DCIT., Central Circle-2(3), Hyderabad, Hyderabad V. Sri Rajendra Kumar Modi, Secunderabad

ITA 100/HYD/2015

• Counselvise Citation: 10022514 RSA 2015
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 28-01-2015
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: P PRASAD
• Keywords: Business income; Search and seizure
• Section: 153A; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NOS. 100 & 101/HYD/2015 ASSESSMENT YEARS: 2008-09 & 2009-10 DY. COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE-2(3), HYDERABAD VS SRI RAJENDRA KUMAR MODI, SECUNDERABAD [PAN: ACCPA8698J] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAJAT MITRA, DR FOR ASSESSEE : SHRI P. PRASAD, AR DATE OF HEARING : 20-07-2015 DATE OF PRONOUNCEMENT : 24-07-2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE TWO APPEALS ARE FILED BY REVENUE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XII, HY DERABAD DATED 25-11-2014 CANCELLING THE PENALTIES U/S. 271AAA OF THE INCOME TAX ACT [ACT]. 2. BRIEFLY STATED, ASSESSEE HEREIN IS AN INDIVIDUAL HAVING BUSINESS IN THE NAME OF M/S. RAJENDRA KUMAR JEWELLERS AND PEARL S AND ALSO PARTNERSHIP IN M/S. SRI KRISHNA JEWELLERY MART & OT HERS, HYDERABAD. CONSEQUENT TO SEARCH AND SEIZURE OPERATIONS CONDUCT ED IN THE GROUP CASES ON 05-06-2008, PROCEEDINGS U/S. 153A OF THE A CT WERE INITIATED FOR THE IMPUGNED YEARS. ASSESSEE DECLARED TOTAL INCOME OF RS. 1,14,91,940/- FOR AY. 2008-09 WHICH INCLUDED UNDISCLOSED INCOME O F RS. 1,05,00,000/- I.T.A. NOS. 100 & 101/HYD/2015 SRI RAJENDRA KUMAR MODI :- 2 -: ADMITTED U/S.132(4). FOR AY. 2009-10 ASSESSEE DECL ARED INCOME OF RS. 71,77,880/- WHICH INCLUDED AN AMOUNT OF RS. 60 LAKH S AS INCOME FOR THE YEAR ADMITTED U/S 132(4). WHILE MAKING ASSESSM ENT, THE ASSESSING OFFICER (AO) MADE FURTHER ADDITIONS OF RS. 82,17,00 0/- IN AY. 2008-09 AND RS. 1,12,32,600/- FOR AY. 2009-10. HE ALSO INI TIATED PENALTY PROCEEDINGS U/S. 271AAA ON ACCOUNT OF DETERMINATION OF CONCEALED INCOME, CONSEQUENT TO SEARCH PROCEEDINGS IN ASSESSE ES CASE. 3. ASSESSEE PREFERRED APPEALS ON THE QUANTUM ADDITI ONS MADE BY THE AO WHICH WERE ULTIMATELY STANDS DELETED BY THE ORDE RS OF THE ITAT AS WELL AS CONSEQUENTIAL ORDERS PASSED BY THE AO AFTER VERIFICATION. CONSEQUENTLY, THE AMOUNTS ADDED IN THE ASSESSMENT A S UNDISCLOSED INCOME DOES NOT SURVIVE AT PRESENT. HOWEVER, BEFOR E THE ORDERS WERE RECEIVED FROM THE ITAT, AO FINALIZED PENALTY PROCEE DINGS U/S. 271AAA AND LEVIED PENALTY NOT ONLY ON THE ADMITTED INCOME IN THE COURSE OF SEARCH BUT ALSO ON ADDITIONS MADE IN THE ASSESSMENT . ACCORDINGLY, AO LEVIED PENALTY OF RS. 16,85,910/- IN AY. 2008-09 AN D A SIMILAR AMOUNT FOR AY. 2009-10. 4. BEFORE THE LD.CIT(A), ASSESSEE EXPLAINED THAT AS SESSEE NOT ONLY ADMITTED UNDISCLOSED INCOME IN STATEMENT U/S. 132(4 ) IN THE COURSE OF SEARCH BUT ALSO SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND ALSO SUBSTANTIATED THE MANNER IN WHICH SUCH UNDISCLOSED INCOME WAS DERIVED AND FURTHER PAID THE TAXES IN SU PPORT OF UNDISCLOSED INCOME. IN VIEW OF THIS, PROVISIONS OF SECTION 271 AAA(1) DOES NOT APPLY AS 271AAAA(2) WILL APPLY TO ASSESSEES CASE. ASSES SEE RELIED ON THE FOLLOWING CASE LAW: '(A) AJIT KUMAR SURANA VS ACIT (KOLKATA TRIBUNAL) (ITA NO. 835, 836, 837, 838 AND 839/KOL/2013) DATE OF ORDER 18/0 3/2014 (2014) 39 CCH 0138 KOL TRIB. I.T.A. NOS. 100 & 101/HYD/2015 SRI RAJENDRA KUMAR MODI :- 3 -: (B) ASHOK KUMAR SHARMA VS DCIT (CUTTACK BENCH) (IT A NO. 476, 47, 478, 479 & 480/CTK/2011) DATE OF ORDER 22/12/2011 (2012) (31 CCH 0310 CUTTACK TRIB) (2012) 77 DTR 0241 (2012) 1 49 TTJ 0033 (UO). (C) ACIT VS A.N. ANNAMALAISWAMY (HUF) (CHENNAI C B ENCH) ITA NO. 1634/MADRAS/2012) ORDER DATED 05/02/2013 (2013) 35 CCH 0305 (2013) 87 DTR 0202). (D) CIT VS SUDHIR JAIN (DELHI HIGH COURT) (ITA NO. 575/2013, ORDER DATED 26/11/2013 (2013) 87 CCH DEL(HC). (E) DAVINDER SARA PROP. VS ACIT (AMRITSAR TRIBUNAL ) (ITA NO. 682 (ASR)/2013) ORDER DATED 08/04/2014 (2014) 40 CCH 0 287 (ASR TRIB). (F) DCIT VS POINTEER MARBLES & INTERIORS (P) LTD ( KOLKATA BENCH) (ITA NO. 1326/KOL/2011) ORDER DATED 17/02/2012 (2012) 3 1 XCCH 0009 KOL TRIB; (2012) 68 DTR 0001), (2012) 14 ITR (TRIB) 0608, (2012) 50 SOT 0571 (2012) 144 TTJ 0663). (G) DCIT VS PIONEER ONLINE LTD (KOLKATA 'A' BENCH) (ITA NO. 1324- 5/KOL/2011 ORDER DATED 17.02.2012 (2012) 31 CCH 02 453 KOL TRIB), (2012) 52 SOT 0094 (URO). (H) NEERAJ SINGAL VS ACIT (DELHI TRIBUNAL) (ITA NO . 337/DEL/2013) ORDER DATED 24.06.2013 (2014) 40 CCH 0387 DEL TRIB . 4.1 ASSESSEE ALSO FURTHER CONTENDED THAT ADDITIONS MADE BY THE AO DID NOT SURVIVE AND CONSEQUENTLY IN VIEW OF THE DEC ISION OF THE CO- ORDINATE BENCH OF HYDERABAD IN THE CASE OF M/S. MAL I FLOREX LTD., IN ITA NO. 94/HYD/2014 DT. 01-05-2014, PENALTY DOES NOT SU RVIVE ON THE ABOVE AMOUNTS. LD. CIT(A) IN HIS BRIEF FINDINGS IN PARA 6.0 RELYING ON THE ABOVE CITED CASES, DELETED THE PENALTY IN BOTH THE YEARS. 5. REVENUE AGGRIEVED AND RAISED THE FOLLOWING GROUN D COMMON IN BOTH YEARS: I.T.A. NOS. 100 & 101/HYD/2015 SRI RAJENDRA KUMAR MODI :- 4 -: '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE CIT(A) ERRED IN DELETING THE PENALTY LEVI ED ON THE UNDISCLOSED INCOME ADMITTED BY THE ASSESSEE IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S. 153A DESPI TE THE FACT THAT THE ASSESSEE DID NOT SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WERE DERIVED'. 6. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PER USING THE PAPER BOOK PLACED ON RECORD BY THE ASSESSEE-COUNSEL, WE A RE OF THE OPINION THAT THERE IS NO NEED TO DIFFER FROM THE ORDER OF T HE CIT(A). AS SEEN FROM THE ASSESSMENT ORDER ITSELF, AO RECORDS THE FOLLOWI NG IN THE ASSESSMENT ORDER IN AY 2008-09: 'SUBSEQUENTLY, THIS CASE HAS BEEN CENTRALIZED WITH THIS CIRCLE. NOTICE U/S. 153A HAS BEEN ISSUED TO THE ASSESSEE F OR THE ASST. YEAR 2008-09. IN RESPONSE TO THE NOTICE ISSUED U/S. 15 3A OF THE I.T.ACT, THE ASSESSEE FILED RETURN OF INCOME FOR THE ASST. YEAR 2008-09 ON 13/10/2010 DECLARING A TOTAL INCOME OF RS. 1,14,91 ,940/-. THIS INCOME INCLUDES AN AMOUNT OF RS. 1,05,00,000/- WHI CH WAS AGREED BY THE ASSESSEE AS HIS UNDISCLOSED INCOME FOR THE FIN. YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR 2008-09. HOWEVER, THE ASSESSEE HAS GIVEN A BREAK UP OF THE SAID AMOUNT AS RS. 50 LAKHS TOWARDS INVESTMENT IN PROPERTY, RS. 5 LAKHS TOWARDS UNACCO UNTED INVESTMENT IN GOLD AND SILVER ARTICLES AND RS. 50 LAKHS AS 'UNDISCLOSED BUSINESS INCOME'. 6.1 SIMILAR IS THE FINDING BY THE AO IN AY. 2009-10 : '1.2 IN RESPONSE TO THE NOTICE ISSUED, SRI P. PRASA D, FCA, APPEARED AND FILED REQUIRED INFORMATION. CASE DIS CUSSED. IN THE ROI FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/ S. 153A OF THE I.T.ACT, THE ASSESSEE ADMITTED THIS UNDISCLOSED IN COME OF RS. 60,00,000/- FOR THE ASST. YEAR 2009-10 WHICH INCLU DES RS. 50 LAKHS ON ACCOUNT OF CASH AND RS. 10 LAKHS AS INVESTMENT IN GOLD AND SILVER. EVEN THOUGH THE ASSESSEE HAS DECLARED THI S UNDISCLOSED INCOME IN ITS ROI FILED CONSEQUENT TO SEARCH OPERA TION, THE FACT REMAINS THAT THIS UNDISCLOSED INCOME WOULD NOT HAV E BEEN OTHERWISE DISCLOSED BUT FOR THE SEARCH OPERATION C ONDUCTED U/S. 132(1) OF THE I.T.ACT'. I.T.A. NOS. 100 & 101/HYD/2015 SRI RAJENDRA KUMAR MODI :- 5 -: 6.2. THE AO HIMSELF IN BOTH THE YEARS GIVES A FINDI NG THAT ASSESSEE HAS DECLARED THE AMOUNT AND ALSO SPECIFIED THE MANNER I N WHICH SUCH INCOME HAS BEEN DERIVED AND IT ALSO PAID TAXES TOGE THER WITH INTEREST IF ANY, IN RESPECT OF UNDISCLOSED INCOME. SINCE THERE IS NO VARIATION FROM THE AMOUNTS DISCLOSED IN THE SEARCH PROCEEDINGS AND AS ASSESSEE COMPLIED WITH THE PROVISIONS OF SECTION 271AAA(2), PENALTY U/S. 271AAA(1) CANNOT BE LEVIED. FOR THE SAKE OF RECORD , THE PROVISIONS OF SECTION 271AAA (1) & (2) ARE EXTRACTED AS UNDER: '271AAA. PENALTY WHERE SEARCH HAS BEEN INITIATED.( 1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SEC TION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PEN ALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN P ER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APP LY IF THE ASSESSEE, (I ) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES T HE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II ) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOS ED INCOME WAS DERIVED; AND (III ) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, I N RESPECT OF THE UNDISCLOSED INCOME.' 6.3 SINCE ASSESSEES CASE FALLS UNDER THE PROVISION S OF SECTION 271AAA(2), PROVISIONS OF SECTION 271AAA(1) DOES NOT APPLY TO THE FACTS OF THE CASE. THEREFORE, LEVY OF PENALTY U/S. 271AAA(1 ) DOES NOT ARISE. IN VIEW OF THIS, WE AGREE WITH THE ORDER OF THE CIT(A) IN DELETING THE PENALTY ON THE RETURNED INCOME. 6.4 AS FAR AS PENALTY ON THE ADDITIONS IN THE ASSES SMENT ORDER ARE CONCERNED, SINCE ADDITIONS THEMSELVES ARE DELETED I N THE SUBSEQUENT I.T.A. NOS. 100 & 101/HYD/2015 SRI RAJENDRA KUMAR MODI :- 6 -: ORDERS, QUESTION OF LEVY OF PENALTY DOES NOT ARISE. IN VIEW OF THIS, REVENUES GROUNDS ARE REJECTED AND ORDERS OF THE CI T(A) ARE UPHELD. 7. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JULY, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 24 TH JULY, 2015 TNMM COPY TO : 1. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2 (3), 3 RD FLOOR, POSNETT BHAVAN, RAM KOTI, TILAK ROAD, HYDER ABAD. 2. SRI RAJENDRA KUMAR MODI, H.NO. 7-2-604/605, ASHO K NAGAR, R.P. ROAD, SECUNDERABAD. 3. CIT(APPEALS)-XII, HYDERABAD. 4. CIT (CENTRAL), HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.