R C DANDAY
• Assessee Lawyers: SAURABH GOEL
• Keywords: Search and seizure; Opportunity of being heard; Deemed dividend
• Section: 153A; 132; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E , NEW DELHI BEFORE SH. H.S. SIDHU , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 5046 /DE L/ 2014 ASSESSMENT YEAR : 2006 - 07 SH. MANOJ KUMAR RAY, A - 218, MANGAL APARTMENTS, VASUNDHARA ENCLAVE, NEW DELHI VS. DCIT, CENTRAL CIRCLE - 7, NEW DELHI PAN : AENPR5565E (APPELLANT) (RESPONDENT) APPELLANT BY SH. SAURABH GOEL, CA RESPONDENT BY SH. R.C. DANDAY, SR.DR DATE OF HEARING 13.07.2017 DATE OF PRONOUNCEMENT 31.07.2017 ORDER PER O.P. KANT , A. M. : THE PRESENT APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 14/07/2014 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - I, NEW DELHI (IN SHORT THE CIT - A ) IN RELATION TO ASSESSMENT YEAR 2006 - 07, RAISING FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIRECTING THE A.O. TO LEVY PENALTY U/S 271(1)(C) @ 100% OF THE TAX PAYABLE ON RS.1,00,000/ - 2. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE DIRECTION GIVEN BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN BAD AND WITHOUT JURISDICTION. 2 ITA NO.5046/DEL/2014 THE APPELLANT CRAVES LEAVE TO ADD ONE OR MORE GROUND OF APPEAL OR TO ALTER/MODIFY THE EXISTING GROUND BEFORE OR AT THE TIME OF HEARING OF APPEAL. THE AFORESAID GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. T HE BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ORIGINAL RETURN OF INCOME UNDER SECTION 139 (1) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) ON 31/03/200 7 DECLARING TOTAL INCOME OF RS. 11,88,673/ - . SUBSEQUENT TO THE SEARCH AND SEIZURE ACTION , UNDER SECTION 132 OF THE ACT ON 09/09/2010, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 15 3A OF THE ACT ON 06/12/2012 REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME. IN RESPONSE, THE ASSESSEE FILED RETURN OF INCOME ON 11/02/2013, DECLARING T OTAL INCOME OF RS.14,97,620/ . IN SCRUTINY PROCEEDINGS , THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RECEIVED LOAN FROM HRC ENGINEERING ESTATE P RIVATE LIMITED AMOUNTING TO RS.1,00, 000/ - WHICH WAS SATISFYING ALL THE CONDITIONS OF DEEMED DIVIDEND UN DER SECTION 2(22)(E) OF THE ACT , AND ACCORDINGLY , HE MADE THE ADDITION OF RS.1,00, 000/ - . THE ASSESSING OFFICER ALSO IS SUED PENALTY PROCEEDING UNDER SECTION 271(1)(C) OF THE ACT. IN THE ORDER DATED 23/09/2013 LEVYIN G PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER, LEVIED PENALTY IN RESPECT OF THE DIFFERENCE OF THE AMOUNT OF THE TOTAL INCOME DECLARED IN T HE RETURN OF INCOME FILED ON 11/02/2013 UNDER SECTION 15 3A OF THE ACT , I.E. , RS. 14,97,620/ - AND THE INCOME DECLARED IN THE RETURN OF INCOME FILED ON 31/03/2007 UNDER SECTION 139 (1) OF THE ACT , I.E ., RS. 11,88,673/ - AND ACCORDINGLY COMPUTED IN COME SOUGHT TO BE EVADED AT RS.3,08,947/ - AND TAX SOUGHT TO BE EVADED AT RS. 92,684 / - AND MINIMUM PENALTY @ 100 PERCENT AMOUNTING TO RS. 92 , 684/ - WAS IMPOSED. ON FURTHER APPEAL, THE LD. CIT - A C ANCELLED THE PENALTY OF RS. 92, 684 HOLDING THAT VOLUNTARILY INCL USION OF THE OMITTED 3 ITA NO.5046/DEL/2014 INCOME IN THE SUBSEQUENT RETURN FILED IN RESPO NSE TO NOTICE UNDER SECTION 15 3A, WOULD HAVE EFFECT OF REVISION OF INCOME, NOT EXIGIBLE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, THE LD. CIT - A ISSUE D DIRECTIONS TO THE ASSESS ING OFFICER FOR LEVY OF PENALT Y IN RESPECT OF ADDITION OF RS.1, 00 , 000/ - IN RESPECT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT MADE BY THE ASSESSING OFFICER, WHICH WAS NOT CONTESTED BY THE ASSESSEE IN APPE AL. ACCORDING TO THE LD. CIT - A, IT IMPLIED THAT THE ASSESSEE HAD ACCEPTED THE ADDITION AND TO THIS EXTENT THE PARTICULARS OF INCOME FILED WITH ASSESSEE IN THE RETURN UNDER SECTIO N 15 3A WERE INACCURATE AND THEREFO RE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIABLE ON THE SAID AMOUNT. THE DIR ECTION OF THE LD. CIT - A IS REPRODUCED AS UNDER: 5. I FIND FROM THE ASSESSMENT ORDER THAT AN ADDITION OF RS.1,00,000/ - WAS MADE TO THE INCOME OF THE APPELLANT BEING DEEMED DIVIDEND U/S 2(22)(E). THIS ADDITION HAS NOT BEEN CONTESTED IN APPEAL. THIS IMPLIES THAT THE APPELLANT HAS ACCEPTED THE ADDITION AND TO THIS EXTENT THE PARTICULARS OF INCOME FILED BY HIM IN THE RETURN U/S 153A WERE INACCURATE. I AM, THEREFORE, OF THE OPINION THAT PENALTY IS LEVIABLE U/S 271(1)(C) ON THE TAX RELATING TO THIS UNCONTESTED A ND ACCEPTED AMOUNT OF INCOME NOT DISCLOSED IN THE RETURN FILED. I DIRECT THE AO TO LEVY PENALTY U/S 271(1)(C) @ 100% OF THE TAX PAYABLE ON RS.1,00,000/ - 2.1 AGGRIEVED , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ISSUING SUCH DIRECTION FOR LEVY O F PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS NOT WITHIN THE POWERS OF THE CIT - A AS PROVIDED UNDER SECTION 251(1)(B) OF THE ACT. HE FURTHER SUBMITTED THAT NO OPPORTUNITY WAS PROVIDED TO THE ASSESSEE IN TERMS OF SECTION 251(2) OF THE ACT AND THUS THERE WAS VIOLATION OF NATURAL J USTICE , ACCORDINGLY , THE IMPUGNED DIRECTION NEED TO BE CANCELLED. 4 ITA NO.5046/DEL/2014 4. THE LD. S ENIOR DR , ON THE OTHER HAND , REFERRED TO THE EXPLANATION BELOW SECTION 251 OF THE ACT AND SUBMITTED THAT THE CIT - A WAS WITHIN HIS POWER, WHILE DISPOSING OFF IN APPEAL TO CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PRO CEEDING IN WHICH THE ORDER APPEALED AGAINST WAS PASSED, NOTWITHSTANDING THAT SUCH MATTER WAS NOT RAISED BEFORE HIM BY THE APPELLANT. 5. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN TERMS OF SECTION 251(1) (B) OF THE ACT COMMISSIONER OF INCOME - TAX ( APPEALS), HAS POWER FOR CONFIRMING OR CANCELLING OR VARY ING , THE ORDER IMPOSING THE PENALTY. FOR CLARITY, THE SECTION 251 IS REPRODUCED AS UNDER: POWERS OF THE 20[* * *] 21[COMMISSIONER (APPEALS)]. 251. (1) IN DISPOSING OF AN APPEAL, THE 20[* * *] 21[COMMISSIONER (APPEALS)] SHALL HAVE THE FOLLOWING POWERS (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT24; 25[* * *] 25A[(AA) IN AN APPEAL AGAINST THE ORDER OF ASSESSMENT IN RESPECT OF WHICH THE PROCEEDING BEFORE THE SETTLEMENT COMMISSION ABATES UNDER SECTION 245HA, HE MAY, AFTER TAKING INTO CONSIDERATION ALL THE MATERIAL AND OTHER INFORMATION PRODUCED BY THE ASSESSEE BEFORE, OR THE RESULTS OF THE INQUIRY HEL D OR EVIDENCE RECORDED BY, THE SETTLEMENT COMMISSION, IN THE COURSE OF THE PROCEEDING BEFORE IT AND SUCH OTHER MATERIAL AS MAY BE BROUGHT ON HIS RECORD, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT;] (B) IN AN APPEAL AGAINST AN ORDER IMPOSING A PENALTY , HE MAY CONFIRM OR CANCEL SUCH ORDER OR VARY IT SO AS EITHER TO ENHANCE OR TO REDUCE THE PENALTY; (C) IN ANY OTHER CASE, HE MAY PASS SUCH ORDERS IN THE APPEAL AS HE THINKS FIT. (2) THE 26[* * *] 27[COMMISSIONER (APPEALS)] SHALL NOT ENHANCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF REFUND UNLESS THE APPELLANT HAS HAD A REASON - ABLE OPPORTUNITY OF SHOWING CAUSE AGAINST SUCH ENHANCEMENT OR REDUCTION. EXPLANATION. IN DISPOSING OF AN APPEAL, THE 26[* * *] 27[COMMISSIONER (APPEALS)] MAY CONSIDER AND D ECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST 5 ITA NO.5046/DEL/2014 WAS PASSED, NOTWITHSTANDING THAT SUCH MATTER WAS NOT RAISED BEFORE THE 26[* * *] 27[COMMISSIONER (APPEALS)] BY THE APPELLANT. 6. ON PLAIN READING OF THE ABOVE SECTION, I T IS CLEAR THAT COMMISSIONER OF INCOME - TAX (APPEALS) MAY CONFIRM OR CANCEL OR VARY THE ORDER IMPOSING PENALTY. FURTHER , FOR ENHANCING THE PENALTY THE COMMISSIONER OF INCOME - TAX( APPEALS) IS REQUIRED TO GIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE INSTANT CASE, THE LD. CIT - A HAS NOT ENHANCED THE PENALTY, BUT HE HAS DIRECTED THE ASSESSING OFFICER TO LEVY THE PENALTY. THUS , IN OUR OPINION, THERE IS NO VIOLATION OF SECTION 251(2) OF THE ACT IN THE INSTANT CASE, AS BEFORE LEVYING THE PENALTY , IF ANY, THE ASSESSING OFFICER WAS BOUND TO GIVE OPPORTUNITY OF BEING HEARD. 8. BEFORE US, THE LD. S ENIOR DR CONTESTED, THAT THE LD. CIT - A WAS WITHIN HIS POWER TO CONSIDER AND DECIDE THE MATTER IN RESPECT OF PENALTY ON ADDITION UNDER SECTION 2(22)(E) THE ACT , INVOKING EXPLANATION TO SE CTION 251 OF THE ACT. BUT, ON PERUSAL OF THE PEN ALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT PASSED BY THE ASSESSING OFFICER , WE FIND THAT THE ASSESSING OFFICER HAS NOT LEVIED ANY PENALTY IN RESPECT OF ADD ITION OF DEEMED DIVIDE ND OF RS.1,00, 000/ - . IT IS ALSO EVIDENT FROM THE PENALTY ORDER THAT THE ASSESSING OFFICER HAS NOT MADE ANY REFERENCE OF THE SAID ADDITION IN THE SHOW CAUSE NOTICE ISSUED FOR T HE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 9. ACCORDING TO THE EXPLANATION BELOW SECTION 251 OF THE ACT, THE CIT(A) IS EMPOWERED TO DECIDE THE MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED WAS PASSED. IT IS EVIDENT THAT THE ORDER BEFORE THE LEARNED CIT(A) WAS IN RESPECT OF PENALTY AND NOT ASSESSMENT. IN THE CIRCUMSTANCES, WHEN THE ASSESSING OFFICER IN THE PENALTY ORDER DATED 23/09/2013 HAS N EITHER ISSUED SHOW CAUSE NOTICE , NOR CONSIDERED LEVY OF PENALTY IN RESPECT OF ADDITION OF D EEMED DIVIDEND AMOUNTING TO 6 ITA NO.5046/DEL/2014 RS.1,00,000/ - , THE LD. CIT - A WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO LEVY THE PENALTY IN RESPECT OF SAID ADDITION. ACCORDINGLY, THE GROUNDS OF THE APPEAL ARE ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 3 1 S T JULY , 201 7 . S D / - S D / - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 1 S T JULY , 201 7 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI