ACIT, New Delhi V. M/s. Kailash Nath & Associates, New Delhi

ITA 5276/DEL/2011

• Counselvise Citation: 527620114 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-01-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 28-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N BHATIA
• Assessee Lawyers: AJAY VOHRA SHRI ROHIT JAIN; RASHI KHANNA
• Keywords: Capital receipt
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH D DD D : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .5276/DEL/2011 5276/DEL/2011 5276/DEL/2011 5276/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2001 2001 2001 2001- -- -02 0202 02 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -38(1), 38(1), 38(1), 38(1), NEW DELH NEW DELH NEW DELH NEW DELHI. I.I. I. VS. VS. VS. VS. M/S KAILASH NATH & ASSOCIATES, M/S KAILASH NATH & ASSOCIATES, M/S KAILASH NATH & ASSOCIATES, M/S KAILASH NATH & ASSOCIATES, 1006, KANCHANJUNGA BUILDING, 1006, KANCHANJUNGA BUILDING, 1006, KANCHANJUNGA BUILDING, 1006, KANCHANJUNGA BUILDING, 18, BARAKHAMBA ROAD, 18, BARAKHAMBA ROAD, 18, BARAKHAMBA ROAD, 18, BARAKHAMBA ROAD, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAAFK0110H. PAN : AAAFK0110H. PAN : AAAFK0110H. PAN : AAAFK0110H. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.N. BHATIA, SR.DR. RESPONDENT BY : SHRI AJAY VOHRA, SHRI ROHIT JAIN AN D MS. RASHI KHANNA, ADVOCATES. ORDER ORDER ORDER ORDER PER A.D. JAIN, JM PER A.D. JAIN, JM PER A.D. JAIN, JM PER A.D. JAIN, JM : :: : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXVIII, NEW DELHI DATED 16 TH SEPTEMBER, 2011 FOR THE AY 2001-02. 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER: - 1. THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.1,22,74,783/- LEVIED U/S 271(1)(C) OF INCOME TAX ACT, 1961 BY THE AO THOUGH THE ASSESSEE FILED INACCURATE PARTICULARS OF INCOME AND CONCEALED INCOME BY NOT O FFERING TO TAX COMPENSATION AMOUNT OF RS.2.85 CR. ACCRUED T O HIM BY WAY OF SETTLEMENT AGREEMENT WITH DCM, WHEN IT WA S FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 2. THE LD.CIT(A) HAS ERRED IN DELETING A PENALTY OF RS.1,22,74,783/- LEVIED U/S 271(1)(C) BY THE AO NOT APPRECIATING THE FACTS THAT WILLFUL CONCEALMENT OF INCOME IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING PENALTY U/S 271(1)(C) UNLIKE THE MATTER OF PROSECUTION U/S 276C . ITA-5276/DEL/2011 2 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DERI VES INCOME FROM THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT AS BUI LDER, DEVELOPER AND CONTRACTOR. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961, THE ASSESSING OFFICER MAD E THE ADDITION OF ` 2,85,00,000/- ON ACCOUNT OF ACCRUED INCOME FROM DCM PROJECT. IN THE RETURN OF INCOME, THE ASSESSEE HAS NOT DISCLOSED AN Y SUCH INCOME BUT A NOTE WAS ANNEXED ALONGWITH THE RETURN OF INCOME R ELATING TO DCM PROJECT WHICH IS REPRODUCED BY THE ASSESSING OFFICE R AT PAGES 2 & 3 OF THE ASSESSMENT ORDER. AFTER GIVING FACTUAL DETAILS , IT WAS CLAIMED BY THE ASSESSEE THAT AS PER THE LEGAL ADVICE OBTAINED BY THE ASSESSEE, THE COMPENSATION RECEIVED/RECEIVABLE DOES NOT REPRESENT ANY INCOME SUBJECT TO TAXATION AND NEED NOT, THEREFORE, BE INC LUDED IN THE TOTAL INCOME RETURNED IN THE PREVIOUS YEAR ENDED ON 31 ST MARCH, 2001. IN THE NOTE, IT WAS ALSO MENTIONED THAT THE COMPENSATI ON PAYABLE BY DCM ITSELF IS IN DISPUTE BECAUSE AFTER THE SETTLEME NT, DCM HAS RAISED A COUNTER CLAIM VIDE LETTER DATED 19 TH JULY, 2001 IN WHICH THEY HAVE LODGED THE CLAIM AGAINST THE ASSESSEE AMOUNTING TO ` 3,37,59,906/-. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CONTENTION AND MADE THE ADDITION OF ` 2,85,00,000/-. ON APPEAL, LEARNED CIT(A), VIDE ORDER DATED 23 RD SEPTEMBER, 2004, ACCEPTED THE ASSESSEES CONTENTIO N AND DELETED THE ADDITION OF ` 2,85,00,000/-. THE REVENUE FILED APPEAL AGAINST THE ORDER OF LEARNED CIT(A) BEFORE THE ITAT , WHICH, VIDE ITA NO.5594/DEL/2004 AND 5743/DEL/2004, ALLOWED THE REV ENUES APPEAL AND THE ADDITION OF ` 2,85,00,000/- MADE BY THE ASSESSING OFFICER WAS SUSTAINED. THEREAFTER, THE ASSESSING OFFICER LEVIE D PENALTY UNDER SECTION 271(1)(C) AMOUNTING TO ` 1,22,74,783/-. THE ASSESSEE FILED APPEAL BEFORE THE LEARNED CIT(A) AGAINST THE PENALT Y ORDER. THE CIT(A), VIDE ORDER DATED 16.09.2011, CANCELLED THE PENALTY LEVIED BY THE ASSESSING OFFICER. THE REVENUE, AGGRIEVED BY THE O RDER OF LEARNED CIT(A), IS IN APPEAL BEFORE US. ITA-5276/DEL/2011 3 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D HAVE PERUSED THE MATERIAL PLACED BEFORE US. AFTER CONSI DERING THE ARGUMENTS OF BOTH THE SIDES AND THE FACTS OF THE CA SE, WE ARE OF THE OPINION THAT THE ISSUE UNDER APPEAL IS SQUARELY COV ERED BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. RELIAN CE PETROPRODUCTS PVT.LTD. [2010] 322 ITR 158 (SC) WHEREIN THEIR LO RDSHIPS HELD AS UNDER:- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE R ETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 5. IN THE ABOVE CASE, THEIR LORDSHIPS CLEARLY HELD THAT WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSE E IN ITS RETURN OF INCOME ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE, THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C). THE ASSESSEE GAVE DETAILED NOTE REGARDING DCM PROJECT IN WHICH A LL THE PRIMARY FACTS RELATING TO COMPENSATION RECEIVABLE AGAINST DCM PRO JECT WERE SUBMITTED. THE ASSESSEE DID NOT OFFER ANY INCOME O N ACCOUNT OF COMPENSATION RECEIVABLE ON TWO COUNTS (I) THE COM PENSATION RECEIVABLE ITSELF IS IN DISPUTE BECAUSE OF COUNTER CLAIM PUT UP BY DCM AND (II) THE COMPENSATION RECEIVABLE IS A CAPITAL R ECEIPT. IT IS NOT THE CASE OF THE REVENUE THAT ANY FACTUAL DETAILS FURNIS HED BY THE ASSESSEE WERE EITHER INCORRECT OR ERRONEOUS OR FALSE. MEREL Y BECAUSE THE ASSESSEES CLAIM THAT THE COMPENSATION RECEIVABLE I S A CAPITAL RECEIPT IS NOT ACCEPTED BY THE ASSESSING OFFICER, IT CANNOT BE SAID THAT THE ASSESSEE IS LIABLE FOR PENALTY FOR CONCEALMENT UNDE R SECTION 271(1)(C). HONBLE APEX COURT HAS CLEARLY HELD THAT MERE MAKIN G OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOU NT TO FURNISHING OF INACCURATE PARTICULARS. IN THIS CASE, THE BONA FID E OF THE ASSESSEES ITA-5276/DEL/2011 4 CLAIM IS EVIDENT FROM THAT FACT THAT THE CIT(A) UPH ELD THE ASSESSEES CLAIM THOUGH IT WAS SUBSEQUENTLY REVERSED BY THE IT AT. CONSIDERING THE TOTALITY OF THE ABOVE FACTS, IN OUR OPINION, TH E RATIO OF THE ABOVE DECISION OF HONBLE APEX COURT IS SQUARELY APPLICAB LE TO THE ASSESSEES CASE. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD T HE ORDER OF LEARNED CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2014. SD/- SD/- ( (( (G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL) )) ) (A.D. JAIN (A.D. JAIN (A.D. JAIN (A.D. JAIN) )) ) VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 24.01.2014 VK. COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -38(1), NEW DELHI. 38(1), NEW DELHI. 38(1), NEW DELHI. 38(1), NEW DELHI. 2. RESPONDENT : M/S KAILASH NATH & ASSOCIATES, M/S KAILASH NATH & ASSOCIATES, M/S KAILASH NATH & ASSOCIATES, M/S KAILASH NATH & ASSOCIATES, 1006, KANCHANJUNGA BUILDING, 1006, KANCHANJUNGA BUILDING, 1006, KANCHANJUNGA BUILDING, 1006, KANCHANJUNGA BUILDING, 18, BARAKHAMBA ROAD, NEW DELHI 18, BARAKHAMBA ROAD, NEW DELHI 18, BARAKHAMBA ROAD, NEW DELHI 18, BARAKHAMBA ROAD, NEW DELHI 110 001. 110 001. 110 001. 110 001. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR