M/s Virender Kumar Chanana, New Delhi v. ACIT, New Delhi

ITA 690/DEL/2010 | 2006-2007
Pronouncement Date: 30-04-2010 | Result: Allowed

Appeal Details

RSA Number 69020114 RSA 2010
Assessee PAN AFKPC9145B
Bench Delhi
Appeal Number ITA 690/DEL/2010
Duration Of Justice 2 month(s) 13 day(s)
Appellant M/s Virender Kumar Chanana, New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 30-04-2010
Date Of Final Hearing 15-06-2010
Next Hearing Date 15-06-2010
Assessment Year 2006-2007
Appeal Filed On 15-02-2010
Judgment Text
ITA NO. 690/DEL/2010 A.Y. 2006-07 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH H: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 690/DEL/2010 A.Y. : 2006-07 M/S. VIRENDER KUMAR CHANANA VS. ASSISTANT COMM ISSIONER OF D-79 GULMOHAR PARK NEW DELHI INCOME TAX CIRCLE 9(1) (PAN: AFKPC9145B) NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VK DHINGRA CA DEPARTMENT BY : SHRI N.K. CHAND DR O R D E R PER SHAMIM YAHYA AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 17.9.200 9 AND PERTAINS TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE PENALTY IMPOSED BY THE ASSESS ING OFFICER U/S 271(1)(C) OF THE IT ACT. 3. IN THIS CASE THE RETURN DECLARING AN INCOME OF R S. 16 73 330/- WAS FILED ON 31.7.2006 AND THE SAME WAS PROCESSED U/S 143(1) ON 28.2.2007. THE CASE WAS SELECTED FOR SCRUTINY. ASSESSING OFFICER OBSERVED THAT DURING THE COURSE OF ASSESSMENT IT WAS NOTICED THAT ASSESSEE HAS NOT INC LUDED THE SHORT-TERM CAPITAL ITA NO. 690/DEL/2010 A.Y. 2006-07 2 GAIN ON SALE OF IDFC CLASSIC EQUITY FUND AMOUNTING TO RS. 2 24 250/- AND THE SAME WAS POINTED OUT TO THE ASSESSEE THE ASSESSEE FIL ED A REVISED STATEMENT OF INCOME WHEREIN THE ABOVE AMOUNT WAS DISCLOSED. TH E ASSESSEE FURTHER DISCLOSED OTHER INTEREST AND THE TOTAL REVISED INCO ME WAS SHOWN AT RS. 18 97 580/- AND THEREBY ENHANCING THE INCOME BY RS. 2 24 250/-. ASSESSEES EXPLANATION WAS THAT IT HAS VOLUNTARILY FILED A RE VISED RETURN WHICH WAS REJECTED BY THE ASSESSING OFFICER AND PENALTY OF RS. 75 483 /- WAS LEVIED. 4. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) ASSESSEE SUBMITTED THAT ASSESSMENT ORDER WAS PASSED U/S 143(3) ON 31.1 0.2008. ASSESSEE FILED A REVISED COMPUTATION OF INCOME ON 29.10.2008. IT WAS CLAIMED THAT THE RECTIFICATION PERTAINING TO INVESTMENT OF RS. 1.7 C RORE IN IDFC PUBLIC ISSUE WAS MADE SUO-MOTO HENCE PENALTY COULD NOT BE LEVIED. IT WAS FURTHER CLAIMED THAT ASSESSEE HAD INADVERTENTLY OMITTED TO FILE AND IN CORPORATE SHORT TERM CAPITAL GAIN AND INTEREST ON FOREIGN DEPOSITS. 4.1 HOWEVER LD. COMMISSIONER OF INCOME TAX (APPEAL S) DID NOT ACCEPT THIS CONTENTION THAT THERE WAS INADVERTENTLY OMISSION WH ICH WAS RECTIFIED SUO-MOTO. HE OBSERVED THAT ACCORDING TO THE ORDER SHEET ENTRI ES THE ISSUE OF INVESTMENT OF RS. 1.7 CRORES WAS CLEARLY BROUGHT ON RECORD AND SP ECIFICALLY DISCUSSED AND ITA NO. 690/DEL/2010 A.Y. 2006-07 3 EXPLANATION REGARDING THE SAME WAS SOUGHT BY THE AS SESSING OFFICER VIDE ORDER SHEET ENTRY. 4.2 LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD T HAT ASSESSEE FILED A REVISED RETURN ONLY 2 YEARS AND 3 MONTHS AFTER FILING THE A PPEAL RETURN WHEN CONFRONTED AND CORNERED JUST TWO DAYS BEFORE THE FINAL ORDER W AS PASSED AND 22 DAYS AFTER BEING CONFRONTED AND ASKED TO EXPLAIN. LD. COMMISS IONER OF INCOME TAX (APPEALS) CONFIRMED THE ASSESSING OFFICER S ACTION IN THIS REGARD. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT ORIGINAL RETURN IN THIS CASE WAS FILED ON 31.7.2006 DECLARING AN INCOME OF RS. 16 73 330/- THE SAME WAS PROCESSED U/S 143(1) ON 28.2.2007. NOTICE U/S 143(2) WAS ISSUED IN THIS CASE ON 21.7.2007. AFTER SEVERAL HEARINGS VIDE ORDER SHEET ENTRY DATED 6.10.2008 THE ASSESSING OFFICER WROTE ON THE ORDER SHEET AS UNDER:- SHRI R.L. GARG ATTENDS. FILES DETAILS REGARDING I NVESTMENT IN MUTUAL FUNDS AND THE SAME HAS BEEN VERIFIED W.R. TO BANK S TATEMENT. PL. EXPLAIN WHY RS. 1 70 00 000/- INVESTED ON 24.7.05 A S PER BANK STATEMENT IS SHOWN ON 08.05.05 IN THE AIR INFORMATI ON. CASE ADJOURNED TO 5.10.08. 6.1 IN RESPONSE THERETO THE ASSESSEE HAS SUBMITTED THE FOLLOWING LETTERS. ITA NO. 690/DEL/2010 A.Y. 2006-07 4 A)THE ASSISTANT COMMISSIONER OF INCOME TAX OCT 29 2008 CIRCLE 9(1) NEW DELHI SUB:- INCOME TAX ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2006-07 DEAR SIR IN CONNECTION WITH THE ABOVE PROCEEDINGS I AM ENCL OSING HEREWITH MY REVISED COMPUTATION OF INCOME ALONGWITH PHOTOCOPY OF CHALLAN AMOUNTING TO RS. 31 825/- FOR THE AFORESAID ASSESSMENT YEAR. RETURN OF INCOME IS BEING REVISED BECAUSE SHORT TER M CAPITAL GAIN ON IDFC CLASSIC EQUITY FUND (RS. 2 07 725/- AND INTER EST ON FOREIGN DEPOSIT WERE INADVERTENTLY NOT CONSIDERED WHILE FIL ING THE ORIGINAL RETURN AND HAVE NOW BEEN DISCLOSED SUOMOTO WITH THE UNDERSTANDING THAT NO PENAL ACTION SHALL BE INITIATED. B) THE ASSISTANT COMMISSIONER OF INCOME TAX OCT 31 2008 CIRCLE 9(1) NEW DELHI REG. : SH. V.K. CHANANA SUB:- INCOME TAX ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2006-07 DEAR SIR WITH REFERENCE TO THE ABOVE MENTIONED ASSESSEE ENC LOSED PLEASE FIND HEREWITH THE FOLLOWING DETAILS/ DOCUMEN TS:- 1. STATEMENT IF /AFFAIRS AS ON 31.03.2006 IS ENCLOSED . ITA NO. 690/DEL/2010 A.Y. 2006-07 5 2. REVISED COMPUTATION OF INCOME ALONGWITH NECESSARY DOCUMENTS AND LETTER DATED 29.10.2008. 3. NOTE ON SHARE APPLICATION MONEY OF RS. 1.70 CRORES TOWARDS SHARE APPLICATION MONEY IN IPO OF IDFC LTD. VIDE CHEQUE N O. 0171856 DRAWN ON CORPORATION BANK KAUSHLIYA PARK NEW DELH I WHICH WAS CLEARED FROM THE BANK OF THE ASSESSEE ON 24.07.2005 . HOWEVER IN ITS DETAILS PROVIDED BY YOU THE DATE OF INVESTMENT IS MENTIONED 08.05.2005. THIS FACT CAN BE VERIFIED FROM THE BAN K AS WELL AS FROM IDFC LTD. WHO HAVE PROVIDED THE NECESSARY DETA ILS. TRUST YOU WILL FIND THE ABOVE IN ORDER. 6.2 FROM THE ABOVE WE FIND THAT IT IS AMPLY CLEAR T HAT ASSESSING OFFICER HAD NOT DISCOVERED ANY NON-DISCLOSURE OR CONCEALMENT OF I NCOME. IN THE ORDER SHEET DATED 6.10.2008 HE HAS STATED THAT ASSESSEES COUNS EL HAS ATTENDED AND FILED DETAILS REGARDING INVESTMENTS IN MUTUAL FUNDS AND T HE SAME HAVE BEEN VERIFIED WITH RESPECT TO THE BANK STATEMENT. THE ASSESSI NG OFFICER HAS ONLY ASKED THE ASSESSEE TO EXPLAIN WHY RS. 1 70 00 000/- INVESTED ON 24.7.2005 AS PER THE BANK STATEMENT AS SHOWN ON 8.5.2005 IN THE AIR INFORMATI ON. ASSESSEES EXPLANATION IN THIS REGARD AS EVIDENT FROM THE LETTER DATED 31. 10.2008 IS THAT ASSESEE HAS APPLIED IN THE IPO OF IDFC LTD. VIDE CHEQUE NO. 017 1856 DRAWN ON CORPORATION BANK KAUSHLIYA PARK NEW DELHI WHICH WAS CLEARED F ROM THE BANK OF THE ASSESSEE ITA NO. 690/DEL/2010 A.Y. 2006-07 6 ON 24.7.2005. HOWEVER IN THE DETAIL RECEIVED BY TH E ASSESSING OFFICER THE DATE OF INVESTMENT WAS MENTIONED AS 08.05.2005. 6.3 NOW FROM THE ABOVE SEQUENCE OF EVENTS WE DO N OT FIND THAT THERE WAS ANY SCOPE FOR THE ASSESSING OFFICER TO DISCOVER AN Y CONCEALMENT OF INCOME ON NON-DISCLOSURE OF INCOME BY THE ASSESSEE. ASSESS ING OFFICER HAS MENTIONED IN THE ORDER SHEET ENTRY THAT HE HAS CHECKED THE DETAI LS OF INVESTMENT WITH BANK STATEMENT. HE HAD ONLY NOTICED THE DIFFERENCE BETWE EN THE DATE OF INVESTMENT MENTIONED IN BANK STATEMENT AND AIR INFORMATION. AS SESSEE HAS SUO-MOTO FOUND THAT SHORT-TERM CAPITAL GAIN ON IDFC CLASSIC EQUIT Y FUNDS OF RS. 2 07 725/- AND INTEREST ON FOREIGN DEPOSITS WERE INADVERTENTLY NO T CONSIDERED IN FILING THE ORIGINAL RETURN. HENCE THE ASSESSEE HAS DULY FILED THE REVISED RETURN ON 29.10.2008. IT IS ALSO NOT THE CASE THAT THE REVIS ED RETURN WAS NOT VALID. UNDER THESE CIRCUMSTANCES WE FIND CONSIDERABLE COGENCY I N THE ASSESSEES SUBMISSION THAT ASSESSEE HAS VOLUNTARILY DISCLOSED THE INCOME. IN SUCH CIRCUMSTANCES ASSESSEE CANNOT BE SAID TO BE A GUILTY OF CONCEALME NT OR FURNISHING OF INACCURATE PARTICULARS AND THUS INVITING THE RIGORS PENALTY PR OVISION U/S 271(1)(C). 6.4 IN THIS REGARD WE REFER THE DECISION OF THE HON BLE APEX COURT RENDERED IN THE CASE OF C.I.T. VS. SURESH CHANDRA MITTAL 251 IT R 9 WHEREIN THE HEAD NOTES ARE AS UNDER:- ITA NO. 690/DEL/2010 A.Y. 2006-07 7 THE ASSESSEE HAD ORIGINALLY FILED RETURNS SHOWING M EAGER INCOME. WHEN AFTER ACTION UNDER SECTION 132 OF THE INCOME TAX ACT 1961 A NOTICE UNDER SECTION 148 SERVED ON HIM HE FILED R EVISED RETURNS SHOWING HIGHER INCOME. EVENTUALLY ASSESSMENT ORD ERS WERE PASSED AND THE RETURNS SUBMITTED REGULARIZED UNDER SECTION 148. IN PENALTY PROCEEDINGS UNDER SECTION 271 THE ASSESSEE CLAIMED THAT HE HAD OFFERED ADDITIONAL INCOME TO BUY PEACE OF MIND AND AVOID LITIGATION. PENALTY ORDERS WERE PASSED AND THE COMMISSIONER (AP PEALS) CONFIRMED THE ORDERS. BUT THE APPELLATE TRIBUNAL H ELD THAT THE DEPARTMENT HAD NOT DISCHARGED ITS BURDEN OF PROVING CONCEALMENT AND HAD SIMPLY RESTED ITS CONCLUSION ON THE ACT OF VOLUNTARY SURRENDER DONE BY THE ASSESSEE IN GOOD FAITH AND THAT PENALT Y COULD NOT BE LEVIED. ON A REFERENCE THE HIGH COURT HELD THAT NO PENALTY COULD BE LEVIED FOR CONCEALMENT (SEE [2000] 241 ITR 124). TH E DEPARTMENT PREFERRED APPEALS TO THE SUPREME COURT. THE SUPRE ME COURT DISMISSED THE APPEALS HOLDING THAT NO INTERFERENCE WITH THE ORDER OF THE HIGH COURT WAS CALLED FOR. 7. IN THE BACKGROUND OF THE AFORESAID DISCUSSION A ND PRECEDENT WE HOLD THAT THE ASSESSEE CANNOT BE SAID TO BE A GUILTY LIABLE F OR PENALTY U/S 271(1)(C) OF THE IT ITA NO. 690/DEL/2010 A.Y. 2006-07 8 ACT. HENCE WE SET ASIDE THE ORDERS OF THE AUTHORIT IES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 8. IN THE RESULT THE ASSESSEES APPEAL IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/04/2010 . SD/- SD/- [C.L. SETHI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30/04/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A)5. DR ITAT TRUE COPY DEPUTY REGISTRAR ITAT DELHI BENCHES