Mr. Pawan Talwar, New Delhi v. ITO, New Delhi

ITA 1974/DEL/2009 | 2001-2002
Pronouncement Date: 07-05-2010 | Result: Allowed

Appeal Details

RSA Number 197420114 RSA 2009
Assessee PAN APWPT9368F
Bench Delhi
Appeal Number ITA 1974/DEL/2009
Duration Of Justice 11 month(s) 27 day(s)
Appellant Mr. Pawan Talwar, New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 07-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 07-05-2010
Date Of Final Hearing 26-04-2010
Next Hearing Date 26-04-2010
Assessment Year 2001-2002
Appeal Filed On 11-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI VIMAL GANDHI HONBLE PRESIDENT AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 1974/DEL/2009 ASSESSMENT YEAR: 2001-02 PAWAN TALWAR 187 JOR BAGH NEW DELHI. APWPT9368F VS. INCOME TAX OFFICER WARD 13(3) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. LALITA KRISHANAMURTHY CA RESPONDENT BY: SHRI H.K. LAL SR. DR O R D E R PER SHAMIM YAHYA A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF CIT(A) DATED 09.02.2009 AND PERTAINS TO A.Y. 2001-0 2. 2. THE ISSUE RAISED IS THAT CIT(A) ERRED IN SUSTAIN ING THE PENALTY OF RS. 25 000/- U/S 271(1)(C) OF THE ACT IMPOSED ON TH E ASSESSEE IN RESPECT OF ADDITION MADE U/S 2(22)(E) OF RS. 65 844/-. 3. IN THIS CASE DURING THE COURSE OF ASSESSMENT TH E AO OBSERVED THAT ASSESSEE HAS RECEIVED AN AMOUNT OF RS. 3 56 99 2/- AS ADVANCE FROM M/S NITCO MARBLE & GRANITE PVT. LTD. THE AO WAS OF THE OPINION THAT THE SAID AMOUNT WAS TO BE TREATED AS DEEMED DI VIDEND AS THE ASSESSEES SHAREHOLDING IN THE SAID COMPANY WAS 16. 45%. ASSESSEES EXPLANATION THAT OUT OF SUM OF RS. 3 56 992/- AN AM OUNT OF RS. 2 ITA NO. 1974/D EL/2009 2 65 134/- AND RS. 2 544/- REPRESENTED OPENING BALA NCE WAS ACCEPTED BY THE AO. HOWEVER FOR THE REMAINING RS. 65 844/- ASSESSEES EXPLANATION THAT THE SAME WAS MEANT FOR EXPENSES WA S NOT ACCEPTED. THE AO PROCEEDED TO IMPOSE PENALTY U/S 271(1)(C) ON THE SAME AMOUNTING TO RS. 25 000/-. 4. UPON ASSESSEES APPEAL LD.CIT(A) CONFIRMED THAT PENALTY. LD. CIT(A) INTER-ALIA PLACED RELIANCE UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA AND OTHERS VS. DHARMENDRA TEXTILE PROCESSORS & OTHERS 306 ITR 277. 5. AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE US. LD. COUNSEL OF THE ASSESSEE ARGUED BEFORE US THAT THE PROVISION S OF SEC. 2(22)(E) RELATING TO THE DEEMED DIVIDEND ARE COMPLEX PROVISI ONS AND ASSESSEE WAS NOT AWARE OF THE INTRICACIES THEREOF. SHE FURT HER CLAIMED THAT ASSESSEE HAS FILED HER RETURN OF INCOME PRIOR TO TH E FINALIZATION OF AUDIT OF ACCOUNTS OF THE COMPANY NAMELY NITCO MARBLE & GRANI TE COMPANY. HENCE SHE CLAIMS THAT ASSESSEE WAS NOT AWARE OF TH E POSITION OF ACCUMULATED PROFIT OF THE COMPANY WHICH WAS NECESSA RY FOR THE COMPUTATION OF DEEMED DIVIDEND. LD. COUNSEL FURTHE R PLACED RELIANCE UPON HONBLE APEX COURT DECISION IN THE CASE OF ..83 ITR 26. LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 6. WE ARE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S AND PERUSED THE RECORDS. WE FIND THAT INITIALLY AO WAS OF THE OPINION THAT ASSESSEE 3 ITA NO. 1974/D EL/2009 WAS LIABLE FOR DEEMED DIVIDEND FOR AN AMOUNT OF RS. 3 56 992/-. HOWEVER THE AO ACCEPTED THE EXPLANATION THAT A LAR GE PART THEREOF WAS AN OPENING BALANCE. HOWEVER HE DID NOT ACCEPT ASS ESSEES PLEA FOR THE BALANCE AMOUNT OF 66 444.30 THAT THE SAME WAS ADVAN CED FOR EXPENSES. NOW LD. COUNSEL OF THE ASSESSEE HAS FURTHER SUBMITT ED THAT THE PROVISIONS OF SEC. 2(22)(E) ARE COMPLEX PROVISIONS AND THE ASSESSEE WAS NOT AWARE OF THE SAME. MOREOVER SHE HAS ALSO CLAI MED THAT ASSESSEE HAD SUBMITTED HER INCOME TAX RETURN MUCH BEFORE THE FINALIZATION OF AUDIT AND ACCOUNTS OF M/S NITCO MARBLE & GRANITE PV T. LTD. FROM THIS SHE HAS CLAIMED THAT ASSESSEE WAS NOT AWARE OF THE FINAL ACCUMULATED PROFIT FIGURE OF THE COMPANY WHICH WAS NECESSARY FO R ARRIVING AT THE AMOUNT OF DEEMED OF DIVIDEND. 7. NOW IN THE BACKGROUND OF ABOVE DISCUSSION WE HAV E TO SEE WITH THE PROVISIONS OF SEC. 271(1)(C) ARE ATTRACTED IN T HE PRESENT CASE. SECTION 271(1)(C) OF THE INCOME TAX ACT POSTULATES LEVY OF PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME & FURNISHING I NACCURATE PARTICULARS THEREOF. IN THE PRESENT CASE WE FIND THAT ASSESSE E HAS RECEIVED ADVANCE FROM M/S NITCO MARBLE & GRANITE PVT. LTD. W HERE ADMITTEDLY ASSESSEE HAD MORE THAN 10% SHAREHOLDING. WE ALSO N OTE THAT ASSESSEE HAS RECEIVED SIMILAR ADVANCES IN PRECEDING YEARS ALSO. ASSESSEES EXPLANATION FOR THE ADVANCE OF RS. 66444 .30 FOR THE CURRENT YEAR IS THAT THE SAME WAS MEANT FOR ADVANCE FOR EXP ENSES. ASSESSEE HAS ALSO PLEADED THAT ASSESSEE WAS NOT AWARE OF THE INTRICATE PROVISIONS OF SEC. 2(22)(E. IT HAS ALSO BEEN CLAIMED THAT ASS ESSEE HAS SUBMITTED THE INCOME TAX RETURN MUCH EARLIER THEN THE FINALIZ ATION OF ACCOUNTS OF 4 ITA NO. 1974/D EL/2009 THE SAID COMPANY. HENCE ASSESSEE COULDNOT HAVE ARR IVED AT THE FIGURE OF ACCUMULATED PROFITS OF THE COMPANY WHICH WAS NEC ESSARY FOR ARRIVING AT THE FIGURE OF DEEMED DIVIDEND. IN THIS BACKGROU ND IN OUR CONSIDERED OPINION THE ASSESSEES CONDUCT WAS NOT CONTUMACIOUS SO AS TO ATTRACT THE RIGORS OF PENALTY PROVISIONS OF SEC. 271(1)(C). IN THIS REGARD WE DRAW SUPPORT FROM HONBLE APEX COURT DECISION IN THE CAS E OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA 83 ITR 26 RENDERED BY A LA RGE BENCH COMPRISING 3 OF THEIR LORDSHIPS. AN ORDER IMPOSING PENALTY FO R FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI CRIMI NAL PROCEEDING AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE P ARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFENSE OF LAW OR WAS GUILTY OF CONDUCT. 8. IN THIS REGARD WE FURTHER REFERRED TO HONBLE AP EX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL APPEAL NO. 2643 OF 2010 VIDE ORDER DATED 17.03.2010. IN THIS DECISION HONBLE APEX COURT HAD HELD THAT THE LAW LAID DOWN IN DILIP SHRA FF 291 ITR 519 (SC) AS TO THE MEANINGS OF WORD CONCEAL AN INACCURATE CONTI NUES TO BE GOOD LAW BECAUSE WHAT WAS OVERRULED IN DHARMENDRA TEXTILE PR OCESSORS 306 ITR 277 (SC) WAS ONLY THAT PART IN DILIP SHRAFF WHERE I T WAS HELD THAT MENS REA WAS AN ESSENTIAL REQUIREMENT FOR PENALTY U/S 27 1(1)(C) OF THE INCOME TAX ACT. 9. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PR OCEEDINGS WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELET E THE LEVY OF PENALTY. 5 ITA NO. 1974/D EL/2009 10. IN THE RESULT THIS APPEAL BY THE ASSESSEE STAN DS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 07.05.201 0 (VIMAL GANDHI) HONBLE PRESIDENT (SHAMIM YAHYA) ACCOUNTANT MEMBER DATED: *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR