SURYAPRAKSH G. AGARWAL, NAVI MUMBAI V. ASST CIT CIR 22(3), NAVI MUMBAI

ITA 5779/MUM/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3634 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 25-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: DR P DANIAL
• Keywords: Validity of assessment
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BE NCH, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER / I .TA NO.5779/MUM/2013 ( / ASSESSMENT YEAR: 2009-10 MR. SURYAPRAKASH G. AGARWAL, SUNNY REAL ESTATE CONSULTANTS, ARENJA CORNER, SEC-17, VASHI, NAVI MUMBAI-40 703 / VS. THE ACIT, CIRCLE 22(3), MUMBAI ./ ./ PAN/GIR NO. AABPA 7894B ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: DR P. DANIAL / RESPONDENT BY: SHRI LOVE KUMAR / DATE OF HEARING :12.01.2016 !' / DATE OF PRONOUNCEMENT :15.01.2016 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-33, MUMBAI DATED 01.08.2013 PERTAINI NG TO ASSESSMENT YEAR 2009-10. 2. THE SOLE GRIEVANCE OF THE ASSESSEE RELATES TO TH E LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT ON ACCOUNT OF ADDITION O UT OF SUNDRY CREDITORS OF EARLIER YEARS. ITA. NO. 5779/M/2013 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS IN THE BUSINESS OF REAL ESTATE CONSULTANT AND COMMISSION A GENT. RETURN FOR THE YEAR WAS FILED ON 30.9.2009 DECLARING TOTAL INC OME OF RS. 50,18,900/-. 3.1. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE A SSESSMENT ORDER DATED 20.12.2011 MADE U/S. 143(3) OF THE ACT. 3.2. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A SSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN UNDER THE HEAD CURRENT LIABILITIES AND PROVISIONS IN ITS BALANCE SHEET A SUM OF RS. 14 ,99,58,342/- AS PAYABLE TOWARDS ADVANCE FOR PLOTS. THE AO FURTHER NOTICED UNDER THE HEAD CURRENT ASSETS LOANS AND ADVANCES GIVEN BY THE ASSESSEE AT RS. 15,83,37,096/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE PURPOSE OF GIVING AND TAKING THE LOANS AND ADVANCES. THE ASSE SSEE EXPLAINED THE NECESSARY QUERY MADE BY THE AO. THE ASSESSEE WAS A SKED TO FURNISH LEDGER COPIES OF ALL THE PERSONS WHO HAVE GIVEN LOA NS AND ADVANCES TO THE ASSESSEE ALONGWITH CONFIRMATIONS. 3.3. THE ASSESSEE SHOWED HIS INABILITY TO FURNISH C ONFIRMATIONS FROM THE RESPECTIVE PARTIES AS THE SAME WERE OLD BA LANCES. THE ASSESSEE ALSO SUBMITTED THAT HE HAS FORFEITED THE ADVANCES AND THE SAME CAN BE TREATED AS INCOME OF THE ASSESSEE. ON THIS CONCESSION MADE BY THE ASSESSEE THE AMOUNT OF RS. 42,61,000/- WAS TREATED AS UNEXPLAINED ADVANCE AND ADDED TO THE INCOME OF THE ASSESSEE. 3.4. PENALTY PROCEEDINGS WERE SEPARATELY INITIATED U/S. 271(1)(C) OF THE ACT. DURING THE COURSE OF THE PENALTY PROCEEDI NGS, THE ASSESSEE ITA. NO. 5779/M/2013 3 WAS ASKED TO EXPLAIN AS TO WHY PENALTY SHOULD NOT B E LEVIED FOR THE ADDITIONS ACCEPTED IN THE ASSESSMENT PROCEEDINGS. THE ASSESSEE STRONGLY CONTENDED THAT THE AO HAS MADE THE ADDITIO NS ONLY BECAUSE THE ASSESSEE HAS ACCEPTED THE SAME. NO ENQUIRY WAS MADE BY THE AO AND MERELY ON THE BASIS OF ACCEPTANCE OF THE ASSESS EE, NO PENALTY SHOULD BE LEVIED. THIS CONTENTION OF THE ASSESSEE WAS RUBBISHED BY THE AO WHO CONCLUDED BY LEVYING PENALTY OF RS. 14,4 8,382/-. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE CHAL LENGED THE VALIDITY OF THE ADDITIONS MADE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. IT IS THE SAY OF THE LD. COUNSEL THAT THE ADDITIONS ITSELF MADE BY THE AO ARE BAD IN LAW AND THEREFORE ON THE BASIS OF SUCH ADDITIONS, NO PENALTY CAN BE LEVIED. STRONG RELIANC E WAS PLACED ON THE DECISION OF THE DELHI BENCH IN 96 ITD 406. IT IS T HE SAY OF THE LD. COUNSEL THAT IT IS OPEN TO THE ASSESSEE TO SET UP/R AISE THE QUESTION OF VALIDITY OF ASSESSMENT IN THE APPEAL AGAINST THE LE VY OF PENALTY. THE LD. COUNSEL CONTINUED STATING THAT ALL THE ADVANCES PERTAINED TO EARLIER YEARS THEREFORE ADDITIONS MADE ON ACCOUNT O F FAILURE BY ASSESSEE TO FILE CONFIRMATIONS IS NOT JUSTIFIABLE A ND SINCE THE ADDITIONS ITSELF ARE NOT JUSTIFIABLE, NO PENALTY SHOULD BE LE VIED. 6. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CONSIDERED THE JUD ICIAL DECISIONS RELIED UPON BY THE LD. COUNSEL. WE FIND FORCE IN T HE CONTENTION OF THE LD. COUNSEL. UNDISPUTEDLY, THE ADDITIONS WERE MADE ON ACCOUNT OF ITA. NO. 5779/M/2013 4 ADVANCES TAKEN BY THE ASSESSEE IN EARLIER ASSESSMEN T YEARS. SINCE DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE WA S ASKED TO FILE CONFIRMATIONS AND SINCE THE ASSESSEE COULD NOT FILE THE CONFIRMATIONS, HE ACCEPTED THE ADVANCES OF EARLIER YEARS HAS BEING FORFEITED AND OFFERED THE SAME AS INCOME FOR THE YEAR UNDER CONSI DERATION. THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS USHA STUD AGRICULTURAL FARMS LTD 301 ITR 384 HAS HELD THAT S INCE THE CREDIT BALANCE IN THE ACCOUNTS OF THE ASSESSEE DID NOT PER TAIN TO THE YEAR UNDER CONSIDERATION, THE AO WAS NOT JUSTIFIED IN MA KING THE ADDITIONS. A SIMILAR VIEW WAS TAKEN BY THE RAJASTH AN HIGH COURT IN THE CASE OF CIT VS PRAMESHWAR BOHARA 301 ITR 404 W HEREIN THE HONBLE HIGH COURT HAS HELD THAT THE CARRIED FORWAR D AMOUNT FOR THE PREVIOUS YEAR DID NOT BECOME AN INVESTMENT OR CASH CREDIT GENERATED DURING THE IMPUGNED ASSESSMENT YEAR. 7. THE REFERENCE MADE TO THE ABOVE JUDICIAL DECISIO NS NO DOUBT RELATES TO THE QUANTUM PROCEEDINGS AND THE ASSESSEE HAS NOT PREFERRED ANY APPEAL AGAINST THE QUANTUM ADDITIONS. WHAT WE WANT TO EMPHASIS IS THAT THE ADDITIONS MADE BY THE AO AR E NOT ACCORDING TO THE PROVISIONS OF THE LAW AND SETTLED PROPOSITION O F LAW. IT SHOWS THAT THE ADDITIONS HAVE BEEN MADE MERELY BECAUSE TH E ASSESSEE ACCEPTED THE SAME. 8. IN OUR CONSIDERED OPINION AND IN OUR UNDERSTANDI NG OF THE LAW, NO PENALTY U/S. 271(1)(C) CAN BE LEVIED ON ACCOUNT OF ADDITIONS WHICH ARE NOT JUSTIFIABLE IN LAW. ITA. NO. 5779/M/2013 5 9. MERELY BECAUSE THE QUANTUM ADDITIONS HAVE NOT BE EN AGITATED BY THE ASSESSEE DOES NOT IPSO FACTO GIVE RISE TO THE RIGHT TO LEVY PENALTY U/S. 271(1)(C) OF THE ACT. WE, THEREFORE S ET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE P ENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2016. SD/- SD/- (C.N. PRASAD) (N.K. BILLAIYA) %&# /JUDICIAL MEMBER # / ACCOUNTANT MEMBER MUMBAI; )# DATED : 15 TH JANUARY, 2016 . & . ./ RJ , SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. +,-&&./ , ./' , / DR, ITAT, MUMBAI 6. -012 / GUARD FILE. / BY ORDER, +& //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI