CIT vs. INTEGRATED TECHNOLOGIES LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . . . ITA 522/2012 . . . CIT ..... Appellant . Through: Mr. Sanjeev Sabharwal, Sr. Standing Counsel. . versus . . . INTEGRATED TECHNOLOGIES LTD ..... Respondent . Through: None. . . . CORAM: . HON'BLE MR. JUSTICE S. RAVINDRA BHAT . HON'BLE MR. JUSTICE R.V.EASWAR . . . O R D E R . 25.09.2012 . . . The Revenue claims to be aggrieved by the order of the Income Tax Appellate Tribunal (?Tribunal?, for short) dated 09.02.2012 in ITA No.5552/Del/2011 the question of law sought to be urged is that whether the Tribunal fell into an error in holding that the assessee had not violated Section 269SS of the Income Tax Act, 1961 (?Act?, for short). . The assessment, completed under Section 143(3) of the Act by order dated 14.03.2001, sought to add under Section 68 of the Act, certain amounts on account of unexplained and unsecured credits. The matter was remanded and in further proceedings `18,39,800/- was again added under Section 68 of the Act. The Assessing Officer while completing the assessment noted that the substantial amount was on account of amounts credited through journal entry and added them under Section 68 of the Act and referred the matter to the Addl. CIT to initiate penalty proceedings u/s 271D which were taken on 12.10.2011. The assessee in response denied the liability but its explanation was rejected. The CIT (Appeals) cancelled the penalty holding that the assessee had not in fact received the amount in cash, but was only a beneficiary since the amount in question was paid otherwise than by the cheque on its behalf by its Director to the creditor. The Revenue?s appeal was dismissed by the Tribunal. Learned counsel for the Revenue contended that the Tribunal?s order defeats the very purpose for which the provision i.e. Section 269SS was introduced. If the impugned order is to be upheld, the devices and mechanism to circumvent the mandatory provision of Section 269SS, infraction of which attracts penal action under Section 271D of the Act, can conveniently be used to get around the provision. . This Court is of the opinion that the language and terminology of Section 269SS clarifies that the amount should be received by the concerned individual which is sought to be visited with the penalty under Section 271D. The Tribunal discussed this aspect elaborately in para 5.6 and concluded as below: - . ?5.6 It is well established by the decision of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa, (1972) 83 ITR 26 that the liability to pay penalty does not arise merely upon proof of default in complying with the statutory requirements and an order imposing penalty for failure to carry out a statutory obligation being the result of a quasi-criminal proceeding, will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest or acted in conscious disregard of its obligation, and penalty will also not be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform the statutory obligation, it is stated, is a matter of discretion of the authority concerned to be exercised judicially on a consideration . of all relevant circumstances and even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified.? . . . In the present case the facts of this case would reveal that the assessee was only the beneficiary of the payment and was in fact neither the recipient and nor did it make payments. The payments were received by third party from the direction of the assessee; consequently, in the opinion of the Tribunal, the Revenue appears to have misdirected the inquiry towards the assessee rather than someone else. We fully concur with the opinion of the Tribunal. . We also notice that this view accords that the previous judgment of this Court in CIT v. Noida Toll Bridge Company Ltd., (2003) 262 ITR 260. The appeal has to consequently fail; the same is, therefore, dismissed. . . . . . . . S. RAVINDRA BHAT, J . . . . . . . R.V.EASWAR, J . SEPTEMBER 25, 2012 . hs . . . . . $ 5 and 6 .