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ACIT, Central Circle-2, New Delhi Versus Cellcap Invofin India Pvt. Ltd.,

2015 (9) TMI 130 - ITAT DELHI

Penalty u/s 158BFA(2) - CIT(A) deleted penalty levy - Held that:- CIT(A) mainly granted relief to the assessee by noticing that the SLPs are pending before Hon’ble Supreme Court and issue is debatable but in the light of subsequent order of Hon’ble Apex Court dismissing the SLPs of the Revenue we can safely hold that the issue has attained finality. We also note that the CIT(A) has also not considered the second proviso to Section 158 BFA(2) which is relevant to decide the issue at levy of penal .....

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For The Respondent : Shri Rohit Jain, Adv., Ms Deepashree Rao, CA ORDER PER CHANDRAMOHAN GARG, J.M. These appeals by the revenue have been directed against the order of CIT(A)-III, New Delhi dated 29.01.2013 passed in Appeal No. 22 and 25/11- 12/CIT(A)-III for the block period from 1.4.89 to 31.1.10. The revenue has raised following ground in this appeals:- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in cancelling the penalty of ₹ 10,15,733/- imposed by the .....

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tted that in view of the facts of the case and decision of Hon ble High Court wherein the addition pertaining to said undisclosed income of the assessee has been sustained, the provisions of section 158BFA(2) of the Act are squarely applicable and therefore, the AO was quite justified in imposing penalty of ₹ 10,15,733 i.e. @100% of tax on undisclosed income of the assessee company. Ld. DR has placed reliance on the judgment of Hon ble High Court of Rajasthan dated 12.2.2014 in the case of .....

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eading the relevant paras of these judgements and orders. 3. Replying to the above, ld. Counsel of the assessee, at the very outset, placed his reliance on recent order of ITAT E Bench New Delhi dated 20.4.2015 in the case of DCIT vs M/s Mehrotra Invofin India Pvt. Ltd. in IT(SS)A No. 11/Del/2013 and submitted that where there is a difference of opinion either between different benches of Tribunal or the High Court which is finally settled by the pending judgement of the Supreme Court and all ne .....

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of the decision of Hon ble Jurisdictional High Court of Delhi in the case of CIT vs H.V. Leasing & Finance Co. Ltd. reported as 334 ITR 367 (Del) that the issue can be said to be debatable when such substantial question of law has been admitted and when quantum proceedings are debatable, then penalty cannot be imposed. Supporting the impugned order of the CIT(A), ld. Counsel also pointed out that the legislature did not intend imposition of penalty u/s 158BFA(2) by itself to be mandatory ra .....

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be treated as undisclosed income of the assessee, then where there is a difference of opinion either between different benches of the Tribunal or High Court which is finally settled by the pending judgment of Hon ble Supreme Court and specially when all necessary facts have been disclosed by the assessee in its return, the penalty is not warranted. However, before parting with the argument, ld. Counsel of the assessee fairly submitted that the SLP (Civil) Nos. 9018-9022/2011 including SLPs of t .....

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elied by the ld. Counsel of the assessee (supra) pertain to a situation when the penalty was deleted on the ground that the issue has not attained finality as the SLP is pending before Hon ble Apex Court in the present case, the issue has attained finality, therefore, the penalty cannot be deleted merely on the basis that the issue has not attained finality due to pending SLP before the Hon ble Supreme Court. 6. On careful consideration of above submissions and vigilant perusal and consideration .....

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after the due date i.e. 31.3.1999, the case of the assessee fell within the ambit of provisions of section 158BB(i)(c) of the Act and accordingly, the AO assessed the impugned said income as undisclosed income of the assessee . 7. Aggrieved by the above assessment order, the assessee preferred first appeal before the CIT(A) by pleading following submissions:- 2.2 Aggrieved by the above action of the AD, in the first appeal the appellant pleaded before the CIT (A): (a) as the documents relating t .....

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s in the year in which they were purchased and the return of income for those years were filed in time and (c) also given the fact that the sale proceeds gain are duly been deposited in the declared bank account for the year under consideration. Therefore there was no intention to hide said income and it was only a technical fault that the return of income was filed under section 139(4). In support of this the appellant also relied on ITAT s Pune Bench decision in the case of Vidya Madan Lal Mal .....

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Delhi High Court held that since the return of income was not filed by the due date which falls before the date of search, therefore, provisions of section 158BB(1)(c) of the Act were rightly applied by the AO and therefore, impugned long term capital gain has to be treated as undisclosed income of the assessee and the action of the AO was confirmed by the Hon ble High Court. Subsequently, the AO levied penalty u/s 158BFA(2) and the aggrieved assessee filed an appeal before the first appellate a .....

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on account of SLP filed by it, hence, penalty needs to be kept in abeyance. 9. On careful and vigilant reading of the findings of the CIT(A), from para 4 to 4.9 of the impugned orders, we note that in the beginning of the order, the CIT(A) noted that the assessment proceedings and penalty proceedings are two different proceedings and the issue may call for an addition in the assessment proceedings but the addition in itself cannot be the sole criteria or ground for imposition or levy of penalty .....

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ed income within the meaning of section 155BB(1)(c) of the Act. The CIT(A) in last operative para 4.8 noted that as per spirit of decision of Hon ble Delhi High Court in the case of CIT vs Sarla Fabrics P. Ltd. dated 20.7.2012 in ITA 788/2011 it was held that where there is a difference of opinion either between different Benches of Tribunal or the High Courts, which is finally settled by the pending judgment of the Supreme Court and all necessary facts have been disclosed by the assesses in its .....

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eedings are two all together different proceedings. An issue may call or an additions in the assessment proceedings, but that addition in itself cannot be the sole ground for imposition or levy of penalty. For the purpose of imposing penalty, the AO has to walk a little extra mile to prove that the appellant has concealed or likely to conceal the income or furnished the inaccurate particular of its income. 4.2 Further before discussing the facts of the present case and to see whether the penalty .....

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tely" and the word wilfully are no longer part of the statue. (ii) Mere omission or negligence would not constitute a deliberate act of suppressiio veri or suggestio falsi. (iii) Primary burden of proof is on the revenue. The statute requires satisfaction on the part of the Assessing Officer. He is required to arrive at a satisfaction so as to show that there is primary evidence to establish that the assessee had concealed the amount or furnished inaccurate particulars and this onus is to b .....

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e it is observed that: (i) the investment in shares (which were sold during the year and on which long term has been earned) were duly been reflected in the financial account of the year in which they were purchased. (ii) the sale consideration/gain which has been received during the year under consideration has duly been deposited in the declared bank account of the appellant. {iii} the unaudited profit and loss account and balance sheet which were found during the search, duly contains the rec .....

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hat time the return of income for Assessment Year 1999-2000 was not filed before the due date i.e. 31.12.1999, therefore the amount of long term capital was rightly been assessed as "undisclosed income" with the meaning of section 158BB(1)(c). But the fact that such shares were duly been recorded in unaudited balance sheet, profit and loss account and sale proceeds have been deposited in the declared bank account and also the investment in shares (which were said in the year under cons .....

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ikely to conceal. The levy of penalty under section 158BFA(2) is not an automatic action, the wards "may direct" mentioned in section 158BFA(2) has to be given its normal meaning. The ward "may" cannot be read as "shall". 4.5 Looking into the facts of the appellant's case, it is quite likely that the appellant might be waiting for the requisite details of shares sold and this may be the genuine reason for not been able to file the return of income by due date i. .....

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se of K. Ramakrishnan (HUF) vs. DCIT (IT(55) No. 7 of 2011), where on the similar facts the ITAT has held penalty under section 158BFA (2) is not leviable if the return of income is not filed by the due date, but the income be assessed as undisclosed income within the meaning of section 158BB(1)(c). FACTS A search and seizure action under section 132 was carried out in the case of the assessee. The seized materials made out a case of undisclosed income. The Assessing Officer thus initiated proce .....

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ary return offering the capital gains for taxation. The assessee computed the tax liability at 20 per cent, applicable to long term capital gains. The return filed by the assessee was anyhow belated. The Assessing Officer did not take into cognizance the, belated return and completed the assessment accordingly. On appeal, the Commissioner {Appeals} confirmed the block assessment order as well as penalty order passed under section 1588FA(2). HELD It was a unique case. Technically speaking, the re .....

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ccepted. All these factors were very relevant for completing the quantum assessment and demanding the tax at 60 per cent from the assessee. But the above factors were not sufficient to impose penalty under section 158BFA. The reason that the assessee had not furnished any undisclosed income in the block return filed by it in pursuance of notice under section 158BO was not a grievous mistake when the earlier belated return filed by the assessee and available in the files of the assessing authorit .....

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n its hands. If that amount of capital gains was impregnated in the block return filed by the assessee, the equation would become completed. The only correction was calculating tax at 60 per cent instead of 20 per cent. If the assessee had not furnished its belated related immediately after the search, the assessee would have definitely offered the capital gains for taxation in its block return. If that amount was offered through the block return there would be no cause of action to impose penal .....

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ram Das Ved Pal (117 Taxman 398) Delhi where Hon'ble Court has held that the penalty imposable under section 158BFA(2) is not mandatory, and AO must use his judicial consideration before imposing the penalty. The foot notes of the said decision read as under: "Section 1588FA of the Income-tax Act, 1961 - Block assessment in search cases - Levy of interest and penalty in certain cases - Block period 1-4-1999 to 6-7-2000- Whether Legislature did not intend imposition of penalty under sect .....

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of block assessment proceedings and de hors surrender, there was no evidence which could have been said to have been found as a result of search, 'computation' of undisclosed income by Assessing Officer in block assessment proceedings could not be construed as a 'determination' of undisclosed income contemplated under section 158BC(c) or section 15888 and no penalty would be imposable under section 158BFA(2) in such case - Held, yes 4.8 Also it is a trite law that where two view .....

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s to be treated as "undisclosed income", further even against the said order of High Court the appellant has filed an SLP before the Apex Court on 01.03.2011. Therefore in such an event as per the spirit of decision of Delhi High Court in the recent case of CIT vs. Sarla Fabrics P. Ltd . (ITA 788/2011) dated 20.07.2012) the Hon'ble court by relying on their own decision in the case of CIT-IV Delhi vs. IP India P. Ltd. (204 Taxman 368) (2012) have held that: "where there is a d .....

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ied by the AO, is deleted. 11. In view of above, it is vivid that the CIT(A) granted relief for the assessee deleting the impugned penalty by observing that the special leave petition was pending before the Hon ble Supreme Court against the quantum order of the Hon ble High Court dated 29.11.2010, where penalty u/s 158BFA is not an automatic fall out or mandatory specially when the old necessary facts have been disclosed by the assessee in its return. 12. Now, we proceed to consider the ratio of .....

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