Jasbir Singh Sethi, New Delhi v. DCIT, New Delhi

ITA 4621/DEL/2009 | 2006-2007
Pronouncement Date: 12-02-2010 | Result: Allowed

Appeal Details

RSA Number 462120114 RSA 2009
Assessee PAN AAQPS8291K
Bench Delhi
Appeal Number ITA 4621/DEL/2009
Duration Of Justice 2 month(s) 5 day(s)
Appellant Jasbir Singh Sethi, New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 12-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 12-02-2010
Date Of Final Hearing 08-02-2010
Next Hearing Date 08-02-2010
Assessment Year 2006-2007
Appeal Filed On 07-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 4621/DEL/2009 ASSESSMENT YEAR : 2006-07 JASBIR SINGH SETHI 11224 DORIWALA KAROL BAGH NEW DELHI. NEW DELHI. (PAN NO. AAQPS8291K) VS. DCIT CIRCLE 39(1) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SATYEN SET HI ADV. RESPONDENT BY : SHRI J.A. KHAN SR. D.R. O R D E R PER: C.L. SETHI J.M. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 21.09.2009 PASSED BY THE LD. CIT(A) CONFIRMING THE PENALTY OF RS. 84 772/- L EVIED U/S 271(1)(C) OF THE INCOME TAX ACT 1961 (THE ACT) FOR THE ASSESSMENT YEAR 2006-07. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER LEVYING PENALTY OF RS. 84 772/- U/S 271(1)(C) ON AC COUNT OF DISALLOWNACE U/S 40A(3) OF THE ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE FACTS THAT THE TAX AUDITOR IN HIS REPORT U/S 44AB OF THE ACT; HAS NOT QUALIFIED FOR A NY DISALLOWANCE U/S 40A(3) OF THE ACT; AND THE APPELLANT HAVING FILED T HE RETURN OF INCOME MAKING NO DISALLOWANCE ON THE BASIS OF TAX AUDIT RE PORT U/S 44AB OF THE ACT. ITA NO. 4621/DEL/2009 2 3. IN THIS CASE DURING THE COURSE OF ASSESSMENT PR OCEEDINGS IT WAS NOTICED BY THE A.O. THAT ASSESSEE HAD MADE CASH PAYMENTS IN VI OLATION OF SECTION 40A(3) OF THE ACT TO VARIOUS PERSONS. THE TOTAL AMOUNT PAID WAS AMOUNTING TO RS. 11 91 56/-. AS PER PROVISIONS OF SECTION 40A(3) OF THE ACT THE A.O. DISALLOWED 20% THEREOF AND ADDED THE SAME TO THE ASSESSEES TA XABLE INCOME WORKED OUT AT RS. 2 38 314/-. THE A.O. FURTHER NOTICED THAT IN TH E TAX AUDIT REPORT FILED ALONGWITH RETURN OF INCOME UNDER THE COLUMN 17(H)(B ) THE PAYMENT IN VIOLATION OF SECTION 40A(3) WAS SHOWN AT RS. NIL. IN REPLY T O THE QUERY RAISED BY THE A.O. THE ASSESSEE REPLIED THAT AT THE TIME OF AUDIT THE AUDITOR DID NOT FIND ANY CASH PAYMENT EXCEEDING RS. 20 000/-. HOWEVER IT IS NOW ASCERTAINED THAT PAYMENTS WERE MADE THROUGH BEARER CHEQUES WHICH IS ALSO COV ERED BY SECTION 40A(3) OF THE ACT. THE DETAILS OF THE PAYMENT ALONGWITH THE DETAILS OF PARTIES WITH THE DATE AND AMOUNT WAS FILED BEFORE THE A.O. THE AUDITOR A LSO STATED BEFORE THE A.O. THAT HIS AUDIT REPORT MAY BE TREATED AS AMENDED ACC ORDINGLY. THEREFORE DISALLOWANCE U/S 40A(3) TO THE EXTENT OF RS. 2 38 3 14/- WAS MADE BY THE A.O. FURTHER THE DISALLOWANCE OF RS. 38 720/- WAS ALSO M ADE BY THE A.O. ON ACCOUNT OF PAYMENT MADE BY BEARER CHEQUE THROUGH BANK ACCOU NT IN PUNJAB NATIONAL BANK. THEREFORE THE TOTAL DISALLOWANCE WAS OF RS. 2 77 034/-. THE A.O. ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) AS HE F OUND THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME AND FURNISH ED INACCURATE PARTICULARS OF HIS INCOME TO THAT EXTENT. THE A.O. ULTIMATELY LEVIED PENALTY OF RS. 85 772/- BEING 100% OF THE TAX SOUGHT TO BE EVADED ON AMOUNT OF RS . 2 77 034/- ITA NO. 4621/DEL/2009 3 4. ON AN APPEAL THE LD. CIT(A) CONFIRMED THE PENAL TY BY HOLDING THAT ASSESSEE HAS FAILED TO PROVE THAT HIS EXPLANATION I S BONAFIDE AND ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED. 5. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THR OUGH THE ORDERS OF THE AUTHORITIES BELOW. 6. IN THE PRESENT CASE THE DETAILS OF ALL THE PAYM ENTS ALONGWITH NAME OF PARTIES WERE FILED BY THE ASSESSEE. NO PAYMENT SO MADE BY THE ASSESSEE HAS BEEN FOUND TO BE BOGUS OR NON-GENUINE. IT IS ALSO THE A DMITTED POSITION THAT ALL THE PAYMENTS WERE ROUTED THROUGH BANK ACCOUNT THOUGH W ERE TRANSACTED THROUGH BEARER CHEQUE INSTEAD OF ACCOUNT PAYEE OR CROSSED C HEQUE AS SO PROVIDED U/S 40A(3) OF THE ACT. THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT SINCE PAYMENTS WERE MADE BY CHEQUES ASSESSEE DID NOT VIO LATE ANY PROVISIONS CONTAINED IN SECTION 40A(3) OF THE ACT. THE DISALL OWANCE MADE BY THE A.O. IS IN THE NATURE OF MANDATORY STATUTORY DISALLOWANCE OF 2 0% OF THE TOTAL PAYMENT AS IT STOOD AT THE RELEVANT TIME. IN THE RELEVANT ASSESS MENT YEAR THE GENUINE DIFFICULTY OF MAKING PAYMENT IN CASH HAS NOT BEEN MADE AN EXCE PTION FOR DISALLOWANCE U/S 40A(3) UNLIKE IT WAS SO PRIOR TO THE AMENDMENT MAD E IN THE YEAR OF 1995. WE THEREFORE FIND THAT ASSESSEE HAS NOT CONSIDERED TH E PAYMENT FOR THE PURPOSE OF DISALLOWANCE U/S 40A(3) ON HIS BONAFIDE BELIEF INAS MUCH AS THE PAYMENTS WERE MADE THROUGH BANKING CHANNEL AND THEREFORE THE AS SESSEE HAD GIVEN AN UNDERSTANDING TO THE AUDITOR THAT THE PAYMENTS WERE MADE THROUGH CHEQUES. THE ITA NO. 4621/DEL/2009 4 TOTAL PAYMENT MADE BY THE ASSESSEE HAS NOT BEEN DOU BTED AND 20% THEREOF HAS ALREADY BEEN INCLUDED AS INCOME LIABLE TO TAX FOR V IOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. WE ARE THEREFORE OF T HE CONSIDERED VIEW THAT THIS CASE IS NOT FIT WHERE FURTHER PENALTY U/S 271(1)(C) SHOULD BE IMPOSED. WE THEREFORE DELETE THE SAME. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 8. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 12 TH FEBRUARY 2010. SD/- SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER (C.L. SETHI) JUDICIAL MEMBER DATED: 12 TH FEBRUARY 2010. MAMTA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. BY ORDER DEPUTY REGISTRAR