Siddhraj Developers Pvt. Ltd., Gandhinagar V. The ACIT, Gandhinagar Circle, Gandhinagar

ITA 1041/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7038 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 24-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJAN KUMAR SINGH
• Assessee Lawyers: T P HEMANI
• Section: 271(1)(c); 143(3); 133A

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.1041/AHD/2015 / ASSTT. YEAR: 2009-10 SIDDHRAJ DEVELOPERS P.LTD.117, 1 ST FLOOR, SUMAN CITY SECTOR 11, GANDHINAGAR. PAN : AAHCS 6960 R VS. ACIT, GANDHINAGAR CIR. GANDHINAGAR. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI T.P. HEMANI, AR REVENUE BY : SHRI RANJAN KUMAR SINGH, SR.DR ! / DATE OF HEARING : 07/01/2019 '#$ ! / DATE OF PRONOUNCEMENT: 09 /01/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-7, AHMEDABAD DATED 28.1.2015 PASSED FOR T HE ASSTT.YEAR 2009-10. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING PENALTY OF RS.93,630/- WHICH WAS IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. ITA NO.1041/AHD/2015 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 29.9.2009 DECLARING TOTAL INCOME AT RS.12 ,11,950/-. IT EMERGES OUT FROM THE RECORD THAT ON 10.9.2009 A SUR VEY UNDER SECTION 133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF TH E ASSESSEE. ACCORDING TO THE AO, THE ASSESSEE HAS DISCLOSED AN AMOUNT OF RS.11.50 LAKHS VOLUNTARILY TOWARDS UNACCOUNTED RECEIPTS FOR ACCOUNTING YEAR 2008-09 IN ADDITION TO ITS REGULAR INCOME. THE LD. AO FURTHER OBSERVED THAT IN THE RETURN FILED ON 29.9.2009 FOR A.Y.2009- 10 IT HAD OFFERED RS.8.50 LAKHS INSTEAD OF ADMITTED UNACCOUNTED RECEI PT OF RS.11.50 LAKHS. THUS, IN THE OPINION OF THE AO A SUM OF RS. 3 LAKHS REQUIRED TO BE ADDED TO THE TOTAL INCOME. HE ACCORDINGLY PASSED AS SESSMENT ORDER UNDER SECTION 143(3) OF THE ACT ON 21.11.2011 WHERE BY ADDITION OF RS.3.00 LAKHS WAS MADE. THE LD.AO HAS INITIATED PE NALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ON THE ADDITION MADE TO THE INCOME OF THE ASSESSEE. IN RESPONSE TO THE SHOW CAUSE NOT ICE OF THE AO, IT WAS CONTENDED BY THE ASSESSEE THAT IT HAS MADE A NOTE A LONG WITH RETURN OF INCOME WHEREIN IT SUBMITTED THAT RS.3,99,850/- WAS EARNED IN EARLIER YEAR, AND IT WAS DULY RECOGNIZED AS NORMAL PROFIT I N THE RETURN FILED FOR EARLIER YEAR. THEREFORE, BALANCE OF RS.8.50 LAKHS WAS OFFERED IN THIS ASSESSMENT YEAR. THE LD.AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE OBSERVED THAT THE ASSESSEE HAS FU RNISHED INACCURATE PARTICUALRS TO THE EXTENT OF RS.3.00 LAKHS, AND ACC ORDINGLY LEVIED PENALTY OF RS.93,630/- WHICH IS EQUIVALENT TO THE T AX SOUGHT TO BE EVADED OF RS.3 LAKHS. THE FINDING RECORDED BY THE AO IN PARA-5 IS WORTH TO NOTE. IT READS AS UNDER: 5. IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR T HAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME TO THE EXTENT OF RS.3,00,000/-. THEREFORE, IT IS A FIT CAS E FOR IMPOSING PENALTY U/S. 271(1) (C) OF THE IT. ACT 1961. ACCORD INGLY, I IMPOSE THE MINIMUM PENALTY LEVIABLE @ 100% OF TAX S OUGHT TO BE EVADED U/S 271 (1) (C) OF THE ACT OF RS.93,630/- AS AGAINST PENALTY OF RS.2,80,890/- BEING 300% OF THE TAX SOUG HT TO BE EVADED. I THEREFORE, LEVY A PENALTY OF RS.93,630/- @ 100% U/S ITA NO.1041/AHD/2015 3 271 (1) (C) OF THE INCOME TAX ACT 1961. ISSUE NOTIC E OF DEMAND AND CHALLAN. 4. ON APPEAL, THE LD.CIT(A) CONCURRED WITH THE AO, BUT CHANGED BASIS FOR VISITING THE ASSESSEE PENALTY. THE LD.AO HAS LEVIED PENALTY FOR THE REASONS THAT THE ASSESSEE HAS FURNISHED INACCUR ATE PARTICULARS, BUT THE LD.CIT(A) HAS CONFIRMED THE PENALTY WITH HELP O F EXPLANATION -1 TO SECTION 271(1)(C). THE RELEVANT FINDING OF THE LD. CIT(A) IS ALSO WORTH TO NOTE. IT READS AS UNDER: 3.2 I HAVE CONSIDERED THE PENALTY ORDER ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE APPELLA NT, DURING THE COURSE OF SURVEY, BASED ON THE DOCUMENT FOUND, HAS DISCLOSED UNACCOUNTED/UNDISCLOSED RECEIPT OF RS.11,50,000/- N OT ENTERED IN THE BOOKS OF ACCOUNTS FOR ACCOUNTING YEAR 2008-09. HOWEVER, IN THE RETURN OF INCOME FILED, IT HAS INCLUDED ONLY RS .8,50,000/-. THE APPELLANT, BEFORE ME, HAS CONTENDED THAT RS.11,50,0 00/-WAS UNACCOUNTED RECEIPT AND CONSIDERING THE EXPENDITURE , UNDISCLOSED INCOME WAS OF RS.8,50,000/-, THEREFORE, ONLY RS.8,5 0,000/- WAS ADDED AS DISCLOSED UNDER SURVEY. THE APPELLANT NEIT HER BEFORE THE AO NOR BEFORE ME HAS SUBMITTED THE DETAILS OF EXPEN DITURE TO ARRIVE AT THE FIGURE OF RS.8,50,000/-. IN VIEW OF T HE ABOVE AND EXPLANATION 1 TO SECTION 271(1)(C), PENALTY OF R S.3,00,000/- LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) I S CONFIRMED. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. THE LD.COUNSEL FOR T HE ASSESSEE HAS RAISED MULTI-FOLD CONTENTIONS BEFORE US. IN THE FIRST FOL D OF CONTENTIONS, HE SUBMITTED THAT THE ADDITION HAS BEEN MADE ON THE BA SIS OF ALLEGED VOLUNTARY DISCLOSURE. THIS DISCLOSURE IS BASED ON A STATEMENT RECORDED DURING THE COURSE OF SEARCH, AND SUCH STATEMENT WAS GIVEN WITHOUT ANY OATH, BECAUSE OFFICER IN THE SURVEY TEAM IS NOT AUT HORIZED TO ADMINISTER OATH AS PROVIDED IN SUB-SECTION (3) OF SECTION 133( A). IT WAS A JUST INFORMATION FOR SETTING MACHINERY IN MOTION. HENCE , THERE IS NO EVIDENCE WITH THE REVENUE TO SAY THAT THE ASSESSEE HAS UNACCOUNTED RECEIPTS. FOR BUTTRESSING HIS CONTENTIONS, HE MADE REFERENCE TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF S. KHADER KAHN SON, 25 TAXMANN.COM 413 (SC). ITA NO.1041/AHD/2015 4 IN THE NEXT FOLD OF CONTENTIONS, HE SUBMITTED THAT THE ASSESSEE HAS DULY PROVIDED A NOTE AT THE END OF THE RETURN F ILED BY IT WHEREIN IT HAS SUBMITTED THAT OUT OF RS.11.50 LAKHS, RS.3.99 L AKHS WAS PART OF NORMAL PROFIT WHICH HAS BEEN OFFERED EARLIER. THE ASSESSEE HAS DISCLOSED EVERYTHING INCLUDING ITS ACCOUNT. REVENU E HAS FAILED TO REBUT THIS DISCLOSURE AND FAILED TO DISCLOSE WHICH INCORR ECT FACT WAS FURNISHED BY THE ASSESSEE. IN THE NEXT FOLD OF CONTENTIONS, HE SUBMITTED THAT PENALTY HAS BEEN IMPOSED BY THE AO ON THE GROUND THAT THE ASSES SEE HAS FURNISHED INACCURATE PARTICULARS; WHEREAS THIS BASIS HAS BEEN CHANGED BY THE LD.CIT(A) WHO CONFIRMED THE PENALTY WITH THE HELP O F EXPLANATION 1 TO SECTION 271(1)(C). THIS EXPLANATION PROVIDES THAT IF AN ADDITION IS BEING MADE TO THE TOTAL INCOME OF THE ASSESSEE, THEN IT W OULD BE DEEMED THAT SUCH ADDITION REPRESENTS CONCEALED INCOME. SO PENA LTY HAS BEEN CONFIRMED FOR CONCEALMENT AND NO SHOW CAUSE NOTICE WAS GIVEN FOR THIS PURPOSE. THE LD.CIT(A) CANNOT CHANGE BASIS OF VISI TING THE ASSESSEE WITH PENALTY UNLESS SUCH PENALTY PROCEEDINGS WAS IN ITIATED BY THE LD.CIT(A). FOR BUTTRESSING HIS CONTENTIONS, HE REL IED UPON THE ORDER OF THE ITAT PASSED IN THE CASE OF SHRI KANTIBHAI NARAN BHAI PRAJAPATI IN ITA NO.2880/AHD/2014 WHICH HAS BEEN TAKEN NOTE BY THE T RIBUNAL IN THE CASE OF SHRI JAYENDRA N. SHAH VS. ACIT, IN ITA NO.1 381/AHD/2016. THE TRIBUNAL HAS REPRODUCED FINDING OF THE ITAT IN THE CASE OF KANTIBHAI NARANBHAI PRAJPATI (SUPRA). SUCH FINDING READS AS U NDER: 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FI ND THAT IN THE IDENTICAL FACTS AND CIRCUMSTANCES THE HON'BLE ITAT IN THE CASE OF KANTIBHAI NARANBHAI PRAJAPATI (SUPRA) HAS DELETED T HE PENALTY IMPOSED BY THE LOWER AUTHORITIES. THE RELEVANT EXTR ACT OF THE ORDER IS REPRODUCED BELOW: '8. WE STRAIGHT AWAY FIND THAT THE AO VIDE PENALTY ORDER DOTED 25/11/2013 UNDER S.271(L)(C) OF THE ACT IMPOS ED PENALTY ON ADDITIONS MADE ALLEGING 'CONCEALMENT OF ITA NO.1041/AHD/2015 5 PARTICULARS OF INCOME'. HOWEVER, THE CIT(A), ON THE OTHER HAND, HAS CONFIRMED THE PENALTY ON THE GROUND OF 'FURNISHING INACCURATE PARTICULARS OF INCOME'. APPA RENTLY, THE BASIS AND FOUNDATION FOR IMPOSITION OF PENALTY HAS BEEN ALTERED BY THE C1T(A). IT IS THUS OSTENSIBLE THAT F INDINGS RECORDED BY THE CIT(A) SHOW THAT PENALTY HAS BEEN CONFIRMED ON A DIFFERENT PREMISE AND THE ORIGINAL SATISFACTION FOR IMPOSITION OF PENALTY HAS BEEN ALT ERED OR MODIFIED BY THE APPELLATE AUTHORITY. IN SUCH CIRCUM STANCES, WHERE THE ORIGINAL BASIS OF IMPOSITION OF PENALTY H AS BEEN ALTERED IN A SIGNIFICANT WAY BY THE FIRST APPELLATE AUTHORITY, THE VERY BASIS FOR SUSTAINING THE PENALTY IS RENDER ED NON- EXISTENT. NEEDLESS TO SAY, THE IMPOSITION OF PENALT Y IS SOLELY DEPENDENT UPON THE 'SATISFACTION' OF THE AO [UNLESS INITIATED BY CIT(A)] AND NON-ELSE. THE GROUND FOR ACTION BY A O WAS ALLEGATION OF 'CONCEALMENT'. THIS GROUND HAS BEEN SUBSTITUTED BY CIT(A) TO 'FURNISHING INACCURATE PAR TICULARS OF INCOME' WHILE CONFIRMING THE PENALTY QUANTIFIED BY THE AO. THUS, IN THE ABSENCE OF CONTINUITY IN THE FINDINGS OF THE AO AND THE CIT(A), THE ORDER OF THE PENALTY PASSED BY THE AO IS LIABLE TO BE STRUCK DOWN ON THIS GROUND ALONE. FOR SUCH A VIEW, WE USEFULLY REFER TO THE DECISION OF THE HON' BLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGI NEERING COMPANY VS. CIT(2006) 282 ITR 642 (GUJ.) AND CIT VS . MANU ENGINEERING WORKS (1980) 122 ITR 306 (GUJ.). S IMILAR VIEW HAS BEEN TAKEN BY THE COORDINATE BENCH OF THE TRIBUNAL IN GIAN CHAND BATIA VS. DCIT 61 ITD 24(AIL ). THEREFORE, WHERE CONCURRENT I.T.AUTHORITIES ARE NOT SURE ABOUT NATURE OF DEFAULT, THE PENAL ACTION UNDER S.2 71(L)(C) OF THE ACT IS NOT SUSTAINABLE IN LAW.' THE FACTS OF THE CASE IN HAND ARE IDENTICAL TO THE FACTS OF THE CASE AS DISCUSSED ABOVE. THEREFORE, THE RATIO LAID DOWN BY THIS TRIBUNAL IN THE CASE OF KANTIBHAI NARANBHAI PRAJAPATI (SUPRA ) IS SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE. THEREF ORE, RESPECTFULLY FOLLOWING THE SAME WE REVERSE THE ORDERS OF AUTHORI TIES BELOW. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOW ED. 6. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ER OF THE LD.CIT(A). 7. ON DUE CONSIDERATION OF THE ABOVE FACTS AND CIRC UMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE DOES NOT DESERVE TO BE VISITED WITH PENALTY BECAUSE THERE IS NO EVIDENCE BROUGHT ON REC ORD BY THE REVENUE ITA NO.1041/AHD/2015 6 DEMONSTRATING THE FACT THAT THE ASSESSEE HAS FURNIS HED INACCURATE PARTICULARS. ONLY CIRCUMSTANCES REFERRED BY THE AO IS THE STATEMENT GIVEN DURING THE COURSE OF SURVEY FOR HARBOURING BE LIEF THAT INCOME OF RS.3.00 LAKHS DESERVES TO BE ASSESSED IN THE HANDS OF THE ASSESSEE, OVER AND ABOVE, INCOME DISCLOSED BY IT. THIS EVIDE NCE IS AN INFORMATION ONLY, WHICH DOES NOT CARRY EVIDENTIARY VALUE, HENCE , ON THE BASIS OF THIS STATEMENT, IT CANNOT BE CONCLUDED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. APART FROM ABOVE , THE ASSESSEE HAS COMPLETELY DISCLOSED THE DETAILS ALONG WITH COPIES OF ACCOUNTS. IT HAS MADE A NOTING IN THE RETURN OF INCOME SHOWING AS TO HOW RS.3.00 LAKH IS NOT TO BE INCLUDED IN ITS INCOME. IT IS A SEPAR ATE MATTER THAT SUCH ADDITION HAS BEEN MADE, WHICH MIGHT HAVE NOT BEEN C HANGED, BUT FOR THE PURPOSE OF PENALTY, THE STAND TAKEN BY THE ASSE SSEE DESERVES TO BE LOOKED INTO AND DESERVES TO BE DECIDED AFRESH. APA RT FROM TWO CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD.CIT(A ) HAS CONFIRMED PENALTY FOR DEEMED CONCEALMENT, WHEREAS, THIS WAS N OT USED BY THE AO AS REASON FOR VISITING THE ASSESSEE WITH PENALTY. WE EXTRACTED A PART OF THE PENALTY ORDER AS WELL AS FINDING OF THE LD.CIT( A). IF BOTH THE ORDERS OF THE REVENUE AUTHORITIES ARE BEING EXAMINED IN TH E LIGHT OF THE DISCUSSION MADE BY THE TRIBUNAL IN THE CASE SHRI KA NTIBHAI NARANBHAI PRAJPATI (SUPRA), THEN PENALTY IS NOT SUSTAINABLE. THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE PENALTY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 9 TH JANUARY, 2019 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 09/01/2019