M/s. Rimjhim Ispat Ltd., Kanpur V. ACIT, New Delhi

ITA 6987/DEL/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1846 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 14-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 26-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Section: 40A(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-I NEW DELHI BEFORE SMT DIVA SINGH: JUDICIAL MEMBER ITA NO. 6987/DEL/2014 ASSESSMENT YEAR :2005-06 RIMJHIM ISPAT LTD., VS. ACIT, CENTRAL CIRCLE- 19, NEW DELHI /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI NIRAJ JAIN CA /BY RESPONDENT SHRI P. DAM KANUNJNA, SR. DR /DATE OF HEARING 14-10-2015 /DATE OF PRONOUNCEMENT 18 - 11 -2015 /O R D E R THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 29.08.2014 OF CIT(A) -XXXIII, NEW DELHI PERTAINING TO ASSTT. YEAR 2005-06, CONFIRMING THE P ENALTY OF RS. 26,070/- IMPOSED U/S 271(1)(C). 2. BOTH THE PARTIES HAVE BEEN HEARD. THE LD. AR, I NVITING ATTENTION TO PAGE 4 OF THE IMPUGNED ORDER, SUBMITTED THAT THE AO , IN THE COURSE OF THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE, HELD THAT SINCE PAYMENT OF RS. 3,55,406/- WAS MADE IN CONTRAVENTION OF PROV ISIONS OF SECTION 40A(3) 2 ITA NO. 6987/DEL/2014 AS THEY HAVE BEEN MADE IN EXCESS OF RS. 20,000/-, A S A RESULT OF THIS, ADDITION OF RS. 71,080/- WAS MADE U/S 40A(3), AS 20% OF THE SAID AMOUNT WAS ADDED. AS A RESULT OF THIS ADDITION, PENALTY U/S 2 71(1)(C) WAS IMPOSED. THIS ACTION WAS CHALLENGED IN APPEAL BEFORE THE CIT(A), BEFORE WHOM, AS PER RECORD, IT IS FOUND TO HAVE BEEN PLEADED THAT AT BE ST IT WOULD HAVE BEEN ABOUT TWO INSTANCES OF CONSIGNMENTS WHEREIN PAYMENT IN EX CESS OF RS. 20,000/- WOULD HAVE BEEN MADE. ACCORDINGLY, IT WAS PLEADED T HAT SIMPLY BECAUSE THE ADDITION WAS CONFIRMED IN APPEAL, PENALTY CANNOT BE AUTOMATICALLY ATTRACTED. 3. SINCE THE ASSESSEE DID NOT SUCCEED BEFORE THE CI T(A), THE PRESENT APPEAL HAS BEEN FILED. 4. REITERATING THE ARGUMENTS ADVANCED BEFORE THE TA X AUTHORITIES, THE LD. AUTHORIZED REPRESENTATIVE RELYING UPON THE DECISION OF THE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (2010) 322 ITR 158 (SC), SUBMITTED THAT IN THE FACTS OF THE PRESENT CASE, COMPLETE FACTS WERE MADE AVAILABL E AND IT IS NOT A CASE OF NON- DISCLOSURE OF MATERIAL FACTS OR CONCEALMENT BUT IT IS ONLY AS A RESULT OF ABOUT TWO INSTANCES WHERE THE PAYMENT WAS IN EXCESS. THUS, SI NCE THE ASSESSEE WAS NOT HABITUALLY VIOLATING SECTION 40A(3) OF THE ACT AND THIS WAS AT BEST RELATABLE ONLY TO TWO CONSIGNMENTS, THE PENALTY PROCEEDINGS SHOULD HA VE BEEN QUASHED BY THE CIT(A), AS THESE ARGUMENTS HAVE NOT BEEN REBUTTED O R CONTROVERTED. 5. LD. SR. DR SUBMITTED THAT THOUGH THE CLAIM IS CO NSISTENTLY MADE THAT THERE WOULD BE ABOUT TWO CONSIGNMENTS WHERE THE PAYMENT W AS IN EXCESS OF RS. 20,000/-, THE FACT REMAINS THAT VIOLATION IS NOT DI SPUTED. THE ARGUMENT, THAT LOOKING AT THE SMALLNESS OF THE AMOUNT, WHERE THE GENUINENE SS OF THE EXPENDITURE HAS NOT BEEN DOUBTED, IT WAS THE SUBMISSION IS NOT A COGENT OR RELEVANT ARGUMENT. THUS, THE IMPUGNED ORDER WAS HEAVILY RELIED UPON. 3 ITA NO. 6987/DEL/2014 6. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, I AM OF THE VIEW THAT IN THE PECULIAR FACTS AND CIRCUMST ANCES OF THE CASE, LOOKING AT THE JUDICIAL PRECEDENT CITATION OF THE APEX COURT, THE EXPLANATION OFFERED BY THE ASSESSEE DESERVES TO BE ACCEPTED. THE ASSESSEE HAS CONSISTENTLY PLEADED THAT THE VIOLATION WAS ONLY IN REGARD TO TWO CONSIGNMENTS AN D THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE IS HABITUALLY AND KNOWINGLY VIOLATING THE PROVISIONS OF SECTION 40A(3). SIMPLY BECAUSE THE ADDITION HAS BEE N MADE, IN THE OVERALL FACTUAL BACKGROUND OF THE CASE AND CONSIDERING THE LEGAL PO SITION AS LAID DOWN BY THE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA), THE IMPUGNED ORDER IS DIRECTED TO BE SET ASIDE AND THE PENALTY ORDER IS D IRECTED TO BE QUASHED. THE SAID ORDER WAS PRONOUNCED ON THE DATE OF HEARING ITSELF IN THE OPEN COURT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 18 TH OF NOVEMBER, 2015. SD/- (DIVA SINGH) JUDICIAL MEMBER DATED: 18/11/2015. *MP* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR, ITAT.