Sh. Aashish Arora, Ludhiana V. ITO, W-3(2), Ludhiana

ITA 595/CHANDI/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4457 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-10-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 01-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENAKSHI VOHRA CIT
• Keywords: Set aside
• Section: 271(1)(c); 13; 68; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH (VIRTUAL COURT) .., !' '# $, % &' BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO. 595/CHD/2019 ASSESSMENT YEAR : 2013-14 SHRI ASHISH ARORA PROP. M/S SHANTI KNIT FAB, 413, 4 TH FLOOR, K-10 TOWR FEROZE GANDHI MRKET, LUDHIANA THE ITO WARD-3(2), LUDHIANA PAN NO: ADKPA1111B APPELLANT RESPONDENT !' ASSESSEE BY : SHRI YOGESH KUMAR SAXENA, ADVOCATE SHRI AMANDEEP SAXENA, CA #!' REVENUE BY : SMT. MEENAKSHI VOHRA, ADDL. CIT $ %! & DATE OF HEARING : 20/10/2020 '()*! & DATE OF PRONOUNCEMENT : 20/10/2020 &(/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT . 18/02/2019 OF LD. CIT(A)-1, LUDHIANA. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1(I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED BOTH ON THE FACTS AND IN LAW IN UPHOLDING ORDER OF THE A.O. LEV YING PENALTY BOTH FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME IN RESPECT OF ADDITIONS OF RS. 1,36,00,030/- MADE UNDER SECTION 68 BY THE A.O. (II) THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT I NAPPROPRIATE WORDS IN THE PENALTY NOTICE ISSUED BY THE LD. A.O. FOR LEVY OF PENALTY ARE NOT STUCK OFF AND THE NOTICE DOES NOT SPECIFY AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS PARTIC ULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. (III) THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ACCOUNTS OF THE APPELLANT WERE DULY AUDITED AND ADDITIONS TO THE CAPITAL ACCOUNTS OF TH E APPELLANT WERE FROM THE KNOWN SOURCES. (IV) THE LD. CIT(A) HAS ALSO FAILED TO APPRECIATE T HAT THE LD. A.O. HAS NOT BROUGHT ANY EVIDENCE ON RECORDS TO DRAW POSITIVE INFERENCE AS T O WHETHER ADDITIONS TO THE CAPITAL 2 ACCOUNTS OF THE APPELLANT REPRESENT CONCEALED INCOM E OR IT IS ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 2(I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED BOTH ON THE FACTS AND IN LAW IN UPHOLDING ORDER OF THE A.O. LEV YING PENALTY BOTH FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME IN RESPECT OF ADDITIONS OF RS. 28,25,138/-, IN SAVING BANK ACCOUNT OF THE APPELLA NT. (II) THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT I NAPPROPRIATE WORDS IN THE PENALTY NOTICE ISSUED BY THE LD. A.O. FOR LEVY OF PENALTY ARE NOT STUCK OFF AND THE NOTICE DOES NOT SPECIFY AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS PARTIC ULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. (III) THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ACCOUNTS OF THE APPELLANT WERE DULY AUDITED AND ADDITIONS OF RS. 28,25,138/- IN SAVING BANK ACCOUNT OF THE APPELLANT WERE FROM THE KNOWN SOURCES. (IV) THE LD. CIT(A) HAS ALSO FAILED TO APPRECIATE T HAT THE LD. A.O. HAS NOT BROUGHT ANY EVIDENCE ON RECORDS TO DRAW POSITIVE INFERENCE THAT AS TO HOW CREDIT ENTRIES IN SAVING BANK ACCOUNT OF THE APPELLANT, DULY RECORDED IN THE BOOK S OF ACCOUNT OF THE APPELLANT REPRESENT CONCEALED INCOME AND FURNISHING INACCURAT E PARTICULARS OF INCOME. (V) THE LD. CIT(A) HAS ALSO FAILED TO APPRECIATE TH AT PENALTY FOR CONCEALMENT IS ATTRACTED IF THERE ARE CLEAR FINDINGS BY THE LD. A.O. TO HOLD UN DER WHICH PROVISIONS OF LAW ADDITION OF RS. 28,25,138/- WAS MADE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A)HAS ERRED BOTH ON THE FACTS AND IN LAW IN UPHOLDING ORDER OF THE A.O. LEV YING PENALTY IN RESPECT OF ADDITIONS OF RS. 1,36,00,030/-MADE U/S 68 BY THE A.O. AND ADDITIONS OF RS. 28,25,138/- ON ACCOUNT OF CREDIT ENTRIES IN SAVING BANK ACCOUNT OF THE APPELLANT BEF ORE DECIDING QUANTUM APPEAL NO. 57/IT/CIT(A)-1/LDH/2016-17 OF THE APPELLANT FILED A GAINST THE ORDER OF THE A.O. DATED 14/03/2016 PASSED U/S 144 WHEREBY AFORESAID ADDITIO NS MADE BY THE A.O. HAVE BEEN CHALLENGED. 4. THE APPELLANT CRAVES THE RIGHT TO ADD, ALTER, AM END ANY GROUND(S) OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. FROM THE AFORESAID GROUND IT WOULD BE CLEAR THAT T HE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO THE SUSTENANCE OF PENALTY LEVIED BY THE A.O. UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FI LED THE RETURN OF INCOME ON 24/05/2014 DECLARING TOTAL INCOME OF RS. 34,05,640/- . THE ASSESSMENT HOWEVER WAS FRAMED BY THE A.O. AT AN INCOME OF RS. 2,63,32,375/- U NDER SECTION 144 OF THE ACT BY MAKING VARIOUS ADDITIONS WHICH INCLUDED THE ADDITION OF RS. 1,36,00,030/- MADE UNDER SECTION 68 AND RS. 28,25,138/- ON ACCOUNT OF DEPOSIT IN THE SAVING BANK ACCOUNT. THE A.O. ALSO ADDED RS. 56,68,679/- ON ACCOUNT OF TRADING ADDITION BY APPLYING G.P. RATE, ANOTHER ADDITION OF RS. 46,499/-, RS. 1,86,399/- AND RS . 6,00,000/- WERE MADE ON ACCOUNT OF ABSENCE OF THE EVIDENCE FOR CLAIMING THE DEDUCTION U NDER CHAPTER VI A, 3 DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 57 OF THE ACT AND ESTIMATED ADDITION ON ACCOUNT OF HOUSEHOLD EXPENSES RESPECTIVELY. 4.1 ON THE AFORESAID ADDITIONS THE PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT WAS INITIATED. HOWEVER, THE A.O. LEVIED THE PENALTY OF RS. 70,84,362/-. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO DELETED THE PENALTY IN RESPECT OF TRADING ADDITION OF RS. 56,68 ,679/- BY OBSERVING THAT THE SAID ADDITION WAS ON ESTIMATE BASIS. HE ALSO DELETED THE PE NALTY ON THE DISALLOWANCE AND THE ADDITIONS WHICH WERE CONSIDERED TO BE GENERAL IN NA TURE AND WERE MADE BY THE A.O. BY PASSING THE EXPARTE ASSESSMENT ORDER. THE LD . CIT(A) SUSTAINED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE ADDITION OF RS. 1,36,00,000/- AND RS. 28,25,138. 6. NOW THE ASSESSEE IS IN APPEAL. 7. LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STA TED THAT WHEN THE APPEAL OF THE ASSESSEE ON THE PENALTY LEVIED BY THE A.O. UNDER SEC TION 271(1)(C) OF THE ACT WAS FILED, THE ANOTHER APPEAL ON QUANTUM ADDITION WAS PENDING BEFORE THE LD. CIT(A) WHO DELETED THE ADDITION OF RS. 1,36,00,030/- AND THE ADD ITION OF RS. 27,22,138/- OUT OF THE ADDITION OF RS. 28,25,138/-. HE FURNISHED THE COPY OF THE ORDER OF THE LD. CIT(A)-1, LUDHIANA DT. 09/07/2019 WHEREIN THE AFORESAID ADDITIO N HAD BEEN DELETED VIDE PARA 9 AND 13 OF THE SAID ORDER. IT WAS FURTHER SUBMITTED THAT THE REMAINING ADDITION OF RS. 1,03,000/-(RS. 28,25,138/- (-) RS. 27,22,138/-) ON A CCOUNT OF CASH DEPOSITED IN BANK ACCOUNT WAS DELETED BY THE ITAT A BENCH CHANDIGARH VIDE PARA 14 OF THE ORDER DT. 29/09/2020 (COPY OF THE AFORESAID ORDERS OF THE LD. C IT(A) AND ITAT WERE FURNISHED WHICH ARE PLACED ON THE RECORD). ACCORDINGLY IT WAS SUB MITTED THAT THE ADDITIONS ON THE BASIS OF WHICH THE IMPUGNED PENALTY UNDER SECTION 271 (1)(C) WAS LEVIED BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) IS NOT IN EXISTENCE. THER EFORE THE IMPUGNED PENALTY DESERVES TO BE DELETED. 8. IN HER RIVAL SUBMISSIONS THE LD. SR. DR STRONGLY S UPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE I T IS AN ADMITTED FACT THAT THE 4 ADDITION ON THE BASIS OF WHICH THE IMPUGNED PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS SUSTAINED BY THE LD. CIT(A) ARE NOT IN EXISTENCE. O N A SIMILAR ISSUE THE HON'BLE SUPREME COURT IN THE CASE OF K.C. BUILDERS AND ANOTHER V S. ASST. CIT REPORTED AT 265 ITR 562 HELD AS UNDER: WHERE THE ADDITIONS MADE IN THE ASSESSMENT ORDER ON THE BASIS OF WHICH PENALTY FOR CONCEALMENT IS LEVIED, ARE DELETED, THERE REMAINS N O BASIS AT ALL FOR LEVYING PENALTY FOR CONCEALMENT AND, THEREFORE, IN SUCH A CASE NO PENAL TY CAN SURVIVE AND THE PENALTY IS LIABLE TO BE CANCELLED. ORDINARILY, PENALTY CANNOT STAND IF THE ASSESSMENT ITSELF IS SET ASIDE. IN THE PRESENT CASE ALSO SINCE THE ADDITIONS ON THE BASI S OF WHICH THE IMPUGNED PENALTY WAS SUSTAINED BY THE LD.CIT(A) HAVE ALREADY BEEN DELETE D BY THE LD. CIT(A) / ITAT, AS SUCH THE SAID ADDITIONS WHICH WERE THE BASIS FOR LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT ARE NOT IN EXISTENCE, THEREFORE, BY RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE AFORESAID REFERRED TO CASE OF THE K.C. BUILDERS AND ANOTHER VS. ASST. CIT (SUPRA) IMPUGNED PENA LTY SUSTAINED BY THE LD. CIT(A) IS DELETED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 20/10/2020 ) SD/- SD/- '# $ .., (SANJAY GARG ) ( N.K. SAI NI) % &'/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE: 20/10/2020 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE