Harsh International Pvt. Ltd., Delhi V. DCIT, Central Circle- 8, New Delhi

ITA 861/DEL/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5585 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 05-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEETA SINGH
• Keywords: Rejection of books of accounts; Search and seizure; Question of law
• Section: 143(3); 153A; 260A; 145; 132

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI S.K.YADAV , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 861 & 86 2 /DEL/2018 (ASSESSMENT YEAR: 2004 - 05 AND 2005 - 06 ) HARSH INTERNATIONAL PVT. LTD, 11/2A, PUSA ROAD, NEW DELHI PAN: AABCH1511K VS. DCIT, CENTRAL CIRCLE - 8, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL AGARWAL, ADV SHRI SHAILESH KR GUPTA, CA REVENUE BY: SMT MEETA SI N GH, CIT DR DATE OF HEARING 17/05 /2017 DATE OF PRONOUNCEMENT 2 2 / 05 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THESE ARE THE TWO APPEALS FILED BY ASSESSEE FOR ASSESSMENT YEAR 2004 - 05 AND 2005 - 06 AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) XXV , NEW DELHI DATED 13/12/2017 , WHEREIN PENALTY LEVIED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 08, NEW DELHI UNDER SECTION 271(1)( C ) OF THE INCOME TAX ACT ( THE ACT ) VIDE ORDER DATED 20/3/2014 FO R BOTH THE ASSESSMENT YEARS OF RS. 21909613/ AND RS. 31289013/ RESPECTIVELY ARE CONFIRMED. 2. THOUGH IN BOTH THE APPEALS THE ASSESSEE HAS RAISED EFFECTIVELY 5 GROUNDS OF APPEAL, HOWEVER THE CHALLENGE TO THE ORDER OF THE COMMISSIONER OF INCOME TAX (A) WAS T HAT ASSESSEE HAS NEITHER FURNISHED ANY INACCURATE PARTICULARS OF INCOME AND NOR THERE WAS ANY CONCEALMENT OF INCOME, ON THE FACTS OF THE INSTANT CASE AS THERE WAS NO SPECIFIC CHARGE IN THE SHOW CAUSE NOTICE ISSUED BY THE LD. ASSESSING OFFICER TO THE SAID EFFECT, THE IMPUGNED ADDITION ON WHICH THE PENALTY HAS BEEN LEVIED BY THE LD. ASSESSING OFFICER, THE HONBLE HIGH COURT HAS ADMITTED THE APPEAL OF THE ASSESSEE AGAINST THAT ADDITION AND HARSH INTERNATIONAL PVT. LTD VS. DCIT, ITA NO. 861 & 86 2 /DEL/2018 (ASSESSMENT YEAR: 2004 - 05 AND 2005 - 06) PAGE | 2 INDEPENDENTLY THE ADDITIONS ARE BASED ON MERE SUSPICION, SURMISES AN D CONJECTURES ON WHICH PENALTY CANNOT BE LEVIED. 3. THE BRIEF FACTS OF THE ADJUSTMENT/ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE ON WHICH PENALTY HAS BEEN LEVIED ARE CULLED OUT FROM ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004 05 PASSED BY THE LD. ASSES SING OFFICER UNDER SECTION 143 (3) READ WITH SECTION 153A OF THE ACT. SEARCH AND SEIZURE OPERATION WERE CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 16/2/2005, WHO IS A MANUFACTURER OF CHAINI KHAINI A TOBACCO PRODUCT. THE PRODUCT IS NEW CON CEPT WHEREIN THE MATERIAL IS PACKED IN A FILTER, WHICH IS PUT IN MOUTH WITHOUT ACTUALLY CHEWING IT. THE ASSESSEE FILED ITS RETURN OF INCOME ON 8/11/2006 DECLARING TOTAL INCOME OF RS 802150/ - IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT DATED 10/07 /2006. DURING THE COURSE OF SEARCH IT WAS FOUND THAT THE ASSESSEE IS HIGHLY SUPPRESSING THE PRODUCTION OF THE FINISHED GOODS. DURING THE COURSE OF SEARCH STATEMENT OF THE MANAGER WAS ALSO RECORDED UNDER SECTION 132 (4) ON 16/ 0 2/2005 AND 21/ 0 2/2005 WHEREIN THE LD. ASSESSING OFFICER HAS NOTED THAT THE FACTORY AND THE MACHINES OF THE ASSESSEE ARE RUNNING FOR 16 HOURS A DAY FOR 312 DAYS IN A YEAR. SUCH STATEMENT OF OPERATOR ALSO CONFIRMED THE ABOVE FACT. THERE WAS ALSO FOUND DISCREPANCY RELATING TO THE NUMBER O F WORKERS EMPLOYED IN THE FACTORY. CERTAIN DOCUMENTS WERE ALSO SEIZED. SURVEY WAS ALSO CARRIED OUT IN THE MANUFACTURING PREMISES OF THE ASSESSEE AND BOOKS OF ACCOUNTS WERE SEIZED WHEREIN IT HAS BEEN NOTED THAT NO SALES HAS BEEN RECORDED IN THE BOOKS OF ACC OUNTS AND NO LOCAL SALES HAS BEEN MADE AFTER 11/ 0 2/2005. THE STOCK WAS ALSO FOUND OF RS. 8.66 LACS HOWEVER NO BILLS OR VOUCHERS OF THE STOCK WERE FOUND FROM THOSE PREMISES. IT WAS FURTHER NOTED THAT CENTRAL EXCISE AUTHORITIES HAVE ALSO RECEIVED THE INFORMA TION THAT ASSESSEE IS ENGAGED IN EVASION OF EXCISE DUTY AMOUNTING TO RS. 56,000 IN CASE OF PRODUCTION OF THE GOODS. BASED ON THE ABOVE , THE LD. ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS AND HARSH INTERNATIONAL PVT. LTD VS. DCIT, ITA NO. 861 & 86 2 /DEL/2018 (ASSESSMENT YEAR: 2004 - 05 AND 2005 - 06) PAGE | 3 COMPUTED THE TURNOVER OF THE ASSESSEE AT RS. 20.59 CRORES A ND WORKED OUT GROSS PROFIT THEREON AT 30.45% AMOUNTING TO RS. 6.27 CRORES. OVER AND ABOVE GROSS PROFIT , THERE WAS AN ESTIMATION OF INITIAL INVESTMENT IN THE PURCHASE OF RAW MATERIAL AT THE RATE OF 9.81% OF THE TOTAL ESTIMATED TURNOVER OF THE ASSESSEE OF RS . 20.59 CRORES RESULTING INTO RS. 2.02 CRORES. BASED ON THIS THE TOTAL ADDITION TO THE INCOME OF THE ASSESSEE WAS MADE OF RS. 8.29 CRORES. CONSEQUENTLY THE ASSESSMENT WAS PASSED UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT . THE ABOVE ADDITIONS WE RE CHALLENGED BY THE ASSESSEE BEFORE THE APPELLANT AUTHORITIES AND ULTIMATELY REACHED AT THE DOORSTEP OF THE HONBLE HIGH COURT WHEREIN, VIDE ITA NO. 948/2016 DATED 18/07/2017 THE APPEAL OF THE ASSESSEE WAS ADMITTED FOR ASSESSMENT YEAR 2004 - 05 ON THE ISSUE THAT WHETHER THE ADDITION MADE BY THE LD. ASSESSING OFFICER WAS BASED ON ANY INCRIMINATING MATERIAL AND WHETHER THE ADDITION OF RS. 6.27 CRORES ON ESTIMATION OF PROFIT AND RS. 2.02 CRORES ON ACCOUNT OF INVESTMENT IS CORRECT OR NOT. 4. FOR ASSESSMENT YEAR 200 5 - 06 , TOTAL TURNOVER OF THE ASSESSEE WAS ESTIMATED AT RS. 20.59 CRORES AND THE GROSS PROFIT WAS ESTIMATED AT 53.31%. THEREFORE THE GROSS PROFIT WAS COMPUTED AT RS. 10.97 CRORES AND CONSEQUENTLY THE ASSESSMENT UNDER SECTION 143 (3) OF THE ACT WAS PASSED ON THAT S UM . ASSESSEE CHALLENGED THE MATTER BEFORE THE HIGHER FORUM WHICH REACHED THE DOORSTEP OF HONBLE DELHI HIGH COURT WHEREIN HONBLE HIGH COURT WAS PLEASED TO ADMIT THE APPEAL OF THE ASSESSEE VIDE ITA NO. 1/2017 DATED 18/07/2017 WHEREIN HONBLE HIGH COURT IS SEIZED OF THE MATTER WHETHER THE ITAT WAS CORRECT IN LAW IN UPHOLDING THE ADDITION OF RS. 10.97 CRORES TO THE RETURNED INCOME ON AN ESTIMATION OF PROFITS UPHOLDING THE REJECTION OF THE BOOKS OF ACCOUNTS UNDER SECTION 145 (3) OF THE ACT. 5. MEANWHILE FOR ASS ESSMENT YEAR 2004 - 05 THE LD. ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271 (1) (C) OF THE ACT ISSUING THE SHOW CAUSE NOTICE DATED 28/12/2006 UNDER SECTION 274 HARSH INTERNATIONAL PVT. LTD VS. DCIT, ITA NO. 861 & 86 2 /DEL/2018 (ASSESSMENT YEAR: 2004 - 05 AND 2005 - 06) PAGE | 4 READ WITH SECTION 271 (1) (C) OF THE ACT FOR RESPECTIVE YEARS WHICH WAS REPLIED BY THE ASSESSEE STATING THAT THE STATEMENT OF THE PERSONS WERE RECORDED BEHIND THE BACK OF THE ASSESSEE WHO ARE MERELY SUPERVISOR S . THE LD. AO REJECTED ALL THE CONTENTIONS OF THE ASSESSEE AND LEVIED A PENALTY UNDER SECTION 271 (1) (C) OF THE ACT OF RS. 2.19 CRORES V IDE ORDER DATED 20/3/2014. 6. SIMILARLY FOR ASSESSMENT YEAR 2005 - 0 6 ALSO B Y EVEN DATED NOTICE WAS ISSUED WHICH WAS REPLIED BY THE ASSESSEE BUT REJECTED BY THE LD. AO AND CONSEQUENTLY THE PENALTY UNDER SECTION 271(1) (C) WAS LEVIED V IDE OR DER DATED 20/3/2014 AMOUNTING TO RS. 3.12 CRORES. 7. ASSESSEE CHALLENGED THE PENALTY ORDERS FOR BOTH THE YEAR S BEFORE THE LD. CIT (A) WHO VI D E ORDER DATED 13/12/2017 UPHELD THE PENALTY FOR IDENTICAL REASONS STATED IN HIS ORDER AT PARA NO. 5 OF HIS ORDER. THE MAIN REASON FOR CONF I RMATION OF THE PENALTY , HE STATED THAT THE CLAIM OF THE ASSESSEE IS BOGUS, ON THE ADMISSION OF APPEAL BY THE HONBLE HIGH COURT HE HELD THAT THE DECISION RELIED UPON BY THE LD. AUTHORISED REPRESENTATIVE ARE ON DIFFERENT FACTS AND HENCE DO NOT CARRY ANY BINDING FORCE, THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS PLACED ON IT AND THE CONCURRENT AUTHORITIES HAVE CONFIRMED THE ADDITIONS AND THE BONAFIDES WERE NOT ESTABLISHED BY THE APPELLANT. HE FURTHER CONFIRMED THE PENALTY FOR THE REASON THAT QUANTUM ADDITIONS BASED ON THE STATEMENT OF THE EMPLOYEES CONFIRMING THE BUSINESS PRACTICE OF THE ASSESSEE TO EVADE TAXES AND SUSTAINED BY THE COORDINATE BENCH. ASSESSEE AGGRIEVED BY THE ORDER OF THE LD. CIT (A) HAS PREFERRED AN APPEAL BEFORE US. 8. THE LD. AUTHORISED REPRESENTATIVE VEHEMENTLY CONTESTED THE CONF I RMATION OF THE PENALTY BY THE LD. CIT (A) ON FOLLOWING GROUNDS: - I. HIS 1 ST CONTENTION WAS THAT AS THE HONBLE HIGH COURT HAS ADMITTED THE APPEAL OF THE ASSESSEE AS A SUBSTANTIAL QUESTION OF LAW FOR BOTH THE ASSESSMENT YEARS, THE ISSUE BECOMES DEBATABLE HARSH INTERNATIONAL PVT. LTD VS. DCIT, ITA NO. 861 & 86 2 /DEL/2018 (ASSESSMENT YEAR: 2004 - 05 AND 2005 - 06) PAGE | 5 AND THEREFORE THE PENALTY CANNOT BE LEVIED ON SUCH ADDITION. HE RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS LIQUID INVESTMENT LIMITED , CIT VS. THOMSON PRESS INDIA LTD, CIT VS. H B LEASING AND FINANCE COMPANY LIMITED . II. HE FURTHER SUBMITTED THAT THE NOTICE IS ISSUED BY THE LD. ASSESSING OFFICER UNDER SECTION 274 DOES NOT HAVE ANY SPECIFIC CHARGE EITHER OF THE FURNISHING OF THE INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. HE REFERRED TO PAGE NO. 248 AND 249 OF PAPER BOOK WHEREIN SUCH NOTICES UNDER SECTION 274 ARE PLACED. HE SHOWED THAT THE LD. ASSESSING OFFICER HAS FAILED TO STRIKE OFF ONE OF THE TWO CHARGES SPECIFIED THEREIN. HE THEREFORE SUBMITTED T HAT IT IS HELD BY THE HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VERSUS SSA EMERALD MEADOWS 73 TAXMANN.COM 241 AND 242 TAXMAN 180 THAT IN SUCH CASE PENALTY CANNOT BE LEVIED. HE FURTHER REFERRED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VERSUS SAMSON PERICHERY 392 ITR 4 , WHERE SIMILAR VIEW WAS TAKEN . III. HE FURTHER SUBMITTED THAT THE PENALTY IS AN INDEPENDENT PROCEEDINGS AND LD. ASSESSING OFFICER HAS NOT REACHED AT THE CONCLUSION THAT HOW THE ASSESSEE HAS CONCEALED OR FURNISHED INACCURAT E PARTICULARS OF THE INCOME. IV. HE FURTHER SUBMITTED THAT THE ADDITIONS HAVE BEEN BASED ON ESTIMATE BASIS. HE STATED THAT WHEN THE ADDITION HAS BEEN MADE ON ESTIMATED BASIS THE PENALTY UNDER SECTION 271(1) (C) CANNOT BE LEVIED. V. HE FURTHER SUBMITTED THAT THE A DDITION HAS BEEN MADE ON THE BASIS OF THE STATEMENT OF THE EMPLOYEES OF THE ASSESSEE WHO WERE NOT ALLOWED TO BE CROSS - EXAMINED. HE STATED THAT EVEN THE ADDITION DESERVES TO BE DELETED HOWEVER IN THE CASE OF THE PENALTY AT LEAST IT CANNOT BE LEVIED. HARSH INTERNATIONAL PVT. LTD VS. DCIT, ITA NO. 861 & 86 2 /DEL/2018 (ASSESSMENT YEAR: 2004 - 05 AND 2005 - 06) PAGE | 6 9. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT ASSESSEE HAS SUPPRESSED THE SALES WHICH HAS BEEN PROVED BY THE LD. ASSESSING OFFICER AND ALSO CONFIRM ED BY THE CONCURRENT AUTHORITIES AND THEREFORE THE PENALTY HAS BEEN CORRECTLY LEVIED BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (A). ON THE ISSUE OF PENALTY NOTICES HE SUBMITTED THAT THE LD. ASSESSING OFFICER HAS CORRECTLY ISSUED THE SHOW CAUSE NOTICES AND LEVIED THE PENALTY. WITH RESPECT T O THE ADMISSION OF THE APPEAL OF THE ASSESSEE BEFORE THE HONBLE HIGH COURT HE SUBMITTED THAT APPEAL OF THE ASSESSEE HAS NOT BEEN ADJUDICATED AND THEREFORE MERE ADMISSION OF THE APPEAL CANNOT ABSOLVE ASSESSEE FROM LEVY OF PENALTY. 10. WE HAVE CAREFULLY CONSIDE RED THE ORDERS OF THE LOWER AUTHORITIES OF ASSESSMENT, PENALTY PROCEEDINGS, AND RIVAL CONTENTIONS PLACED BEFORE US. UNDISPUTEDLY THE ADDITIONS HAVE BEEN CONFIRMED IN THE HANDS OF THE ASSESSEE ON THE ABOVE STATED FACTS UP TO THE LEVEL OF THE COORDINATE BENC H. THE HONBLE HIGH COURT HAS ADMITTED THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2004 05 ON TWO COUNTS, (1) ON WHETHER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE IN ABSENCE OF ANY INCRIMINATING MATERIAL, (2) ON MERITS OF THE ADDITION OF GROSS PROFIT AND INVESTMENT INITIALLY ALLEGEDLY MADE. THEREFORE , FOR ASSESSMENT YEAR 2004 - 05 IT IS APPARENT THAT HONBLE HIGH COURT HAS ADMITTED THE APPEAL OF THE ASSESSEE ON LEGAL GROUNDS AS WELL AS ON THE MERITS OF THE CASE. SIMILARLY FOR ASSESSMENT YEAR 2005 - 06 THE HONBLE HIGH COURT HAS ADMITTED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT WHETHER THE COORDINATE BENCH IS CORRECT IN CONFIRMING THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER BY REJECTING THE BOOKS OF ACCOUNTS UNDER SECTION 145 (3) OF THE ACT OR NOT. HENCE IT IS APPARENT THAT APPEAL OF THE ASSESSEE HAS BEEN ADMITTED ON THE ISSUE OF INVOCATION OF THE PROVISIONS OF SECTION 145 (3) AS WELL AS ON THE MERITS OF THE ADDITION. THEREFORE , IT IS APPARENT THAT FOR BOTH THE ASSESSMENT YEARS THE HONBLE HI GH COURT HAS ADMITTED THE APPEAL OF THE ASSESSEE ON HARSH INTERNATIONAL PVT. LTD VS. DCIT, ITA NO. 861 & 86 2 /DEL/2018 (ASSESSMENT YEAR: 2004 - 05 AND 2005 - 06) PAGE | 7 MERITS AS WELL AS ON LEGAL GROUNDS. THE HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. ADVAITA ESTATE DEVELOPMENT PRIVATE LIMITED IN ITA NO. 1498 OF 2014 DATED 17/2/2017 HAS DEALT WITH THE ISSUE THAT WHEN T HE HONBLE HIGH COURT ADMITS THE APPEAL OF THE ASSESSEE WHETHER ON SUCH ADDITIONS/DISALLOWANCE , PENALTY UNDER SECTION 271(1) (C) OF THE ACT CAN BE LEVIED OR NOT AS UNDER: - 4. IN THE ABOVE VIEW, THE IMPUGNED ORDER FOLLOWED ITS DECISION IN NAYAN BUILDERS AND DEVELOPERS PVT.LTD. VS. THE INCOME TAX OFFICER IN INCOME TAX APPEAL NO. 2379/MUM/2009 RENDERED ON 18TH MARCH, 2011 AND THE DECISION OF THE DELHI HIGH COURT IN CIT VS LIQU ID INVESTMENT AND TRADING CO (ITA NO.240/2009) RENDERED ON 5TH OCTOBER, 2010 TO HOLD THAT WHEN AN APPEAL HAS BEEN ADMITTED IN QUANTUM PROCEEDINGS BY THE HIGH COURT, THEN THAT ITSELF IS AN EVIDENCE OF THE ISSUE BEING DEBATABLE, NOT WARRANTING ANY PENALTY. 5. THE REVENUE HAD FILED AN APPEAL FROM THE ORDER OF THE TRIBUNAL IN NAYAN BUILDERS AND DEVELOPERS PVT. LTD. (SUPRA) DELETING THE PENALTY. THIS APPEAL BEING CIT VS. NAYAN BUILDERS AND DEVELOPERS [(2014) 368 ITR 722] WAS NOT ENTERTAINED BY THIS COURT. IT UP HELD THE VIEW OF THE TRIBUNAL THAT THE IMPOSITION OF PENALTY WAS NOT JUSTIFIED AS ADMISSION OF APPEAL IN QUANTUM PROCEEDING ON THIS ISSUE AS SUBSTANTIAL QUESTION OF LAW WAS PROOF ENOUGH OF THE ISSUE BEING DEBATABLE. THE AFORESAID DECISION IN NAYAN BUILDERS AND DEVELOPERS PVT.LTD (SUPRA) WAS ALSO FOLLOWED BY THIS COURT IN CIT - 8 VS. ADITYA BIRLA POWER CO. LTD. IN INCOME TAX APPEAL NO. 851 OF 2014 RENDERED ON 2ND DECEMBER, 2015 . 6. HOWEVER, MR. TEJVEER SINGH, LEARNED COUNSEL APPEARING FOR THE APPELLANTREVENU E SEEKS TO DISTINGUISH THE DECISION OF THIS COURT IN NAYAN BUILDERS AND DEVELOPERS PVT. LTD. (SUPRA) ON THE GROUND THAT THIS COURT HAD AFTER RECORDING THE FACT THAT WHERE APPEALS FROM ORDERS IN QUANTUM PROCEEDINGS OF THIS COURT HAVE BEEN ADMITTED AS GIVING RISE TO SUBSTANTIAL QUESTION OF LAW THEN THAT ITSELF DISCLOSES THAT THE ISSUE IS DEBATABLE. HOWEVER, MR. SINGH POINTS OUT THAT IT ALSO FURTHER RECORDS IN OUR VIEW THERE WAS NO CASE MADE OUT FOR IMPOSITION OF PENALTY AND THE SAME WAS RIGHTLY SET ASIDE.. ON THE BASIS OF THE ABOVE OBSERVATION, IT IS CONTENTION OF MR. TEJVEER SINGH THAT THE APPEAL FROM PENALTY PROCEEDING WAS NOT ADMITTED BY THIS COURT AS ON MERITS NO CASE FOR IMPOSITION OF PENALTY WAS MADE OUT. 7. MR. DALAL, THE LEARNED COUNSEL FOR THE RESP ONDENT - ASSESSEE INVITED OUR ATTENTION TO THE ORDER OF THE TRIBUNAL DATED 18TH MARCH, 2011 IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS PVT. LTD (SUPRA). ON PERUSAL OF THE TRIBUNAL ORDER DATED 18TH MARCH, HARSH INTERNATIONAL PVT. LTD VS. DCIT, ITA NO. 861 & 86 2 /DEL/2018 (ASSESSMENT YEAR: 2004 - 05 AND 2005 - 06) PAGE | 8 2011 WE NOTE THAT THE TRIBUNAL IN NAYAN BUILDERS AND DEVELOPERS PVT. LTD (SUPRA) HAD DELETED THE PENALTY ONLY ON THE GROUND THAT AS SUBSTANTIAL QUESTION OF LAW HAD BEEN ADMITTED BY THIS COURT IN QUANTUM PROCEEDINGS THE ISSUE IS DEBATABLE. IT WAS ON THE BASIS OF THE AFORESAID REASONING OF THE TRIBUNAL IN NAY AN BUILDERS AND DEVELOPERS PVT.LTD. (SUPRA), THAT THIS COURT HELD THAT NO PENALTY IS IMPOSABLE. THUS THE DISTINCTION SOUGHT TO BE MADE BY MR. TEJVEER SINGH DOES NOT ASSIST THE REVENUE, AS IT DOES NOT EXIST. 8. IN VIEW OF THE DECISION TAKEN BY THIS COURT IN NAYAN BUILDERS AND DEVELOPERS PVT. LTD (SUPRA) AS WELL AS IN ADITYA BIRLA POWER CO. LTD. (SUPRA) THE PROPOSED QUESTION DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS NOT ENTERTAINED. 11. THE HONBLE DELHI HIGH COURT IN CIT VERSUS LIQUID INVESTM ENTS LIMITED IN ITA NO. 240/2009 IS ALSO HELD THAT WHEN THE ASSESSEE HAS PREFERRED AN APPEAL UNDER SECTION 260A OF THE ACT WHICH HAS ALSO BEEN ADMITTED AS SUBSTANTIAL QUESTION OF LAW , THIS ITSELF SHOWS THAT THE ISSUE IS DEBATABLE AND FOR THIS REASON THE PE NALTY UNDER SECTION 271(1) (C) IS NOT LEVIABLE. THE SAME VIEW WAS REITERATED BY THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. THOMSON PRESS INDIA LTD WHEREIN , IT HAS BEEN HELD THAT WHERE THE QUESTION OF LAW RAISED BY THE ASSESSEE HAS BEEN FRAMED AND ADMIT TED IN THE CIRCUMSTANCES OF THE CASE, IMPOSITION OF PENALTY CANNOT JUSTIFY. SIMILAR VIEW HAS FURTHER BEEN TAKEN BY THE HONBLE DELHI HIGH COURT IN THE 3 34 ITR 367 WHEREIN IT HAS BEEN HELD IN PARA NO. 3 THAT ONCE THE APPEAL PREFERRED BY THE ASSESSEE HAS BEE N ADMITTED THAT WOULD SHOW THAT SUBSTANTIAL QUESTION OF LAW ON THE INCOME ADDITION IS INVOLVED AND THUS THE ISSUE IS CLEARLY DEBATABLE. WE ARE ALSO AWARE THAT HONBLE GUJARAT HIGH COURT HAS TAKEN A CONTRARY VIEW IN [ 2015] 58 TAXMANN.COM 334 (GUJARAT)/[2015 ] 232 TAXMAN 352 (GUJARAT)/[2014] 272 CTR 353 (GUJARAT CIT VS. PRAKASH S VYAS HOLDING THAT UNLESS THERE IS ANY INDICATION IN ORDER OF ADMISSION PASSED BY HIGH COURT, SIMPLY BECAUSE TAX APPEAL IS ADMITTED, WOULD NOT GIVE RISE TO PRESUMPTION THAT ISSUE IS DE BATABLE; PENALTY UNDER SECTION 271(1)(C) COULD NOT BE DELETED ON THIS GROUND. HOWEVER AS HONBLE DELHI HIGH COURT BEING JURISDICTIONAL HIGH COURT BINDS US AND FURTHER SUCH VIEW IS ALSO SUPPORTED BY THE HONBLE BOMBAY HIGH COURT, WE HARSH INTERNATIONAL PVT. LTD VS. DCIT, ITA NO. 861 & 86 2 /DEL/2018 (ASSESSMENT YEAR: 2004 - 05 AND 2005 - 06) PAGE | 9 TAKE A VIEW THAT WHEN TH E APPEAL OF THE ASSESSEE HAS BEEN ADMITTED BY THE HONBLE DELHI HIGH COURT ON THE MERITS AS WELL AS ON THE LEGAL ISSUE THE PENALTY LEVIED BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (A) FOR ASSESSMENT YEAR 2004 - 2005 AND 2005 06 IS NOT SUSTAINABLE. 12. EVEN OTHERWISE WE HAVE ALSO PERUSED THE SHOW CAUSE NOTICE ISSUED BY THE LD. ASSESSING OFFICER UNDER SECTION 274 OF THE INCOME TAX ACT AND FIND THAT FOR BOTH THE YEARS THE LD. ASSESSING OFFI CER HAS NOT CANCELLED ONE OF THE CHARGE ON THE ASSESSEE. WE HAVE ALSO PERUSED THE ASSESSMENT ORDERS FOR BOTH THE YEARS WHEREIN THE LD. ASSESSING OFFICER HAS ALSO NOT LEVIED ANY SPECIFIC CHARGE ON THE ADDITIONS MADE BUT HAS SIMPLY STATED THAT HE IS SATISFIE D THAT THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) SHOULD BE INITIATED AGAINST THE ASSESSEE COMPANY. THEREFORE WE FIND THAT THERE IS NO SPECIFIC CHARGE LEVIED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDERS AS WELL AS IN THE PENALTY NOTICES BUT HAS L EVIED THE PENALTY ON THE ASSESSEE HOLDING THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THEREFORE AS HELD BY HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VERSUS SSA EMERALD MEADOWS IN 396 ITR 538 WHICH HELD SO AND AGAINST WHICH THE HONB LE SUPREME COURT HAS DISMISSED THE SPECIAL LEAVE PETITION OF THE REVENUE IN 73 TAXMANN.COM 248, WE ALSO HOLD THAT WHEN IN THE SHOW CAUSE NOTICE THE LD. ASSESSING OFFICER HAS FAILED TO CREATE A SPECIFIC CHARGE AND WHICH HAS ALSO NOT BEEN SPECIFIED IN THE AS SESSMENT ORDER THE PENALTY CANNOT BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT SHOW US ANY OTHER CONTRARY DECISION ON THIS ISSUE. IN THE RESULT ON THIS GROUND ALSO THE PENALTY DESERVES TO BE CANCELLED. 13. AS WE H AVE ALREADY CANCELLED THE PENALTY ORDERS ON TWO DIFFERENT SUBMISSIONS OF THE ASSESSEE, WE DO NOT DEAL WITH OTHER ISSUES RAISED AS NOW THEY ARE PURELY ACADEMIC IN NATURE. HARSH INTERNATIONAL PVT. LTD VS. DCIT, ITA NO. 861 & 86 2 /DEL/2018 (ASSESSMENT YEAR: 2004 - 05 AND 2005 - 06) PAGE | 10 14. IN VIEW OF THE ABOVE FACTS WE DIRECT THE LD. ASSESSING OFFICER TO DELETE THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR BOTH THE ASSESSMENT YEARS AND REVERSE THE FINDING OF THE LD. CIT (A). IN THE RESULT APPEAL OF THE ASSESSEE FOR BOTH THE YEARS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 / 05 / 2018 . - S D / - - S D / - ( S.K.YADAV ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 2 / 05 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI