Suresh Dutt Sharma, Panipat V. ITO, Panipat

ITA 5201/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58512 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2003-2004
• Appeal Filed On: 23-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SRUJANI MOHANTY
• Assessee Lawyers: RANO JAIN CAS
• Keywords: Income from undisclosed sources; Bonafide belief
• Section: 144

Judgement Text

ITA NO. 5201/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 5201/DEL/2011 A.Y. : 2003-04 SURESH DUTT SHARMA, 458, MODEL TOWN, PANIPAT (PAN: AQLPS0792G) VS. ITO, WARD - 3, PANIPAT (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. VED JAIN AND RANO JAIN, CAS DEPARTMENT BY : MRS. SRUJANI MOHANTY, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 14.9.2 011 PERTAINING TO ASSESSMENT YEAR 2003-04. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOM E TAX (APPEALS) ERRED IN CONFIRMING THE PENALTY OF ` 1,32, 930/- U/S. 271(1)(C) OF THE IT ACT. 3. IN THIS CASE ASSESSING OFFICER HAD COMPLETED TH E ASSESSMENT U/S 144 OF THE IT ACT. ASSESSING OFFICER ASSESSED THE TOTAL INCOME OF THE ASSESSEE OF ` 14,65,472/- BY APPLYING THE RATE OF 20% FOR INCOME ON GROSS RECEIPTS OF THE ASSESSEE FROM BOTH THE PROPRIE TARY CONCERNS AND BY HOLDING THE AGRICULTURAL INCOME OF ` 1,05,000/- AS INCOME FROM UNDISCLOSED SOURCES. ITA NO. 5201/DEL/2011 2 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO COMPU TE THE INCOME OF THE 10% OF THE GROSS RECEIPTS FROM BOTH THE CONCERNS . LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE A CTION OF THE ASSESSING OFFICER ASSESSING THE AGRICULTURAL INCOM E OF ` 1,05,000/- AS INCOME FROM UNDISCLOSED SOURCES. 5. IN PENALTY PROCEEDINGS, THE ASSESSING OFFICER H ELD THAT ASSESSEE HAD DELIBERATELY CONCEALED THE PARTICULARS OF HIS I NCOME TO THE EXTENT OF ` 4,58,749/- AND THUS, LIABLE FOR IMPOSING PENALT Y U/S 271(1)(C). ACCORDINGLY, ASSESSING OFFICER PROCEEDED TO IMPOSE THE PENALTY OF 1,32,930/-. 6. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE SUBMITTED THAT NO PENALTY CAN BE MADE IN THIS CASE AS THE ADDITION IS ON ESTIMATE BASIS. HOWEVER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT FIND THIS CONTENTION ACCEPTABLE. HE CONFIRMED THE LEVY OF PENALTY. 7. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT SECTION 271(1(C) OF THE ACT POSTULATES IMPOSITION OF PENALTY FOR FURNIS HING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. 8.1 IN THIS CASE ASSESSING OFFICER HAS ESTIMATED TH E PROFIT BY APPLYING PROFIT RATE @20% WHICH WAS REDUCED TO 10% BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THUS THE ADDIT ION MADE IS PURELY ON ESTIMATE BASIS. IN OUR CONSIDERED OPINIO N ON THE FACTS OF THE CASE ASSESSEE CONDUCT CANNOT BE SAID TO BE CONT UMACIOUS SO AS TO ITA NO. 5201/DEL/2011 3 ATTRACT LEVY OF PENALTY U/S. 271(1)(C). HENCE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETED THE LEVY OF PENAL TY. 8.2 IN THIS REGARD WE PLACE RELIANCE FROM THE APEX COU RT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSH IPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGA TION IS THE RESULT OF A QUASI- CRIMINAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARI LY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LA W OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDIC IALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENA LTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE P ROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OF FENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 8.3 WE WOULD ALSO LIKE TO REFER TO THE HONBLE AP EX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010. IN THIS CASE VIDE ORDER DATED 17.3.2010 IT HAS BEEN HELD T HAT THE LAW LAID DOWN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANI NG OF WORD CONCEALMENT AND INACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WH AT WAS OVERRULED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILI P SHEROFF CASE WHERE IT WAS HELD THAT MENSREA WAS A ESSENTIAL REQUIREMENT OF PE NALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO OBSERVED THAT IF THE CONTEN TION OF THE REVENUE IS ITA NO. 5201/DEL/2011 4 ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CL AIM IS NOT ACCEPTED BY THE AO FOR ANY REASON, THE ASSESSEE WILL INVITE THE PENAL TY U/S 271(1)(C). THIS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 8.4 IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENTS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELET E THE LEVY OF PENALTY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/1/2012. SD/- SD/- [ [[ [RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 25/1/2012 SRB COPY COPY COPY COPY FORWARDED TO: FORWARDED TO: FORWARDED TO: FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES