Sh. Mahavir Parsad, Bhiwani V. ITO, Bhiwani

ITA 571/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4018 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-05-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 02-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Assessee Lawyers: NK JAIN
• Keywords: Unexplained cash credit; Unexplained investment; Initiation of penalty proceedings; Reassessment proceedings
• Section: 27; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI SHAMIM YAHYA ITA NO. 571/DEL/2011 ASSESSMENT YEAR: 1997-98 SH. MAHAVIR PRASAD, VS. INCOME-TAX OFFICER, S/O SH. MATU RAM, WARD-2, C/O M/S. R.K. ISPAT LTD., BHIWANI. INDUSTRIAL AREA, BHIWANI. (PAN AFZPS7608M) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI NK JAIN, ADV . RESPONDENT BY: SHRI KISHORE B., S R. DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(APPEALS) DATED 18.11.2010 PASSED FOR ASSESSMENT YEAR 1997-98. THE GROUNDS OF APPEALS TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RULES, THEY ARE DESCRIPTIVE AND ARGUM ENTATIVE IN NATURE. IN BRIEF, THE SOLITARY GRIEVANCE OF THE ASSESSEE IS TH AT THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY AMOUNTI NG TO RS.1,40,925 UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAS FILED HIS RETURN OF INCOME ON 5 TH SEPTEMBER 1997 DECLARING AN INCOME OF RS.46,100. T HIS 2 RETURN WAS PROCESSED UNDER SEC. 143(1) ON 27.2.1998 AND A REFUND OF RS.1380 WAS GRANTED TO THE ASSESSEE. ASSESSING OFFI CER NOTED AN INFORMATION FROM PERUSAL OF FILE OF M/S. OM PRAKASH & CO., CHAR KHI DADRI THAT ASSESSEE HAS DEPOSITED A SUM OF RS. 4 LAC WITH THE ABOVE FIR M THROUGH CHEQUE DRAWN ON O.B.C. BANK BUT AS PER RECORD AND DOCUMENTS FILE D BY THE ASSESSEE THERE IS NO PROOF FOR SUCH DEPOSIT. HE ISSUED A NOTICE UN DER SEC. 148 ON 303.2001. IN RESPONSE TO THE NOTICE ISSUED UNDER SEC. 148, AS SESSEE HAS FILED HIS RETURN OF INCOME ON 15.5.2001 DECLARING THE SAME INCOME. T HE REASSESSMENT WAS COMPLETED ON 28.3.2003 AT A TOTAL INCOME OF RS.1,14 ,100. ASSESSING OFFICER HAS MADE AN ADDITION OF RS.68,000. THIS AMOUNT WAS FOUND TO BE DEPOSITED IN CASH IN THE ASSESSEES BANK ACCOUNT WITH THE ORI ENTAL BANK OF COMMERCE, BHIWANI ON 18.3.1997. WITH REGARD TO THE EXPLANATIO N OF SOURCE OF RS.4 LACS, ASSESSING OFFICER HAS ACCEPTED THE CONTENTIONS OF T HE ASSESSEE. 3. LEARNED COMMISSIONER ON PERUSAL OF THE ASSESSMEN T RECORD ARRIVED AT A CONCLUSION THAT ACCEPTANCE OF THE SOURCE OF INVES TMENT IN THE FIRM TO THE EXTENT OF RS.3,08,000 BY THE ASSESSING OFFICER IS E RRONEOUS. HE ISSUED A SHOW-CAUSE NOTICE UNDER SEC. 263 OF THE ACT. THE AS SESSEE APPEARED BEFORE THE LEARNED COMMISSIONER AND SUBMITTED HIS EXPLANAT ION, WHEREBY HE EXPLAINED THE SOURCE OF THE MONEY DEPOSITED IN THE OBC BANK, FROM WHERE A SUM OF RS.4 LACS WERE DRAWN FOR MAKING A DEPOSIT WI TH THE FIRM. LEARNED 3 COMMISSIONER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE DIRECTED THAT AN ADDITION OF RS.3,08,000 OUGHT TO B E MADE OVER AND ABOVE THE ADDITION OF RS.68,000 MADE BY THE ASSESSING OFFICER IN THE REASSESSMENT PROCEEDINGS. THE CONCLUSION MADE BY THE LEARNED COM MISSIONER IN PARAGRAPH 9 READS AS UNDER: 9. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE AND EVIDENCES ON RECORD, I AM SATISFIED THAT THE ASSESSING OFFICE R HAS ACCEPTED LOANS OF RS.3,08,000 AND SOURCE OF DEPOSIT OF CASH AMOUNT ING TO RS.24,000 IN THE BANK ACCOUNT NO.11105/51 WITH ORIENTAL BANK COMMERCE, BHIWANI AS GENUINE WITHOUT ANY SUPPORTING E4VIDENCE IN THIS REGARD. ACCORDINGLY, THE ORDER PASSED BY THE ASSESSING OFFI CER IS HELD TO BE ERRONEOUS, IN AS MUCH AS IT IS DETRIMENTAL TO THE I NTEREST OF REVENUE. THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO MA KE AN ADDITION OF RS.3,08,000 BEING UNEXPLAINED INVESTMENT OVER AND A BOVE THE ADDITION OF RS.68,000 ALREADY MADE STATED TO BE BY RAISING LOANS FROM S/SHRI VINOD KUMAR, PARVEEN KUMAR, BANWARI LAL AND SUSHIL KUMAR AND UNEXPLAINED CASH DEPOSIT OF RS.24,000 IN THE BA NK ACCOUNT AS INCOME FROM SOURCES NOT DISCLOSED TO THE DEPARTMENT . HE IS ALSO DIRECTED TO INITIATE PENALTY PROCEEDINGS U/S. 271(1 )(C) OF THE INCOME- TAX ACT, 1961 FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 4. DISSATISFIED WITH THE ACTION OF THE LEARNE D COMMISSIONER, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED ITA T VIDE ITA 4 NO.2597/DEL/05. THE APPEAL OF THE ASSESSEE HAS BEEN PARTLY ALLOWED VIDE ORDER DATED 26.10.2007. THE ITAT HAS CONFIRMED THE ORDER OF LEARNED COMMISSIONER FOR TAKING ACTION U/S. 263 OF THE ACT BUT SET ASIDE THE ORDER ON THE ISSUE OF DIRECTING THE ASSESSING OFFICER TO INI TIATE PENALTY PROCEEDINGS. THE CONCLUDING PART OF THE ITATS ORDER IN PARAGRAP H NO. 4.2 READS AS UNDER: 4.2 COMING TO THE INITIATION OF PENALTY U/S. 271(1)(C), IT BECOMES CLEAR FROM THE LANGUAGE OF THE SECTION THAT THE ASS ESSING OFFICER OR THE COMMISSIONER(A) OR THE COMMISSIONER, IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, CAN INITIATE PENALTY PRO CEEDINGS U/S. 271(1)(C) IF HE IS SATISFIED THAT THE PERSON HAS CO NCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. TH E INITIATION OF THE PENALTY DEPENDS UPON SATISFACTION OF THE CONCERNED AUTHORITY AND ONE AUTHORITY CANNOT DIRECT ANOTHER AUTHORITY TO INITIA TE PENALTY PROCEEDINGS. THEREFORE, IN VIEW OF EXPRESS LANGUAGE OF SECTION 271 REGARDING SATISFACTION, IT IS CLEAR THAT REVISIONAR Y JURISDICTION U/S 263 CANNOT BE INVOKED TO DIRECT THE ASSESSING OFFICER T O INITIATE PENALTY PROCEEDINGS. THIS HAS ALSO BEEN THE RATIO OF VARIOU S CASES CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THE LEARNED COMMISSIONER ERRED IN DIRECTING THE ASSESSI NG OFFICER TO INITIATE PENALTY PROCEEDINGS U/S. 271(1)(C). 5 5. IN THE PRESENT APPEAL, LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT APART FROM EXPLANATION OF ASSESSEE ON MERIT FOR NOT IMPOSITION OF THE PENALTY U/S. 271(1)(C), THE ASSESSING OFFICER CANNOT IMPOSE THE PENALTY UPON THE ASSESSEE, BECAUSE NO AUTHORITY HAS INITIATED THE PE NALTY UNDER SEC. 271(1)(C). THE ADDITION HAS BEEN MADE BY THE LEARNED COMMISSIO NER BUT HE DID NOT INITIATE THE PENALTY PROCEEDINGS. HE RELEGATED THIS INITIATION OF THE PENALTY TO THE ASSESSING OFFICER. THIS DIRECTION HAS BEEN VACA TED BY THE ITAT. IN THE ABSENCE OF THIS DIRECTION, ASSESSING OFFICER CANNOT INITIATE PENALTY PROCEEDINGS, BECAUSE HE HAS NOT MADE THE ADDITION I N THE ORIGINAL REASSESSMENT PROCEEDINGS. THE PENALTY UNDER SEC. 27 1(1)(C) CAN BE INITIATED IF DURING THE COURSE OF ANY PROCEEDING IT EMERGES OUT TO THE ASSESSING OFFICER, LEARNED CIT(APPEALS) OR LEARNED COMMISSION ER THAT ASSESSEE HAS CONCEALED THE PARTICULARS. THE RIGHT TIME FOR THE A SSESSING OFFICER TO INITIATE THE PENALTY WAS WHEN HE PASSED THE REASSESSMENT ORD ER BUT NO PENALTY PROCEEDINGS HAS TAKEN PLACE AT THAT STAGE. THE PENA LTY PROCEEDINGS HAS TAKEN PLACE ONLY AFTER THE ORDER OF THE LEARNED CIT WHOSE DIRECTIONS HAVE ALREADY BEEN VACATED BY THE ITAT. THE LEARNED COUNSEL FOR T HE ASSESSEE FOR BUTTRESSING HIS CONTENTIONS TOOK US THROUGH THE REA SSESSMENT ORDER DATED 28.3.2003 AVAILABLE ON PAGES 1 AND 2 OF THE PAPER B OOK. 6 6. LEARNED DR ON THE OTHER HAND CONTENDED THAT AFTE R THE ORDER UNDER SECTION 263, ASSESSING OFFICER HAS PASSED THE ASSES SMENT ORDER ON 6.3.2006. HE HAS GIVEN FULL OPPORTUNITY TO THE ASSESSEE AND H E MADE THE ADDITION. HE INITIATED THE PENALTY PROCEEDINGS. HE RELIED UPON T HE ORDERS OF THE REVENUE AUTHORITIES BELOW. 7. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) COMMENCED WITH AN IMPRESSION THAT IF THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) O R THE LEARNED COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PERSON . C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME, HE MAY DIRECT THAT SUC H PERSON SHALL PAY BY WAY OF A PENALTY .., MAKES IT CLEAR THAT PENALTY PROC EEDINGS WOULD BE COMMENCED BY ANY OF THE THREE OFFICERS I.E.; ASSESS ING OFFICER, LEARNED CIT(APPEALS), OR THE LEARNED COMMISSIONER IN THE CO URSE OF ANY PROCEEDINGS UNDER THIS ACT. ASSESSING OFFICER HAS P ASSED THE REASSESSMENT ORDER ON 28.3.2003 WHEN HE DETERMINED THE TAXABLE I NCOME OF THE ASSESSEE AT RS.1,14,100. HE DID NOT INITIATE THE PENALTY PRO CEEDINGS. THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER CAME TO AN END WHEN HE PASSED 7 THIS ORDER. ASSESSING OFFICER DID NOT CHOOSE TO VIS IT THE ASSESSEE WITH THE PENALTY FOR CONCEALMENT. THE NEXT STAGE COMES WHEN LEARNED COMMISSIONER PASSED AN ORDER UNDER SEC. 263. UNDER THIS SECTION, THE LEARNED CIT AFTER SATISFYING THAT ORDER OF THE ASSESSING OFFICER IS E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE MAY SET ASIDE THAT ORDE R AND REMIT THE PROCEEDINGS TO THE ASSESSING OFFICER FOR FRESH INVESTIGATION OR PASSING OF A DE NOVO ORDER. HE MAY ENHANCE THE INCOME OF AN ASSESSEE. HE MAY MODIFY THE ASSESSMENT ORDER AND CAN DECIDE HIMSELF ABOUT THE A DDITION OF ANY INCOME SUBJECT TO PROVIDING OF AN OPPORTUNITY OF HEARING T O THE ASSESSEE. IN THE PRESENT CASE, LEARNED COMMISSIONER HAD DECIDED THE ISSUE HIMSELF. HE DID NOT REMIT THE MATTER OF UNEXPLAINED CASH CREDIT FOR FURTHER INVESTIGATION TO THE ASSESSING OFFICER RATHER HE HELD THAT ADDITION OF RS.3,08,000 IS REQUIRED TO BE MADE IN THE INCOME OF THE ASSESSEE AS UNEXPLA INED INVESTMENT. AT THIS STAGE, HE COULD HAVE INITIATED THE PENALTY PROCEEDI NGS AND VISIT THE ASSESSEE WITH THE PENALTY ALSO BUT INSTEAD OF INITIATING THE PENALTY HIMSELF HE REMITTED THIS PART TO THE ASSESSING OFFICER. THIS DIRECTION OF THE LEARNED COMMISSIONER HAS BEEN VACATED, MEANING THEREBY NO D IRECTION LEFT AUTHORIZING THE INITIATION OF PENALTY PROCEEDINGS. ASSESSING OFFICER CANNOT VISIT THE ASSESSEE WITH THE PENALTY UNDER SECTION 2 71(1)(C) BECAUSE HE HAS NO JURISDICTION TO INITIATE THE PENALTY PROCEEDINGS, I N VIEW OF THE ITATS ORDER, 8 PASSED ON THE APPEAL OF ASSESSEE, IMPUGNING THE ORD ER OF THE LEARNED COMMISSIONER UNDER SEC. 263 OF THE ACT. ASSESSING O FFICER AS WELL AS LEARNED CIT(APPEALS) MISERABLY FAILED TO LOOK INTO THIS ASPECT. WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE PENALTY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 20.05.2011 SD/- SD/- ( SHAMIM YAHYA ) ( RAJPA L YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20/05/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR