Cellcap Invofin India P. Ltd., New Delhi V. ACIT, New Delhi

ITSSA 6/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6991 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 28-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR V K CHADHA
• Keywords: Period of limitation; Question of law; Time period of passing order; Set aside; Capital Gains
• Section: 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH DNEW DLEHI BEFORE SHRI G.S. PANNU, VICE PRESIDENT AND SHRI K. NARSIMHA CHARY, JUDICIAL MEMBER ITA.NO06/DEL/2016 ASSESSMENT YEAR/ BLOCK PERIOD :01/04/1989 TO 13/01/2000 CELLCAPINVOFIN INDIA P. LTD. VS. ACIT A-60, NARAINAINDL. AREA, CENTRAL CIRCLE-2 NEW DELHI. NEW DELHI PAN AAACC4102A (APPLICANT) (RESPONDENT) APPELLANT BY: SH. ROHIT JAIN, ADV. MS DEEPASHREE RAO, CA & SH. VIBHU GUPTA, CA RESPONDENT BY: DR. V.K.CHADHA, SR. DR DATE OF HEARING: 31/10/2019 DATE OF ORDER : 31/10/2019 ORDER PER K. NARSIMHA CHARY, J.M. AGGRIEVED BY THE ORDER IN APPEAL NO. 22/11-12/ CIT(A)-29 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-29, NEW DELHI CONFIRMING THE PENALTY OF RS. 10,15,733/- BY WAY OF ORDER DATED 19/5/2011 PASSED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 158 BFA (2) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) FOR THE BLACK PERIOD OF 1/4/1989 TO 30/01/2000, CALLCAPINVOFIN INDIA P. LTD (THE ASSESSEE) PREFERRED THIS APPEAL, WITH A DELAY OF 30 DAYS. 2. BRIEF FACTS OF THE CASE ARE THAT DURING THE FINANCIAL YEAR 1998-99, FALLING IN THE BLACK PERIOD OF 1/4/1989 TO 13/01/2000, ASSESSEE EARNED INCOME FROM TRANSFER OF SHARES IN A COMPANY CALLED M/S SRU KNITTERS LTD, WHICH WERE ACQUIRED IN THE EARLIER YEARS. THE RETURN OF INCOME TAX FOR THE ASSESSMENT YEAR 1999-2000 WAS NOT FILED BY THE 2 ASSESSEE DUE TO NONRECEIPT OF CERTAIN DOCUMENTS IN SUPPORT OF THE TRANSFER OF SHARES, BUT THE SAID RETURN OF INCOME FOR 1999-2000 WAS FILED ON 31/3/2000. 3. THERE WAS A SEARCH IN THE PREMISES OF SHYAM GROUP OF COMPANIES ON 13/01/2000 WHEREIN VARIOUS DOCUMENTS INCLUDING THE PROVISIONAL FINANCIAL STATEMENTS OF THE ASSESSEE FOR THE YEAR ENDED ON 31/3/1999 WERE FOUND BY THE SEARCH PARTY AND IN SUCH FINANCIAL STATEMENTS GAINS ARISING ON TRANSFER OF SHARES WERE DULY REFLECTED. 4. THOUGH SUCH SHARES WERE ACQUIRED IN THE EARLIER YEARS, THOSE WERE DULY SHOWN IN THE AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED ON 31/3/1997 AND 31/3/1998, CONSIDERATION ON TRANSFER OF SHARES WAS RECEIVED IN THE REGULAR BANK ACCOUNTS OF THE ASSESSEE, AND MERELY ON ACCOUNT OF NON-FILING OF RETURN OF INCOME BEFORE THE DUE DATE AS PRESCRIBED IN SECTION 139(1) OF THE ACT, INCOME OF RS. 19, 62, 690/- ARISING ON TRANSFER OF SHARES WAS TREATED AS UNDISCLOSED INCOME. 5. WHEN THE ASSESSEE PREFERRED APPEAL, LD. CIT(A) VIDE ORDER DATED 14/11/2002 CONFIRMED THE SAME, BUT IN A FURTHER APPEAL, THE TRIBUNAL BY ORDER DATED 03/08/2007 DELETED THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER. HONBLE HIGH COURT, HOWEVER, BY ORDER DATED 29/11/2010 REVERSED THE ORDER OF THE TRIBUNAL AND RESTORED THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER BY HOLDING THAT ON ACCOUNT OF NON-FILING OF RETURN BEFORE THE DUE DATE PRESCRIBED IN SECTION 139(1) OF THE ACT, GAINS ARISING ON TRANSFER OF SHARES AS TO BE REGARDED AS UNDISCLOSED INCOME. 6. SUBSEQUENT TO THE ORDER OF THE HONBLE HIGH COURT, LEARNED ASSESSING OFFICER, VIDE ORDER DATED 19/5/2011 LEVIED A PENALTY UNDER SECTION 158BFA(2) OF THE ACT IN RESPECT OF THE UNDISCLOSED INCOME ON ACCOUNT OF NON-FILING OF RETURN OF INCOME BEFORE THE DUE DATE 3 PRESCRIBED UNDER SECTION 139(1) OF THE ACT. INITIALLY, BY ORDER DATED 29/01/2013, LD. CIT(A) DELETED THE PENALTY IMPOSED BY THE LEARNED ASSESSING OFFICER ON THE GROUND THAT THE PENALTY UNDER SECTION 158BFA(2) OF THE ACT WAS NOT AUTOMATIC AND SINCE THE APPLICANT DID NOT HAVE ANY INTENTION TO CONCEAL THE SAID CAPITAL GAIN FOR THE PURPOSE OF TAXATION AND HAD DISCLOSED THE INVESTMENT IN ITS FINAL STATEMENTS AND HAD ALSO FILED RETURN OF INCOME, THOUGH BELATEDLY, THERE WAS NO NEED TO LEVY PENALTY. 7. WHEN THE REVENUE PREFERRED APPEAL TO THE TRIBUNAL CHALLENGING THE DELETION OF THE PENALTY, A COORDINATE BENCH OF THIS TRIBUNAL BY ORDER DATED 20/08/2015 SET ASIDE THE ISSUE TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION ON TWO ISSUES, NAMELY, THE ISSUE OF APPLICABILITY OF THE SECOND PROVISO TO SECTION 158BFA(2) OF THE ACT AND THE IMPACT OF DISMISSAL OF SLP BY THE HONBLE SUPREME COURT. 8. IN THE SET ASIDE PROCEEDINGS, LD. CIT(A) CONSIDERED THE ASPECTS THAT WERE REFERRED BY THE TRIBUNAL FOR FRESH CONSIDERATION AND BY ORDER DATED 23/3/2016 LD. CIT(A) CONFIRMED THE ORDER OF LEARNED ASSESSING OFFICER LEVYING THE PENALTY UNDER SECTION 158BFA(2) OF THE ACT. 9. ASSESSEE EXPLAINS THAT THEY HAVE RECEIVED THE IMPUGNED ORDER OF THE LD. CIT(A) ON 30/3/2016 AND COMMUNICATED THE SAME TO THEIR COUNSEL FOR PREPARATION OF THE GROUNDS OF APPEAL ON 04/05/2016. ACCORDING TO THEM THE COUNSEL WAS UNDER THE BONA FIDE BELIEF THAT THE ORDER WAS RECEIVED ON 04/05/2016 ONLY AND THEREFORE THE TIME IS AVAILABLE FOR PREFERRING THE APPEAL TILL 30/7/2016. IT IS ONLY AT THE TIME OF FINALISATION OF THE GROUNDS OF APPEAL THE MISTAKE WAS REALISED AND THEREFORE THE APPEAL WAS PREFERRED ON 28/6/2016 INSTEAD OF 29/5/2016 WITH A DELAY OF 30 DAYS. 4 10. ON A CAREFUL CONSIDERATION OF THE MATTER WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE DOES NOT STAND TO GAIN BY PREFERRING THE APPEAL WITH ANY DELAY AND THEREBY RUNNING THE RISK OF GETTING THE APPEAL DISMISSED FOR AFFLUX OF TIME. THOUGH THE LD. DR VEHEMENTLY OPPOSED THE CONDONATION OF DELAY, AND ON THE OTHER SIDE THE LD. AR PLACED RELIANCE ON SEVERAL RELATIONS IN SUPPORT OF THEIR CONTENTION THAT IN THE ABSENCE OF ANY MISCHIEF, A GENUINE CASE CANNOT BE THROWN AWAY AT THE THRESHOLD ON THE ASPECT OF LIMITATION AND THAT TOO WHEN THE RIGHTS OF THE PARTIES ARE NOT CRYSTALLISED UNDER THE LAW OF LIMITATION, WE ARE OF THE CONSIDERED OPINION THAT BY CONDONING THE DELAY IN THIS MATTER THE HIGHEST THAT WOULD HAPPEN IS THAT A CAUSE COULD BE DECIDED ON MERITS AND BECAUSE OF THE DELAY OF ONE MONTH OCCURRED IN PREFERRING THE APPEAL, NO PREJUDICE IS CAUSED TO THE REVENUE. IT IS THE SETTLED PRINCIPLE OF LAW THAT WHEN THE TECHNICALITIES ARE PITTED AGAINST THE DELIVERY OF SUBSTANTIAL JUSTICE, THE FORMER MUST GIVE WAY TO THE LETTER. WITH THIS VIEW OF THE MATTER WE ARE INCLINED TO CONDONE THE DELAY AND PROCEED TO HEAR THE ISSUE ON MERITS. 11. CONTENTION OF THE LD. AR IS TWOFOLD. FIRSTLY HE CONTENDS THAT ACCORDING TO THE LAW OF LIMITATION PRESCRIBED UNDER SECTION 158BFA(3) (C) OF THE ACT, NO ORDER IMPOSING PENALTY UNDER SECTION 158BFA OF THE ACT SHALL BE PASSED AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED; OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE LD. CIT(A) OR ITAT WAS RECEIVED BY THE PR. CCIT/CCIT/CIT, WHICH ARE PERIOD EXPIRES LATTER. LD. AR SUBMITS THAT THE ORDER OF THE TRIBUNAL WAS PASSED ON 03/08/2007 AND WAS RECEIVED BY THE AUTHORITIES AND THEREFORE THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER ON 19/5/2011 IS BEYOND THE PERIOD OF LIMITATION. HE PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCHES OF THIS TRIBUNAL IN THE CASE OF CELLPHONE CREDIT &SECURITIES PRIVATE LIMITED 5 VS. ACIT IT (SS) NO. 7 OF 2006, DCIT VS. INTELLINVOFININDIA PRIVATE LIMITED IT (SS) NO. 4 OF 2013 AND THE DECISION OF THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF ARAVIND KUMAR JAIN VS. ACIT 145 ITD 271. 12. FURTHER CONTENTION OF THE LD. AR THAT INASMUCH AS THE TRIBUNAL DELETED THE QUANTUM ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) AND THE HONBLE HIGH COURT RESTORED THE ADDITION ONLY ON THE SUBSTANTIAL QUESTION OF LAW, IT AMOUNTS THAT THE ISSUE INVOLVED WAS A DEBATABLE ISSUE AND NO PENALTY COULD BE LEVIED ON THE ADDITIONS MADE IN RELATION TO THE DEBATABLE ISSUES. 13. PER CONTRA, IT IS THE SUBMISSION ON BEHALF OF THE REVENUE THAT THE LIMITATION PERIOD IN THIS MATTER WOULD START FROM THE DATE OF THE ORDER OF THE HONBLE DELHI HIGH COURT INASMUCH AS THE CAUSE OF ACTION TO LEVY THE PENALTY HAD ARISEN ONLY ON THE HONBLE HIGH COURT RESTORING THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER AND, THEREFORE, IT CANNOT BE SAID THAT THE LEVY OF PENALTY IS BARRED BY LIMITATION. HE FURTHER SUBMITTED THAT THE HONBLE HIGH COURT HELD THAT ON ACCOUNT OF NON-FILING OF RETURN BEFORE THE DUE DATE PRESCRIBED IN SECTION 139(1) OF THE ACT, THE GAINS ARISING ON TRANSFER OF SHARES HAVE TO BE TREATED AS UNDISCLOSED INCOME AND SUCH A FINDING OF THE HONBLE HIGH COURT WAS NOT DISTURBED BY THE HONBLE SUPREME COURT SINCE THE SLP WAS DISMISSED. HE, THEREFORE, SUBMITS THAT NO PENALTY COULD BE LEVIED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 14. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. THERE IS NO DISPUTE AS TO THE FACTS INVOLVED IN THIS MATTER. ASSESSMENT ORDER UNDER SECTION 158BC(C) READ WITH SECTION 158BD OF THE ACT WAS PASSED BY THE LEARNED ASSESSING OFFICER ON 10/6/2002; THAT THE LD. CIT(A) CONFIRMED THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER BY ORDER DATED 14/11/2002; THAT THE TRIBUNAL REVERSED THE ORDERS OF THE 1 ST APPELLATE AUTHORITY AND A 6 DELETED THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER BY ORDER DATED 03/08/2007; THAT THE HONBLE HIGH COURT RESTORED THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER WHILE REVERSING THE ORDER OF THE TRIBUNAL, BY ORDER DATED 29/11/2010; AND THAT THE IMPUGNED PENALTY ORDER UNDER SECTION 158BFA(2) OF THE ACT WAS PASSED BY THE LEARNED ASSESSING OFFICER ON 15/5/2011. 15. FACTS NARRATED ABOVE ARE IDENTICAL TO THE FACTS INVOLVED IN THE CASE OF CELLPHONE CREDIT (SUPRA) AND INTEL INVOFIN (SUPRA) WHEREIN THE TRIBUNAL WHILE PLACING RELIANCE ON THE DECISION IN THE CASE OF ARAVIND KUMAR JAIN (SUPRA) HELD THAT THE PENALTY ORDER THAT WAS PASSED ON 19/5/2011 AS AGAINST THE ORDER OF THE TRIBUNAL ON 12/10/2006 WAS BARRED BY LIMITATION IN TERMS OF PROVISIONS UNDER SECTION 158BFA(3)(C) OF THE ACT. 16. FURTHER, IT IS AN ADMITTED FACT THAT ON THE SAME SET OF FACTS THE TRIBUNAL REACHED A CONCLUSION THAT THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER WERE NOT SUSTAINABLE WHEREAS THE HONBLE HIGH COURT TOOK THE VIEW THAT ON ACCOUNT OF NON-FILING OF RETURN BEFORE THE DUE DATE PRESCRIBED IN SECTION 139(1) OF THE ACT, GAINS ARISING ON TRANSFER OF SHARES HAVE TO BE TREATED AS UNDISCLOSED INCOME. IT IS NOT IN DISPUTE THAT THE CAPITAL GAINS ACCRUED TO THE ASSESSEE WERE DISCLOSED IN THE FINANCIAL STATEMENTS OF THE ASSESSEE AND ALSO IN THE BELATEDLY FILED RETURN OF INCOME. LD. AR ARGUES THAT THIS PARTICULAR FACT RULES OUT ANY INTENTION ON THE PART OF THE ASSESSEE TO CONCEAL THE CAPITAL GAIN COULD BE INFERRED AND SINCE THE LEVY OF PENALTY IS NOT AUTOMATIC, LEARNED ASSESSING OFFICER SHOULD HAVE TAKEN A PRAGMATIC VIEW AND NOT LEVIED PENALTY. 17. ON A CAREFUL CONSIDERATION OF THE MATTER, WE FIND SOME FORCE IN THE ARGUMENT OF THE LD. AR THAT THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 158BFA(2) OF THE ACT CANNOT BE SUSTAINED BECAUSE THE ASSESSEE DOES NOT SEEM TO HAVE ANY INTENTION 7 TO CONCEAL THE CAPITAL GAIN FURTHER THE PURPOSE OF TAXATION AND IN FACT HAD DISCLOSED SUCH INVESTMENT IN ITS FINANCIAL STATEMENTS AND ALSO HAD FILED THE RETURN OF INCOME, OF COURSE WITH SOME DELAY.WE HAVE TO KEEP IN MIND THAT THE LEVY OF PENALTY IS NOT AUTOMATIC. 18. VIEWING FROM ANY ANGLE, WE FIND IT DIFFICULT TO SUSTAIN THE PENALTY THAT IS LEVIED UNDER SECTION 158BFA(2) OF THE ACT AND THE SAME IS LIABLE TO BE DELETED. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY. 19. APPEAL OF THE ASSESSEE IS, ACCORDINGLY, ALLOWED. PRONOUNCED IN OPEN COURT ON THIS 31 ST OCTOBER,2019. SD/- SD/- (G.S. PANNU) (K. NARSIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: /10/2019 BR 8 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED DRAFT PLACED BEFORE AUTHOR APPROVED DRAFT COMES TO THE SR.PS/PS ORDER SIGNED AND PRONOUNCED ON FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER. DATE OF UPLOADING ON THE WEBSITE