HCL Comnet Ltd., New Delhi V. DCIT, New Delhi

ITA 555/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97994 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-08-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 03-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV RANKA
• Keywords: Search and seizure; Reassessment proceedings
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI L.P. SAHU ITA NOS. 555 & 556/DEL/2012 ASSESSMENT YEARS: 2003-04 & 2004-05 HCL COMNET LTD., VS. DEPUTY CIT, 806- SIDDHARTH, 96-NEHRU PLACE, CIRCLE 12(1), NEW DELHI. NEW DELHI. (PAN: AAACH9667H) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ASHWANI KUMAR, CA RESPONDENT BY: SHRI RAJIV RANKA , SR. DR DATE OF HEARING : 01 .09.2015 DATE OF PRONOUNCEMENT: :11.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER IN THESE APPEALS FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05, THE ASSESSEE HAS QUESTIONED PENALTY LEVIED UNDER SEC. 2 71(1)(C) OF THE INCOME- TAX ACT, 1961 AT RS.6,75,465 IN 2003-04 AND RS. 15 ,38,030 IN ASSESSMENT YEAR 2004-05 SUSTAINED BY THE LEARNED CIT(APPEALS). 2. SINCE THE FACTS ARE SIMILAR WITH THE ONLY DIFFER ENCE IN THE QUANTUM OF THE PENALTY, THESE APPEALS WERE HEARD TOGETHER. 3. SEVERAL GROUNDS HAVE BEEN RAISED IN THESE APPEAL S INVOLVING THE SOLE ISSUE REGARDING VALIDITY OF IMPOSITION OF PENALTY U NDER SEC. 271(1)(C) OF THE 2 INCOME-TAX ACT, 1961 ON THE AMOUNT OF DISALLOWED ON ACCOUNT OF EXPENDITURE BY WAY OF PAYMENT MADE TO GLOBEXTECH IN DIA (P) LTD. 4. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIA L AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 5. THE RELEVANT FACTS ARE THAT ORIGINAL ASSESSMENT UNDER SEC. 143(3) OF THE ACT WAS FRAMED. SUBSEQUENTLY, SEARCH AND SEIZURE OP ERATION WAS CARRIED ON S.K. GUPTA GROUP OF CASES AND DURING THE COURSE OF SEARCH, EVIDENCES WERE AVAILABLE SHOWING THAT S.K. GUPTA GROUP HAD ABOUT 3 0 PAPER COMPANIES, ONE OF WHICH WAS GLOBEXTECH INDIA LTD. TO WHICH THE ASSESSEE HAD PAID RS.18,38,000 IN ASSESSMENT YEAR 2003-04 AND RS.42,8 7,200 IN ASSESSMENT YEAR 2004-05. THE ASSESSING OFFICER IN THE ASSESSME NT FRAMED ADDED THE ABOVE AMOUNT AS THE SAME WERE OFFERED BY THE ASSESS EE TO BE TAXED. ON THESE ADDITIONS, THE ASSESSING OFFICER LEVIED PENALTY ON THE BASIS THAT THE ASSESSEE AGREED TO THE ADDITION ONLY AFTER DETECTION BY THE DEPARTMENT AND THUS THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISH ING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE TOW ARDS THE ABOVE ADDITIONS. 3 THE LEARNED CIT(APPEALS) HAS UPHELD THE SAME WHICH HAS BEEN QUESTIONED BEFORE US. 6. IN SUPPORT OF THE GROUNDS INVOLVING THE ISSUE TH E LEARNED AR SUBMITTED THAT DURING THE RELEVANT PREVIOUS YEAR CL AIMED DEDUCTION FOR EXPENSES ON ACCOUNT OF CONTRACTUAL PAYMENT FOR JOB WORK AMOUNTING TO RS.18,38,000 IN ASSESSMENT YEAR 2003-04 AND RS.42,8 7,200 IN ASSESSMENT YEAR 2004-05 TO GLOBEXTECH INDIA LTD. IN THE COURS E OF REASSESSMENT PROCEEDINGS , IN RESPONSE TO THE QUERY RAISED FROM THE ASSESSING OFFICER, THE ASSESSEE VIDE LETTER DATED 21.11.2009 SUBMITTED COP Y OF LEDGER ACCOUNT OF GLOBEXTECH INDIA LTD. WITH THIS FURTHER SUBMISSION THAT IN VIEW OF THE INFORMATION BEING OLD, OTHER DOCUMENTARY EVIDENCE T O SUPPORT THE TRANSACTION OF THE SAID PARTY COULD NOT BE PROVIDED AND, THEREFORE, THE ASSESSEE SUO MOTO OFFERED THE SAID EXPENDITURE FOR THE DISALLOWANCE. THE ASSESSING OFFICER ACCORDINGLY COMPLETED THE ASSESSM ENT UNDER SEC. 143(3)/147 OF THE INCOME-TAX ACT, 1961 MAKING BOTH THE DISALLOWANCES ON ACCOUNT OF EXPENDITURE INCURRED ON PAYMENT OF JOB W ORK THROUGH GLOBEXTECH INDIA LTD. THE ASSESSING OFFICER, HOWEVER, DID NOT AGREE WITH THE ABOVE EXPLANATION OF THE ASSESSEE DURING THE PENALTY PROC EEDINGS AND LEVIED CORRESPONDING PENALTY FOR THE ASSESSMENT YEAR UNDER CONSIDERATION UNDER 4 SEC. 271(1)(C) OF THE ACT WHICH HAS BEEN UPHELD BY THE LEARNED CIT(APPEALS). 7. THE LEARNED AR CONTENDED THAT THE ASSESSEE HAS S UO-MOTO ADMITTED THE SAID ADDITION ON ACCOUNT OF NON-AVAILABILITY OF RELEVANT EVIDENCES AND WITHOUT APPRECIATING THAT THE PENALTY PROCEEDINGS A RE SEPARATE AND INDEPENDENCE PROCEEDINGS FROM THE ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER HAS LEVIED THE PENALTY. HE CONTENDED THAT MERELY BECAUSE A CLAIM MADE BY THE ASSESSEE WAS HELD INADMISSIBLE THAT BY ITSELF WOULD NOT ATTRACT LEVY OF PENALTY UNDER SEC. 271(1)(C) OF THE ACT IF THE PARTICULARS IN RESPECT OF SUCH CLAIM WERE FILED ALONG WITH THE RETURN OF INCO ME. THE LEARNED AR PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) CIT VS. RELIANCE PETRO-PRODUCTS (P) LTD. 322 ITR 158 (S.C); II) CIT VS. J.K. SYNTHETICS LTD.- 2109 ITR 267 (DE L.); III) CIT VS. GLOBE SALES CORPORATION 196 CTR 187 (DEL.); IV) JAI NARAYAN BABU LAL VS. CIT 170 ITR 399 (BO M.); 8. THE LEARNED AR ALSO CITED THE DECISIONS NAGPUR B ENCH OF THE ITAT IN THE CASE OF SONU LIQUOR TRADERS VS. DCIT 100 I TD 455 (NAGPUR) HOLDING THAT THE FACT THE ASSESSEE HAS ACCEPTED ASS ESSMENT OF INCOME TO 5 AVOID LITIGATION WOULD NOT AUTOMATICALLY LEAD TO CO NCLUSION THAT IT HAD CONCEALED INCOME. 9. THE LEARNED SENIOR DR ON THE OTHER HAND PLACED R ELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT ONLY BE CAUSE SOME EVIDENCES WERE FOUND DURING THE COURSE OF SEARCH ON S.K. GROU P OF CASES SHOWING THAT S.K. GUPTA GROUP HAD ABOUT 30 PAPER COMPANIES, ON E OF WHICH WAS GLOBEXTECH INDIA LTD. TO WHICH ASSESSEE HAD PAID AM OUNT IN QUESTION IN THE YEARS UNDER CONSIDERATION, THE ASSESSEE CAME FORWAR D AND SURRENDERED THE PAYMENT MADE TO THE SAID PAPER COMPANY, HENCE, IT I S A CLEAR CASE OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE TOWARDS THE SAI D DISALLOWANCES. 10. IN REJOINDER, THE LEARNED AR SUBMITTED THAT NOT HING INCRIMINATING WAS FOUND AGAINST THE ASSESSEE DURING THE COURSE OF SEA RCH AT THE PREMISES OF S.K. GUPTA GROUP OF COMPANIES. THE LEARNED AR ALSO REFERRED COPY OF LEDGER ACCOUNT OF GLOBEXTECH INDIA LTD. IN THE BOOK S OF ASSESSEE MADE AVAILABLE AT PAGE NOS. 7 TO 9 OF THE PAPER BOOK WHI CH WAS FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER ALONG WITH RE PLY DATED 21.11.2009 OF THE ASSESSEE WITH SUO-MOTO OFFERING OF AMOUNT OF EX PENDITURE FOR 6 DISALLOWANCE IN THE COURSE OF ASSESSMENT MAKING IT CLEAR THAT SINCE, MATTER BEING OLD, THE ASSESSEE WAS NOT IN A POSITION TO CO LLECT EVIDENCE IN SUPPORT. 11. CONSIDERING THE ABOVE SUBMISSION AND HAVING GON E THROUGH THE CITED DECISIONS, IT IS CLEAR THAT BEING PENAL IN NATURE, THE PROVISIONS UNDER SEC. 271(1)(C) OF THE ACT IS TO BE INVOKED ONLY IN SUCH CASES WHERE THERE IS EVIDENCE BEYOND DOUBT THAT TOWARDS THE DISALLOWANCE /ADDITION MADE, THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISH ING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE. I N THE PRESENT CASE, THE ASSESSING OFFICER HAS LEVIED THE PENALTY ON THE DIS ALLOWANCE MADE ON ACCOUNT OF EXPENDITURE TOWARDS PAYMENTS MADE TO GLO BEXTECH INDIA (P) LTD. BY THE ASSESSEE ON THE BASIS THAT DUE TO SEARCH AND SEIZURE OPERATION CONDUCTED AT THE PREMISES OF S.K. GUPTA GROUP OF CO MPANIES, IT WAS REVEALED THAT GLOBEXTECH INDIA PVT. LTD. WAS ONE OF THE PAPER COMPANIES AND THE ASSESSEE HAD SURRENDERED THE AMOUNT FOR TAX ATION ONLY BECAUSE IT WAS HAVING NO EXPLANATION. THUS, AS PER THE AUTHORITIES BELOW, IT WAS CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS THEREOF ON THE PART OF THE ASSESSEE TO ATTRACT THE PENAL PROVISION S. THE EXPLANATION OF THE ASSESSEE REMAINED THAT THE MATTER WAS OLD AND THE A SSESSEE WAS HAVING NO OTHER EVIDENCE THAN THE LEDGER ACCOUNT OF GLOBEXTEC H INDIA LTD. IN THE BOOKS 7 OF THE ASSESSEE, HENCE, TO AVOID LITIGATION, IT HAD OFFERED THE CLAIMED PAYMENT FOR PAYMENT OF TAX. KEEPING BOTH THE ASPECTS OF THE CASE I.E. ONE DISCUSSED BY THE ASSESSING OFFICER TO JUSTIFY THE LEVY OF PEN ALTY AND THE OTHER BY THE ASSESSEE TO JUSTIFY THE SURRENDER, IN OUR VIEW, POS SIBILITIES OF BOTH THE ASPECTS OF THE MATTER AS ENVISAGED BY THE PARTIES WERE THER E. THUS, UNDER THE CIRCUMSTANCES, IT CANNOT BE HELD BEYOND DOUBT THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS THEREOF ON THE PART OF THE ASSESSEE TOWARDS THE ADDITIONS IN QUESTION T O ATTRACT THE PENAL PROVISIONS UNDER SEC. 271(1)(C) OF THE ACT AS THE F ULFILLMENT OF THE ABOVE CONDITION IS SINE QUO NON. OF COURSE, IN A PENAL PR OVISIONS, ADVANTAGE OF BENEFIT OF DOUBT WILL GO IN FAVOUR OF ASSESSEE. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW DIRECT THE ASSESSIN G OFFICER TO DELETE THE PENALTIES IN QUESTION I.E. RS.6,75,465 IN THE ASSES SMENT YEAR 2003-04 AND RS. 15,38,030 IN ASSESSMENT YEAR 2004-05 LEVIED UNDER S EC. 271(1)(C) OF THE ACT. THE GROUNDS ARE ACCORDINGLY ALLOWED. 12. IN RESULT, THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 .11.2015 SD/- SD/- ( L.P. SAHU ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 /11/2015 MOHAN LAL 8 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON COMPUTER 26.11.2015 DRAFT PLACED BEFORE AUTHOR 26.11.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 26.11.20 15 APPROVED DRAFT COMES TO THE SR.PS/PS 26.11.2015 KEPT FOR PRONOUNCEMENT ON 26.11.2015 FILE SENT TO THE BENCH CLERK 26.11.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.