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Income Tax Appellate Tribunal, DELHI BENCHES: ‘D’, NEW DELHI
Before: SMT. BEENA A PILLAI & SHRI PRASHANT MAHARISHI
ORDER PER BEENA A PILLAI, JUDICIAL MEMBER Present appeal has been filed by assessee against order dated 01/01/16 passed by Ld.CIT (A)-7, New Delhi on following grounds of appeal: That the Ld. CIT(A) has erred in law and on facts in 1. confirming the penalty imposed by the Assessing Officer in respect of amount of Rs.7,50,000/- holding that the assessee had furnished inaccurate particulars of income with reference to amount of Rs.7,50,000/-.
Roots Education (P) Ltd. Vs. ITO
That the Ld. CIT(A) has erred in law and on facts in holding 2. that this is a fit case for invoking the provisions of section 271(1)(c) of the Act as the assessee had not been able to satisfactorily explain the source of credit of Rs.7,50,000/-. That the Ld. CIT(A) has erred in confirming the penalty in 3. respect of amount of Rs.7,50,000/- ignoring the entire material produced and submissions made by the assessee. That the Ld. CIT(A) has misdirected himself in ignoring the 4. material fact that the assessee had discharged the burden laid upon him by way of furnishing confirmations, bank statement, PAN, copy of accounts of the loan creditors / share applicants. However, the same has not been rebutted by the Assessing Officer as well as CIT(A) in quantum proceeding and therefore, upholding the penalty qua Rs.7,50,000/- is bad-in-law. That the Ld. CIT(A) has merely relied upon the order passed 5. by the Assessing Officer and CIT(A) in quantum proceeding and has not applied his mind to the evidences produced by the assessee during the proceeding. Therefore, the penalty confirmed by him is liable to be deleted. That the Ld. CIT(A) has ignored the material fact that once 6. the burden laid upon the assessee discharged by it, then the burden is shifted to the Assessing Officer to rebut the same by way of making investigation. In the present case, no investigation, not even a single notice has been issued by the Assessing Officer to the loan creditors / share applicants and therefore, no penalty could have been levied by him for furnishing inaccurate particulars of income particularly when no particulars has been concealed by the assessee.
Roots Education (P) Ltd. Vs. ITO
7. That the Ld. CIT(A) has misdirected himself in ignoring the fact and law that the assessment proceedings and penalty proceedings are two separate and distinct proceedings. Hence the assessee is entitled to adduce the evidences in the penalty proceeding in order to show that he had not furnished inaccurate particulars of income and had furnished all the relevant documents before the Assessing Officer to explain the source of credits. In the present case, the Assessing Officer and the CIT(A) has ignored all the evidences. Mere addition by the Assessing Officer as confirmed by CIT(A) in quantum appeal would not automatically justify the imposition of penalty u/s 271(1)(c) of the Act.
8. That the observation of Ld.CIT(A) that the AO has recorded his satisfaction regarding furnishing of inaccurate particulars of income with reference to the credit of Rs.7,50,000/- in the assessment order, is incorrect. Mere averment is not sufficient; rather satisfaction has to be discernible from the order itself. Hence, the penalty imposed by the Assessing Officer is bad in law. 9. That the appellant seeks leave to add, amend, alter, abandon or substitute any of the above grounds during the hearing of the appeal.” 2. Brief facts of case are as under: Assesse is a private limited company, and is engaged in business of educational consultancy. During year under consideration, assessee filed its return, declaring cash loss amounting to Rs.35,80,538/- and unabsorbed depreciation allowance amounting to Rs.1,68,473/-. Case of assessee was picked up for scrutiny and notice under section 143(2)/142(1) of the I.T.Act, 1961 (the Act) were issued. After calling for all relevant
Roots Education (P) Ltd. Vs. ITO information /details from assessee and submissions filed by assessee, Ld.AO passed assessment order under section 143(3) by making following additions: under section 40 (a) of the Act - Rs.19,77,318/- under section 68 of the Act - Rs. 7,50,000/- 3. Aggrieved by additions made by Ld.AO, assessee preferred appeal before Ld.CIT (A) who partly allowed appeal filed by assessee.
Ld.AO simultaneously issued notice under section 274 of the Act, r.w. 271 (1) (c ) of the Act, on addition made under Section 68 of the Act by Ld.AO.
During penalty proceedings, Ld.AO recorded that, assessee filed no further evidence either during assessment proceedings or during penalty proceedings, and therefore it is established that assessee accepted additions. He therefore computed penalty at 100% of Rs.7,52,103/-.
Aggrieved by penalty levied by Ld.AO, assessee preferred appeal before Ld.CIT (A) who confirmed order passed by Ld.AO.
Aggrieved by order passed by Ld.CIT (A), assessee is in appeal before us now.
Both parties agree that all grounds relates to penalty levied amounting to Rs.7,52,103/-. Therefore, for sake of convenience, we are considering all grounds together.
Ld.Counsel submitted that assessee raised following amounts towards share capital and unsecured loans: I. Share Capital: 1. Ms Bharti Singh Rs.1,00,000 2. Mr.Sumit Yadav Rs.10,40,000
Roots Education (P) Ltd. Vs. ITO
Abhishek Kalra Rs.9,99,750 4. Palash Sen Rs. 5,000 5. Pareek Jain Rs. 2,49,984 Total: Rs. 23,94,734 II. Unsecured Loans 1. Sh. Deekshant Sahrawat Rs. 8,07,000 2. Sh. Mohit Khurana Rs. 3,95,000 3. Sh. Pawan Kaushik Rs. 5,24,000 4. Sh. Abhijat Rs.6,85,000 5. Sh. Abhishek Kalra Rs. 7,65,000 6. Sh. Amit Gupta Rs.1,76,715 7. Sh. Anita Khurana Rs.4,00,000 Total: Rs.37,42,715 9.1. She further submitted that Assessing Officer for sake of making addition only considered share capital and unsecured loans from following: 1. Sh. Mohit Khurana Rs.3,95,000/- (Unsecured loans) 2. Sh. Abhishek Kalra Rs.1,00,000/- (Unsecured loans) 3. Sh. Palash Sen Rs. 5,000/- (Share Capital) 4. Sh. Parikh Jain Rs.2,50,000/- (Share Capital)
9.2. She submitted before Ld.CIT (A) that in quantum proceedings, additional evidence were filed under Rule 46A, wherein confirmations along with PAN card copies, identity proof of shareholders as well as lenders were filed. She submitted that above referred transactions were genuine on which no penalty could be levied.
Roots Education (P) Ltd. Vs. ITO 9.3. She submitted that none of details filed by assessee has been verified by authorities below, as once assessee filed details it discharged it’s initial onus, and burden shifts on Department to verify the same. 9.4. Further Ld.Counsel placed reliance upon decision of Hon’ble Supreme Court in case of CIT vs.SSA Emerald Meadows reported in [2016] 73 taxmann.com 248 in support of her argument that notice issued under section 274 read with section 271(1)(c) was bad in law, as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated.
On contrary, Ld.Sr.DR submitted that addition confirmed by Ld.CIT (A) has been accepted by assessee, thereby no appeal has been preferred by assessee before this Tribunal. Ld.Sr.DR submitted that from assessment order it is clear that penalty has been initiated for furnishing of inaccurate particulars. Further on issuance of notice under section 274 read with section 271 (1) (c ) of the Act, assessee has not filed any reply in response to penalty notice and no explanation has been offered to substantiate the claim. She thus supported orders of authorities below.
We have perused submissions advanced by both sides in light of records placed before us.
It is observed that assessee during assessment proceedings as well as before Ld.CIT(A) had filed details/documents/evidences regarding shareholders as well as creditors which includes confirmation, identity and creditworthiness, thereby discharging initial onus cast upon assessee under section 68 of the Act. Neither Ld. CIT (A) nor
Roots Education (P) Ltd. Vs. ITO Assessing Officer in assessment proceedings or during remand proceedings verified any of aforestated details and summarily dismissed claim of assessee by stating that shareholders/creditors were not presented in person before authorities. Be that as it may, we are of the opinion that quantum proceedings are different from penalty proceedings. In our considered view Assessing Officer has not disproved documents/evidences filed by assessee to be inaccurate/false in penalty proceedings. Merely because quantum addition has been confirmed by Ld. CIT (A) against which assessee has not preferred any appeal before this Tribunal, would not lead to automatic levy of penalty unless Assessing Officer establishes that documents filed by assessee were not true. 12.1. Under such circumstances we do not find it fit and proper for penalty to be sustained, as Assessing Officer do not have any evidence to disprove that documents filed by assessee are not true and cannot lead to levy of penalty for filing of inaccurate particulars. 12.2. We thus allow grounds of appeal raised by assessee.
13. In the result appeal filed by assessee stands allowed. Order pronounced in the open court on 01st February, 2019. Sd/ Sd/- (PRASHANT MAHARISHI) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dt. 01st February, 2019 *GMV
Roots Education (P) Ltd. Vs. ITO