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Income Tax Appellate Tribunal, DELHI BENCH “F” DELHI
Before: SHRI PRADIP KUMAR KEDIA & SHRI NARENDER KUMAR CHOUDHRY
PER PRADIP KUMAR KEDIA, A.M.: The captioned appeals have been filed at the instance of the assessee against the revisional orders of the Principal Commissioner of Income Tax-XII, Delhi (‘Pr.CIT’ in short) dated 10.06.2020 passed under Section 263 of the Income Tax Act, 1961 (the Act) whereby the assessment orders passed by the Assessing Officer under Section 143(3) r.w. Section 153A of the Act were sought to be set aside for reframing the assessment in terms of supervisory jurisdiction.
ITA No.1356/Del/2020 (A.Y. 2013-14)
When the matter was called for hearing, ld. counsel for the assessee pointed out that a revised concise ground of appeal has I.T.A. No.1356 & 1358/Del/2020 2 been placed at page no.21 and 22 of paper book. He however in the same vein submitted that he does not seek to press various grievances raised in the revised concise ground except Ground no.5(ii) and Ground no.6 thereof which is reproduced herein.
“5(ii). in directing the AO to make verification of claim of tax deducted at source by HHEC Ltd a Government of India Undertaking for alleged claim of excess TDS proportionate to interest of Rs. 13,91302/- not pertaining to the assessee by directing him to verify the same ignoring the fact that HHEC Ltd had deducted excess TDS without any accrual of corresponding additional interest income.
6. That the Learned Principal Commissioner of income Tax has grossly erred in directing the AO to initiate penalty proceedings under section 271AAB(1)(c) instead of u/s 271(1)(c) of the Act ignoring the fact that in proceedings u/s. 263, the PC1T is not empowered to give directions on the issue of penalty which direction is bad in law and facts of the case.”
Adverting to Ground No.5(ii) supra, the ld. counsel for the assessee submitted that the Pr.CIT in the revisional order has alleged non disclosure / understatement of interest income to the tune of Rs.14,12,952/- on the basis of difference between the income returned by the assessee qua annual information statement, i.e., AIR information in the possession of the Department.
3.1 In the matter, the ld. counsel submitted that the assessee is a proprietor of M/s. Supreme Gold which is engaged in the business of bullion. The assessee inter alia was in receipt of interest from HHEC India Ltd., a Government of India undertaking. The assessee has earned interest income of Rs.36,30,57,245.49 from HHEC India Ltd. and disclosed the same in its P&L account. A copy of relevant
I.T.A. No.1356 & 1358/Del/2020 3 extract ledger account of the assessee in the books of M/s. HHEC India Ltd. placed in the paper book and also placed before PCIT in the revisional proceedings was referred and it was submitted that the identical amount was also shown to have been credited in the name of the assessee by M/s. HHEC India Ltd. It was thus contended that the interest income of Rs.13,91,302/- does not belong to the assessee and thus did not accrue to the assessee despite its reference in the AIR information. It was contended that the stance of the assessee is vouched by the ledger account of the assessee in the books of HHEC India Ltd. which is a Government of India undertaking. It was further submitted that balance amount of Rs.21,650/- has been disclosed as income from other sources. It was submitted that TDS was claimed as per the credits available in the AIR information but excess credit granted in respect of alleged transactions of Rs.14,12,952/- could not give rise to inference of any undisclosed income in existence which is a drastic allegation without any corresponding confirmation from the party that too, a Govt. undertaking. The Ld. Counsel thus submitted that no error should be perceived in the assessment order merely on account of difference in figure between the AIR information and the return of income in the absence any accrual of income per se.
As regards other issue as per Ground No.6, ld. counsel for the assessee submitted that the direction given by the revisional Commissioner to the Assessing Officer to initiate the penalty proceedings under Section 271(1)(c) of the Act instead of 271AAB(1)(c) of the Act in the assessment order is bad in law and charge for penalty cannot be modified under the revisional powers of Section 263 of the Act. For this proposition, the ld. counsel relied upon several judgments, namely, Addl. CIT vs. JK D’Costa, (1982) 133 ITR 7 (Del) and decision of the Co-ordinate Bench of Tribunal
I.T.A. No.1356 & 1358/Del/2020 4 in Sunila Asasthi vs. Pr.CIT in order dated 7th July, 2021 and Amarjeet Dhall vs. CIT in ITA No.357/Chd/2013 order dated April 21, 2014. The Ld. counsel thus submitted that any modification in the satisfaction drawn by the Assessing Officer with reference to nature of default for the purposes of initiation of penalty proceedings is not permissible within the scope of jurisdiction exercisable under Section 263 of the Act.
The Ld. CIT-DR for the Revenue on the other hand relied upon the revisional order of the Pr.CIT. The Ld. CIT-DR further referred to the judgment rendered by the Hon’ble Allahabad High Court in the case of CIT vs. Surendra Prasad Agrawal (2005) 142 Taxman 653 (Alld) for the proposition that omission of the Assessing Officer to initiate penalty proceedings in the course of the assessment renders assessment order erroneous and prejudicial to the interest of Revenue and thus susceptible to proceedings under Section 263 of the Act. The Ld. CIT-DR thus submitted that the ld. Pr.CIT is capable of modification in the charge for imposition of penalty under Section 263 of the Act where the Assessing Officer has committed glaring error resulting in loss of Revenue.
We have carefully considered the rival submissions. First issue relates to understatement of interest income to the extent of Rs.14,12,952/-. The Pr.CIT on perusal of records found that the interest income is under-reported by the assessee to the above extent as detected from the corresponding AIR information available to the Department. Whereas the TDS amount was deducted on the higher figure and also claimed by the assessee in the return of income the assessee has reported interest income lower to above extent. In these facts, the Pr.CIT has invoked the jurisdiction under Section 263 of the Act and has set aside the matter to the file of the Assessing
I.T.A. No.1356 & 1358/Del/2020 5 Officer. In our view, the action of the Pr.CIT cannot be condemned as without jurisdiction. The Pr.CIT has sufficient basis to presume error in the assessment order in the absence of any inquiry in this regard by the Assessing Officer. While the assessee has attempted to justify its case that the impugned interest income has not accrued to it at all and is not in existence, this aspect requires objective verification which was not done by the Assessing Officer. While the assessee may possibly explain its stance with factual corroboration in the proceedings before the Assessing Officer arising from revisional proceedings, the action of the Pr. CIT cannot be faulted per se. We thus are not inclined to interfere with the order of the Pr.CIT. Hence, this ground in the assessee’s appeal is dismissed.
Adverting to other issue concerning modification in the charge of initiation of penalty proceedings from Section 271AAB to Section 271(1)(c) in the revisional order, we find that the issue is squarely covered in favour of the assessee by several decisions as referred to on behalf of the assessee. The Hon’ble Delhi High Court in case of Addl. CIT vs. JK D’Costa (supra) has observed that failure of the Assessing Officer in recording satisfaction for initiation of penalty proceedings cannot be said to be a factor for vitiating the assessment order or making it erroneous or prejudicial to the interest of the Revenue. The revisional Commissioner is thus not vested with power to rectify/modify such alleged errors in the revisional jurisdiction. Similar view has been expressed by the Co-ordinate Benches in Sunila Asasthi vs. Pr.CIT (supra) and Amarjeet Dhall vs. CIT (supra) by placing reliance on series of decisions rendered in this regard. The plea of the assessee is thus found to be consistent with binding judicial precedents. In view of the Jurisdictional High Court expressing its view in favour of the assessee, we do not deem it necessary to refer to the judgment delivered by Hon’ble Allahabad
I.T.A. No.1356 & 1358/Del/2020 6 High Court in the case of Surendra Prasad Agrawal (supra) relied upon by Revenue.
In the result, the action of the Pr. CIT directing the Assessing Officer to modify the initiation of penalty proceedings under Section 271(1)(c) instead of 271AAB(1)(c) of the Act is set aside. The ground pertaining to the aforesaid issue is thus allowed.
In the result, the appeal of the assessee is partly allowed.
In the revised concise grounds of appeal, the assessee has raised the following grounds of appeal.
“(1) That the order passed by the Learned Principal Commissioner of Income Tax-12, Delhi under section 263 of the Act, is arbitrary, biased and bad in law and in facts of the case.
(2) That the assumption of jurisdiction by the Learned Principal Commissioner of Income Tax under section 263 is bad in law as the order passed by the Assessing Officer was neither erroneous nor pre-judicial to the interest of the revenue.
(3) That the Learned Principal Commissioner of Income Tax has grossly erred in passing an order under section 263 and in summarily dismissing the submission of the appellant.
(4) That the Learned Principal Commissioner of Income Tax has grossly erred in passing order u/s 263 without making any independent enquiry herself rendering the assumption of jurisdiction u/s 263 unsustainable in law and facts of the case.
(5) Without prejudice to the above grounds that the assumption of jurisdiction u/s 263 by the Pr. C1T is bad in law. as the order passed by the Assessing Officer was neither erroneous nor pre-
I.T.A. No.1356 & 1358/Del/2020 7 judicial to the interest of the revenue, the Learned Principal Commissioner of Income Tax has grossly erred in directing the AO to make further detailed enquiry and verification on the following issues:
(i) to make enquiry and verification of source of payment made to M/s Bonanza Portfolio Ltd. for conducting derivatives transactions ignoring the fact that the amounts paid to M/s Bonanza Portfolio Ltd. had been made through proper banking channel and sourced from tax reflected sources of the assessee. Further, the Principal Commissioner of Income Tax has grossly erred in ignoring the fact that M/s. Bonanza Portfolio Ltd. has been made payment through personal bank account of the assessee in which the amount had been transferred from the proprietorship concern of the assessee M/s. Supreme Gold whose books of account, bank statement and other record was verified by the jurisdictional Assessing Officer during the remand proceedings on examination of which no adverse inference was drawn by him in his remand report and the Pr.CIT failed to make any enquiry from the record available with the department rendering the direction on the issue unsustainable in facts and law of the case.
6. That the Learned Principal Commissioner of income Tax has grossly erred in directing the AO to initiate penalty proceedings under section 271AAB(1)(c) instead of u/s 271(1)(c) of the Act ignoring the fact that in proceedings u/s. 263, the PC1T is not empowered to give directions on the issue of penalty which direction is bad in law and facts of the case.”
The assessee has taken several grounds but however fairly submitted that all other grounds are not pressed except Ground no.6 concerning the direction of the Pr.CIT to the Assessing Officer to initiate penalty proceedings under Section 271AAB(1)(c) instead of 271(1)(c) of the Act. Identical issue has been adjudicated in favour
I.T.A. No.1356 & 1358/Del/2020 8 of the assessee in concerning Assessment Year 2013-14. The observations made in Assessment Year 2013-14 thus shall apply mutatis mutandis to Assessment Year 2014-15 in question as well. Consequently, the action of the Pr. CIT directing the Assessing Officer to modify the initiation of penalty proceedings under Section 271(1)(c) instead of 271AAB(1)(c) of the Act is set aside. In the result, this ground of appeal is allowed. In the wake of other grounds not being pressed, the appeal is partly allowed.
In the combined result, both the appeals of the assessee are partly allowed. Order pronounced in the open Court on 04/05/2022.