Transgulf Frozen Foods Containers Pvt. Ltd., Ghaziabad V. ACIT, Circle- 2, Ghaziabad

ITA 5116/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5103 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 26-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RESPEC; CITAGHAZIABA D ASSESSMENT YEAR
• Assessee Lawyers: AGAINST D ATED; PASSED
• Keywords: Business income; Question of law
• Section: 271(1)(c); 143(3); 40(a)(ia); 274; 73

Judgement Text

1 ITA NO. 5116 & 5117/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 5116/DEL/20 18 (A.Y 2010-11) & I.T.A. NO. 5117/DEL/20 18 (A.Y 2014-15) (THROUGH VIDEO CONF ERENCING) TRASNGULF FROZEN FOODS CONTAINERS PVT. LTD. AKHISLESH KUMAR, ADVOCATE CHAMBER NO. 206-207, ANSAL SATYAM, RDC RAJ NAGAR, GHAZIABAD, UTTAR PRADESH AACCT2067R (APPELLANT) VS A CIT CIRCLE-2 GHAZIABAD (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINS T THE ORDER DATED 16/05/2018 & 31/05/2018 PASSED BY CIT(A)-GHAZIABA D FOR ASSESSMENT YEAR 2010-11 & 2014-15 RESPECTIVELY. 2. THE GROUNDS OF APPEAL ARE AS UNDER: I.T.A. NO. 5116/DEL/2018 (A.Y 2010-11 1. BECAUSE, THE ORDER OF LEANED COMMISSIONER OF I NCOME TAX (A) IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AS NEITHER THERE IS APPELLANT BY SH. PUSHKAR PANDEY, ADV & MS. ISHITA GUPTA, CA RESPONDENT BY SH. PRAKASH DUEBY, SR. DR DATE OF HEARING 14.09.2021 DATE OF PRONOUNCEMENT 28.09.2021 2 ITA NO. 5116 & 5117/DEL/2018 ANY CONCEALMENT NOR ASSESSEE HAS FILED ANY INACCURA TE PARTICULARS. 2. BECAUSE, THE LEANED COMMISSIONER OF INCOME TAX (A) , GROSSLY ERRED IN SUSTAINING THE PENALTY OF RS. 7,56,000/- IMPOSED U/S 271(1) (C ) OF THE ACT WITHOUT APPRECIATING-THE FACT THAT THE LUMP SUM ADD ITION IS MADE BY APPLYING FLAT RATE THAT TOO BY ADMITTINGLY BY APPLYING WRONG PROVISION IN WHOLE DISREGARD OF FACTS ON RECORDS LIKE BETTER BOOK RESU LTS AND FACTUALLY THERE IS NO SPECIFIC ITEM/TRANSACTION/MATERIAL WHICH IS FOUND W RONG/ CONCEALED, HENCE ORDER IS ARBITRARY. 3. BECAUSE, WITHOUT PREJUDICE TO ABOVE AND IN ALTERNA TIVE, PENALTY IS WITHOUT ANY APPLICATION OF MIND/SATISFACTION AGAINST THE RA TIO OF LAW LAID DOWN IN CASE OF MANJUNATHA COTTON AND GINNING FACTORY (2013 ) 359 ITR 565(KAMATKA) APPROVED BY HONBLE APEX COURT IN CASE OF SSAS EMRALD MEADOWS AS THE SAME IS INITIATED BY WAY OF A PRINTE D PENALTY NOTICE, WITHOUT SPECIFYING ANY SPECIFIC DEFAULT EITHER OF C ONCEALMENT OR FURNISHING INACCURATE PARTICULARS. I.T.A. NO. 5117/DEL/2018 (A.Y 2014-15) 1. BECAUSE, THE LEANED COMMISSIONER OF INCOME TAX (A) , GROSSLY ERRED IN SUSTAINING THE PENALTY OF RS. 81,900/- IMPOSED U/S 271(1)(C) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE NON DISALLOW ANCE U/S 40(A)(IA) WAS BROUGHT TO THE NOTICE OF ID. AO VOLUNTARILY BY ASSE SSEE AND ADDED TO INCOME WITHOUT DETECTION BY AO PROVING NON-EXISTENCE OF AN Y DELIBERATENESS ON THE PART OF ASSESSEE. 2. BECAUSE, IN ADDITION TO ABOVE, ASSESSEE HAD DISCLO SED ALL THE FACTS RELATING TO COMPUTATION OF INCOME AND IN TERMS OF B INDING DECISION OF HONBLE JURISDICTION HIGH COURT NO DISALLOWANCE U/S 40(A)(I A) WAS POSSIBLE AT THE RELEVANT TIME AND IN ANY EVENTUALITY ISSUE WAS HIGH LY DEBATABLE. 3. BECAUSE, WITHOUT PREJUDICE TO ABOVE AND IN ALTERNA TIVE, PENALTY IS WITHOUT ANY APPLICATION OF MIND/SATISFACTION AGAINST THE RA TIO OF LAW LAID DOWN IN CASE OF MANJUNATHA COTTON AND GINNING FACTORY (2013 ) 359 ITR 565(KANATKA) APPROVED BY HONBLE APEX COURT IN CASE OF SSAS EMR ALD MEADOWS AS THE SAME IS INITIATED BY WAY OF A PRINTED PENALTY NOTIC E, WITHOUT SPECIFYING ANY 3 ITA NO. 5116 & 5117/DEL/2018 SPECIFIC DEFAULT EITHER OF K/CONCEALMENT OR FURNISH ING INACCURATE PARTICULARS. THEREFORE, PENALTY OF RS. 81,900/- IMPOSED U/S 271( 1)(C) IS PRAYED TO BE QUASHED. 3. BOTH THE APPEALS ARE ON IDENTICAL FACTS, THEREFO RE, WE ARE TAKING UP THE FACTS OF A.Y. 2010-11. THE RETURN OF INCOME FOR ASS ESSMENT YEAR 2010-11 WAS FILED ON 2.10.2010 DECLARING LOSS OF RS, 82,33,103/ -. THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSMENT IN THIS CASE WAS COMP LETED U/S 143(3) ON 25.03.2013 TOTAL INCOME AT NIL AGAINST NET LOSS OF RS. 82,33,203/-. DURING ASSESSMENT PROCEEDINGS, THE THEN ASSESSING OFFICER OBSERVED THAT BUSINESS RESULTS FURNISHED BY THE ASSESSEE HAVE NOT BEEN FOU ND TO BE RELIABLE, BOOKS OF ACCOUNTS HAS NOT BEEN FOUND TO BE RELIABLE, AND REJ ECTED BOOKS OF ACCOUNT INVOKING SECTION 145(3). THE ASSESSING OFFICER WOR KED OUT THE BUSINESS INCOME OF THE ASSESSES BY APPLYING THE PROVISIONS O F SECTION 44AE AND MADE ADDITION OF RS. 25,20,000/- IN INCOME OF THE ASSESS EE. THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T ACT, 1961 WERE ALSO INITIATED IN THIS CASE. THE ASSESSING OFFICER ISSUED NOTICE DATED 25.03.201 3 U/S 274 R.W.S. 271(1)(C) OF THE ACT. THE ASSESSING OFFICER PASSED PENALTY OR DER DATED 28.03.2017 THEREBY IMPOSING PENALTY OF RS. 7,56,000/- IN A.Y. 2010-11. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT (A) DISMISSED THE APPEAL OF THE AS SESSEE. 5. THE LD. AR SUBMITTED THAT THE NOTICE DATED 25.03 .2013 HAS NOT GIVEN A SPECIFIC CHARGE FOR PENALTY. THE LD. AR 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 WHETHER 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 TH E PENALTY PROVISION BEING 4 ITA NO. 5116 & 5117/DEL/2018 QUASI JUDICIAL, UNLESS THERE IS SPECIFIC CHARGE THE RE CANNOT BE LEVY OF PENALTY. THEREFORE, THE ORDER LEVYING PENALTY IS WRONG AND B AD IN LAW. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN C ASE OF CIT VS. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 248 (SC) AND C IT 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. M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (ITA NO.475/2019 VIDE ORDER DATED 02.08.2019) HELD THAT NOTICE ISSUED BY THE ASSESSIN G OFFICER WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271 (1)(C) OF THE PENALTY PROCEEDINGS HAD BEEN INITIATED. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSING OFFICER MADE AN ADDITION OF RS. 25,20,000 /- IN THE INCOME OF THE ASSESSEE COMPANY ESTIMATING THE INCOME FROM TRUCK O PERATION ON THE BASIS OF THE PROVISIONS GIVEN U/S 44AE OF THE ACT I.E. @ RS. 3500 PER MONTH PER TRUCK. THE CIT(A) IN QUANTUM APPEAL OBSERVED THAT THE PROV ISIONS OF SECTION 44AE ARE NOT APPLICABLE TO THE ASSESSEE, STILL CONFIRMED THE ADDITIONS. THE ASSESSEE HAS NOT FILED APPEAL AS TO AVOID LITIGATION AND TO BUY PEACH OF MIND. THE LD. AR SUBMITTED THAT THIS DOES NOT CONTEMPLATE THAT THE A SSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED THE INACCURATE P ARTICULARS OF INCOME AS PER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. 6. THE LD. DR SUBMITTED THAT THE PENALTY ORDER IS V ERY CLEAR THAT THE PENALTY IS IMPOSED ON CONCEALMENT OF INCOME AND, TH EREFORE, MERELY NOT MENTIONING THE SPECIFIC LIMB OF SECTION 271(1)(C) W ILL NOT MAKE THE PENALTY ORDER BAD IN LAW. THE LD. DR RELIED UPON THE ASSESS MENT ORDER, PENALTY ORDER AND THE ORDER OF THE 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 IS SUED U/S 274 R.W.S 271(1)(C) OF THE INCOME TAX ACT, 1961, THERE WAS NO SPECIFIC CHA RGES AS RELATES TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. FROM THE NOTICE DATED 25.03.2013 PRODUCED BY THE LD . AR DURING THE HEARING, 5 ITA NO. 5116 & 5117/DEL/2018 IT CAN BE SEEN THAT THE ASSESSING OFFICER WAS NOT S URE UNDER WHICH LIMB OF PROVISIONS OF SECTION 271 OF THE INCOME TAX ACT, 19 61, THE ASSESSEE IS LIABLE FOR PENALTY. BESIDES THIS, THE PRESENT CASE IS RELATING TO AN ADDITION OF RS. 25,20,000/- IN THE INCOME OF THE ASSESSEE COMPANY E STIMATING THE INCOME FROM TRUCK OPERATION ON THE BASIS OF THE PROVISIONS GIVEN U/S 44AE OF THE ACT I.E. @ RS. 3500 PER MONTH PER TRUCK. THE CIT(A) IN QUANTUM APPEAL OBSERVED THAT THE PROVISIONS OF SECTION 44AE ARE NOT APPLICA BLE TO THE ASSESSEE, BUT CONFIRMED THE ADDITIONS. FOR NOT FILING THE APPEAL CANNOT BE SAID THAT IT IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULAR OF INCOME. IN FACT, THE ASSESSMENT ORDER ALSO DID NOT SPECIFY THE CHARGE AS TO WHETHER THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME IN ASSESSEES CASE. THUS, THERE IS NO PARTICULAR LIMB MENTIONED IN THE NOTICE ISSUED UNDER SECTION 271(1)(C) R.W.S. 274 OF THE AC T. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COUR T IN CASE OF M/S SSA EMERALD MEADOW. THE EXTRACT OF THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN M/S SSA EMERALD MEADOWS ARE AS UNDER WHIC H WAS CONFIRMED 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 SECTIO N 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'T HE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. 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 ITR 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 SUBSTANTIA L QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE AP PEAL 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 BE COME NULL AND VOID, THERE IS NO NEED TO COMMENT ON MERIT OF THE CASE. THE PENALT Y U/S 271(1)(C) OF THE ACT IS QUASHED. 6 ITA NO. 5116 & 5117/DEL/2018 SINCE IN THE INSTANT CASE ALSO THE INAPPROPRIATE W ORDS IN THE PENALTY NOTICE HAS NOT BEEN STRUCK OFF AND THE NOTICE DOES NOT SPECIFY AS TO UNDER WHICH LIMB OF THE PROVISIONS, THE PENALTY U/S 271(1 )(C) HAS BEEN INITIATED, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E PENALTY LEVIED U/S 271(1)(C) IS NOT SUSTAINABLE AND HAS TO BE DELETED. ALTHOUGH THE LD. DR SUBMITTED THAT MERE NON-STRIKING OFF OF THE INAPPROPRIATE WORDS WI LL NOT INVALIDATE 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 CONTEST ED HEREIN BY THE ASSESSEE. FURTHER, WHEN THE NOTICE IS NOT MENTIONING THE CONC EALMENT OR THE FURNISHING OF INACCURATE PARTICULARS, THE RATIO LAID DOWN BY T HE HONBLE HIGH COURT IN CASE OF M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (S UPRA) WILL BE APPLICABLE IN THE PRESENT CASE. THE HONBLE DELHI HIGH COURT HELD AS UNDER: 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, WHICH W AS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT I N CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR) AND OBSE RVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIG H COURT HAD FOLLOWED THE ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIO NER OF INCOME TAX V. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 241(KAR) , THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA I N 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 QUESTION 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 THE CIT(A) AN D DIRECT THE ASSESSING OFFICER 7 ITA NO. 5116 & 5117/DEL/2018 TO CANCEL THE PENALTY SO LEVIED. THUS, ITA NO. 5116 /DEL/2018 FOR A.Y. 2010-11 IS ALLOWED. 8. SINCE ITA NO. 5117/DEL/2018 FOR A.Y. 2014-15 IS ALSO ON IDENTICAL GROUNDS TO THAT OF ITA NO. 5116/DEL/2018 FOR A.Y. 2 010-11, THE SAME IS ALSO ALLOWED. 8. IN RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF SEPTEMBER, 2021 SD/- SD/- (PRASHANT MAHARISHI) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28/09/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 8 ITA NO. 5116 & 5117/DEL/2018