Ajay Engicon Pvt Ltd., V. Addl. CIT,

ITA 93/RAN/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0321 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 07-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK ROUSHAN SR S C
• Assessee Lawyers: V K JALAN
• Keywords: Question of law
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI CIRCUIT BENCH, RANCHI BEFORE SHRI N.S. SAINI, HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 93/RAN/2013 (ASST. YEAR : 2004-05) SHRI AJAY ENGICON (P) LTD., HARIHAR SINGH ROAD, MORHABARI, RANCHI. VS. ACIT, RANGE-1, RANCHI. PAN NO. AADCA 2509 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.K. JALAN FCA DEPARTMENT BY : SHRI DEEPAK ROUSHAN SR.SC DATE OF HEARING : 27/10/2015. DATE OF PRONOUNCEMENT : 27/10/2015. O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), RANCHI, DATED 09/09/2013. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE IN THIS APPEAL IS THAT COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT J USTIFIED IN CONFIRMING THE LEVY OF PENALTY OF RS. 32,28,750/- U NDER SECTION 271(1)(C) OF THE ACT. 3 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE O RDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED TO HAVE BEEN RECEIVED SHARE APPLICATION MONEY OF RS. 90 LAC. THE ASSESSI NG OFFICER DID NOT 2 ITA NO. 93/RAN/2013 ACCEPT THE SHARE APPLICATION MONEY AS CLAIMED TO HA VE BEEN RECEIVED BY THE ASSESSEE AS GENUINE AND, THEREFORE MADE THE ADDITION OF RS. 90 LAC TO THE INCOME OF THE ASSESSEE. 4. THE ASSESSEE BEING AGGRIEVED BY THE SAID ORDER OF THE ASSESSING OFFICER FILED APPEAL BEFORE THE COMMISSIONER OF INC OME TAX (APPEALS), WHO ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFI CER. 5. BEING FURTHER AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL ALSO CONFIRMED THE ADDITI ON ON ACCOUNT OF SHARE APPLICATION OF RS. 90 LAC. 6 . THE ASSESSING OFFICER INITIATED THE PROCEEDINGS U NDER SECTION 271(1)(C) OF THE ACT AND LEVIED PENALTY OF RS. 32,2 8,750/- BEING 100% OF THE TAX SOUGHT TO BE EVADED UNDER SECTION 271(1) (C) OF THE ACT ON THE GROUND OF INTENTIONALLY AND WILLINGLY CONCEALIN G THE PARTICULARS OF INCOME / IN ACCURATE PARTICULARS OF SUCH INCOME. 7 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) A LSO CONFIRMED THE LEVY OF PENALTY ON THE GROUND THAT THE ASSESSEE HAD NO VALID EXPLANATION IN REGARD TO SOURCE OF INCREASE IN SHAR E CAPITAL FOR RS. 90 LAC IN THE NAMES OF SRI MATHURA PRASAD SINGH (HUF), SRI AJAY SUMAN, SRI SANJAY SUMAN & SRI VIJAY SINGH. 8 . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE VEH EMENTLY ARGUING AND ASSAILING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) SUBMITTED THAT THE HON'BLE BOMBAY HIGH CO URT IN THE CASE OF SHREE NIRMAL COMMERCIAL LTD. VS. CIT REPORTED IN 2008-TIOL-426-HC- MUM-IT WHILE DECIDING THE FOLLOWING QUESTION OF LAW :- 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE INCOME ASSESSED UNDER SECTION 68 OF THE ACT, PE NALTY UNDER SECTION 271(1)(C) CAN BE LEVIED IN LAW? 3 ITA NO. 93/RAN/2013 THE HON'BLE HIGH COURT HELD AS UNDER:- WE HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO THE CASE LAW CITED BY MR. MEHTA. IN THE PRESE NT CASE IN THE REASSESSMENT FOR THE A.Y. 1966-67 AN AMOUNT OF RS. 50,000/- WAS ADDED AS INCOME OF THE ASSESSEE THROUGH UNDISCL OSED SOURCES. SIMILARLY, IN THE REASSESSMENT FOR THE A. Y. 1967-68 THE AMOUNT OF RS. 1,25,000/- WAS TREATED AS INCOME OF T HE ASSESSEE FROM UNDISCLOSED SOURCES. THE ASSESSEE AT NO POINT OF TIME HAS ADMITTED THAT THE INCOME TREATED BY THE AUTHORITIES FOR A.Y. 1996- 97 AND A.Y. 1967-68 AS INCOME FROM UNDISCLOSED SOUR CES IS CONCEALED INCOME. THE RATIO LAID DOWN BY THE DIVIS ION BENCH OF THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TA X, POONA VS. BHIMJI BHANJEE AND CO. (SUPRA), THEREFORE, SQUARELY APPLIED TO THE FACTS OF THE INSTANCE CASE AND WE DO NOT FIND ANY H ESITATION IN COMING TO THE CONCLUSION THAT THE INCOME TAX AUTHOR ITIES WHO HAVE ASSESSED THE INCOME OF THE ASSESSEE FOR A.Y. 1 966-67 AND A.Y. 1967-68 UNDER SECTION 68 OF THE I.T. ACT OUGHT NOT TO HAVE LEVIED ANY PENALTY UNDER SECTION 271(1)(C) OF THE I .T. ACT, 1961. 9. HE FURTHER RELIED ON THE DECISION OF THE HON'BLE KA RNATAKA HIGH COURT IN THE CASE OF CIT, GULBARGA AND OTHERS VS. M/S. MANJUNATHA COTTON AND GINNING FACTORY, BELLARY AND OTHERS REPORTED IN 2013-TIOL- 536-HC-KAR-IT AND SUBMITTED THAT THE HON'BLE HIGH C OURT HELD THAT IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUBSTANTIA TED BY THE ASSESSEE, BUT IS FOUND TO BE BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. 10 . ON THE OTHER HAND, DEPARTMENTAL REPRESENTATIVE R ELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 11 . WE FIND THAT IN THE INSTANT CASE, THE ASSESSING O FFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR CONC EALMENT OF INCOME / SUBMISSION OF INACCURATE PARTICULARS OF INCOME ON T HE AMOUNT OF ADDITION OF RS. 90 LAC CLAIMED TO HAVE BEEN RECEIVE D AS SHARE APPLICATION BY THE ASSESSEE. THE ADDITION MADE WAS CONFIRMED BY THE TRIBUNAL IN APPEAL FILED BEFORE IT BY THE ASSESSEE. WE FIND THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHREE NIRMAL COMMERCIAL LTD . 4 ITA NO. 93/RAN/2013 (SUPRA) HAS HELD THAT NO PENALTY UNDER SECTION 271( 1)(C) OF THE ACT CAN BE LEVIED WHERE THE INCOME IS ASSESSED UNDER SECTIO N 68 OF THE INCOME TAX ACT, 1961. WE ALSO FIND THAT THE HON'BLE KARNA TAKA HIGH COURT IN THE CASE OF M/S. MANJUNATHA COTTON AND GINNING FACTOR, BALLARY (SUPRA) HAS HELD THAT IF THE EXPLANATION OFFERED BY THE ASS ESSEE, EVEN THOUGH NOT SUBSTANTIATED, BUT IS FOUND TO BE BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAS BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. 12. WE FURTHER FIND THAT THE ASSESSEE HAS FILED BEFORE US AN ORDER OF THE HON'BLE HIGH COURT OF JHARKHAND AT RANCHI IN TH E CASE OF AJAY ENGICON PRIVATE LTD. VS. DCIT IN TAX APPEAL NO. 25/2010 ORDER DATED 09/09/2011 BY WHICH THE HON'BLE HIGH COURT HAS ADMI TTED THE APPEAL OF THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL CONF IRMING THE ADDITION OF SHARE CAPITAL OF RS. 90 LAC. 13. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, W E FIND THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. LIQUID INVESTMENT LTD. VIDE ITS ORDER DATED 05/10/2010 IN ITA NO. 240/09 H AS HELD THAT WHERE THE HIGH COURT HAS ACCEPTED THE SUBSTANTIAL QUESTIO N OF LAW UNDER SECTION 260A, THIS ITSELF SHOWS THAT THE ISSUE IS D EBATABLE. ACCORDINGLY, NO PENALTY WAS UNDER SECTION 271(1)(C) OF THE ACT I S LEVIABLE. THE HON'BLE HIGH COURT FURTHER OBSERVED THAT THE SUPREM E COURT IN THE CASE OF SANTOSH HOSIERY IN CIVIL APPEAL NO. 1117/2001 IN ITS ORDER DATED 03/02/2001 OBSERVED THAT SUBSTANTIAL QUESTION OF L AW MUST BE DEBATABLE. THE HON'BLE SUPREME COURT WHILE DECIDIN G AS TO WHAT IS THE SUBSTANTIAL QUESTION OF LAW HAS HELD THAT SAME MUST BE DEBATABLE. 14. SIMILARLY, THE HON'BLE BOMBAY HIGH COURT IN THE CAS E OF CIT VS. M/S. NAYAN BUILDERS AND DEVELOPERS IN TAX APPEAL NO. 415/2012 ORDER DATED 08/07/2014 HAS HELD THAT WHEN THE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION, IT BECOMES APPARENT THAT THE ADDITION IS 5 ITA NO. 93/RAN/2013 CERTAINLY DEBATABLE. IN SUCH CIRCUMSTANCES, PENALT Y CANNOT BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 15. IN VIEW OF THE FOREGOING REASONS, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE LEVY OF PENALTY OF RS. 32,28,750/- AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING ON TUESDAY, THE 27 TH DAY OF OCTOBER, 2015 AT RANCHI. SD/- SD/- (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27 TH OCTOBER, 2015. VR/- COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., RANCHI 6 ITA NO. 93/RAN/2013 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 28/10/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 28/10/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 28/10/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 28/10/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28/10/2015 SR.PS 6. DATE OF PRONOUNCEMENT 27/10/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 28/10/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER