Sh. Dheer Chand Sharma, New Delhi V. ITO, Ghaziabad

ITA 868/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6469 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN GEORGE SENIOR
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.868/DEL./2013 (ASSESSMENT YEAR : 2009-10) SHRI DHEER CHAND SHARMA, VS. ITO, WARD 1 (2), SD 487, SHASTRI NAGAR, GHAZIABAD. GHAZIABAD. (PAN : BDLPS0502C) (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. RAKESH GUPTA, ADVOCATE AND SHRI SOMIL AGGARWAL, CA REVENUE BY : MS. SUSAN GEORGE, SENIOR DR O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (APPEALS), GHAZIABAD DATED 24.12.2012 FOR THE ASSES SMENT YEAR 2009-10. 2. THE SOLE ISSUE INVOLVED IN THE APPEAL FILED BY T HE ASSESSEE IS AS UNDER :- THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT DELETI NG THE PENALTY OF RS.1,47,02,805/- FULLY AS LEVIED BY LD. AO @ 300 % AND HAS FURTHER ERRED IN SUSTAINING THE PENALTY TO THAT EXT ENT @ 150% AND THAT TOO WITHOUT ANY BASIS AND WITHOUT CONSIDERING THE SUBMISSIONS OF ASSESSEE AND BY RECORDING INCORRECT FACTS AND FINDINGS. 3. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE HAD F ILED RETURN ON 30.09.2009 DISCLOSING INCOME AT RS.5,82,490/- WHICH WAS SELECT ED FOR SCRUTINY. THE ITA NO.868/DEL./2013 2 ASSESSEE IS ENGAGED IN THE BUSINESS OF SUPPLY OF EA RTH SOIL TO VARIOUS BUILDERS AND CONTRACTORS WHEREVER THE SAME WAS REQUIRED FOR THE PURPOSES OF EARTH FILLING. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE FURNISHED PURCHASE VOUCHERS, SALE VOUCHERS, PAYMENT SHEETS, BANK STATE MENTS, ETC. THE AO NOTED THAT THE TURNOVER OF THE ASSESSEE WAS INCREASED CON SIDERABLY IN COMPARISON TO THE EARLIER YEAR AND HE NOTED THAT THE VOUCHERS PRODUCE D BY THE ASSESSEE WERE NOT FULLY VERIFIABLE SINCE MOSTLY THE PAYMENTS WERE SHO WN TO HAVE BEEN PAID BY CASH AND EXPENSES AS WELL AS PURCHASES WERE NOT FULLY VE RIFIABLE. THEREFORE, HE PROPOSED TO THE ASSESSEE WHY THE INCOME OF THE ASSE SSEE BE NOT ESTIMATED @ 2% OF THE TOTAL RECEIPT/TURNOVER. FOR THAT, THE ASSES SEE REPLIED THAT ASSESSEE HAD ALREADY PRODUCED COMPLETE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS AND ADVANCE OF MAKING PAYMENT TO THE FARMERS FOR THE PURCHASE OF E ARTH SOIL BESIDES COMPLETE EVIDENCE OF PURCHASE AND SALE OF SHARES. ACCORDING TO THE ASSESSEE, IT WAS ALSO STATED THAT GROSS PROFIT RATE IS TO THE TUNE OF 0.3 6% ON THE CONSOLIDATED TURNOVER OF RS.79,05,21,239/- AS AGAINST THE TOTAL SALES OF RS.37,44,15,104/-. THE ASSESSEE PLEADED THAT THE MARGIN IS NOT TO THAT EXTENT. HOW EVER, THE ASSESSEE OFFERED VOLUNTARILY TO BE ASSESSED AT A NET PROFIT FIGURE O F RS.1,50,00,000/- INCLUSIVE OF THE INCOME DECLARED IN THE RETURN WHICH WORKS OUT T O APPROXIMATELY 2% OF THE CONSOLIDATED SALES PROVIDED NO PENALTIES ARE LEVIED . THE AO COMPLETED THE ASSESSMENT ON TOTAL INCOME OF RS.1,50,00,000/- 3.1 THE AO ASSESSED THE INCOME OF THE ASSESSEE AT R S.1,50,00,000/- AND ALSO ISSUED NOTICE OF PENALTY U/S 271(1)(C) OF THE ACT. THE AO IN THE PENALTY PROCEEDINGS POINTED OUT THAT THE TAX SOUGHT TO BE E VADED WAS RS.49,00,935/-AND ITA NO.868/DEL./2013 3 THE MAXIMUM PENALTY @ 300% ON THE TAX SOUGHT TO BE EVADED CAME TO RS.1,47,02,805/- AND THE SAID PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED BY THE AO. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO ALSO CONFIRMED THE PENALTY LEVIED BY THE AO BUT RED UCED THE SAME TO 150% OF THE TAX SOUGHT TO BE EVADED INSTEAD OF 300% LEVIED BY THE AO. 5. THE ASSESSEE, BEING AGGRIEVED, IS IN APPEAL BEFO RE US. 6. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OU TSET STATED THAT IN IDENTICAL FACTS, THE SIMILAR PENALTY WAS LEVIED IN THE CASE O F SMT. VINAY SHARMA BELONGING TO THE SAME GROUP TO WHICH THE ASSESSEE BELONGS. IT WAS FURTHER STATED THAT IN THE SAID CASE ALSO, THE INCOME WAS ESTIMATED BY THE AO AND PENALTY WAS LEVIED @ 200% OF THE TAX SOUGHT TO BE EVADED AND THE LD. CIT (A) REDUCED THE PENALTY TO 150% AND THE ASSESSEE PREFERRED AN APPEAL TO THE I TAT, DELHI BENCH H, NEW DELHI IN ITA NO.871/DEL/2013 FOR THE ASSESSMENT YEA R 2009-10 WHEREIN VIDE ORDER DATED 30 AUGUST, 2013 THE PENALTY LEVIED BY T HE AO U/S 271(1)(C) OF THE ACT AND CONFIRMED BY THE LD. CIT(A) WAS DELETED. AG AINST THE SAID ORDER OF THE TRIBUNAL, THE DEPARTMENT PREFERRED AN APPEAL TO THE HONBLE JURISDICTIONAL HIGH COURT IN ITA NO.187 OF 2014 WHEREIN VIDE ORDER DATE D 02.05.2014 THE ORDER OF THE TRIBUNAL WAS CONFIRMED. LD. COUNSEL FOR THE ASS ESSEE FURNISHED THE COPIES OF THE AFORESAID ORDERS IN THE CASE OF SMT. VINAY SHAR MA WHICH ARE PLACED ON RECORD. THE LD. SR. DR ALTHOUGH SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF TH E LD. COUNSEL FOR THE ASSESSEE. ITA NO.868/DEL./2013 4 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD, IT IS NOTICED THA T IN IDENTICAL CIRCUMSTANCES, SIMILAR PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED IN THE CASE OF SMT VINAY SHARMA (SUPRA) HOWEVER, THE SAID PENALTY WAS DELETE D BY THE ITAT, VIDE ORDER DATED 30 TH AUGUST, 2013 IN ITA NO. 871/DEL/2013 FOR THE ASSES SMENT YEAR 2009- 10 BY OBSERVING AS UNDER :- IT IS A SETTLED LAW THAT PENALTY PROCEEDINGS ARE S EPARATE AND INDEPENDENT AND A FINDING IN THE ASSESSMENT ORDER M AY BE AN EVIDENCE WHICH CAN BE RELIED BUT IT CANNOT BE CONCL USIVE BY ITSELF FOR IMPOSITION OF PENALTY. BESIDES IN THIS CASE THE FIN DING IN ASSESSMENT ORDER IS NOT OF CONCEALED INCOME BUT THAT OF A VOLU NTARY SURRENDER AND HENCE CANNOT BE MADE A SOLE BASIS FOR IMPOSING PENALTY. THUS, THE FINDING IN THE ASSESSMENT ORDER ITSELF DOES NOT MILITATE AGAINST THE STAND TAKEN BY THE ASSESSEE THAT IT WAS A VOLUNTARY SURRENDER. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WE HAVE NO HES ITATION TO HOLD THAT THE ASSESSEE MADE THIS SURRENDER OFFER VOLUNTA RY IN PECULIAR CIRCUMSTANCES OF THIS CASE. ASSESSING OFFICER HIMSE LF ACCEPTED IT AS VOLUNTARY OFFER, REPRODUCED THE SAME IN HIS ORDER A ND ASSESSED THE INCOME ON EXACTLY THE SAME AMOUNT. THERE IS NO REFE RENCE TO ANY INVESTIGATION OR ADVERSE MATERIAL. THUS, THE ASSESS EES OFFER IS TO BE HELD AS VOLUNTARY SURRENDER, ACCEPTED BY THE DEPART MENT ACCORDINGLY. THERE BEING NO ADVERSE MATERIAL AVAILABLE ON RECORD OR ANY RELIANCE THEREON, THE OBSERVATIONS OF ASSESSING OFFICER AND CIT(A) ABOUT CONCEALMENT OR INACCURATE PARTICULARS ARE NOT BORNE FROM THE RECORD AND THE SAME ARE CONTRADICTORY TO EACH OTHER. IN VI EW THEREOF, WE DELETE THE PENALTY IMPOSED ON THE ASSESSEE. 8. AGAINST THE ORDER OF THE TRIBUNAL THE DEPARTMENT PREFERRED AN APPEAL TO THE HONBLE HIGH COURT IN ITA NO. 187 OF 2014 WHERE IN THEIR LORDSHIP VIDE ORDER DATED 2.5.2014 UPHELD THE ORDER DATED 30.08.2013 PA SSED BY THE ITAT FOR DELETING THE PENALTY U/S 271(1)(C) OF THE ACT, BY O BSERVING IN PARA 8 AS UNDER :- 8. IN THE PRESENT CASE, AS OBSERVED EARLIER, THE T RIBUNAL HAS RELIED UPON RULINGS OF SEVERAL HIGH COURTS WHERE THE VOLUN TARY NATURE OF SURRENDER OF INCOME TO BUY PEACE AND THE CIRCUMSTAN CES IN WHICH THE SURRENDER INCOME COULD BE ACCEPTED LEGITIMATELY, WA S DISCUSSED. IN THE PRESENT CASE, THE ASSESSEE DID PRODUCE ALL THE RELEVANT MATERIAL IN ITA NO.868/DEL./2013 5 THE FORM OF BOOKS OF ACCOUNT, BANK STATEMENTS, VOUC HERS, SALE BILLS ETC. DURING THE COURSE OF FURTHER ENQUIRY IN THE AS SESSMENT PROCEEDINGS. THE ASSESSEE VOLUNTARILY OFFERED A SUM OF 75LACS FOR ASSESSMENT STATING THAT EVEN THOUGH ALL THE MATERIA L EXISTED, YET IN ORDER TO BUY PEACE IT WAS OFFERING THE AMOUNT TO TA X. THE FACTS OF THIS CASE ARE CLEARLY SUCH THAT THE DECISION IN MAK DATA (SUPRA), IN THE OPINION OF THIS COURT, CANNOT BE ATTRACTED. THE ASS ESSEE AT NO POINT SEEM TO HAVE ACCEPTED THE REVENUES CONTENTIONS THA T SUCH CLAIMED EXPENDITURE WAS BOGUS AND THAT IT WAS NOT ALLOWABLE , HE OFFERED THE AMOUNT ONLY TO BUY PEACE. THERE IS ALSO NO FINDING BY THE AO THAT THE APPELLANT HAD FAILED TO OFFER AN EXPLANATION IN RESPECT OF THE INCOME RETURNED OR HAD FAILED TO DISCLOSE MATERIAL PARTICULARS. 9. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICA L TO THE FACTS INVOLVED IN THE CASE OF SMT VINAY SHARMA (SUPRA), SO RESPECTFULLY F OLLOWING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 02.05.2014 IN THE AFORESAID REFERRED CASE, WE DELETE THE PENALTY LEVI ED BY THE AO U/S 271(1)(C) OF THE ACT AND CONFIRMED BY THE LD. CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF MARCH, 2016. SD/- SD/- (PRASHANT MAHARISHI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11 TH DAY OF MARCH, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), GHAZIABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.