Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-3’ NEW DELHI
Before: SMT DIVA SINGH
ORDER The present appeal has been filed by the assessee assailing the correctness of the order dated 29.08.2013 of CIT(A), XVIII, New Delhi pertaining to 2010 –11 assessment year on the following grounds:-
1. “That the notice issued u/s 271 (1) (c) and order imposing penalty of Rs.4,44,440.00 under said section are illegal, bad in law, and without jurisdiction.
2. That the CIT(A) has, in view of the facts and circumstance of the case, Tailed to appreciate that the claim of the appellant was bonafied and was based on supporting documents and no penalty U/s 271(l)(c) could be sustained under such circumstances. 3. That the CIT(A) erred in law and the facts & circumstance that the addition is made by the AO on the basis of the difference of the opinion and also failed to appreciate the explanation given by the assessee 4. That the penalty has been levied without any specific charge hence the same is illegal, bad in law & same is liable to be set aside. 5. "That the appellant has neither concealed any income nor has filed any inaccurate particulars of Income and as such the penalty imposed U/s 271(1)(c) is illegal and bad in law and the same is liable to be cancelled. 6. That the explanation filed and the material available on record has not been properly considered and illegally interpreted. The penalty imposed cannot be justified by any material on record. 7. That in any case the penalty imposed is unjust, arbitrary and highly excessive.”
I.T.A .No.-4545/Del/2014
At the time of hearing an adjournment petition was moved by an Advocate unaccompanied by any Power of Attorney. No one was present either on behalf of the assessee or in support of the petition moved. Since the appeal could be decided on the basis of the material available on record the adjournment petition was rejected. The Revenue represented by Sr. DR, Mr. Farhat Khan was heard.
The relevant facts of the case as emanating from the record are that the assessee declared an income of Rs.4,26,630/- from salary. In the joint account of the assessee which he held with his wife Smt. Gita Singh in ICICI Bank, Saharanpur A/c No.019101511721 cash deposits were found to have been made as a result the case was picked up for scrutiny. After issuance of notice u/s 143(2) etc., the assessee was required to explain the deposits of Rs.23,37,785/- as per the bank statement of the ICICI for the period 01.04.2009 to 31.03.2010. The assessee appeared in person and explained that the cash deposits in the bank accounts were made on obtaining loans from friends and gifts from relatives for construction of house. The assessee was required to produce those persons. Admittedly the assessee could produce evidence only to the extent of Rs.8,75,000/- as the parties “refused to appear before the AO”. As a result of this, the remaining amount of Rs.14,62,785/- remained unexplained leading the assessee to surrender the same.
As a result of this, penalty proceedings were initiated. The assessee contested that the surrender was made on the understanding that there would be no penal action u/s 271(1)(c). This assertion was supported by the order sheet entry dated 09.04.2012 duly signed by the AO as per the extract at page 2 of the penalty order.
The same is reproduced hereunder:-
I.T.A .No.-4545/Del/2014
“Shri Balwant Singh attended and filed his written reply and surrendered Rs.14,62,785/- (Rs.Fourteen Lacs Sixty Two Thousand & Seven Hundred Eighty Five) provided no penal action u/s 271(1)(c) is initiated against him. Case discussed. Sd/- (Income Tax Officer) Surrendered Rs.14,62,785/- (Rs.Fourteen Lacs Sixty Two Thousand & Seven Hundred Eighty Five) provided no penal action under section 271(1)(c) is initiated against me. (In the hand writing of the assessee) Sd/- (Balwant SIngh) 3.1. Accordingly relying upon various decisions it was submitted unsuccessfully before the AO that the surrender was made in the peculiar facts and circumstances of the case where the assessee believed that no penalty would be imposed. The issue travelled in appeal before the CIT(A). In support of its claim, detailed submissions of the assessee are found recorded in the impugned order.
As a result of dismissal of his appeal, the assessee is in appeal before the Tribunal.
The Ld.Sr.DR relied on the orders.
On a perusal of the orders of the authorities below and considering the written submissions of the assessee reproduced in the order under challenge it is seen that the assessee having surrendered the amount on the understanding that there would be no penal action against him remained confident that the said belief harboured by him would be a sufficient explanation. Admittedly the said belief of the assessee is contrary to law as there is no estoppel against law. The AO had no authority to give any undertaking or convey any impression that the rigourous of law would not operate to the surrender made in good faith. Accordingly, the arguments that the surrender was made on the basis of the assertions of the AO in the eyes of law is of no help. The law is clear if the action is found to be contrary to the provisions of law it is the provision of law which shall prevail. The AO
I.T.A .No.-4545/Del/2014 admittedly had no authority whatsoever to give any undertaking contrary to the provisions of the Statute and if an assessee acts on the same then he does so at his peril. The law is well settled and its rigorous shall not be kept in abeyance because the assessee believed that the AO had the authority to state that penalty shall not be levied. Having addressed the legal position, I find that in the peculiar facts of the present case, the assessee has remained mistakenly confident that having acted upon the statement of the AO, the law would protect him. Thus, he may not have put all necessary facts and evidences in support of its claim and merely relied on the written submissions. It is seen that the assessee on record has consistently pleaded that construction of the house was assisted by contribution from relatives and friends who have not come forward to give evidences in support of their help. The assessee sheltering under the belief that no penal action would be imposed may have hesitated in placing the evidence in naming and identifying the parties who have given the loans. Considering the overall factual matrix, I am of the view that bereft of appropriate legal advice the assessee mis-directed its efforts in relying upon a fact which in law is of no help i.e. the AO had the authority to ensure that penalty u/s 271(1)(c) would not be imposed. Accordingly in the interests of the substantial justice, I find that the assessee may not have made an all out effort to support its consistent claim.
Opportunity to substantiate the claim in the circumstances, I am of the view is warranted on facts. The impugned order is accordingly set aside and the issue is restored back to the AO with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Liberty is given to the assessee to produce full facts and particulars in support of its claim. Page 4 of 5
I.T.A .No.-4545/Del/2014 It is hoped that the opportunity so provided is not abused by the assessee and full and proper compliance is made before the AO.
In the result, the appeal of the assessee is allowed for statistical purposes.
The order is pronounced in the open court on 19th August 2016.