ITO, New Delhi V. Shri Nitin Mahajan, New Delhi

ITA 641/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4238 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 12-04-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 11-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Keywords: Maximum Marginal Rate; Accommodation entries; Capital Gains
• Section: 271(1)(c); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F DELHI) BEFORE SHRI A.D. JAIN AND SHRI R.C. SHARMA ITA NO. 641(DEL)2010 ASSESSMENT YEAR: 2001-02 INCOME TAX OFFICER, SHRI NITIN MAHAJAN, COMPANY WARD 4(1), NEW DELHI. V. A-180, OK HLA INDL. AREA, PHASE I, NEW DELHI-20. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI H.K. LAL, SR. DR RESPONDENT BY: SHRI GAU TAM JAIN, CA ORDER PER A.D. JAIN, J.M . THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2001-02 AGAINST THE CONFIRMATION OF LEVY OF PENALTY OF RS.6 ,32,934/- ON THE ASSESSEE U/S 271(1)(C) OF THE INCOME TAX ACT. 2. THE ASSESSEE INDIVIDUAL SHOWED INCOME OF RS. 23, 75,439/- FROM LONG TERM CAPITAL GAIN ACCRUED OUT OF SALE OF SHARE S OF M/S. VIRAJ CREDIT CAPITAL LTD. THROUGH THE JRD STOCK BROKER PVT. LTD. THE CASE WAS REOPENED U/S 148 OF THE ACT ON THE BASIS OF INFORMA TION RECEIVED FROM THE INVESTIGATION WING THAT ONE SHRI ASHOK GUPTA OF M/ S. JRD STOCK BROKER PVT. LTD. HAD ADMITTED THAT HE HAD BEEN PRO VIDING THE 2 ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN BY ISSUING THE CHEQUES IN LIEU OF CASH. THE NAME OF THE ASSESSEE WAS ALSO ADMITTED FOR THE PURPOSE OF ACCOMMODATION ENTRIES FROM M/S. JRD STOC K BROKER PVT. LTD. IN THE INVESTIGATION CARRIED OUT BY THE AO IN THE A SSESSMENT PROCEEDINGS, IT CAME OUT THAT THE ASSESSEE HAD SOLD THE SHARES A T A HIGHLY INFLATED VALUE RANGING FROM RS. 91.90 TO RS. 99/- EACH ON DIFFEREN T DATES, WHEREAS AS PER ENQUIRIES MADE FROM THE COMPANY AND THE STOCK EXCHA NGE, THE QUOTED RATE OF THESE SHARES NEVER EXCEEDED RS. 340/- DURIN G THE YEAR. AS SUCH, THE AO WORKED OUT THE CAPITAL GAIN ON THE ADOPTED S ALE VALUE OF RS. 3.40 PER SHARE. THIS WAS HOW, THE ADDITION WAS MADE BY THE AO. 3. IN THE FIRST APPEAL, THE LD. CIT(A) CONFIRMED TH E AOS AFORESAID ORDER. 4. THE PENALTY IN QUESTION WAS LEVIED ON THE ASSESS EE FOR THE STATED REASON THAT THE ASSESSEE HAD FILED INACCURATE PARTI CULARS OF HIS INCOME BY PAYING TAXES AT A MUCH LOWER RATE OF 10% INSTEAD OF THE MAXIMUM MARGINAL RATE OF 30% SURCHARGE AS AVAILABLE TO AN INDIVIDUAL ASSESSEE. 5. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THIS PENALTY. 6. CHALLENGING THE IMPUGNED ORDER THE LD. DR HAS CO NTENDED THAT WHILE WRONGLY DELETING PENALTY RIGHTLY LEVIED BY TH E AO, THE LD. CIT(A) 3 IGNORED THE FACT THAT THE ASSESSEE HAD CONCEALED HI S INCOME AND HAD SUBMITTED INACCURATE PARTICULARS THEREOF BY INTRODU CING HIS OWN MONEY THROUGH ENTRY OPERATORS. 7. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS SUBMITTED THAT THE TRIBUNAL, VIDE ORDER DATED 25.6. 2009 (COPY PLACED ON RECORD), HAS DELETED THE ADDITION FORMING THE VERY BASIS OF THE PENALTY LEVIED; THAT THAT BEING SO, THE LD. CIT(A) HAS RIGH TLY DELETED THE PENALTY. 8. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE LD. CIT(A), IT IS SEEN, HAS, WHILE DE LETING THE PENALTY, QUOTED, INEXTENSO, FROM THE AFORESAID TRIBUNAL ORDE R, AS FOLLOWS:- 6. THAT THE APPELLANT BEING AGGRIEVED FROM THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAD PRE FERRED THE APPEAL BEFORE THE HONBLE TRIBUNAL IN ITA NO. 2695/ D/06 AND THE SAID APPEAL DISPOSED OF BY AN ORDER DATED 25.6.2009 WHEREIN ADDITION MADE RESTRICTING THE LONG TERM CAPITAL GAI N OF RS. 88,400/- AS AGAINST DECLARED LONG TERM CAPITAL GAIN OF RS. 4 2,422/- AS AGAINST DECLARED LONG TERM CAPITAL GAIN OF RS. 25,2 6,950/- WAS HELD TO BE INVALID. THE HONBLE TRIBUNAL IN PARA 6 OF THE ORDER HAS HELD AS UNDER: WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH TH E MATERIAL CAREFULLY. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF THE ITAT IN THE CASE OF MR. JATIN MAHAJAN. THE DECISI ON OF ITAT, DELHI BENCH C IN THE CASE OF JATIN MAHAJAN, ON TH E IDENTICAL FACTS WAS ALSO FOLLOWED IN THE CASE OF SHRI LALIT M AHAJAN IN ITA NO. 2615 (DEL)OF 2007 FOR ASSESSMENT YEAR 2001-02 [ DELHI BENCH D] DATED 05.06.2009 , ITAT, DELHI BENCH C IN TH E CASE OF JATIN MAHAJAN WHILE ALLOWING RELIEF, HELD AS UNDER:- 4 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. AS THE FACTS EMERGE LD. DR C OULD DEMONSTRATE ONLY THE INFORMATION WAS CONFRONTED I.E . SHOWN TO ASSESSEE. THE ARGUMENTS OF THE ASSESSEE THAT NEI THER THE STATEMENT OF ASHOK GUPTA WAS GIVEN TO HIM AND CROSS -EXAMINATION WAS NOT GIVEN TO HIM COULD NOT BE CONTROVERTED. T HE ASSESSEE HAD MADE REPEATED REQUEST IN THIS BEHALF AND CONTENDS T HAT SO FAR IT HAS NEVER SEEN WHAT IS THERE IN THE STATEMENT OF ASHOK GUPTA, WHICH HAS BEEN STATED AGAINST ASSESSEE. IN THE CIRCUMSTA NCES ASSESSEE IS NOT AWARE WHAT IS THE NATURE OF ALLEGATION AGAINST HIM AND IN THE ABSENCE OF CROSS EXAMINATION THE STATEMENT OF ASHOK GUPTA DOES NOT BECOME RELEVANT EVIDENCE TO DISTURB THE WORKING OF CAPITAL GAINS OF THE ASSESSEE. HONBLE DELHI HIGH COURT I N THE CASE OF SMC CREDITS, DHARAM PAL PREM CHAND AND S.M. AGGARWA L CASE (SUPRA) HAS HELD THAT NON-FURNISHING OF COPIES OF M ATERIAL PROPOSED TO BE USED AGAINST ASSESSEE AND KNOT ALLOW ING CROSS- EXAMINATION OF SUCH EVIDENCE OR PERSON WILL VITIATE THE ASSESSMENT AND ADDITIONS. IN VIEW THEREOF WE HOLD THAT IN THE GIVEN FACTS AND CIRCUMSTANCES THE WORKING OF LONG TERM CAPITAL GAIN AS GIVEN BY ASSESSEE HAS TO BE UPHELD. THIS GROUND OF THE ASS ESSEE IS ALLOWED. SINCE THE ISSUE BEFORE US IS IDENTICAL TO THE CASES OF SHRI JATIN MAHAJAN AND SHRI LALIT MAHAJAN AND THE TRIBUNAL HAS DELETED THE ADDITION IN THESE CASE, RESPECTFULLY FOLLOWING THE PRECEDENTS, THE ISSUE RELATING TO THE ADDITION OF RS. 24,83,920/- I S DELETED. 9. ONCE THE ADDITION FORMING THE VERY BASIS OF THE PENALTY IN QUESTION STANDS DELETED BY THE TRIBUNAL AS ABOVE, THERE REMA INS NO GROUND FOR THE PENALTY TO BE SUSTAINED. AS SUCH, THE LD. CIT(A) HAS CORRECTLY DELETED THE PENALTY IMPOSED. THEREFORE, FINDING NO ERROR WHATSOEVER WITH THE ORDER OF THE LD. CIT(A), THE SAME IS HEREBY CONFIRM ED. 5 10. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.04.2010. SD/- SD/- (R.C. SHARMA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12.04.2010 *RM COPY FORWARDED TO: 1. INCOME TAX OFFICER, COMPANY WARD 4(1), NEW DELHI. 2. SHRI NITIN MAHAJAN, A-180, OKHLA INDL. AREA, PHASE I, NEW DELHI-20. 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR