Sh. Dheeraj Gupta, New Delhi V. DCIT, New Delhi

ITA 5234/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6618 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 23-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure
• Section: 54F; 132

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC-3: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 5234/DEL/2014 A.Y. : 2009-10 SH. DHEERAJ GUPTA, VS. DCIT C/O RAJ KUMAR & ASSOCIATES, CENTRAL CIRCLE-1, CHARTERED ACCOUNTANTS NEW DELHI 4435/7, ANSARI ROAD, DARYA GANJ, NEW DELHI 2 (PAN : AAGPG8850N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJ KUMAR GUPTA, CA DEPARTMENT BY : SH. ANIL KUMAR SHARMA, SR. DR DATE OF HEARING : 23-11-2016 DATE OF ORDER : 25-11-2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-III, NEW DELHI DAT ED 11.9.2014 PERTAINING TO ASSESSMENT YEAR 2009-10. 2. THE GROUND OF APPEAL READ AS UNDER:- THAT UNDER THE FACTS AND CIRCUMSTANCES, LEVY OF PEN ALTY OF RS. 4,32,389/- U/S. 271(1) OF THE ACT IS ABSOLUTELY UN SUSTAINABLE IN LAW AS WELL AS ON MERITS. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 31.3.2010 AT A TOTAL I NCOME OF RS. 2,16,500/- AND THE SAME WAS PROCESSED U/S. 143(1) OF THE I.T. AC T, 1961. A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT WAS CARRIED OUT ON 21.9 .2010 IN THE SHILPI GROUP OF COMPANIES AND IN THE CASE OF THE ASSESSEE ALSO. THE REFORE, A NOTICE U/S. 153(A) OF THE ACT, DATED 11.10.2011 WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED RETURN OF INCOME ON 2.11.2011 DECL ARING A NET TAXABLE INCOME OF RS. 2,16,500/-. ON PERUSAL OF THE RETURN OF INCOME, AO OBSERVED THAT THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAIN OF RS. 19,18,379/- O N SALE OF PROPERTY. THE ASSESSEE, THEREFORE, CLAIMED DEDUCTION U/S. 54F OF THE ACT AMOUNTING TO RS. 19,18,379/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH NECESSARY DETAILS / DOCUMENTS REGARDING THE SAID IN VESTMENT. THE ASSESSEE DID NOT SUBMIT ANY DETAILS / DOCUMENTS, HOWEVER, HE FILED R EVISED RETURN OF INCOME ON 18.3.2013 SHOWING TOTAL INCOME OF RS. 21,34,877/- WH EREIN HE OFFERED LONG TERM CAPITAL GAINS OF RS. 19,18,379/- WHICH WAS EARLIER C LAIMED AS DEDUCTION U/S. 54F OF THE ACT. IN VIEW OF THE FACTS OF THE CASE, PENAL TY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE ALSO INITIATED FOR CONCEALMENT / FURNISHIN G INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153A/143(3) OF THE ACT ON 25.3.2013. ACCORDINGLY, NOTICE U/S. 274 OF THE ACT R .W.S. 271(1)(C) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 25.3.2013 AND THEREAFTER, ON 26.8.2013 REQUIRING HIM TO EXPLAIN AS TO WHY PENALTY U/S. 271(1) SHOULD NOT BE IMPOSED ON HIM. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE REPLIED VIDE HIS L ETTER DATED 3.9.2013. AFTER EXAMINING THE REPLY OF THE ASSESSEE, THE AO HELD TH AT ASSESSEES SUBMISSION DOES NOT HOLD WATER AND THE SAME IS DEVOID OF ANY MERIT. THUS, THE ASSESEES REPLY IS NOT AT ALL TENABLE AND WAS NOT ACCEPTED AND THE SAME WA S REJECTED BY THE AO BY 3 OBSERVING THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S. 271(1) OF THE ACT AND IMPOSED THE PENALTY OF RS. 4,32,389/- U/S. 271(1) OF THE AC T VIDE HIS ORDER DATED 30.9.2013. 4. AGAINST THE PENALTY ORDER THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 11.9.2014 HAS SUSTAINED THE PENALTY AND DISMISSED THE APPEAL OF THE ASSESSEE. 5. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASS ESSEE HAS STATED THAT THE PENALTY PROCEEDINGS OUGHT TO FAIL, BECAUSE IN THE A SSESSMENT ORDER, PENALTY HAS BEEN INITIATED AS PENALTY PROCEEDINGS U/S. 271(1) ARE INITIATED SEPARATELY. IT WAS FURTHER STATED BY HIM THAT IT NOWHERE MENTIONS THAT IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME. IT WAS FURTHER STATED THAT PENALTY NOTICE DATED 25.3.2013 (SENT ALONGWITH THE ASSESSMENT ORDER) MENTIONS BOTH THE ALLEGED CHARGES WITHOUT CLEARLY SPECIFYIN G AS TO WHETHER IT IS FOR CONCEALMENT OR FOR INACCURATE PARTICULARS. HE FURTH ER STATED THAT THE NEXT PENALTY NOTICE DATED 26.8.2013 IS ALSO ON THE SIMILAR LINE S AS PER NOTICE DATED 25.3.2013. THEREFORE, HE STATED THAT THE NOTICE FOR PENALTY W AS AMBIGUOUS AND VAGUE IN AS MUCH AS IT IS STATED BOTH CONCEALMENT OF PARTICU LARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. HE STATED THAT THAT BOTH TH E CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, THE EVENTUAL PENALTY ORDER IS FOR CONCEALMENT OF PARTICULARS OF INCOME WHERE THE PENA LTY PROCEEDINGS WERE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS, IF FINALL Y CULMINATED INTO AN ORDER FOR CONCEALMENT OF PARTICULARS OF INCOME. IN OTHER WORD S, NO PROPER OR REASONABLE OPPORTUNITY WAS GIVEN BY THE AO TO MEET THE CHARGE. THE CHARGE ITSELF WAS STATED TO BE NEBULOUSLY. HE FURTHER STATED THAT IT IS A S ETTLED LAW THAT WHERE THE SHOW 4 CAUSE NOTICE OF PENALTY IS VAGUE OR AMBIGUOUS, NO P ENALTY IS SUSTAINABLE. THE PENALTY NOTICE CONTAINS BOTH INGREDIENTS OF PENALTY WITHOUT SATISFYING THE PARTICULAR CONTRAVENTION FOR WHICH THE PROCEEDINGS HAVE BEEN I NITIATED. IN SUCH CIRCUMSTANCES, THE PENALTY AS LEVIED BY THE AO IN TERMS OF HIS ORD ER DATED 30.9.2013 IN AB INITIO INVALID, ILLEGAL AND MUST BE QUASHED. FINALLY, HE S TATED THAT PENALTY IN DISPUTE HAS BEEN LEVIED BY THE AO AND WRONGLY CONFIRMED BY THE LD. CIT(A). HE REQUESTED THAT ON LEGAL ISSUE THE PENALTY MAY BE DELETED. IN SUPPOR T OF HIS CONTENTION HE RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT VS. WHITEFORD INDIA LTD. {2013} 38 TAXMANN.COM 15 (GUJA RAT). 6. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER O F THE LD. CIT(A) AND STATED THAT THE QUANTUM IN DISPUTE HAS BEEN UPHELD BY THE REVENUE AUTHORITY AND THE PENALTY IN DISPUTE HAS RIGHTLY BEEN LEVIED BY THE AO, BECAUSE THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION ON THE ISSUE IN DISPUTE BEFORE THE REVENUE AUTHORITIES AND EVEN BEFORE THIS BENCH. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE OR DERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH RELEVANT RECORDS AVAILABLE WI TH US. I HAVE PERUSED THE NOTICE DATED 25.3.2013 AND 26.8.2013 ISSUED BY THE DY. CO MMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, NEW DELHI FOR THE ASSTT. YEAR IN DISPUTE FOR INITIATING THE PENALTY AND DIRECTING THE ASSESSEE TO APPEAR BEFORE HIM AT 11.30 AM ON 22.4.2013 AND FURTHER ON 11.00 AM ON 3.9.2013 RESPECTIVELY AND IS SUED A SHOW CAUSE NOTICES TO THE ASSESSEE STATING THEREIN THAT WHY AN ORDER IMPO SING THE PENALTY OF AMOUNT SHOULD NOT BE MADE U/S. 271(1)(C) OF THE I.T. ACT, 1961. AFTER PERUSING THE NOTICES DATED 25.3.2013 AND 26.8.2013 ISSUED BY THE AO TO T HE ASSESSEE, I AM OF THE VIEW THAT THE AO VIDE HIS PENALTY ORDER DATED 30.9. 2013 VIDE PARA NO. 9 HAS 5 STATED THAT THE ASSESSEE HAS CONCEALED / FURNISHED INACCURATE PARTICULARS OF THIS INCOME TO THE EXTENT OF RS. 19,18,379/- AND IMPOSE D MINIMUM PENALTY @100% WAS IMPOSED. I FIND THAT IN THE PENALTY ORDER IT NO WHERE MENTIONS THAT IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME. I FURTHER NOTE THAT PENALTY NOTICE DATED 25.3.2013 MENTIONS BOTH THE ALLEGED CHARGES WITHOUT CLEARLY SPECIFYING AS TO WHETHER IT IS FO R CONCEALMENT OR FOR INACCURATE PARTICULARS. I NOTE THAT IN THE NEXT PENALTY NOTICE DATED 26.8.2013 IS ALSO ON THE SIMILAR LINES AS PER NOTICE DATED 25.3.2013. THEREFOR E, THE NOTICE FOR PENALTY WAS AMBIGUOUS AND VAGUE IN AS MUCH AS IT IS STATED BO TH CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. I FU RTHER FIND THAT BOTH THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, THE EVENTUAL PENALTY ORDER IS FOR CONCEALMENT OF PARTI CULARS OF INCOME WHERE THE PENALTY PROCEEDINGS WERE INITIATED FOR FURNISHING O F INACCURATE PARTICULARS, IF FINALLY CULMINATED INTO AN ORDER FOR CONCEALMENT OF PARTIC ULARS OF INCOME. IN OTHER WORDS, NO PROPER OR REASONABLE OPPORTUNITY WAS GIVEN BY TH E AO TO MEET THE CHARGE. THE CHARGE ITSELF WAS STATED TO BE NEBULOUSLY. I FIND T HAT THE HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF CIT VS. WHITEFORD INDIA LTD . (2013) 38 TAXMANN.COM 15 (GUJARAT) HAS HELD THAT WHERE THE SHOW CAUSE NOTIC E OF PENALTY IS VAGUE OR AMBIGUOUS, NO PENALTY IS SUSTAINABLE. THE PENALTY N OTICE CONTAINS BOTH INGREDIENTS OF PENALTY WITHOUT SATISFYING THE PARTICULAR CONTR AVENTION FOR WHICH THE PROCEEDINGS HAVE BEEN INITIATED. IN SUCH CIRCUMSTANCES, THE PEN ALTY AS LEVIED BY THE AO IN TERMS OF HIS ORDER DATED 30.9.2013 IN AB INITIO INVALID, ILLEGAL AND MUST BE QUASHED. THE PENALTY IN DISPUTE HAS BEEN LEVIED BY THE AO AND W RONGLY CONFIRMED BY THE LD. CIT(A) IS IN CONTRAVENTION OF THE PROVISION OF LAW A S WELL AS THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. WHI TEFORD INDIA LTD.(SUPRA), IN AS 6 MUCH AS, WITHOUT SPECIFYING THE EXACT CHARGED ON TH E ASSESSEE, THE PENALTY HAS BEEN LEVIED ON A PREMISE WHICH THE ASSESSEE WAS NEV ER TOLD AND OR ALLOWED TO MEET. HENCE, THE PENALTY IN DISPUTE IS NOT SUSTAINA BLE IN THE EYES OF LAW. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS A ND RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. WHITEFORD INDIA LTD. {2013} 38 TAXMANN.COM 15 (GUJARAT) (SUPRA), I DELETE THE PENALTY IN DISPUTE AND DECIDED THE ISSUE IN DISPUTE IN FAVOR OF THE AS SESSEE AND AGAINST THE REVENUE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/11/2016. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 25/11/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES