Appeal details
Counselvise Citation
570720114 RSA 2013
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 9 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-07-2015
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
11-06-2015
Assessment Year
2009-2010
Appeal Filed On
23-10-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. GEORGE GEORGE K, JM ITA NO. 5707/DEL/2013 : ASSTT. YEAR : 2009-10 BRINDAVAN AGENCIES PVT. LTD. 318, 2 ND FLOOR, DLF SOUTH COURT MALL, SAKET NEW DELHI VS ACIT CIRCLE 3(1) NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAACB3167C ASSESSEE BY : SH. R.S.GUPTA, CA REVENUE BY : SH. AMIT JAIN, SR. DR DATE OF HEARING : 11.06.2015 DATE OF PRONOUNCEMENT : 27 .07.2015 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 16.09.2013 OF LD. CIT(A)-VI, NEW DELHI. 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RE LATES TO THE SUSTENANCE OF PENALTY AMOUNTING TO RS. 4,92,141 /- LEVIED BY THE AO U/S 271(1) (C) OF THE IT ACT, 1961(HEREIN AFTER REFERRED TO AS THE ACT). 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASS ESSEE FILED THE RETURN OF INCOME DECLARING AN INCOME OF RS. 41, 25,310/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT. LATER ON THE CASE WAS SELECTED FOR SCRUTINY. ITA NO. 5707/DEL/2013 BRINDAVAN AGENCIES PVT. LTD. 2 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE AO NOTICED THAT THE ASSESSEE CLAIMED COMMISSION EXPENS ES AT RS. 63,70,460/- IN COMPARISON TO EXPENSES OF LAST YEAR AT RS. 2,26,574/-. THE AO ASKED THE ASSESSEE TO PROVIDE TH E LIST OF PERSONS TO WHOM THE COMMISSION HAVE BEEN MADE. IN R ESPONSE THE ASSESSEE FURNISHED THE LSIT OF 22 PERSONS. THE AO IN ORDER TO CROSS VERIFY THE FACTS SUBMITTED BY THE ASSESSEE , ISSUED NOTICES U/S 133(6) OF THE ACT TO THE 15 PARTIES FRO M WHOM THE ASSESSEE WAS MAKING PURCHASES DURING THE YEAR UNDER CONSIDERATION. IN RESPONSE ALL THE PARTIES INFORMED THAT THEY WERE MAKING THE SALES DIRECTLY AND NO BROKER WAS IN VOLVED. 5. THE ABOVE FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, IN RESPONSE THE ASSESSEE SUBMITTED THAT T HE PAYMENTS OF COMMISSIONS WERE MADE TO THE BROKERS/ COMMISSION AGENTS AGAINST SUBMITTING THEIR DEBIT NOTES SHOWING THE SE RVICES RENDERED IN PROCURING THE MATERIALS, QUANTUM OF MAT ERIALS WHICH WERE VARYING KEEPING THEIR AVAILABILITY AND DISTANCE WHERE MATERIAL COULD BE MADE AVAILABLE. IN ORDER T O VERIFY THE PAYMENT OF COMMISSION THE AO ASKED THE ASSESSEE TO PRODUCE THE PERSONS TO WHOM COMMISSION CLAIMED TO HAVE BEEN MADE. THE AO RECORDED THE STATEMENT OF THE PERSONS WHO AP PEARED BEFORE HIM AND OBSERVED THAT THERE WAS NO AGREEMENT ENTERED BY THOSE PERSONS WITH THE ASSESSEE. THE AO DISALLOW ED 25% OF ITA NO. 5707/DEL/2013 BRINDAVAN AGENCIES PVT. LTD. 3 THE COMMISSION AND MADE THE ADDITION OF RS. 15,92,6 90/-. HE ALSO INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT IN RESPECT OF THE SAID ADDITION. THE AO DID NOT ACC EPT THE CLAIM OF THE ASSESSEE THAT THE COMMISSION WAS PAID ON PURCHASES DURING THE YEAR. HE LEVIED THE PENALTY OF RS. 4,92,141/- U/S 271(1)(C) OF THE ACT. 6. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATT ER TO THE LD. CIT(A) AND SUBMITTED THAT IT WAS ENGAGED IN THE BUSINESS OF EXPORTING OF FERROUS & NON FERROUS METAL, EARLIE R IT WAS IN THE BUSINESS OF AGENCY OF FLOUR MILLING IMPORTED MA CHINES. IT WAS FURTHER STATED THAT THE AVAILABILITY OF EXPORTA BLE MATERIAL LIKE HC FERRO CHROME, HIGH CARBON FERRO MANGANESES, FERRO SILICON ETC. IN A BIG SCALE REQUIRED THE EXPERTISE OF CERTAIN PERSONS AND FOR THE PROCUREMENT OF SUCH EXPORTABLE MATERIALS, THE ASSESSEE CONTACTED VARIOUS PERSONS WHO COULD MA KE AVAILABLE THE SUPPLY OF SUCH MATERIALS AND THAT IT WAS ONLY ON RENDERING THEIR SERVICES, THE COMMISSION WAS USED T O BE PAID BY THE ASSESSEE. IT WAS STATED THAT THE AO MADE THE ADDITION ON ADHOC BASIS AND LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT WITHOUT RECORDING HIS SATISFACTION BEFORE THE CONCL USION OF THE ASSESSMENT PROCEEDINGS. IT WAS FURTHER SUBMITTED TH AT THE PENALTY WAS NOT TO BE LEVIED MERELY ON THE BASIS TH AT THE CLAIM WAS NOT SUSTAINABLE BECAUSE THE SAME WOULD NOT AMOU NT TO ITA NO. 5707/DEL/2013 BRINDAVAN AGENCIES PVT. LTD. 4 FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. THE RELIANCE WAS PLACED ON THE FOLLOW ING CASES :- CIT VS. KRISHNA MARUTI LTD. (2009) 309 ITR 138 (DEL HI) CIT VS. RAM COMMERCIAL ENTERPRISES LTD. (2000) 246 ITR 568 (DELHI) DIWAN ENTERPRISES VS. CIT(2000) 246 ITR 571 (DELHI) RELIANCE PETRO PRODUCTS (2010) 322 ITR 158 (SC) CIT VS. RAMPUR ENGG. CO. LTD. (2009) 176 TAXMAN 211 (DEL)/(2009)309 ITR 143(DELHI) CIT VS. IFCI LTD. (2011) 199 TAXMAN 21/9 TAXMANN.CO M 114 CIT VS. RAJDEV SINGH & CO. (2011) 11 TAXMANN.COM 370(DELHI)/(2011) 202 TAXMAN 433(DEL) SHERVANI HOSPITALITIES LTD. VS. CIT (2013) 35 TAXMA NN.COM 271 (DELHI) CIT VS. JYOTI LTD. (2013) 34 TAXMANN.COM 65 (GUJARA T)/(2013) 216 TAXMAN 64 (GUJARAT) (MAG) DEVSONS (P) LTD. VS. CIT (2011) 196 TAXMAN 21 DELHI /(2010) 329 ITR 483 (DELHI) MAHAVIR IRRIGATION PVT. LTD. VS. CIT (2009) 314 ITR (AT) 150 DELHI 7. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE OBSERVED THAT THE OFFENCE OF CONCEALMENT I S A DIRECT ATTEMPT TO HIDE AN ITEM OR A PORTION THERE OF FROM THE KNOWLEDGE OF INCOME TAX AUTHORITIES AND THERE IS ST RICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OF INCOME OR FOR GIVING INACCURATE PARTICULARS OF INCOME WHILE FILIN G THE RETURN. HE FURTHER OBSERVED THAT THE DUTY IS ENJOINED UPON THE PERSON TO MAKE A CORRECT AND COMPLETE DISCLOSURE OF HIS OR HER INCOME AND IT IS ONLY WHEN HE/SHE FAILS IN HIS/HER DUTY BY NOT DISCLOSING HIS/HER INCOME OR PART THEREOF, THAT HE/ SHE CONCEALS THE PARTICULARS OF HIS/HER INCOME. HE FURTHER OBSE RVED THAT THE ITA NO. 5707/DEL/2013 BRINDAVAN AGENCIES PVT. LTD. 5 ASSESSEE HAD FAILED TO DISCHARGE ITS STRICT LIABILI TY TO FURNISH TRUE AND THE CORRECT PARTICULARS OF INCOME WHILE FI LING ITS RETURN OF INCOME. HE FURTHER OBSERVED THAT WITH THE INSERTION OF SECTION 271(1B) BY THE FINANCE ACT, 2008 W.E.F. FRO M 1.4.1989, THE REQUIREMENT REGARDING SATISFACTION ON THE PART OF THE AO TO SHOW OR ESTABLISH THAT THE ASSESSEE HAS C ONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME HAD BECOME IRRELEVANT AS THE ASSESSMENT ORDE R IN THIS CASE WAS PASSED U/S 143(3) OF ACT, IT CONTAINED A D IRECTION FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO. THE REFERENCE WAS MADE TO THE FOLLOWING CASE LAWS :- DILIP N. SHROFF V. JCIT(2007) 291 ITR 519(SC) T. ASHOKPAI V. CIT (2007) 161 TAXMAN 221 (SC)/(2007 ) 292 ITR 11(SC) CIT V. RAM COMMERCIAL ENTERPRISES LTD. (2000) 245 I TR 568 (DEL) DIWAN ENTERPRISES V. CIT (2000) 246 ITR 571 (DEL) ANAMTHARAM VEERASINGHAIAH & CO. V. CIT (1980) 123 I TR 437(SC) UNION OF INDIA V. DHARMENDRA TEXTILES PROCESSORS (2 007) 295 ITR 244 (SC) KANBEY SOFTWARE INDIA (P) LTD. V. DCIT, CIRCLE 8, P UNE (2009) 31 SOT 153 (PUNE) UNION OF INDIA V. RAJASTHAN SPG & WVG. MILLS (2009) 180 TAXMAN 609 (SC) CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (2010) 3 6 DTR 449 (SC)/ (2010) 322 ITR 158(SC) AJAI JAIN VS. ACIT (2012) 34CCH 006 DEL TRIB. CIT VS. JEEVAN LAL SHAH (1994) 205 ITR 244 (SC) ITA NO. 5707/DEL/2013 BRINDAVAN AGENCIES PVT. LTD. 6 NOW, THE ASSESSEE IS IN APPEAL. 8. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT THE ADDITION IN THIS CASE WAS MADE O N THE ESTIMATED BASIS AND NO FINDING WAS GIVEN AS TO WHET HER THE ASSESSEE CONCEALED THE INCOME OR FURNISHED INACCURA TE PARTICULARS OF INCOME. IT WAS FURTHER STATED THAT M ERELY ON THIS BASIS THAT THE CLAIM OF THE ASSESSEE WAS NOT ACCEPT ED THE PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED TH E RELIANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE SUPREME C OURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD . (2010) 322 ITR 158(SC). 9. IN HIS RIVAL SUBMISSIONS, THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITT ED THAT THE ASSESSEE COULD NOT PROVE THE CLAIM OF COMMISSION PA ID TO THE VARIOUS PARTIES AND THAT THE ADDITION WHICH WAS MAD E BY THE AO WAS A CONCEALED INCOME OF THE ASSESSEE. THEREFOR E, THE PENALTY U/S 271(1)(C) OF THE ACT LEVIED BY THE AO W AS FULLY JUSTIFIED AND THE LD. CIT(A) RIGHTLY CONFIRMED THE SAME. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH T HE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ADDITION HAS BEEN MADE BY THE AO ONLY ON ESTIMATED BASIS. IN ITA NO. 5707/DEL/2013 BRINDAVAN AGENCIES PVT. LTD. 7 THE INSTANT CASE, ASSESSMENT ORDER DATED 30.11.2011 REVEALS THAT THE AO WHILE INITIATING THE PENALTY PROCEEDING S U/S 271(1)(C) OF THE ACT MENTIONED AS UNDER :- FOR THE ABOVE MENTIONED REASONS, I AM SATISFIED THAT ASSESSEE COMPANY CONCEALED THE INCOME/FILED INACCURATE PARTICULARS, HENCE PENALTY PROCEEDINGS U /S 271(1)(C) OF THE I.T.ACT HAVE BEEN INITIATED SEPARATELY. FROM THE ABOVE OBSERVATION OF THE AO, I T IS CRYSTAL CLEAR THAT THE AO HIMSELF WAS NOT CLEAR AS TO WHETHER THE ASSESSEE CONCEALED THE INCOME OR FILED INACCURATE PARTICULAR S OF INCOME. 11. IN THE PRESENT CASE, THE AO ACCEPTED 7 5% OF THE COMMISSION EXPENSES CLAIMED BY THE ASSESSEE AND DI SALLOWED 25% OF THE CLAIM ON ESTIMATE BASIS, THE SAID DISALL OWANCE MAY BE RELEVANT FOR MAKING THE ADDITION BUT IT IS NOT S UFFICIENT AND CONCLUSIVE TO LEVY THE PENALTY U/S 271(1)(C) OF THE ACT, AS THE ADDITION MADE BY THE AO WAS ONLY ON ESTIMATED BASIS AND IT WAS NOT BROUGHT ON RECORD TO SUBSTANTIATE WITH COGE NT REASON THAT THE ASSESSEE CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. 12 ON A SIMILAR ISSUE THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD HAS HELD AS UNDER :- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCOR RECT ITA NO. 5707/DEL/2013 BRINDAVAN AGENCIES PVT. LTD. 8 OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVIT ING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF , WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 13. IN THE PRESENT CASE ALSO THE ASSESSEE CLAIME D THE COMMISSION EXPENSES WHICH WERE DISALLOWED ON ADHOC BASIS TO THE EXTENT OF 25%. THEREFORE, THE SAID DISALLOWA NCE WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE AND THE PENALTY U/S 271( 1)(C) WAS NOT LEVIABLE. ACCORDINGLY, WE DELETE THE PENALTY LE VIED BY THE AO U/S 271(1)(C) OF THE ACT AND SUSTAINED BY THE LD . CIT)(A). IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D (ORDER PRONOUNCED IN THE COURT ON 27/07/2015) SD/- SD/- (GEORGE GEORGE K) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 /07/2015 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO. 5707/DEL/2013 BRINDAVAN AGENCIES PVT. LTD. 9 DATE INITIAL 1. DRAFT DICTATED ON 30/06/2015 2. DRAFT PLACED BEFORE AUTHOR 30/06/2013 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.
