Handa Engineering Private Ltd., New Delhi V. ITO, New Delhi

ITA 539/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82117 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-11-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 30-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH

Judgement Text

ITA NO. 539/D/2013 ASSTT.YEAR: 2001-02 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO. 539/DEL/2013 ASSTT.YEAR: 2001-02 HANDA ENGINEERING PRIVATE LTD., VS INCOME TAX OFFICER, R-160, GREATER KAILASH-I, WARD 12(3), NEW DELHI. NEW DELHI. (PAN: AAACH0312F) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AJAY JAIN RESPONDENT BY: SHRI SATPAL SINGH, SR.DR O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AG AINST THE ORDER OF THE CIT(A)-VIII, NEW DELHI DATED 27.11.2012 IN APPEAL N O. 790/2009-10 FOR AY 2001-02 BY WHICH THE CIT(A) UPHELD THE PENALTY ORDE R DATED 17.6.2009 PASSED U/S 271(1)( C) OF THE INCOME TAX ACT, 1961. 2. ALTHOUGH THE ASSESSEE HAS RAISED AS MANY AS 3 G ROUNDS ALONG WITH SEVERAL SUB GROUNDS BUT EXCEPT GROUND NO. 2, OTHER GROUNDS ARE ARGUMENTATIVE AND SUPPORTIVE TO THE MAIN GROUND NO. 2 WHICH READS AS UNDER:- ITA NO. 539/D/2013 ASSTT.YEAR: 2001-02 2 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN CONFIRMING PENALTY U/S 271(1)(C) ON ERRONEOUS GROUND. 3. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL AND RECORD PLACED BEFORE U, INTER ALIA, PENALTY ORDER, QUANTUM ORDER OF THE AO, IMPUGNED ORDER AND PAPER BOOK FILE D BY THE ASSESSEE. 4. LD. AR SUBMITTED THAT IN ABSENCE OF MENS REA AND CONSCIOUS CONCEALMENT BY THE ASSESSEE, THE PENALTY CANNOT BE IMPOSED. TH E AR FURTHER CONTENDED THAT THE ASSESSEE RECEIVED RS.8,50,000/- UNDER SOFTWARE DEVELOPMENT AGREEMENT FROM M/S CORE CAPITAL SERVICES LTD. DURING FY 2000- 2001 AND SUBSEQUENTLY, THE CONTRACT WAS CANCELLED BY MUTUAL CONSENT AND TH E ASSESSEE RETURNED ENTIRE AMOUNT IN THE SAME FINANCIAL YEAR TO THE CONTRACTEE . THE AR HAS FURTHER DRAWN OUR ATTENTION TOWARDS ANNEXURE-4 AT PAGE 15 OF THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE RECORDED ALL TRANSACTIONS OF RS.8 ,00,000/- IN THE BOOKS OF ACCOUNTS BUT THE AO DISPUTED THE THREE ENTRIES, THE REFORE, IN ORDER TO BUY PEACE, THE ASSESSEE SURRENDERED THE AMOUNT OF RS.3 LAKH WI THOUT ANY ADMISSION OF ANY CONCEALMENT OF INCOME. 5. THE DR REPLIED THAT THE VOLUNTARY SURRENDER DOES NOT BRING ANY IMMUNITY FROM THE PENALTY FOR THE ASSESSEE. LD. DR SUPPORTE D THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 539/D/2013 ASSTT.YEAR: 2001-02 3 6. ON CAREFUL CONSIDERATION OF ABOVE, WE NOTE THAT THE AO IN THE PENALTY ORDER HAS NOTED THE TWO ARGUMENTS OF THE ASSESSEE: (I) THE AMOUNT IN QUESTION WAS RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESS EE, AND (II) THE SUM OF RS. 3 LAKH WAS OFFERED TO TAX TO AVOID LITIGATION TO BUY PEACE. 7. THE DR HAS NOT DISPUTED THE AFOREMENTIONED FACT AND WE ALSO OBSERVE THAT THE ASSESSEE HAS RETURNED ENTIRE AMOUNT TO THE CONTRACTEE IN THE SAME FINANCIAL YEAR THROUGH BANKING CHANNELS AND THE LD. DR HAS NOT DISPUTED THAT THE ASSESSEE SURRENDERED IMPUGNED AMOUNT TO BUY PEACE A ND TO AVOID FURTHER LITIGATION. HENCE, IN THIS SITUATION WHEN OUT OF D ISPUTED AMOUNT OF RS. 8 LAKH, THE DEPARTMENT HAS ACCEPTED A PART OF RS.5 LAKH AS GENUINE AND REMAINING PART OF RS.3 LAKH WAS SURRENDERED BY THE ASSESSEE TO BUY PEACE AND AVOID FURTHER LITIGATION WITHOUT ADMITTING THE ACT OF CONCEALMENT OF INCOME, THEN, THIS WOULD NOT ATTRACT PENALTY. WE ALSO NOTE THAT THE ASSESSE E RECEIVED IMPUGNED AMOUNT FROM M/S CORE CAPITAL SERVICES LTD. UNDER A CONTRAC T OF SOFTWARE DEVELOPMENT (PAPER BOOK PAGE 1 TO 8) AND SUBSEQUENTLY WHEN THE CONTRACT WAS SCRAPPED OR CANCELLED BY MUTUAL CONSENT, THE ASSESSEE RETURNED ENTIRE AMOUNT RECEIVED UNDER CONTRACT. THIS FACT HAS NOT BEEN DISPUTED BY THE L D. DR. IN THIS SITUATION, EVEN WHEN THE ASSESSEE HAS SURRENDERED A PART OF RS. 3 L AKH TO TAXATION WITHOUT ACCEPTING ACT OF CONCEALMENT, PENALTY IS NOT IMPOSA BLE ON THE ASSESSEE AS THIS CANNOT BE SAID TO BE A CONSCIOUS CONCEALMENT OF INC OME OR AN ACT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE . ITA NO. 539/D/2013 ASSTT.YEAR: 2001-02 4 8. THE AO HAS RELIED ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF H.V. VENUGOPAL CHETTIAR 153 ITR 376 (KER) AND DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF JASWANT RAI VS C BDT 133 ITR 19 (DEL) BUT IN THE LIGHT OF FACTUAL MATRIX OF THE PRESENT C ASE, SPECIALLY IN THE EXISTENCE OF THE FACT THAT THE AMOUNT WAS RECEIVED UNDER CONTRAC T AND THE SAME WAS RETURNED ON CANCELLATION OF CONTRACT AND THE LETTER OF THE A SSESSEE WHICH SURRENDERED THE PART OF RS. 3 LAKH FOR TAXATION TO BUY PEACE AND AV OID LITIGATION, WITHOUT ACCEPTING THE ACT OF CONCEALMENT, THE FACTS OF THE EXTANT CASE ARE CLEARLY DISTINGUISHABLE FROM THE PRESENT CASE. HENCE, WE R ESPECTFULLY HOLD THAT THE BENEFIT OF THE RATIO OF THE DECISIONS AS RELIED BY THE AO IS NOT AVAILABLE FOR THE REVENUE IN THE ABOVE DISTINCT FACTS AND CIRCUMSTANC ES. HENCE, SOLE GROUND OF THE ASSESSEE IS ALLOWED AND THE ORDERS OF THE AUTHO RITIES BELOW ARE SET ASIDE AND THE AO IS DIRECTED TO DELETE THE PENALTY. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.11.2014. SD/- SD/- (R.S. SYAL) (CHANDRAMOHA N GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 14TH NOVEMBER, 2014 GS ITA NO. 539/D/2013 ASSTT.YEAR: 2001-02 5 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER AS STT. REGISTRAR