Sh. Kuldip Singh Prop., Ludhiana V. ITO, Ludhiana

ITA 908/CHANDI/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8449 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-08-2010
• Assessment Year: 1993-1994
• Appeal Filed On: 07-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S KHEMWAL
• Keywords: Bonafide mistake; Ignorance of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 908/CHD/2010 ASSESSMENT YEAR: 1993-94 SHRI KULDIP SINGH V I.T.O. VI(2), LUDHIANA PROP ACCURATE ENGG WORKS LUDHIANA PAN NO.: ACSPS 8747 C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARI OM ARORA RESPONDENT BY: SHRI S.S. KHEMWAL ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A)-II, LUDHIANA DATED 31.3.2010 RELATING TO ASSESSMENT YEAR 1993-94 AGAINST THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE I.T. ACT. 2 THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL BUT THE ISSUE RAISED IS AGAINST THE PENALTY LEVIED AGAINST SEC 271(1)(C) OF IT ACT. 3 THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT DU RING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE ADDITIONS ON ACCOUNT OF UNDER MENTIONED REASONS: A) ADDITION ON ACCOUNT OF PROVISIONS OF SECTION 2(22)(E) AS DISCUSSED ABOVE IN PARA (A) RS. 1,82,437/- 2 B) ADDITION ON ACCOUNT OF MINORS INTEREST U/S 64 AS DISCUSSED ABOVE IN PARA (B) RS. 25,003/- C) ADDITION ON ACCOUNT OF MARRIAGE EXPENSES OF SON AS DISCUSSED IN PARA (C) RS. 1,00 ,000/- 4. THE CIT(A) IN QUANTUM PROCEEDINGS, DELETED THE ADDITION ON ACCOUNT OF ADDITION ON ACCOUNT OF MARRIAGE EXPENSES OF SON AND ADDITION ON ACCOUNT OF PROVISIONS OF SECTION 2(22)(E) WAS REDUCED TO R S. 84,127. THE TRIBUNAL IN ITA NO. 189/CHANDI/1996 VIDE ORDER DATED 17.2.20 03 CONFIRMED THE ORDER OF CIT(A). THE ASSESSING OFFICER IN THE PENALTY PRO CEEDINGS U/S 271(1)(C) OF IT ACT AFTER INVESTIGATION LEVIED PENALTY ON ACCOUN T OF ADDITION MADE UNDER PROVISIONS OF SECTION 2(22)(E) AND ADDITION ON ACCO UNT OF MINORS INTEREST U/S 64. THE ASSESSING OFFICER LEVIED PENALTY OF RS. 50, 306/- WHICH WAS CONFIRMED BY THE CIT(A). THE TRIBUNAL RESTORED THE MATTER BACK TO THE FILE OF CIT(A) ON THE QUESTION OF LIMITATION. THE CIT(A ) HELD THE PROCEEDINGS TO BE INITIATED AND COMPLETED WITHIN TIME; HOWEVER, DELETED THE PENALTY ON ADDITION ON ACCOUNT OF MINORS INTEREST U/S 64 OF T HE ACT. THE CIT(A) CONFIRMED THE PENALTY LEVIED ON ACCOUNT OF ADDITION ON ACCOUNT OF PROVISIONS OF SECTION 2(22)(E) OF THE ACT AGAINST WHICH THE AS SESSEE IS IN APPEAL. 5. THE CIT(A) WHILE CONFIRMING THE PENALTY VIDE PA RA 4.4 OBSERVED AS UNDER: 4.4 COMING TO THE CASE OF SUNIL CHANDRA VOHRA V AC IT (SUPRA) RELIED UPON BY THE LD. COUNSEL IT IS NOT A CASE WHERE THE APPELLANT COULD BE SAID TO HAVE NOT UNDERSTOOD THE LAW IN THE CORRECT PERSPECTIVE. IT IS SEEN THAT IN THE OR DER U/S 143(3) DATED 20.3.1996 PASSED BY THE ASSESSING OFFICER THE APPELLANT HAD RATHER MADE CERTAIN EFFORT BY SHOWING BOGUS SAL ES OF SHARES TO REDUCE HIS SHARE HOLDING SO THAT IT COULD BE BROUGHT DOWN FROM THE REQUISITE SHARE HOLDING FOR APPLICATI ON OF THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE ASS ESSING 3 OFFICER HAD TO MAKE DETAILED INQUIRIES BY RECORDING EVEN STATEMENTS OF SHRI DALJIT SINGH AND SHRI HARMINDER SINGH TO WHOM THESE SHARES WERE ALLEGEDLY TRANSFERRED BY TH E APPELLANT AND ALSO THE STATEMENT OF THE APPELLANT. THE ASSESSING OFFICER HELD IN THE ASSESSMENT ORDER THAT THE PURPOSE OF SELLING THE SHARES BY THE APPELLANT WAS ONLY TO ESCAPE THE PROVISIONS OF SECTION 2(22)(E) OF THE AC T AND THAT THESE TRANSACTIONS WERE NOTHING BUT SHAM TRANSACTIO NS LACKING ANY VALIDITY IN THE EYES OF LAW. IF THE ABOVE OBSE RVATIONS AND FINDING OF THE ASSESSING OFFICER IS TAKEN INTO ACCO UNT, IT CANNOT BE SAID THAT THE APPELLANT WAS IGNORANT OR T HAT HE DID NOT UNDERSTAND THE LAW IN THE CORRECT PERSPECTIVE E TC. THE RATIO OF THE ABOVE MENTIONED DECISION AND THE CONTE NTIONS OF THE LD. COUNSEL IN THIS REGARD IS, THEREFORE, NOT O F ANY HELP TO THE APPELLANT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE ASSESSEE HAS FAILED TO CONTROVERT THE FINDINGS OF A UTHORITIES BELOW. THE ASSESSING OFFICER HAD MADE DETAILED ENQUIRIES AND E VEN RECORDED THE STATEMENT OF PERSONS TO WHOM SHARES WERE ALLEGEDLY TRANSFERRED AND ALSO OF THE ASSESSEE. THE SAID TRANSACTIONS WERE HELD TO B E SHAM TRANSACTION BY ASSESSING OFFICER AND CARRIED OUT TO ESCAPE THE PRO VISIONS OF SECTION 2(22)(E) OF IT ACT. IN THE ABOVE SAID, IT CANNOT B E HELD THAT NO PENALTY IS LEVIABLE AS ASSESSEE WAS IGNORANT OF LAW. THE ASS ESSEE IN THE FACTS AND CIRCUMSTANCES HAD FURNISHED INACCURATE PARTICULARS OF INCOME, MAKING THE ASSESSEE EXIGIBLE TO LEVY OF PENALTY FOR CONCEALMEN T UNDER SEC 271(1)(C) OF THE IT ACT. WE UPHOLD THE ORDER OF CIT(A) IN THIS REGARD. 7 THE SECOND OBJECTION OF THE LD. A.R. FOR THE ASSE SSEE WAS THAT THE ASSESSING OFFICER HAD CONFIRMED THE PENALTY ON A IS SUE AGAINST WHICH NO PENALTY PROCEEDINGS WERE INITIATED. WE FIND NO MER IT IN THE STAND OF THE LD. A.R. FOR THE ASSESSEE IN VIEW OF THE ORDER OF ASSE SSING OFFICER IN INITIATING 4 PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ON ACC OUNT OF ADDITION AS PER PARA (A), (B) & (C) IN ASSESSMENT ORDER ITSELF. 8 FURTHER THE RELIANCE OF THE LD. A.R. FOR THE ASSE SSEE ON SUNIL CHANDRA VOHRA VS. ACIT [(32 SOT 365 (MUM)]IS MISPLACED AS I N FACTS OF THE CAPTIONED CASE, THERE WAS A BONAFIDE MISTAKE ON THE PART OF ASSESSEE THEREIN, BECAUSE OF IGNORANCE OF LAW. HOWEVER, IN THE CASE BEFORE US THE MALAFIDES OF THE ASSESSEE STAND PROVED. 9. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF TH E CASE AND THE LAW, WE UPHOLD THE LEVY OF PENALTY U/S 271 (1)(C) OF THE AC T ON THE ADDITION MADE U/S 2 (2)(E) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE DISMISSED. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF OCTOBER, 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22 ND OCTOBER, 2010 RKK COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR