KSHITI R. MANIAR, MUMBAI V. ASST CIT CEN CIR 46, MUMBAI

ITA 1020/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70979 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 12-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 04-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Search and seizure
• Section: 27; 132; 153A

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . , , ! ! ! ! '# $% '# $% '# $% '# $% , ,, , & & & & ' ' ' ' BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER . / ITA NO. 1020/MUM./2011 ( &) * !+* / ASSESSMENT YEAR : 200708 ) KSHITI R. MANIAR 21, KAMAL BUILDING 69, WALKESHWAR ROAD MUMBAI 400 006 .. ,- / APPELLANT ) V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE46, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... ./,- / RESPONDENT , . / PERMANENT ACCOUNT NUMBER ABAPS7753F 1! 2 3 / ASSESSEE BY : MR. HARI S. RAHEJA &) *4# 2 3 / REVENUE BY : MR. O.P. SINGH )! 2 # / DATE OF HEARING 12.08.2013 $ 5+ 2 # / DATE OF ORDER 28.08.2013 $ $ $ $ / ORDER '# $% '# $% '# $% '# $% , ,, , & & & & 6 6 6 6 / PER AMIT SHUKLA, J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE, CHALLENGING THE IMPUGNED ORDER DATED 30 TH NOVEMBER 2010, PASSED BY THE LEARNED COMMISSIONER (APPEALS)XXXVII I, MUMBAI, M/S. KHUSHI DEVELOPERS P. LTD. 2 FOR THE ASSESSMENT YEAR 200708, IN THE MATTER OF PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME T AX ACT, 1961 (FOR SHORT THE ACT ) FOR ` 1,00,000 WHICH HAS ALSO, BEEN CONFIRMED BY THE LEA RNED COMMISSIONER (APPEALS). 2. THE RELEVANT FACTS, APROPOS THE LEVY OF PENALTY ARE THAT, IN ASSESSEES CASE, A SEARCH AND SEIZURE ACTION UNDER SECTION 132 (1) WAS CARRIED OUT ON 19 TH JUNE 2007. ACCORDINGLY, NOTICE UNDER SECTION 153A WAS ISSUED TO THE ASSESSEE ON 8 TH OCTOBER 2008. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE HAD FILED RETURN OF INCOME ON 11 TH FEBRUARY 2009, DECLARING TOTAL INCOME OF ` 9,57,450. THIS INCOME ALSO INCLUDED A SUM OF ` 3,05,000, ON ACCOUNT OF CREDIT ENTRIES IN THE BANK ACCOUNT WITH THE BANK OF BARODA ACCOUNT NO.27014. IT IS WITH REGARD TO THIS INCOME SHOWN IN THE RETURN OF INCOME FILED UNDER SECTION 153A THAT PENALTY HAS BEEN INITIATED AND LEVIED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ALSO O BSERVED THAT THE ASSESSEE HAS NOT FILED A RETURN OF INCOME UNDER SECTION 139( 1) AND, THEREFORE, EXPLANATION 5 TO SECTION 271(1)(C) WOULD BE APPLICA BLE. 3. THE COMMISSIONER (APPEALS) HAS CONFIRMED THE PENALT Y ON THE GROUND THAT THE ASSESSEE HAS NOT FILED THE RETURN OF INCOM E UNDER SECTION 139(1) AND THE RETURN OF INCOME WAS ONLY FURNISHED IN RESP ONSE TO NOTICE UNDER SECTION 153A, HENCE, THE INCOME REFLECTED IN HER BA NK ACCOUNT CANNOT BE SAID TO BE DISCLOSED. ACCORDINGLY, HE ALSO CONFIRME D THE PENALTY. 4. BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT, FIRS T OF ALL EXPLANATION 5 IS NOT APPLICABLE BUT ONLY EXPLANATION 5A CAN BE INVOKED. THE SAID EXPLANATION PROVIDES THAT WHERE THE DUE DATE OF FIL ING OF THE RETURN OF INCOME HAS NOT EXPIRED, THE SAID EXPLANATION CANNOT BE INV OKED. IN THIS CASE, THE DUE DATE OF FILING OF THE RETURN OF INCOME UNDER SE CTION 139(1) WAS 31 ST JULY 2007 AND UNDER SECTION 139(4) WAS 31 ST MARCH 2008. IN THE PRESENT CASE, A SEARCH HAS TAKEN PLACE ON 19 TH JUNE 2007 AND BY THIS DATE, THE DUE DATE HAS M/S. KHUSHI DEVELOPERS P. LTD. 3 NOT EXPIRED. THEREFORE, BY FICTION OF EXPLANATION 5 A, PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESE NTATIVE RELYING UPON THE ORDER OF THE COMMISSIONER (APPEALS), SUBMI TTED THAT THE ASSESSEE HAS NOT FILED HIS ORIGINAL RETURN OF INCOME UNDER S ECTION 139(1) FOR THE ASSESSMENT YEAR 200708 BUT HAS ONLY FILED THE RETU RN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 153A, WHEREIN THE ASSESSEE HAS INCLUDED THE SUM OF ` 2,05,000, ON THE BASIS OF CREDIT ENTRIES OF THE BA NK ACCOUNT. THUS, EXPLANATION 5A TO SECTION 271(1)(C) CLEARLY GETS AT TRACTED AND PENALTY HAS RIGHTLY BEEN LEVIED AND CONFIRMED IN THIS CASE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PERUSE D THE FINDINGS OF THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER ( APPEALS). IN THE PRESENT CASE, PENALTY HAS BEEN LEVIED BY INVOKING THE PROVI SIONS OF EXPLANATION 5A TO SECTION 271(1)(C) (AND NOT EXPLANATION 5, AS MENTIO NED BY THE ASSESSING OFFICER). EXPLANATION 5A, IS A DEEMING PROVISION WH ERE IN CASE OF SEARCH AND SEIZURE OPERATION CARRIED OUT UNDER SECTION 132 AFT ER 1 ST JUNE 2007, THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULAR S OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, IF HE I S FOUND TO BE THE OWNER OF ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTIC LE OR THING ACQUIRED BY HIM UTILIZING HIS INCOME IN ANY PREVIOUS YEAR OR AN Y INCOME BASED ON ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS FOR ANY PREVIOUS YEAR. THE RELEVANT PROVISIONS OF EXPLANATION 5A TO SECTION 27 1(1)(C) IS REPRODUCED BELOW: [EXPLANATION 5A. WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSE SSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSET S) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM B Y UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOU NT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH E NTRY IN THE BOOKS M/S. KHUSHI DEVELOPERS P. LTD. 4 OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRE SENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS Y EAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN D ECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME F OR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SEC TION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INC OME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THUS, IN CASE OF SEARCH CONDUCTED ON / OR AFTER 1 ST JUNE 2007, PENALTY FOR CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IS DEEMED UNDER EXPLANATION 5A. HOWEVER, TWO EXCEPTION S OR SAVING CLAUSE HAS BEEN PROVIDED WHEREIN THE PENALTY CANNOT BE LEVIED UNDER THIS SECTION. FIRSTLY, THE ASSESSEE HAS SHOWN THE ASSETS AS MENTI ONED IN CLAUSE (I) OR INCOME AS MENTIONED IN CLAUSE (II), IN THE RETURN O F INCOME FURNISHED BEFORE THE DATE OF SEARCH OR SECONDLY, THE DUE DATE FOR FI LING OF RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS NOT EXPIRED. IF ANY CASE FAL LS UNDER THESE SAVING CLAUSES, EXPLANATION 5A CANNOT BE INVOKED. 7. IN THE PRESENT CASE, THE SEARCH HAD TAKEN PLACE ON 19 TH JUNE 2007. THE DUE DATE FOR FILING OF RETURN OF INCOME FOR THE ASSESSMENT YEAR 200708, HAD NOT EXPIRED ON THE DATE OF SEARCH AS THE DUE DA TE OF FILING OF RETURN OF INCOME UNDER SECTION 139(1) WAS 31 ST JULY 2007 AND DUE DATE UNDER SECTION 139(4) WAS 31 ST MARCH 2008. THUS, IN THE PRESENT CASE, DEEMING PRO VISIONS OF EXPLANATION 5A CANNOT BE APPLIED HERE BECAUSE AT THE TIME OF SEARCH, THE RELEVANT PREVIOUS YEAR FOR THE ASSESSMENT YEAR 2007 08, THE DUE DATE OF FILING OF RETURN OF INCOME HAD NOT EXPIRED. WHETHER THE ASSESSEE HAD FILED THE RETURN OF INCOME UNDER SECTION 139(1) OR 139(4) AFTER THE DATE OF SEARCH, WILL NOT BE OF MUCH CONSEQUENCE BECAUSE THE INCOME IN QUESTION PERTAINS TO ASSESSMENT YEAR 200708 FOR WHICH THE DUE DATE HAD NOT EXPIRED AT THE TIME OF SEARCH. THE DEEMING PROVISIONS AS GIVEN ANY EXPLANATION 5A HAS TO M/S. KHUSHI DEVELOPERS P. LTD. 5 BE STRICTLY CONSTRUED BECAUSE ONE HAS TO SEE WHAT I S THE STATUS OF INCOME ON THE DATE OF SEARCH AND NOT AFTERWARDS. THE PENALTY IN THIS CASE, CANNOT BE LEVIED UNDER THE MAIN PROVISION AS THE ASSESSEE HAS INCLUDED THIS INCOME IN THE RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SE CTION 153A AND WHICH HAS BEEN ASSESSED ALSO. THERE IS NO VARIATION BETWEEN T HE RETURN OF INCOME AND THE ASSESSED INCOME, QUA THIS ADDITION. FOR LEVYING THE PENALTY IN CASES OF SEARCH AFTER 1 ST JUNE 2007, THE DEEMING PROVISIONS OF EXPLANATION 5 A CAN ONLY BE INVOKED, WHICH CLEARLY CARVES OUT THE EXCEP TION IN THE CASES WHERE DUE DATE OF FILING OF THE RETURN OF INCOME HAD NOT EXPIRED AT THE TIME OF SEARCH. THUS, FOR LEVY OF PENALTY UNDER EXPLANATION 5A, IT HAS TO BE SEEN WHETHER ANY ASSETS OR INCOME FOUND ON THE DATE OF S EARCH HAS BEEN ACQUIRED OUT OF THE PREVIOUS YEAR AND NOT AFTERWARDS FOR WHI CH PENALTY CAN BE LEVIED OR INITIATED UNDER OTHER PROVISIONS OF SECTION 271 (1)(C). THUS, IN OUR OPINION, ONCE THE DUE DATE HAD NOT EXPIRED FOR FILING THE RE TURN OF INCOME FOR THE ASSESSMENT YEAR 200708, AT THE TIME OF SEARCH, PEN ALTY CANNOT BE LEVIED UNDER THE DEEMING PROVISIONS OF EXPLANATION 5A. CON SEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSION ER (APPEALS) AND HOLD THAT ON THIS PRELIMINARY GROUND, PENALTY LEVIED BY THE ASSESSING OFFICER AND AS CONFIRMED BY THE COMMISSIONER (APPEALS) CANNOT B E SUSTAINED AND SAME IS DELETED. 8. 4 #7 &) *4# 2 !# 8 ) 1# 9: ; 8. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED. $ 2 5+ < =)7 28 TH AUGUST 2013 2 > ; ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST 2013 SD/- . .. . B. RAMAKOTAIAH ACCOUNTANT MEMBER SD/- '# '# '# '# $% $% $% $% & & & & AMIT SHUKLA JUDICIAL MEMBER MUMBAI, =) =) =) =) DATED : 28 TH AUGUST 2013 M/S. KHUSHI DEVELOPERS P. LTD. 6 $ 2 .&#'? @?+# / COPY OF THE ORDER FORWARDED TO : (1) &) *4# / THE ASSESSEE; (2) 1! / THE REVENUE; (3) A () / THE CIT(A); (4) A / THE CIT, MUMBAI CITY CONCERNED; (5) ?!D> .&#&) , , / THE DR, ITAT, MUMBAI; (6) >E* F / GUARD FILE. /?# .&# / TRUE COPY $) / BY ORDER . 1. GH / PRADEEP J. CHOWDHURY !4I &)1 G! / SR. PRIVATE SECRETARY J / 9 1 / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI