INCOME TAX OFFICER, MUMBAI vs. RAJENDRA LADAKCHAND JAIN, MUMBAI

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ITA 3425/MUM/2023Status: DisposedITAT Mumbai03 June 2024AY 2012-136 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Revenue's appeal was liable to be dismissed. The primary reasoning was that a coordinate bench of the ITAT Mumbai, in ITA No. 2827/MUM/2018 for the same Assessment Year 2012-13, had already quashed the assessment order. Although the copy of this order was not filed, the fact that the assessment order was quashed was not disputed by the Revenue's counsel. The Tribunal reasoned that since the foundation of the penalty (the assessment order) had collapsed, the penalty order could not survive. Consequently, all factual grounds raised by the Revenue in its appeal were diluted. The Tribunal upheld the CIT(A)'s decision to delete the penalty, as the quantum addition had been deleted by the Tribunal. The appeal was dismissed, and the impugned order of the CIT(A) was confirmed. No issue was expressly left undecided.

What were the facts?

The Revenue has appealed the deletion of a penalty of Rs. 63,13,321/- imposed under Section 271(1)(c) of the Income Tax Act, 1961, for Assessment Year 2012-13. The penalty was levied by the Assessing Officer (AO) following a search on the Shri Bhanwarlal Jain group, which was involved in issuing fictitious sales bills and accommodation entries for non-genuine unsecured loans. The assessee, Rajendra Ladakchand Jain, a director in M/s Nakoda Floor Mills Pvt. Ltd., was found to be present at one of the searched premises. The AO completed the assessment under Section 153C read with Section 143(3) on March 31, 2016, assessing total income at Rs. 4,18,58,139/-. The assessee did not respond to penalty notices, leading to the imposition of the penalty. The Commissioner of Income-tax (Appeals) deleted the penalty, noting that the quantum addition had already been deleted by the Tribunal.

What were the issues?

1. Whether, on the facts and in law, the CIT(A) erred in deleting the penalty under Section 271(1)(c) without considering that the additions were based on the Investigation Wing's report, which is a credible agency? (Question of law and fact, concerning Section 271(1)(c)) 2. Whether, on the facts and in law, the CIT(A) erred in deleting the penalty under Section 271(1)(c) by ignoring that the assessee admitted in a statement under Section 131 to possessing a diary detailing cash loans not reflected in his books? (Question of law and fact, concerning Section 271(1)(c)) 3. Whether, on the facts and in law, the CIT(A) erred in deleting the penalty under Section 271(1)(c) by considering the Supreme Court decision in MAK DATE P. Ltd. Vs CIT, which held that an assessee has a statutory duty to declare true income and is liable for penalty for concealment? (Question of law and fact, concerning Section 271(1)(c)) Revenue's Contention: The Revenue argued that the assessee concealed true particulars of income and supported the penalty order, seeking to set aside the CIT(A)'s order. The Revenue relied on the Investigation Wing's report and the assessee's statement under Section 131. Assessee's Contention: The assessee argued that a coordinate bench of the ITAT Mumbai in ITA No. 2827/MUM/2018 for AY 2012-13 had quashed the assessment order. The assessee also referred to a Delhi Bench ITAT decision where a penalty was set aside because the assessment order was quashed. The assessee relied on the decision of the ITAT Mumbai in ITA No. 2827/MUM/2018 and the Delhi Bench ITAT in ITA No. 3363/DEL/2018.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 250,Section 143(1),Section 153C,Section 143(3),Section 131,Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH

Before: SHRI GIRISH AGRAWAL, ACCOUNTANT & SHRI SUNIL KUMAR SINGH

For Appellant: Shri. Rajesh C. Shah (CA)
Pronounced: 03/06/2024

आदेश / O R D E R PER SUNIL KUMAR SINGH (J.M): 1. This appeal has been preferred by the revenue against the impugned order dated 01.08.2023 passed in appeal no. CIT(A)-47, MUM/10030/2019-20 by the Ld. Commissioner of Income–tax(Appeals)/National Faceless Appeal Centre(NFAC) [hereinafter referred to as the “CIT(A)”] u/s. 250 of the Income–tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment year [A.Y.] 2012–13, wherein Rajendra Ladakchand Jain,Mumbai learned CIT(A) has deleted the penalty of Rs. 63,13,321/- imposed upon assessee u/s. 271(1)(C) of the Act, vide penalty order dated 30.03.2019.

2.

The brief facts related to the appeal state that assessee is an individual and filed original return of income on 29.09.2012 declaring total income at Rs. 14,85,000/-. The return of income was processed u/s. 143(1) of the Act. Subsequently, a search was conducted on Shri Bhanwarlal Jain group by DGIT(Inv.) Mumbai on 3.10.2013 involved in issuance of fictitious sales bills and accommodation entries of non genuine unsecured loans. The premises of one of the concerns reportedly managed and controlled by Shri Bhanwarlal Jain and Shri Rajesh Bhanwarlal namely M/s Nakoda Floor Mills Pvt. Ltd. having registered office at 9th Floor Novelty Chambers, M.S.Road, Mumbai 400001 was found to be inhabited by Shri Rajendra Ladakchand Jain/assessee, who is one of the directors with Shri Bhawarlal Jain and Shri Rajesh Bhanwarlal Jain as two other directors. This fact was confirmed by the assessee in his statement u/s. 131 of the Act. In response to the notices issued and served upon the assessee u/s. 153C of the Act dated 21.05.2015, Shri Rajesh Shah, CA Rajendra Ladakchand Jain,Mumbai represented the assessee before Assessing Officer. Assessing Officer found that assessee failed to file and disclose correct particulars of income under the Act. The order u/s. 153C r.w.s 143(3) of the Act was completed on 31.03.2016, assessing total income of Rs. 4,18,58,139/–. Assessee did not respond to the penalty notices u/s 274 r.w.s 271(1)(C) of the Act. Hence, the penalty of Rs. 63,13,321/– (@ 100% tax evasion, was imposed u/s. 271(1)(C) of the Act by Assessing Officer/ (DCIT Central Circle–1(3)Mumbai.

3.

The assessee filed an appeal before learned CIT(A) against the penalty order dated 30.03.2019. Learned CIT(A) found that the Tribunal had already deleted the quantum addition, hence the penalty was deleted.

4.

The assessee has approached this tribunal on the following grounds: “1.Whether on the facts and circumstances of the case and in law the CIT(A) erred in deleting the penalty u/s 271(1)(c) of the Act, without considering the fact the additions were made by the Assessing Officer on relying the report of Investigation Wing, Mumbai which is a creditable agency of the Income-Tax Department? 2.Whether on the facts and circumstances of the case and in law the CIT(A) has erred in deleting the penalty u/s 271(1)(c) of the Act, ignoring the fact that the survey proceedings, a statement on oath was recorded u/s 131 of the Act and assessee has admitted that a blue coloured diary belongs to him and confirmed that it contains details of cash load given & received back in his personal capacity on different dates from various parties and the same is not reflected in this regular books of accounts? 3.Whether on the facts and circumstances of the case and in Rajendra Ladakchand Jain,Mumbai law the CIT(A) has erred in considering the decision in the case MAK DATE P. Ltd Vs CIT Supreme Court)-CIVIL Application No. 9772(2013) (Arising out of SLP(Civil) No. 18389 of 20133, wherein it was held that it is statutory duty of the assessee to declare its true income in the return of income filed by it from year to year and if the assessee had concealed true particulars of income than, the assessee is hable for penalty proceedings u/s 271(1)(c) r.w.s 274 of the Act ?”

5.

Assessee appeared in response to the notice issued by this tribunal and participated in the proceedings.

6.

We have pursued the material on record & heard, Ld. Representatives for both the parties.

7.

Learned DR for the revenue has supported the penalty order, submitting that the assessee had concealed the true particulars of income, further submitting to sustain the penalty order and to set aside impugned order passed by learned CIT(A).

8.

Learned AR has submitted that Hon‟ble „D‟ Bench of ITAT Mumbai Bench in for the A.Y. 2012–13 r/w ITA no. 2825/MUM/2018 for the A.Y. 2010- 11, vide common order dated 26.07.2019, has quashed the assessment. Further referred the order dated 17.05.2022 passed by the Delhi Bench of ITAT in ITA NO. 3363/DEL/2018 Heritage Infracon Pvt. Ltd. Vs. DCIT, Central circle, Karnal for A.Y. 2006-07, wherein Tribunal allowed assessee‟s appeal and set aside penalty order on the ground that the said assessment order was quashed by Rajendra Ladakchand Jain,Mumbai coordinate bench of the Tribunal in ITA no. 1919/MUM/2015 for the A.Y. 2006–07. Ld. AR has further submitted that revenue‟s appeal be dismissed and the impugned order be confirmed.

9.

It is pertinent to mention that though the copy of aforesaid order dated 26.07.2019 passed in the ITA NO. 2825/MUM/2018, quashing the assessment related to the impugned penalty has not been filed, however the fact that the concerned assessment order, has been quashed by this Tribunal in above referred appeal, has not been disputed by the Ld DR. In this view of the matter, since the foundation of the penalty has collapsed, the penalty order does not survive. All factual grounds taken by the revenue in this appeal gets diluted accordingly. We accordingly hold that learned CIT(A) was right in deleting the penalty since the tribunal has already deleted the quantum addition. The appeal is thus liable to be dismissed.

10.

In the result, the appeal of the revenue stands dismissed. The impugned order dated 01.08.2023 passed by learned CIT(A), deleting penalty, stands confirmed. Order pronounced on 03.06.2024.

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