Deloitte Haskins & Sells, Gurgaon V. DCIT, New Delhi

ITA 5972/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3549 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S P SINGH
• Keywords: Reassessment proceedings

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH B, NEW DELHI BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 5972/DEL./2014 ASSESSMENT YEAR: 2002-03 DELOITTE HASKINS & SELLS, 7 TH FLOOR, BUILDING 10, TOWER B, DLF CYBER CITY COMPLEX, DLF CITY PHASE-II, GURGAON. PAN- AABFD2095B (APPELLANT) VS. DCIT, CIRCLE 37(1), NEW DELHI. (RESPONDENT) APPELLANT BY SH. S.P. SINGH, AR RESPONDENT BY SH. ARUN KUMAR YADAV, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A)- XXVIII, NEW DELHI DATED 11.08.2014 FOR THE ASSESSME NT YEAR 2002-03, CHALLENGING THE SUSTENANCE OF PENALTY IMPOSED U/S. 271(1)(C) OF THE IT ACT, ON THE FOLLOWING GROUNDS : 1. THE LEARNED DEPUTY COMMISSIONER OF INCOME-TAX ERR ED IN LAW WELL AS ON FACTS IN LEVYING PENALTY UNDER SECTION 271(1)(C) ON RS.3,47,831 IN RESPECT OF ADDITION MADE FOR CLIENTS DEPOSIT ACCOUNT. THE COMMI SSIONER (APPEALS) ERRED IN CONFIRMING THE SAME. 2. THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE BALANCE IN CLIENT DEPOSIT ACCOUNT WAS DISCLOSED ON THE FACE OF THE BALANCE SHEET AND THEREFORE NO PENALTY OUGHT TO HAVE BEEN LEVIED. DATE OF HEARING 20.11.2017 DATE OF PRONOUNCEMENT 01 .02.2018 ITA NO. 5972/DEL./2014 2 3. WITHOUT PREJUDICE TO GROUND NO.1, COMMISSIONER ( APPEALS) ERRED IN CONFIRMING THE PENALTY WITHOUT APPRECIATING THE THA T AMOUNT OF CLIENT DEPOSIT CAN ONLY BE TAXED AT BEST IN THE YEAR IN WHICH DEBT OF APPELLANT FIRM HAS BECOME TIME BARRED I.E. AFTER THREE YEARS AND NOT I N THE YEAR OF RECEIPT ITSELF. 4. WITHOUT PREJUDICE TO GROUND NOS.1 AND 2, COMMISS IONER (APPEALS) ERRED IN CONFIRMING THE PENALTY WITHOUT APPRECIATING THE THA T APPELLANT HAS UNILATERALLY OFFERED THE AMOUNT OF RS.3,47,831 TO T AX IN THE RETURN OF INCOME IN THE A.Y. 2010-11 AS THERE WAS NO FURTHER DIRECTION BY CLIENT TO MAKE PAYMENT ON ITS BEHALF AND THE AMOUNT COULD NOT BE REFUNDED FOR A LONG PERIOD OF TIME. 2. FROM THE ABOVE GROUNDS OF APPEAL AND ATTENDING F ACTS AVAILABLE ON RECORD, IT EMERGES OUT THAT THE PENALTY U/S. 271(1)(C) OF THE ACT HAS BEEN IMPOSED AGAINST THE ASSESSEE ON THE BASIS OF ADDITION OF RS.3,47,83 1/- MADE BY ASSESSING OFFICER IN REASSESSMENT PROCEEDINGS ON ACCOUNT OF THE ABOVE AM OUNT LYING IN THE CLIENTS DEPOSIT ACCOUNT SHOWN ON THE LIABILITY SIDE OF THE BALANCE SHEET. THE CONTENTION OF THE ASSESSEE HAS BEEN THAT THE ASSESSEE IS SAID TO HAVE RECEIVED RS.5,75,331/- FROM HIS CLIENT FOR PAYMENT OF TAX TO BE MADE ON THEIR B EHALF. OUT OF ABOVE AMOUNT, RS.2,27,500/- WAS SPENT ON BEHALF OF THE CLIENT AND THE BALANCE AMOUNT OF RS.3,47,831/- WAS CARRIED FORWARD AS CREDIT BALANCE , WHICH WAS RECEIVED FROM M/S. GENERAL MOTORS IN F.Y. 2001-02. THE ASSESSEE C OULD NOT FURNISH ANY DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAIM THAT I T WAS NOT THE INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. THE ASSE SSING OFFICER, THEREFORE, MADE ADDITION ALSO IMPOSED PENALTY U/S. 271(1)(C) OF THE ACT. THE ADDITION SO MADE WAS CONFIRMED BY THE LD. CIT(A) AND THE TRIBUNAL. AGGRI EVED BY THE PENALTY ORDER, THE ITA NO. 5972/DEL./2014 3 ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER, SUSTAINED THE PENALTY. BEING AGGRIEVED, THE ASSESSE E IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE LD. AR SUBMITTED THAT THE AMOUNT OF RS.3,47, 831/- WAS LYING WITH THE APPELLANT FOR PAYMENT ON BEHALF OF THE CLIENT AND T HEREFORE, IT WAS SHOWN AS LIABILITY IN THE APPELLANTS BOOKS. THE IMPUGNED AM OUNT WAS, THEREFORE, NOT IN THE NATURE OF APPELLANTS INCOME, BUT IN THE NATURE OF LIABILITY. THERE BEING NO FURTHER DIRECTIONS FROM THE CLIENT TO MAKE ANY OTHER PAYMEN TS ON THEIR BEHALF FROM LONG TIME AND AS THE AMOUNT WAS LYING AS CREDIT BALANCE SINCE LONG, THEREFORE, THE AMOUNT WAS OFFERED AS INCOME FOR TAXATION IN THE AS SESSMENT YEAR 2010-11 AND THEREFORE IN THESE FACTS, THE ASSESSEE CANNOT BE SA ID TO HAVE EITHER FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE P ARTICULARS OF INCOME. THEREFORE, THE PENALTY SUSTAINED IS LIABLE TO BE QUASHED. RELI ANCE IS PLACED ON THE DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF SH. KESHAVBHAI B. TANDEL VS. ITO (ITA NOS. 1215/AHD./2007 AND 3266/AHD/2009) (COPY PLACED ON R ECORD), WHEREIN RELYING ON THE DECISION OF HONBLE SUPREME COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158, THE PENALTY HAS BEEN DELETED. RE LIANCE IS ALSO PLACED ON THE DECISION OF DELHI HIGH COURT IN KARAN RAGHAV EXPORT S (P) LTD. VS. CIT, 21 TAXMANN.COM 8(DELHI). ITA NO. 5972/DEL./2014 4 4. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ADDITION ON THE BASIS OF WHICH, THE IMPUGNED PENALTY HAS BEEN LEVIED STOOD CONFIRMED BY THE TRIB UNAL. THEREFORE, THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT HAVE RIGHTLY BEEN I NVOKED BY THE AUTHORITIES BELOW FOR LEVYING PENALTY AGAINST THE ASSESSEE. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND PERU SING THE MATERIAL AVAILABLE ON RECORD, WE DO NOT FIND IT A FIT CASE TO SUSTAIN THE PENALTY U/S. 271(1)(C) OF THE IT ACT. IT IS NOTABLE THAT THE ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS AND THE ASSESSING OFFICER IN T HE PENAL PROCEEDINGS HAS TO PROVE THE OFFENSE IN TERMS OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSE E HAD BEEN SHOWING THE IMPUGNED AMOUNT AS LIABILITY IN THE CLIENT DEPOSIT ACCOUNT. IT IS ALSO BORN OUT ON RECORD THAT PART OF THE AMOUNT RECEIVED FROM THE CLIENT STOOD D EPOSITED BY THE ASSESSEE. THE DISPUTE WAS AS TO THE NATURE OF AMOUNT LYING IN THE ACCOUNT WHETHER IN THE NATURE OF LIABILITY OR INCOME. IN THE QUANTUM PROCE EDINGS, THE ADDITION WAS, HOWEVER, SUSTAINED AS THE ASSESSEE COULD NOT FURNIS H ANY DOCUMENTARY EVIDENCE TO SUPPORT ITS CLAIM. THEREFORE, RELYING ON THE DECISI ON OF HONBLE APEX COURT IN RELIANCE PETROPRODUCTS (SUPRA), MERE MAKING OF A CL AIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE, PARTICULARLY WHEN THE ASSES SEE HAD SHOWN SOME THE ITA NO. 5972/DEL./2014 5 REASONS FOR NOT FURNISHING THE SUPPORTING DOCUMENTA RY EVIDENCE IN THE QUANTUM PROCEEDINGS. IT IS ALSO A FACT THAT THE EXPLANATION OF ASSESSEE THAT THE IMPUGNED AMOUNT WAS OFFERED TO TAX IN THE A.Y. 2010-11 HAS N OT BEEN COMMENTED UPON BY THE AUTHORITIES BELOW. THE DECISION OF HONBLE DELH I HIGH COURT RENDERED IN THE CASE OF KARAN RAGHAV EXPORTS P. LTD. VS. CIT(SUPRA) RELIED BY THE ASSESSEE ALSO SUPPORTS THE CASE OF THE ASSESSEE. IN THE ATTENDIN G FACTS AND CIRCUMSTANCES OF THE CASE, WE, THEREFORE, DO NOT FIND THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF ENTAILING PENALTY U/S. 271(1)(C) OF THE ACT. THEREFORE, IN THE PECULIAR CIRCUMSTANCE S, THERE IS NO GOOD REASON TO SUSTAIN THE PENALTY IN THE INSTANT CASE. ACCORDINGL Y, THE IMPUGNED ORDER DESERVES TO BE SET ASIDE AND THE APPEAL OF THE ASSESSEE DESE RVES TO BE ALLOWED. 6. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST FEBRUARY, 2018 SD/- SD/- (BHAVNESH SAINI) (L.P. SA HU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 ST FEB., 2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI