Sh. Arun Duggal, New Delhi V. DCIT, New Delhi

ITA 740/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6539 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-12-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : A : NEW DELHI BEFORE SHRI R.S. SYAL, AM & SHRI K.N. CHARY, JM ITA NO.740/DEL/2014 ASSESSMENT YEAR : 2006-07 ARUN DUGGAL, C/O SHRIRAM CAPITAL, 709, 7 TH FLOOR, ANSAL BHAWAN, KASTURBA GANDHI MARG, NEW DELHI. PAN: AEJPD7754D VS. DCIT, CIRCLE-31(1), NEW DELHI. ASSESSEE BY : SHRI LALIT MOHAN PANDEY, CA DEPTT. BY : SHRI S.K. JAIN, DR DATE OF HEARING : 20.12.2016 DATE OF PRONOUNCEMENT : 21.12.2016 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DT. 29.11.2013 PASSED BY THE CIT(A) CONFIRMING THE PENALTY OF RS.3,09,822/-IMPOSED BY THE AO U/S 271(1)(C) OF THE INCOME- ITA NO.740/DEL/2014 2 TAX ACT, 1961 (HEREINAFTER ALSO CALLED `THE ACT) R ELATING TO THE A.Y. 2006-07. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS IN THE BUSINESS OF CONSULTANCY. A SUM OF RS.9,20,4 45/- WAS CLAIMED AS COMMISSION EXPENSE. ON BEING CALLED UPO N TO GIVE THE DETAILS OF SUCH COMMISSION, THE ASSESSEE FURNIS HED A REPLY STATING THAT HE HAD HIRED THE SERVICES OF PROFESSIO NALS, CONSULTANTS AND SOME OTHER INDIVIDUALS TO HELP IMPR OVEMENT IN RENDERING SERVICES. VIDE LETTER DATED 18.12.2008, THE ASSESSEE SUBMITTED THAT HE WAS TO PROVIDE FUNDS TO SHRI RAM GROUP OF COMPANIES THROUGH M/S CYRUS CAPITAL, USA, WHICH WAS THE LENDER COMPANY. THE SAID LENDER COMPANY APPOINTED SOME MONITORING AGENTS FOR MONITORING THESE FUNDS PROVID ED TO SHRI RAM GROUP OF COMPANIES AND THE ASSESSEE MADE PAYMEN T OF COMMISSION TO THESE MONITORING AGENTS. THE ASSESSEE FURNISHED A LIST OF SUCH FIVE MONITORING AGENTS WHICH HAS BEE N REPRODUCED IN THE ASSESSMENT ORDER AS UNDER :- ITA NO.740/DEL/2014 3 1. MS SUMAN GUPTA, ADD:-265/21B, KANNEL FARM, TIGR I EXTN. NEW DELHI 110062. INR 1,83,500.00 2. MR. NAVDEEP GUPTA, ADD:-AL-130, SHALIMAR BAGH, NEW DELHI. INR 2,04,910.00 3. RAKESH GUPTA, ADD:- RZ-26P/32A, INDRA PARK, PALA M COLONY, NEW DELHI. INR 2,04,910.00 4. KAPIL GUPTA, ADD:- C-530, SECTOR-1, ROHINI AVANT IKA, NEW DELHI. INR 2,26,200.00 5. I.K. AGGARWAL, ADD:- G-1/168, UTTAM NAGAR, NEW DELHI INR 1,00,925.00 3. NOT CONVINCED WITH THE ASSESSEES SUBMISSIONS, T HE AO MADE THE ADDITION BY HOLDING THAT THERE WAS NO LOGI C FOR PAYMENT OF ANY COMMISSION TO PERSONS CLAIMED TO BE APPOINTED AS AGENTS OF THIRD PARTY TO MONITOR THE FUNDS BELON GING TO SUCH THIRD PARTY. THEREAFTER, PENALTY WAS IMPOSED WITH REFERENCE TO THIS ADDITION, WHICH CAME TO BE CONFIRMED IN THE FI RST APPEAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT T HE ASSESSEE SUBMITTED THE DETAILS OF COMMISSION AMOUNTING TO RS.9,20,445/- BEFORE THE AO GIVING PARTICULARS OF T HE MONITORING AGENTS TO WHOM COMMISSION WAS PAID AT TH E ITA NO.740/DEL/2014 4 INSTANCE OF LENDER COMPANY. NOT ONLY THEIR NAMES, BUT, COMPLETE ADDRESSES WERE ALSO GIVEN. WITHOUT EMBARKI NG ON ANY ENQUIRY TO EXAMINE THE GENUINENESS OF THE COMMI SSION PAYMENT, THE AO SIMPLY WENT ON HIS OWN LOGIC AND RA TIONALE IN DISALLOWING THE AMOUNT. THIS IS A CASE IN WHICH TH E ASSESSEE FURNISHED NECESSARY DETAILS AND THE AO MADE ADDITIO N BY SIMPLY REJECTING THE ASSESSEES CONTENTION WITHOUT VERIFYING THE VERACITY OF THE ASSESSEES EXPLANATION. NOTWIT HSTANDING THE FACT THAT THE ADDITION WAS NOT CHALLENGED BY TH E ASSESSEE, THIS CANNOT BE A CASE CALLING FOR IMPOSITION OF PEN ALTY U/S 271(1)(C) OF THE ACT. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 32 2 ITR 158 (SC) HAS HELD THAT SIMPLY FOR THE REASON THAT THE ASSES SING OFFICER DID NOT FIND THE CLAIM OF THE ASSESSEE TO B E SUSTAINABLE IN LAW UP TO A CERTAIN EXTENT, CANNOT BE A CASE FOR PENALTY U/S.271(1)(C) MORE SO WHEN THE PARTICULARS FURNISHE D BY THE ASSESSEE WERE NOT INACCURATE. ITA NO.740/DEL/2014 5 5. AT THE MOST, THE ASSESSEES CLAIM OF DEDUCTIO N CAN BE CONSIDERED AS UNPROVED CLAIM AND NOT A DISPROVED CL AIM OF EXPENDITURE. THE HONBLE GUJARAT HIGH COURT IN NATIONAL TEXTILES VS. CIT (2001) 249 ITR 125 (GUJ.) , HAS HELD THAT IN ORDER TO JUSTIFY LEVY OF PENALTY FOR ADDITION OF CASH CREDITS, THE EXPLANATI ON TENDERED BY THE ASSESSEE MUST BE DISPROVED. DELETING THE PENALTY S O IMPOSED, THE HONBLE HIGH COURT HELD THAT IT WAS NOT A CASE OF I MPOSITION OF PENALTY. THE HONBLE CALCUTTA HIGH COURT IN DURGA KAMAL RICE MILLS VS. CIT (2004) 265 ITR 25 (CAL) , RELYING ON NATIONAL TEXTILES 249 ITR 125 (GUJ) , HAS HELD THAT THERE IS A DIFFERENCE IN `FACTS NOT PROVED' AND `FACTS DISPROVED'. IT FURTHER HELD THAT PENALTY CAN BE LE VIED ONLY FOR THE LATTER. SIMILAR VIEW HAS BEEN TAKEN IN CIT VS. VIDYAGAURI NATVARLAL & ORS (1999) 153 CTR (GUJ) 546 . 6. IN THE LIGHT OF THE FOREGOING PRECEDENTS, WE ARE SATISFIED THAT IT IS NOT A CASE WARRANTING ANY IMPOSITION OF PENALTY U/S 271(1)(C). WE, THEREFORE, SET ASIDE THE IMPUGNED OR DER AND ORDER FOR THE DELETION OF PENALTY. ITA NO.740/DEL/2014 6 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.12.2016. SD/- SD/- [K.N. CHARY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, DECEMBER, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.