DCIT, CHENNAI V. K.Pandiarajan, CHENNAI

ITA 54/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90463 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 01-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Recovery proceedings
• Section: 56; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . , ! '# $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ] ./ I.T.A.NO.54/MDS/2015 / ASSESSMENT YEAR : 2009-10 THE DY. COMMISSIONER OF INCOME-TAX CORPORATE CIRCLE 4(1) CHENNAI VS. SHRI K. PANDIARAJAN AJ25, OLD NO.AJ 54 SHANTHI COLONY 4 TH STREET, 9 TH MAIN ROAD ANNA NAGAR, CHENNAI 4- [PAN AADPP 4895 M ] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI P. RADHAKRISHNAN, JCIT /RESPONDENT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE / DATE OF HEARING : 01-06-2015 ! / DATE OF PRONOUNCEMENT : 12-06-2015 / O R D E R PER D. KARUNAKARA RAO, ACCOUNTANT MEMBER: THIS IS THE APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, CHENNAI, D ATED 110.2014 FOR ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE REVOLVE AROUND T HE ISSUE OF DELETION OF PENALTY BY THE CIT(A). THE ASSESSIN G OFFICER LEVIED THE ITA NO.54/15 :- 2 -: PENALTY U/S 271(1)(C) OF THE ACT. THE REVENUE RE LIED ON CERTAIN DECISIONS IN THE APPEAL. PRIMA FACIE, THE GROUNDS RAISED IN THE APPEAL ARE ARGUMENTATIVE IN NATURE. 3. THE RELEVANT FACTS OF THE ISSUE UNDER CONSIDERATION INCLUDE THAT THE ASSESSEE RECEIVED 1 MILLION EUROS FOR FO RGOING THE RIGHT TO SUE/INITIATE LEGAL PROCEEDINGS FOR BREACH OF PRE-EM PTIVE RIGHT TO PURCHASE SHARES HELD BY M/S VENDIOR NV THROUGH VEDI OR ASIA AV IN M/S MAFOI. DURING THE ASSESSMENT PROCEEDINGS, THERE WA S DISPUTE BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER ABO UT THE NATURE OF THE SAID RECEIPT EQUIVALENT OF ` 3,82,40,000/-. THE REVENUE IS OF THE OPINION THAT THE SAID RECEIPT CONSTITUTES REVENUE R ECEIPT AGAINST THE ASSESSEES CLAIM THAT IT FALLS IN CAPITAL ZONE. TH E ASSESSING OFFICER TAXED THE SAME U/S 28(VA) OF THE ACT. 4. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESS EE FILED WRITTEN SUBMISSIONS DATED 19.12.2011, THE CONTENTS OF WHICH ARE EXTRACTED IN PARA 3 OF THE IMPUGNED ORDER. EVENTUA LLY, THE CIT(A) HAS HELD THAT TAXING THE SAME U/S 28(VA) OF THE ACT IS NOT PROPER. HE, ACCORDINGLY CHANGED THE HEAD OF INCOME AND HELD IT AS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND INVOKED TH E PROVISIONS OF SECTION 56 OF THE ACT. THE MATTER TRAVELLED UPTO T HE ITAT AND THE ITAT HELD AGAINST THE ASSESSEE AND TREATED THE SAM E AS A REVENUE RECEIPT. THE RELEVANT ORDER OF THE ITAT IS DATED 20 .12.2012 VIDE ITA NO.54/15 :- 3 -: I.T.A.NO.1776/MDS/2012 AND 1777/MDS/2012. AGGRIEVE D BY THE SAID ORDER OF THE TRIBUNAL, THE ASSESSEE PREFERRED AN A PPEAL BEFORE THE HON'BLE HIGH COURT. THE HON'BLE HIGH COURT ADMITTE D THE APPEAL OF THE ASSESSEE VIDE TAX CASE APPEAL NO.92 OF 2013 AN D GRANTED INTERIM STAY OF ALL FURTHER PROCEEDINGS INCLUDING RECOVERY OF TAX ARREARS. THE ASSESSING OFFICER INTERPRETED THE SAID DIRECTIONS O F THE HON'BLE HIGH COURT AND RESTRICTED THE SAME TO THE ASSESSMENT PRO CEEDINGS ONLY AND PROCEEDED TO LEVY PENALTY U/S 271(1)(C) OF THE AC T WHICH ARE SEPARATE PROCEEDINGS AND DIFFERENT FROM THE ASSESSMENT PROCE EDINGS. THE ASSESSING OFFICER LEVIED PENALTY OF ` 1,28,90,141/- WHICH WAS SUBSEQUENTLY CONFIRMED BY THE CIT(A) VIDE THE IMPUG NED ORDER. THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US AGA INST THE SAID ORDER OF THE CIT(A). 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE MADE VA RIOUS SUBMISSIONS. SOME OF THEM INCLUDE THAT THE NATURE OF RECEIPT OF ` 3,82,40,000/- IS A DEBATABLE ONE. THERE IS NO CLEA R CUT FINDINGS/ JUDICIAL PRECEDENT ABOUT THE NATURE OF THAT RECEIPT AND IT FALLS IN REVENUE FIELD. IN SUCH CIRCUMSTANCES, LEVYING PENA LTY IS NOT VALID. HE ALSO MENTIONED THAT THE HON'BLE HIGH COURT HAS ADM ITTED THE APPEAL OF THE ASSESSEE, AND THEREFORE, THE DEBATABILITY OF THE ISSUE UNDER CONSIDERATION IS SELF-EVIDENT. IN SUCH CIRCUMSTANC ES, PENALTY U/S 271(1)(C) OF THE ACT IS NOT EXIGIBLE. FOR THIS PRO POSITION, HE RELIED ON ITA NO.54/15 :- 4 -: VARIOUS DECISIONS INCLUDING THE DECISION OF THE HON 'BLE BOMBAY HIGH COURT IN CIT VS M/S NAYAN BUILDERS & DEVELOPERS P. LTD [2014] 89CHH 187. OTHER DECISIONS ARE NARRATED IN PARA 7. 4 OF THE IMPUGNED ORDER. HE ALSO SUBMITTED THAT MERELY THE QUANTUM I S CONFIRMED, PENALTY U/S 271(1)(C) OF THE ACT COULD NOT BE AUT OMATICALLY LEVIED BY THE ASSESSING OFFICER. FOR THIS PROPOSITION, HE RE LIED ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN M/S DELOITTE CO NSULTING INDIA (P) LTD VS ACIT (2013TII-02-HC-MUM-TP). HE ALSO SUBMI TTED THE ASSESSEE IS NOT IN ANY DEFAULTER SO FAR AS FURNISHI NG OF RELEVANT INFORMATION IN THE RETURN OF INCOME IS CONCERNED. ASSESSEE SUBMITS THAT THERE IS NO CONCEALMENT OF PARTICULARS IN ANY FORM. THE ASSESSEE HAS TAKEN ONE VIEW AND TREATED THE SAME AS REVEN UE RECEIPT; PER CONTRA, THE ASSESSING OFFICER HAS TAKEN ANOTHER VIE W AND TREATED THE SAME AS REVENUE RECEIPT. SO, THERE IS NO CLARITY O N THE REAL NATURE OF THIS RECEIPT. IN SUCH CIRCUMSTANCES, LEVYING PENAL TY U/S 271(1)(C) OF THE ACT IS NOT APPROPRIATE AND THEREFORE, THE SAME IS UNSUSTAINABLE IN LAW. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RE LIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND RELIED ON THE DECISIONS CITED BY THE REVENUE IN THE GROUNDS. ITA NO.54/15 :- 5 -: 7. WE HEARD BOTH THE PARTIES ON THE ISSUE OF LEVIABILI TY OF PENALTY ON THE FACTS OF THE PRESENT CASE. WE FIND THERE IS NO DISPUTE BEFORE US SO FAR AS DISCLOSURE OF INFORMATION IN THE RETURN OF INCOME IS CONCERNED. ASSESSEE FURNISHED ALL RELEVANT PAR TICULARS RELATING TO THE IMPUGNED RECEIPT. WHATEVER IS RELIED UPON BY T HE ASSESSING OFFICER IN THE PENALTY PROCEEDINGS, THE SAME ARE EM ANATED FROM THE RETURN OF INCOME FURNISHED BY THE ASSESSEE IN NORM AL COURSE. THERE IS ALSO DISPUTE ON THE NATURE OF THE SAID RECEIPT WH ETHER IT IS A CAPITAL OR REVENUE RECEIPT. WHILE THE ITAT UPHELD THE REVENUE NATURE OF THE RECEIPT, THE HON'BLE HIGH COURT ADMITTED THE APPEAL OF THE ASSESSEE. THEREFORE, WE FIND DEBTABILITY ON THIS ISSUE. IT I S ALSO UNDISPUTED FACT THAT THE HON'BLE HIGH COURT HAS ADMITTED THE APPEA L AND THE SAME IS PENDING FOR FINAL ADJUDICATION. CONSIDERING ALL TH ESE UNDISPUTED FACTS, WE FIND NO DEFAULT IN DISCLOSURE OF INFORMATION IN THE RETURN OF INCOME BY THE ASSESSEE. DEBATABILITY IS EVIDENT AS NARRA TED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US. ON THE OTHER H AND, THE REVENUE FAILED TO PROVE THE ABSENCE OF DEBATABILITY ON THE ISSUE. CONSIDERING THE OVERALL FACTUAL MATTERS OF THE CASE, WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE FOR LEVYING PENALTY U/S 271(1)(C) OF THE ACT . ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED AND THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO.54/15 :- 6 -: 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH OF JUNE, 2015, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( . ) (D. KARUNAKARA RAO) ! / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 12 TH JUNE, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF