RADHIKA SURGICAL PVT. LTD., NEW DELHI V. ACIT, CENTRAL CIRCLE- 6, NEW DELHI

ITA 5088/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7595 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Unexplained cash credit; Search and seizure; Question of law
• Section: 271(1)(c); 274; 73; 153C

Judgement Text

1 ITA NO. 7678/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 5088/DEL/20 17 (A.Y 2008-09) (THROUGH VIDEO CON FERENCING) RADHIKA SURGICAL PVT. LTD. C-30, PANCHSHEEL ENCLAVE, NEW DELHI AADCR5053L (APPELLANT) VS ACIT CENTRAL CIRCLE-6 NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER DATED 29/06/2017 PASSED BY CIT(A)-24 DELHI FOR ASSESSME NT YEAR 2008- 09. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDI NG THE PENALTY OF RS. 10,52,593/- IMPOSED BY THE AO., INVO KING THE PROVISIONS OF SEC 271(1)( C) OF IT ACT 1961. APPELLANT BY SH. P. C. YADAV, ADV RESPONDENT BY SH. ATIQUE AHMED, SR. DR DATE OF HEARING 19.01.2021 DATE OF PRONOUNCEMENT 21.01.2021 2 ITA NO. 7678/DEL/2017 2. THAT THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDING THE PENALTY OF RS. 10,52,593/-,WITHOUT CONSIDERING THE FACTS AND C IRCUMSTANCES OF THE CASE AND RELYING ON IRRELEVANT JUDICIAL PRON OUNCEMENTS. 3. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY, ILLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF C ONTEMPORARY JURISPRUDENCE ADDITIONAL GROUND: A) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT I S VOID AS THE NOTICE U/S 274 READ WITH SEC. 271 IS BAD AND DEFECT IVE AS IT IS ISSUED WITHOUT DELETING THE APPROPRIATE CLAUSE UNDE R WHICH THE PENALTY IS PROPOSED TO BE IMPOSED IS EITHER FOR FIL ING OF INACCURATE PARTICULAR OF INCOME OR CONCEALMENT OF PARTICULAR O F INCOME AND AS SUCH THE NOTICE IS NOT SUSTAINABLE AND NOT CURABLE. 3. SEARCH AND SEIZURE ACTION U/S 132(4) OF THE INCO ME TAX ACT, 1961 (HEREAFTER REFERRED TO AS THE THE ACT) WAS C ARRIED OUT IN THE ROCKLAND GROUP OF CASES ON 06.09.2011. SUBSEQUENT T O THE SEARCH AND SEIZURE ACTION, ASSESSMENT PROCEEDINGS WERE CAR RIED OUT U/S 153C R.W.S. 143(3), BY ISSUE OF NOTICE DATED 05.08. 2013 TO THE APPELLANT TO FILE THE RETURN OF INCOME. IN RESPONSE , THE ASSESSEE FILED RETURN OF INCOME ON 10.09.2013, DISCLOSING THE TOTA L INCOME AS NIL. SUBSEQUENTLY, THE ASSESSEE FILED AN APPLICATION FOR SETTLEMENT U/S 245C OF THE ACT BEFORE THE INCOME TAX SETTLEMENT CO MMISSION IN 3 ITA NO. 7678/DEL/2017 THE CAPACITY OF A RELATED PERSON, RELATED TO THE OTHER ASSESSEES OF THE ROCKLAND GROUP WHO HAD ALSO FILED SETTLEMENT AP PLICATIONS AS SPECIFIED PERSON' U/S 245C(I) PROVISO (I). HOWEVER , THE ASSESSEE'S APPLICATION WAS REJECTED BY THE INCOME TAX SETTLEME NT COMMISSION VIDE THEIR ORDER DATED 23.04.2013, WHEREIN THE COMM ISSION HELD THAT THE ASSESSEE DOES NOT QUALIFY FOR ADMISSION AS A PERSON RELATED TO TO THE SPECIFIED PERSON. THE ASSESSE E FILED A WRIT PETITION BEFORE THE HONBLE DELHI HIGH COURT, CHALL ENGING THE REJECTION ORDER OF THE SETTLEMENT COMMISSION, BUT T HE PETITION WAS DISMISSED BY THE HONBLE DELHI HIGH COURT ON 20.10. 2015. MEANWHILE, THE ASSESSING OFFICER PASSED THE ASSESSM ENT ORDER MAKING THE FOLLOWING ADDITIONS OVER AND ABOVE THE I NCOME RETURNED BY THE ASSESSEE: A.Y HEAD OF ADDITION AMOUNT (IN RS.) 200 8 - 09 (I) DISCLOSURE IN SETTLEMENT APPLICATION 30,00,000 (II) UNEXPLAINED CASH CREDITS 1,79,56,880/ - (III) COMMISSION PAID TO SECURE UNEXPLAINED CASH CREDITS 5,38,706/ - THE ASSESSEE FILED APPEAL AGAINST ALL THE ABOVE HEA DS OF ADDITIONS. IN THE APPEAL AGAINST THE QUANTUM ADDITIONS, THE FO LLOWING AMOUNTS WERE CONFIRMED IN FIRST APPEAL. A.Y HEAD OF ADDITION AMOUNT (IN RS.) 200 8 - 09 (I) DISCLOSURE IN SETTLEMENT APPLICATION 30,00,000 (II) UNEXPLAINED CASH CREDITS 2,26,000/ - (III) COMMISSION PAID TO SECURE UNEXPLAINED CASH CREDITS 1,79,569/ - 4 ITA NO. 7678/DEL/2017 AFTER GIVING EFFECT TO THE ORDER OF CIT(A), THE ASS ESSING OFFICER AFTER PROVIDING THE ASSESSEE AN OPPORTUNITY TO SHOW CAUSE AS TO WHY PENALTY U/S 271(1)(C) SHOULD NOT BE LEVIED FOR CONC EALMENT OF INCOME, AND CONSIDERING THE SAME, REJECTED THE SUBM ISSIONS OF THE ASSESSEE AND PROCEEDED TO LEVY PENALTY AT THE RATE OF 100% OF THE TAX SOUGHT TO BE EVADED ON THE AMOUNTS CONFIRMED IN FIRST APPEAL. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT (A) DISMISSED THE APPEA L OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE NOTICE DATED 20/6/ 2014 HAS NOT GIVEN A SPECIFIC CHARGE FOR PENALTY. THE LD. A R SUBMITTED THAT THE CIT(A) ERRED IN CONFIRMING THE PENALTY U/S 271( 1)(C) OF THE ACT AS UNDER WHICH LIMB OF SECTION 271(1)(C), THE PENALTY IS LEVIED WAS NOT MENTIONED IN THE NOTICE ISSUED UNDER SECTION 271(1) (C) READ WITH SECTION 274 OF THE ACT. THE LD. AR SUBMITTED THAT W HETHER THE PENALTY IS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WAS NOT EVIDENT FROM THE NOTI CE NOR FROM THE PENALTY ORDER AS WELL. THE LD. AR FURTHER SUBMITTED THAT THE PENALTY PROVISION BEING QUASI JUDICIAL, UNLESS THERE IS SPE CIFIC CHARGE THERE CANNOT BE LEVY OF PENALTY. THEREFORE, THE ORDER LEV YING PENALTY IS WRONG AND BAD IN LAW. THE LD. AR RELIED UPON THE DE CISION OF THE HONBLE SUPREME COURT IN CASE OF CIT VS. SSAS EMER ALD MEADOWS (2016) 73 TAXMAN.COM 248 (SC) AND CIT V. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KAR). THE LD AR FURTHER SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN CASE OF PR. CIT VS. 5 ITA NO. 7678/DEL/2017 M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (ITA NO.475/2019 VIDE ORDER DATED 02.08.2019) HELD THAT NOTICE ISSUE D BY THE ASSESSING OFFICER WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE PENALTY PROCEEDING S HAD BEEN INITIATED. 6. THE LD. DR SUBMITTED THAT THE PENALTY ORDER IS V ERY CLEAR THAT THE PENALTY IS IMPOSED ON CONCEALMENT OF INCOME AND , THEREFORE, MERELY NOT MENTIONING THE SPECIFIC LIMB OF SECTION 271(1)(C) WILL NOT MAKE THE PENALTY ORDER BAD IN LAW. THE LD. DR RELIE D UPON THE ASSESSMENT ORDER, PENALTY ORDER AND THE ORDER OF TH E CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORD. FIRST OF ALL, IN THE NOTICE ISSUED U/S 274 R.W.S 271(1)(C) OF THE INCOME TAX ACT, 1961, TH ERE WAS NO SPECIFIC CHARGES AS RELATES TO CONCEALMENT OF INCOM E OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. FROM THE NOTICE DATED 20/06/2014 PRODUCED BY THE LD. AR DURING THE HEARIN G, IT CAN BE SEEN THAT THE ASSESSING OFFICER WAS NOT SURE UNDER WHICH LIMB OF PROVISIONS OF SECTION 271 OF THE INCOME TAX ACT, 19 61, THE ASSESSEE IS LIABLE FOR PENALTY. BESIDES THAT THE ASSESSMENT ORDER ALSO DID NOT SPECIFY THE CHARGE AS TO WHETHER THERE IS CONCEALME NT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN A SSESSEES CASE. BESIDES THIS, THE PRESENT CASE IS RELATING TO SEARC H CONDUCTED BY THE REVENUE IN THE PREMISES OF THE ASSESSEE, WHILE THE DECISION RELIED BY THE ASSESSING OFFICER AS WELL AS CIT (A) THAT OF HONBLE SUPREME 6 ITA NO. 7678/DEL/2017 COURT IN CASE OF MAK DATA P. LTD. VS. CIT 358 ITR 5 93 IS RELATING TO SURVEY AND THERE IS NO ISSUE INVOLVED ABOUT THE NOT ICE ISSUED U/S 271(1)(C) R.W.S. 274 OF THE ACT. THIS CASE RELIED B Y THE REVENUE IS NOT APPLICABLE IN THE PRESENT CASE DUE TO THE DISTI NGUISHING FACTS. THERE IS SEPARATE PROVISION FOR PENALTY IN SEARCH C ASES GIVEN UNDER THE STATUTE AFTER 01.07.2012 THAT OF SECTION 271AAB OF THE ACT WHICH WAS TOTALLY IGNORED BY THE ASSESSING OFFICER. THUS, THE PENALTY ITSELF IS BASED ON INCORRECT SECTION. THERE FORE WE ARE TAKING UP THE CONTENTION OF THE ASSESSEE THAT THERE IS NO PARTICULAR LIMB MENTIONED IN THE NOTICE ISSUED UNDER SECTION 271(1) (C) R.W.S. 274 OF THE ACT. THIS ISSUE IS SQUARELY COVERED BY THE DECI SION OF THE HONBLE SUPREME COURT IN CASE OF M/S SSA EMERALD M EADOW. THE EXTRACT OF THE DECISION OF THE HONBLE KARNATAKA HI GH COURT IN M/S SSA EMERALD MEADOWS ARE AS UNDER WHICH WAS CONFIRM ED BY THE HONBLE APEX COURT: '3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY TH E ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX A CT, 1961 (FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT DID NOT SPE CIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEE DINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE ITA NO. 4913/DEL/2015 DECISION OF THE DIVISION BENCH OF THI S COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 IT R 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION , NO SUBSTANTIAL 7 ITA NO. 7678/DEL/2017 QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINA TION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED.' THUS, ADDITIONAL GROUND NO. (II) OF THE ASSESSEE'S APPEAL IS ALLOWED. SINCE THE INCEPTION OF THE NOTICE ISSUED U /S 271(1)(C) HAS BECOME NULL AND VOID, THERE IS NO NEED TO COMMENT O N MERIT OF THE CASE. THE PENALTY U/S 271(1)(C) OF THE ACT IS QUASH ED. SINCE IN THE INSTANT CASE ALSO THE INAPPROPRIATE W ORDS IN THE PENALTY NOTICE HAS NOT BEEN STRUCK OFF AND THE NOTI CE DOES NOT SPECIFY AS TO UNDER WHICH LIMB OF THE PROVISIONS, T HE PENALTY U/S 271(1)(C) HAS BEEN INITIATED, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY LEVIED U/S 271(1)(C) IS NO T SUSTAINABLE AND HAS TO BE DELETED. ALTHOUGH THE LD. DR SUBMITTED T HAT MERE NON- STRIKING OFF OF THE INAPPROPRIATE WORDS WILL NOT IN VALIDATE THE PENALTY PROCEEDINGS, HOWEVER, THE DECISION OF THE HONBLE K ARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) WHERE THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED IS DIRECTLY ON THE ISSUE CONTESTED HEREIN BY THE ASSESSEE. FURTHER, WHEN THE NOTICE IS NOT MENTIONING THE CONCEALMENT OR THE FURNISHING OF INA CCURATE PARTICULARS, THE RATIO LAID DOWN BY THE HONBLE HIG H COURT IN CASE OF M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (SUPR A) WILL BE APPLICABLE IN THE PRESENT CASE. THE HONBLE DELHI H IGH COURT HELD AS UNDER: 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, WHICH WAS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF T HE KARNATAKA HIGH COURT IN CIT V. MANJUNATHA COTTON & GINNING FA CTORY 359 ITR 565 (KAR) AND OBSERVED THAT THE NOTICE ISSUED BY TH E AO WOULD BE 8 ITA NO. 7678/DEL/2017 BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECT ION 271(1)(C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. W HETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIGH COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIO NER OF INCOME TAX V. SSAS EMERALD MEADOWS (2016) 73 TAXMA N.COM 241(KAR), THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA IN SLP NO. 11485 OF 2016 BY ORDER DATED 5 TH AUGUST, 2016. 22. ON THIS ISSUE AGAIN THIS COURT IS UNABLE TO FIN D ANY ERROR HAVING BEEN COMMITTED BY THE ITAT. NO SUBSTANTIAL Q UESTION OF LAW ARISES. THUS, NOTICE UNDER SECTION 271(1)(C) R.W.S. 274 OF THE ACT ITSELF IS BAD IN LAW. WE, THEREFORE, SET-ASIDE THE ORDER OF T HE CIT(A) AND DIRECT THE ASSESSING OFFICER TO CANCEL THE PENALTY SO LEVIED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF JANUARY, 2021 SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 21/01/2021 R. NAHEED * 9 ITA NO. 7678/DEL/2017 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI