DCIT, Jaipur V. MANGAL ELECTRICAL INDUSTIRES PVT. LTD, Jaipur

ITA 1028/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5090 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 31-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 1026/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR. CUKE VS. SHRI RAHUL MANGAL, A-30, PARAS, SUBHASH NAGAR, SHASTRI NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABYPM 3247 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 1027/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR. CUKE VS. SHRI ASHISH MANGAL, A-30, PARAS, SUBHASH NAGAR, SHASTRI NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABYPM 3246 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 1028/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR. CUKE VS. M/S. MANGAL ELECTRICAL INDUSTRIES PVT. LTD., F-259-260, ROAD NO. 13, VKI AREA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAFCM 4722 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14.07.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 20/07/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THESE ARE THREE APPEALS BY THE REVENUE AGAINST DIF FERENT ORDERS OF LD. CIT (A) DATED 30.10.2015 IN RESPECT OF THREE DIFFERENT ASSE SSES. THE GROUNDS RAISED BY THE 2 ITA NO. 1026, 1027 & 1028/JP/2015 DCIT VS. SHRI RAHUL MANGAL & OTHERS REVENUE ARE COMMON IN ALL THE APPEALS EXCEPT CHANGE IN FIGURES. THEREFORE, ALL THE APPEALS ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. THE GROUNDS RAISED BY THE REVENUE IN ITA NO. 1026/J P/2015 ARE AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE CIT (A) WAS RIGHT IN DELETING THE PENALTY OF RS. 42,22, 600/- LEVIED U/S 271AAA OF THE ACT, WHEREAS THE ASSESSEE HAD NOT FUL FILLED THE REQUIREMENT AS PER SECTION 271AAA(2)(II) OF THE I.T . ACT, 1961. 2. THE APPELLANT CRAVE, LEAVE OR RESERVES THE RIGHT TO AMEND MODIFY, ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. BRIEFLY STATED THE FACTS ARE THAT A SEARCH ACTIO N WAS CONDUCTED ON 31.1.2012 IN THE CASE OF MANGAL GROUP, JAIPUR. THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 153B(1)(B) OF THE I.T. ACT, 1961 (HEREINAFT ER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 30.03.2014. WHILE FRAMING THE ASSESSMENT, THE AO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271AAA ON THE GROUND THAT THE TOTAL INCOME DECLARED IN THE RETURN FOR THE SPECIFIED YEA R INCLUDED THE UNDISCLOSED INCOME OF RS. 4,22,26,000/- WHICH REPRESENTED THE UNEXPLAI NED MONEY IN THE FORM OF SUNDRY CREDITOR WRITTEN OFF. ACCORDINGLY, PENALTY U /S 271AAA OF THE ACT IS INITIATED ON SUCH AMOUNT OF RS. 4,22,26,000/- BY WAY OF ISSUE OF NOTICE U/S 274 READ WITH SECTION 271AAA OF THE ACT AS PER PARA 6 OF ASSESSME NT ORDER AND A NOTICE WAS ISSUED ON 31.3.2014 AND DULY SERVED UPON THE ASSESS EE ALONG WITH ASSESSMENT ORDER. THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINS T THE ASSESSMENT ORDER DATED 31.3.2014. ANOTHER SHOW CAUSE NOTICE DATED 4.8.2014 WAS ISSUED TO THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY U/S 271AAA MAY NOT BE LEVIED AND DATE OF COMPLIANCE WAS FIXED FOR 27.8.2014. IN COMPLIANCE, THE ASSESS EE FILED DETAILED WRITTEN SUBMISSION ON 27.8.2014. THE SUBMISSIONS OF THE AS SESSEE ON THE ISSUE OF 3 ITA NO. 1026, 1027 & 1028/JP/2015 DCIT VS. SHRI RAHUL MANGAL & OTHERS SURRENDER MADE IN THE RETURN OF INCOME FILED WERE C ONSIDERED BY THE AO CAREFULLY BUT HE COULD NOT FOUND IT ACCEPTABLE IN THE LIGHT O F FACTS OF THE CASE. THE AO HELD THAT SINCE THE ASSESSEE HAS NEITHER SPECIFIED NOR S UBSTANTIATED THE MANNER IN WHICH INCOME HAS BEEN DERIVED, THEREFORE HE HELD THE ASSE SSEE LIABLE FOR PENALTY U/S 271AAA OF THE ACT ON SUCH DISCLOSURE IN THE RETURN THOUGH IT IS PART OF RETURNED INCOME. SUBSEQUENTLY A PENALTY ORDER UNDER SECTION 271AAA OF THE ACT DATED 24.09.2014 WAS PASSED ON THE GROUND THAT THE ASSESS EE COULD NOT SATISFACTORILY EXPLAIN AND SUBSTANTIATED THE INCOME DURING THE ASS ESSMENT PROCEEDINGS. THE ASSESSEE AGGRIEVED BY THIS ORDER, PREFERRED AN APPE AL BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE SUBMISSIONS ALLOWED THE APPEAL OF T HE ASSESSEE. 3. NOW THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. D/R SUPPORTED THE ORDER OF THE AO. 4.1. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT (A) AND SUBMITTED THAT THE AO FAILED TO APPRECIATE THE FACTS AND WRONGLY APPLIED THE PROVISIONS. HE SUBMITTED THAT THE LD. CIT (A) HAS E XAMINED THE FACTS AND HAS RIGHTLY ALLOWED THE APPEAL. 4.2. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FAC T THAT THE ASSESSEE HAS OFFERED IN HIS RETURN OF INCOME THE UNDISCLOSED INCOME OF RS. 4,22,26,000/-. THE SAME ARE DULY RECORDED BY THE AO AT PARA 5 OF THE ASSESSMENT ORDE R. NOWHERE IN THE ASSESSMENT ORDER, THE AO RECORDED THAT THE ASSESSEE WAS ASKED TO SPECIFY OR SUBSTANTIATE THE MANNER IN WHICH THE INCOME HAS BEEN DERIVED AND THE ASSESSEE HAS FAILED TO DO SO. THE AO HAS MERELY RECORDED THAT THE TOTAL INCOME DE CLARED IN THE RETURN OF INCOME FOR THE SPECIFIED YEAR INCLUDED THE UNDISCLOSED INC OME OF RS. 4,22,26,000/- WHICH 4 ITA NO. 1026, 1027 & 1028/JP/2015 DCIT VS. SHRI RAHUL MANGAL & OTHERS REPRESENTED THE UNEXPLAINED MONEY IN THE FORM OF SU NDRY CREDITOR WRITTEN OFF. THE LD. CIT (A) HAS GIVEN A FINDING OF FACT AS UNDER :- UNDOUBTEDLY, IN ACCORDANCE WITH SUB SECTION (2) O F SECTION 271AAA OF THE ACT, THE PENALTY PROVISIONS UNDER SUB-SECTIO N (1) OF SECTION 271AAA WILL NOT APPLY IF THE ASSESSEE (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER S UB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME A ND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED ; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME. IN THIS REGARD, AR HAS SUBMITTED THAT THE ASSESSEE SATISFIES ALL THE ABOVE THREE CONDITIONS AS IS EVIDENT FROM FACTS OF THE CASE AND DOCUMENTS SUBMITTED. FURTHER, THE ASSESSEE, IN COUR SE OF SEARCH IN THE SWORN STATEMENT RECORDED UNDER SECTION 132(4) OF TH E ACT, HAS ADMITTED THE UNDISCLOSED INCOME, AND CLEARLY STATED THE MANNER IN WHICH THE UNDISCLOSED INCOME (WITHIN THE MEANING OF EXPLANATION (A)(I) OF SECTION 271AAA) WAS DERIVED AND SUBSTANTIATED IN STATEMENT RECORDED IN COURSE OF SEARCH. SUBSEQUENTLY, THE ASS ESSEE PAID TAX, TOGETHER WITH INTEREST IN RESPECT OF THE UNDISCLOSE D INCOME AND FILED RETURN OF INCOME, WHICH STAND ACCEPTED IN ASSESSMEN T U/S 153B(1)(B) R.W.S. 143(3) OF THE ACT. ON PERUSAL OF THE ABOVE, IT IS SEEN THAT ASSESSEE HAS OFFERED FOR TAX HIS UNDISCLOSED INCOME (RS. 4,22,26,000/-) INCLUDING JEWELLERY AS UNDER :- ADVANCE GIVEN RS. 3,80,00,000/- JEWELLERY RS. 30,00,000/- ON A/C OF OTHER DISCREPANCIES RS. 12,26,000/- -------------------- RS. 3,22,26,000/- FURTHER, FOR MANNER IN WHICH SUCH UNDISCLOSED INCOM E DERIVED, AS AO HAS MADE REFERENCE OF ASSESSEES SUBMISSION IN THE PENALTY ORDER PARA 3 PG 3 TO 11. ON CAREFUL PERUSAL OF THE SAME, IT IS SEEN AO IN TH E PENALTY ORDER HAS OBSERVED THAT ASSESSEE HAS FAILED TO COMPLY TO THE TERMS AND CONDITIONS OF SEC 271AAA(2) OF THE ACT AS HE IS NOT ABLE TO 5 ITA NO. 1026, 1027 & 1028/JP/2015 DCIT VS. SHRI RAHUL MANGAL & OTHERS SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED. HERE, DICTIONARY MEANING OF SUBSTANTIATES NEEDS F URTHER ELABORATION. THE DICTIONARY MEANING OF SUBSTANTIATE(AS A VERB) IS TO ESTABLISH BY PROOF OR COMPETENT EVIDENCE. FURTHER, THE WORD SUB STANTIATE IS RELATED TO THE WORD SUBSTANTIAL, WHICH MEANS SOLID . SO, TO SUBSTANTIATE A CLAIM IS TO MAKE IT SOLID OR BELIEVA BLE. IF THE EVIDENCE GIVEN IN SUPPORT OF AN ARGUMENT IS WEAK AND UNCONVI NCING, THAT EVIDENCE CAN BE DESCRIBED AS INSUBSTANTIAL. THE LEG AL MEANING OF TO SUBSTANTIATE IS AS UNDER :- (I) AS VERB . TO ESTABLISH THE EXISTENCE OR TRUTH OF A PARTICULAR FACT THROUGH THE USE OF COMPETENT EVIDENCE; TO VERIFY (II) AS NOUN . SUBSTANTIATION NOUN AUTHENTICATING EVID ENCE, CONFIRMATION, CONFIRMING EVIDENCE, CORROBORATING EV IDENCE. THEREFORE, TO SUBSTANTIATE MEANS EVIDENCE, WHICH BE ARS OUT THE TRUTH, EVIDENCE WHICH PROVES A SUPPOSITION, EVIDENCE WHICH RATIFIES A POSITION EVIDENCE WHICH VALIDATES A SUPPOSITION, SUPPORTING EVIDENCE, VERIFICATION. IN VIEW OF THESE FACTS, IT IS SEEN T HAT ASSESSEE HAS SATISFIES THE CLAUSES OF SEC 271AAA(2) OF THE ACT A S (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER S UB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME A ND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED ; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED BY AND LATER ON FILED A DETAILED LETTER ON 02/04/2012 IN THIS REGARD ; AND (III) PAID THE APPLICABLE TAXES, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. IN VIEW OF THESE FACTS, AND CIRCUMSTANCES AS DISCUS SED ABOVE, IN THIS CASE AO HAS NOT CORRECTLY APPLIED THE PROVISIONS OF SECTION 271AAA OF THE ACT WHICH CANNOT BE SUSTAINED, THEREFORE, AOS ACTION FOR LEVYING PENALTY OF RS. 42,22,600/- BEING 10% OF UNDISCLOSED INCOME OF RS. 42,22,600/- IS HEREBY DELETED. ASSESSEES APPEAL IN GROUND NO. 1 SUCCEEDS. THE REVENUE HAS NOT PLACED ANY CONTRARY MATERIAL ON RECORD. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT (A), WHICH IS HEREBY UPHELD. 6 ITA NO. 1026, 1027 & 1028/JP/2015 DCIT VS. SHRI RAHUL MANGAL & OTHERS 5. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 1026/JP/2015 IS DISMISSED. ITA NOS. 1027 & 1028/JP/2015 : 6. THE FACTS INVOLVED IN THESE APPEALS ARE EXACTLY SAME AS IN ITA NO. 1026/JP/2015 EXCEPT CHANGE IN FIGURES. THEREFORE, ON THE SAME REASONING, WE APPLY THE DECISION ARRIVED AT IN ITA NO. 1026/JP/20 15 FOR THESE APPEALS ALSO I.E. ITA NOS. 1027 & 1028/JP/2015 AND DISMISS THE APPEALS OF THE REVENUE. 7. IN TOTALITY, THE APPEALS OF THE REVENUE ARE DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/07/2016. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 20/07/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE DCIT, CENTRAL CIRCLE-3, JAIP UR. 2. THE RESPONDENT- SHRI RAHUL MANGAL, JAIPUR, SHRI ASHISH MANGAL, JAIPUR AND M/S. MANGAL ELETRICAL INDUSTRIES PVT. LTD., JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 1026, 1027 & 1028/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NO. 1026, 1027 & 1028/JP/2015 DCIT VS. SHRI RAHUL MANGAL & OTHERS