M/s Soul Space Projects Ltd, New Delhi V. DCIT, New Delhi

ITA 542/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1505 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 28-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: ANANYA KAPOOR S; SAUMYA SINGH
• Keywords: Principle of natural justice; Deemed dividend

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH G, NEW DELHI BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 542/DEL/2015 ASSESSMENT YEAR: 2006-07 SOUL SPACE PROJECTS LTD., E - 23/B - 1, EXTN. MCIE, MATHURA ROAD, NEW DELHI. PAN-AAJCS 7736F (APPELLANT) VS. DCIT, CENTRAL CIRCLE 17, NEW DELHI. (RESPONDENT) APPELLANT BY MS. SAUMYA SINGH & MS. ANANYA KAPOOR, ADVOCATES RESPONDENT BY SH. S.S. RANA, CIT/DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 14.11.2014 OF LD. CIT(A)-11, NEW DELHI FOR THE ASSE SSMENT YEAR 2006-07, CHALLENGING THE PENALTY U/S. 271(1)(C) OF THE ACT O N THE FOLLOWING GROUNDS : 1. THE NOTICE ISSUED U/S 271 (1) (C) AND ORDER OF AO IMPOSING PENALTY AND ORDER OF CIT(A) UPHOLDING IT ARE ILLEGAL, BAD IN LAW, AND WITHOUT JURISDICTION. 2. THAT THE AO HAS IN THE FACTS AND CIRCUMSTANCES, ERRED IN LAWR AND ON FACTS IN INITIATING THE PENALTY IN HASTE AS THE QUANTUM APPEAL WAS PENDING IN ITAT, THE AO HAS ACTED AGAINST THE PRINCI PLES OF NATURAL JUSTICE. DATE OF HEARING 30.08.2018 DATE OF PRONOUNCEMENT 07 .09.2018 ITA NO. 3180/DEL/2013 2 3. THAT CIT (A) IN VIEW OF FACTS AND CIRCUMSTANCES E RRED ON FACTS AND IN LAW IN UPHOLDING PENALTY OF RS. 16,15,681 IN RES PECT OF ADDITION OF RS. 48 LACS ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) WIT HOUT APPRECIATING THAT CONDITIONS OF INVOKING PROVISIONS OF SECTION 2 (22)(E) ARE NOT SATISFIED. FURTHER, CIT(A) FAILED TO APPRECIATE THAT SPECIAL AU DITORS REPORT ON WHICH ADDITIONS ARE BASED IS WITHOUT JURISDICTION, ILLEGA L, UNJUSTIFIED, WITHOUT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE AND WIT HOUT CONSIDERING THE EVIDENCES. 4. THAT THE CIT(A) ERRED IN FACTS OF THE CASE AND IN LAW IN NOT APPRECIATING THAT UNLESS IT CAN BE SHOWN THAT ASSES SEE HAS CONSCIOUSLY CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME, THE PENALTY CANNOT BE LEVIED U/S 271(1 )(C ). 5. THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME, HENCE THE PENALTY ORDER IS ILLEGAL AND BAD IN LAW AND LIA BLE TO BE QUASHED. 6. THAT THE AO ERRED ON FACTS AND IN LAW IN NOT REC ORDING SATISFACTION BEFORE IMPOSING PENALTY U/S 271(1)(C) AND CIT(A) ERR ED IN DISREGARDING THE SAME. 7. THE ORDER PASSED BY AO U/S 271(1 )(C ) IS CRYPTI C AND WITHOUT ANY REASONING AND THE SAME IS LIABLE TO BE QUASHED. 8. THAT THE AO & CIT (A) HAS FAILED TO APPRECIATE T HAT THE MERE ADDITION/DISALLOWANCE DOES NOT ATTRACT PENALTY U/S 271(1) (C). 9. THE ADDITION/DISALLOWANCE HAS BEEN MADE MERELY O N THE BASIS OF REJECTION OF EXPLANATIONS OF THE APPELLANT. HENCE N O PENALTY U/S 271(1)(C) COULD BE LEVIED ON THE BASIS OF SUCH A DISALLOWANCE . 10. THAT THE INFORMATION FILED AND THE MATERIAL AVA ILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSIDERED AND AS SUCH THE O RDER OF AO IMPOSING PENALTY U/S 271 (1) (C) AND CIT (A) UPHOLDING THE SA ME IS ILLEGAL AND BAD IN LAW. ITA NO. 3180/DEL/2013 3 11. THAT IN ANY CASE THE PENALTY IMPOSED IS UNJUST, ARBITRARY AND HIGHLY EXCESSIVE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S. 153A/143(3) ON 10.08.2010 AT AN INCO ME OF RS.50,16,591/- AGAINST THE RETURNED INCOME OF RS. NIL. AS PER ASSE SSING OFFICER, DURING THE YEAR THE COMPANY M/S. BL KASHYAP & SONS HAD PAID AN AMOUNT OF RS.48,00,000/- TO ONE SH. GIRIJA SHANKAR ON BEHALF OF THE ASSESSEE WHICH ATTRACTED THE PROVISIONS OF SECTION 2(22)(E) OF THE IT ACT AND ACCORDINGLY, THE AMOUNT OF RS.48,00,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE AS DEEMED DIVIDEND. THIS ADDITION WAS SUSTAINED BY THE LD. CI T(A) VIDE ORDER DATED 21.03.2013 IN THE QUANTUM APPEAL. THE ASSESSING OFF ICER, THEREFORE, BASED ON THIS ADDITION IMPOSED A PENALTY OF RS.16,15,681/- U /S. 271(1)(C) OF THE ACT, REPRESENTING TO 100% OF THE TAX SOUGHT TO BE EVADED . THE ASSESSEE CHALLENGED THE PENALTY ORDER IN APPEAL BEFORE THE LD. CIT(A), WHO DISMISSED THE APPEAL OF THE ASSESSEE VIDE IMPUGNED ORDER. AGGRIEVED, THE AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THR OUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. THE CONTENTION OF THE LD. AR HAS BEEN THAT THE ADDITION ON THE BASIS OF WHICH THE IMPUGNED PENALTY HAS BEEN IMPOSED STOOD DELETED BY THE ITAT IN QUANTUM APPEAL OF THE ASSESS EE BEARING NO. 3180/DEL/2013 VIDE ORDER DATED 16.12.2015 AND THERE FORE, NOW THERE REMAINS NO REASON TO SUSTAIN THE IMPUGNED PENALTY. COPY OF TRIBUNAL ORDER IS PLACED ON RECORD. THE LD. DR COULD NOT CONTROVERT T HE ABOVE CONTENTION OF THE ASSESSEE. WE, THEREFORE, ARE OF THE OPINION THAT ON CE THE ADDITION GIVING RISE TO THE PENALTY STOOD DELETED IN THE QUANTUM APPEAL OF THE ASSESSEE, IT CANNOT BE ITA NO. 3180/DEL/2013 4 SAID THAT THE ASSESSEE HAD FURNISHED INACCURATE PAR TICULARS OF INCOME WITH RESPECT THERETO. ACCORDINGLY, THE VERY FOUNDATION O F IMPUGNED PENALTY IMPOSED STANDS COLLAPSED AND, THUS, THERE IS NO REA SON TO SUPPORT THE IMPUGNED ORDER. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH SEPTEMBER, 2018. SD/- SD/- (BHAVNESH SAINI) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 7 TH SEPTEMBER, 2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI