AVEE MEDI SURGICALS PVT. LTD., NEW DELHI V. ACIT, CENTRAL CIRCLE- 6, NEW DELHI

ITA 5126/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5880 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 08-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY TRIPATHI
• Keywords: Unexplained cash credit; Unexplained expenditure; Search and seizure; Question of law; Assessment record; Set aside
• Section: 271(1)(c); 153A; 274; 73; 22; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DLEHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ITA NOS. 5123 TO 5126/DEL/2017 ASSESSMENT YEARS: 2008-09 TO 2011-12 AVEE MEDI SURGICALS PVT. LTD., VS. ACIT CENTRAL CI RCLE-6, C-30, PANCHSHEEL ENCLAVE, NEW DELHI. NEW DELHI. PAN : AAGCA 0815N (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P.C. YADAV, ADVOCATE RESPONDENT BY: SH. SANJAY TRIPATHI, SR. DR DATE OF HEARING: 02.09.2021 DATE OF ORDER : 02.09.2021 ORDER PER BENCH: ALL THESE APPEALS HAVE BEEN PREFERRED BY THE ASSE SSEE AGAINST SEPARATE ORDERS DATED 29.06.2017 PASSED BY THE LD. CIT(A)-24, NEW DELHI IN THE PENALTY MATTERS FOR THE ASSESSMENT YEA RS 2008-09 TO 2011-12. 2. SINCE THE GROUNDS RAISED BY THE APPELLANT IN ALL THESE APPEALS ARE IDENTICAL EXCEPT THE AMOUNTS OF PENALTY IMPOSED AND THE FACTS INVOLVED THEREIN ARE SIMILAR, ALL THESE APPEALS ARE BEING DISPOSED OF BY 2 WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENC E AND BREVITY. FIRST OF ALL, WE WOULD LIKE TO TAKE UP ITA NO. 5123 /DEL/2017 FOR THE ASSESSMENT YEAR 2008-09, WHEREIN, THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL : 1. THAT THE LD. CIT(APPEAL) HAS ERRED IN UPHOLDING THE PENALTY OF RS.4,01,258/-, IMPOSED BY THE A.O., INVOKING THE PR OVISIONS OF SEC. 271(1)(C) OF IT ACT 1961. 2. THAT THE LD. CIT(APPEAL) HAS ERRED IN UPHOLDING THE PENALTY OF RS.4,01,258/-,, WITHOUT CONSIDERING THE FACTS AND C IRCUMSTANCES OF THE CASE AND RELYING ON IRRELEVANT JUDICIAL PRONOUNCEMENTS. 3. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY, ILLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF CONTE MPORARY JURISPRUDENCE. 3. APART FROM THE ABOVE SAID GROUNDS, THE ASSESSEE HAS ALSO TAKEN AN ADDITIONAL LEGAL GROUND FIRST TIME BEFORE US AS FOLLOWS : A). ON THE FACTS AND UNDER THE CIRCUMSTANCES OF TH E CASE THE PENALTY LEVIED UNDER SECTION 271(1))C) OF THE ACT IS VOID A S THE NOTICE U/S. 274 READ WITH SEC. 271 IS BAD AND DEFECTIVE AS IT IS ISSUED WITHOUT DELETING THE APPROPRIATE CLAUSE UNDER WHICH THE PENALTY IS PROPO SED TO BE IMPOSED IS EITHER FOR FILING OF INACCURATE PARTICULARS OF INCO ME OR CONCEALMENT OF PARTICULAR OF INCOME AND AS SUCH THE NOTICE IS NOT SUSTAINABLE AND NOT CURABLE. 4. BRIEF FACTS OF THE CASE ARE THAT A SEARCH & SEIZ URE OPERATION U/S. 132 OF THE IT ACT, 1961 WAS CONDUCTED AT BUSINESS P REMISES OF COMPANIES OF ROCKLAND GROUP AS WELL AS AT THE RESID ENTIAL PREMISES OF DIRECTORS OF THE COMPANIES ON 06.09.2011. A NOTICE U/S. 153A WAS ISSUED TO THE ASSESSEE, IN RESPONSE TO WHICH RETURN OF INCOME DECLARING NIL INCOME WAS FILED BY THE ASSESSEE ON 0 3.12.2012. DURING 3 THE PENDENCY OF ASSESSMENT, THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION U/S. 245C OF THE ACT IN THE CAPACITY OF A PERSON RELATED TO OTHER ASSESSEES OF THE ROCKLAND GROUP AND DECLARED AN ADDITIONAL INCOME OF RS.10,00,000/-. HOWEVER, THE APPLICATION OF THE ASSESSEE WAS REJECTED BY THE SETTLEMENT COMMISSION HOLDING T HAT THE ASSESSEE DOES NOT QUALIFY AS A PERSON RELATED TO THE SPECIF IED PERSON. THEREAFTER, ASSESSMENT U/S. 153A OF THE ACT WAS COM PLETED ON 20.06.2014 AT AN INCOME OF RS.1,63,02,586/- BY MAKI NG FOLLOWING ADDITIONS : (I) RS.1,48,56,880/- ON ACCOUNT OF UNEXPLAINED CASH CRE DIT ON PROTECTIVE BASIS. (II) RS.4,45,706/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE (III) RS.10,00,000/- ON ACCOUNT OF ADDITIONAL INCOME DECL ARED BEFORE THE SETTLEMENT COMMISSION. 5. IN QUANTUM APPEAL, FILED BY ASSESSEE BEFORE THE LD. CIT(A), THE LD. CIT(A) REDUCED THE ADDITION ON ACCOUNT OF UNEXP LAINED CASH CREDIT TO RS.1,50,000/- AND UNEXPLAINED EXPENDITURE TO RS. 1,48,569/-. HOWEVER, THE ADDITION OF RS.10,00,000/- MADE ON ACC OUNT OF ADDITIONAL INCOME DECLARED BEFORE THE SETTLEMENT CO MMISSION WAS CONFIRMED. THUS, THE TOTAL ADDITIONS SUSTAINED BY T HE LD. CIT(A) STOOD AT RS.12,98,000/-. BASED ON THESE ADDITIONS, PENALT Y PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE AND A PENALTY O F RS.4,01,258/- WAS IMPOSED AGAINST THE ASSESSEE U/S. 271(1)(C) OF THE ACT. 6. THEREAFTER, AGAINST THE LEVY OF PENALTY BY THE L D. ASSESSING OFFICER, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A), 4 WHO DISMISSED THE APPEAL OF THE ASSESSEE WITH FOLLO WING OBSERVATIONS: 4.2.6. BEFORE PARTING WITH THE MATTER, IT IS NECES SARY TO DEAL WITH THE OBJECTIONS MADE ON LEGAL GROUNDS. IT HAS BEEN CONTE NDED THAT NEITHER THE ASSESSMENT ORDER, NOR THE PENALTY NOTICE, NOR THE P ENALTY ORDER HAVE MENTIONED AS TO UNDER WHICH LIMB OF SEC.271(1 )(C) HAS THE PENALTY BEEN LEVIED I.E., WHETHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, AND AS SUCH THE P ENALTY IS VITIATED. THE JURISDICTION ISSUE NEEDS TO BE ADDRESSED AS TO WHET HER APPELLANT WAS AWARE OF THE SPECIFIC LIMB OF SECTION 271(1 )(C) UN DER WHICH HE WAS BEING CHARGED. THE APPELLANT HAS NOT FURNISHED THE COPY O F THE PENALTY NOTICE FOR VERIFICATION, BUT IN MY VIEW, IT IS IMMATERIAL, ONC E WE EXAMINE THE CONTENTS OF THE ASSESSMENT ORDER ON BASIS OF WHICH THE SATIS FACTION HAS BEEN RECORDED BY THE A.O, FOR INITIATING PENALTY. IN RES PECT OF THE ADDITIONAL INCOME DISCLOSED IN THE SETTLEMENT APPLICATION, THE ASSESSMENT ORDER RECORDS THAT PROVISIONS OF SEC, 271(1)(C) ARE CLEAR LY ATTRACTED ON THE AMOUNT SINCE THE ASSESSEE HAS NOT DISCLOSED THE AB OVE INCOME ( EMPHASIS PROVIDED), THIS IS NOTHING BUT STATING, IN A DIFFERENT WAY, THAT THE APPELLANT HAS CONCEALED ITS INCOME. NO DOUBT, THE E XACT PHRASE HAS NOT BEEN USED, BUT IS NECESSARY TO LOOK INTO THE INTENT , RATHER THAN THE EXACT WORDS. THE INTENT SHOULD BE DISCERNIBLE FROM THE AS SESSMENT ORDER. THERE IS YET ANOTHER ADDITION ON WHICH PENALTY HAS BEEN L EVIED, BUT NO EXPLANATION ADDUCED ON MERITS, VIZ., THE UNEXPLAINE D CASH CREDIT AMOUNT , WHICH HAS NOT BEEN INCLUDED IN THE DISCLOSURE MADE BEFORE THE SETTLEMENT COMMISSION IN THE HANDS OF THE FLAGSHIP COMPANIES O F THE ROCKLAND GROUP. THE A.O. HAS IN FACT, WHILE DEALING WITH THIS MATTE R, SPECIFICALLY MENTIONED THAT PENALTY PROVISIONS OF SEC 271(1)(C) ARE ATTRAC TED AS THE ASSESSEE HAS CONCEALED THE INCOME TO THE EXTENT OF UNEXPLAINED CASH CREDIT. THE COMMISSION AMOUNT PAID TO ARRANGE FOR AMOUNT TO FLO W THROUGH THE BOOKS OF ACCOUNT IS PAID IS ALSO PAID OUTSIDE THE BOOKS A ND CLEARLY IS CONCEALED INCOME AND NOT INACCURATE PARTICULARS OF INCOME. 7. WE HAVE GONE THROUGH THE RECORD INCLUDING THE IM PUGNED ORDERS OF THE AUTHORITIES BELOW. LEARNED DR OPPOSED RAISING OF ADDITIONAL LEGAL GROUND BY SAYING THAT BEFORE THE L OWER AUTHORITIES, THIS GROUND WAS NOT TAKEN UP BY THE ASSESSEE AND MO REOVER, HE NEEDS TO VERIFY FROM THE ASSESSMENT RECORD ABOUT THE FACT UAL CORRECTNESS OF 5 THE LEGAL GROUND. THEREFORE, AT THIS STAGE, SAME SH OULD NOT BE ADMITTED. 8. WE HAVE HEARD BOTH THE SIDES AND WE ARE OF THE C ONSIDERED OPINION THAT THE LEGAL GROUND CAN BE TAKEN AT ANY S TAGE AND THE ASSESSEE CANNOT BE BARRED FOR RAISING FIRST TIME AN Y LEGAL GROUND AT THIS STAGE. THUS, WE ADMIT THE ADDITIONAL GROUND RA ISED BY THE LD. AR. THE CONTENTION OF THE LD. AR IS THAT THE LD. ASSESS ING OFFICER HAS SIMPLY INITIATED PENALTY PROCEEDINGS WITHOUT RECORDING HIS CLEAR SATISFACTION AND WITHOUT MENTIONING ANY SPECIFIC CHARGE AGAINST THE ASSESSEE IN THE NOTICE ISSUED FOR IMPOSITION OF PENALTY. IT IS NOW VERY WELL SETTLED BY HONBLE APEX COURT IN THE MATTER OF CIT VS. SSA S EMERALD MEADOWS - (2016) 73 TAXMANN.COM 248 (SC), WHEREIN I T IS HELD THAT IN SUCH CASES, NOTICE ISSUED FOR ASSUMING JURISDICTION U/S. 271(1)(C) SHOULD BE UNAMBIGUOUS. LEARNED AR ALSO CITED AN ORD ER DATED 19.10.2020 OF COORDINATE BENCH IN THE CASE OF AKHIL MEDITECH (ITA NO. 5118/DEL/2017), WHEREIN, IN THE SIMILAR FACTS AND C IRCUMSTANCES, WHEREIN AKHIL MEDITECH WAS ALSO SUBJECTED TO THE SA ME SEARCH AND SEIZURE, AND ITAT QUASHED THE PENALTY PROCEEDINGS A ND DELETED THE PENALTY IMPOSED AGAINST THE ASSESSEE WITH THE FOLLO WING OBSERVATIONS : 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. LEARNED COUNSEL FOR THE ASSESSEE REFERRED T O THE SHOW CAUSE NOTICES ISSUED BY A.O. BEFORE LEVY OF THE PENALTY D ATED 20.06.2014, THE SAME ARE BAD IN LAW AS IT DID NOT SPECIFY UNDER WHI CH LIMB OF SECTION 271(1)(C) OF THE I.T. ACT THE PENALTY PROCEEDINGS H AD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE CASE OF CIT VS. M/S. SSAS EMERALD MEADOWS 6 73 TAXMANN.COM 241 (KARN-HC.) THE HONBLE KARNATAKA HIGH COURT DISMISSED THE DEPARTMENTAL APPEAL IN WHICH THE TRIB UNAL ALLOWED THE APPEAL OF ASSESSEE ON THE SAME REASON BY FOLLOWING ITS EARLIER DECISION IN THE CASE OF CIT & ANOTHER VS., MANJUNATHA COTTON AN D GINNING FACTORY [2013] 359 ITR 565 (KARN-HC.). THE JUDGMENT OF HON BLE KARNATAKA HIGH COURT HAVE BEEN AFFIRMED BY DISMISSING THE SLP OF T HE DEPARTMENT REPORTED IN 73 TAXMANN.COM 248. THE HONBLE DELHI H IGH COURT IN THE CASE OF PR. CIT VS. M/S. SAHARA INDIA LIFE INSURANCE COM PANY LTD., 2019-(8)-TMI- 409-(DEL.-HC) VIDE JUDGMENT DATED 02.08.2019 IN PAR AS 21 AND 22 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 THE KARNATAKA HIGH COURT IN CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 ( KAR) AND OBSERVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) (C) TH E PENALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. WHETHER F OR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACC URATE PARTICULARS OF INCOME. THE KARNATAKA HIGH COURT HAD FOLLOWED TH E ABOVE JUDGMENT IN THE SUBSEQUENT ORDER IN COMMISSIONER OF INCOME TAX V. SSAS EMERALD MEADOWS (2016) 73 TAXMAN.COM 241 ( KAR), THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME C OURT OF INDIA IN SLP NO.11485 OF 2016 BY ORDER DATED 5TH 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. 6.1. IN VIEW OF THE ABOVE, SINCE THE ISSUE OF NOTIC E ITSELF IS BAD IN LAW, THEREFORE, IT VITIATE THE ENTIRE PENALTY PROCEEDING S AND AS SUCH, THE PENALTY PROCEEDINGS ARE LIABLE TO BE QUASHED. IN VI EW OF THE ABOVE DISCUSSION, WE SET ASIDE THE ORDERS OF THE AUTHORIT IES BELOW AND QUASH THE PENALTY PROCEEDINGS AND DELETE THE PENALTIES IN ALL THE APPEALS. IN VIEW OF THE ABOVE, THERE IS NO NEED TO DECIDE THE REMAINING ISSUES INVOLVED IN THE APPEALS. ALL THE APPEALS OF THE ASSESSEE ARE ALLOWE D. THUS, IN PARTY WITH THE AFORESAID ORDER AND SINCE T HE COORDINATE BENCH HAS DECIDED THE MATTER IN FAVOUR OF THE ASSES SEE IN THE IDENTICAL FACTS AND CIRCUMSTANCES, WE DIRECT THE AS SESSING OFFICER TO DELETE THE PENALTY AGAINST THE ASSESSEE. IN THE RES ULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7 ITA NOS. 5124 TO 5126/DEL/2017: (A.YRS. 2009-10 TO 2011-12): 9. AS ALREADY NOTED, SIMILAR GROUNDS HAVE BEEN RAIS ED BY THE ASSESSEE IN ALL THESE CONNECTED MATTERS, AS WERE RA ISED IN ITA NO. 5123/DEL/2017, WHICH HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE PARAGRAPH NO. 8 OF THIS ORDER. FOR DETAILED DI SCUSSION, PLEASE REFER ABOVE MENTIONED PARAGRAPH NO. 8 OF THIS ORDER . ACCORDINGLY, WE HOLD THAT THE FINDING GIVEN IN ABOVE PARAGRAPH WITH RESPECT TO ITA NO. 5123/DEL/2017 WILL MUTATIS MUTANDIS APPLY HERE IN THESE CASES ALSO. 10. IN THE RESULT, ALL THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND SEPTEMBER, 2021. SD/- SD/- (R.K. PANDA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 ND SEPT., 2021 AKS