Dr. Kaushal Goel, New Delhi V. ACIT, Faridabad

ITA 5249/DEL/2013

• Counselvise Citation: 524920114 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 18-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Search and seizure; Loose papers; Principle of natural justice; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D , NEW DELHI) BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO. 5249/DEL/2013 ASSESSMENT YEAR : 2007-08 DR. KAUSHAL GOEL, VS. ACIT. CC-II, PROP. M/S. KAUSHAL SURGICAL HOSPITAL FARIDABAD & MATERNITY HOME, MODEL TOWN, REWARI GIR / PAN:AHNPG3149A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SOMIL AGARWAL, ADV. MS. POONAM AHUJA, ADV. RESPONDENT BY : MS. RISHPAL BEDI, SR. DR DATE OF HEARING : 18.11.2015 DATE OF PRONOUNCEMENT : 27.11.2015 ORDER PER KULDIP SINGH, JM: THE APPELLANT, DR. KAUSHAL GOEL (ASSESSEE), BY FIL ING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATE D 31.07.2013 PASSED BY LD. CIT(A) (CENTRAL), GURGAON QUA THE ASSESSMENT YE AR 2007-08 CONFIRMING THE PENALTY IMPOSED BY A.O. U/S 271(1)(C) OF THE IN COME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT), ON THE GROUNDS INTER ALIA THAT:- L. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LD. AO IN LEVYING PENALTY U/S 271(L)(C) AND THAT TO O @300% IN RESPECT OF THE INCOME OF RS.4,95,000/-, MORE SO WHEN APPELL ANT WAS ENTITLED TO IMMUNITY UNDER EXPLANATION 5 TO SECTION 271 (1)( C) OR INCOME TAX ACT, 1961. ITA NO.5249/DEL/2013 2 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN LEVYIN G THE PENALTY U/S 271(L)(C) AND THAT TOO @ 300% IS BAD IN LAW AND AGA INST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT( A) HAS ERRED IN LAW AND ON FACTS IN CONFIR MING THE ACTION OF LD. AO IN LEVYING PENALTY U/S 271(L)(C) IN RESPECT OF THE INCOME OF RS.4,95,000/- AND FRAMING THE IMPUGNED ASSESSMENT O RDER U/S 143(3)1153B(L)(B) DATED 19-12-2008 IS ALSO CONTRARY TO LAW AND FACTS. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LD. AO IN LEVYING PENALTY U/S 271 (L)( C) WHICH IS BAD IN LAW BEING BEYOND JURISDICTION AND BARRED BY LIMITATION AND CO NTRARY TO THE PRINCIPLES OF NATURAL JUSTICE AND HAS BEEN PASSED B Y RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT GIVING ADE QUATE OPPORTUNITY TO THE ASSESSEE AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LD. AO IN IMPOSING A PENALTY OF RS.20,79,453/- THAT TOO WITHOUT RECORDING MANDATORY 'SATISFACTION' AS PER LAW. 2. BRIEFLY STATED, THE FACTS OF THIS CASE ARE THAT DURING THE SEARCH AND SEIZURE OPERATION CONDUCTED AT THE RESIDENCE OF THE ASSESSEE, DR. KAUSHAL GOEL, AND KAUSHAL AND SURGICAL HOSPITAL AND MATERNI TY HOME, DOCUMENTS / LOOSE PAPERS DETAILED AS ANNEXURE-12, WERE SEIZED F ROM THE PREMISES. DURING THE ASSESSMENT PROCEEDINGS U/S 153B READ WIT H SECTION143(3) OF THE ACT, ADDITION TO THE TUNE OF RS.4,95,000/- ON ACCOU NT OF DEMAND DRAFT PURCHASED AND RS.15,50,000/- AS UNACCOUNTED CASH FO UND IN LOCKER, WERE MADE. THE ASSESSEE CARRIED THE MATTER BEFORE LD. C IT(A) WHO HAS DISMISSED THE APPEAL, CONFIRMING THE ADDITION AND PROCEEDED T O LEVY OF PENALTY U/S ITA NO.5249/DEL/2013 3 271(1)(C) OF THE ACT ON ACCOUNT OF ISSUE OF ADDITIO N OF RS.4,95,000/- MADE ON ACCOUNT OF PURCHASE OF DEMAND DRAFTS AND RS.15,5 0,000/- ON ACCOUNT OF UNACCOUNTED CASH. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE PREFERRED TO OFFER THE AMOUNT OF RS.4,95,0 00/- FOR TAXATION IN HIS HAND SUBJECT TO NO PENAL INFERENCES WHICH WERE NOT ACCEPTED BY THE A.O. 3. DURING THE COURSE OF SEARCH OF LOCKER NO.152 MAI NTAINED WITH STATE BANK OF INDIA, REWARI IN THE JOINT NAMES OF ASSESSE E AND HIS WIFE, CASH AMOUNT OF RS.15,50,000/- WAS FOUND AND SEIZED. HOW EVER, THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF CASH IN QUESTION FO UND IN THE LOCKER DESPITE AVAILING SEVERAL OPPORTUNITIES, CONSEQUENTLY, A.O. TREATED THE CASH FOUND FORM THE LOCKER AS UNACCOUNTED MONEY AND MADE ADDIT ION OF RS.15,50,000/-. FINDING CONCEALMENT OF INCOME OF RS.20,54,000/- (4, 95,000/- + 15,50,000/-) , PENALTY @ 300% I.E. RS.20,79,453/- HAS BEEN IMPOS ED. 4. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A ) WHO HAS PARTLY ALLOWED THE APPEAL BY DELETING THE PENALTY AMOUNT O N ADDITION OF RS.15,50,000/-. FEELING AGGRIEVED, THE ASSESSEE HA S COME UP BEFORE THE TRIBUNAL BY FILING THE PRESENT APPEAL. 5. WE HAVE HEARD LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES AND HAVE GONE THROUGH THE MATERIAL ON RECORD IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE AND ORDERS OF TAX AUTHORITIES BELOW. 6. LD. A.R. CHALLENGING THE IMPUGNED ORDER, CONTEND ED INTER ALIA THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY ORDE R THAT THE PENALTY IMPOSED IN ASSESSMENT YEAR 2007-08 ON THE BASIS OF DOCUMENTS SEIZED ON 14.06.2004 IS NOT SUSTAINABLE IN THE EYES OF LAW BE ING WITHOUT JURISDICTION; THAT IN THE PENALTY PROCEEDINGS ASSESSEE HAS ALSO C HALLENGED THE ASSESSMENT ITA NO.5249/DEL/2013 4 PROCEEDINGS AND RELIED UPON THE ORDERS PASSED BY IT AT, LUCKNOW A BENCH IN CASE ENTITLED ACIT VS SMT. SURINDER KAUR 1 20 TTJ 618. 7. ON THE OTHER HAND, LD. D.R. REPELLED THE ARGUMEN TS ADVANCED BY THE LD. A.R. FOR THE ASSESSEE AND CONTENDED THAT ONCE T HE ASSESSEE HAS REFLECTED THE SURRENDERED AMOUNT IN HIS RETURN OF INCOME, REV ENUE IS JUSTIFIED IN IMPOSING THE PENALTY WHICH IS CHARGEABLE IN THE GIV EN CIRCUMSTANCES. 8. IT IS SETTLED PRINCIPLE OF LAW THAT PENALTY PROC EEDINGS AS WELL AS ASSESSMENT PROCEEDINGS ARE TO BE DECIDED INDEPENDEN TLY AND THE PENALTY PROCEEDINGS ARE NOT TO BE INFLUENCED BY THE ASSESSM ENT PROCEEDINGS IN ANY MANNER WHATSOEVER. UNDISPUTEDLY, ON THE BASIS OF S EARCH AND SEIZURE OPERATION ON 24.08.2006 AT THE HOSPITAL CUM RESIDEN CE OF THE ASSESSEE, DOCUMENTS/ BANK SLIPS DATED 14.06.2004 SHOWING PURC HASE OF DEMAND DRAFTS TO THE TUNE OF RS.4,95,000/- AND UNACCOUNTED CASH O F RS.15,50,000/- WERE SEIZED FROM THE LOCKER MAINTAINED WITH SBI, REWARI IN THE JOINT NAME OF THE ASSESSEE AND HIS WIFE, THE SEIZED AND UNACCOUNTED I NCOME OFRS.20,45,000/- (RS.4,95,000+15,50,000) HAS BEEN ASSESSED DURING TH E ASSESSMENT YEAR 2007-08 VIDE ASSESSMENT ORDER DATED 19.12.2008 ON T HE BASIS OF WHICH PENALTY PROCEEDINGS HAVE BEEN INITIATED. 9. NOW, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS, AS TO WHETHER PENALTY ORDER PASSED BY ACIT IS WITHOUT ANY JURISDICTION, HAVING BEEN PASSED ON THE BASIS OF BANK SLIPS DATED 14.06. 2004 SHOWING UNACCOUNTED INCOME OF RS.4,95,000/-, THE SAID INCOM E HAVING BEEN ASSESSED DURING THE YEAR 2007-08. 10. UNDISPUTEDLY, THE ASSESSEE HAS REFLECTED THE SU RRENDERED AMOUNT OF RS.4,95,000/- IN HIS INCOME TAX RETURN ON THE BASIS OF WHICH ASSESSMENT ORDER DATED 19.12.2008 QUA THE ASSESSMENT YEAR 2007 -08 HAS BEEN PASSED. ITA NO.5249/DEL/2013 5 UNDISPUTEDLY, WHEN THE UNACCOUNTED INCOME OF RS.4,9 5,000/- WAS PERTAINING TO THE ASSESSMENT YEAR 2005-06 AS PER BA NK SLIPS DATED 14.06.2004, THE A.O. HAS NO JURISDICTION TO INITIAT E THE PENALTY PROCEEDINGS ON THE BASIS OF ASSESSMENT ORDER DATED 19.12.2008 Q UA THE ASSESSMENT YEAR 2007-08. EVEN OTHERWISE THE REVENUE WAS EMPOWERED TO REOPEN THE ASSESSMENT OF THE ASSESSEE QUA THE ASSESSMENT YEAR 2005-06 TO MAKE AN ADDITION OF RS.4,95,000/- PERTAINING TO RELEVANT YE AR, BUT THE REVENUE HAS NOT PREFERRED TO DO SO. 11. THE CONTENTION OF LD. D.R. THAT ONCE THE ASSESS EE HAS HIMSELF REFLECTED AND SURRENDERED THE UNACCOUNTED INCOME OF RS.4,95,000/- IN HIS INCOME TAX RETURN THE DEFENSE OF LACK OF JURISDICTI ON IS NOT AVAILABLE TO THE ASSESSEE, IS NOT TENABLE FOR THE TWO REASONS: ONE T HAT THERE IS NO ESTOPPELS AGAINST THE STATUTE BECAUSE WHEN DEFENSE IS AVAILAB LE BY VIRTUE OF STATUTE TO THE ASSESSEE, THE PENALTY PROCEEDINGS BEING INDEPEN DENT ONE, HE CANNOT BE ESTOPPED MERELY BY VIRTUE OF THE FACT THAT HE HIMSE LF HAS SURRENDERED THE UNACCOUNTED INCOME IN HIS INCOME TAX RETURN, BECAUS E THE ASSESSEE CLAIMED TO HAVE SURRENDERED THE AMOUNT OF RS.4,95,000/- TO BUY PEACE OF MIND AND TO AVOID THE PROTRACTED LITIGATION; SECOND, WHEN THE R EVENUE HAS STATUTORY POWER TO PROCEED AGAINST THE ASSESSEE BY REOPENING THE ASSESSMENT OF A PARTICULAR ASSESSMENT YEAR AND THEN INITIATING THE PENALTY PROCEEDINGS, IT CANNOT BE ALLOWED TO PROCEED MECHANICALLY TO INVOKE THE PENAL PROVISIONS. SO INITIATING THE PENALTY PROCEEDINGS ON THE BASIS OF VOID ASSESSMENT ORDER ARE NOT SUSTAINABLE IN THE EYES OF LAW. ASSESSEE I S WELL WITHIN HIS RIGHT TO TAKE THIS DEFENCE OF CHALLENGING THE ASSESSMENT ORD ER EVEN THOUGH ASSESSMENT ORDER HAS NOT BEEN CHALLENGED, AT THE TI ME OF CHALLENGING THE PENALTY ORDER. ITA NO.5249/DEL/2013 6 12. COORDINATE BENCH IN THE CASE ENTITLED ACIT VS S MT. SURINDER KAUR 120 TTJ 618 DECIDED THE IDENTICAL ISSUE IN THE IDEN TICAL CIRCUMSTANCES IN FAVOUR OF THE ASSESSEE, WHICH IS APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. SO, WHEN THE FOUNDATION OF ADDITION ON U NACCOUNTED INCOME OF RS.4,95,000/-, THOUGH NOT CHALLENGED BY THE ASSESSE E, IS NOT SUSTAINABLE IN THE EYES OF LAW, THE QUESTION OF IMPOSING PENALTY Q UA THE SAID AMOUNT, DOES NOT ARISE. 13. IN VIEW OF WHAT HAS BEEN DISCUSSED, WE ARE OF T HE CONSIDERED VIEW THAT THE IMPUGNED ORDER PASSED BY LD. CIT(A) CONFIR MING THE PENALTY @ 300%, THE AMOUNT OF RS.4,95,000/- IS NOT SUSTAINABL E IN THE EYES OF LAW, HENCE, HEREBY SET ASIDE AND THE APPEAL OF THE ASSES SEE IS ALLOWED. 16. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOV., 2015. SD./- SD./- ( J. S. REDDY) (KULDIP SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 27 TH NOV., 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.5249/DEL/2013 7 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 23/11 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 23,26,26 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 27/11/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 27/11 SR. PS/PS 7 FILE SENT TO BENCH CLERK 27/11 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER