Mr. Sushil Kumar Trehan, New Delhi V. DCIT, New Delhi

ITA 5049/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7423 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 26-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 02-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARAMITA M VISHVASH
• Assessee Lawyers: SANJEEV K BINDAL
• Keywords: Document seized; Bonafide belief; Documents seized
• Section: 143(3); 153A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.5049/DEL./2013 (ASSESSMENT YEAR : 2007-08) SHRI SUSHIL KUMAR TREHAN, VS. DCIT, C/O VINOD KUMAR BINDAL & CO., CENTRAL CIRCLE 25, CHARTERED ACCOUNTANTS, NEW DELHI. SHIV SUSHIL BHAWAN, D 219, VIVEK VIHAR PHASE-I, NEW DELHI 110 095. (PAN : ACGPT8017J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJEEV K. BINDAL, CA REVENUE BY : SMT. PARAMITA M. VISHVASH, CIT DR DATE OF HEARING : 26.05.2016 DATE OF ORDER : 31.05.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, SHRI SUSHIL KUMAR TREHAN (HEREINAFTER R EFERRED TO AS THE ASSESSEE), BY FILING THE PRESENT APPEAL SO UGHT TO SET ASIDE THE IMPUGNED ORDER DATED 07.06.2013 PASSED BY THE C OMMISSIONER OF INCOME-TAX (APPEALS)-1, NEW DELHI QUA THE ASSESS MENT YEAR 2007-08 CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) ON THE GROUNDS INTER ALIA THAT :- ITA NO.5049/DEL./2013 2 THE LD. APPELLATE AUTHORITY ERRED IN LAW AND ON FA CTS IN CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) ON CASH OF RS.16,16,881/- FOUND AT THE RESIDENCE DURING THE SE ARCH IN AN ARBITRARY MANNER BY WRONGLY INTERPRETING THE EXPLAN ATION OF THE APPELLANT AND NOT CONSIDERING THE RECOGNIZED PRINCI PLE OF TELESCOPING. THUS, THE PENALTY SO LEVIED CONFIRMED MUST BE CANCELLED. 2. THE APPELLANT CRAVES LEAVE TO ADD, SUBSTITUTE, M ODIFY, DELETE OR AMEND ALL OR ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE : DURI NG THE SEARCH OPERATION CONDUCTED ON 22.11.2006 UNDER SECTION 132 (1) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT), A CASH AMOUNT OF RS.27,31,000/- WAS RECOVERED AND OUT OF WHICH, AMOU NT OF RS.27,00,000/- WAS SEIZED. ASSESSEE, IN ORDER TO E XPLAIN, FILED CASH FLOW STATEMENT. OUT OF WHICH, AO FOUND DEFICIT OF CASH OF RS.11,14,119/- IN M/S. KIRTI TRADING CO. ON DATE OF SEARCH AND AO ALSO CAME TO THE CONCLUSION THAT ASSESSEE HAD MADE LARGE SCALE PAYMENTS IN CASH FOR UNACCOUNTED PURCHASES. FINDING EXPLANATION MADE BY THE ASSESSEE NOT SUSTAINABLE, AO ADDED BACK THE CASH SEIZED DURING SEARCH OPERATION AS UNEXPLAINED CASH U/S 69 OF THE ACT AND THEREBY, MADE AN ADDITION OF RS.27,31,000/- . 3. ON THE BASIS OF ASSESSMENT ORDER, PENALTY PROCEE DINGS WERE INITIATED. DURING THE RELEVANT YEAR UNDER ASSESSME NT, ASSESSEE FILED RETURN OF INCOME ON 31.03.2008 DECLARING INCOME AT RS.9,09,537/-, WHICH WAS COMPLETED U/S 143(3) ON 31.12.2008 TO THE TUNE OF TOTAL ITA NO.5049/DEL./2013 3 INCOME OF RS.36,40,537/- BY MAKING ADDITION OF RS.2 7,31,000/- ON ACCOUNT OF UNEXPLAINED CASH. ON ACCOUNT OF FURNISH ING INACCURATE PARTICULARS OF INCOME, PENALTY PROCEEDINGS WERE INI TIATED AND NOTICE U/S 274 READ WITH SECTION 271(1)(C) OF THE A CT WAS ISSUED. ASSESSEE FILED HIS EXPLANATION IN THE PENALTY PROCE EDINGS FOR THE ASSESSMENT COMPLETED U/S 153A FOR AY 2001-02 TO 200 7-08. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AN D BY AGREEING WITH THE ORDER PASSED BY THE AO, THE LD. CIT (A), A FFIRMED BY THE ITAT, NEW DELHI, PENALTY TO THE TUNE OF RS.28,20,90 0/- @ 300% HAS BEEN IMPOSED. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) WHO HAS PARTLY ALLOWED THE APPEAL BY REDUCING THE PENALTY F ROM MAXIMUM RATE OF 300% TO 100% ON THE AMOUNT EVADED BY THE AS SESSEE I.E. 16,16,881/- (RS.27,31,000/- - RS.11,14,119/-, DELET ED BEING THE AMOUNT BELONGING TO M/S. KIRTI TRADING CO.) FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.5049/DEL./2013 4 6. THE LD. AR FOR THE ASSESSEE CHALLENGING THE IMPU GNED ORDER CONTENDED INTER ALIA THAT THE ASSESSEE HAS DULY EXP LAINED SOURCE OF IMPUGNED CASH OF RS.16,16,881/- AVAILABLE OUT OF AD DITIONAL INCOME DECLARED IN THE RETURN OF INCOME FILED U/S 1 53A QUA ASSESSMENT YEARS 2001-02 TO 2006-07 AND THIS CONTEN TION HAS BEEN CONTINUOUSLY PUT FORTH BEFORE THE REVENUE AUTHORITI ES AS WELL AS ITAT DURING QUANTUM PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS; THAT DURING THE SEARCH, NO DOCUMENT HAS BEEN SEIZED SHOWING UNDISCLOSED TRANSACTIONS FOR THE AY 2007-08 AND AS SUCH, NO INCOME WAS OFFERED BY THE ASSESSEE DURING AY 2007-0 8; THAT THE ASSESSEE HAS DULY EXPLAINED AVAILABILITY OF CASH FO UND DURING THE SEARCH OUT OF THE AVAILABLE CASH BALANCE OF RS.3,95 ,00,000/- UNDER THE BONAFIDE BELIEF ON THE BASIS OF TELESCOPING; TH AT THE ASSESSEE IS ENTITLED FOR THE BENEFIT OF PRINCIPLE OF TELESCOPIN G. 7. HOWEVER, THE LD. DR HAS RELIED UPON ASSESSMENT O RDER PASSED BY THE AO, AFFIRMED BY THE LD. CIT (A) AND I TAT, AND THE PENALTY ORDERS AS WELL AS ORDER PASSED BY LD. CIT ( A) AND RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT IN MAK D ATA PVT. LTD. VS. CIT-II 2013-TIOL-58-SC-IT 8. UNDISPUTED FACTS, NECESSARY FOR ADJUDICATING THE CONTROVERSY AT HAND ARE, INTER ALIA, THAT ON THE BASIS OF SEARC H AND SEIZURE OPERATION, CASH AMOUNT OF RS.27,31,000/- WAS SEIZED ON THE BASIS ITA NO.5049/DEL./2013 5 OF WHICH ADDITION OF RS.27,31,000/- WAS MADE QUA TH E AY 2007-08 U/S 143(3); THAT THE QUANTUM PROCEEDINGS QUA THE AD DITION OF RS.27,31,000/- STANDS ALREADY FINALIZED, ON THE BAS IS OF WHICH PENALTY OF RS.28,20,900/- @ 300% HAS BEEN IMPOSED U /S 271(1)(C); THAT LD. CIT (A) BY PARTLY ALLOWING THE APPEAL ACCE PTED THE CONTENTION OF THE ASSESSEE TO THE EXTENT THAT AMOUN T OF RS.11,14,119/- BELONGS TO M/S. KIRTI TRADING CO. AN D DELETED THE PENALTY ON THE SAID AMOUNT, WHEREAS CONFIRMED THE P ENALTY ON AMOUNT OF RS.16,16,881/-; THAT THE ASSESSEE DECLARE D ADDITIONAL INCOME TO THE TUNE OF RS.4,88,43,493/- BY FILING TH E RETURN U/S 153A/143(3) QUA THE BLOCK PERIOD 2001-02 TO 2006-07 WHICH HAS BEEN ACCEPTED; THAT PENALTY U/S 271(1)(C) HAS BEEN IMPOSED ON THE ASSESSEE ON THE SOLE GROUND THAT THE QUANTUM PROCEE DINGS HAVE ALREADY BEEN TERMINATED AGAINST THE ASSESSEE. 9. UNDISPUTEDLY, PENALTY PROCEEDINGS AS WELL AS ASS ESSMENT PROCEEDINGS ARE TO BE DECIDED INDEPENDENTLY AND THE PENALTY PROCEEDINGS ARE NOT TO BE INFLUENCED BY THE ASSESSM ENT PROCEEDINGS AND THE FINDINGS RECORDED IN THE ASSESSMENT ORDER A RE NOT CONCLUSIVE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 10. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FAC TS, ARGUMENTS ADDRESSED BY THE LD. AR AND LD. DR IN THE LIGHT OF THE CASE LAWS RELIED UPON, WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY ORDER ITA NO.5049/DEL./2013 6 PASSED BY THE AO AND IMPUGNED ORDER PASSED BY THE L D. CIT (A) IS NOT SUSTAINABLE IN THE EYES OF LAW FOR THE FOLLOWIN G REASONS :- I. THAT BARE PERUSAL OF THE PROVISIONS CONTAINED U/S 271(1)(C) OF THE ACT GOES TO PROVE THAT TO IMPOSE PENALTY UPON THE ASSESSEE UNDER THE RELEVANT PROVISIONS OF THE ACT, TWO CONDITIONS ARE REQUIRED TO BE FULFILLED ONE: THAT THE ASSESSEE MUST HAVE FURNI SHED INACCURATE PARTICULARS OF INCOME AND TWO: THE ASSES SEE MUST HAVE CONCEALED PARTICULARS OF INCOME FROM THE TAX AUTHORITIES. II. THAT IN THE CASE CITED AS CIT VS HARSH TALWAR 335 ITR 200 (DEL.) AND CIT VS SAS PHARMACEUTICALS 335 ITR 2359 (DEL.) DELIVERED BY HONBLE JURISDICTIONAL HIGH COURT HELD THAT, TO PROCEED WITH THE IMPOSITION OF PENALTY U/S 271(1)(C), THE A.O. H AS TO PROVE THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME . III. THAT SINCE ALL THE TRANSACTIONS INCORPORATED IN THE SEIZED DOCUMENTS AND LOOSE PAPER RECOVERED IN THE SEARCH OPERATION ON 22.11.2006 FROM THE RESIDENCE O F THE ASSESSEE ARE IN CONSONANCE WITH THE CASH FLOW ITA NO.5049/DEL./2013 7 STATEMENT PREPARED FOR COMPUTING THE UNDISCLOSED INCOME ON THE BASIS OF WHICH ADDITIONAL INCOME TO T HE TUNE OF RS.3,95,00,000/- OFFERED BY THE ASSESSEE U/ S 153A QUA THE BLOCK PERIOD 2001-02 TO 2006-07 HAS BEEN ACCEPTED BY THE REVENUE, THE REVENUE CANNOT BE ALLOWED TO ACCEPT THE CASH FLOW STATEMENT ON PIECEMEAL BASIS BY DENYING THE BENEFIT OF TELESCOP ING OF INCOME FROM THE EARLIER YEARS; IV. THAT THE AO HAD MERELY MADE AN ADDITION OF RS.27,31,000/- BY FINDING THE EXPLANATION OF THE ASSESSEE UNSATISFACTORY ON THE GROUND THAT ASSESSEE HAD MADE LARGE SCALE PAYMENT IN CASH FOR UNACCOUNTE D PURCHASES WITHOUT DISPUTING UNACCOUNTED CASH PURCHASE RECORDED IN THE CASH FLOW STATEMENT AND TH IS FACT GOES TO PROVE THAT THE PENALTY IMPOSED IN THIS CASE IS NOT FOR FURNISHING INACCURATE PARTICULARS OF INC OME RATHER BY REJECTING THE EXPLANATIONS OFFERED BY THE ASSESSEE; V. THAT EVEN OTHERWISE, WHEN LD. CIT (A) BY ACCEPTING THE CASH FLOW STATEMENT LYING AT PAGES 1 TO 14 OF T HE PAPER BOOK EXTENDED THE RELIEF OF RS.11,14,119/- BE ING BELONGING TO M/S. KIRTI TRADING CO., THE REVENUE ITA NO.5049/DEL./2013 8 AUTHORITIES ARE ESTOPPED FROM DENYING THE RELIEF OF TELESCOPING OF INCOME AND PASSING THE PENALTY ORDER ; VI. THAT IN THE QUANTUM PROCEEDINGS, THE CIT (A) HAS AL SO PROCEEDED ON THE BASIS OF CONJECTURES AND SURMISES THAT CARRY FORWARD OF AVAILABLE CASH FROM THE UNDISCLOSED INCOME, UNDISPUTEDLY DECLARED AND ACCEPTED QUA THE BLOCK PERIOD 2001-02 TO 2006-07, COULD NOT BE CORRELATED WITH THE CASH FOUND DURING SEARCH AS THE WEALTH-TAX RETURN SHOWING THE SAID CA SH BALANCE HAD NOT BEEN FILED FOR THOSE YEARS; VII. THAT IT IS APPARENTLY CLEAR THAT LD. CIT (A) AND IT AT IN THE QUANTUM PROCEEDINGS HAVE MERELY PROCEEDED ON THE BASIS OF NON-ACCEPTANCE OF THE EXPLANATION FURNISHED BY THE ASSESSEE AND THERE IS NOT AN IOTA OF EVIDENCE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE; VIII. THAT DURING THE APPELLATE PROCEEDINGS, QUA THE ASSESSMENT ORDER, THE CIT (A) RAISED THE PRESUMPTIO N U/S 132(4A) ON THE GROUND THAT ASSESSEE HAS FAILED TO CORRELATE THE CASH WITH THE UNDISCLOSED INCOME OF EARLIER YEARS AND AS SUCH, THE DATE OF ACQUISITION IS PRESUMED TO BE DATE OF SEARCH. SO, AGAIN WE ARE OF THE ITA NO.5049/DEL./2013 9 CONSIDERED VIEW THAT THIS IS NOT A CASE OF FURNISHI NG OF INACCURATE PARTICULARS WHICH IS A BASIC REQUIREMENT TO INVOKE PROVISIONS CONTAINED U/S 271(1)(C) OF THE AC T; IX. THAT WHEN UNDISPUTEDLY THE ASSESSEE HAS ADMITTED TH AT THE CASH AMOUNT RECOVERED DURING SEARCH OPERATION WAS EARNED FROM UNDISCLOSED SOURCES AND HAS ALREADY OFFERED FOR TAXATION DURING THE YEAR UNDER ASSESSME NT, PERTAINING TO THE EARLIER YEARS REGARDING WHICH CAS H FLOW STATEMENT HAS BEEN FILED AND ACCEPTED BY THE REVENUE AUTHORITIES WHILE COMPLETING THE ASSESSMENT U/S 153A/143(3), THE QUESTION OF IMPOSITION OF PENA LTY DOES NOT ARISE; X. THAT THE AO TO PROVE THE CHARGE OF INACCURATE PARTICULARS AGAINST THE ASSESSEE HAS NOT COLLECTED ANY EVIDENCE RATHER PREFERRED TO PROCEED ON THE BASIS O F PARTICULARS FURNISHED BY THE ASSESSEE BY REJECTING HIS EXPLANATION; XI. THAT PAGE 12 OF THE PAPER BOOK, WHICH IS PART OF TH E CASH FLOW STATEMENT, OTHERWISE ACCEPTED BY THE REVENUE AUTHORITIES, APPARENTLY SHOWS THAT THE ASSE SSEE HAS CASH BALANCE OF RS.4,13,28,821/- AS ON 14.11.2005; ITA NO.5049/DEL./2013 10 XII. THAT AS PER ENTRIES OF THE CASH BOOK RECORDED AT PA GE 40 OF THE PAPER BOOK, THE ASSESSEE HAS BALANCE OF RS.3,95,24,249 AS ON 01.04.2006, MEANING THEREBY TH E AMOUNT SEIZED DURING SEARCH OPERATION WAS PART AND PARCEL OF THE CASH AMOUNT AVAILABLE WITH THE ASSESS EE, QUA WHICH RETURN OF INCOME HAS ALREADY BEEN FILED A ND ACCEPTED BY THE REVENUE; XIII. THAT PERUSAL OF THE ASSESSMENT ORDER DATED 31.12.20 08 ON THE BASIS OF WHICH PENALTY PROCEEDINGS HAVE BEEN SOUGHT TO BE INITIATED, APPARENTLY SHOWS THAT THE A O HAS PROCEEDED ON THE BASIS OF WRONG FIGURES BY RECORDING THAT, THE ASSESSEE HAS FILED A CASH FLOW STATEMENT WHICH SHOWS THAT THE CASH AVAILABLE OF RS.29,02,730/- AS ON 14.11.2005, WHEREAS CASH FLOW STATEMENT FILED BY THE ASSESSEE WITH CASH BALANCE A S ON 14.11.2005 WAS RS.4,11,40,749/-. THIS MISTAKE ON THE PART OF THE AO FURTHER PERPETUATED DURING TH E APPELLATE PROCEEDINGS QUA THE ASSESSMENT ORDER BEFO RE THE LD. CIT (A) TO THE DETRIMENT OF THE ASSESSEE; XIV. THAT THE PENALTY IN THIS CASE HAS MERELY BEEN IMPOS ED ON THE GROUND THAT THE ASSESSEE HAS FAILED TO EXPLA IN AND JUSTIFY AS TO HOW THE CASH AMOUNT OF ITA NO.5049/DEL./2013 11 RS.16,16,881/- PERTAINS TO THE EARLIER YEARS WHEREA S THIS FACT IS TO BE EXAMINED IN THE LIGHT OF CASH F LOW STATEMENT, WHICH IS AN UNDISPUTED DOCUMENT BELIEVE D BY THE REVENUE WHILE ACCEPTING THE RETURN OF INCOME U/S 153A/143(2) OF THE ACT. EVEN OTHERWISE, THERE IS NOT AN IOTA OF EVIDENCE ON THE FILE TO PROVE THAT T HIS IS A CASE OF FURNISHING OF INACCURATE PARTICULARS; XV. THAT THE DECISION OF MAK DATA PVT. LTD. (SUPRA), RELIED UPON BY THE LD. DR, IS NOT APPLICABLE OT THE FACTS AND CIRCUMSTANCES OF THE CASE BECAUSE THE SAID CASE WAS APPARENTLY OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, WHEREAS THE PRESENT CASE IS ONLY QUA THE NO N- ACCEPTANCE OF THE EXPLANATION RENDERED BY THE ASSES SEE AS TO THE AVAILABILITY OF CASH BALANCE IN QUESTION AVAILABLE WITH HIM BEING PART AND PARCEL OF RS.4,39,00,000/- ; XVI. THAT WITHOUT ANY COGENT EVIDENCE ON RECORD THAT THE ASSESSEE HAS CONCEALED OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME, PROVISIONS CONTAINED U/S 271(1)(C) CANNOT BE INVOKED; ITA NO.5049/DEL./2013 12 XVII. THAT HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC) WHILE EXAMINING THE APPLICABILITY OF SECTION 271(1) (C) HAS HELD THAT, WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS., WHICH IS APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 11. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE HE REBY ACCEPT THE PRESENT APPEAL FILED BY THE ASSESSEE AND THE PE NALTY ORDER DATED 04.10.2012, PARTLY AFFIRMED BY THE LD. CIT (A), IS HEREBY SET ASIDE. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF MAY, 2016. SD/- SD/- (PRASHANT MAHARISHI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST DAY OF MAY, 2016/TS ITA NO.5049/DEL./2013 13 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-1, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.