Garg Exports (India), New Delhi V. ITO, Ward-35(2), New Delhi

ITA 5882/DEL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2248 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 05-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CHALLENG ING DATED PASSED
• Keywords: Additional evidence; Initiation of penalty proceedings; TDS
• Section: 271(1)(c); 44AD; 274; 73; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: SMC-1 NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.5882/DEL/2019 ASSESSMENT YEAR: 2012-13 M/S. GARG EXPORTS (INDIA), 29/5, NANGIA PARK, SHAKTI NAGAR, NEW DELHI VS. ITO, WARD-35(2), NEW DELHI PAN :AAAFG3071H (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENG ING THE ORDER DATED 30/04/2019 PASSED BY THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS)-12, NEW DELHI [IN SHORT THE L D. CIT(A)], WHEREIN PENALTY LEVIED UNDER SECTION 271(1)(C) OF T HE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) BY THE ASSESSING OFF ICER HAS BEEN SUSTAINED. APPELLANT BY MS. APOORVA BHARDWAJ, ADV. RESPONDENT BY SHRI R.K. GUPTA, SR.DR DATE OF HEARING 28.06.2021 DATE OF PRONOUNCEMENT 30.06.2021 2 ITA NO.5882/DEL/2019 2. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE FIL ED ADDITIONAL GROUNDS RAISED BY THE ASSESSEE, WHICH AR E REPRODUCED AS UNDER: 1. THAT THE ASSESSEE RESPONDENT CRAVES TO WITHDRAW GROUNDS OF APPEAL NO. 2 AND 3 AS PREFERRED BY THE APPELLANT IN THE MEMORANDUM OF APPEAL: 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) -12, NEW DELHI, HAS ERRED IN OVERLOOKING AND IN SUMMARIL Y REJECTING THE BANK ANALYSIS SUBMITTED AS ADDITIONAL EVIDENCE. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S)-12, NEW DELHI, HAS ERRED IN REJECTING RECTIFICATION APP LICATION SUBMITTED FOR ADDITIONAL EVIDENCE. II. THE ASSESSEE RESPONDENT CRAVES LEAVE TO RAISE T HE FOLLOWING ADDITIONAL GROUNDS OF APPEAL BEFORE YOUR HONOUR: '1. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE TH AT THE LD. ASSESSING OFFICER HAS NOT RECORDED SATISFACTION IN THE ASSESSMENT ORDER AS WARRANTED BY SECTION 271 OF THE INCOME TAX ACT, 1961 FOR INITIATION OF PENALTY PROCEEDINGS AGAINST THE APPELLANT. AS SUCH, IN ABSENCE OF SUCH SATISFACTION , THE SUBSEQUENT ORDER LEVYING PENALTY UNDER SECTION 271( L)(C) OF THE ACT IS BAD IN LAW AND THUS, MAY PLEASE BE QUASHED. 2. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THA T THE ID. ASSESSING OFFICER HAD NOT SPECIFIED IN THE NOTI CE UNDER SECTION 271(L)(C) R.W.S. 274 OF THE ACT, WHETHER TH E PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOM E OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. AS SUCH, THE PENALTY ORDER UNDER SECTION 271(L)(C) OF THE ACT IS BAD IN LAW AND MAY PLEASE BE QUASHED.' IN THIS REGARD IT IS FURTHER SUBMITTED THAT WHILE F ILLING THE MEMORANDUM OF APPEAL, THE APPELLANT HAD DULY REQUES TED VIDE GROUND OF APPEAL NO. 4 BEFORE THE HON'BLE TRIBUNAL, TO ADD, ALTER, VARY OR AMEND ANY OF THE GROUND OF APPEAL AND AS SU CH, IN VIEW OF GROUND OF APPEAL NO. 4, ADDITIONAL GROUNDS UNDERTAK EN HEREIN ABOVE MAY PLEASE BE PERMITTED. THE AFORESAID GROUNDS OF APPEAL RAISE LEGAL ISSUES, WHICH DOES NOT INVOLVE ANY FRESH INVESTIGATION INTO THE FACTS; FAC TS ALREADY BEING ON RECORD. THE ASSESSEE/ RESPONDENT RELIES, IN THIS RE GARD, ON THE DECISION OF THE GAUHATI HIGH COURT IN THE CASE OF A SSAM COMPANY (INDIA) LTD.VS. CIT.: 256 ITR 423, WHEREIN THEIR LO RDSHIPS HELD THAT IT IS PERMISSIBLE ON THE PART OF THE TRIBUNAL TO EN TERTAIN A GROUND BEYOND THOSE INCORPORATED IN THE MEMORANDUM OF APPE AL THROUGH THE PARTY URGING THE SAID GROUND HAD NEITHER APPEAL ED BEFORE IT NOR HAD FILED A CROSS OBJECTION IN THE APPEAL FILED BY THE OTHER PARTY, PROVIDED THE RELEVANT FACTS ON WHICH SUCH GROUND IS FOUNDED ARE AVAILABLE ON RECORD. 3 ITA NO.5882/DEL/2019 FURTHER, IN VIEW OF THE DECISION OF THE HON'BLE SUP REME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT: 229 ITR 383 AS ALSO THE DECISION IN THE CASE OF JUTE CORPORATION OF IND IA V. CIT: 187 ITR 688, THE GROUND OF APPEAL CALLS FOR BEING ADMITTED AND ADJUDICATED ON MERITS. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT SCRUTINY ASSESSMENT OF THE INCOME FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED ON 03/03/2015 UNDER SECTION 144 OF THE ACT, IN VIEW OF NON-FILING OF VITAL INFORMATION CALLED FOR BY THE ASSESSING OFFIC ER. THE ASSESSEE HAD SHOWN GROSS TURNOVER OF 45,94,809/- WITH GROSS PROFIT RATE OF 23.11% IN TERMS OF SECTION 44AD OF THE ACT AND AFTER CLAIMING INTEREST TO PARTNERS OF 5,53,428/- AND REMUNERATION TO PARTNERS OF 3,94,800/-, DECLARED NET PROFIT OF 1,13,847/-. THE ASSESSING OFFICER EXAMINED BANK STATEMENT OF THE ASSESSEE AND NOTICED THAT THE ASSESSEE HAD DEPOSITED CASH MONEY OF 79,36,046/- INTO BANK ACCOUNTS MAINTAINED WITH CANARA BANK AND ICIC I BANK . THE ASSESSING OFFICER DISALLOWED INTEREST AND REMUN ERATION TO THE PARTNERS. THE ASSESSING OFFICER ESTIMATED NET BUSIN ESS INCOME OF THE ASSESSEE AT RS.18,34,020/- AND UNEXPLAINED SUND RY CREDITORS OF 15,833/-. THE ASSESSING OFFICER ALSO INITIATED PEN ALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. AGA INST THE APPEAL FILED IN QUANTUM PROCEEDING, THE LEARNED CIT(A) ALL OWED PART RELIEF TO THE ASSESSEE. IN VIEW OF THE DECISION OF THE LEARNED CIT(A), THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE FOR LEVY OF PENALTY IN RESPECT OF THE ADDITION SUSTAINED. AF TER CONSIDERING SUBMISSION OF THE ASSESSEE, THE ASSESSING OFFICER L EVIED PENALTY VIDE HIS ORDER DATED 31/03/2018 @ 100% OF THE TAX O UGHT TO BE EVADED, WHICH HAS BEEN WORKED OUT TO 1,32,246/-. ON FURTHER APPEAL, THE LD. CIT(A) SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER. A RECTIFICATION FILED BEFORE THE LD. CIT(A) WAS 4 ITA NO.5882/DEL/2019 ALSO REJECTED BY THE LEARNED CIT(A) VIDE HIS ORDER DATED 27/06/2019. 4. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE ADD RESSING THE ADDITIONAL GROUND SUBMITTED THAT SAME ARE LEGAL IN NATURE AND NO INVESTIGATION OF THE FRESH FACTS ARE REQUIRE D AND, THEREFORE, SAME MIGHT BE ADMITTED. THE LEARNED DR OPPOSED ADMI SSION OF THE ADDITIONAL GROUND AND SUBMITTED THAT SAME HAVE NOT BEEN ADJUDICATED BY THE LEARNED CIT(A). 5. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE OF ADMISSIBILITY OF THE ADDITIONAL GROUND. WE FIND THAT BOTH GROUNDS ARE PURELY LEGAL IN NATURE AND ALL THE FACT S IN RELATION TO THE ADDITIONAL GROUND RAISED ARE ALREADY AVAILABLE ON RECORD AND NO INVESTIGATION OF THE FRESH FACTS IS REQUIRED FOR ADJUDICATION OF THESE GROUNDS. ACCORDINGLY, IN VIEW OF THE SETTLED PRINCIPAL IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT 229 ITR 383 (SC), THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE A DMITTED. 5.1 IN SUPPORT OF ADDITIONAL GROUND NO.1, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT NO SATISFACTION HAS BEE N RECORDED FOR INITIATING THE PENALTY PROCEEDINGS BY THE ASSESSING OFFICER AND THEREFORE, IN VIEW OF THE DECISION CIT VS RAM COMME RCIAL ENTERPRISES LTD., (2001) 246 ITR 563 (DELHI HIGH CO URT), THE PENALTY SHOULD BE DELETED. 5.2 IN SUPPORT OF GROUND NO.2, THE LEARNED COUNSEL SUB MITTED THAT WHILE INITIATING THE PENALTY PROCEEDING RELEVA NT CHARGES EITHER OF CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME WAS NOT MADE CLEAR IN THE ASS ESSMENT ORDER AS WELL AS IN THE NOTICE ISSUED FOR INITIATING PENA LTY PROCEEDINGS. ACCORDING TO HER, IN VIEW OF LACK OF CLARITY OF CHA RGES FOR PENAL 5 ITA NO.5882/DEL/2019 ACTION, THE PENALTY LEVIED IS VOID AND NOT SUSTAINA BLE IN LAW IN VIEW OF THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS MANJUNATHA COT TON & GINNING FACTORY [2013] 359 ITR 565, WHICH HAS BEEN FURTHER APPROVED BY THE HONBLE SUPREME COURT IN THE CASE O F COMMISSIONER OF INCOME-TAX VS. SSAS EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 (SC)]. 5.3 THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE O RDER OF THE LOWER AUTHORITIES. 5.4 WE HAVE HEARD RIVAL SUBMISSION OF PARTIES ON THE I SSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON RECORD . WE FIND THAT WHILE INITIATING THE PENALTY PRECEDING, THE ASSESSI NG OFFICER IN THE ASSESSMENT ORDER OBSERVED AS UNDER: 4. ASSESSED U/S 144 (EX-PARTE) AT AN INCOME OF RS .18,49,850/-. CHARGE INTEREST RULES. PENALTY PROCEEDINGS U/S 271 (1)(B) AND 271(1)(C) HAVE BEEN INITIATED SEPARATELY. ISSUE NEC ESSARY FORMS. 5.5 FROM THE ABOVE PARAGRAPH, IT CAN BE INFERRED THAT THERE IS NO CLARITY OF THE CHARGES FOR WHICH PENALTY HAS BEE N INITIATED. THERE IS NO MENTION, WHETHER THE PENALTY HAS BEEN I NITIATED FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. IN THE NOTICE DATED 03/03/2015 FOR INITIATI NG PENALTY PROCEEDING ALSO THE RELEVANT PART AS TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME HAS NOT BEEN TICKED. IN SUCH CIRCUMSTANCES, THE ASSESSEE WAS NOT CLEAR U NDER WHICH LIMB OF SECTION 271C OF THE ACT, THE PENALTY WAS IN ITIATED. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNA THA COTTON AND GINNING FACTORY (SUPRA) HAS HELD THAT WHILE ISS UING THE NOTICE THE ASSESSING OFFICER HAS TO COME TO CONCLUS ION THAT 6 ITA NO.5882/DEL/2019 WHETHER IT IS A CASE OF CONCEALMENT OF INCOME OR FU RNISHING OF INACCURATE PARTICULARS OF INCOME AND SENDING PRINTE D FORMS WHERE ALL GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED, WOULD NOT SATISFY REQUIREMENT OF LAW. THE HONBLE SUPREME COU RT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA), HAS ALSO UPH ELD THE FINDING IN THE CASE OF MANJUNATHA COTTON AND GINNIN G FACTORY (SUPRA) 5.6 RESPECTFULLY, FOLLOWING THE DECISION OF THE HONBL E KARNATAKA HIGH COURT AND HONBLE SUPREME COURT, WE ARE OF THE OPINION THAT PENALTY LEVIED IS BAD IN LAW AND ACCORDINGLY W E CANCEL THE SAME. THE ADDITIONAL GROUND NO.2 OF THE APPEAL IS A LLOWED. 5.7 SINCE WE HAVE ALREADY ALLOWED ONE OF THE ADDITIONA L GROUNDS AND PENALTY HAS BEEN CANCELLED, WE ARE NOT REQUIRED TO ADJUDICATE UPON THE ADDITIONAL GROUND AND REGULAR GROUND RAISE D BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2021 SD/- SD/- (KUL BHARAT) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH JUNE, 2021. RK/- (DTDS) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI