ACIT, CC-XXIV, Kolkata, Kolkata V. Subhash Chand Agarwal, Siliguri

ITA 1070/KOL/2011

• Counselvise Citation: [2013] 119 COUNSELVISE.COM (IT) 2944 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-04-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 05-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MAHAPATRA
• Assessee Lawyers: SUBASH AGARWAL O R D E
• Keywords: Search and seizure; Documents seized
• Section: 5(2); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI P.K.BANSAL, A.M. & SHRI MAHAVIR SINGH, J.M. ] I.T.A. NOS.1070 TO 1072/KOL/2011 : ASSESSMENT YEARS 2004-05 TO 2006-07 ACIT, CC-XXIV, KOLKATA -VS- SUBHAS CHA ND AGARWAL SILIGURI PAN : ACVPA 7581K ( APPELLANT ) ( RESPONDENT ) DATE OF CONCLUDING THE HEARING : 21.03.2013 DATE OF PRONOUNCING THE ORDER : 21.03.2013 APPEARANCES : FOR THE DEPARTMENT : SHRI A.K. MAHAPATRA, CIT(DR) : FOR THE RESPONDENT : SHRI SUBASH AGARWAL , ADVOCATE O R D E R PER BENCH : ALL THESE APPEALS HAVE BEEN FILED BY THE REVENUE AG AINST THE ORDERS OF THE CIT(A), CENTRAL-III, KOLKATA OF DIFFERENT DATES FOR THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07 RESPECTIVELY. ALL THESE APPEALS ARE BEING DISPOSED OFF BY THIS COMMON ORDER, AS THE ISSUE INVOLVED IN ALL THESE AP PEALS IS COMMON EXCEPT THE CHANGE IN THE FIGURES. 2. THE ONLY COMMON ISSUE RAISED BY THE REVENUE IN A LL THE APPEALS IS THAT THE CIT(A) WAS NOT CORRECT IN DELETING THE PENALTY IMPO SED ON THE ASSESSEE IN TERMS OF EXPLANATION TO SECTION 271(1)(C) OF THE INCOME-TAX ACT GRANTING THE IMMUNITY TO THE ASSESSEE, IN VIEW OF THE PROVISIONS OF EXPLANAT ION 5 TO SECTION 271(1)(C), WITHOUT APPRECIATING THAT THE CONDITIONS LAID DOWN IN EXCEPTION CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) WERE NOT FULFILL ED. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION WAS CONDUCTED UNDER SECTION 132 ON THE ASSESSEE ON 08.12.2002, WH ICH WAS COMPLETED AFTER 2 I.T.A. NOS. 1070 TO 1072/KOL/2011 2004-05 TO 2006-07: A.Y R. 2004-05 TO 2006-07 18.01.2007. DURING THE COURSE OF SEARCH, THE ASSESS EE HAS VOLUNTARILY DISCLOSED ADDITIONAL AMOUNT OF RS.1 CRORE UNDER SECTION 132(4 ) OF THE INCOME TAX ACT AT THE TIME OF STATEMENT TAKEN ON OATH ON 17.01.2007 AND 1 8.01.2007, IN REPLY TO QUESTION NO.22, WHICH READS AS UNDER: Q.22. DO YOU WANT TO ADD/ALTER ANYTHING FROM THE ST ATEMENT GIVEN BY YOU ABOVE? A22. NO. ON THE BASIS OF THE DOCUMENTS SEEN BY ME, I AM WILLING TO MAKE A VOLUNTARY DISCLOSURE OF RS.1 CRORE AS MY ADDITIONA L UNDISCLOSED INCOME BASED ON THE ISSUES AND DOCUMENTS PERTAINING TO LO ANS GIVEN BY ME TO FARMERS IN THE FORM OF CASH AND SEEDS AND INTEREST RECEIVED FROM THEM, THE SOURCE OF WHICH ARE UNACCOUNTED FOR IN SOME CASES. THERE ARE ALSO CERTAIN OTHER ISSUES LIKE THE INVESTMENTS IN JALPESH COLD STORAGE AND INVESTMENTS IN OTHER LANDS ALSO IN WHICH SOME OF THE AMOUNTS ARE UNCOUNTED FOR. SUBSEQUENTLY, THE ASSESSEE, IN RESPONSE TO NOTICE U NDER SECTION 153A, DISCLOSED THE ADDITIONAL INCOME FROM THE ASSESSMENT YEARS 2003-04 TO 2007-08. THE AO INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271 (1)(C) BUT DROPPED THE PENALTY PROCEEDINGS FOR THE ASSESSMENT YEAR 2007-08. THE AS SESSEE CONTENDED THAT THE ASSESSEE VOLUNTARILY DISCLOSED THE ADDITIONAL INCOM E AND ALSO PAID THE TAX AND INTEREST THEREOF AND THERE SHOULD NOT BE ANY PENALT Y UNDER SECTION 271(1)(C), IN VIEW OF EXPLANATION 5(2) OF THE INCOME TAX ACT ACT. RELIANCE WAS PLACED IN THIS REGARD ON THE DECISION IN THE CASE OF CIT-VS- S.D.V . CHANDRU 266 ITR 175. THE AO DID NOT AGREE. THE AO WAS OF THE OPINION THAT TH E PROVISIONS OF EXPLANATION (1) TO SECTION 271(1)(C) WERE SQUARELY APPLICABLE I N THESE CASES. THE IMMUNITY PROVIDED IN EXPLANATION (5) TO SECTION 271(1)(C) IS NOT APPLICABLE TO THE ASSESSEES CASE AND THE CASE OF THE ASSESSEE IS COVERED BY EXP LANATION (1) TO SECTION 271(1)(C). WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE PENALTY BY HOLDING AS UNDER: 4. WITHIN THIS FRAMEWORK THE ONLY ISSUE TO BE DECI DED IS WHETHER THE APPELLANT IS ELIGIBLE FOR IMMUNITY FROM PENALTY AS PER THE PROVISIONS OF EXPLANATION (5) TO SECTION 271(L)(C) AND WHETHER S UCH IMMUNITY IS AVAILABLE FOR THE ASSESSMENT YEARS PRIOR TO THE ASSESSMENT Y EAR DURING WHICH THE SEARCH HAS TAKEN PLACE. 3 I.T.A. NOS. 1070 TO 1072/KOL/2011 2004-05 TO 2006-07: A.Y R. 2004-05 TO 2006-07 4.1 AS FAR AS THE SECOND QUESTION IS CONCERNED, I AM INCLINED TO FOLLOW THE DECISION OF HONBLE MADRAS HIGH COURT IN THE C ASE OF CIT VS. S.D.V. CHANDRU 266 ITR 0175 (2004). THE HONBLE MADRAS HI GH COURT HAS OBSERVED THAT IN CASES WHERE THE ASSESSEE HAD NOT DISCLOSED INCOME IN THE RETURNS FILED FOR THE PREVIOUS YEAR WHICH HAVE END ED PRIOR TO THE DATE OF THE SEARCH AND, IN THE STATEMENT GIVEN U/S.132 (4) THE ASSESSEE ADMITS THE RECEIPT OF UNDISCLOSED INCOME FOR THOSE YEARS AND ALSO SPECIFIES THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED AND THEREAFT ER PAYS THE TAX ON THAT UNDISCLOSED INCOME WITH INTEREST, SUCH UNDISCLOSED INCOME WOULD GET IMMUNIZED FROM THE LEVY OF PENALTY. IN THE INSTANT CASE THE ASSESSEE IN A STATEMENT GIVEN U/S.132(4) HAS ADMITTED THE RECEIP T OF UNDISCLOSED INCOME AND HAS ALSO SPECIFIED THE MANNER IN WHICH SUCH IN COME HAD BEEN DERIVED. IN THE ANSWER TO THE QUESTION 22 OF THE STATEMENT THE ASSESSEE HAS STATED ON THE BASIS OF DOCUMENTS SEEN BY ME, I AM WILLIN G TO MAKE A VOLUNTARY DISCLOSURE OF RS. 1 CRORE AS MY ADDITIONAL UNDISCL OSED INCOME BASED ON THE ISSUES AND DOCUMENTS PERTAINING TO LOANS GIVEN BY ME TO FARMERS IN THE FORM OF CASH AND SEEDS AND INTEREST RECEIVED FROM THEM, THE SOURCE OF WHICH ARE UNACCOUNTED FOR IN SOME CASES. THERE ARE ALSO CERT AIN OTHER ISSUES LIKE THE INVESTMENTS IN JALPESH COLD STORAGE AND INVESTMENT S IN OTHER LANDS ALSO IN WHICH SOME OF THE AMOUNTS ARE UNACCOUNTED FOR. 5. AFTER THAT THE ASSESSEE HAS DISCLOSED HIS INCO MES IN THE RETURNS FILED U/S.153A AND FILED THE TAX AND INTEREST ON THESE I NCOMES. THEREFORE, I AM OF THE OPINION THAT THE ASSESSEE HAS FULFILLED ALL RI TE REQUIREMENTS OF EXPLANATION (5) TO SECTION 271(L)(C) AND HENCE IS ELIGIBLE FOR IMMUNITY FROM PENALTY. THIS VIEW IS BUTTRESSED BY THE FACT THAT THE A.O. HAS DROPPED THE PENALTY PROCEEDINGS U/S.271(1)(C) FOR THE A.Y.2007 -08 ON IDENTICAL ISSUE WHERE SUCH UNDISCLOSED INCOME AMOUNTED TO RS.23,43 ,106/-. IT APPEARS THAT THE A.O.S DECISION TO DROP THE PENALTY FOR A.Y.20 07-08 WHILE IMPOSING THE PENALTIES FOR THE ASSESSMENT YEARS UND CONSIDERATI ON IN THESE APPEALS EMANATES FROM AN INTERPRETATION OF EXPLANATION (5) THAT THE IMMUNITY IS AVAILABLE ONLY FOR THE ASSESSMENT YEAR RELATED TO THE PREVIOUS YEAR IN WHICH THE SEARCH AND SEIZURE ACTION HAS BEEN CONDUCTED A ND NOT FOR EARLIER ASSESSMENT YEARS. AS I HAVE ALREADY STATED SUCH IN TERPRETATION HAS BEEN NEGATED BY THE DECISION OF HONBLE MADRAS HIGH COU RT (SUPRA). 6. TO SUM UP, AFTER CONSIDERATION OF ALL THE MATER IAL FACTS RELATED TO THE ISSUE I HOLD THAT THE APPELLANT IS ELIGIBLE FOR IM MUNITY FROM PENALTIES U/S.27L(L)(C) OF THE I.T. ACT FOR ALL THESE THREE ASSESSMENT YEARS. THEREFORE, THE PENALTIES IMPOSED BY THE A.O. FOR ALL THESE TH REE YEARS ARE CANCELLED. 4 I.T.A. NOS. 1070 TO 1072/KOL/2011 2004-05 TO 2006-07: A.Y R. 2004-05 TO 2006-07 4. THE LD. D.R. BEFORE US CONTENDED THAT THE IMMUNI TY PROVIDED IN EXPLANATION 5 TO SECTION 271(1)(C) WAS NOT APPLICABLE IN THE CA SE OF THE ASSESSEE AS THE ASSESSEE HAS NOT DISCLOSED THE MANNER IN WHICH SUCH INCOME H AS BEEN DERIVED. OUR ATTENTION WAS DRAWN TO THE ANSWER TO QUESTION NO.22 , WHICH IS REPRODUCED HEREINABOVE. THE LD. A.R., ON THE OTHER HAND, DREW OUR ATTENTION TO THE ANSWER TO QUESTION NO.11 AND VEHEMENTLY CONTENDED THAT THE AS SESSEE HAS DULY EXPLAINED THE MANNER IN WHICH THE INCOME HAS BEEN DERIVED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE CIT(A). THE ONLY PLEA OF THE LD. D.R. WHY THE IMUNITY UNDER EXPLANATION 5 WILL NOT BE AVAILABLE TO THE AS SESSEE THAT THE ASSESSEE HAS NOT DISCLOSED ANY STATEMENT RECORDED UNDER SECTION 132( 4), THE MANNER IN WHICH THE INCOME HAS BEEN EARNED BY THE ASSESSEE. WE HAVE GO NE THROUGH THE ANSWER TO QUESTION NO.22. WE HAVE ALSO GONE THROUGH THE ANSWE R TO QUESTION NO.11 WHICH READS AS UNDER: Q.11.AFTER PERUSAL OF ALL DOCUMENTS SEIZED FROM YOU R RESIDENCE IT IS SEEN THAT ONE OF THE BUSINESS ACTIVITIES OF JCS (JALPES H COLD STORAGE), IS GIVING OF CASH AND SEEDS LOANS TO VARIOUS FARMERS, PURCHASE AND SALE OF POTATOES (TRADING). PLEASE STATE THE SOURCE OF GIVING SUCH LOANS AND PURCHASE OF SEEDS AND POTATOES WHICH ARE ONLY IN CASH. A 11. THE SOURCE OF THE LOANS GIVEN TO FARMERS IS ON ACCOUNT OF LOANS TAKEN FROM BANKS SUCH AS STATE BANK SILIGURI COMMERCIAL BRANCH AND S.B.I. JALPAIGURI TOWN BRANCH AND CENTRAL BANK. PANBARI B RANCH, JALPAIGURI WHERE THE C.C. LIMIT IS APPROXIMATELY RS.2.5 CRORE S INCLUSIVE OF BOTH THE BANKS, THE CAPITAL OF JALPESH COLD STORAGE. THE SO URCE OF PURCHASE IS ON ACCOUNT OF INTERNATIONAL ACCRUALS OF JCS AND THE B ROUGHT OVER CASH BALANCE. 5.1 FROM THE READING OF THE ANSWER TO QUESTION NO.1 1, WE AGREE WITH THE LD. A.R. THAT THE ASSESSEE HAS NOT DISCLOSED THE MANNER IN W HICH THE INCOME HAS BEEN 5 I.T.A. NOS. 1070 TO 1072/KOL/2011 2004-05 TO 2006-07: A.Y R. 2004-05 TO 2006-07 DERIVED BY THE ASSESSEE. IN VIEW OF THE FACT, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDERS OF THE CIT(A) DELETING THE PENALTY IN ALL THE ORDERS. 6. IN THE RESULT, THE APPEALS FILED BY THE REVENUE STAND DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 ST MARCH, 2013. SD/- SD/- (MAHAVIR SINGH) (P. K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21 ST MARCH, 2013 COPY OF THE ORDER FORWARDED TO: 1. SUBHAS CHAND AGARWAL, C/O- SHARDA COMPLEX, 2 ND FLOOR, SEVOKE ROAD, SILIGURI 734 401 2. ACIT, CC-XXIV, KOLKATA 3. THE CIT(A), KOLKATA 4. CIT, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA TALUKDAR(SR.P.S.)