Smt. Mala Dhingra, New Delhi V. ITO, New Delhi

ITA 5811/DEL/2012

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5483 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 09-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IN THIS REGARD SH ARUN KIS
• Assessee Lawyers: LAW; CONJECTURES; IS BASED ON ASSUMPTIONS
• Section: 80C; 143(3); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE MR. G.D. AGRA WAL , PRESIDENT AND MR. KUL BHARAT , JUDICIAL MEMBER ITA N O. 5811 /DEL/201 2 A SSESSMENT YEAR: 20 08 - 09 SMT. MALA DHINGRA 85 - GOLF LINK, NEW DELHI 110003 VS. ITO WARD - 18(2) NEW DELHI PAN: AADPD6808Q (APPELLANT) (RESPONDENT) O R D E R PER KUL BHARAT, JUDICIAL M EMBER . : APPEAL BY THE ASSESSEE PERTAINING TO THE ASSESSMENT YEAR 2008 - 09 AGAINST THE ORDER OF LEARNED CIT(A) - XXI, NEW DELHI DATED 21 ST AUGUST, 2012. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - I. THAT THE ORDER IS AG AINST FACTS AND LAW AND IS BASED ON WRONG INTERPRETATIONS OF LAW & FACTS HENCE IS LIABLE TO BE STRUCK DOWN. II. THE PENALTY OF RS. 1,88,640/ - IS AGAINST FACTS AND LAW AND IS BASED ON ASSUMPTIONS & CONJECTURES & BASED ON CONCLUSIONS EXTRANEOUS TO THE ISSUE INVOLVED AND THE LAW ON THE POINT. III. THE LD. CIT(A), HAS UPHELD THE ADDITION, WHICH WAS THE BASIS FOR THE LEVY OF PENALTY , WITHOUT GIVING ANY REASONS FOR REJECTING THE SUBMISSIONS MADE BY THE ASSESSEE IN THIS REGARD. ASSESSEE BY SH. ARUN KISHORE, CA RESPONDENT BY SH. S.R. SENAPATI, SR. DR DATE OF HEARING 03 .0 4 .2018 DATE OF PRONOUNCEMENT 04 .04 .2018 2 ITA NO . 5811 /DEL/201 2 IV. THAT THE ADDITION MADE WAS AT BEST ON ACCOUNT OF AN INNOCENT MISTAKE ON THE PART OF THE ASSESSEE AND THE ASSESSEE NEVER HAD INTENTIONS TO CONCEAL HER INCOME, AS IS APPARENT FROM THE FACTS OF THE CASE. V. THAT THE ORDER IS AGAINST THE INTERPRETATION OF LAW GIVEN IN VARIOUS JUDICIAL P RONOUNCEMENTS, INCLUDING A RECENT PRONOUNCEMENT BY THE APEX COURT. VI. THAT THE APPELLANT PRAYS FOR LEAVE, TO ADD, ALTER, AMEND OR VARY ANY OF THE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3 . THE ONLY EFFECTIVE GROUND IS RAISED AGAINST CONFIRMING THE PENALTY OF RS. 1,88,640/ - . 3. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS FRA MED UNDER SECTION 143(3) OF THE INCOME TAX ACT (HEREINAFTER R EFERRED TO THE AS THE ACT ) VIDE ORDER DATED 10 TH DECEMBER, 2010 . DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD WITHDRAWN A SUM OF RS. 6,68,367 / - FROM HER NATIONAL SAVING SCHEME OUT OF THE ENTIRE SUM THE ASSESSEE HAD DECLARED RS. 61,795/ - AS INTEREST INCOME FROM THE SCHEME. THE ASSESSING OFFICER OBSERVED THAT AS P ER THE PROVISIONS OF THE SCHEME, THE WHOLE AMOUNT I.E. PRINCIPAL AS WELL AS THE INTEREST RECEIVED THEREON WOULD BE TAXED IN THE YEAR. THE ASSESSING OFFICER S UBSEQUENTLY ON THE BASIS OF THE REVISED COMPUTATION COMPUTED THAT AMOUNT AS INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ALSO INITIATED PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND SUBSEQUENTLY A PENALTY OF RS. 1,88,640/ - WAS LEVIED VIDE ORDER DATED 31.3.2008 . AGAINST THIS , THE ASSESSEE 3 ITA NO . 5811 /DEL/201 2 PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS SUSTAINED THE PENALTY. 4. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 5. LEARNED COUNSEL FOR THE ASSESSEE REITERATE D THE SUBMISSIONS AS MADE IN THE WRITTEN SYNOPSIS. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT WAS WRONGLY OFFERED FOR TAX, IN FACT THIS AMOUNT WAS NOT TAXABLE. LEARNED DR OPPOSED THE SUBMISSION AND SUPPORTED THE ORDERS OF THE AUTHORITIES BE LOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CONTENTIONS OF THE ASSESSEE IN THE WRITTEN SYNOPSIS ARE AS UNDER: - THE ASSESSEE U/S 143(3) OF THE INCOME TAX ACT, 1961, FOR THE AY 2008 - 09 IN THE CASE OF THE ASSESSEE WAS COMPLETED AFTER ADDING THE FOLLOWING AMOUNTS TO THE RETURNED INCOME. PRINCIPAL AMOUNT WITHDRAWN FROM NSS RS. 606572/ - . DISALLOWANCE OF ACCOUNTING CHARGES CLAIMED UNDER SEC. 57 RS. 5056/ - . REDUCTION OF DEDUCTION U/E 80C IN PAUCITY OF INADEQUATE PAPER EVIDENCE OF RS. 5509/ - . AFTER HAVING INITIATED PENALTY PROCEEDINGS, PENALTY OF RS. 188640/ - WAS LEVIED U/S 271(1), KEEPING IN MIND THE ALLEGED CONCEALMENT OF NSS WITHDRAWAL OF RS.606572/ - . THE SAID AMOUNT OF RS. 606572/ - REPRESENTS NSS INVESTMENT MADE BY ASSESSEE S FATHER IN HER NAME. THE TOTAL WITHDRAWAL BEING RS. 668367/ - , INCLUDING INTEREST ON NSS INVESTMENT OF RS.61795/ - . THE INTEREST PORTION OF THE NSS WITHDRAWAL STATED ABOVE WAS DISCLOSED BY THE ASSESSEE IN HER RETURN OF INCOME FILED. MOREOV ER, TDS OF RS. 137683/ - ON NSS WITHDRAWAL WAS ALSO CLAIMED BY ASSESSEE IN HER INCOME TAX RETURN, AGAINST TAXES PAYABLE AND WAS ALSO SHOWN IN THE ORIGINAL COMPUTATION OF TAXABLE INCOME FILED DURING ASSESSMENT PROCEEDINGS. ASSESSEE DID NOT FILE ANY QUANTUM APPEAL BECAUSE ASSESSEE DIDN T ANALYZE THE LAW IN DEPTH IN RESPECT OF MAJOR ADDITION OF RS. 6, 4 ITA NO . 5811 /DEL/201 2 06,572 ON ACCOUNT OF WITHDRAWAL OF NSS. HOWEVER, ON ANALYSIS OF THE LAW ON THE POINT, IT WAS SUBMITTED BEFORE THE LD. CIT(A) DURING THE PENALTY APPEAL THAT THE A DDITION ON THIS ACCOUNT WAS NOT TO BE MADE BECAUSE ASSESSEE NEITHER DEPOSITED THE AMOUNT IN NSS NOR CLAIM ANY DEDUCTION FOR HER DEPOSITS U/S 80CCA. AS THE SECTION WHICH PERMITTED THE DEDUCTION U/S 80CCA CEASES TO BE OPERATIVE FROM AY 1992 - 93, THE ASSESSEE WAS ONLY MINOR AT THAT TIME. THE LD. AO HAS ADDED WITHDRAWALS OF RS. 6, 06, 572 (NET OF INTEREST PORTION ALREADY TAXED) TO THE INCOME OF THE ASSESSEE ON THE BASIS THAT AS PER THE PROVISIONS OF THE SCHEME, AT THE TIME OF WITHDRAWAL OF MONEY FROM THE SCHEME THE ENTIRE AMOUNT WILL BE TAXED INCLUDING INTEREST IN THE YEAR OF WITHDRAWAL. THOUGH THE SCHEME HAD BEEN TAKEN IN THE NAME OF THE ASSESSEE, THE AMOUNT IN ACTUAL HAD NOT BEEN DEPOSITED BY HER IN THE SCHEME. IT WAS ASSESSEE S FATHER SHRI RAVINDER SINGH JHEL UMI WHO HAS MADE DEPOSITS IN NSS AND CLAIMED THE DEDUCTION U/S 80CCA IN THE INCOME TAX RETURNS FILED BY HIM FOR THE RELEVANT ASSESSMENT YEARS. SO, IF THE DEPOSITS HAVE NOT BEEN MADE BY THE ASSESSEE IN NSS AND THE DEDUCTIONS U/S 80CCA HAS NOT BEEN CLAIMED B Y HER, THEN HOW CAN THE WITHDRAWALS FROM NSS BE TAXABLE IN THE HANDS OF THE ASSESSEE? THE PROVISIONS OF SEC 80CCA ARE REPRODUCED AS UNDER: ON PERUSAL OF THE PROVISIONS OF SEC 80CCA, IT IS CLEAR THAT THE ASSESSEE WHO HAS DEPOSITED THE AMOUNT IN NSS SHALL B E ALLOWED A DEDUCTION FROM HIS TOTAL INCOME LIABLE TO TAX. ALSO, AS PER SUBSECTION (2), ON THE WITHDRAWAL OF THE AMOUNT FROM NSS WHOSE DEDUCTION HAS BEEN CLAIMED U/S 80CCA, ASSESSEE SHALL BE LIABLE TO PAY TAX ON THE ENTIRE AMOUNT. HENCE, AS ASSESSEE HAS NO T CLAIMED DEDUCTION OF AMOUNT DEPOSITED IN NSS UNDER U/S 80CCA, SHE IS NOT LIABLE TO PAY TAX ON THE RECEIPTS OF THE SAID AMOUNT. CIRCULAR NO. 532 DATED 17.03.1989 ISSUED BY CBDT SPECIFICALLY STATES THAT WHERE THE AMOUNT CREDITED TO THE ACCOUNT OF AN ASSESS EE UNDER THE NATIONAL SAVINGS SCHEME IS PAID ON THE DEATH OF THE ASSESSEE TO HIS LEGAL HEIRS, THE AMOUNT SO PAID WILL NOT FALL WITHIN THE AMBIT OF SECTION 80CCA (2) AND, ACCORDINGLY, THE AMOUNT OF SUCH REPAYMENT WILL NOT BE CHARGEABLE TO TAX IN THE HANDS O F THE LEGAL HEIRS. SINCE LEGAL HEIRS ARE NOT LIABLE TO PAY TAX ON THE AMOUNT RECEIVED FROM NSS AS THE AMOUNT WHICH IS RECEIVED BY THEM DOES NOT GET COVERED IN THE AMBIT OF SECTION 80CCA(2). I N OTHER WORDS, THE AMOUNT RECEIVED BY ANY PERSON OTHER THAN THE ASSESSEE FROM NSS IS NOT CHARGEABLE IN HIS HANDS AS HE HAS NOT DEPOSITED THE SAME IN NSS AND TOO, THE DEDUCTION U/S 80CCA HAS NOT BEEN CLAIMED BY HIM. AN AFFIDAVIT FROM ASSESSEE TO THIS EFFECT WAS SUBMITTED IN FIRST APPEAL. THE ASSESSEE S THIS CONTENTION WAS DISREGARDED BY THE LD. CIT(A) ONLY ON THE BASIS OF THE FACT THAT NO QUANTUM APPEAL WAS FILED. THE LD. CIT(A) WAS UNJUSTIFIED WITH HIS APPROACH AND THIS REGARD, REFERENCE MAY BE MADE TO PARA 4 OF PAGE 48 OF KANGA AND PALKHIWALA 8TH EDITION VO.1, WHICH S TATES THAT IT MAY BE QUESTION WHETHER IT IS LEGITIMATE TO HAVE REGARD TO THE FACT THAT THE IT IS NOW KNOWN THAT THE PAYMENTS ARE IRREVOCABLE AND THAT THE CONTINGENCY OF REPAYMENT CAN NOW NEVER ARISE . A C OURT OUGHT NOT TO SHUT ITS EYES TO THE TRUE FACTS IF IT SUBSEQUENTLY KNOWS THEM ALTHOUGH THESE FACTS COULD NOT HAVE BEEN KNOWN WHEN THE QUESTION ORIGINALLY AROSE, AND OUGHT TO RESORT TO GUESSING WHEN CERTAINTY IS AVAILABLE. SINCE, FROM THE ABOVE STATED FACTS, WITHDRAWALS FROM NSS ARE NOT LIABLE TO BE TA XED IN THE HANDS OF ASSESSEE, THIS ADDITION CANNOT E MADE BASIS FOR LEVY OF PENALTY. 5 ITA NO . 5811 /DEL/201 2 WITHOUT PREJUDICE TO THE ABOVE CONTENTION, THE ASSESSEE, WHILE DRAWING UP THE COMPUTATION OF TAXABLE INCOME, DUE TO AN INADVERTENT MISTAKE, DID NOT INCLUDE THE PRINCIPAL COMPONENT OF WITHDRAWAL FROM NSS OF RS.6.07 LAKHS, IN THE TAXABLE INCOME. DURING THE SCRUTINY PROCEEDINGS ON HAVING NOTED THIS MISTAKE, ASSESSEE VERBALLY INFORMED LD. AO OF THIS ERROR. LATER A WRITTEN REPLY DATED 29 - 11 - 2010 WAS FILED POINTING OUT THIS MIS TAKE, ALONG WITH A REVISED COMPUTATION OF INCOME. TAX DUE, AFTER CONSIDERING THE SAID WITHDRAWAL AS TAXABLE WAS PAID FORTHWITH. LEVY OF PENALTY IN THE CASE OF THE ASSESSEE WAS NOT JUSTIFIED IN THE FIRST PLACE BECAUSE THE MISTAKE WAS POINTED OUT BY THE AS SESSEE HERSELF WITHOUT THE AO HAVING KNOWLEDGE OF THE MISTAKE. SECONDLY, THE RECEIPT WAS PARTIALLY RETURNED BY ASSESSE E (INTEREST COMPONENT OF RS. 61795/ - ) OF THE FACT OF WITHDRAWAL OF THE PRINCIPAL AMOUNT ALSO WAS APPARENT FORM COMPUTATION OF INCOME SUBMI TTED IN ASSESSMENT PROCEEDINGS. LASTLY, TDS DEDUCTED ON THE ENTIRE RECEIPT (INCLUDING PRINCIPAL AND INTEREST COMPONENT, WHICH FAR EXCEEDED THE AMOUNT OF INTEREST OF 61795/ - ) WAS CLAIMED IN ITR AND ALSO SHOWN IN COMPUTATION OF INCOME FILED IN THE ASSESSMENT PROCEEDINGS. UNDER THE CIRCUMSTANCES, BY NO STRETCH OF IMAGINATION, CAN IT BE SAID THAT THE ASSESSEE HAS ATTEMPTED TO CONCEAL PARTICULARS OF HER INCOME. AT BEST, IT CAN BE SAID TO BE A CLERICAL ERROR / INADVERTENT MISTAKE WHICH, IN LIGHT OF RECENT JUDICI AL PRONOUNCEMENT OF SEVERAL COURTS INCLUDING THE JURISDICTIONAL HIGH COURT AND THE APEX COURT CANNOT BE BASIS FOR LEVY OF PENALTY. 7 . THE REVENUE HAS NOT DISPUTED THE FACT THAT THIS AMOUNT WAS OFFERED BY THE ASSESSEE OUT OF HIS OWN WILL . IT IS ALSO NOT I N DISPUTE THAT AT THE TIME OF INVESTMENT , THE ASSESSEE WAS MINOR. AFTER CONSIDERING THE TOTALITY OF THE FACTS THAT THE ISSUE OF TAXABILITY OF THE INCOME BEING DEBAT ABLE , WE ARE THEREFORE OF THE CONSIDERED VIEW THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IMPOSING THE PENALTY. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE SAID AMOUNT PENALTY. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ( OR DER PRONOUNCED IN THE OPEN COURT ON 04 . 0 4 .2018. ) SD/ - SD/ - ( G.D. AGRA WAL ) ( KUL BHARAT ) PRESIDENT JUDICIAL MEMBER DT. 04 . 0 4 .2018 SH 6 ITA NO . 5811 /DEL/201 2 COPY FORWARDED TO: 1 . APPELLA NT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR , ITAT NEW DELHI DATE 1. DRAFT DICTATED ON PS 2. DRAFT PLACED BEFORE AUTHOR . 4 . 201 8 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS . 4 . 201 8 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK . 4 .201 8 PS 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.