Shri Dinesh Chand Sharma, New Delhi V. ACIT, New Delhi

ITA 5521/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3476 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 26-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHAUDHARI
• Assessee Lawyers: DEEPESH GARG ADVS
• Keywords: Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER I.T.A .NO.-5521/DEL/2016 (ASSESSMENT YEAR-2009-10) DINESH CHAND SHARMA, C/O-M/S RRA TAXINDIA, D-28, SOUTH EXTENSION, PART- 1, NEW DELHI-110049. PAN-AKZPS5524L. ( APPELLANT) VS ACIT, CIRCLE-47(1), NEW DELHI. (RESPONDENT) ASSESSEE BY SH.SOMIL AGGARWAL & SH.DEEPESH GARG, ADVS. REVENUE BY MS.BEDOBANI CHAUDHARI, SR.DR DATE OF HEARING 03.04.2017 DATE OF PRONOUNCEMENT 19.04.2017 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD.CIT(A)-34, NEW DELHI DATED 28.09.2016 FOR A.Y. 2 009-10, CHALLENGING THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. 3. IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S 1 43(3) OF THE ACT AT THE TOTAL INCOME OF RS.27,05,056/- AGAINST THE RETU RNED INCOME OF RS.24,81,648/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, ADDITIONS WERE MADE U/S 2(22)(E) OF THE ACT AMOUNTING TO RS.3 ,33,408/- ON ACCOUNT OF LOANS OBTAINED BY THE ASSESSEE FROM TWO DIFFERE NT CLOSELY HELD COMPANIES, AMOUNTING TO RS.2,90,000/- AND RS.43,408 /- RESPECTIVELY. THE AO IMPOSED PENALTY U/S 271(1)(C) OF THE ACT ON THESE ADDITIONS. 4. THE ASSESSEE SUBMITTED BEFORE THE LD.CIT(A) THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.2,90,000/- FROM M/S MAA SHARD A GARMENT PVT.LTD. AND RS.44,60,000/- FROM M/S BRIJMON PUMPS PVT.LTD. THE ASSESSEE HAD 26.22% SHARE HOLDING IN M/S MAA SHARDA GARMENT PVT . LTD. AND 50% SHARE HOLDING IN M/S BRIJMON PUMPS PVT. LTD. THE A SSESSEE EXPLAINED THAT BOTH THE SUMS WERE RECEIVED AS IMPREST HOWEV ER, THE MONEY SO RECEIVED, WAS NOT PUT TO ANY USE FOR THE PURPOSES O F BUSINESS. THE AO MADE ADDITIONS OF THE ABOVE AMOUNT AND LEVIED THE P ENALTY. THE ASSESSEE THUS, EXPLAINED THE ISSUE BEFORE THE AUTHORITIES BE LOW. HOWEVER, THE LD.CIT(A) NOTED THAT THE EXPLANATION FILED BY THE A SSESSEE IS NOT SUBSTANTIATED AND EXPLANATION IS NOT ACCEPTABLE. S INCE THE ASSESSEE HAS FAILED TO ESTABLISH HIS CASE THAT THE ADDITIONS MAD E BY THE AO DO JUSTIFY, THEREFORE, LEVY OF PENALTY IS UPHELD. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I DO NO T FIND ANY REASON TO CONFIRM THE LEVY OF PENALTY. LD. COUNSEL FOR THE A SSESSEE REFERRED TO PAPER BOOK I WHICH IS SHOW CAUSE NOTICE ISSUED FOR LEVY O F PENALTY IN WHICH THE AO HAS PUT A REMARK OF RIGHT ON HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME IN TERMS OF EXPLANATION 1, 2, 3, 4 AND 5.. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO WAS NOT SURE AS TO FOR WHICH OFFENCE T HE PENALTY HAS BEEN LEVIED WHETHER FOR CONCEALMENT OR FILING INACCURATE PARTICULARS. HE HAS RELIED UPON THE DECISION OF KARNATKA HIGH COURT IN THE CASE OF CIT & ANR. VS M/S. SSAS EMERALD MEADOWS DATED 23.11.2015 IN ITA NO.380/15 IN WHICH HONBLE HIGH COURT DISMISSING THE DEPARTMENT APPEAL, CONFIRMED THE ORDER OF THE TRIBUNAL IN WHICH THE TRIBUNAL ALL OWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE NOTICE ISSUED BY THE AO U/S 274 R.W.S. 271(1)(C) OF THE ACT TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDI NGS HAD BEEN INITIATED I.E WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS JUDGEMENT IS CONFIRMED BY THE HONBLE SUPREME COURT BY DISMISSING THE SLP OF THE DEPARTMENT VIDE ORDER DATED 05.08.2016, COPIES OF THE SAME ARE PLAC ED ON RECORD. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E IN THE REPLY BEFORE THE AO SUBMITTED THAT THE AMOUNTS HAVE BEEN RECEIVE D ON ACCOUNT OF IMPREST WHICH HAVE BEEN SHOWN IN THE BOOKS OF ACC OUNTS OF BOTH THE PARTIES AND FULL PARTICULARS HAVE BEEN DISCLOSED IN THE AUDITED ACCOUNTS AND RELIED UPON THE ORDER OF DELHI BENCH OF THE TRI BUNAL IN THE CASES OF SUNIL SETHI VS DCIT 26 SOT 95 (ITAT-DEL-2010) & SUNIL CHOPRA VS DCIT 26 SOT 95 DEL, ON THE PROPOSITION THAT FOR IMPREST ACCOUNT, ADDI TION NEED NOT BE MADE. HE HAS, THEREFORE, SUBMITTED THAT THE ASSESSEE OFFERED EXPLANATION, THEREFORE, PENALTY IS NOT LEVIABLE. H E HAS ALSO RELIED UPON THE ORDER OF THE ITAT, CHANDIGARH BENCH IN THE CAS E OF ITO VS QUIXOTIC HEALTHCARE IN ITA NO.163/CHD/2015 DATED 06.08.2015 IN WHICH ON ACCOUNT OF DEEMED DIVIDEND, FULL FACTS HAVE BEEN DI SCLOSED TO THE REVENUE. IT WAS, THEREFORE, HELD THAT THE ASSESSEE HAS NOT CONCEALED THE PARTICULARS. IT WAS FURTHER HELD THAT ADDITION MAD E APPLYING DEEMING PROVISIONS WOULD NOT DISCLOSE IT BE A CASE OF FILIN G INACCURATE PARTICULARS OF INCOME. ON THE OTHER HAND, LD.DR RELIED UPON TH E AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE ACCEPTED THE QUANTU M ORDER, THE PENALTY WAS CORRECTLY LEVIED. 5.1. IN VIEW OF THE SUBMISSIONS OF THE PARTIES AND FACTS OF THE CASE, IT IS CLEAR THAT THE ASSESSEE DISCLOSE ALL THE FACTS OF R ECEIPT OF IMPREST AMOUNT FROM BOTH THE COMPANIES AND ALL THE FACTS WERE COMP LETELY DISCLOSED IN THE BOOKS OF THE ACCOUNTS OF BOTH THE COMPANIES. T HE ASSESSEE OFFERED EXPLANATION THAT AMOUNT WAS RECEIVED AS IMPREST W HICH HAVE BEEN PROPERLY RECORDED IN THE BOOKS OF ACCOUNTS. THEREF ORE, MERELY BECAUSE EXPLANATION OF ASSESSEE WAS NOT ACCEPTABLE TO THE R EVENUE WOULD NOT SAY THAT PENALTY SHOULD BE LEVIED IN THE FACTS AND CIRC UMSTANCES. FURTHER, THE AO HAS NOT MENTIONED IN THE NOTICE AS TO FOR WH ICH LIMB OF SECTION 271(1)(C) OF THE ACT, PENALTY HAS BEEN INITIATED I. E WHETHER THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE CASE OF M/S QUIXOTIC HEALTHCARE (SUPRA), ORDER OF THE LD.CIT(A) WAS CONFIRMED FOR CANCELLING THE PENALTY BECAUSE ALL THE FACTS WERE DISCLOSED TO THE REVENUE AND ADD ITION MADE APPLYING DEEMING PROVISION WOULD NOT DISCLOSE IT TO BE A CAS E OF FILING INACCURATE PARTICULARS OF INCOME. CONSIDERING THE ABOVE DISCU SSION, I DO NOT FIND IT TO BE A FIT CASE OF LEVY OF PENALTY. I ACCORDINGLY , SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- (BHA VNESH SAINI) JUDICIAL MEMB ER DATE:-19 TH APRIL, 2017 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI