ACIT, New Delhi V. M/s. Moongipa Securities Ltd., New Delhi

ITA 5944/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98306 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 07-12-2015
• Assessment Year: 1995-1996
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM JAIN
• Assessee Lawyers: P DAM KANUNJNA SENIOR

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 E EE E : 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 CHANDRA MOHAN GARG SHRI CHANDRA MOHAN GARG SHRI CHANDRA MOHAN GARG SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 5944/DEL/2013 5944/DEL/2013 5944/DEL/2013 5944/DEL/2013 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 1995 1995 1995 1995 - -- - 96 9696 96 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -5(1) 5(1) 5(1) 5(1), ,, , NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S MOONGIPA SECURITIES LIMITED, M/S MOONGIPA SECURITIES LIMITED, M/S MOONGIPA SECURITIES LIMITED, M/S MOONGIPA SECURITIES LIMITED, 18/12, W.E.A., KAROL BAGH, 18/12, W.E.A., KAROL BAGH, 18/12, W.E.A., KAROL BAGH, 18/12, W.E.A., KAROL BAGH, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 005. 110 005. 110 005. 110 005. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAUTAM JAIN, ADVOCATE. RESPONDENT BY : SHRI P. DAM KANUNJNA, SENIOR DR. DATE OF HEARING : 07.12.2015 07.12.2015 07.12.2015 07.12.2015 DATE OF PRONOUNCEMENT : 17.12.2015 17.12.2015 17.12.2015 17.12.2015 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 1995-96 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-VIII, NEW DELHI DATED 27 TH AUGUST, 2013. 2. THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL READ AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) IS JUSTIFIED IN DELETING THE PENALTY U/S 271(1)(C) OF RS.7,99,430/- AS ALL THE ASSETS AN D LIABILITY OF SH. SURESH CHAND MANGAL PROP. OF M/S S.C. MANGAL & CO. HAVE BEEN PURCHASED BY M/S MOONGIPA SECURITIES LTD. AS PER THE DECREE PASSED BY THE HON. HIGH COURT OF DEL HI AND IS LIABLE TO PAY THE PENALTY AS PART OF LIABILITY O F THE PURCHASED BUSINESS? 2. THAT THE ORDER OF THE LD.CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. ITA-5944/DEL/2013 2 3. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND OR FORGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE A T THE TIME OF THE HEARING. 3. AT THE OUTSET, IT IS STATED BY THE LEARNED COUNS EL THAT THE GROUND RAISED BY THE REVENUE IS MISCONCEIVED AND NOT ARISI NG OUT OF THE ORDER OF LEARNED CIT(A) BECAUSE LEARNED CIT(A) HAS NOT DE LETED THE PENALTY AS CHALLENGED IN THE GROUND OF APPEAL. ON THE OTHE R HAND, LEARNED CIT(A) ONLY HELD THAT THE PENALTY LEVIED UPON SHRI S.C. MANGAL CANNOT BE RECOVERED FROM THE ASSESSEE, I.E., M/S MOONGIPA SECURITIES LIMITED. HE FURTHER POINTED OUT THAT HON'BLE JURISDICTIONAL HIGH COURT HAS ALREADY DECIDED THIS ISSUE IN THE CASE OF THE ASSES SEE VIDE ORDER DATED 20 TH NOVEMBER, 2013. COPY OF THE ORDER IS PLACED ON RE CORD AND IT WAS POINTED OUT THAT HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT THE AMOUNT OF PENALTY CANNOT BE RECOVERED FROM THE ASSE SSEE UNLESS THE REVENUE PASSES AN ORDER U/S 170(3) OF THE INCOME-TA X ACT, 1961. 4. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE ASSESSING OFFICER AND HE STATED THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR PASSING THE O RDER U/S 170(3) OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE RELEVANT MATERIAL PLACED BEFORE US. THE UNDISPUTED FACTS ARE THAT THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF T HE ACT FOR ASSESSMENT YEAR 1995-96 AMOUNTING TO `7,99,430/- IN THE CASE O F SHRI S.C. MANGAL, PROPRIETOR OF M/S S.C. MANGAL & CO. HOWEVER, THE D EMAND NOTICE AGAINST THIS LEVY OF PENALTY WAS SERVED UPON THE AS SESSEE, I.E., M/S MOONGIPA SECURITIES LIMITED, BECAUSE, BY THE TIME T HE PENALTY ORDER WAS PASSED, THE BUSINESS OF M/S S.C. MANGAL & CO. W AS TAKEN OVER BY THE ASSESSEE COMPANY, I.E., M/S MOONGIPA SECURITIES LIMITED. THE ITA-5944/DEL/2013 3 ASSESSEE HAS CHALLENGED THE RECOVERY OF THE AMOUNT OF PENALTY FROM IT BEFORE THE LEARNED CIT(A) AS WELL AS BY FILING THE WRIT PETITION BEFORE HON'BLE JURISDICTIONAL HIGH COURT. LEARNED CIT(A) CANCELLED THE DEMAND NOTICE WITH THE FOLLOWING ORDER:- 7.4 IN LIGHT OF THE ABOVE, IT IS HELD THAT THE DEM AND RAISED ON THE APPELLANT COMPANY OF RS.7,99,430/- FO R ASSESSMENT YEAR 1995-96 IN PURSUANCE TO ORDERS U/S 271(1)(C) OF THE ACT ON SHRI SURESH CHAND MANGAL BY WAY OF NOTICE OF DEMAND DATED 30.9.1998 IS NOT VALID AND THEREFORE CANCELLED. 6. THE REVENUE, AGGRIEVED WITH THE ORDER OF LEARNED CIT(A), IS IN APPEAL BEFORE US. HOWEVER, IN THE GROUNDS OF APPEA L, THE REVENUE HAS MENTIONED THAT LEARNED CIT(A) IS NOT JUSTIFIED IN D ELETING THE PENALTY U/S 271(1)(C) OF `7,99,430/-. FROM THE ORDER OF LE ARNED CIT(A), WE FIND THAT THE CIT(A) HAS NOT CANCELLED THE PENALTY BUT H E HAS ONLY HELD THAT THE DEMAND RAISED ON THE APPELLANT COMPANY IN RESPE CT OF THE PENALTY OF SHRI S.C. MANGAL IS NOT VALID. THUS, THE GROUND RAISED BY THE REVENUE IN ITS APPEAL IS MISCONCEIVED AND NOT ARISI NG OUT OF THE ORDER OF LEARNED CIT(A). 7. HOWEVER, HON'BLE JURISDICTIONAL HIGH COURT HAS A LSO PASSED ORDER DATED 20 TH NOVEMBER, 2013 IN WRIT PETITION (CIVIL) NO.6531/19 98 ON THE IDENTICAL ISSUE AND, IN PARAGRAPH 22, HELD AS UNDER :- 22. THE WRIT PETITION IS ACCORDINGLY PARTLY ALLOWE D. IT IS DIRECTED THAT THE PENALTY AMOUNTS UNDER SECTION 18( 1)(C) OF THE WT ACT RELATING TO ASSESSMENT YEARS 1991-92 AND 1992-93 CANNOT BE RECOVERED FROM THE PETITIONER. W ITH REGARD TO THE INCOME TAX DEMAND INCLUDING PENALTY F OR THE ASSESSMENT YEAR 1995-96, RELATING TO S.C. MANGAL, I T IS OPEN TO THE RESPONDENTS TO INITIATE RECOVERY PROCEE DINGS AFTER DECIDING THE DISPUTE BY PASSING AN ORDER UNDE R SECTION 170(3), THE ASSESSING OFFICER WILL DECIDE W HETHER PENALTY AMOUNT UNDER SECTION 271(1)(C) OF THE IT AC T CAN BE RECOVERED FROM THE PETITIONER, EVEN WHEN THE LIA BILITY WAS DETERMINED SUBSEQUENT TO THE DATE OF SUCCESSION . ITA-5944/DEL/2013 4 PETITIONER, IF AGGRIEVED, BY THE SAID ORDER WILL BE ENTITLED TO FILE AN APPEAL AND QUESTION THE SAME. THE WRIT PET ITION IS DISPOSED OF. NO COSTS. 8. FROM A READING OF THE ABOVE ORDER, IT IS EVIDENT THAT AS PER HON'BLE JURISDICTIONAL HIGH COURT, THE RECOVERY OF THE PENALTY U/S 271(1)(C) FOR ASSESSMENT YEAR 1995-96 RELATING TO S HRI S.C. MANGAL CAN BE MADE FROM THE ASSESSEE ONLY AFTER THE ORDER U/S 170(3) OF THE INCOME-TAX ACT IS PASSED. ADMITTEDLY, TILL THE ORD ER OF THE CIT(A), NO SUCH ORDER WAS PASSED BY THE REVENUE. THEREFORE, S O FAR AS THE ORDER OF LEARNED CIT(A) IS CONCERNED, WE FIND NO JUSTIFIC ATION TO INTERFERE WITH IT. ACCORDINGLY, THE SAME IS SUSTAINED. HOWEVER, BEFORE WE PART WITH THE MATTER, WE MAY MENTION THAT THE ASSESSING OFFIC ER IS AT LIBERTY TO ACT AS PER THE OBSERVATION OF HON'BLE JURISDICTIONA L HIGH COURT IN WRIT PETITION (CIVIL) NO.6531/1998, ORDER DATED 20 TH NOVEMBER, 2013. SUBJECT TO THIS REMARK, THE APPEAL FILED BY THE REV ENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 17.12.2015 . SD/- SD/- (CHANDRA MOHAN GARG (CHANDRA MOHAN GARG (CHANDRA MOHAN GARG (CHANDRA MOHAN GARG ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -5(1), NEW DELHI. 5(1), NEW DELHI. 5(1), NEW DELHI. 5(1), NEW DELHI. 2. RESPONDENT : M/S MOONGIPA SECURITIES LIMITED, M/S MOONGIPA SECURITIES LIMITED, M/S MOONGIPA SECURITIES LIMITED, M/S MOONGIPA SECURITIES LIMITED, 18/12, W.E.A., KAROL BAGH, 18/12, W.E.A., KAROL BAGH, 18/12, W.E.A., KAROL BAGH, 18/12, W.E.A., KAROL BAGH, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 005. 110 005. 110 005. 110 005. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR