The DCIT, Central Circle-3, Surat V. Smt,. Sulochanadevi A.Agarwal, Mumbai

ITA 1052/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60623 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Section: 143(3); 153A; 250; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND A. MOHAN ALANKAMON Y, AM) ITA NO.1052/AHD/2012 A. Y.: 2009-10 THE D. C. I. T., CENT. CIR-3, AAYAKAR BHAVAN, ROOM NO.507, MAJURA GATE, SURAT VS SMT. SULOCHANADEVI A. AGARWAL, PATEL BUILDING, 2 ND FLOOR, 20, DADYSETH AGIARY LANE, MUMBAI P. A. NO. AABPA 9575 D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI RAHUL KUMAR, SR. DR RESPONDENT BY NONE DATE OF HEARING: 17-07-2012 DATE OF PRONOUNCEMENT: 20-07-2012 O R D E R PER A. MOHAN ALANKAMONY: THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A )-II, SURAT IN APPEAL NO. CIT(A)-II/CC.3/139/2011-12 DATED 16-03-2 012 PASSED U/S 271AAA R.W.S 250 OF THE IT ACT FOR ASSESSMENT YEAR 2009-10. 2. THE REVENUE HAS RAISED THREE GROUNDS IN ITS APPE AL WHEREIN GROUNDS NO.2 AND 3 ARE GENERAL IN NATURE. GROUND NO .1 OF THE APPEAL IS REPRODUCED HEREIN BELOW FOR OUR CONSIDERATION: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO DELETE THE PENALTY OF RS.5,00,000/- LEVIE D BY THE ASSESSING OFFICER U/S. 271AAA OF THE ACT. ITA NO.1052/AHD/2012 (AY: 2009-10) DCIT, CENT CIR-3, SURAT VS SMT. SULOCHANADEVI A. AG ARWAL 2 3. BRIEF FACTS: - A SEARCH ACTION U/S 132 OF THE AC T WAS CARRIED ON IN THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASS ESSEE ON 24-09- 2008 AND ASSESSMENT ORDER U/S 143(3) READ WITH SECT ION 153A OF THE ACT WAS PASSED ON 27-12-2012 WHEREIN THE ASSESSEE H AD ADMITTED UNDISCLOSED INCOME OF RS.50,00,000/- AS HER ADDITIO NAL INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE LEARNED AO INITIATED PENALTY PROCEEDINGS US/ 271 AAA OF THE ACT AND LEVIED PENAL TY OF RS.5,00,000/- WITH THE FOLLOWING OBSERVATIONS: HOWEVER, IT IS SEEN THAT IN THE RETURN OF INCOME F ILED BY THE ASSESSEE FOR AY 2009-10 ON 29-03-2010, THE ASSESSEE HAS OFFERED TO TAX ONLY AFTER BEING DETECTED BY THE DEP ARTMENT DURING THE COURSE OF SEARCH PROCEEDINGS. HAD THE SEARCH NO T TAKEN PLACE, THE ASSESSEE WOULD NOT HAVE COME FORWARD VOL UNTARILY TO DISCLOSE THE AFORESAID INCOME IN HER RETURN OF INCO ME. THE TREATMENT GIVEN TO THE UNDISCLOSED INCOME IN THE CO MPUTATION OF INCOME READS AS UNDER: PARTICULARS AMOUNT ON ACCOUNT OF UNEXPLAINED CASH IN HAND RS.24,07,20 0/- TO COVER UNIDENTIFIED DISCREPANCIES/RECEIVABLES THA T MAY BE FOUND BASED ON ANY ENTRY, NOTE, SCRIBBLING E TC. IN THE BOOKS OF ACCOUNTS, OTHER DOCUMENTS, LOOSE PAPER, HARD DISK, OR IN ANY ASSETS ETC. EITHER IN H ER HANDS OR IN THE HANDS OF HER FAMILY MEMBERS OR RELATIVES OR EMPLOYEES OF PARTNERSHIP FIRM OR SISTE R CONCERNS OR ANY OF THE COMPANY OR ITS DIRECTORS OF THE ENTIRE GROUND RS.24,92,800/ - TOTAL RS.50,00,000/ - THE ASSESSEES CASE IS THEREFORE NOT COVERED UNDER SECTION 271AAA(2), THE EXEMPTION PROVISION OF SECTION 271AA A. THE CONDITIONS AND THEIR STATUS IN ASSESSEES CASE ARE AS UNDER:- ITA NO.1052/AHD/2012 (AY: 2009-10) DCIT, CENT CIR-3, SURAT VS SMT. SULOCHANADEVI A. AG ARWAL 3 CONDITION FULFILLED 1 IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED NO 2 SUBSTANTIATES THE MANNER IN WHICH UNDISCLOSED INCOME HAS BEEN DERIVED NO 3 PAYS THE TAX TOGETHER WITH INTEREST, IF ANY IN RE SPECT OF UNDISCLOSED INCOME YES FROM THE ABOVE CHAT IT IS VERY MUCH CLEAR THAT OUT OF THREE CONDITIONS, THE ASSESSEE FAILED TO FULFILL FIRST TW O CONDITIONS. THEREFORE, THE ASSESSEES CASE IS NOT COVERED IN SE CTION 271AAA (2) OF T HE ACT. AS PER THE SECTION 271AAA (A) UNDISCLOSED INCOME MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR TH ING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT S OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UND ER SECTION 132, WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH 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 COMMISSIONER OR COMMISSIONER BEFORE THE DATE OF THE SEARCH; OR IN THE INSTANT CASE, THE INCOME DECLARED BY THE ASS ESSEE WAS NOT FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF T HE ASSESSEE ON THE DATE OF SEARCH. IT MEANS THE ASSESSEE HAS HE RSELF ACCEPTED THAT THIS INCOME IS NOT RECORDED IN HER BO OKS OF A/C. FURTHER, THE INCOME WAS NOT PREVIOUSLY DISCLOSED TO CCIT OR CIT BEFORE THE DATE OF SEARCH. THEREFORE, THE INCOME DE CLARED BY THE ASSESSEE SQUARELY FALLS UNDER THE DEFINITION OF UN DISCLOSED INCOME. IT IS PERTINENT TO MENTION HERE THAT HAD T HE SEARCH ACTION NOT TAKEN PLACE, THE ASSESSEE WOULD NOT HAVE COME F ORWARD VOLUNTARILY TO DISCLOSE THE AFORESAID INCOME IN HER RETURN OF INCOME. ITA NO.1052/AHD/2012 (AY: 2009-10) DCIT, CENT CIR-3, SURAT VS SMT. SULOCHANADEVI A. AG ARWAL 4 THEREFORE, I AM OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS DISCLOSED RS.50,00,000/- DURING THE COURSE OF S EARCH FOR WHICH THE ASSESSEE FAILED TO SPECIFY THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND ALSO SUBSTANTIATE THE M ANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. THEREFORE , SECTION 271AAA (1) IS CLEARLY APPLICABLE IN ASSESSEES CASE . HENCE, PENALTY OF RS.5,00,000/- @10% OF DISCLOSED INCOME O F RS.50,00,000/- AS SPECIFIED IN THE SECTION IS IMPOS ED. ACCORDINGLY, THE ASSESSEE IS DIRECTED TO PAY, BY WA Y OF PENALTY, A SUM OF RS.5,00,000/- WITHIN THE STIPULATED DATE AND TIME MENTIONED ON THE DEMAND NOTICE AND CHALLAN ISSUED W ITH THIS ORDER. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARN ED CIT(A). THE LEARNED CIT(A) DELETED THE PENALTY LEVIED BY THE LE ARNED AO WITH THE FOLLOWING REASONING: 6. I HAVE CONSIDERED THE FACTS OF THE CASE, ORDER OF THE A. O., THE SUBMISSIONS OF THE APPELLANT AS ALSO THE STATEM ENT OF THE APPELLANTS SON VIZ. SHRI MITESH AGARWAL RECORDED U /S 132 (4) DURING THE COURSE OF SEARCH. IT IS SEEN THAT DURING THE COURSE OF SEARCH, PENDI NG VERIFICATION OF THE SEIZED MATERIAL, THE APPELLANTS SON VIZ. SH RI MITESH AGARWAL IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT, HAD VOLUNTARILY DISCLOSED A TOTAL AMOUNT OF RS.17 CRORE S FOR THE ENTIRE GROUP, WITH A REQUEST THAT NO PENALTY SHOULD BE LEVIED IN RESPECT OF THE SAID DISCLOSURE. IT IS FURTHER SEEN THAT AFTER OBTAINING THE SAID DISCLOSURE WITH A REQUEST OF NOT LEVYING PENALTY, THE STATEMENT U/S. 132(4) HAS BEEN CONCLUD ED BY THE AUTHORIZED OFFICER AND NO SPECIFIC QUESTION AS REGA RDS MANNER OF EARNING THE UNDISCLOSED INCOME OR SUBSTANTIATION THEREOF WAS PUT FORTH BY THE AUTHORIZED OFFICER. EVEN DURING THE POST SEARCH PROCEEDINGS OR ASSESSME NT PROCEEDINGS, WHEN THE ASSESSEE-WISE BREAK-UP OF THE AFORESAID TOTAL DISCLOSURE OF RS.17 CRORES WAS SUBM ITTED TO THE A. D. I. T. ALLOCATING AN AMOUNT OF RS.50 LACS IN T HE HANDS OF THE APPELLANT, NO SPECIFIC QUESTIONS AS REGARDS MAN NER OF ITA NO.1052/AHD/2012 (AY: 2009-10) DCIT, CENT CIR-3, SURAT VS SMT. SULOCHANADEVI A. AG ARWAL 5 EARNING THE UNDISCLOSED INCOME OR SUBSTANTIATION TH EREOF WAS PUT FORTH BY THE DEPARTMENTAL OFFICER. IT IS FURTHE R SEEN THAT IN PURSUANCE OF THE STATEMENT U/S. 132(4), THE APPELLA NT HAS OFFERED THE INCOME OF RS.50 LACS IN THE RETURN OF I NCOME OF THE CURRENT YEAR AND HAS EVEN PAID THE TAX THEREON. THU S, THE APPELLANTS CASE IS SQUARELY COVERED BY THE DECISIO N OF THE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF CIT V. MAHENDRA C. SHAH (2008) 299 ITR 305 (GUJ) WHEREIN I T HAS BEEN HELD THAT WHEN THE UNDISCLOSED INCOME ADMITTED BY THE ASSESSEE HAS BEEN OFFERED FOR TAX IN THE RETURN OF INCOME AND THE TAX THEREON IS DULY PAID, PENALTY COULD NOT BE LEVIED ON THE GROUND THAT MANNER OF EARNING THE UNDISCLOSED INCOM E HAS NOT BEEN SPECIFIED, IN ABSENCE OF ANY QUESTION IN THIS RESPECT BY THE AUTHORIZED OFFICER. I ALSO DO NOT AGREE WITH THE REASONING OF THE A. O. THAT THERE IS NO ADMISSION BY THE APPELLANT INSTATEMENT U/S. 132( 4) OF THE ACT SINCE, THE DISCLOSURE OF RS.50 LACS OFFERED FOR TAX BY THE APPELLANT DULLY FORMS PART OF THE TOTAL DISCLOSURE OF RS.17 CRORES MADE BY HER SON IN THE STATEMENT RECORDED U/S. 132( 4), WHICH HAS BEEN ACCEPTED BY THE A. O. DURING THE COURSE OF ASSESSMENT. FURTHER, THE REASONING OF THE A. O. THAT THE APPELL ANT HAS NOT SPECIFIED THE MANNER OF EARNING THE UNDISCLOSED INC OME AND HAS FAILED TO SUBSTANTIATE THE SAME, IT ALSO NOT IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT OF GUJARA T IN THE CASE OF CIT V. MAHENDRA C. SHAH (SUPRA), SINCE, NO QUESTION AS REGARDS SPECIFICATION OF MANNER OF EARNING THE UNDI SCLOSED INCOME AND SUBSTANTIATION THEREOF WAS PUT FORTH BY THE AUTHORIZED OFFICER WHILE RECORDING THE STATEMENT U/ S. 132(4) DURING THE COURSE OF SEARCH. THUS, CONSIDERING THE FACTS OF THE CASE THAT THE UN DISCLOSED INCOME HAS BEEN ADMITTED IN THE STATEMENT RECORDED U/S. 132(4), THE SAME HAS BEEN OFFERED IN THE RETURN IN THE CURRENT YEAR, THE TAX ALONG WITH INTEREST THEREON HAS BEEN DULY PAID AND THERE BEING NO FURTHER QUESTION BY THE DEPARTMENTAL OFFICIALS WHILE RECORDING THE STATEMENT U/S. 132(4) OR DURING THE ASSESSMENT PROCEEDINGS AS REGARDS MANNER OF EARNING SUCH ITA NO.1052/AHD/2012 (AY: 2009-10) DCIT, CENT CIR-3, SURAT VS SMT. SULOCHANADEVI A. AG ARWAL 6 UNDISCLOSED INCOME AND SUBSTANTIATION THEREOF, IN S PITE OF REQUEST, BY THE ASSESSEE DURING STATEMENTS U/S 132( 4), NOT TO LEVY PENALTY, I HEREBY DELETE THE PENALTY U/S. 271A AA AMOUNTING TO RS.5,00,000/- LEVIED @10% ON THE DISCL OSURE OF RS.50,00,000/- MADE DURING THE COURSE OF SEARCH. 5. NOW, THE REVENUE IS IN APPEAL BEFORE US AGGRIEVE D BY THE ORDER OF THE LEARNED CIT(A) DELETING THE PENALTY LEVIED BY T HE LEARNED AO. 6. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARNE D AO AND PRAYED THAT THE SAME MAY BE SUSTAINED WHILE NONE AP PEARED ON BEHALF OF THE ASSESSEE. 7. WE HAVE HEARD THE SUBMISSIONS OF THE REVENUE AND CAREFULLY PERUSED THE MATERIALS ON RECORD. THE LEARNED CIT(A) HAD DELETED THE PENALTY DUE TO THE FOLLOWING REASONS: (1) THE ASSESSEE HAD VOLUNTARILY DISCLOSED THE SUM OF RS.50,00,000/- DURING THE SEARCH PROCEEDINGS WITH REQUEST THAT NO PENALTY SHOULD BE LEVIED IN RESPECT OF SUCH DISCLOSURE. (2) DURING THE POST SEARCH PROCEEDINGS NO SPECIFIC QUESTION AS REGARDS MANNER OF EARNING OF UNDISCLOSED INCOME OR SUBSTANTIATION THEREOF WAS PUT FORTH BY THE REVENUE. (3) THE ASSESSEE HAD ALSO PAID DUE TAX FOR THE UNDISCLOSED INCOME OF RS.50,00,000/- DECLARED VOLUNTARILY. (4) IN THE DECISION RENDERED BY THE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF CIT VS MAHENDRA C. SHAH (2008) 299 ITR 305 (GUJ) IT WAS HELD THAT WHEN UNDISCLOSED INCOME ADMITTED BY THE ASSESSEE HAS BEEN OFFERED FOR TAX IN THE RETURN OF INCOME AN D THE TAX THEREOF DULY PAID, PENALTY CANNOT BE LEVIED , SPECIFICALLY, IN THE ABSENCE OF ANY QUESTION IN THI S RESPECT BY THE AO. ITA NO.1052/AHD/2012 (AY: 2009-10) DCIT, CENT CIR-3, SURAT VS SMT. SULOCHANADEVI A. AG ARWAL 7 AT THIS JUNCTURE, WE MUST ADMIT THAT THE REASONS PO INTED OUT BY THE LEARNED CIT(A) ARE JUSTIFIABLE FOR DELETING THE PEN ALTY LEVIED BY THE LEARNED AO U/S 271 AAA OF THE ACT. THEREFORE, WE DO NOT FIND ANY HESITATION TO CONFIRM THE ORDER OF THE LEARNED CIT( A) 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20-07-2012 SD/- SD/- (D. K. TYAGI) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 17-07-2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 18-07-2012 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR.P.S ./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: