ACIT, Patiala V. Sh. Sanjay Kumar Goyal, Mandi Gobindgarh

ITA 1007/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73534 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 28-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Income from undisclosed sources; Document seized; Initiation of penalty proceedings; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1005/CHD/2013 ASSESSMENT YEAR : 2010-11 A.C.I.T. C.C, PATIALA VS. GIAN CHAND GUPTA ST. NO. 1, SHAM NAGAR MANDI GOBINDGARH AASPG 00490J ITA NO. 1006/CHD/2013 ASSESSMENT YEAR : 2010-11 A.C.I.T. C.C, PATIALA VS. MOHINDER GUPTA 6, SECTOR 2, BLOCK A MANDI GOBINDGARH AASPG 0556B ITA NO. 1007/CHD/2013 ASSESSMENT YEAR : 2010-11 A.C.I.T. C.C, PATIALA VS. SANJAY KUMAR GOYAL GOYAL COLONY SHASTRI NAGAR MANDI GOBINDGARH ABCPK6376Q (APPELLANT) (RESPONDENT) APPELLANT BY SHRI J.S.NAGAR RESPONDENT BY: SHRI ASHOK KUMAR GOYAL DATE OF HEARING 10.3.2014 DATE OF PRONOUNCEMENT 27.3.2014 O R D E R PER T.R.SOOD, A.M THESE APPEALS ARE DIRECTED AGAINST THE ORDER DATED 2.8.2013 OF THE LD CIT(A)-I, LUDHIANA. ISSUES ARE COMMON IN THE SE APPEALS AND THE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 2. IN THESE APPEALS THE REVENUE HAS RAISED THE FOLL OWING GROUND: 1 THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACT S WHILE DELETING THE PENALTY OF RS. 17,67,482/-, RS. 22,54, 950/- AND RS. 45,00,000/- WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE MANNER IN W HICH 2 UNDISCLOSED INCOME WAS DERIVED SO AS TO QUALIFY FOR NON-LEVY OF PENALTY WITHIN THE MEANING OF SUB-SECTION (2) OF SE C 271AAA OF THE ACT. 3 BOTH THE PARTIES CLEARLY SUBMITTED THAT THE FACTS AND CONTENTIONS INVOLVED IN THESE APPEALS ARE IDENTICA L TO THE FACTS AND CONTENTS OF THE ISSUES INVOLVED IN ITAS NO. 1003 & 1004/2013 IN CASE OF MUNISH KUMAR GOYAL AND HARISH KUMAR SINGLA, THEREFORE SAME DECISION MAY BE FOLLOWED IN THESE CASES. 4 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND THE M ATERIAL ON RECORD, WE FIND THAT IDENTICAL ISSUES CAME UP FOR CONSIDERATION OF THE TRIBUNAL IN ITAS NO. 1003 & 1004/2013 IN CASE O F MUNISH KUMAR GOYAL AND HARISH KUMAR SINGLA WHICH WERE ADJUDICATE D VIDE PARAS 8 TO 13 WHICH IS AS UNDER: 8 WE HAVE GONE THROUGH THE RIVAL SUBMISSIONS CAREFU LLY. THE LD. CIT(A) HAS DECIDED THIS ISSUE VIDE PARA 5 W HICH IS AS UNDER: I HAVE CONSIDERED THE BASIS OF PENALTY IMPOSED BY T HE AO AND THE ARGUMENTS OF THE AR ON THE ISSUE. THE PERUSAL OF THE PROVISIO NS OF SECTION 271AAA MAKE IT CLEAR THAT THE PENALTY CAN BE LEVIED ON UNDISCLOSED INCOME OF THE SPECIFIED YEAR IF THE CONDITIONS SPECIFIED IN SUB SECTION (2) OF S ECTION 271AAA ARE NOT SATISFIED. IT, THEREFORE, FOLLOWS THAT FIRST THING TO DETERMINE IS WHAT IS THE AMOUNT OF UNDISCLOSED INCOME UNDER THE GIVEN CIRCUM STANCES. THE CONCEPT OF UNDISCLOSED INCOME HAS BEEN CLEARLY DEFINED BY EXPL ANATION TO SECTION 271AAA AND THE SAME READS AS UNDER:- UNDISCLOSED INCOME MEANS- I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRES ENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER V ALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF SEARCH UNDER SECTION 132, WHICH HAS-A A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARC H IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMIS SIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECOR DED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED;. THE PERUSAL OF ABOVE DETAILED DEFINITION SHOWS THAT IT IS EXHAUSTIVE DEFINITION AND THERE IS CLEAR IDENTIFICATION OF THE INCOME REP RESENTED EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER V ALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS O F TRANSACTIONS FOUND IN THE COURSE OF SEARCH UNDER SECTION 132. IT IS SEEN THA T THERE IS CLEAR AND DIRECT ASSOCIATION BETWEEN THE INCOME ON ONE HAND AND ASSE TS / DOCUMENTS ON THE OTHER HAND FOUND DURING THE COURSE OF SEARCH. IT FO LLOWS THAT IF CERTAIN INCOME IS NOT REPRESENTED BY ANY ASSETS/DOCUMENTS/ENTRY FOUND DURING THE SEARCH, THE 3 SAME WOULD NOT BE COVERED UNDER THE DEFINITION OF U NDISCLOSED INCOME BUT WOULD INVITE PENALTY PROCEEDINGS U/S 271(1)(C) ON T HE FULFILLMENT OF OTHER REQUISITE CONDITIONS. THIS MEANS THAT ENTIRE DISCLO SURE OF INCOME AT THE TIME OF SEARCH OPERATION MAY NOT FALL UNDER THE DEFINITION OF UNDISCLOSED INCOME IF IT COULD NTO BE RELATABLE TO SOME ASSETS/DOCUMENTS/ENT RY FOUND DURING THE COURSE OF SEARCH OPERATION. IT ALSO MEANS THAT IF THE AO D URING THE COURSE OF SEARCH OPERATION. IT ALSO MEANS THAT IF THE AO DURING THE COURSE OF SEARCH ASSESSMENT PROCEEDINGS MAKES CERTAIN ADDITIONS INDEPENDENT OF THE INCRIMINATING MATERIAL/DOCUMENTS FOUND DURING THE COURSE OF SEARC H OPERATION THEN SUCH AN ASSESSED INCOME WOULD NOT INVITE PENALTY PROCEEDING S U/S 271AAA BUT UNDER SECTION 271(1)(C). IT ALSO MEANS THAT INITIATION OF PENALTY PROCEEDINGS WOULD DEPEND UPON THE NATURE OF THE INCOME ASSESSED AND T HERE COULD BE PENALTY PROCEEDINGS U/S 271AAA AS WELL AS 271(1)(C) FOR THE SAME ASSESSMENT YEAR, HOWEVER IN RESPECT OF DIFFERENT INCOME. THE AO IN T HE PENALTY ORDER HAS CLEARLY ACCEPTED THAT DISCLOSURE OF INCOME BY THE ASSESSEE TO THE TUNE OF RS. 3,80,12,500/- IS NOT REPRESENTED BY ANY ASSETS/DOCU MENTS FOUND DURING THE COURSE OF SEARCH OPERATION AND HAS ALSO OBSERVED TH AT THE SAME WAS PART OF THE UNDISCLOSED INCOME JUST BECAUSE THIS DISCLOSURE HAD COME DURING THE COURSE OF SEARCH AND WAS THEREFORE AS A RESULT OF THE SEARCH. THERE IS A CLEAR ACCEPTANCE OF THE FACT THAT THE SAID DISCLOSURE IS NOT WITH RE FERENCE TO ANY ASSETS/DOCUMENTS FOUND DURING THE COURSE OF SEARCH. IT IS ONLY BECAUSE THE SAID DISCLOSURE HAPPENED DURING THE SEARCH THAT THE SAME HAS BEEN CLUBBED IN THE DEFINITION OF UNDISCLOSED INCOME REQUIRING THE ASSE SSEE TO FULFILL THE CONDITION AS SPECIFIED IN SUB SECTION (2) OF 271AAA. I AM OF THE CLEAR VIEW THAT INCOME TO THE EXTENT OF RS. 3,80,12,500/- DOES NOT COME UNDER THE DEFINITION OF UNDISCLOSED INCOME AS DEFINED UNDER SECTION 271AAA AND THEREFORE NO PENALTY U/S 271AAA COULD BE LEVIED. THE SECOND ASPECT OF TH E PENALTY ORDER PASSED BY THE ASSESSING OFFICER IS THAT WHETHER THE ASSESSEE HAD FULFILLED THE REQUISITE CONDITIONS AS SPECIFIED UNDER SUB SECTION (2) OF SE CTION 271AAA. THE ASSESSING OFFICER HAS ACCEPTED THAT THE ASSESSEE HAD MADE THE DISCLOSURE UNDER SECTION 132(4) DURING THE COURSE OF SEARCH OPERATION AND SP ECIFIED THE MANNER OF EARNING SUCH INCOME AND IT ALSO SUBSTANTIATED THE S AME ON THE BASIS OF SEIZED DOCUMENTS TO THE TUNE OF RS. 19,87,500/-. THE AOS VIEW THAT THE ASSESSEE IS REQUIRED TO SUBSTANTIATE THE QUANTUM OF UNDISCLOSED INCOME DOES NOT SEEM LOGICAL FROM THE BARE READING OF THE PROVISIONS OF SECTION 271A SUB SECTION (2). THE REQUIREMENT OF THE LAW IS THAT THE ASSESSEE SHO ULD STATE THE MANNER OF EARNING UNDISCLOSED INCOME AND ALSO SUBSTANTIATE TH E SAME. IT WOULD NOT BE CORRECT INTERPRETATION OF THE PROVISIONS TO STRETCH THE REQUIREMENT TO SUBSTANTIATE THE QUANTUM AS WELL. THERE IS NO DOUBT WITH REGARD TO THE FACT THAT THE ASSESSEES MANNER OF EARNING UNDISCLOSED INCOME BEING FINANCING ACTIVITIES HAS BEEN SUBSTANTIATED BY THE SEIZED DOCUMENTS. THE REQUIREMENT OF THE LAW HAS THEREFORE BEEN FULFILLED AS THE ASSESSEE HAD ST ATED THE MANNER OF EARNING UNACCOUNTED INCOME, SUBSTANTIATING THE SAME AND ALS O PAID THE DUE TAXES ALONG WITH THE INTEREST WITHIN THE SPECIFIED TIME L IMIT. EVEN IF THE ENTIRE INCOME BY ANY LOGIC IS INCLUDED IN THE DEFINITION OF UNDIS CLOSED INCOME, THE PENALTY UNDER SECTION 271AAA WOULD NOT BE LEVIABLE BECAUSE OF FULFILLMENT OF REQUIREMENT OF SUB SECTION (2) OF SECTION 271AAA. 9 WE FURTHER FIND THAT SECTION 271AAA READS AS UNDE R: 271AAA. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYT HING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHER E SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007 43 [BUT BEFORE THE 1ST DAY OF JULY, 2012], THE ASSESSE E SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYA BLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PRE VIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, ( I ) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDE R SUB-SECTION (4) OF SECTION 132 , ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHIC H SUCH INCOME HAS BEEN DERIVED; ( II ) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSE D INCOME WAS DERIVED; AND ( III ) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE ( C ) OF SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCL OSED INCOME REFERRED TO IN SUB-SECTION (1). 4 (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION. EXPLANATION. FOR THE PURPOSES OF THIS SECTION, ( A ) 'UNDISCLOSED INCOME' MEANS ( I ) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRES ENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132 , WHICH HAS ( A ) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PR EVIOUS YEAR; OR ( B ) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISS IONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR ( II ) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESE NTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCO UNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YE AR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CO NDUCTED; (B) NOT RELEVANT----------------- 10 PLAIN READING OF SUB-SECTION WOULD SHOW THAT IF THE ASSESSEE DURING THE COURSE OF SEARCH IN A STATEMENT ADMITS TO SOME UNDISCLOSED INCOME AND PAY TAXES ON THE SAME T HEN PENALTY CANNOT BE LEVIED IN TERMS OF SUB-SEC (1) OF THIS SECTION. IN THE CASE BEFORE US, THE AMOUNT OF RS. 4 CRORES W HICH WAS SURRENDERED DURING SEARCH, HAS BEEN DECLARED BY THE ASSESSEE IN THE RETURN AND TAXES HAVE BEEN PAID ACCORDINGLY. THEREFORE THE ASSESSEE IS NORMALLY ENTITLED FOR THE IMMUNITY PROVIDED IN SEC 271AAA ITSELF. HOWEVER, THE REVENUE HAS RAISED FURTHER DISPUTE THAT WHETHER THE ASSESSEE HAS DISCLOSED THE MANNER IN WHICH INCOME HAS BEEN EARNED. IN THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER FOLLOWING QUESTIONS AND ANSWE RS HAVE BEEN EXTRACTED: Q. DO YOU WANT TO SAY ANYTHING MORE ? ANS. I VOLUNTARILY SURRENDER A SUM OF RS. 4.00 CRO RE (RS. FOUR CRORES) FOR CURRENT FINANCIAL YEAR I.E. 2009-10 RELEVANT TO A.Y . 2010-11 IN ANY (SHOULD BE MY) INDIVIDUAL CAPACITY. THEY COVER ALL THE DISCR EPANCIES IN THE SEIZED PAPERS DURING THE COURSE OF SEARCH PROCEEDINGS. 11 THEREFORE CLEARLY THE REVENUE HAS NOT ASKED THE ASSESSEE TO DISCLOSE THE MANNER IN WHICH SUCH INCOM E WAS EARNED. IN ANY CASE ONCE THE INCOME IS SURRENDERED DURING THE COURSE OF SEARCH U/S 132(4) IT CAN BE SAFELY ASSUME D THAT DURING DISCUSSION THE ASSESSEE MUST HAVE DISCLOSED THE MANNER. IN ANY CASE WE FIND FORCE IN THE SUBMISSION S OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF THE EXPLANATION OF THE ASSESSEE HAS BEEN ACCEPTED FOR A SUM OF RS. 1987500 OUT OF TOTAL SURRENDER OF RS. 4 CRORES THEN SAME MANNER SH OULD HAVE BEEN ACCEPTED FOR THE WHOLE OF THE AMOUNT. IT IS NO T CLEAR FROM THE PENALTY ORDER HOW EXPLANATION FOR RS. 1987500 W AS ACCEPTED. IN ANY CASE THE LD. CIT(A) HAS CONSIDERED ALL THESE ISSUES IN DETAIL AND THE D.R. FOR THE REVENUE HAS N OT REFERRED TO ANY MATERIAL OR DECISION WHICH CAN CONTROVERT TH E FINDINGS OF THE CIT(A). IN THE FOLLOWING CASES WHICH HAVE BEEN RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE WHICH WAS CLEARLY HELD THAT PENALTY IS NOT LEVIABLE. 5 12 FURTHER THE ASSESSEE HAS RELIED ON THE FOLLOWING DECISIONS: KANAKIA SPACES P. LTD, MUMBAI VS. DEPARTMENT OF INC OME TAX, ITA NO. 6763/MUM/2011 (COPY FILED) A.N. ANNAAMALAIWSAMI (HUF) VS. DEPARTMENT OF INCOME TAX, ITA NO. 1634/MDS/2012 (COPY FILED) PRAMOD KUMAR JAIN, BARGARH VS. ASSESSEE ITA NO. 131, 132 & 133/CTK/2012 (COPY FILED) RAJ RANI GUPTA, NEW DELHI VS. ASSESSEE ITA NO. 3371/DEL/2011(COPY FILED) 13 THE LD. D.R. FOR THE REVENUE WAS NOT ABLE TO PLA CE BEFORE US ANY DECISION WHICH SUPPORTS HIS CASE, THEREFORE WE FIND NOTHING WRONG WITH THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. FOLLOWING THE ABOVE DECISION WE CONFIRM THE ORDER O F THE LD. CIT(A). 5 IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.3.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27.3.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR