Smt. D.K. Bhatia, Faridabad V. ACIT, Faridabad

ITA 5120/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81682 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 06-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Assessee Lawyers: VINAY BHATIA
• Keywords: Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM ITA NO.5120/DEL/2013 ASSESSMENT YEAR : 2007-08 D.K. BHATIA, 20/6, MATHUR ROAD, FARIDABAD. PAN : AABPS4706A VS. ACIT, CENTRAL CIRCLE-1, FARIDABAD. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI VINAY BHATIA, CA DEPARTMENT BY : DR. B.R.R. KUMAR, SR. DR ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT (A) ON 26.06.2013 UPHOLDING THE P ENALTY OF ` 45,900/- IMPOSED BY THE AO U/S 271(1)(C) OF THE INC OME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATIO N TO THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT D URING THE COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED ON THE ITA NO.5120/DEL/2013 2 ASSESSEE, CASH TO THE TUNE OF ` 2,28,500/- WAS FOU ND. APART FROM OTHERS, THE ASSESSEE STATED THAT A SUM OF ` 1,50,00 0/- WAS CONTRIBUTED BY HIS WIFE WHICH SHE HAD WITHDRAWN FRO M HER BANK ACCOUNT IN KANPUR ABOUT 2 YEARS AGO. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS ALSO EXPLAINED THAT THE AMOUNT WAS KEPT FOR EMERGENCY REQUIREMENT WHICH BELONGED T O HIS WIFE AND THE AMOUNT, IN TURN, WAS GIVEN TO HER BY HER FA THER FROM KANPUR. AFFIDAVIT OF THE PARENTS OF THE ASSESSEES WIFE WAS ALSO FILED TO SUPPORT THE CONTENTION. AS THE AO WAS NOT AGREEING WITH THE GENUINENESS OF THE SOURCE OF CASH, THE ASSESSEE AGREED FOR SURRENDER OF THIS AMOUNT FOR TAXATION SUBJECT TO NO PENALTY. THE AO NOT ONLY MADE ADDITION, BUT ALSO IMPOSED PENALTY WITHOUT VERIFYING THE CORRECTNESS OF THE ASSESSEES STAND T AKEN IN SUPPORT OF THE GENUINENESS OF THE TRANSACTION OF RECEIPT OF CASH BY HIS WIFE FROM HER PARENTS. PENALTY SO IMPOSED CAME TO BE UPHELD IN THE FIRST APPEAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. BEFORE EMBARKING UPON THE SUSTAINABILITY OR OTHERWISE OF THE INSTANT PENALTY, IT IS RELEVANT TO NOTE THAT THE MERE FACT ABOUT THE MAKING OR CONFIRM ATION OF SUCH ITA NO.5120/DEL/2013 3 ADDITION IN QUANTUM PROCEEDINGS DOES NOT AUTOMATICA LLY JUSTIFY THE IMPOSITION OF PENALTY. THE CRITERIA FOR SUSTEN ANCE OF AN ADDITION AND IMPOSITION OF PENALTY IS NOT NECESSARI LY THE SAME. THAT IS THE REASON FOR WHICH THE LEGISLATURE HAS KE PT THE ASSESSMENT PROCEEDINGS DISTINCT FROM PENALTY PROCEE DINGS. THE REASON IS OBVIOUS THAT IF THE ASSESSEE FAILS TO PER SUADE THE AUTHORITIES IN QUANTUM PROCEEDINGS ABOUT THE GENUIN ENESS OF ITS CLAIM FROM THE ANGLE OF TAXABILITY IN QUANTUM PROCE EDINGS, WHICH FORMS THE FOUNDATION FOR THE IMPOSITION OF PENALTY, THE ASSESSEE GETS ANOTHER OPPORTUNITY OF EXPLAINING HIS POINT OF VIEW FOR NON- IMPOSITION OF PENALTY BY DEMONSTRATING THAT THERE W AS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS. IF THE ASSESSEE SUCCEEDS IN MAKING OUT A CASE IN PENAL TY PROCEEDINGS THAT EITHER ADDITION WAS WRONGLY MADE O R EVEN IF IT WAS RIGHTLY MADE, BUT THE SAME CANNOT GIVE RISE TO PENALTY, THEN, THERE CAN BE NO HINDRANCE ON THE AUTHORITIES IN DEL ETING SUCH PENALTY. THE HONBLE BOMBAY HIGH COURT IN CIT VS. BALRAJ SAHNI [(1979) 119 ITR 36 (BOM)] HAS UPHELD THE DELETION OF PENALTY WHEN THE ADDITION WAS CONFIRMED IN QUANTUM PROCEEDI NGS. SIMILAR VIEW HAS BEEN TAKEN IN CIT VS. DEVI DAYAL ALUMINIUM INDUSTRIES ITA NO.5120/DEL/2013 4 PVT. LTD. [(1988) 171 ITR 663 (ALL)] . IN VIEW OF THE ABOVE DISCUSSION, WE FEEL NO HESITATION IN HOLDING THAT T HE MERE FACT ABOUT THE SUSTENANCE OF DISALLOWANCE IN QUANTUM PRO CEEDINGS CANNOT BE A GROUND FOR AUTOMATIC CONFIRMATION OF PE NALTY U/S 271(1)(C). 4. ADVERTING TO THE FACTS OF THE INSTANT CASE, IT I S OBSERVED THAT THE ASSESSEE GAVE A SPECIFIC EXPLANATION TO SUPPORT HIS CONTENTION ABOUT THE SOURCE OF CASH OF ` 1,50,000/-. IT WAS S TATED DURING THE COURSE OF SEARCH PROCEEDINGS ITSELF THAT THIS AMOUN T BELONGED TO HIS WIFE WHICH SHE HAD WITHDRAWN FROM HER BANK ACCO UNT AT KANPUR ABOUT 2 YEARS AGO AND THIS AMOUNT WAS GIVE N TO HER BY HER PARENTS. NOT ONLY THAT, THE ASSESSEE ALSO FURN ISHED AN AFFIDAVIT FROM HER PARENTS IN SUPPORT OF THIS CONTE NTION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO DID NOT C ARRY OUT ANY INVESTIGATION TO FALSIFY THE ASSESSEES STAND ABOUT THE SOURCE OF AMOUNT. NO CASE HAS BEEN MADE OUT BY THE AO THAT T HOUGH THE AMOUNT OF ` 1,50,000/- WAS RECEIVED BY THE ASSESSEE S WIFE WHICH WAS KEPT IN BANK, BUT THE SAME WAS SPENT ELSEWHERE. IN VIEW OF THE PREVAILING FACTUAL SCENARIO, WE DO NOT FIND THA T THE AO HAS MADE A SUCCESSFUL CASE FOR IMPOSITION OF PENALTY. A T THE MOST, IT ITA NO.5120/DEL/2013 5 CAN BE TREATED AS A CASE OF UNPROVED EXPLANATION BU T CERTAINLY NOT A DISPROVED EXPLANATION GIVEN BY THE ASSESSEE. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT [(2001) 249 ITR 125 (GUJ)] HAS HELD THAT IF THE ASSESSEE GIVES SOME EXPLANATION WHICH REMAINS UNPROVED, BUT, IS NOT DIS PROVED, NO PENALTY IS IMPOSABLE. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. UPENDRA V. MITHANI [ITA (L) NO.1860 OF 2009] DATED 05.08.2009. IN VIEW OF THE ABOVE CITED PRECEDENTS, WHICH ARE FULLY APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION, WE HOLD THAT THE LD. CIT(A) WA S NOT JUSTIFIED IN SUSTAINING THE PENALTY. WE, THEREFORE, ORDER FO R ITS DELETION. 5. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.09.201 4. /- SD/- SD/- [ A.T. VARKEY ] [ R.S. SYAL ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 9 TH SEPTEMBER, 2014. DK ITA NO.5120/DEL/2013 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.