DCIT, New Delhi V. Smt. Kusum Gupta, New Delhi

ITA 5131/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81741 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-09-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 09-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Keywords: Unexplained investment; Gift
• Section: 143(3); 153A; 14A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI A.T. VARKEY : JUDICIAL MEMBER ITA NO S . 5131, 5132 & 5133 /DEL/2013 ASSTT. YR: 200 3 - 04, 04 - 05 & 2005 - 06 DCIT CEN. CIRCLE - 15, VS. SMT. KUSUM GUPTA, NEW DELHI. 21/40, SHAKTI NAGAR, NEW DELHI - 17. PAN: AEDPG 4771M ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : S MT. SULEKHA VERMA CIT( DR ) ASSESSEE BY : SHRI SALIL AGARWAL ADV. & SHRI SHAILESH GUPTA CA DATE OF HEARING : 2 5 - 09 - 2014 DATE OF ORDER : 29 - 09 - 2014. O R D E R PER BENCH : - THESE APPEALS, PREFERRED BY THE REVENUE, ARE DIRECTED AGAINST SEPARATE ORDERS DATED 6 - 6 - 2013 PASSED BY THE LD. CIT(A) - IV , NEW DELHI, DELETING PENALTIES LEVIED BY THE AO U/S 271(1)(C) OF THE I.T. ACT, 1961, RELATING TO A.YRS. 200 3 - 0 4 , 200 4 - 0 5 & 200 5 - 0 6 . 2. BRIEF FACTS OF THE CASE ARE THAT SEARCH & SEIZURE OPERAT I ON U/S 132 WAS CARRIED OUT ON 7 - 2 - 2007 AT THE RESIDENTIAL/ BUSINESS PREMISES OF THE ASSESSEE. IN RESPONSE TO NOTICE U/S 153A, THE ASSESSEE FILED HER RETURNS OF INCOME, WHICH WERE ASSESSED AS UNDER: 2 ITA 5131, 5132 & 5132/D/13 ASSESSMENT YEAR INCOME AS RETURNED BY ASSESSEE INCOME AS ASSESSED BY AO 2003 - 04 3,73,830/ - 13,73,830/ - 2004 - 05 4,49,910/ - 80,49,910/ - 2005 - 06 4,60,240/ - 3,15,26,100/ - 3. THE AO HAD INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) AND LEVIED PENALTIES AS UNDER: ASSTT. YR . PENALTY LEVIED 2003 - 04 RS. 4,72,500/ - 2004 - 05 RS. 37,62,000/ - 2005 - 06 RS. 5,93,762/ - 4. IN APPEAL, THE LD. CIT(A) DELETED THE PENALTIES FOR THE ASSESSMENT YEARS UNDER CONSIDERATION BY HOLDING AS UNDER: 4.3. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. AR AND PERUSED THE ORDER PASSED BY THE AO. I FIND THAT HON BLE IT A T VIDE PARA 13, 14 AND 15 OF THE ORDER HAVE ALLOWED THE APPEAL OF THE ASSESSEE FOR THE AY 2003 - 04, 2004 - 05, 2 5 - 06 AND 2006 - 07 AND DISMISSED THE APPEAL OF THE REVENUE FOR THE AY 2002 - 03, 2005 - 06 AND 2006 - 07. FOR THE SAKE OF THE CONVENIENCE PARA 13, 14 A ND 15 OF THE ITAT ORDER ARE REPRODUCED AS UNDER: '13. IN THE APPEALS FOR THE A YS 2003 - 04, 2004 - 05, 2005 - 06 AND 2006 - 07 PREFERRED BY THE ASSESSEE, THE ADDITIONS MADE IN THESE A YS IN THE ASSESSMENT FRAMED U/S 153 A HAVE ALSO BEEN QUESTIONED ON THEIR M ERITS. IN THE AY 2003 - 04 ADDITION HAS BEEN MADE U/S ON ACCOUNT OF NON - GENUINENESS OF GIFT RECEIVED AT RS.5,00,000/ - EACH FROM MR. RAHUL JAIN AND SMT. BABITA JAIN BY THE MINOR SON OF THE ASSESSEE. IN A Y 2004 - 05 ADDITION 68 HAS AGAIN BEEN MADE ON ACCOUNT OF NON - GENUINENESS OF THE GIFTS RECEIVED OF RS. 69, 00, 000/ - FROM SHRI GOVERDHAN DASS AND ADDITION AT RS. 7,00,000/ - HAS BEEN MADE ON ACCOUNT OF AD - HOC DISALLOWANCE OF EXPENSES. IN A Y 2005 - 06 ADDITION HAS BEEN MADE AT RS. 17,64,000/ - ON ACCOUNT OF EDUCATIO N EXPENSES OF ASSESSEE'S SON. IN AY 2006 - 07 IN THE APPEAL PREFERRED BY THE REVENUE THE ACTION OF LD. CIT (A) HAS BEEN QUESTIONED IN DIRECTING THE A O. TO 3 ITA 5131, 5132 & 5132/D/13 TREAT THE INCOME OF SALE OF SHARES AS ONE FROM LONG TERM CAPITAL GAIN; TO TREAT THE CHARGEABILITY OF I NCOME OF RS. 29, 09, 500/ - AT LOWER TAX RATE AND IN DELETING THE ADDITION RS. 3.39 CRORES MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE PROPERTY. IN THE APPEAL PREFERRED BY THE ASSESSEE FOR THIS YEAR THE ACTION OF THE LD. CIT(A) HAS BEEN QUESTIONED WHER EBY THE LD. CIT(A) HAS MADE DISALLOWANCE OF RS. 1,00,000/ - U/S 14A OF THE ACT AND HAS SUSTAINED ADDITION OF RS. 17,64,000/ - MADE ON ACCOUNT OF ESTIMATE BASIS FOR EDUCATION EXPENSES OF ASSESSEE'S SON. THE REVENUE IS ALSO IN APPEAL FOR THE AY 2005 - 06 WHEREIN THEY HAVE QUESTIONED THE ACTION OF LD. CIT(A) WHEREBY HE HAS ALLOWED EXEMPTION U/S10(38) AMOUNTING TO RS. 2,92,22,804/ - . WE HOWEVER, FIND THAT FATE OF THESE APPEALS ON THE ADDITIONS ON ITS MERITS DEPENDS UPON THE OUTCOME OF THE ADJUDICATION OF THE LEGAL I SSUE RAISED QUESTIONING THE VALIDITY OF ADDITION/DISALLOWANCE MADE BY THE A O. IN THE ASSESSMENT FRAMED U/S 153A OF THE ACT IN ABSENCE OF ANY INCRIMINATING MATERIAL RECOVERED OR STATEMENT RECORDED DURING THE COURSE OF SEARCH, WHERE ORIGINAL ASSESSMENTS WER E NOT ABATED. 14. SIMILAR ARGUMENT AS MADE IN AY 2002 - 03 HAS BEEN ADVANCED BY THE PARTIES ON THE VALIDITY OF ADDITION MADE IN THE ASSESSMENT U/S 153A IN THESE YEARS. THE LD. AR ASSERTED THAT IN THESE YEARS ALSO THERE WAS NO INCRIMINATING MATERIAL RECOVE RED OR STATEMENTS RECORDED DURING THE SEARCH SUGGESTING THE NON - GENUINENESS OF THE GIFTS OR EXPENSES CLAIMED WHICH WAS NOT REMAINED THE SUBJECT MATTER OF THE ADDITION MADE IN THE ORIGINAL ASSESSMENT WHICH WERE NOT ABATED. HE POINTED OUT THAT EXCEPT A Y 200 4 - 05 IN ALL THE A YS ORIGINAL ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT, WHEREAS IN THE A Y 2004 - 05 RETURN FILED WAS PROCESSED U/S 143(1) AND NO NOTICE U/S 143(2) WAS ISSUED WITHIN THE PRESCRIBED TIME LIMIT HENCE IT REACHED FINALITY. 15. SINCE THERE IS NO CHANGE ON THIS MATERIAL FACT THAT DURING ALL THESE ASSESSMENT YEARS NO INCRIMINATING MATERIAL WAS RECOVERED OR STATEMENT WAS RECORDED DURING THE COURSE OF SEARCH SUGGESTING NON - GENUINENESS OF THE CLAIMED GIFTS OR EXPENSES ETC. AND NO SUCH ADDITION/DISA LLOWANCE WAS MADE IN THE ORIGINAL ASSESSMENT WHICH REMAINED UNABATED, WE FOLLOWING THE DECISION ON THE ISSUE HEREINABOVE IN THE APPEAL PREFERRED BY THE REVENUE FOR A Y 2002 - 03, HOLD THAT SUCH ADDITION/DISALLOWANCE CANNOT BE MADE IN THE ASSESSMENT FRAMED U/ S 153A OF THE ACT IN THESE A YS. IN APPEALS. IN RESULT THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN VIEW OF THIS FINDING THE REMAINING GROUNDS QUESTIONING THE MERITS OF ADDITIONS/DISALLOWANCES DO NOT NEED ADJUDICATION AS THEY HAVE BECOME INFRUCTUOUS AND ACADEMIC ONLY. CONSEQUENTLY APPEALS PREFERRED BY THE ASSESSEE FOR THE A YS. 2003 - 04, 2004 - 05, 2005 - 06 AND 2006 - 07 ARE ALLOWED AND APPEALS PREFERRED BY THE REVENUE IN THE A.YS. 2002 - 03, 2005 - 06, 2006 - 07 ARE DISMISSED. ' SINCE, T HE HON BLE ITAT HAS HELD THAT NO ADDITION/ DISALLOWANCE CAN BE MADE IN THE ASSESSMENT YEAR UNDER CONSIDERATION U/S 153A OF THE ACT, THE ADDITION MADE BY THE AO STANDS DELETED. SINCE THE QUANTUM ADDITION ITSELF DOES NOT SURVIVE, THE PENALTY ORDER PASSED BY THE AO HAS NO LEGS TO SAND. RESPECTFULLY 4 ITA 5131, 5132 & 5132/D/13 FOLLOWING THE ORDER OF THE HON BLE TRIBUNAL THE PENALTY ORDER PASSED BY THE AO IS HEREBY CANCELLED. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE THE QUANTUM ADDITIONS FOR THE ASSESSMENT YEARS IN QUESTION HAVE BEEN DELETED BY THE IT A T, THE VERY BASIS FOR LEVY OF PENALTY U/S 271(1)(C) HAS GONE. THUS, WE SEE NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A), DELETING THE PENALTIES IN QUESTION. 6. IN THE RESULT, REVENUE S APPE ALS ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29 - 09 - 2014. SD/ - SD/ - ( A.T. VARKEY ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29 - 09 - 2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 5 ITA 5131, 5132 & 5132/D/13