M.A. Projects Pvt. Ltd., New Delhi V. ACIT, Central Circle- 13, New Delhi

ITA 583/DEL/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5060 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 25-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURESH K GUPTA
• Section: 271(1)(c); 14A; 274; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E, NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI G.S. PANNU, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.583/DEL/2018 (ASSESSMENT YEAR-2011-12) M/S M.A. PROJECTS PVT. LTD., BA-17A, DDA FLATS, ASHOK VIHAR, PHASE-1, NEW DELHI. PAN:AAECM 2372E VS. ASST. CIT, CENTRAL CIRCLE-13, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY SH. SURESH K. GUPTA. CA RESPONDENT BY MS. RAKHI VIMAL, SR. DR DATE OF HEARING 18.08.2020 DATE OF PRONOUNCEMENT 30.09.2020 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST O RDER DATED 30 TH NOVEMBER, 2017 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XVI, NEW DELHI {CIT (A)} FOR AS SESSMENT YEAR 2011-12 WHEREIN THE LD.CIT (A) HAS UPHELD THE IMPOSI TION OF 2 ITA NO.583/DEL/2018 M..A. PROJECTS PVT. LTD. VS. ACIT PENALTY OF RS.15,45,000/- U/S 271(1)(C) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT,). 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE. THE RETURN OF INCOME WAS FILED DECLARING AN INCOME AT RS. NIL AND THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.50,19,200/- AFTER M AKING AN ADDITION OF RS.50 LACS U/S 68 OF THE ACT AND RS.19, 200/- U/S 14A OF THE ACT. THE ADDITION OF RS.50 LACS WAS ON ACCOUNT O F RECEIPT ON SHARE APPLICATION MONEY WHICH, AS PER THE ASSESSING OFFICER, COULD NOT BE SUBSTANTIATED. THE ASSESSEES APPEAL AGAINST THE QUANTUM ADDITION WAS UPHELD BOTH BY THE LD. CIT (A) AS WELL AS THIS TRIBUNAL. THE IMPUGNED PENALTY OF RS.15,45,000/- WAS IMPOSED B Y THE ASSESSING OFFICER VIDE ORDER DATED 28.03.2016 FOR THE CONCEALING/FURNISHING INACCURATE PARTICULARS OF INC OME. NOW THE ASSESSEE HAS APPROACHED THIS TRIBUNAL CHALLENGING T HE CONFIRMATION OF PENALTY BY RAISING THE FOLLOWING GROUNDS OF APPEA L: 1. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND IN FAC TS IN UPHOLDING THE IMPUGNED PENALTY ORDER PASSED BY LD. AO IS ARBITRARILY, UNJUSTLY AND WITHOUT BASIS IN LEVYING PENALTY OF RS. 15,45,000/- U/S 271(1)(C) OF THE IT ACT. 3 ITA NO.583/DEL/2018 M..A. PROJECTS PVT. LTD. VS. ACIT 2. THE LD. CIT(A) IS, NEITHER ON FACTS OR IN LAW, J USTIFIED IN UPHOLDING THE LEVY OF PENALTY OF RS.15,45,500 - U/S 271(1 )(C) FOR CONCEALING/FURNISHING INACCURATE PARTICULARS OF INC OME WHEREAS THE PENALTY PROCEEDINGS HAD BEEN INITIATED AS PER T HE ORDER OF ASSESSMENT FOR ONE DEFAULT WHICH IS FURNISHING INAC CURATE PARTICULARS OF INCOME. THE AO WAS NOT JUSTIFIED CHA NGING OVER THE DEFAULT WHILE LEVYING THE PENALTY IN CONSEQUENT OF SUCH INITIATION FOR THE DEFAULT FOR WHICH PENALTY PROCEE DINGS WERE INITIATED. 3. THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN CIRCUMSTANCES OF THE CASE IN CONFIRMING IMPOSITION OF PENALTY OF RS. 15,45,500/- U/S 271(1)(C) FOR CONCEALING/FURNIS HING INACCURATE PARTICULARS OF INCOME WITHOUT SPECIFYING THE PRECISE DEFAULT IN THE NOTICE AND THEREFORE THE PRINTED NOT ICE WITHOUT STRIKING OFF THE INAPPLICABLE ISSUED FOR LEVY OF PE NALTY WAS VAGUE, NON- COMMUNICATIVE AND THUS NON SPEAKING DEF EATING THE PURPOSE OF NOTICE. 4. THE IMPUGNED ORDER OF PENALTY PASSED BY LD. AO NEED BE QUASHED ON THE GROUND THAT THE AO HAS RELIED ON AUT HORITIES JUSTIFYING DEEMED CONCEALMENT WHEREAS THE PENALTY PROCEEDINGS WERE INITIATED NOT FOR CONCEALMENT BUT FOR A DIFFERENT DEFAULT OF FURNISHING OF INACCURATE PARTI CULARS OF INCOME. 5. THE IMPUGNED ORDER OF PENALTY IS NOT SUSTAI NABLE AS THE ADDITION U/S68 DOES NOT OFFER GROUND TO THE AO TO C ONSIDER THE ADDITIONAL INCOME AS CONCEALED INCOME. 6. THE APPELLANT CRAVES LEAVE TO ADD, DELETE, MODIF Y / AMEND THE ABOVE GROUNDS OF APPEAL WITH THE PERMISSION OF THE HONBLE APPELLATE AUTHORITY. 3.0 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THERE HAS BEEN INCONSISTENCY IN THE APPROACH OF THE ASSESSING 4 ITA NO.583/DEL/2018 M..A. PROJECTS PVT. LTD. VS. ACIT OFFICER (AO) WHILE IMPOSING THE PENALTY. IT WAS SUBM ITTED THAT IN PAGE-4 OF THE ASSESSMENT ORDER, THE PENALTY WAS INIT IATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHEREAS IN THE NOTICE U/S 274 DATED 03.03.2014, THE PENALTY WAS PROPOSED F OR CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. IT WAS FURTHER SUBMITTED THAT IN THE PENALTY ORDER, THE PENALTY WAS IMPOSED FOR FURNISHING INACCURATE PARTIC ULARS OF INCOME AND THE ASSESSING OFFICER ALSO STATED THAT T HE ASSESSEE COULD NOT PROVE THAT THERE WAS NO CONCEALMENT. IT WAS SUBMITTED THAT, THUS, THERE HAS BEEN TOTAL NON APPLICATION OF MIND BY THE ASSESSING OFFICER AND THAT THE ASSESSING OFFICER KE PT OF SWITCHING BETWEEN THE TWO LIMBS OF DEFAULT. IT WAS ALSO SUBMITT ED THAT THE ASSESSING OFFICER ALSO INVOKED EXPLANATION-1 TO SEC .271(1)(C) WHICH APPLIES TO CONCEALMENT OF PARTICULARS OF INCOME, FO R WHICH THE PENALTY PROCEEDINGS HAD NOT BEEN INITIATED. IT WAS S UBMITTED THAT THERE WAS A COMPLETE FAILURE ON THE PART OF THE ASSE SSING OFFICER TO SPECIFY THE CHARGE FOR WHICH THE PENALTY WAS BEING I NITIATED AND ALSO FOR WHICH IT WAS IMPOSED. THE LD. AUTHORIZED REP RESENTATIVE PLACED RELIANCE ON NUMEROUS JUDICIAL PRECEDENTS WHER EIN IT HAS 5 ITA NO.583/DEL/2018 M..A. PROJECTS PVT. LTD. VS. ACIT BEEN HELD THAT FAILURE TO SPECIFY THE CHARGE FOR WH ICH THE PENALTY HAS BEEN INITIATED AND IMPOSED WOULD MAKE THE IMPOSI TION OF PENALTY UNSUSTAINABLE. 4.0 IN RESPONSE, THE LD. SR. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY ARGUED THAT NON-STRI KING OF THE LIMB DID NOT CAUSE ANY PREJUDICE TO THE ASSESSEE IN AS MUCH AS THE ASSESSEE HAD BEEN GIVEN PROPER OPPORTUNITY TO DEFEN D ITS CASE PRIOR TO THE IMPOSITION OF PENALTY. IT WAS FURTHER SUBMIT TED BY THE LD. DR THAT THE TRIBUNAL HAS UPHELD THE QUANTUM ADDITION A ND, THEREFORE, IT WAS A FIT CASE FOR IMPOSITION OF PENALTY. IT WAS A LSO ARGUED THAT FURNISHING OF INACCURATE PARTICULARS LEADS TO CONCE ALMENT OF INCOME. THE LD. SR. DR RELIED ON NUMEROUS CASE LAWS TO BUTT RESS HER ARGUMENT THAT THE PENALTY HAD BEEN RIGHTLY IMPOSED. THE LD. SR. DR SPECIFICALLY RELIED ON THE JUDGMENT OF HONBLE M ADRAS HIGH COURT IN THE CASE OF SUNDARAM FINANCE LIMITED VS. A CIT REPORTED IN 403 ITR 407 (MADRAS) FOR THE PROPOSITION THAT IF TH E ASSESSEE HAS UNDERSTOOD THE PURPORT AND IMPORT OF NOTICE, NO PRE JUDICE IS CAUSED BY NOT STRIKING OFF OF THE IRRELEVANT LIMB IN THE P ENALTY NOTICE. THE LD. SR. DR PRAYED FOR UPHOLDING OF THE PENALTY. 6 ITA NO.583/DEL/2018 M..A. PROJECTS PVT. LTD. VS. ACIT 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. ALTHOUGH, IT IS UND ISPUTED THAT THE QUANTUM ADDITION HAS BEEN UPHELD BY THIS TRIBUNAL, ALL THE SAME, IT IS TRITE THAT IMPOSITION OF PENALTY DOES NOT AUTOMA TICALLY FOLLOW THE CONFIRMATION OF QUANTUM ADDITION. WE HAVE GONE THRO UGH THE NOTICE DATED 03.03.2014 ISSUED U/S 274 OF THE ACT AND WE NO TE IN THIS NOTICE, IRRELEVANT WORDS IN THE PENALTY NOTICE HAVE NOT BEEN STRUCK OF AND, THUS, THE NOTICE DOES NOT SPECIFY AS TO UND ER WHICH THE LIMB OF SECTION 271(1)(C) WAS THE PENALTY BEING PROPOSED TO IMPOSED. WE ALSO NOTE THAT RIGHT FROM THE ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER HAS BEEN INCONSISTENT IN HIS APPROACH REGAR DING THE IMPOSITION OF PENALTY. AS HAS BEEN RIGHTLY BROUGHT TO OUR NOTICE BY THE LD. AUTHORIZED REPRESENTATIVE, IT IS SEEN THAT IN PAGE -4 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS RECORDE D SATISFACTION FOR IMPOSITION PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME WHEREAS IN THE NOTICE DATED 03.03.2014 ISSUED U/S 274 OF THE ACT, PENALTY PROCEEDINGS HAVE BEEN INITIATED FO R CONCEALING PARTICULARS OF INCOME/FURNISHING INACCURATE PARTICU LARS. FURTHER, IN THE PENALTY ORDER, THE PENALTY HAS BEEN IMPOSED FOR FURNISHING 7 ITA NO.583/DEL/2018 M..A. PROJECTS PVT. LTD. VS. ACIT INACCURATE PARTICULARS OF THE INCOME AS THE ASSESSE E COULD NOT PROVE THAT THERE WAS NO CONCEALMENT. FURTHER IN PARA -6 OF THE PENALTY ORDER, THE PENALTY IS ULTIMATELY IMPOSED FO R CONCEALING/FURNISHING INACCURATE PARTICULARS OF INC OME. THUS, APPARENTLY THE ASSESSEE WAS NOT MADE AWARE OF THE CH ARGE FOR WHICH THE PENALTY WAS BEING PROPOSED TO BE IMPOSED AN D WAS FINALLY IMPOSED. THIS ISSUE IS NO LONGER RES-INTEGRA AND THE ISSUE HAS TO BE DECIDED IN FAVOUR OF THE ASSESSE IN LIGHT OF THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY REPORTED IN 359 ITR 565 (K ARN-HC) WHEREIN IT HAS BEEN HELD THAT THE NOTICE ISSUED BY THE ASSE SSING OFFICER WOULD BE BAD IN LAW, IF IT DID NOT SPECIFY UNDER WHICH LIMB OF SEC. 271(1) (C) THE PENALTY PROCEEDINGS HAD BEEN INITIAT ED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISH ING INACCURATE PARTICULARS OF INCOME. FURTHER, THE HONBLE DELHI H IGH COURT, IN THE CASE OF SAHARA INDIA LIFE INSURANCE COMPANY LTD., HAS APPROVED THE ACTION OF THIS TRIBUNAL IN APPLYING THE LAW LAID DOW N BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF ACIT VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA) AND HAS HELD THAT THERE WAS NO ERROR 8 ITA NO.583/DEL/2018 M..A. PROJECTS PVT. LTD. VS. ACIT COMMITTED BY THIS TRIBUNAL IN DELETING THE PENALTY. THEREFORE, IN VIEW OF THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SAHARA INDIA LIFE INSURANCE COMPANY LTD. , BEING THE JURISDICTIONAL HIGH COURT FOR THE ASSESSEE AND RESPECTFULLY FOLLOWI NG THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY (SUPRA) WE HAVE NO OPTION BUT TO SET THE ORDER OF THE LD. CIT (A) AND DIRECT THE ASSESSING O FFICER TO DELETE THE PENALTY. IT IS SO DIRECTED ACCORDINGLY. 5.1 BEFORE PARTING, WE WOULD ALSO LIKE TO STATE TH AT THE REVENUES RELIANCE ON THE JUDGMENT OF THE HONBLE M ADRAS HIGH COURT IN THE CASE OF SUNDARAM FINANCE LIMITED VS. C IT (SUPRA) CANNOT COME TO THE RESCUE OF THE DEPARTMENT IN THE PRESENT CASE FOR THE REASON THAT BEING BOUND BY THE JUDICIAL DISCIPL INE, WE HAVE TO FOLLOW AND APPLY THE LAW AS APPROVED BY THE JURISDICT IONAL HIGH COURT I.E., THE HONBLE DELHI HIGH COURT. 6.0 IN THE FINAL RESULT, THE APPEAL OF THE ASSESSE E STANDS ALLOWED. 9 ITA NO.583/DEL/2018 M..A. PROJECTS PVT. LTD. VS. ACIT ORDER PRONOUNCED ON 30/09/2020. SD/- SD/- (G.S.PANNU) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER DATED: 30/09/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI