Sh. Rohit Kochhar, New Delhi V. ACIT, New Delhi

ITA 6549/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4157 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 03-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B S SISTANI
• Keywords: Income from undisclosed sources; Source of fund; Onus to prove
• Section: 143(3)

Judgement Text

ITA NO.6549/DEL/14 ASSESSMENT YEAR: 2007-08 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F: NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 6549/DEL /2014 ASSESSMENT YEAR: 2007-08 MR. ROHIT KOCHHAR, UNIT NO.1120-1121, 11 TH FLOOR, DLF TOWERS, JASOLA DISTT. CENTRE, NEW DELHI-110025 (PAN: AAFPT2953A) VS ACIT, CIRCLE-37(1), NEW DELHI-110002 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.S. SISTANI, CA RESPONDENT BY : NONE DATE OF HEARING : 04.09.2017 DATE OF PRONOUNCEMENT: 04.10.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE LD. CIT(A)-XXVIII, NEW DELH I DATED 10.09.2014 WHEREIN PENALTY OF RS. 67,320/- IMPOSED U/S 271(1)(C) HAS BEEN CONFIRMED. THE GROU NDS OF APPEAL READ AS UNDER:- ITA NO.6549/DEL/14 ASSESSMENT YEAR: 2007-08 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL )-28 DELHI WAS NOT JUSTIFIED IN UPHOLDING THE PENALTY IM POSED U/S 271(L)(C) OF THE INCOME TAX ACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) -28 DELHI WAS NOT JUSTIFIED IN UPHOLDING THE PENALTY OR DER IN SPITE OF THE FACT THAT THE LEARNED ASSESSING OFFICER DID NOT RECORD HIS SATISFACTION IN THE ASSESSMENT ORDER TO THE EFF ECT THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF THE INCOM E. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DEL ETE ANY GROUND OF APPEAL. 4. IT IS PRAYED THAT PENALTY OF RS.67,320 BE DELETED. 2. AN APPLICATION WAS RECEIVED ON BEHALF OF THE L D. SENIOR DR STATING THAT THE LD. SENIOR DR WAS ABSENT AND ADJOU RNMENT WAS SOUGHT BY THE DEPARTMENT ON THIS GROUND. HOWEVER, LOOKING INTO THE FACTS OF THE CASE, WE REJECT THE ADJOURNMENT AP PLICATION AND PROCEED TO HEAR THE CASE EX PARTE QUA THE DEPARTMEN T. 3. BRIEF FACTS OF THE CASE ARE THAT THE RETURN DECL ARING A TOTAL INCOME OF RS. 4,70,86,580/- WAS FILED WHEREAS THE A SSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER CALLED THE ACT) AT RS. 5,62,60,570/- A FTER MAKING AN ADDITION OF RS. 62,90,000/- AS INCOME FROM UNDISCLO SED SOURCES ON ACCOUNT OF UNSECURED LOANS NOT ACCEPTED BY THE A SSESSING OFFICER. THERE WERE CERTAIN OTHER DISALLOWANCES ON ACCOUNT OF EXPENSES ALSO. ON APPEAL BEFORE THE LD. CIT(A), TH E LD. CIT(A) DELETED THE ADDITION OF RS. 62,90,000/- AND ONLY CO NFIRMED AN ITA NO.6549/DEL/14 ASSESSMENT YEAR: 2007-08 ADDITION OF RS. 2 LAKH UNDER THIS HEAD BEING LOAN R ECEIVED FROM SHRI SARABJEET SINGH JOLLY. PENALTY U/S 271(1)(C) OF THE ACT AMOUNTING TO RS. 6,73,290/- WAS IMPOSED ON THIS REM AINING AMOUNT OF RS. 2 LAKH WHICH WAS CONFIRMED BY THE LD. CIT(A). 4. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAD MADE AN ADDITION SINCE THE SO URCE OF SOURCE OF FUNDS COULD NOT BE PROVED BY THE ASSESSEE . IT WAS SUBMITTED THAT THE ASSESSEE HAD FILED COPY OF THE B ANK PASS BOOK AND THE AFFIDAVIT OF SHRI SARABJEET SINGH JOLLY AND HAD ALSO DEMONSTRATED THE FLOW OF FUNDS FROM THE ACCOUNT OF SHRI JOLLY TO THE ASSESSEES ACCOUNT. IT WAS SUBMITTED THAT, THU S, THE IDENTITY WAS ESTABLISHED BUT THE SOURCE FROM WHICH SHRI JOLL Y HAD OBTAINED THE FUNDS I.E. SOURCE OF SOURCE COULD NOT BE ESTABLISHED. IT WAS ALSO SUBMITTED THAT SHRI JOLLY WAS ALSO BEIN G GIVEN INTEREST ON THE FUNDS LOANED BY HIM. IT WAS SUBMITTED THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS. 10 LAKH FROM SHRI JOL LY DURING THE YEAR AND RS. 8 LAKH HAD BEEN ACCEPTED BY THE LD. CI T (A) AND ONLY RS. 2 LAKH HAD BEEN CONFIRMED AND, THEREFORE, THERE WAS ALL THE MORE REASON THAT THE PENALTY IMPOSED SHOULD BE DELE TED. 5. WE HAVE HEARD THE LD. AR AND HAVE ALSO CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. IT IS SEEN THAT THE LD. CIT ITA NO.6549/DEL/14 ASSESSMENT YEAR: 2007-08 (A) HAS CONFIRMED THE ADDITION OF RS. 2 LAKH BY STA TING AS UNDER:- AN ADDITION OF RS.2,00,000/- AS LOAN RECEIVED FROM SARABJIT SINGH JOLLY TREATED BY THE ASSESSING OFFIC ER AS INCOME FROM UNDISCLOSED SOURCES DOES NOT APPEAR EXPLAINED. THE ASSESSING OFFICER IN THE REMAND REPORT HAS STATED THAT THE CREDITWORTHINESS OF MR. JOLLY IS IN DOUBT AS DURING THE RELEVANT YEAR HE HA S FILED A RETURN SHOWING AN INCOME OF RS. 1,55,916/- FROM WHICH HE HAS DEDUCTED REBATE OF RS.1,00,000/- UNDER CHAPTER-VI OF THE INCOME -TAX ACT. THUS SHOWING AN INCOME OF RS.55,916/- IN NET. DURING THE YEAR HE HAS ADVANCED LOAN OF RS. 10,00,000/- THE HAS NOT FILED HIS STATEMENT OF AFFAIRS AND BALANCE SHEET. IN VIEW OF THE FINDINGS OF THE ASSESSING OFFI CER IN THE REMAND REPORT, I SUSTAIN THE ADDITION OF RS.2,00,000/- MADE BY THE ASSESSING OFFICER. THIS GROUND OF APPEAL IS DISMISSED. 6. THUS, IT IS UNDISPUTED THAT SHRI JOLLY HAD ADVAN CED AN AMOUNT OF RS. 10 LAKH TO THE ASSESSEE DURING THE YE AR AND ONLY RS. 2 LAKH HAVE BEEN CONFIRMED BY THE LD. CIT (A). IT IS ALSO UNDISPUTED THAT SHRI JOLLY HAS ACCEPTED AS HAVING A DVANCED AN AMOUNT THROUGH AN AFFIDAVIT AND THE ASSESSEE HAS AL SO FURNISHED DOCUMENTS PROVING THE IDENTITY OF SHRI JOLLY AND AL SO THE FLOW OF FUNDS FROM THE BANK ACCOUNT OF SHRI JOLLY TO THE AS SESSEES BANK ACCOUNT. HOWEVER, THE CREDITWORTHINESS COULD NOT B E ESTABLISHED TO THE SATISFACTION OF THE ASSESSING OFFICER. IT I S ALSO NOTEWORTHY THAT THE LD. CIT (A) HAD ACCEPTED RS. 8 LAKH AS HAV ING BEEN RECEIVED FROM SHRI JOLLY OUT OF RS. 10 LAKH AND CON FIRMED ONLY ITA NO.6549/DEL/14 ASSESSMENT YEAR: 2007-08 RS. 2 LAKH AS HAVING NOT BEEN RECEIVED FROM SHRI JO LLY. THE HONBLE SUPREME COURT, IN THE CASE OF HINDUSTAN STE EL LTD. V. STATE OF ORISSA 83 ITR 26, HAD LAID DOWN THE POSITI ON OF LAW BY HOLDING THAT THE ASSESSING OFFICER IS NOT BOUND TO LEVY PENALTY AUTOMATICALLY SIMPLY BECAUSE THE QUANTUM ADDITION H AS BEEN SUSTAINED. ALSO IN CASE OF CIT V. KHODAY ESWARA (83 ITR 369) (SC), INCIDENTALLY REPORTED IN SAME ITR VOLUME, IT IS HELD THAT PENALTY CANNOT BE LEVIED SOLELY ON BASIS OF REASONS GIVEN IN ORIGINAL ORDER OF ASSESSMENT. THE HONBLE SUPREME C OURT HAS REITERATED THE LAW IN CASE OF DILIP N. SHROFF V. JT . CIT [2007] 291 ITR 519 BY HOLDING IN PARA 62 THAT FINDING IN ASSES SMENT PROCEEDINGS CANNOT AUTOMATICALLY BE ADOPTED IN PENA LTY PROCEEDINGS AND THE AUTHORITIES HAVE TO CONSIDER TH E MATTER AFRESH FROM DIFFERENT ANGLE. THE STATUTE REQUIRES A SATISFACTION ON THE PART OF THE ASSESSING OFFICER. HE IS REQUIRE D TO ARRIVE AT A SATISFACTION SO AS TO SHOW THAT CONCEALED THE AMOUN T OR FURNISHED INACCURATE PARTICULARS AND THIS ONUS IS T O BE DISCHARGED BY THE DEPARTMENT. WHILE CONSIDERING WH ETHER THE ASSESSEE HAS BEEN ABLE TO DISCHARGE HIS BURDEN THE ASSESSING OFFICER SHOULD NOT BEGIN WITH THE PRESUMPTION THAT HE IS GUILTY. SINCE THE BURDEN OF PROOF IN PENALTY PROCEEDINGS VA RIES FROM THAT ITA NO.6549/DEL/14 ASSESSMENT YEAR: 2007-08 IN THE ASSESSMENT PROCEEDINGS, A FINDING IN THE ASS ESSMENT PROCEEDINGS THAT A PARTICULAR RECEIPT IS INCOME CAN NOT AUTOMATICALLY BE ADOPTED, THOUGH A FINDING IN THE A SSESSMENT PROCEEDINGS CONSTITUTES GOOD EVIDENCE IN THE PENALT Y PROCEEDINGS. IN THE PENALTY PROCEEDINGS THE AUTHORI TIES MUST CONSIDER THE MATTER AFRESH AS THE QUESTION HAS TO B E CONSIDERED FROM A DIFFERENT ANGLE. IT IS IMPORTANT TO KEEP IN MIND THE FUNDAMENTAL LEGAL PROPOSITION THAT ASSESSMENT PROCE EDINGS ARE NOT CONCLUSIVE. ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT. FINDINGS IN ASSESSMENT P ROCEEDINGS DONT OPERATE AS RES JUDICATA IN PENALTY PROCEEDINGS. FOR THIS PROPOSITION RELIANCE IS PLACED ON THE DECISION IN C IT VS. DHARAMCHAND L. SHAH (1993) 204 ITR 462 (BOM). IN VI JAY POWER GENERATORS LTD VS. ITO (2008)6 DTR 64 (DEL) IT WAS HELD THAT IT IS WELL SETTLED THAT THOUGH THEY CONSTITUTE GOOD EV IDENCE DO NOT CONSTITUTE CONCLUSIVE EVIDENCE IN PENALTY PROCEEDIN GS. DURING PENALTY PROCEEDINGS, THERE HAS TO BE REAPPRAISAL OF THE VERY SAME MATERIAL ON THE BASIS OF WHICH THE ADDITION WAS MAD E AND IF FURTHER MATERIAL IS ADDUCED BY THE ASSESSEE IN THE COURSE OF THE PENALTY PROCEEDINGS, IT IS ALL THE MORE NECESSARY T HAT SUCH FURTHER MATERIAL SHOULD ALSO BE EXAMINED IN AN ATTE MPT TO ITA NO.6549/DEL/14 ASSESSMENT YEAR: 2007-08 ASCERTAIN WHETHER THE ASSESSEE CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS. THUS, UNDER PENAL TY PROCEEDINGS ASSESSEE CAN DISCHARGE HIS BURDEN BY RE LYING ON THE SAME MATERIAL ON THE BASIS OF WHICH ASSESSMENT IS M ADE BY CONTENDING THAT ALL NECESSARY DISCLOSURES WERE MADE AND THAT ON THE BASIS OF MATERIAL DISCLOSED THERE CANNOT BE A C ASE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. FURTHER IF THERE IS ANY MATERIAL OR ADDITIO NAL EVIDENCE WHICH WAS NOT PRODUCED DURING ASSESSMENT PROCEEDING S SAME CAN BE PRODUCED IN PENALTY PROCEEDINGS AS BOTH ASSE SSMENT AND PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE. IN C IT VS. M/S SIDHARTHA ENTERPRISES (2009) 184 TAXMAN 460 (P & H) (HC) IT WAS HELD THAT THE JUDGMENT IN DHARMENDRA TEXTILE CANNOT BE READ AS LAYING DOWN THAT IN EVERY CASE WHERE PARTICULARS OF INCOME ARE INACCURATE, PENALTY MUST FOLLOW. EVEN SO, THE CONCE PT OF PENALTY HAS NOT UNDERGONE CHANGE BY VIRTUE OF THE SAID JUDG MENT. PENALTY IS IMPOSED ONLY WHEN THERE IS SOME ELEMENT OF DELIBERATE DEFAULT. 7. REVERTING TO THE FACTS OF THE PRESENT CASE, THE PEN ALTY ORDER IS WOEFULLY SILENT ON THE ISSUE AS TO HOW THIS SATI SFACTION OF CONCEALMENT WAS ARRIVED AT. THE QUANTUM ADDITION ON WHICH THE ITA NO.6549/DEL/14 ASSESSMENT YEAR: 2007-08 PENALTY HAS BEEN IMPOSED PERTAINS TO AN ADDITION OF RS. 2 LAKHS ONLY SUSTAINED BY THE LD. CIT (A) OUT OF A TOTAL AD DITION OF RS. 10 LAKHS. IT IS ALSO NOTEWORTHY THAT THIS ADDITION WAS SUSTAINED ON THE GROUND THAT THE ASSESSEE HAD FAILED TO PROVE TH E SOURCE OF SOURCE BUT HOW THIS HAS RESULTED IN CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCO ME IS NOT DISCERNIBLE FROM THE PENALTY ORDER. THE LD. CIT (A) HAS ALSO NOT EXAMINED THE ISSUE IN DETAIL BUT HAS SIMPLY CONFIRM ED THE PENALTY BY RELYING ON THE FINDINGS OF THE AO AND TH E CONFIRMATION OF THE ADDITION BY THE LD. CIT (A) IN THE QUANTUM P ROCEEDINGS. THUS, THERE IS NO FINDING BY THE AUTHORITIES BELOW ON THE ISSUE AS TO HOW THE CONCEALMENT HAS COME TO BE ESTABLISHED SO AS TO WARRANT IMPOSITION OF PENALTY. THUS, IT IS APPARENT THAT THE PENALTY HAS BEEN IMPOSED AS AN AUTOMATIC OUTCOME OF THE CONFIRMATION OF THE QUANTUM ADDITION. CONSIDERING THE ENTIRETY OF THE CIRCUMSTANCES, IN OUR VIEW THE IMPUGNED DISALLO WANCE DOES NOT INVITE THE PROVISIONS OF SECTION 271(1)(C) OF T HE ACT. WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND DIRECT THE A O TO DELETE THE ENTIRE PENALTY. 8. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.6549/DEL/14 ASSESSMENT YEAR: 2007-08 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 4 TH OCTOBER, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 4 TH OCTOBER, 2017 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR