Pragati Portfolio Pvt Ltd., Delhi V. ITO, New Delhi

ITA 855/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52462 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 10-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 03-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: PRAVEEN KUMAR MANAGER
• Keywords: Accommodation entries

Judgement Text

ITA NO. 855/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 855/DEL/2010 A.Y. : 2006-07 PRAGATI PORTFOLIO PVT. LTD., FLAT NO. 10, C-1/2, MODEL TOWN, DELHI 110 009 (PAN : AAACP0689F) VS. ITO WARD 14(3), CR BUILDING, IP ESTATE, NEW DELHI 2 (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. PRAVEEN KUMAR, MANAGER DEPARTMENT BY : SMT. ANUSHA KHURANA, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM PER SHAMIM PER SHAMIM PER SHAMIM YAHYA: AM YAHYA: AM YAHYA: AM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 30.12. 2009 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INC OME TAX (APPEALS) ERRED IN CONFIRMING THE PENALTY U/S 271(1) (C) OF THE IT ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT SURVEY U /S. 133 WAS CARRIED OUT ON 13.1.2006 ON ASSESSEES PREMISES. DURING THE COURSE OF SURVEY THE ASSESSING OFFICER NOTICED THAT 139 COMPANIES A RE HAVING THE SAME ADDRESS AND ALL THESE COMPANIES ARE BEING RUN B Y FOUR BROTHERS ALONGWITH THEIR WIVES. ON THE BASIS OF MATERIAL GAT HERED DURING THE SURVEY, ASSESSING OFFICER CONCLUDED THAT THE ASSES SEE COMPANY WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES ON COMMISSI ON BASIS. ITA NO. 855/DEL/2010 2 DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFIC ER NOTICED THAT THE ASSESSEE HAS THE SAME CREDIT AND DEBIT BALANCE IN HIS BANK ACCOUNT AND THE AMOUNT DEPOSITED IS TRANSFERRED ON T HE SAME VERY DAY OR THE NEXT DAY TO VARIOUS ACCOUNTS. ASSESSING OFF ICER CONCLUDED THAT THE ASSESSEE COMPANY WAS AN ACCOMMODATION ENTRY PRO VIDER. HE MADE AN ESTIMATED ADDITION @5% OF TURNOVER. ACCORDIN GLY, ASSESSING OFFICER MADE AN ADDITION OF ` 91,000/- AS COMMISSION ON THE CREDIT BALANCE AVAILABLE IN THE BANK STATEMENT WITH ORIENT AL BANK OF COMMERCE AND IMPOSED PENALTY U/S. 271(1)(C). 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT ASSESSEE HAS NOT FILED APPEAL AGAINST THE ADDITION OF ` 91,000/-. LD. COMMISSIONER OF INCOME TAX (APPE ALS) PROCEEDED TO CONFIRM THE PENALTY IMPOSED BY THE ASSESSING OFFICER. 5. AGAINST THIS ORDER, THE ASSESSEE IS IN APPEAL B EFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT AD DITION IN THIS CASE HAS BEEN MADE ONLY ON ESTIMATE BASIS. FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF PARTICULARS HAS NOT BEEN PROVED BY THE REVENUE. UNDER THE CIRCUMSTANCES, IN OUR CONSIDERE D OPINION, PROVISION OF SECTION 271(1)(C) ARE NOT APPLICABLE. IN THIS REGARD, WE NOTE THAT IN ASSESSEES GROUP CASE ON SIMILAR CIRCU MSTANCES, THIS TRIBUNAL IN ITA NO. 914/DEL/2010 FOR A.Y. 2006-07 IN THE CASE OF PRAGATI FOODS PVT. LTD. VS. ITO VIDE ORDER DATED 06.5.2010 HA S HELD AS UNDER:- 6. WITH THE ASSISTANCE OF LD. DEPARTMENTAL REPRESENTATIVE WE HAVE GONE THROUGH THE RECORD CAREFULLY. NOWHERE IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER ASSESSING OFFICER COULD MAKE OUT A ITA NO. 855/DEL/2010 3 CASE WHAT SORT OF INACCURATE PARTICULARS ASSESSEE H AS FURNISHED. THE ADDITION MADE BY HIM IS PURELY ON ESTIMATE BASIS. THERE IS NO FOUNDATION EVEN IN THE ASSESSMENT ORDER. IN SUPPORT OF THIS ADDITION TH E ASSESSING OFFICER UNDER A PRESUMPTION THOUGH THAT ASSESSEE MUST HAVE RECEIVED COMMISSION INCOME ON ROTATING THE ENTRIES IN THE BANK ACCOUNT. HE QUANTIFIED SUCH COMMISSION INCOME AT 0.05%. THERE MAY BE SOME SUBSTANCE IN HIS LOGIC FOR ESTIMATING THE INCOME OF ASSESSEE WHICH CAN BE TESTED IN THE QUANTUM APPEAL BUT AS FAR AS VISITING THE ASSESSEE WITH A PENALTY FOR FURNISHING INACCURATE PARTICULA RS THE ASSESSING OFFICER FAILED TO MAKE OUT ANY CASE. ACCORDING TO THE ASSESSEE IT HAS NOT INCOME ON SUCH TRANSACTION WHEREAS ACCORDING TO THE ASSESSING OFFICER SOME ELEMENT OF INCOME IS INVOLVED. SUCH OPINION HAS BEEN FORMED BY THE ASSESSING OFFICER ON ASSUMPTION BASIS. TAKING INTO CONSIDERATION THE ABO VE FACTS AND CIRCUMSTANCES WE ARE OF THE OPINION THAT PENALTY IS NOT SUSTAINABLE. WE ALLOW THE APPEAL OF ASSESSEE AND DELETE THE PENALTY. 6.1 WE FIND THAT THE ABOVE PRECEDENT IS ALSO APPLI CABLE IN THE PRESENT CASE. HENCE, IN OUR CONSIDERED OPINION, PENALTY IS NOT LEVIABLE U/S. 271(1)(C) OF THE IT ACT IN THIS CASE. 6.2 IN THIS REGARD, WE WOULD LIKE TO REFER TO THE HON BLE APEX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCT S LTD. IN CIVIL APPEAL NO. 2463 OF 2010. IN THIS CASE VIDE ORDER DATED 17.3 .2010 IT HAS BEEN HELD THAT THE LAW LAID DOWN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE ITA NO. 855/DEL/2010 4 MEANING OF WORD CONCEALMENT AND INACCURATE CONT INUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRULED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP SHEROFF CASE WHERE IT WAS HELD THAT MEN SREA WAS A ESSENTIAL REQUIREMENT OF PENALTY U/S 271(1)(C). THE HONBLE A PEX COURT ALSO OBSERVED THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED T HEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY THE AO FOR ANY RE ASON, THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). THIS IS CLEARLY N OT THE INTENDMENT OF LEGISLATURE. 6.3 WE WOULD ALSO LIKE TO REFER THE DECISION OF THE HONBLE APEX COURT RENDERED BY A LARGER BENCH COMPRISING OF THREE OF T HEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 2 6 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PENA LTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIB ERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST , OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NO T ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCR ETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF AL L THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED , THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIE F THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE . ITA NO. 855/DEL/2010 5 7. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AN D PRECEDENTS RELIED UPON, WE DELETE THE PENALTY MADE U/S 271(1)( C). 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/8/2011 UPO N CONCLUSION OF HEARING. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [C.L. SETHI] [C.L. SETHI] [C.L. SETHI] [C.L. SETHI] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTAN ACCOUNTAN ACCOUNTAN ACCOUNTANT MEMBER T MEMBER T MEMBER T MEMBER DATE 10/8/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES