SHRI KESAR SINGH MEHTA, Jaipur V. ITO, Kishangarh

ITA 688/JPR/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5410 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 15-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Section: 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES SMC, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA- @ ITA NO. 688/JP/2011 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2007-08 KESAR SINGH MEHTA, C/O- SHREENATH MARBLE INDUSTRIES, C/O- SHREENATH CANDLE WORKS, KISHANGARH CITY. CUKE VS. INCOME TAX OFFICER, KISHANGARH. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AIYPM 8252 G VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI MANISH AGARWAL (CA). JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 11/01/2016 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 29/02/2016 VKNS'K @ ORDER PER: R.P. TOLANI, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 27/05/2011 PASSED BY THE LEARNED CIT(A), AJMER FOR A.Y. 2007-08. EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E LD CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY OF RS. 1,53,000/- LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. ITA 688/JP/2011_ KISAR SINGH MEHTA VS ITO 2 1.1 THAT THE LD CIT(A) HAS ERRED IN UPHOLDING THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE INCOME WAS SURRENDERED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING AND THE INCOME WAS OFFERED SUO-MOTTO, TO BUY THE PEACE OF MIND AND TO AVOID PROLONGED LITIGATION. THUS UPHOLDING THE PENALTY SO LEVIED DESERVES TO BE DELETED. 1.2 THAT THE PENALTY U/S 271(1)(C) HAS BEEN IMPOSED AND CONFIRMED BY THE LD. CIT(A) WITHOUT MAKING ANY INDEPENDENT ENQUIRY IN PENALTY PROCEEDINGS AND SIMPLY RELYING UPON THE CONCLUSION DRAWN IN ASSESSMENT ORDER THUS THE PENALTY DESERVES TO BE DELETED. 1.3 THAT THE ASSESSEE HAS VOLUNTARILY SURRENDERED T HE INCOME AND PAID THE DUE TAX THEREON THUS THERE REMAINED NO INCOME ON WHICH TAX SOUGHT TO BE EVADED COULD BE CALCULATED WHICH FACT WAS NOT APPRECIATED BY THE LD. CIT(A). 2. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT A SUM OF RS. 5,00,000/- THROUGH CHEQUE NO. 0004442 ON 22.03.2007 FROM SHRI PANKAJ KUMAR JAIN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE HAS FILED CONFIRMATION FROM SHRI PANKAJ KU MAR JAIN WHICH WAS DULY SIGNED BY HIM. HOWEVER IN RESPONSE TO NOTICE U/ S 133(6), SHRI PANKAJ KUMAR JAIN HAS SUBMITTED THAT HE DID NOT HAV E ANY FUNDS TO MAKE DEPOSITS OF THIS MUCH AMOUNT AS HIS MAIN SOURC E OF INCOME IS FROM SALARY AND INCOME FROM OTHER SOURCES. ASSESSEE COULD NOT ITA 688/JP/2011_ KISAR SINGH MEHTA VS ITO 3 UNDERSTAND, WHY THE CREDITOR DENIED FOR THE DEPOSIT. WHILE ALL THE TRANSACTION WAS MADE FOR HIS ACCOUNT WITH HIS SIGNATU RE AND ALSO PROVIDED HIS CONFIRMATION FOR THE ABOVE TRANSACTION WHICH WAS DULY SIGNED BY HIM. DESPITE OF THIS FACT, THE ASSESSEE V OLUNTARILY SURRENDERED THE AMOUNTS TO BUY PEACE OF MIND AND TO AVOID ANY L ITIGATION. DESPITE OF SUCH CO-OPERATIVE GESTURE OF THE APPELL ANT, THE LD. AO PROCEEDED TO INITIATE PENALTY PROCEEDINGS U/S 271(L )(C) OF THE INCOME TAX ACT, 1961 AND IMPOSED A PENALTY OF RS. 1,53,000/ - ON ACCOUNT OF THE UNEXPLAINED INCOME OF THE ASSESSEE U/S 68 OF TH E INCOME TAX ACT, 1961. WHILE IMPOSING THE PENALTY THE LD. AO FAILED TO MAKE ANY INDEPENDENT INQUIRY DURING THE COURSE OF PENALTY PR OCEEDINGS AND SIMPLY RELIED UPON THE INQUIRIES MADE AND CONCLUSIO NS DRAWN AT THE TIME OF ASSESSMENT PROCEEDINGS, WHEN IT IS A FACT O N RECORD THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE AND FRESH ENQUIRIES SHOULD HAVE BEEN MADE AND AO SHOULD HAVE GIVEN AN OPPORTUNITY TO THE APPELLANT OF BEING HEARD AND TO EXPLAIN ITS CASE. BY NOT DOING SO THE LD. AO HAS PR OCEEDED TO CONCLUDE THE ORDER ONLY BY RELYING ON FINDING IN ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS SURRENDERED THE AMOUNT DURING THE COUR SE OF ASSESSMENT PROCEEDINGS COMPELLED BY SHORTAGE OF TIME SPAN DURI NG WHICH THE ITA 688/JP/2011_ KISAR SINGH MEHTA VS ITO 4 JUSTIFICATION WAS TO BE FILED. THE SURRENDER WAS SOLEL Y TO AVOID LITIGATION AND ENSURE PEACE OF MIND AND. IT IS FURTHER SUBMITT ED THAT ASSESSEE HAS NO CONTROL OVER THE THIRD PARTY I.E. THE ALLEGED CR EDITOR WHO IS NON- RELATED TO THE APPELLANT AND IT IS NOT KNOWN TO THE APPELLANT THAT FROM WHICH SOURCES HE HAS DEPOSITED CASH IN HIS BANK ACCO UNT TO GIVE THE LOAN TO THE ASSESSEE. ASSESSEE DUE TO THE TIME BARR ING LIMIT WAS VERY CLOSE DO NOT HAVE SUFFICIENT TIME TO FIND OUT, WHY T HE CREDITORS DENIED FROM THE TRANSACTION, THEREFORE IN ORDER TO AVOID P ROLONGED LITIGATION AND TO BUY THE PEACE OF MIND HAD ACCEPTED THE LOAN AMOUNT AS HIS INCOME. IT IS NOT THE CASE THAT AFTER IN DEPTH EXAM INATION AND CROSS VERIFICATION BY THE ASSESSEE THE AMOUNT WAS SURRENDE RED. FURTHER, IF SUCH AMOUNT RECEIVED FROM THE PARTY IS TREATED AS O UT OF UNDISCLOSED INCOME OF THE APPELLANT AND THE SAME FLOWN FROM THE ASSESSEE AS ALLEGED BY LD. AO, IN SUCH A CASE, THE LD. AO HAS M ISERABLY FAILED TO BROUGHT ON RECORD ANY EVIDENCE OR MATERIAL TO ESTAB LISH FROM WHAT SOURCES THE ASSESSEE HAS EARNED ALLEGED UNDISCLOSED INCOME. MANY OF SUCH CASES CAME UP FOR HEARING BEFORE THE HONBLE I TAT JAIPUR BENCH IN THE CASE OF SMT. DURGA DEVI SOMANI IN ITA NO. 672/ JP/2011 ORDER DATED 31/10/2014 WHEREIN THE HONBLE BENCH HAS HELD AS UNDER:- 2.11 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. ITA 688/JP/2011_ KISAR SINGH MEHTA VS ITO 5 WE ARE INCLINED TO DELETE THE PENALTY ON FOLLOWING REASONS:- I. IT CLEARLY EMERGES THAT THE AMOUNTS IN QUESTION WERE CARRIED OVER TRADE CREDITS FROM EARLIER YEAR, CORRESPONDING PURCHASES WERE INCLUDED IN TRADING A/ C THUS LEGALLY SPEAKING IF TRADE CREDITS ARE ADDED AS CESSATION OF LIABILITY, THE RELEVANT ENTRIES EXIST IN BOOKS AND IF THEY ARE HELD AS BOGUS THEN THEY BELONG TO E ARLIER YEARS. BESIDES RELEVANT INFORMATION IS FURNISHED ALONGWITH RETURN OF INCOME. II. THOUGH SURRENDERED IN ASSESSMENT THE ASSESSEE CAN TAKE FRESH PLEAS IN THE PENALTY PROCEEDINGS WHICH B Y SETTLED LAW ARE DISTINCT AND SEPARATE. ASSESSEE CAN MAKE FRESH SUBMISSIONS AND LEAD FRESH EVIDENCE. AO CAN M AKE FRESH INVESTIGATIONS ON THE BASIS OF NEW PLEAS AND MATERIAL. THUS WHEN SURRENDER IS TECHNICALLY REJECT ED AND ASSESSEE GIVES REASONABLE EXPLANATION, PENALTY CAN BE IMPOSED NOT ON THE SOLE BASIS OF ALLEGED REFUSED SURRENDER. AO HAS A DUTY TO CONSIDER THE MATERIAL A ND SUBMISSION OF THE ASSESSEE AND DECIDE WHETHER INCOM E ON THE BASIS OF THESE PLEAS WAS ASSESSABLE IN THE Y EAR IN QUESTION. III. AO HAS HELD THAT THE SURRENDER IS NOT ACCEPTA BLE AND CHOSE TO ADD IT U/S 41(1) OF THE ACT. THUS TECHNICA LLY EVEN THE SURRENDER IS NOT ACCEPTED AND UNILATERAL CESSATION OF LIABLE IS ASSUMED IGNORING THE PLEA TH AT IN SUBSEQUENT YEARS TRADING LIABILITY AMOUNTS WERE PAI D. IV. THE MAK DATA JUDGMENT RELIED BY ID DR ALSO HOLD S THAT PENALTY CANNOT BE DELETED MERELY HOLDING THAT ASSES SES VOLUNTARILY SURRENDERED THE INCOME. THERE IS NO SUC H IMMUNITY AND IT IS THE EXPLANATION WHICH SHOULD BE CONSIDERED FOR PENALTY. IN THAT CASE ASSESSEE DID N OT OFFER ANY EXPLANATION EXCEPT A SPECIOUS PLEA OF VOL UNTARY SURRENDER, WHICH ALSO ON FACTS WAS FOUND TO BE NOT VOLUNTARY. THUS IN MAK DATA CASE ALSO HON'BLE SUPRE ME COURT DID NOT DISPENSE WITH THE CONSIDERATION OF EXPLANATION OF THE ASSESSEE AND DETERMINATION OF IMPOSITION ON MERITS. ITA 688/JP/2011_ KISAR SINGH MEHTA VS ITO 6 V. THE DETAILS ABOUT TRADING LIABILITIES AND TRANSA CTIONS WERE REFLECTED IN THE ACCOUNTING STATEMENTS WHICH WERE P ART OF THE RETURN OF INCOME. HONBLE SUPREME COURT IN RELIANCE PETRO PRODUCTS CASE (SUPRA) HAS HELD THAT IF THE RELEVANT INFORMATION IS FILED WITH THE RETURN OF IN COME IN THAT CASE ANY VARIATION IN THE CLAIMS OF THE ASSESS EE WILL NOT ENTAIL PENALTY. THIS JUDGMENT ALSO SUPPORTS THE CASE OF THE ASSESSEE, IN VIEW THEREOF ALSO THE PENALTY I N THIS CASE CANNOT BE IMPOSED BY MERELY REFERRING TO THE ALLEGED SURRENDER AND WITHOUT CONSIDERING THE EXPLANATION. VI. ASSUMING WORST AGAINST ASSESSEE, PENALTY PROCEE DINGS BEING SEPARATE AND DISTINCT THE YEAR OF TAXABILITY CAN BE DETERMINED DURING PENALTY PROCEEDINGS. LOOKING FROM THIS ANGLE THE AMOUNT WHICH AT ALL MAY BE CONSIDERE D FOR PENALTY ARE TRANSACTIONS OF THIS YEAR WHICH ARE RS. 2,45,000/- AND RS. 3,58,141/-. THESE ALSO IN OUR VI EW ARE NOT LIABLE FOR PENALTY AS ALL THE RELEVANT PART ICULARS ARE FILED ALONG WITH THE RETURN. THUS, IN CONSIDERATION OF ENTIRETY OF FACTS, CIRCUM STANCES AND CASE LAWS AS RELIED ON BY ASSESSEE, WE ARE OF THE V IEW THAT IT IS NOT A FIT CASE OF IMPOSITION OF PENALTY U/S 271( 1)(C)OF THE ACT. THEREFORE, WE DIRECT TO DELETE THE PENALTY. BESIDES IN THE CASES OF ASHISH GUPTA ITA NO. 671/JP /11 VIDE ORDER DATED 17-10-2014 AND SHRI ASHOK KUMAR KAMDAR IN ITA NO. 684/JP/11 SIMILAR PENALTY HAS BEEN DELETED. FURTHER RELIANCE IS PLACED ON HONBLE APEX COURT JUDGMENT IN THE CASE OF EILLY LILLY & COMPANY REPORTED IN 312 ITR 225 HOLING THAT THE PENALTY U/S 271(L)(C) IS NOT AN AUTOMATIC OR MANDATORY FALLOUT OF THE ADDITION MADE DURING THE ASSESSMENT PROCEEDINGS. MERELY BECAUSE AN ADDITION HAD BEEN MADE ITA 688/JP/2011_ KISAR SINGH MEHTA VS ITO 7 DURING ASSESSMENT PROCEEDINGS DOES NOT IPSO FACT CO NSTITUTE DEFAULT OF CONCEALMENT ON PART OF THE ASSESSEE, THEREFORE, THE SAME SHOULD NOT BE LEVIED IN ROUTINE MANNER. IT IS FURTHER PLEADED THA T THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE ARE SIMILAR TO THE CASE OF SMT. DURGA DEVI SOMANI, ASHISH GUPTA AND SHRI ASHOK KUMA R KAMDAR, THEREFORE, PENALTY PROCEEDINGS MAY BE DELETED. FURT HER RELIANCE IS PLACED IS AS UNDER:- (I) 170 TAXMAN 471 CIT VS. ASHOK TAKER (DELHI) (II) 300 ITR 40 V.V. PROJECTS AND INVESTMENTS PVT. L TD. VS. DY. CIT (2008) (AP) (III) 35 DTR 420 ASSTT. CIT VS. INDICA EXPORTS (DEL H) (IV) 127 TT J 599 ACIT VS. MALU ELECTRODES PVT. LTD. (2010) (NAG.) (V) 131 ITR 619 ADDL.COT VS AGGARWAL MISTHAN BHANDAR (RAJ.). (VI) 308 ITR 33 (AT) STAR INTERNATIONAL P. LTD. V. A SSISTANT COMMISSIONER OF INCOME-TAX (LUCKNOW) (VII) 251 ITR 9 (SC) COMMISSIONER OF-INCOME-TAX V. S URESH CHANDRA MITTAL (VIII) 265 ITR 329 COMMISSIONER OF INCOME-TAX V. BA DRILAL CHATURBHUJ (RAJ.) 3. THE LD DR RELIED ON THE ORDER OF THE LOWER AUTHORI TIES. ITA 688/JP/2011_ KISAR SINGH MEHTA VS ITO 8 4. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN MY CONSIDE RED VIEW, THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE, THE ASSES SEES CASE IF SIMILAR TO SMT. DURGA DEVI SOMANI TO WHICH THE UNDERSIGNED WA S ALSO A PARTY, THE SAME HAS BEEN FOLLOWED IN THE CASES OF S/SHRI A SHISH GUPTA AND ASHOK KUMAR KAMDAR (SUPRA). FOLOWING THESE JUDGMENT AND HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF EILLY LILLY & COMPANY (SUPRA), PENALTY IMPOSED IS HEREBY DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/02/2016. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 29 TH FEBRUARY, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI KESAR SINGH MEHTA, KISHANGARH C ITY. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, KISHANGARH. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDR @ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 688/JP/2011) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR