DCIT,CC-4(4), KOLKATA, Kolkata V. Sri Pawan Kumar Khaitan, Kolkata

ITA 1056/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1216 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 29-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND R BAIWAR
• Assessee Lawyers: MANISH TIWARI
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 143(3); 142(1); 153A; 132; 139

Judgement Text

1 ITA NOS.1054 TO 1056/KOL/2015 RAVI KUMAR KHAITAN., AY, 2012-13 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 1054/KOL/2015 ASSESSMENT YEAR: 2012-13 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-4(4), KOLKATA VS. SHRI RAVI KUMAR KHAITAN (PAN: AGBPK2281N) FLAT-1C, 4, HO-CHI-MINH SARANI, KOLKATA-700 071. APPELLANT RESPONDENT & I.T.A. NO. 1055/KOL/2015 ASSESSMENT YEAR: 2012-13 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-4(4), KOLKATA VS. SHRI PRADEEP KUMAR KHAITAN (PAN: AGBPK7703R) FLAT-1C, 4, HO-CHI-MINH SARANI, KOLKATA-700 071. APPELLANT RESPONDENT & I.T.A. NO. 1056/KOL/2015 ASSESSMENT YEAR: 2012-13 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-4(4), KOLKATA VS. SHRI PAWAN KUMAR KHAITAN (PAN: AGBPK7702Q) FLAT-1C, 4, HO-CHI-MINH SARANI, KOLKATA-700 071. APPELLANT RESPONDENT DATE OF HEARING 20.09.2017 DATE OF PRONOUNCEMENT 18.10.2017 FOR THE APPELLANT SHRI ANAND R. BAIWAR, CIT FOR THE RESPONDENT SHRI MANISH TIWARI, FCA ORDER PER SHRI A.T.VARKEY, JM 2 ITA NOS.1054 TO 1056/KOL/2015 RAVI KUMAR KHAITAN., AY, 2012-13 ALL THESE APPEALS FILED BY THE REVENUE ARE AGAINST THE SEPARATE ORDERS OF LD. CIT(A)- 21, KOLKATA DATED 29.05.2015 FOR AY 2012-13 WHEREIN THE LD. CIT(A) DELETED THE PENALTY LEVIED U/. 271AA OF THE INCOME-TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT). SINCE THE FACTS ARE IDENTICAL, WE PROPOSE TO ADJUDICATE T HE CASE OF SHRI PAWAN KUMAR KHAITAN IN ITA NO. 1056/KOL/2015 AS THE LEAD CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH OP ERATION U/S. 132 OF THE ACT WAS CONDUCTED IN RAHEE GROUP OF CASES ON 22.09.2011. T HE SEARCH OPERATION WAS ALSO CONDUCTED AT THE RESIDENTIAL AND OFFICE PREMISES OF THE ASSESSEE. IN COURSE OF SEARCH OPERATION THE ASSESSEE ADMITTED ADDITIONAL INCOME O F RS.1.50 CR. FOR TAXATION IN THE STATEMENT RECORDED U/S. 132(4) OF THE ACT FOR AY 20 12-13. THE AO INITIATED 153A PROCEEDINGS AGAINST THE ASSESSEE FROM AY 2006-07 TO 2011-12. SINCE THE SEARCH HAPPENED IN THE YEAR UNDER CONSIDERATION I.E. AY 2012-13, TH E ASSESSEE HAD FILED HIS RETURN OF INCOME U/S. 139 OF THE ACT ON 28.09.2012 DECLARING TOTAL I NCOME OF RS.1,53,13,440/- INCLUDING THE ADDITIONAL INCOME OF RS.1.50 CR. THE ASSESSMENT WA S COMPLETED U/. 143(3) OF THE ACT ON 31.03.2014 AT THE ASSESSED INCOME AT RS.1,53,13,440 /- I.E. THE RETURNED INCOME OF THE ASSESSEE WAS ACCEPTED. WHILE COMPLETING THE ASSESS MENT, THE AO INITIATED PENALTY PROCEEDINGS U/S. 271AAA OF THE ACT ON THE ADDITIONA L INCOME ADMITTED BY THE ASSESSEE IN THE COURSE OF THE STATEMENT GIVEN U/S. 132(4) OF TH E ACT WHICH WAS DULY DECLARED IN THE RETURN OF INCOME. DURING THE PENALTY PROCEEDINGS A SSESSEE PLEADED THAT HE SHOULD BE GIVEN IMMUNITY FROM LEVY OF PENALTY AS ALL THE CONDITIONS STIPULATED IN SECTION 271AAA(2) OF THE ACT HAS BEEN SATISFIED. HOWEVER, THE AO DID NOT AG REE WITH THE CONTENTION OF THE ASSESSEE AND LEVIED PENALTY U/S. 271AAA OF THE ACT TO THE SU M OF RS.1.5 CR. ON THE PLEA THAT ASSESSEE HAS NOT PAID TAX TOGETHER WITH INTEREST IN RESPECT OF UNDISCLOSED INCOME AT THE TIME OF FILING OF RETURN IN COMPLIANCE TO NOTICE U/S. 142(1) OF T HE ACT. FURTHER, IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAD NOT SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BY THE ASSESSEE AND ACCORDINGLY, HELD THAT ASSESSEE IS NOT ENTITLED TO IMMUNITY FROM PENALTY. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL B EFORE THE LD. CIT(A), WHO WAS PLEASED TO DELETE THE PENALTY. AGGRIEVED, THE REVENUE IS B EFORE US. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE DID NOT REMIT THE TAX TOGETHER WITH INTEREST WHILE FILING HIS RETURN OF INCOME. HOWEVER, NOTHING TURNS AROUND ON THIS SCORE BECAUSE SEC. 271AAA OF THE 3 ITA NOS.1054 TO 1056/KOL/2015 RAVI KUMAR KHAITAN., AY, 2012-13 ACT DOES NOT PRESCRIBE ANY TIME LIMIT FOR PAYMENT O F TAXES. WE FIND THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF THI S TRIBUNAL IN DCIT VS. PIONEER MARBLE & INTERIOR REPORTED IN 19 TAXMAN 391 WHEREIN IT WAS HELD IN OUR CONSIDERED VIEW, THEREFORE, ON THE FACTS OF THE PRESENT CASE WHEREIN THE ENTIRE TAX AND INTEREST HAS BEEN DULY PAID WELL WITHIN THE TIME LIMIT FOR PAYMENT OF NOTI CE OF DEMAND U/S. 156 OF THE ACT AND WELL BEFORE THE PENALTY PROCEEDINGS WERE CONCLUDED. THE ASSESSEE COULD NOT BE DENIED THE IMMUNITY U/S. 271AA OF THE ACT ONLY BECAUSE ENTIRE TAX ALONG WITH INTEREST WAS NOT PAID BEFORE FLING OF INCOME TAX RETURN OR FOR THAT PURPO SE CONCLUDING THE ASSESSMENT PROCEEDING . WE NOTE IN THE PRESENT CASE THAT THE ASSESSEE H AS PAID THE ENTIRE TAX AS DEMANDED BY THE AO BEFORE THE PENALTY PROCEEDINGS W ERE CONCLUDED. THEREFORE, JUST BECAUSE THE ASSESSEE DID NOT REMIT THE ENTIRE TAX W ITH INTEREST ALONG WITH THE RETURN OF INCOME CANNOT BE THE GROUND TO DENY IMMUNITY TO THE ASSESSEE. WE NOTE THAT THE ASSESSEE HAD FILED A DISCLOSURE PETITION WHICH HAS BEEN REPR ODUCED BY THE AO AT PARA VI WHICH IS REPRODUCED AS UNDER: DISCLOSURE THE DISCLOSURE PETITION FILED IN COURSE SEARCH IS R EPRODUCED BELOW: DISCLOSURE PETITION 1. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON SRI PRADEEP KUMAR KHAITAN AND ALSO ON M.S RAHEE TRACK TECHNOLOGIES PVT. LTD. (OF WHICH HE IS A DIRECTOR). 2. IN COURSE OF SAID SEARCH, SRI PRADEEP KUMAR KHAI TAN UNDER LETTER 26.09.2011 TO THE LD. DDIT OFFERED A SUM OF RS. 12 CRORES (TWELVE CRORES ONLY) AS THE UNDISCLOSED INCOME OF HIMSELF AND OTHER ASSOCIATES. 3. IT IS SUBMITTED THAT THE SAID INCOME OF RS. 12 C RORE WAS DERIVED IN THE FINANCIAL YEAR 2011-12 AND WAS NOT DISCLOSED TILL THE DATE OF SEARCH ON 22.09. 2011 OF WHICH NO REGULAR ACCOUNTS ARE MAINTAINED. THE BREAK-UP OF TOTAL UNACCOUNTED INCOME OFFERED FO R TAX, ASSESSEE-WISE, IS SUMMARIZED AS UNDER:- BREAK UP OF UNDISCLOSED INCOME SL. NO. NAME OF THE ENTITY FINANCIAL YEAR AMOUNT (R S. IN LACS) 1 PRADEEP KHAITAN 2011-12 200 2 PAWAN KUMAR KHAITAN 2011-12 150 3 RAVI KHAITAN 2011-12 150 4 RAHEE INFRATECH LTD. 2011-12 TOTAL 700 1200 4. THE DISCLOSURE MADE IN PARA 4 ABOVE BELONGS TO F INANCIAL YEAR 2011-12 AND/OR IS REPRESENTED, EITHER WHOLLY/PARTLY, BY THE ENTRIES IN THE MATERIA L SEIZED FROM VARIOUS LOCATIONS AND MAY ALSO BE REPRESENTED BY NAY MONEY; BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLES OR THING, WHICH MAY HAVE BEEN FOUND IN THE COURSE OF OPERATION. 4 ITA NOS.1054 TO 1056/KOL/2015 RAVI KUMAR KHAITAN., AY, 2012-13 5. IT IS SUBMITTED THAT THE CASH SEIZED AMOUNTING T O RS. 4,00,000/- FROM THE RESIDENTIAL PREMISES MAY PLEASE BE ADJUSTED WITH THE TAXES PAYABLE BY RAHEE LNFRATECH LTD. AGAINST THE UNDISCLOSED INCOME OFFERED FOR TAXATION HEREINABOVE. BALANCE TAX PAYAB LE ON THE UNACCOUNTED INCOME SHALL BE PAID IN DUE COURSE. 6. THIS PETITION IS BEING MADE ONLY TO BUY PEACE OF MIND AND TO AVOID PROTRACTED LITIGATION; THE GROUP HEREBY CONFIRMS DISCLOSURE OF AN AMOUNT OF RS . 12 (TWELVE) CRORE AS ITS ADDITIONAL INCOME IN VIEW OF PROVISIONS OF SECTION 271 AAA OF THE ACT, I F ANY. 7. THE DISCLOSURE IS MADE BY THE GROUP AS A TOKEN O F ITS BONAFIDE INTENTIONS AND TO EXTEND A HAND OF CO-OPERATION TO THE DEPARTMENT FOR CONCLUDING THE S EARCH PROCEEDINGS. 4. FROM THE ABOVE DISCLOSURE STATEMENT WE NOTE THAT THE ASSESSEE HAD IN GENERAL TERMS INTIMATED THE UNDISCLOSED INCOME. THE REQUIREMENT AS PER SECTION 271AAA OF THE ACT READS AS UNDER: 77. IN THE INCOME-TAX ACT, AFTER SECTION 271AA, THE FO LLOWING SECTION SHALL BE INSERTED, NAMELY: 271AAA. PENALTY WHERE SEARCH HAS BEEN INITIATED.( 1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM , A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I ) IN THE COURSE OF THE SEARCH, IN A S TATEMENT UNDER SUB-SECTION (4) OF SECTION 132, ADMI TS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHIC H SUCH INCOME HAS BEEN DERIVED; (II ) SUBSTANTIATES THE MANNER IN WHICH T HE UNDISCLOSED INCOME WAS DERIVED; AND (III ) PAYS THE TAX, TOGETHER WITH INTERES T, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INC OME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, S O 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 YEA R REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONE Y, 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 D ATE OF SEARCH 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 (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEA R REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTR Y IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF A CCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOU S YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH N OT BEEN CONDUCTED; (B ) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARC H, BUT THE DATE OF FILING THE RETURN OF INCOME UNDE R SUB-SECTION (1) OF SECTION 139 FOR SUCH YEAR HAS NO T EXPIRED BEFORE THE DATE OF SEARCH AND 5 ITA NOS.1054 TO 1056/KOL/2015 RAVI KUMAR KHAITAN., AY, 2012-13 THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED.. FROM THE READING OF THE AFORESAID SECTION, 10% OF T HE UNDISCLOSED INCOME WILL BE LEVIED IF THERE IS NO IMMUNITY FOR THE ASSESSEE. AS PER THE EXPLANATION WHEREIN THE DEFINITION OF THE TERM UNDISCLOSED INCOME MEANS FOR THE PURPOSE OF SE CTION 271AAA OF THE ACT THE UNDISCLOSED INCOME IS THE INCOME OF THE SPECIFIED P REVIOUS YEAR WHICH IS REPRESENTED BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF SEARCH WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT ON OR BEFORE THE D ATE OF SEARCH. HOWEVER, AS APPARENT FROM THE ASSESSMENT ORDER, THERE IS NO FINDING OF T HE AO THAT IN THE CASE OF ASSESSEE THERE WAS ANYTHING FOUND IN THE COURSE OF SEARCH WHICH WA S NOT RECORDED IN THE BOOKS OF ACCOUNT. WE ARE OF THE OPINION THAT MERELY FOR THE REASON TH AT THE ASSESSEE HAD ADMITTED ADDITIONAL INCOME IN THE COURSE OF SEARCH FOR TAXATION, IT CAN NOT BE SAID THAT SUCH ADMITTED INCOME WAS UNDISCLOSED INCOME WITHIN THE MEANING OF 'UNDISCLOS ED INCOME' PROVIDED IN EXPLANATION TO SECTION 271AAA OF THE ACT TO IMPOSE THE PENALTY. WE CONCUR WITH THE LD. CIT(A) THAT WHEN THE INCOME DISCLOSED U/S 132(4) IN THE COURSE OF SEARCH, ITSELF CANNOT BE TREATED AS UNDISCLOSED INCOME WITHIN THE MEANING OR UNDISCLOSE D INCOME AS PROVIDED IN EXPLANATION TO 271AAA OF THE ACT, THE SAME CANNOT BE TREATED AS UNDISCLOSED INCOME TO IMPOSE THE PENALTY UNDER THAT SECTION. AS RIGHTLY NOTED BY TH E LD. CIT(A) THAT AS APPARENT FROM THE ASSESSMENT ORDER THERE IS NO FINDING OF THE AO THAT IN THE CASE OF THE ASSESSEE THERE WAS ANYTHING FOUND IN THE COURSE OF SEARCH WHICH WAS NO T RECORDED IN THE BOOKS OF ACCOUNT. JUST BECAUSE THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME IN THE COURSE OF SEARCH IT CANNOT BE SAID THAT SUCH ADDITIONAL INCOME WAS UNDISCLOSED INCOME WITHIN THE MEANING OF UNDISCLOSED INCOME PROVIDED UNDER EXPLANATION TO SECTION 271AAA OF THE ACT TO IMPOSE THE PENALTY. WE AGREE WITH THE LD. CIT(A) THAT WHEN THE INCOME D ISCLOSED U/S. 132(4) OF THE ACT IN THE COURSE OF SEARCH ITSELF CANNOT BE TREATED AS UNDISC LOSED INCOME WITHIN THE MEANING OF UNDISCLOSED INCOME AS PROVIDED IN EXPLANATION TO 27 1AAA OF THE ACT, THE SAME CANNOT BE TREATED AS UNDISCLOSED INCOME TO IMPOSE THE PENALTY UNDER THAT SECTION. WE NOTE THAT RS. 4 LACS SEIZED HAS BEEN OFFERED BY THE ASSESSEE IN THE DISCLOSURE PETITION TO BE TAXED IN THE HANDS OF M/S. RAHEE INFRATECH LTD. SO, WITHOUT THE AO POINTING OUT THAT THE ASSESSEE HAD 6 ITA NOS.1054 TO 1056/KOL/2015 RAVI KUMAR KHAITAN., AY, 2012-13 UNDISCLOSED INCOME IN THE NATURE AS GIVEN IN EXPLAN ATION TO SECTION 271AAA OF THE ACT, THE PENALTY OUGHT NOT TO HAVE BEEN IMPOSED AND THAT HAS BEEN RIGHTLY DELETED BY THE LD. CIT(A). WE FIND NO INFIRMITY IN THE IMPUGNED ORDER AND THE SAME IS HEREBY UPHELD. SINCE FACTS AND LAW ARE IDENTICAL IN ALL OTHER APPEALS, ALL THE APP EALS OF REVENUE ARE DISMISSED. 5. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 18TH OC TOBER, 2017 SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18TH OCTOBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DCIT, CENTRAL CIRCLE-4(4), KOLKATA. 2 RESPONDENT ASSESSEES 3. THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY