Sh. Vikas, Meerut V. ITO, Meerut

ITA 849/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4920 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 12-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Initiation of penalty proceedings
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.849/DEL/2015 ( ASSESSMENT YEAR: 2009-10) SHRI VIKAS, VILLAGE GHAT, P.O. PACHLI KHURD, MEERUT (U.P.) VS. ITO, WARD 2 (4), NEW DELHI. ASSESSEE BY SHRI M.P. RASTOGI, ADVOCATE REVENUE BY SHRI AMIT JAIN, SR. DR ORDER PER DIVA SINGH, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE AS SESSEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 07.01.2015 OF CIT (A ), MEERUT PERTAINING TO 2009-10 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : - 1) THAT THE PENALTY AS IMPOSED BY THE AO AND SUSTA INED BY THE CIT (A) U/S 271(1)(C) AT RS.11.45,666/- IS INVALID, ARBITRARY, UNJUST AND BAD IN LAW. 2) THAT IN THE ABSENCE OF SPECIFIC CHARGE WHICH IS THE PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF FURNISHING OF INACCU RATE PARTICULAR OF HIS INCOME, THE LEVY OF PENALTY U/S 271(1)(C) AT RS.11,45,666/- BY AO AND SUSTAINED BY CIT (A) IS ARBITRARY, UNJUST AND BAD IN LAW AND AT ANY RATE VERY EXCESSIVE. 3) THAT THE EN (A) HAS ERRED ON FACT AND UNDER THE LAW MAKING OBSERVATION THAT AFTER THE INTRODUCTION OF SUB SECT ION 1 B TO SECTION 271, THE ALLEGED SATISFACTION AS RECORDED B Y THE AO IS SUFFICIENT FOR ASSUMPTION OF JURISDICTION TO IMPOSE D THE PENALTY. 4) THAT IN THE ABSENCE OF ANY CONTRARY MATERIAL ABO UT THE IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF CASH CREDITORS, THE IMPOSITION OF PENALTY BY THE AO MERE LY ON ACCOUNT OF NON ACCEPTANCE OF EXPLANATION FURNISHED BY ASSES SEE AND MERELY ON THE GROUND THAT THE ADDITION U/S 68 HAS B EEN AFFIRMED BY CIT (A) IS ARBITRARY, UNJUST AND BAD IN LAW AND AT ANY RATE VERY EXCESSIVE. 5) THAT THE OBSERVATION OF CIT (A), WHICH WAS THE B ASIS OF CONFIRMATION OF PENALTY THAT 'WHEREVER THERE IS DIF FERENCE DATE OF HEARING 3 0.07 .2018 DATE OF PRONOUNCEMENT 03.08.2018 ITA NO.849/DEL/2015 2 BETWEEN THE RETURNED AND ASSESSED INCOME, THERE IS AN INFERENCE OF CONCEALMENT AS A RULE OF LAW' IS UNTEN ABLE AND AGAINST THE LAW AND CONSEQUENTLY THE PENALTY AS IMP OSED BY THE AO AND SUSTAINED BY CIT(A) IS ARBITRARY, UNJUST AND BAD IN LAW. 2. AT THE TIME OF HEARING, LD. AR FOR THE ASSES SEE INVITED ATTENTION TO THE ASSESSMENT ORDER AND REFERRING TO THE SAME, IT WAS HIS SUBMISSION THAT FOR THE PENALTY INVOKED, NO SPECIFIC CHARGE WAS SPELT O UT BY THE AO. SIMILARLY, INVITING ATTENTION TO THE COPY OF THE PENALTY ORDER DATED 01.05.2013, IT WAS HIS SUBMISSION THAT THE PENALTY HAS BEEN IMPOSED AG AIN WITHOUT SPECIFYING THE SPECIFIC CHARGE. INVITING ATTENTION TO THE IMP UGNED ORDER, IT WAS HIS SUBMISSION THAT THE SPECIFIC OBJECTION WAS RAISED B EFORE THE CIT (A) AND RELIANCE WAS PLACED UPON THE POSITION OF LAW AS ADD RESSED BY HONBLE GUJARAT HIGH COURT IN CASE OF NEW SORAPHAHIA ENGINE ERING COMPANY VS. CIT (2006) 282 ITR 642; N.M. SUBRAMANIUM 97 ITR 228; D.M. MANASVI VS. CIT 86 ITR 553 (SC); RANJAN & COMPANY 291 I TR 340 (DELHI); HONBLE DELHI HIGH COURT IN CIT VS. RAM COMMERCIAL ENTERPRISES LTD. (1998) 246 ITR 568; HONBLE HIGH COURT OF MADHYA PR ADESH IN CIT-II VS. PRAVEEN B. GADA (HUF) 2012) 211 TAXMAN 166 (M.P.) DATED 17.02.2011; AND HONBLE KARNATAKA HIGH COURT IN CIT VS. MANJUNA THA COTTON & GINNING FACTORY (2013) 218 TAXMAN 423 DATED 13.12 .2012. IT WAS HIS SUBMISSION THAT THE PENALTY ORDER CONFIRMED BY THE CIT (A) DESERVES TO BE SET ASIDE IN TERMS OF THE DECISION OF THE HONBLE A PEX COURT IN S.S. EMERALD. SPECIFIC ATTENTION WAS INVITED TO COPY OF THE NOTICE ISSUED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (FOR SHORT T HE ACT), PLACED AT PAGES 38 & 39 OF THE ACT SO AS TO POINT OUT THAT IN THE T WO NOTICES ISSUED DATED 12.12.2011 AND 28.03.2013, THE AO HAS NOT SCORED OF F AND/OR EITHER/OR NO SPECIFIC CHARGE NOT BEEN SPELT OUT. IN THE CIRCUMS TANCES, IN TERMS OF THE JUDICIAL PRECEDENT, IT WAS HIS SUBMISSION THAT THE PENALTY ORDER MAY BE QUASHED. EVEN ON MERITS, IT WAS HIS SUBMISSION THA T SIMPLY BECAUSE ADDITION HAS BEEN ACCEPTED BY THE ASSESSEE WHO INIT IALLY HAD CHALLENGED THE IMPUGNED ORDER BEFORE THE CIT (A) BUT ULTIMATEL Y DID NOT AGITATE THE ISSUE FURTHER. THIS FACT BY ITSELF IS NOT A GROUND FOR LEVY OF PENALTY. ITA NO.849/DEL/2015 3 3. LD. SENIOR DR RELIED UPON THE INSERTION OF SUB-S ECTION 1B OF SECTION 271 WHICH HAS BEEN INTRODUCED BY THE FINANCE ACT, 2 008 WITH RETROSPECTIVE EFFECT FORM 01.04.1989. 4. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. IT IS SEEN THAT SUB-SECTION 1B OF SECTI ON 271 OF THE ACT, WHICH HAS BEEN CONSIDERED, WE FIND HAS WRONGLY BEEN UNDER STOOD BY THE CIT (A) AS HE HAS CONSIDERED THE SAID INSERTION AS OVERRIDI NG THE SETTLED LEGAL POSITION NAMELY THAT THE SPECIFIC CHARGE IS REQUIRE D TO BE SPELT OUT BY THE AO. THE SAID SUB-SECTION IS IN AN ENTIRELY DIFFERE NT CONTEXT. THE SPECIFIC PROVISION OF SUB-SECTION 1B OF SECTION 271 ADDRESSE S THE ASPECT OF SATISFACTION WHICH IS DEEMED TO HAVE BEEN CONSTITUT ED WHERE ANY AMOUNT IS ADDED OR DISALLOWED. IT NOWHERE LAYS DOWN THAT THE REQUIREMENT OF SPECIFIC CHARGE IS TO BE DISPENSED WITH. THE PROVISION IS E XTRACTED HEREUNDER:- 1B. WHERE ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OR LOSS OF AN ASSESSEE IN ANY ORDER OF ASSESSMENT OR REASSESSMENT AND THE SAI D ORDER CONTAINS A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS UNDER CLAUSE (C) OF S UB-SECTION (1), SUCH AN ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE DEEMED TO CONSTITUTE SATISFA CTION OF THE AO FOR INITIATION OF THE PENALTY PROCEEDINGS UNDER THE SAID CLAUSE (C). 4.1 IT IS ALSO A WELL SETTLED LEGAL POSITION THAT S IMPLY BECAUSE ADDITION HAS BEEN ACCEPTED BY THE ASSESSEE, THAT FACT ITSELF CANNOT BE A REASON FOR LEVY OF PENALTY UNLESS THE ASSESSEE FAILS TO OFFER ANY EXPLANATION WHATSOEVER OR THE EXPLANATION OFFERED IS NOT ACCEPTABLE ON FAC TS. IN FACT WHERE THE ASSESSEE HAS OFFERED AN EXPLANATION, THE TAX AUTHOR ITIES ARE DUTY BOUND TO CONSIDER THE SAME INDEPENDENTLY IN THE PENALTY PROC EEDINGS. IN THE FACTS OF THE PRESENT CASE, WE FIND THAT THE ORDER CANNOT BE UPHELD ON THE THRESHOLD ITSELF AS THE AO HAS FAILED TO SPECIFY THE SPECIFIC CHARGE WHETHER PENALTY IS TO BE LEVIED FOR FILING OF INACCURATE PARTICULARS O F INCOME OR FOR CONCEALMENT. IN THE ABSENCE OF SPECIFIC CHARGE BEING MADE OUT IN TERMS OF THE JUDICIAL PRECEDENT AVAILABLE, WE FIND THAT THE IMPUGNED ORDE R CANNOT BE UPHELD. THE PENALTY IS DIRECTED TO BE QUASHED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 03 DAY OF AUGUST, 2018. SD/- SD/- (PRASHANT MAHARISHI) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 03 DAY OF AUGUST, 2018/TS ITA NO.849/DEL/2015 4 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS), MEERUT 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI