Anisha Khanna, Meerut V. ITO, Ward- 1(1), Meerut

ITA 514/DEL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4757 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 22-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR JIWANI
• Keywords: Income from undisclosed sources; Wrong claim; Sham transactions
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: C/SMC, NEW DELHI) BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO:- 514/DEL/2018 ( ASSESSMENT YEAR: 2014-15) MS. ANISHA KHANNA, 65-A, SAKET, MEERUT. PAN NO.-BFXPK9302N VS. ITO, WARD 1(1), MEERUT. APPELLANT RESPONDENT ITA NO:- 513/DEL/2018 ( ASSESSMENT YEAR: 2014-15) SMT. ANURADHA KHANNA, 65-A, SAKET, MEERUT. PAN NO.-AEZPK2688E VS. ITO, WARD 1(1), MEERUT. APPELLANT RESPONDENT ASSESSEE BY : SH. RAJKUMAR, CA SH. P.S. KASHYEP, CA SH. SUMIT GOEL, CA REVENUE BY : SH. VIJAY KUMAR JIWANI, SR. DR DATE OF HEARING : 07.08.2018. DATE OF PRONOUNCEMENT : 10/08/2018. 2 ITA NO.- 513 & 514/DEL/2018 SMT. ANURADHA KHANNA & MS. ANISHA KHANNA. ORDER PER: BHAVNESH SAINI, JM BOTH APPEALS BY DIFFERENT ASSESSEES ARE DIRECTED AG AINST THE DIFFERENT ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS), MEERUT, D ATED 20.11.2017 FOR ASSESSMENT YEAR 2014-15, CHALLENGING THE LEVY OF PENALTY U/S 2 71(1)(C) OF THE INCOME TAX ACT, 1961. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. REPRESENTATI VES OF BOTH THE PARTIES MAINLY ARGUED IN THE CASE OF ASSESSEE, MISS ANISHA KHANNA AND SUB MITTED THAT ORDER IN THIS CASE MAY BE FOLLOWED IN THE CASE OF OTHER ASSESSEE NAMELY SM T. ANURADHA KHANNA. THEREFORE, FOR THE PURPOSES OF DISPOSAL OF BOTH THE APPEALS, W E DECIDE THE APPEAL OF THE ASSESSEE, MISS ANISHA KHANNA AS UNDER:- ITA NO. 514/DEL/2018 (MISS ANISHA KHANNA) 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE HAS E-FILED HER RETURN OF INCOME DECLARING INCOME OF RS. 8,20,050/- AND EXEMP T INCOME OF RS. 41,84,861/-. THE CASE WAS SELECTED FOR SCRUTINY IN ORDER TO EXAMINE SUSPICIOUS LONG TERM CAPITAL GAIN ON SHARES. THE AO NOTED THAT THERE IS INFORMATION FR OM DIRECTORATE OF INVESTIGATION, KOLKATA THAT RACKET IS ORGANIZED FOR BOGUS ENTRIES OF LONG TERM CAPITAL GAINS WHICH IS 3 ITA NO.- 513 & 514/DEL/2018 SMT. ANURADHA KHANNA & MS. ANISHA KHANNA. CLAIMED EXEMPT FROM TAX. THE AO AFTER DETAILED INVE STIGATION CONCLUDED THAT THE TRANSACTIONS CONDUCTED BY ASSESSEE WERE SHAM TRANSA CTIONS AND AIMED ONLY TO BRING UNACCOUNTED MONEY IN THE GUISE OF EXEMPTED LONG TER M CAPITAL GAINS. HE THEREFORE DISALLOWED THE CLAIM OF THE ASSESSEE BECAUSE ASSESS EE SURRENDERED THE AMOUNT IN QUESTION. THE AO MADE ADDITION OF RS. 37,77,465/- U/S 68 OF THE ACT. THE AO NOTED THAT THE ASSESSEE HAS DELIBERATELY AND WILLFULLY CO NCEALED ITS UNACCOUNTED INCOME AND INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE AO VIDE SEPARATE ORDERS LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT, ON ACC OUNT OF ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HER INCOME IN ITR BY MAKI NG BOGUS CLAIM OF LONG TERM CAPITAL GAINS EXEMPTED U/S 10(38) OF THE ACT. THE LD. CIT( A) VIDE IMPUGNED ORDER CONFIRMED THE LEVY OF THE PENALTY. 4. LD. COUNSEL FOR THE ASSESSEE REFERRED TO PB 31 WHICH IS SHOW-CAUSE NOTICE U/S 271(1)(C) OF THE ACT DATED 29.12.2016 AND SUBMITTED THAT THE PENALTY NOTICE DO NOT MENTION SPECIFIC CHARGE, WHETHER IT WAS FOR CONCEAL MENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. SUCH VAGUE SHOW-C AUSE NOTICE IS NOT VALID IN LAW FOR LEVY OF PENALTY. IN NOTICE THE AO HAS MENTIONED THA T HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME . HE HAS SUBMITTED THAT ON THE IDENTICAL ISSUE IN THE CASE OF OTHER FAMILY MEMBER OF THE ASSESSEE SH. VINAY RAJ KHANNA, LD. COMMISSIONER OF INCOME TAX (APPEALS), M EERUT VIDE ORDER DATED 30.01.2018 FOR ASSESSMENT YEAR 2014-15 CANCELLED TH E PENALTY. THE COPY OF THE ORDER 4 ITA NO.- 513 & 514/DEL/2018 SMT. ANURADHA KHANNA & MS. ANISHA KHANNA. IS PLACED ON RECORD. THE LD. COUNSEL FOR THE ASSESS EE RELIED UPON THE FOLLOWING DECISIONS: 1. CIT VS. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR.) 2. CIT VS. SSAS EMERALD MEADOWS 242 TAXMAN 180 (SC) 3. MUNINAGA REDDY V. ASST. CIT 396 ITR 398 (KARN) THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO IN THE ASSESSMENT ORDER INITIATED THE PENALTY PROCEEDINGS FOR CONCEALMENT O F INCOME, HOWEVER PENALTY HAVE BEEN IMPOSED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, NO PENALTY IS LEVIABLE ON THE ASSESSEE. 5. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE AGREED FOR THE ADDITION BEFORE AO BECAUSE IT WAS A SHAM TRANSACTIONS AND AS SUCH PENALTY WAS RIGHTLY IMPOSE D AGAINST THE ASSESSEE. THE LD. DR RELIED UPON THE FOLLOWING DECISION:- 1. UNION OF INDIA V. DHARAMENDRA TEXTILE PROCESSORS [ (2007) 295 ITR 244] 2. R L TRADERS VS. ITO (2017-TIOL-2583-HC-DEL-IT) 3. CIT VS. ZOOM COMMUNICATION (P.) LTD. [191 TAXMAN 17 9 (DELHI)/[2010] 327 ITR 510 (DELHI)/[2010] 233 CTR 465] 4. MAK DATA P. LTD VS. CIT [38 TAXMANN.COM 448(SC)/[20 13] 358 ITR 593 (SC)/[2013] 263 CTR 1] 5 ITA NO.- 513 & 514/DEL/2018 SMT. ANURADHA KHANNA & MS. ANISHA KHANNA. 5. K.P. MADHUSUDHANAN VS CIT [[2001] 118 TAXMAN 324 (S C)/[2001] 251 ITR 99 (SC)/[2001] 169 CTR 489 (SC)] 6. SUNDARAM FINANCE LTD V. CIT 403 ITR 407 (MAD), ON THE PROPOSITION THAT ASSESSEE HAD UNDERSTOOD PURPORT AND IMPORT OF NOTIC E HENCE NO PREJUDICE WAS CAUSED TO ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO IN THE ASSESSMENT ORDER, AFTER CONF IRMING THE ADDITION U/S 68 OF THE IT ACT FOR SUM OF RS. 37,77,465/- NOTED AS ASSESSEE HA D DELIBERATELY AND WILLFULLY CONCEALED ITS UNACCOUNTED INCOME AND PENALTY PROCEE DINGS U/S 271(1)(C) IS ALSO INITIATED. HOWEVER, THE AO IN THE PENALTY ORDER HAS LEVIED THE PENALTY BECAUSE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HE R INCOME IN ITR BY MAKING BOGUS CLAIM OF LONG TERM CAPITAL GAINS EXEMPTED U/S 10(38 ) OF THE IT ACT. THE AO, BEFORE LEVY OF THE PENALTY U/S 271(1)(C) OF THE ACT ISSUED SHOW-CAUSE NOTICE DATED 29.12.2016 IN WHICH THE AO HAS MENTIONED HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 6.1 CONSIDERING THE ABOVE FACTS, IT IS APPARENT THA T SHOW-CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 274 READ WITH SECTION 271(1)( C) OF THE IT ACT IS BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMBS OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF PART ICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE KARN ATAKA HIGH COURT IN THE CASE OF CIT 6 ITA NO.- 513 & 514/DEL/2018 SMT. ANURADHA KHANNA & MS. ANISHA KHANNA. VS. SSAS EMERALD MEADOWS 73 TAXMANN.COM 241 FOLLOWING ITS EARLIER DECISION IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 , DISMISSED THE DEPARTMENTAL APPEAL IN WHICH THE TRIB UNAL ALLOWED THE APPEAL OF THE ASSESSEE ON THE ABOVE IDENTICAL REASONS. THE JUDGM ENT OF THE HONBLE KARNATAKA HIGH COURT HAS BEEN CONFIRMED BY THE HONBLE SUPREME COU RT BY DISMISSING THE SLP OF THE DEPARTMENT REPORTED IN 73 TAXMANN.COM 248. 6.2 IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR TH AT THE SHOW-CAUSE NOTICE ISSUED BEFORE LEVY OF THE PENALTY IS BAD IN LAW AND AS SUC H THE ENTIRE PENALTY PROCEEDINGS ARE VITIATED AND ARE LIABLE TO BE SET ASIDE. THE DECIS IONS RELIED UPON BY THE LD. DR WOULD NOT SUPPORT THE CASE OF THE REVENUE BECAUSE OF THE REASONS NOTED ABOVE. LD. DR RELIED UPON THE DECISION OF HONBLE MADRAS HIGH COURT IN T HE CASE OF SUNDARAM FINANCE LTD . (SUPRA). HOWEVER, IT IS WELL SETTLED LAW THAT WH EN TWO VIEWS ARE POSSIBLE, THE VIEW FAVOURABLE TO ASSESSEE MAY BE FOLLOWED. IN VIEW O F THIS MATTER, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENA LTY U/S 271(1)(C) OF THE IT ACT. THERE IS NO NEED TO CONSIDER THE ISSUE ON MERIT AT THIS STAGE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ITA NO. 513/DEL/2018 (ANURADHA KHANNA) 8. THE ISSUE IS SAME IN THIS APPEAL AS HAS BEEN CON SIDERED AND DECIDED IN THE CASE OF MS. ANISHA KHANNA (SUPRA), FOLLOWING THE REASONS FOR DECISION IN THE CASE OF MS. ANISHA KHANNA (SUPRA), WE SET ASIDE THE ORDER OF TH E AUTHORITIES BELOW AND CANCEL THE 7 ITA NO.- 513 & 514/DEL/2018 SMT. ANURADHA KHANNA & MS. ANISHA KHANNA. PENALTY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 10. IN THE COMBINED RESULT, BOTH APPEALS OF THE ASS ESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/8/2018 SD/- SD/- (PRASHANT MAHARISHI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10.08.2018 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 8 ITA NO.- 513 & 514/DEL/2018 SMT. ANURADHA KHANNA & MS. ANISHA KHANNA. DATE OF DICTATION 07/8/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 09/8/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 10/8/2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 10/8/2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 10 /8/2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER