ACIT, New Delhi V. M/s Deepali Design & Exhibits, New Delhi

ITA 6203/DEL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0006 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 02-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S RAJPUROHIT
• Assessee Lawyers: RIDHI KARAN AGARWAL
• Keywords: Income from undisclosed sources; Opportunity of being heard; Question of law; Initiation of penalty proceedings; Reasonable cause; Deemed dividend
• Section: 271(1)(c); 40A(3); 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO. 6203/DEL/2016 ASSESSMENT YEAR: 2011-12 ACIT, CENTRAL CIRCLE-17 VS. M/S DEEPALI DESIGNS & E XHIBITS ROOM NO. 103, 9, 1 ST FLOOR, BEHIND PUNJAB FIRST FLOOR, HALL NO. 1, KESRI, WAZIRPUR INDUSTRI AL ARA CENTRE, AREA, NEW DELHI 110 035 E-2, JHANDEWALAN, (PAN: AAFFD1639M) NEW DELHI 110 057 ( APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. B.S. RAJPU ROHIT, SR. DR. ASSESSEE BY : SH. RIDHI KARAN AGAR WAL, CA ORDER PER H.S. SIDHU, JM THE DEPARTMENT HAS FILED THIS APPEAL AGAINST THE ORDER DATED 08.9.2016 OF LD. CIT(A)-27, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2011-12. THE GROUNDS RAISED IN THE REVENUES A PPEAL READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 25,58,220/- IM POSED BY THE AO WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. THE CIT(A) HAS ERRED IN LAW IN HOLDING THAT WHERE THE ASSESSEE SURRENDERS THE INCOME DURING ASSESSMENT PR OCEEDING, THERE IS NO QUESTION OF CONCEALMENT. 2 3. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT T ENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O THE HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT WAS COMPLETED U/S. 153A R.W.S. 143(3) OF THE ACT ON 21.3.2013 AT ASSESSED AT RS. 95,98,586/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE AO MADE THE MAJOR ON ACCOUNT OF DISALLOWANCE OF UNACCO UNTED INCOME FO RS. 20,59,385/- ON THE BASIS OF SEIZED MATERIAL I.E. PEN DRIVE ANNEXED AS A-16 FROM THE PREMISES OF THE ASSESSEE AND MADE THE ADDITIONS AND ALSO IMPOSED THE PENALTY PROCEEDINGS. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED THE APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS ORDER DATED 4.9.2014, DELETED THE ADDITION OF RS. 15,97,364/- ON ACCOUNT OF DEEMED DIVIDEND AND C ONFIRMED THE ADDITION OF RS. 60,90,871/- ON ACCOUNT OF DISALLOWA NCE OF EXPENSES FOR NON DEDUCTION OF TDS AND AMOUNTS U/S. 40A(3) OF THE ACT. ALTHOUGH LD. CIT(A) RESTRICTED THE ADDITION OF RS. 77,775/- OUT OF RS. 1,55,550/- MADE BY THE AO ON ACCOUNT OF DISALLO WANCE OF 1/5 TH OF EXPENDITURE. ON THE ISSUES OF ADDITION OF RS. 20 ,59,385/- ON ACCOUNT OF DISALLOWANCE OF UNACCOUNTED INCOME AND A DDITION OF RS. 51,000/- ON ACCOUNT OF DONATION, THE ASSESSEE DID N OT PREFER THE APPEAL BEFORE THE LD. CIT(A). KEEPING IN VIEW OF T HESE FACTS, A FRESH 3 OPPORTUNITY OF BEING HEARD WAS GIVEN TO THE ASSESSE E VIDE AO LETTER DATED 2.2.2016 AND IN RESPONSE TO THE SAME ASSESSEE FILED THE REPLY. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, AO I MPOSED THE PENALTY OF RS. 25,58,220/- U/S. 271(1)(C) OF THE ACT VIDE O RDER DATED 18.3.2016. AGGRIEVED WITH THE ORDER OF THE PENALT Y ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A) ON THE LEGAL GROUND RELATING TO RECORDING OF SATISFACTION AS WELL AS ON MERIT, WHO VIDE ORDER DATED 8.9.2016 HAS PARTLY ALLOWED THE APPEAL OF THE ASSE SSEE AND DELETED THE PENALTY IN DISPUTE AND DISMISSED THE SAID LEGA L GROUND. AGAINST THE ORDER OF THE LD. CIT(A), REVENUE IS IN APPEAL B EFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING, LD. AR FOR THE ASSESSEE HAS FILED AN APPLICATION UNDER RULE 27 OF THE ITAT RULES, 1963 S TATING THEREIN THAT THE ASSESSEE HAS CHALLENGED THE INITIATION / V ALIDITY OF PENALTY PROCEEDINGS UNDER SECTION 271(1) OF THE I.T. ACT, 1961 BEFORE THE CIT(A)-27 FOR WANT OF PROPER SATISFACTION / CONDITI ONS FOR INITIATING PROCEEDINGS. HOWEVER, THE LD. CIT(A)-27 HAS REJECTE D THE ABOVE GROUNDS OF APPEAL VIDE ORDER DATED 8.9.2016 (PARA 7 OF THE ORDER). AGGRIEVED BY THE ORDER OF LD. CIT(A) AND IN SUPPORT OF ITS STAND REGARDING THE NON-APPLICABILITY OF SECTION 271(1)(C ) OF THE ACT, HE RAISED THE FOLLOWING GROUND: THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ORD ERS OF THE AO REGARDING THE VALIDITY OF PROCEEDINGS UNDER SECT ION 4 271(1)(C) WHEREAS IT WAS NOT STATED THAT WHETHER P ENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INVO KE OR WHETHER ANY INACCURATE PARTICULARS OF INCOME HAD BE EN FURNISHED BY THE ASSESSEE. 2.1 ON MERIT OF THE CASE, HE RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT HE HAS PASSED A WELL REASONE D ORDER AND RIGHTLY DELETED THE PENALTY IN DISPUTE WHICH DOES N OT NEED ANY INTERFERENCE ON OUR PART. 3. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER OF THE AO AND HAS TRIED TO JUSTIFY THE ACTION OF THE ASSESSING OF FICER IN IMPOSING THE PENALTY IN DISPUTE AND ALSO OPPOSED THE REQUEST TO ADMIT THE APPLICATION FILED U/R 27 OF THE ITAT RULES, 1963. 4. LD. AR FOR THE ASSESSEE FURTHER STATED THAT NO SPECIFIC ALLEGATION AS TO THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS HAS BEEN LEVI ED BY THE AO IN THE NOTICE DATED 21.03.2013 ISSUED BY HIM U/S. 274 RED WITH SECTION 271(1) OF THE ACT PLACED ON FILE WHICH CLEARLY SHO WS THAT THE SAME IS THE STANDARD FORMAT OF THE NOTICE AND AO HAS JUS T TICKED ON THE OPTION OF CONCEALMENT OF INCOME OR FURNISHING INACC URATE PARTICULARS OF SUCH INCOME. HE FURTHER STATED THAT THE PENALTY IMPOSED IS LIABLE TO BE QUASHED ON LEGAL GROUNDS AS THE ISSUE IS SQUA RELY COVERED BY THE FOLLOWING DECISIONS INCLUDING THE COORDINATE B BENCH, ITAT 5 DECISION IN THE CASE SH. SUMEET CHOPRA VS. ACIT PA SSED IN ITA NO. 1493/DEL/2016 (AY 2008-09) DATED 13.4.2018:- - ITAT, DELHI DECISION IN THE CASE OF ABR AUTO PVT. LTD. VS. ACIT IN ITA NO. 6236/DEL/2015 DATED 4.12.2017. - ITAT, A BENCH, NEW DELHI DECISION DATED 05.12.2017 IN THE CASE OF ASHOK KUMAR CHORDIA VS. DCIT PASSED IN ITA NO. 5788 TO 5790/DEL/2014. - HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE OF CIT & ORS. VS. M/S MANJUNATHA COTTON AND GINNIG FACTORY & ORS. (2013) 359 ITR 565 - APEX COURT DECISION IN THE CASE OF CIT & ANR. VS. M/S SSAS EMERALD MEADOWS IN CC NO. 11485/2016 DATED 05.8.2016. 5. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS O F THE AO. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS AVAILABLE WITH US ESPECIALLY THE RULE 27 OF THE ITA T RULES, 1963 AND THE IMPUGNED ORDER. FOR THE SAKE OF CLARITY, WE CAN GAINFULLY REFER HERE THE PROVISIONS OF RULE 27 OF THE ITAT RU LES, 1963 WHICH READS AS UNDER:- THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APPEALED 6 AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM. 6.1 A BARE READING OF THE RULE 27 MANIFESTS THAT TH E ASSESSEE, WITHOUT HAVING FILED ANY CROSS APPEAL OR CROSS OBJE CTION CAN SUPPORT THE IMPUGNED ORDER ON ANY OF THE GROUNDS DECIDED AG AINST HIM. TWO ESSENTIAL ELEMENTS OF THE RULE 27 COME TO THE FORE ON ITS BARE READING. FIRST IS THE CONDITION PRECEDENT FOR INVOK ING THIS RULE AND THE SECOND IS SCOPE OF INTERFERENCE. INSOFAR AS TH E FIRST ELEMENT IS CONCERNED, WE FIND THAT THIS RULE HAS BEEN ENSHRINE D WITH A VIEW TO DISPENSE JUSTICE TO A ASSESSEE WHO IS OTHERWISE ENT ITLED TO ASSAIL THE CORRECTNESS OF THE IMPUGNED ORDER BY FILING APPEAL OR CROSS OBJECTION, WHETHER OR NOT ACTUALLY FILED. THIS IS B ORNE OUT FROM THE EXPRESSION ` THOUGH HE MAY NOT HAVE APPEALED USED IN THE CONTEXT OF A ASSESSEE. THIS AMPLY INDICATES THE EXISTENCE OF A PRE-RIGHT OF THE RESPONDENT TO APPEAL, WHICH MAY HAVE REMAINED UN-AV AILED. THIS RULE CANNOT HELP THE RESPONDENT IN A SITUATION WHER E HE IS OTHERWISE DEBARRED FROM FILING CROSS APPEAL OR CROSS OBJECTIO N. IF NO RIGHT TO FILE A CROSS APPEAL OR CROSS OBJECTION STATUTORILY VESTS IN THE RESPONDENT, THEN IT CANNOT BE INFERRED INDIRECTLY B Y TAKING RECOURSE TO RULE 27. WE HAVE FOUND OUT SUPRA THAT, IN THE GIVEN FACTS, THE ASSESSEE HAS A RIGHT TO FILE CROSS APPEAL OR CROSS OBJECTION AGAINST THE ADVERSE DIRECTION GIVEN BY THE LD. CIT(A) AS CONTAI NED IN HIS 7 APPELLATE ORDER. THUS, THE FIRST ELEMENT, NAMELY, THE CONDITION PRECEDENT FOR INVOKING RULE 27, STANDS SATISFIED. 6.2 THE NEXT ELEMENT IS THE SCOPE OF INTERFERENC E BY THE RESPONDENT. THIS IS CONTAINED IN THE LATER PART OF THE RULE, WHICH PROVIDES THAT THE RESPONDENT `MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM . A CURSORY READING OF THIS PART DIVULGES THAT THE RESPONDENT CAN SUPPORT THE IMPUGNED ORDER ON ANY OF THE GROUNDS WHICH WERE DECIDED AGAI NST HIM. THIS IS A SITUATION IN WHICH THE ASSESSEE IS SUPPORTING THE IMPUGNED ORDER (THAT ARE, THE DELETION OF ADDITIONS MADE BY AO) UN DER RULE 27 ON THE GROUND DECIDED AGAINST IT (THAT IS, UPHOLDING OF TH E INITIATION OF REASSESSMENT). CRUX OF THE MATTER IS THAT THE ORDE R APPEALED AGAINST CAN BE CHALLENGED BY THE ASSESSEE ONLY QUA THE ASPECTS OF THE ISSUE DECIDED AGAINST HIM IN DECIDING SUCH OVERALL ISSUE AGAINST THE APPELLANT, WHICH HAS BEEN ASSAILED IN THE APPEAL. I T MEANS THAT THERE IS AN INHERENT LIMITATION ON THE POWER OF THE ASSES SEE IN NOT CHALLENGING THE ORDER APPEALED AGAINST UNDER RULE 2 7 DE HORS THE GROUND DECIDED AGAINST THE APPELLANT. THIS SHOWS TH AT IF A PARTICULAR INDEPENDENT ISSUE HAS BEEN DECIDED AGAINST THE ASSE SSEE IN THE ORDER APPEALED BY THE APPELLANT ON ANOTHER INDEPENDENT IS SUE DECIDED AGAINST HIM, THEN THE ASSESSEE UNDER RULE 27 HAS NO POWER TO CHALLENGE THE CORRECTNESS OF SUCH INDEPENDENT ISSUE DECIDED AGAINST 8 HIM BEFORE THE TRIBUNAL, WHILE ARGUING FOR UPHOLDIN G THE ORDER ON THE ISSUE DECIDED AGAINST THE APPELLANT. COMING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE LD. COUNSEL FOR THE ASSESSE E HAS INVOKED RULE 27 BY CHALLENGING THE DECISION OF THE LD. CIT(A) ON THE LEGAL ISSUE, AS AFORESAID. 6.3 IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERE D OPINION THAT THE ASSESSEE CAN INVOKE RULE 27 OF THE ITAT RULES WHICH PERMITS THE RESPONDENT TO SUPPORT THE ORDER APPEALED AGAINST ON THE GROUND DECIDED AGAINST IT. WE HAVE NOTICED ABOVE THAT BO TH THE ESSENTIAL ELEMENTS OF RULE 27, NAMELY, THE CONDITION PRECEDEN T FOR INVOKING THIS RULE AND THE SCOPE OF INTERFERENCE STAND FULFI LLED IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. THEREFORE, NOW W E ARE DECIDING THE LEGAL ISSUE RAISED BY THE ASSESSEE AS AFORESAID . 6.4 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES A LONGWITH THE PROVISIONS OF LAW AS WELL AS THE CASE LAW CITED BY THE LD. COUNSEL OF THE ASSESSEE. WE HAVE ALSO PERUSED THE NOTICE DATE D 21.3.2013 ISSUED BY THE AO FOR INITIATION OF PENALTY AND DIR ECTING THE ASSESSEE TO APPEAR BEFORE HIM. FOR THE SAKE OF CONVENIENCE, SOME OF THE CONTENTS OF THE PENALTY NOTICE DATED 21.3.2013 ARE REPRODUCED AS UNDER:- ..IT APPEARS TO ME THAT YOU:- 9 * HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH A NOTICE UNDER SECTION 142(1)/143(2) OF THE INCOME TAX ACT, 1961 DATED. * HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME . YOU ARE HEREBY REQUIRED TO APPEAR BEFORE ME AT ROOM NO. 356, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI AT 11.00 AM/PM ON 22.4.2013 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271 OF THE INCOME TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY TO BEING HEARD IN PER SON OR THROUGH AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH W ILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271. 6.5 AFTER PERUSING THE AFORESAID CONTENTS OF THE NO TICE DATED 21.3.2013, WE ARE OF THE VIEW THAT THE AO HAS INITI ATED THE PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS, WHICH IS CONTRARY TO THE PROVISIONS OF LAW. WE ARE OF THE VIEW THAT NOTICE ISSUED BY THE AO U/S. 271(1) READ WITH SECTION 274 OF THE ACT IS BAD IN LAW AS IT DOES NOT SPECIFY WHICH LIMB OF SECTION 271(1) OF THE ACT, THE PENALTY PROCEEDING S HAD BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULA RS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. THEREFORE, T HE PENALTY IN DISPUTE IS NOT SUSTAINABLE IN THE EYES OF LAW. OUR AFORESAID VIEW FOR 10 DELETING THE PENALTY IN DISPUTE ARE FORTIFIED BY TH E FOLLOWING DECISIONS:- I) CIT & ANR. VS. M/S SSAS EMERALD MEADOWS 2015 (11) TMI 1620 KARNATAKA HIGH COURT HAS HELD THAT TRIBUNAL HAS CORRECTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) (7) TMI 620- KARANATAKA HIGH COURT. THUS SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION NO SUBSTANTIAL QUESTION OF LAW ARISES DECIDED IN FAVOUR OF ASSESSEE. II) CIT & ANR. VS. M/S SSAS EMERALD MEADOWS HONBLE SUPREME COURT OF INDIA REPORTED IN 2016 (8) TMI 1145 11 SUPREME COURT. THE APEX COURT HELD THAT HIGH COURT ORDER CONFIRMED (2015) (11) TMI 1620 (SUPRA) KARNATAKA HIGH COURT. NOTICE ISSUED BY AO UNDER SECTION 274 READ WITH SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME DECIDED IN FAVOUR OF ASSESSEE. III) ITAT, A BENCH, NEW DELHI DECISION DATED 05.12.2017 IN THE CASE OF ASHOK KUMAR CHORDIA VS. DCIT PASSED IN ITA NO. 5788 TO 5790/DEL/2014 WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER:- 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH THE RELEVANT RECORDS AVAILABLE WITH US. FIRSTLY, WE HAVE PERUSED THE NOTICE DATED 26.3.2013 ISSUED BY THE AO FOR INITIATING THE PENALTY AND DIRECTING THE ASSESSEE TO APPEAR BEFORE HIM AT 11.30 AM ON 26/04/2013 AND ISSUED A SHOW CAUSE TO THE ASSESSEE STATING THEREIN THAT ..YOU HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF 12 SUCH INCOME. AFTER PERUSING THE NOTICE DATED 26.3.2013 ISSUED BY THE AO TO THE ASSESSEE, WE ARE OF THE VIEW THAT THE AO HAS INITIATED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME AS WELL AS IN THE PENALTY ORDER DATED 30.9.2013 AO HAS STATED THAT HE IS SATISFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME, WHICH IS CONTRARY TO LAW. IN VIEW OF ABOVE, THE PENALTY IS NOT SUSTAINABLE IN THE EYES OF LAW. OUR AFORESAID VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS:- I) CIT & ANR. VS. M/S SSAS EMERALD MEADOWS 2015 (11) TMI 1620 KARNATAKA HIGH COURT HAS HELD THAT TRIBUNAL HAS CORRECTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR 13 CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) (7) TMI 620- KARANATAKA HIGH COURT. THUS SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION NO SUBSTANTIAL QUESTION OF LAW ARISES DECIDED IN FAVOUR OF ASSESSEE. II) CIT & ANR. VS. M/S SSAS EMERALD MEADOWS HONBLE SUPREME COURT OF INDIA REPORTED IN 2016 (8) TMI 1145 SUPREME COURT. THE APEX COURT HELD THAT HIGH COURT ORDER CONFIRMED (2015) (11) TMI 1620 (SUPRA) KARNATAKA HIGH COURT. NOTICE ISSUED BY AO UNDER 14 SECTION 274 READ WITH SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME DECIDED IN FAVOUR OF ASSESSEE. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENTS, WE DELETE THE PENALTY IN DISPUTE AND DECIDE THE ISSUE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE. IV) ITAT, D BENCH, NEW DELHI DECISION DATED 26.5.2017 IN THE CASE OF RAJENDER JAIN VS. ACIT PASSED IN ITA NO. 6804/DEL/2013 WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER:- 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH THE RELEVANT RECORDS AVAILABLE WITH US. FIRSTLY, WE HAVE PERUSED THE ASSESSMENT ORDER 15 WHEREIN THE AO HAS RECORDED HIS SATISFACTION ON THE PAGE 2, 2 ND PARA VIZ. I AM SATISFIED THAT IT IS A FIT CASE FOR INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME. WE HAVE ALSO PERUSED THE NOTICE DATED 31.12.2007 ISSUED BY THE AO FOR INITIATING THE PENALTY AND DIRECTING THE ASSESSEE TO APPEAR BEFORE HIM AT ---------AM/PM ON ---- ----200------ AND ISSUED A SHOW CAUSE TO THE ASSESSEE STATING THEREIN THAT WHY AN ORDER IMPOSING THE PENALTY OF AMOUNT SHOULD NOT BE MADE U/S. 271(1)(C) OF THE I.T. ACT, 1961. AFTER PERUSING THE NOTICE DATED 31.12.2007 ISSUED BY THE AO TO THE ASSESSEE, WE ARE OF THE VIEW THAT THE AO HAS INITIATED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME, BUT IN THE PENALTY ORDER DATED 06.11.2009 HE HAS STATED THAT HE IS SATISFIED THAT THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULARS OF INCOME. 7.1 HOWEVER, THE LD. CIT(A) HAS GIVEN CLEAR FINDING REGARDING THE 16 FURNISHING OF INACCURATE PARTICULARS. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PARA NO. 5.3.1 OF THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS REPRODUCED AS UNDER:- 5.3.1 THE ABOVE FINDINGS OF THE LD. CIT(A) CLEARLY ESTABLISHES THAT THE APPELLANT HAS CONCEALED THE INCOME OF RS. 26,50,500/- AND DID NOT DECLARE IN THE RETURN OF INCOME INSPITE OF ADMITTING A DISCLOSURE OF RS. 40,00,000/- DURING SURVEY. THUS, THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE FACTS OF THE CASE CLEARLY REVEAL THAT THE APPELLANT TRIED TO EVADE PAYMENT OF TAXES BY FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, I HOLD THAT THE AO WAS FULLY JUSTIFIED IN LEVYING THE PENALTY U/S. 17 271(1)(C) OF THE ACT. THE PENALTY LEVIED BY THE AO IS UPHELD. THIS GROUND OF APPEAL IS REJECTED. 8. KEEPING IN VIEW OF THE AFORESAID FINDING OF THE LD. CIT(A), WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS PASSED THE ASSESSMENT ORDER WHEREIN THE AO HAS RECORDED HIS SATISFACTION ON THE PAGE 2, 2 ND PARA VIZ. I AM SATISFIED THAT IT IS A FIT CASE FOR INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME. FURTHER THE AO VIDE HIS NOTICE DATED 31.12.2007 FOR INITIATING THE PENALTY AND DIRECTED THE ASSESSEE TO APPEAR BEFORE HIM AT ---------AM/PM ON ---- ----200------ AND ISSUED A SHOW CAUSE TO THE ASSESSEE STATING THEREIN THAT WHY AN ORDER IMPOSING THE PENALTY OF AMOUNT SHOULD NOT BE MADE U/S. 271(1)(C) OF THE I.T. ACT, 1961. AFTER PERUSING THE NOTICE DATED 31.12.2007 ISSUED BY THE AO TO THE ASSESSEE, WE ARE OF THE VIEW THAT THE AO HAS INITIATED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS 18 OF INCOME/CONCEALMENT OF INCOME, BUT IN THE PENALTY ORDER DATED 06.11.2009 HE HAS STATED THAT HE IS SATISFIED THAT THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULARS OF INCOME. IN OUR VIEW THE PENALTY IN DISPUTE IS NOT SUSTAINABLE IN THE EYES OF LAW, BECAUSE THE AO HAS NOT RECORDED ANY CLEAR FINDING WHETHER THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. SECONDLY, THE NOTICE U/S. 271(1)(C) HAS BEEN ISSUED TO THE ASSESSEE LEVYING THE PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME, WHEREAS THE PENALTY IN DISPUTE HAS BEEN LEVIED BY THE AO ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS. IN OUR VIEW THE PENALTY IS NOT SUSTAINABLE IN THE EYES OF LAW. OUR AFORESAID VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS:- I) CIT & ANR. VS. M/S SSAS EMERALD MEADOWS 2015 (11) TMI 1620 KARNATAKA HIGH COURT HAS HELD THAT TRIBUNAL HAS 19 CORRECTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY (2013) (7) TMI 620- KARANATAKA HIGH 20 COURT. THUS SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION NO SUBSTANTIAL QUESTION OF LAW ARISES DECIDED IN FAVOUR OF ASSESSEE. II) CIT & ANR. VS. M/S SSAS EMERALD MEADOWS HONBLE SUPREME COURT OF INDIA REPORTED IN 2016 (8) TMI 1145 SUPREME COURT. THE APEX COURT HELD THAT HIGH COURT ORDER CONFIRMED (2015) (11) TMI 1620 (SUPRA) KARNATAKA HIGH COURT. NOTICE ISSUED BY AO UNDER SECTION 274 READ WITH SECTION 271(1)(C) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR 21 CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME DECIDED IN FAVOUR OF ASSESSEE. 8.1 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENTS, WE DELETE THE PENALTY IN DISPUTE AND DECIDE THE ISSUE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE. V) ITAT B BENCH DECISION DATED 13.4.2018 IN THE CASE OF SH. SUMEET CHOPRA VS. ACIT IN ITA NO. 1493/DEL/2016 (AY 2008-09) IN WHICH ON SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE, BY RESPECTFULLY FOLLOWING THE AFORESAID CASES MENTIONED AT SERIAL NO. (I) TO (IV) ALLOWED THE ADDITIONAL GROUND AND PENALTY IN DISPUTE HAS BEEN CANCELLED. 7. KEEPING IN VIEW OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE AFORESAID PRECEDENTS, WE CANCEL THE PENALTY IN DISPUTE AND ALLOW THE LEGAL GROUND RAISED BY THE ASSESSEE IN THE APPLICATION FILED UNDER RULE 27 OF THE ITAT RULES, 1963 WHICH W AS ALSO RAISED BEFORE THE LD. CIT(A). 22 8. EVEN OTHERWISE, ON MERITS OF THE CASE, AFTER HE ARING BOTH THE PARTIES, WE FIND THAT LD. CIT(A) HAS ELABORATELY DI SCUSSED THE ISSUE IN DISPUTE ELABORATELY AT PAGE NO. 12 TO 14 VIDE PARA NO. 6 TO 9. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUCING HEREWIT H THE RELEVANT FINDINGS OF THE LD. CIT(A) AS UNDER:- 6. AS REGARDS GROUND NOS. 1 & 3 WHERE THE APPELLANT HAS CHALLENGED THE LEVY OF PENALTY U/S. 271(1) AND HAS MADE SUBMISSIONS REGARDING NON-APPLICABILITY OF THE SAID PROVISIONS OF THE CASE. AFTER CONSIDERING THE SUBMISSIONS AND CASE LAWS CITED FROM JURISDICTIONAL HIGH COURT AND TRIBUNAL, THERE IS NO DENYING TO THE FACT THAT THE ADDITION SUSTAINED BY THE CIT (A) DURING QUANTUM APPEAL PROCEEDINGS UPHOLDING THE ADDITION MADE ON ACCOUNT OF AMOUNT SURRENDERED BY THE APPELLANT BOTH DURING INVESTIGATION PROCEEDINGS AND DURING ASSESSMENT PROCEEDINGS. AT THE SAME TIME IT IS ESTABLISHED POSITION OF LAW THAT PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT OF QUANTUM PROCEEDINGS. IMPOSITION OF PENALTY IS NOT AUTOMATIC AND THE ASSESSING OFFICER HAS TO APPRECIATE AND ESTABLISH THAT THE ADDITION UPHELD IN THE QUANTUM PROCEEDINGS ARE FALLING WITHIN THE FOUR CORNERS OF PROVISIONS OF SECTION 271 (L)(C) AND HENCE THERE IS ACT OF CONCEALMENT. IN 23 THE IMPUGNED CASE, THE ASSESSEE HAS SURRENDERED HIS FULL INCOME, BOTH DURING THE INVESTIGATION AND ASSESSMENT PROCEEDINGS AND THE SAME WAS BEING ACCEPTED BY THE ASSESSING OFFICER WITHOUT DISTURBING THE INCOME OFFERED FOR TAXATION. ACCORDINGLY, THERE IS NO QUESTION OF ANY CONCEALMENT ON THE PART OF THE ASSESSEE AND CONSEQUENTLY NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE. 7. IT IS ALSO MANIFESTED FROM THE VARIOUS JUDICIAL PRECEDENTS MENTIONED ABOVE THAT ANY INCOME OFFERED FOR TAXATION DURING THE ASSESSMENT PROCEEDINGS U/S 153A WHICH IS ACCEPTED BY THE AO AS IT IS, THERE WILL BE NO CASE OF CONCEALMENT OF INCOME AND CONSEQUENTLY PENALTY U/S 271(1)(C) CANNOT BE IMPOSED. HENCE BASED ON THE ABOVE THE PENALTY U/S 271(1)(C) IMPOSED BY THE ASSESSING OFFICER IS DELETED. 8. AS REGARDS GROUND NO. 4 WHERE THE APPELLANT HAS CHALLENGED THE LEVY OF PENALTY U/S 271(1)(C) AND HAS MADE SUBMISSIONS REGARDING NON APPLICABILITY OF THE SAID PROVISIONS ON THE ADDITION MADE ON ACCOUNT OF UNRECORDED INTEREST. AFTER CONSIDERING THE SUBMISSIONS AND CASE LAWS CITED FROM JURISDICTIONAL AUTHORITIES AND THE FACTS OF 24 THE MATTER, THE AO HAS NOT BEEN ABLE TO ESTABLISH ANY ACT OF CONCEALMENT OR INACCURATE PARTICULARS. CONSEQUENTLY NO PENALTY UNDER SECTION 271(L)(C) IS LEVIABLE. HENCE PENALTY IS DELETED. 9. AS REGARDS GROUND NO.5 WHERE THE APPELLANT HAS CHALLENGED THE LEVY OF PENALTY U/S 271(1)(C) AND HAS MADE SUBMISSIONS REGARDING NON APPLICABILITY OF THE SAID PROVISIONS ON THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S 40A(3). THE ASSESSING OFFICER HAS IDENTIFIED TRANSACTIONS AGGREGATING RS.60,90,871/- FROM THE BOOKS OF ACCOUNTS AND RECORDS PRODUCED BEFORE HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE QUANTUM ADDITION WAS UPHELD FOR PAYMENT EXCEEDING RS.20,000/- HOWEVER, THERE IS EVIDENCE THAT ALL THE TRANSACTIONS WERE DULY RECORDED AND THERE IS NO SUFFICIENT GROUND ON WHICH THE ADDITION WAS MADE. THERE WAS NEITHER THE ACT OF CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULARS. AFTER CONSIDERING THE SUBMISSIONS AND CASE LAWS CITED FROM JURISDICTIONAL HIGH COURT AND TRIBUNAL AND THE FACTS OF THE MATTER, THE AO HAS NOT BEEN ABLE TO ESTABLISH ANY ACT OF CONCEALMENT OR INACCURATE PARTICULARS. CONSEQUENTLY NO 25 PENALTY UNDER SECTION 271(L)(C) IS LEVIABLE. HENCE, THE PENALTY IS DELETED. 9. AFTER PERUSING THE AFORESAID FINDING, ON MERIT O F THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO INFI RMITY IN THE FINDING OF THE LD. CIT(A) AND THEREFORE, THE SAME DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, WE UPHOLD THE SAME AND REJECT THE GROUND RAISED BY THE REVENUE. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. THE DECISION IS PRONOUNCED ON 07 TH DECEMBER, 2018. SD/- SD/- (O.P. KANT) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07 TH DECEMBER, 2018. SRBHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI