Kailash Apartment Pvt. Ltd., New Delhi v. ITO, New Delhi

ITA 4709/DEL/2009 | misc
Pronouncement Date: 15-02-2010 | Result: Allowed

Appeal Details

RSA Number 470920114 RSA 2009
Assessee PAN AAACK4144N
Bench Delhi
Appeal Number ITA 4709/DEL/2009
Duration Of Justice 2 month(s) 1 day(s)
Appellant Kailash Apartment Pvt. Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 15-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 15-02-2010
Date Of Final Hearing 15-02-2010
Next Hearing Date 15-02-2010
Assessment Year misc
Appeal Filed On 14-12-2009
Judgment Text
ITA NO. 4709/DEL/2009 A.Y. 1986-87 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 4709/DEL/2009 A.Y. : 1986-87 KAILASH APARTMENTS PVT. LTD. VS. INCOME TAX OFFI CER 2 TILAK MARG NEW DELHI WARD 5(1) NEW DELHI [PAN: AAACK4144N] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL SHARMA ADV. DEPARTMENT BY : SHRI IPS BINDRA SR. DR O R D E R PER SHAMIM YAHYA : AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDERS OF THE LD. CIT(A) DATED 16.9.2009 PERTAINING TO ASSESS MENT YEAR 1986- 87. 2. THE ISSUES RAISED IS THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY IMPOSED BY THE ITO UNDER SECTION 271(1)(C) OF THE IT ACT AMOUNTING TO RS. 5 25 000/-. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT I N THE ORIGINAL ASSESSMENT COMPLETED UNDER SECTION 143(3) ON 23.3.1 989 THE ASSESSING OFFICER HAD MADE ADDITION OF RS. 10 LACS ON ACCOUNT OF CREDITS IN THE JOINT NAME OF SHRI MANMOHAN SINGH AN D SMT. MANJEET SINGH BEING HUSBAND AND WIFE ON THE GROUND THAT THE ITA NO. 4709/DEL/2009 A.Y. 1986-87 2 ASSESSEE COULD NOT EVEN FILE CONFIRMATIONS FROM TH E SAID PARTIES. IN APPEAL THE CIT HAD SET ASIDE THE ASSESSMENT FOR PA SSING AFRESH ORDER AFTER ALLOWING FURTHER TIME AND OPPORTUNITY T O FILE CONFIRMATIONS AS WELL AS OTHER DOCUMENTS IN SUPPORT OF THE LOAN TRANSACTIONS. IN THIS FRESH ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER UNDER SECTION 143(3)/250 ON 23.11 .1995 NO ADDITION WAS MADE ON ACCOUNT OF CASH CREDIT. CIT THEREAFTER INITIATED PROCEEDINGS UNDER SECTION 263 ISSUED DIRE CTIONS TO THE AO TO MAKE ADDITION OF RS. 10 LACS ON ACCOUNT OF CASH CREDITS. THIS ORDER OF CIT WAS DISPUTED IN APPEAL BEFORE THE TRIBUNAL WHO VIDE ORDER DATED 30.10.2003 UPHELD THE INITIAT ION OF THE PROCEEDING SUNDER SECTION 263. HOWEVER THE TRIBU NAL SET ASIDE THE ORDER OF CIT AND RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE AFRESH THE IDENTITY AND CREDITWO RTHINESS OF THE CREDITORS AS WELL AS THE GENUINENESS OF THE TRANSA CTIONS. 4. THE ASSESSING OFFICER FOUND THAT ASSESSEE CO ULD NEITHER PRODUCE NOR FILE CONFIRMATION. HENCE A SUM OF RS. 10 LACS WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE UNDER SEC TION 68 OF THE IT ACT AND THE SAME WAS CONFIRMED BY THE CIT AND THE I TAT. PENALTY UNDER SECTION 271(1)(C) WAS ALSO LEVIED. AO IN T HE PENALTY ORDER OBSERVED THAT ASSESSEE DESPITE SEVERAL OPPORTUNITIE S FAILED TO SUBSTANTIATE THE IDENTITY OF THE LENDERS; GENUINENE SS OF THE TRANSACTIONS AND THE CREDITWORTHINESS OF THE LENDER S EVEN AS THE BASIC CONFIRMATION OF TRANSACTION WAS NOT FILED. ITA NO. 4709/DEL/2009 A.Y. 1986-87 3 5. UPON ASSESSEES APPEAL LD. CIT(A) CONFIRMED THE PENALTY INTER- ALIA REFERRED TO THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS 30 6 ITR 277. 6. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 7. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT IN THIS CASE THE ORIGINAL ASSESSEMENT WAS COMPLETED UNDER SECTION 143(3). AO HAD NOT MADE ANY ADDITI ON ON ACCOUNT OF ADDITION OF RS. 10 LACS UNDER SECTION 68 OF THE IT ACT. IT WAS ONLY AFTER ORDER UNDER SECTION 263 OF THE IT ACT BY THE CIT THAT ADDITION IN THIS REGARD WAS MADE. ASSESSEES CASE THIS REGA RD IS THAT THE AFORESAID AMOUNT HAS BEEN SAID RECEIVED FROM THE AF ORESAID TWO PERSONS THROUGH BANKING CHANNEL AGAINST BOOKING OF FLATS. LATER ON THE BOOKING WAS CANCELLED AND THE MONEY WAS REFU NDED BY THE ASSESSEE COMPANY BY CHEQUE. THE ASSESSEE HAS FURNI SHED THE LAST KNOWN ADDRESSES OF THE PARTIES AND THE PARTIES HOWE VER WERE NOT AVAILABLE ON THE SAID ADDRESS. SINCE THEN THE ASS ESSEE NOT DEALT WITH THE PERSONS AFTER RETURNING THE MONEY. AS BECA USE THE ASSESSEE DID NOT HAVE KNOWLEDGE OF THEIR WHEREABOU TS IT COULD NOT FURNISH INFORMATION AND COULD NOT PRODUCE THEM FOR EXAMINATION. FURTHER THE TRANSACTION IN THE PRESENT CASE PERTA INING TO TRANSACTION FOR FINANCIAL YEAR 1985-86 AND THE ASSE SEE WAS REQUIRED TO PRODUCE THESE PARTIES IN THE YEAR 1995 AND LATER ON IN 2004. HENCE IN THIS BACKGROUND WE HAVE TO SEE WHETHER T HE PENALTY UNDER SECTION 271(1)(C) IS ATTRACTED OR NOT. ITA NO. 4709/DEL/2009 A.Y. 1986-87 4 7.1 WE FIND SECTION 271(1)(C) OF THE ACT POSTULATES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AN D CONCEALMENT OF INCOME. 7.2 NOW IN THE PRESENT CASE WE FIND THAT PENALTY HAS BEEN LEVIED FOR NON- PRODUCTION OF THE PARTIES AND CONFIRMATION FROM THEM. HAD THE ASSESSEE BEEN ABLE TO PRODUCE THE PERSONS AND F ILE CONFIRMATION THERE WOULD HAVE BEEN NO OCCASION OF THIS ADDITION U/S 68. ASSESSEES PLEA IS THAT THE AMOUNT WAS RE CEIVED THROUGH BANKING CHANNELS THE AMOUNT WAS RETURNED ALSO. AS SESSEE HAS PROVIDED THE LAST KNOW ADDRESSEES AND AFTER SUCH A HUGE GAP OF TIME ASSESSEE WAS NOT IN A POSITION TO LOCATE THE PERSONS ONCE AGAIN. 7.3 IN THIS BACKGROUND IN OUR CONSIDERED OPINION T HE ASSESSEES CONDUCT WAS NOT CONTUMACIOUS ENOUGH TO WARRANT A LE VY OF PENALTY UNDER SECTION 271(1)(C) OF THE IT ACT. IN THIS REG ARD WE DRAW SUPPORT FROM THE APEX COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A S TATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS AND PEN ALTY WILL NOT ITA NO. 4709/DEL/2009 A.Y. 1986-87 5 ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITH ER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CO NDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF IT S OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PE RFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORI TY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVA NT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED THE AUTHOR ITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE P ROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF TH AT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE S TATUTE. 8. AS REGARDS THE DECISION OF DHARMENDRA TEXTILE PR OCESSORS (SUPRA) WE FIND THAT THE SAME IS NOT APPLICABLE. THE HONB LE APEX COURT IN 317 ITR 1 HAS ITSELF EXPLAINED THE RATIO O F THE DECISION AS UNDER:- 23. THE DECISION IN DHARMENDRA TEXTILE MUST THERE FORE BE UNDERSTOOD TO MEAN THAT THOUGH THE APPLICATION OF SECTION 11AC WOULD DEPEND UPON THE EXISTENCE OR OTHERWISE OF THE CONDITIONS EXPRESSLY STATED IN THE ITA NO. 4709/DEL/2009 A.Y. 1986-87 6 SECTION ONCE THE SECTION IS APPLICABLE IN A CASE T HE CONCERNED AUTHORITY WOULD HAVE NOT DISCRETION IN QUANTIFYING THE AMOUNT AND PENALTY MUST BE IMPOSED EQUAL TO THE DUTY DETERMINED UNDER SUB-SECTION (2) OF SECTION 11A. THAT IS WHAT DHARMENDRA TEXTILE DECID ES. 8.1 WE HAVE ALREADY OBSERVED THAT THE ASSESSEES ACTION CANNOT BE SAID TO BE COMING UNDER THE AMBIT OF PENAL PROVI SION OF SECTION 271(1)(C). 8.2 IN THE BACKGROUND OF THE AFORESAID DISCUSSIO NS AND PRECEDENT WE SET ASIDE THE ORDERS OF THE AUTHORITI ES BELOW AND DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) O F THE IT ACT. 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/02/2010 UPON CONCLUSION OF THE HEARING. SD/- SD/- [C.L. SETHI) [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 15/02/ 2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES