M/s. Elite Promoters Pvt. Ltd., New Delhi V. ITO, New Delhi

ITSSA 22/DEL/2014

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3830 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-05-2017
• Assessment Year: misc
• Appeal Filed On: 24-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KR JIWANI
• Keywords: Unexplained expenditure; Search and seizure; Initiation of penalty proceedings
• Section: 69C; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER IT(SS)A NO.-22/DEL/2014 (BLOCK PERIOD : 01.04.1995 TO 22.08.2001) ELITE PROMOTERS PVT. LTD. 9, KASTURBA GANDHI MARG NEW DELHI PAN : AAACE1962C VS ITO WARD-11(4) NEW DELHI ASSESSEE BY SH. SALIL AGGARWAL, ADV. REVENUE BY SH. VIJAY KR. JIWANI, SR. DR ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS IS ASSESSEES APPEAL AGAINST ORDER OF THE LD. CIT (APPEALS)-XII, NEW DELHI DATED 25.02.2014 WHEREIN V IDE THE IMPUGNED ORDER FOR BLOCK PERIOD 01.04.1995 TO 22.08 .2001, THE LD. CIT(A) HAS UPHELD THE IMPOSITION OF PENALTY OF RS. 5,84,713/- IMPOSED U/S 158BFA(2) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER CALLED TO AS ACT). 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEAR CH AND SEIZURE OPERATION WAS CONDUCTED ON 22.08.2001 ON SH. D.N.TA NEJA GROUP OF CASES WHEREIN CERTAIN BOOKS OF ACCOUNTS AND DOCU MENTS WERE DATE OF HEARING 09 .0 5 .201 8 DATE OF PRONOUNCEMENT 30 .0 7 .201 8 2 ITA N O. IT(SS)A. 22/DEL/2014 FOUND AND SEIZED. SUBSEQUENTLY, STATUTORY NOTICE U/ S 158BD READ WITH SECTION 158BC WAS ISSUED AND THE ASSESSEE FILE D THE BLOCK PERIOD RETURN DECLARING UNDISCLOSED INCOME AT NIL. THE AO PASSED THE ORIGINAL ASSESSMENT ORDER DETERMINING THE UNDIS CLOSED INCOME AT RS. 8,64,79,960/-. THE ASSESSEE APPROACHED THE L D. CIT (A) WHO CONFIRMED TWO ADDITIONS OF RS. 3,71,55,000/- AND 9, 55,415/- AND DELETED THE REMAINING ADDITION. THEREAFTER, BOTH TH E DEPARTMENT AS WELL AS THE ASSESSEE APPROACHED THE ITAT AND THE IT AT VIDE ITS CONSOLIDATED ORDER IN IT (SS)A NO. 366/DEL/2004 IT( SS)A NO. 343/DEL/2004 VIDE ORDER DATED 26.08.2005 SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMITTED THE MATTER BACK TO THE FILE OF AO FOR CONSIDERING THE ISSUES AFRESH. THE AO PASSED THE SE COND ASSESSMENT ORDER ON 17.03.2006 DETERMINING THE UNDI SCLOSED INCOME AT RS. 10,30,78,357/-. AS PER THE DEPARTMENT , THIS ADDITION INCLUDED AN ADDITION OF RS.9,55,415/- ON A CCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C AND RELATES TO CAS H PAYMENT MADE TO SH. RAM UJAGAR CHAUHAN DURING ASSESSMENT YE AR 2001- 02. THE ASSESSEE AGAIN APPROACHED THE LD. CIT (A) W HO DELETED THE ADDITIONS. IT IS AGAIN THE DEPARTMENTS CONTENTION THAT THE ADDITION OF RS. 9,55,415/- WAS UPHELD BY THE LD. CIT (A). TH E DEPARTMENTS APPEAL AGAINST THE ORDER OF THE LD. CIT (A) IN THE QUANTUM PROCEEDINGS WAS DISMISSED BY THE ITAT VIDE ORDER DA TED 3 ITA N O. IT(SS)A. 22/DEL/2014 17/04/2009. SUBSEQUENTLY, THE AO CONSIDERED THE ADD ITION OF RS. 9,55,415/- AS UNEXPLAINED INCOME AND LEVIED PENALTY OF RS. 5,84,713/- BEING 100% OF THE TAX ON THIS SAID ADDIT ION OF RS. 9,55,415/-. ON APPEAL BY THE ASSESSEE, THE LD. CIT (A) UPHELD THE IMPOSITION OF PENALTY U/S 158BFA(2) AMOUNTING TO RS . 5,84,713/-. NOW THE ASSESSEE HAS APPROACHED THE ITAT AND HAS CH ALLENGED THE UPHOLDING OF THE PENALTY. 3. THE LD. AUTHORISED REPRESENTATIVE DREW OUR ATT ENTION TO PAGE 37 OF THE ASSESSMENT ORDER IN THE SECOND ROUND OF P ROCEEDINGS WHEREIN, IN PARA 5.3.5 IT HAS BEEN MENTIONED BY THE AO THAT SINCE, DURING THE SAME PERIOD ASSESSEE HAS RECEIVE D RS. 5,49,79,960/- FROM THE SALE OF FLATS OF THE SAME PR OPERTY AND RS. 5,49,79,960/- ARE CONSIDERED AS UNEXPLAINED AND ADD ED BACK TO THE INCOME OF THE ASSESSEE, THE EXPENSES OF RS. 9,5 5,415/- CONSIDERED AS APPLICATION OF THIS INCOME AND NO ADD ITION IS BEING MADE ON THIS ACCOUNT. THE LD. AUTHORISED REPRESENTATIVE WHILE DRAWING ATTENTION TO THIS PARAGRAPH IN THE ASSESSME NT ORDER SUBMITTED THAT SINCE NO ADDITION HAD BEEN MADE, PEN ALTY COULD NOT HAVE BEEN LEVIED ON THIS ACCOUNT. THE LD. AUTHO RISED REPRESENTATIVE ALSO DREW OUR ATTENTION TO THE COPY OF THE SHOW CAUSE NOTICE ISSUE U/S 158BFA DATED 17.03.2016 AND PLACED AT PAGE 1 OF THE PAPER BOOK AND SUBMITTED THAT THE SAI D NOTICE DID 4 ITA N O. IT(SS)A. 22/DEL/2014 NOT SPECIFY THE CHARGE FOR WHICH THE PENALTY U/S 15 8 BFA (2) OF THE ACT WAS BEING INITIATED. THE LD. AUTHORISED REPRESE NTATIVE ALSO SUBMITTED THAT SECTION 158BFA WAS AKIN TO SECTION 2 71(1)(C) OF THE ACT AND, THEREFORE, IT WAS NECESSARY FOR THE CHARGE TO BE SPECIFIED FOR WHICH THE PENALTY WAS BEING INITIATED BEFORE SU CH PENALTY COULD BE IMPOSED. THE LD. AUTHORISED REPRESENTATIVE ALSO PLACED RELIANCE ON A NUMBER OF CASE LAWS TO SUPPORT HIS CO NTENTION THAT SECTION 158BFA WAS AKIN TO SECTION 271(1)(C) OF TH E ACT. THE LD. AUTHORISED REPRESENTATIVE ALSO PLACED RELIANCE ON A NUMBER OF CASE LAWS WHEREIN IT HAD BEEN HELD THAT NO PENALTY WAS IMPOSABLE U/S. 271(1)(C) OF THE ACT WHEN THE CHARGE FOR WHICH THE PENALTY WAS BEING INITIATED WAS NOT SPECIFIED IN THE SHOW CAUSE NOTICE FOR THE INITIATION OF PENALTY PROCEEDINGS. 4. IN RESPONSE THE LD. SR. DEPARTMENTAL REPRESENTA TIVE SUBMITTED THAT IN THE SECOND ROUND AN ADDITION OF RS. 5,49,79 ,960/- HAD BEEN MADE ON ACCOUNT OF MONEY RECEIVED BY THE ASSES SEE COMPANY ON SALE OF FLATS AND THE ASSESSEE HAD CLAIMED BENEF IT OF TELESCOPING. IT WAS FURTHER SUBMITTED THAT LD. CIT (A), IN THE SECOND ROUND, DELETED THE ADDITION OF RS. 5,49,79,9 60/- AGAINST WHICH THE ASSESSEE HAD CLAIMED TELESCOPING BENEFIT IN RESPECT OF ADDITION OF RS. 9,55,415/-. IT WAS SUBMITTED THAT S INCE THE ADDITION OF RS. 5,49,79,960/- HAD BEEN DELETED BY T HE LD. CIT (A), 5 ITA N O. IT(SS)A. 22/DEL/2014 THEREFORE, THE ASSESSEES EXPLANATION REGARDING THE SOURCE OF CASH FROM WHICH THE PAYMENT OF RS. 9,55,415/- WAS MADE T O SH. RAM UJAGAR CHAUHAN REMAINED UNEXPLAINED AND THEREFORE, THE PROVISIONS OF SECTION 158BFA(2) WERE ATTRACTED. THE LD. SR. DR PLACED RELIANCE ON THE ORDER OF THE LD. CIT (A) AS WELL AS A NUMBER OF CASE LAWS TO SUPPORT HIS CONTENTION THAT THE PEN ALTY HAD BEEN RIGHTLY IMPOSED. 5. WE HAVE HEARD THE RIVAL SUBMISSION AND HAVE AL SO PERUSED THE MATERIAL ON RECORD. IT IS SETTLED LAW THAT PENALTY PROCEEDINGS U/S 158BFA(2) ARE AKIN TO SECTION 271(1)(C) OF THE ACT. A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES SH OWS THAT THE AO HAS ACCEPTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE ASSESSEES BOOK SHOWS AVAILABILITY OF CASH DURING T HE ASSESSMENT YEAR 2001-02 WHEN THE IMPUGNED CASH PAYMENT WAS MAD E TO SH. RAM UJAGAR CHAUHAN TO THE TUNE OF RS. 9,55,415/-. I T IS ALSO APPARENT THAT THE EXPLANATION OF THE ASSESSEE HAS N OT BEEN PROVED FALSE. IT IS ALSO A SETTLED LAW THAT QUANTUM PROCEE DINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT PROCE EDINGS AND THEREFORE PENALTY COULD NOT HAVE BEEN LEVIED ONLY F OR THE REASON THAT THE QUANTUM, BY TURN OF EVENTS, STOOD CONFIRME D. IN THE GIVEN FACTS, THE ASSESSEE HAS DISCHARGED ITS BURDEN BY GI VING EXPLANATION AND IT WAS INCUMBENT UPON THE DEPARTMEN T TO 6 ITA N O. IT(SS)A. 22/DEL/2014 THEREAFTER DISCHARGE ITS BURDEN BY PROVING THAT THE EXPLANATION OF THE ASSESSEE WAS FALSE. SINCE 158BFA(2) PROCEEDINGS ARE AKIN TO 271(1)(C) PROCEEDINGS, THE SAME CAUTION AND CARE H AS TO BE EXERCISED BY THE DEPARTMENT WHILE IMPOSING THE PENA LTY AND IT IS NOT AUTOMATIC. WE ARE AFRAID, THE DEPARTMENT HAS NO T DISCHARGED THE ONUS CAST UPON IT. ACCORDINGLY, IN VIEW OF THE FACTS OF THE CASE WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND DIREC T THE AO TO DELETE THE IMPUGNED PENALTY. 6. IN THE FINAL RESULT, THE APPEAL OF THE ASSES SEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.07.2018 SD/- SD/- (R.K.PANDA) (SUDHANSHU SRI VASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30.07.2018 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA N O. IT(SS)A. 22/DEL/2014