Sanjay Sawhney, New Delhi V. ACIT, New Delhi

ITA 5834/DEL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6748 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 24-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJNISH SHARMA S
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH G GG G : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND SHRI KULDIP SINGH SHRI KULDIP SINGH SHRI KULDIP SINGH SHRI KULDIP SINGH, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 5834/DEL/2012 5834/DEL/2012 5834/DEL/2012 5834/DEL/2012 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2009 2009 2009 2009 - -- - 10 1010 10 SHRI SANJAY SAWHNEY, SHRI SANJAY SAWHNEY, SHRI SANJAY SAWHNEY, SHRI SANJAY SAWHNEY, C CC C- -- -83, PHASE 83, PHASE 83, PHASE 83, PHASE- -- -1, 1,1, 1, ASHOK VIHAR, ASHOK VIHAR, ASHOK VIHAR, ASHOK VIHAR, NEW DELH NEW DELH NEW DELH NEW DELHI. I.I. I. PAN : ABNPS4554P. PAN : ABNPS4554P. PAN : ABNPS4554P. PAN : ABNPS4554P. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -11, 11, 11, 11, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO .5959/DEL/2012 .5959/DEL/2012 .5959/DEL/2012 .5959/DEL/2012 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2009 2009 2009 2009 - -- - 10 1010 10 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -20(4), 20(4), 20(4), 20(4), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SHRI SANJAY SAWHNEY, SHRI SANJAY SAWHNEY, SHRI SANJAY SAWHNEY, SHRI SANJAY SAWHNEY, C CC C- -- -83, PHASE 83, PHASE 83, PHASE 83, PHASE- -- -1, 1,1, 1, ASHOK VIHAR, ASHOK VIHAR, ASHOK VIHAR, ASHOK VIHAR, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : ABNPS4554P. PAN : ABNPS4554P. PAN : ABNPS4554P. PAN : ABNPS4554P. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SACHIN JAIN AND SHRI RAJNISH SHARMA, ADVOCATES. REVENUE BY : SHRI N.K. BANSAL, CIT - DR. DATE OF HEARING : 24.10.2016 24.10.2016 24.10.2016 24.10.2016 DATE OF PRONOUNCEMENT : 27.10.2016 27.10.2016 27.10.2016 27.10.2016 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THESE CROSS-APPEALS FOR THE ASSESSMENT YEAR 2009-10 ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXXI, N EW DELHI DATED 31 ST AUGUST, 2012. ITA-5834 & 5959/D/2012 2 2. BOTH THE SIDES HAVE CHALLENGED THE LEVY OF PENALTY UNDER SECTION 140A(3) OF THE INCOME-TAX ACT, 1961 WHICH IS PARTLY SUSTAINED BY THE LEARNED CIT(A). THE ASSESSING OFFICER HAD LEVIED THE P ENALTY OF `1,25,29,942/- BEING 100% OF THE TAX LIABILITY. LE ARNED CIT(A) SUSTAINED THE PENALTY AT 25% OF THE ADMITTED TAX I.E. , `31,32,450/-. THE REVENUE IS IN APPEAL AGAINST THE RELIEF ALLOWED W HILE THE ASSESSEE IS IN APPEAL AGAINST THE PENALTY SUSTAINED. 3. THE ADMITTED FACTS ARE THAT FOR THE YEAR UNDER CO NSIDERATION, THE ASSESSEE FILED THE RETURN OF INCOME ON 27 TH AUGUST, 2010 DECLARING TOTAL INCOME AT `5,54,45,421/-. THE TAX PAYABLE ON THE R ETURNED INCOME WAS `1,25,29,942/-. THE ASSESSEE DID NOT MAKE THE PAYME NT OF ADMITTED TAX LIABILITY U/S 140A BEFORE FILING OF THE RETURN. SUBSEQUENTLY, THE ASSESSEE MADE THE PAYMENT OF `1,25,29, 942/- AS UNDER:- DATE OF PAYMENT MODE AMOUNT BANK DETAILS 14 - 09 - 2010 CHEQUE 1500000 PNB, DARYAGANJ, DELHI 14 - 10 - 2010 CHEQUE 1500000 PNB, DARYAGANJ, DELHI 25 - 01 - 2011 CHEQUE 6800000 PSB, ROSHANARA ROAD, DELHI 25 - 01 - 20 12 CHEQUE 2779942 PSB, ROSHANARA ROAD, DELHI 4. HOWEVER, THE ASSESSING OFFICER LEVIED PENALTY U/S 1 40A(3) ON THE GROUND THAT THE ASSESSEE DID NOT MAKE THE PAYMENT OF A DMITTED TAX LIABILITY BEFORE THE FILING OF THE RETURN. LEARNED CIT(A), IN PRINCIPLE, UPHELD THE LEVY OF PENALTY BUT REDUCED THE AMOUNT O F PENALTY TO 25% OF THE ADMITTED TAX LIABILITY. AGGRIEVED WITH THE ORDER OF LEARNED CIT(A), BOTH THE PARTIES ARE IN APPEAL BEFORE US. ITA-5834 & 5959/D/2012 3 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND P ERUSED THE MATERIAL PLACED BEFORE US. SECTION 140A(3) OF THE A CT, UNDER WHICH THE PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER, READS A S UNDER :- [(3) IF ANY ASSESSEE FAILS TO PAY THE WHOLE OR ANY PART OF SUCH TAX OR INTEREST OR BOTH IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1), HE SHALL, WITHOUT PREJU DICE TO ANY OTHER CONSEQUENCES WHICH HE MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF THE TAX OR INTEREST OR BOTH REMAINING UNPAID, AND ALL THE PROVI SIONS OF THIS ACT SHALL APPLY ACCORDINGLY.] 6. FROM THE ABOVE, IT IS EVIDENT THAT IF THE ASSESSEE FA ILS TO PAY THE TAX ON THE RETURNED INCOME, HE SHALL BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX OR INTEREST WHICH REMAI NS UNPAID. THUS, AS PER THIS SECTION, THE ASSESSEE CAN BE TREATED TO BE IN DEFAULT IN RESPECT OF TAX LIABILITY AS PER RETURN OF INCOME FURN ISHED BY THE ASSESSEE. HOWEVER, THE SECTION DOES NOT EMPOWER THE ASSESSI NG OFFICER TO LEVY THE PENALTY. AS PER THIS SECTION, T HE ASSESSEE WOULD BE TREATED IN DEFAULT BUT THIS SECTION DOES NOT PROVIDE ANY CONSEQUENCE OF THE ASSESSEE BEING IN DEFAULT. THERE ARE OTHER PROV ISIONS UNDER THE INCOME-TAX ACT LIKE SECTION 221 WHICH EMPOWER THE A SSESSING OFFICER TO RECOVER THE TAX AS WELL AS LEVY THE PENALTY WHEN T HE ASSESSEE IS IN DEFAULT. THEREFORE, IF IN THE OPINION OF THE ASSESSING OFFICER, THE ASSESSEE WAS IN DEFAULT FOR NON-PAYMENT OF ADMITTED TAX UNDER SECTION 140A(1), HE COULD HAVE TAKEN THE ACTION UNDER THE R ELEVANT SECTION WHICH AUTHORIZES THE ASSESSING OFFICER TO RECOVER THE AM OUNT OR TO LEVY THE PENALTY. HOWEVER, SECTION 140A(3) DOES NOT AUTH ORIZE THE INCOME TAX OFFICER TO LEVY ANY PENALTY DUE TO THE DEFAULT OF THE ASSESSEE IN MAKING THE PAYMENT OF ADMITTED TAX U/S 140A(1). THE REFORE, IN OUR OPINION, THE PENALTY LEVIED U/S 140A(3) CANNOT BE SUST AINED. ITA-5834 & 5959/D/2012 4 7. AT THE TIME OF HEARING BEFORE US, LEARNED DR TRIE D TO DEFEND THE ORDER U/S 140A(3) ON THE GROUND THAT THE ASSESSEE HAS NOT DISPUTED THE POWER OF THE ASSESSING OFFICER TO LEVY THE PENALTY U/S 140A(3) EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A ). IN OUR OPINION, WHETHER THE ASSESSEE HAS DISPUTED THE POWER OF THE ASSESSING OFFICER OR NOT, WE HAVE TO SEE WHETHER THE ASSESSING OFFICER I S EMPOWERED U/S 140A(3) TO LEVY THE PENALTY. IF HE IS NOT EMPOWERE D, THE LEVY THE PENALTY U/S 140A(3) IS NOT LEGALLY SUSTAINABLE. IN OU R CONSIDERED OPINION, THE ASSESSING OFFICER IS NOT EMPOWERED TO LEVY THE PENALTY U/S 140A(3) AND, THEREFORE, THE PENALTY LEVIED AND PART LY SUSTAINED BY THE LEARNED CIT(A) IS UNSUSTAINABLE. THE SAME IS CANCELLED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED A ND THE APPEAL OF THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 27.10.2016. SD/- SD/- (KULDIP SINGH (KULDIP SINGH (KULDIP SINGH (KULDIP SINGH ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDIC JUDIC JUDIC JUDIC IAL MEMBER IAL MEMBER IAL MEMBER IAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. ASSESSEE : SHRI SANJAY SAWHNEY, C SHRI SANJAY SAWHNEY, C SHRI SANJAY SAWHNEY, C SHRI SANJAY SAWHNEY, C- -- -83, PHASE 83, PHASE 83, PHASE 83, PHASE- -- -1, 1,1, 1, ASHOK VIHAR, NEW DELHI. ASHOK VIHAR, NEW DELHI. ASHOK VIHAR, NEW DELHI. ASHOK VIHAR, NEW DELHI. 2. REVENUE : INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD- -- -20(4), NEW DELHI. 20(4), NEW DELHI. 20(4), NEW DELHI. 20(4), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR