CIT-AMRITSAR vs. ZUBIN KHURANA

ITA/319/2009HC Punjab & HaryanaPHHC01084414200902 May 20163 pages

AI SummaryWithdrawn

What did the High Court hold?

The Revenue, through its learned counsel, submitted that in view of CBDT Circular No. 21/2015 dated 10.12.2015 read with Circular No. 279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, it did not wish to press the present appeal as the tax effect involved was less than ₹20 lacs. The Revenue prayed for liberty to file an application for revival of the appeal if something survived therein. The Court dismissed the appeal as not pressed, granting the liberty as prayed for. It was clarified that the withdrawal of the appeal by the Revenue would not be taken as an affirmation of the Tribunal's order on merits. The legal issue, as claimed by the Revenue, was left open to be adjudicated in an appropriate case. No findings were given on the substantial questions of law raised by the Revenue.

What were the facts?

The Revenue (Commissioner of Income Tax-II, Amritsar) filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 31.10.2008 passed by the Income Tax Appellate Tribunal (ITAT), Amritsar Bench. The ITAT's order pertained to assessment year 1999-2000 and had set aside a penalty order. The dispute arose from allegations of the assessee, Sh. Zubin Khurana, obtaining 'Accommodation Entries' by becoming a partner in M/s A.G. Exports as part of a 'Bogus Export Entry Scam' unearthed by the Income Tax Department. The assessee had declared concealed income in a revised return after the detection of the scam.

What were the issues?

The Tribunal was to decide the following substantial questions of law: 1. Whether the ITAT erred in setting aside the penalty order after finding that penalty proceedings were duly initiated and the assessee declared concealed income in a revised return only after the Department detected the scam? 2. Whether the ITAT committed perversity by ignoring evidence, including statements and documents, demonstrating the assessee's involvement in obtaining 'Accommodation Entries' by becoming a partner in M/s A.G. Exports? 3. Whether the ITAT's order was contrary to law, perverse, and illegal by ignoring the 'Bogus Export Entry Scam' and overwhelming evidence that the assessee was not a partner but had arranged an accommodation entry? 4. Whether the ITAT erred in setting aside the Penalty Order solely because one statement used against the assessee could not be cross-examined, ignoring other overwhelming evidence? 5. Whether the ITAT erred in setting aside the penalty order when Sh. Vivek Kapoor had admitted to providing accommodation entries and paying taxes on disclosed income in his own case before the Income Tax Settlement Commission? The Revenue contended that the ITAT had erred in setting aside the penalty order. The Assessee's arguments are not explicitly recorded in this portion of the judgment, but the Revenue's grounds of appeal imply the Assessee argued against the penalty. The Revenue relied on Circular No. 21/2015 and Circular No. 279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, citing the tax effect being less than ₹20 lacs.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 02.05.2016 Commissioner of Income Tax-II, Amritsar .......Appellant Versus Sh. Zubin Khurana ......Respondent CORAM: HON'BLE MR. JUSTICE RAJESH BINDAL HON'BLE MR. JUSTICE HARINDER SINGH SIDHU Present: Mr. Denesh Goyal, Sr. Standing counsel for the appellant. Mr. Alok Mittal, Advocate for the respondent. RAJESH BINDAL,J. This appeal has been filed under Section 260 A of the Income Tax Act, 1961 (for short 'the Act'), against the order dated 31.10.2008 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, in ITA No. 221/ASR/2008, for the assessment year 1999-2000, raising the following substantial question of law: (i) Whether the Ld. ITAT has grossly erred in law in setting aside the penalty order after giving findings that the penalty proceeding were duly initiated and the assessee declared the concealed income in revised return only after detection of the Scam by the Department/Revenue? (ii) Whether the Ld. ITAT has committed an ex-facie perversity in law by ignoring the evidence on record, which included the various statements and documents demonstrating that the assessee had indulged in obtaining 'Accommodation Entries' by opting to become a partner in M/s A.G. Exports? (iii) Whether in the facts and in the circumstances of REEMA SAINI 2016.05.03 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh -2- the case, the impugned order is contrary to law, perverse and illegal in as much as, ignoring that the 'Bogus Export Entry Scam' unearthed by the Investigation Wing of the Income Tax Department that the assessee is infact not a partner in M/s A.G. Exports and he has simply arranged an accommodation entry and the overwhelming evidence produced thereof? (iv) Whether the impugned order is wholly erroneous in setting aside the Penalty Order only for the reason that one statement used against the assessee could not be cross examined by the assessee, ignoring the other well established overwhelming evidence? (v) Whether in the facts and circumstances of the case, the Ld. ITAT has erred in setting aside the penalty order when Sh. Vivek Kapoor has already in his case before the Income Tax Settlement Commission stated that he provided accommodation entries to the parties and paid taxes on the income disclosed? Learned counsel for the appellant-revenue submitted that in view of circular No.21/2015 dated 10.12.2015 read with circular No.279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, issued by Central Board of Direct Taxes, he does not wish to press the present appeal, as the tax effect involved is less than ` 20 lacs. However, he prays that liberty be granted to the revenue to file an application for revival of the appeal in case something survives therein. Dismissed as not pressed with liberty as prayed for. It is however, clarified that withdrawal of the appeal by the revenue shall not REEMA SAINI 2016.05.03 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh -3- be taken as affirmation of order of the Tribunal on merits. The legal issue as claimed by the revenue is left open to be adjudicated in an appropriate case. (RAJESH BINDAL)

JUDGE (HARINDER SINGH SIDHU) 02.05.2016 JUDGE reema REEMA SAINI 2016.05.03 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh

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