DCIT, Chandigarh V. M/s Parabolic Drugs Ltd., Chandigarh

ITA 108/CHANDI/2015

• Counselvise Citation: 10821514 RSA 2015
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-09-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 30-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: ASHOK GOYAL
• Keywords: Search and seizure; Transactions in derivatives
• Section: 6; 132; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO.109/CHD/2015 ASSESSMENT YEAR:2011-12 THE DCIT, VS. SH. SANJEEV GOYAL CENTRAL CIRCLE H.NO. 105 CHANDIGARH SECTOR 6 PANCHKULA PAN NO. AANPG8228P & ITA NO.108/CHD/2015 ASSESSMENT YEAR:2011-12 THE DCIT, VS. M/S PARABOLIC DRUGS LTD. CENTRAL CIRCLE SCO 99-100 CHANDIGARH SECTOR 17B CHANDIGARH PAN NO. AANPG8228P & ITA NO.110/CHD/2015 ASSESSMENT YEAR:2011-12 THE DCIT, VS. SMT. PAYAL GOYAL CENTRAL CIRCLE H.NO. 105 CHANDIGARH SECTOR 6 PANCHKULA PAN NO. AJRPG1035D (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANJIT SINGH RESPONDENT BY : SH. ASHOK GOYAL DATE OF HEARING : 22/09/2015 DATE OF PRONOUNCEMENT :18/11/2015 ORDER PER ANNAPURNA MEHROTRA A.M. ALL THESE APPEALS OF THE DIFFERENT ASSESSES ARE DIR ECTED AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, GURGAON. SINCE THE FACTS IN ALL THE THREE CASES ARE IDENTICA L AND A COMMON ISSUE ARISES FOR 2 CONSIDERATION IN ALL THESE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOSED THE SAME BY THIS COMMON ORDER 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO LEVY OF PENALTY UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961. 3. WE SHALL DEAL WITH THE FACTS AND FIGURES IN ITA NO. 109/CHD/2015 WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUND S: 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE TOTAL PENALTY AMOUNTING TO RS. 15,00,0 00/- LEVIED U/S 271AAA OF THE ACT IMPOSED BY THE A.O. WITHOUT APPRECIATING TH E FACTS OF THE CASES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) WAS RIGHT IN GRANTING RELIEF TO THE ASSESSEE WHEN E VEN THE BASIC RETIREMENT OF THE SECTION 271AAA IS NOT FULFILLED I.E. THE ASSESS EE FAILED TO ELABORATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED? . 4. BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZ URE OPERATIONS WERE CONDUCTED ON M/S NECTOR GROUP ON 17.09.2010. SH. S ANJEEV GOEL, THE ASSESSEE WAS ONE OF THE PERSONS COVERED. THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 2,12,36,310/- ON 29.0 9.2011. ASSESSMENT WAS COMPLETED ON 31.01.2013 AT A TOTAL INCOME OF RS. 2, 46,78,850/-. PENALTY WAS INITIATED U/S 271AAA AGAINST THE SURRENDERED INCOME OF RS. 1,50,00,000/- AND PENALTY OF RS. 15,00,000/- WAS LEVIED VIDE ORDER DA TED 30.07.2013. BEFORE THE LD. CIT(A) THE ASSESSEE PLEADED THAT THE PENALTY LEVIED U/S 271AAA WAS UNJUSTIFIED SINCE THE ASSESSEE HAD HIMSELF SURRENDERED A SUM O F RS. 1,50,00,000/- FOR THE WHOLE NECTOR GROUP AND SPECIFICALLY SURRENDERED A S UM OF RS. 1,50,00,000/- AGAINST HIMSELF AND ALSO STATED THE SOURCE OF SURRE NDERED INCOME BEING DERIVED AGAINST SPECULATIVE COMMODITY TRADING. THE ASSESSEE FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT, HE HAD ALSO EXPLAI NED THE MANNER IN WHICH THE INCOME HAD BEEN EARNED I.E. THROUGH ORAL DEALINGS, WHICH IS A COMMON PRACTICE IN COMMODITY TRANSACTION. FURTHER THE ASSE SSE STATED THAT AS PER THE PROVISIONS OF SECTION 271AAA PENALTY COULD BE LEVIE D ONLY ON UNDISCLOSED INCOME, WHICH MEANT REPRESENTED BY ANY ASSETS OR DO CUMENTS OR ENTRY FOUND 3 DURING SEARCH . IN THE CASE OF ASSESSEE NO SUCH UND ISCLOSED INCOME WAS FOUND. THE ASSESSEE STATED THAT THE DISCLOSURE / SURRENDER OF INCOME AT THE TIME OF SEARCH DID NOT FALL UNDER THE DEFINITION OF UNDISCL OSED INCOME AS IT COULD NOT BE RELATED TO ANY ASSET, DOCUMENT / ENTRY FOUND DURING THE COURSE OF SEARCH. THE ASSESSEE THEREFORE PLEADED THAT NO PENALTY UNDER SE CTION 271AAA COULD BE LEVIED ON THE ASSESSEE. THE ASSESSEE PLACED RELIANC E ON THE FOLLOWING JUDICIAL DECISIONS IN SUPPORT OF HIS CONTENTION. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E, PATIALA VS. MUNISH KUMAR GOYAL [2014] 45 TAXMAN.COM 563 (CHANDIGARH TRIB.) CHANDIGARH BENCH A JURISDICTIONAL HONBLE ITAT ASSISTANT COMMISSIONER OF INCOME TAX VS. A.N. ANNAM ALAISAMY (HUF) [2013] 38 TAXMANN.COM 440 (CHENNAI- TRIB) IN THE ITAT CHENNAI BENCH C PRAMOD KUMAR JAIN VS. DEPUTY COMMISSIONER OF INCOME TAX [2013]33 TAXMANN.COM 651 (CUTTAK TRIB) IN THE ITAT CUTTACK BENCH SMT. RAJ RANI GUPTA VS. DY. CIT [IT APPEAL NO. 3371 (DELHI) OF 2011, DATED 30.03.2012 ACIT (OSD) VS. KANAKIA SPACES P. LTD. (IT APPEAL NO . 6763 (MUM.) OF 2011 DATED 10.07.2013 5. AFTER CONSIDERING THE ASSESSEE SUBMISSIONS LD. C IT(A) DELETED THE PENALTY LEVIED BY HOLDING THAT THE FACTS OF THE PRESENT CAS E WERE COVERED BY VARIOUS DECISIONS OF HONBLE ITAT. 6. AGGRIEVED BY THE SAME, THE REVENUE FILED PRESENT THE APPEAL BEFORE US. 7. BEFORE US LD. DR ARGUED THAT THE ASSESSEE HAD NO T FULFILLED THE CONDITION PROVIDED U/S 271AAA FOR GRANT OF IMMUNITY FROM PENA LTY. LD. DR ARGUED THAT THE MANNER IN WHICH THE INCOME WAS DERIVED WAS NEITHER SPECIFIED NOR SUBSTANTIATED. LD. DR STATED THAT THE COMPLETE DETA ILS OF THE PARTIES WITH WHOM THE REAL ESTATE TRANSACTIONS HAD BEEN ENTERED INTO, THEIR NAMES, ADDRESSES, THE PROPERTIES AS WELL AS EVIDENCES OF THE CONSIDERATIO N EXCHANGING HANDS WERE NOT FURNISHED LD. DR ARGUED THAT ASESSEES CLAIM THAT T HE SURRENDER RELATED TO REAL ESTATE TRANSACTION REMAINED UNSUBSTANTIATED AND THE REFORE, THE CONDITION U/S 4 271AAA WAS NOT FULFILLED AND PENALTY CORRECTLY LEVI ED. LD. AR ON THE OTHER HAND PLACED RELIANCE ON THE ORDER OF LD. CIT(A) AND REIT ERATED THAT ALL THE CONDITIONS SPECIFIED U/S 271AAA FOR GRANT OF IMMUNITY FROM PEN ALTY HAS BEEN FULFILLED IN THE PRESENT CASE LD. AR STATED THAT THE SURRENDERED AMO UNT HAD BEEN ADMITTED U/S 132(4) AND WAS ALSO ACCEPTED BY THE A.O. LD. AR ALS O SUBMITTED THAT THE MANNER OF EARNING THE SAID INCOME HAD BEEN DISCLOSE D BEING FROM VARIOUS SPECULATIVE REAL ESTATE TRANSACTIONS. FURTHER LD. A R STATED THAT THE INCOME HAD BEEN DULY DISCLOSED AND DUE TAXES THEREON PAID BY T HE ASSESSEE. THUS, LD. AR ARGUED THAT THERE WAS NO CASE FOR LEVY OF PENALTY U /S 271AAA. LD. AR ALSO STATED THAT SINCE THE SURRENDERED INCOME DID NOT RE LATE TO ANY ASSET, OR DOCUMENT OR ENTRY FOUND DURING THE COURSE OF SEARCH U/S 132 IT COULD NOT BE TREATED AS UNDISCLOSED INCOME AND THEREFORE, NO PEN ALTY U/S 271AAA WAS LEVIABLE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND THE PERU SED THE ORDERS OF THE AUTHORITIES BELOW. 9. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THA T DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS U/S 132, THE ASSESSEE HAD SURRENDERED AN AMOUNT OF RS. 1,50,00,000/-. IT IS ALSO NOT IN DISPUTE THA T ASSESSEE HAD ATTRIBUTED THIS INCOME AS BEING DERIVED FROM SPECULATIVE DEALINGS I N COMMODITIES IN ORAL DEALINGS, OUTSIDE THE BOOKS OF ACCOUNTS. IT IS FURT HER NOT IN DISPUTE THAT THE ASSESSEE HAD DISCLOSED THE SURRENDERED INCOME IN IT S RETURN OF INCOME AND PAID THE TAXES THEREON. IN THE ABOVE FACTUAL BACKGROUND, IT IS TO BE SEEN W HETHER PENALTY U/S 271AAA IS LEVIABLE. IT IS THE CONTENTION OF THE REVENUE THAT THOUGH ADM ITTEDLY, THE ASSESSEE HAS SURRENDERED AN INCOME OF RS. 1,50,00,000/- DURI NG THE COURSE OF SEARCH AND SEIZURE OPERATION, DISCLOSED THE MANNER OF EARNING THE SAME BEING FROM 5 SPECULATIVE DEALINGS IN COMMODITIES AND ALSO DISCLO SED THE INCOME IN ITS RETURN OF INCOME, THE ASSESSEE HAD NOT SUBSTANTIATED THE M ANNER OF EARNING THE UNDISCLOSED INCOME AND HENCE NOT FULFILLED ALL THE CONDITIONS SPECIFIED U/S 271AAA FOR GRANT OF IMMUNITY FROM PENALTY. THE ISSUE THEREFORE IS WHETHER ADMISSION OF UNDISCL OSED INCOME AND A DESCRIPTION OF THE NATURE OF THE SAME COULD BE TREA TED AS COMPLIANCE WITH THE CONDITION OF SPECIFYING AND SUBSTANTIATING THE MANN ER IN WHICH THE UNDISCLOSED INCOME IS EARNED AS REQUIRED BY THE SECTION 271AAA( 2)(I) AND (II). 10. WE FIND THAT A SIMILAR REQUIREMENT OF DISCLOSIN G THE MANNER IN WHICH UNDISCLOSED INCOME IS EARNED IS ALSO THERE IN EXPLA NATION--5 TO SECTION 271(1)(C), INTERPRETING WHICH THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADHA KISHAN GOEL (2005) 278 ITR 454 OBSERVED THAT NON DISCLOSUR E OF MANNER OF EARNING THE UNDISCLOSED INCOME IS NOT RELEVANT FOR THE PURPOSE OF AVAILING BENEFIT UNDER EXPLANATION 5 BELOW SECTION 271(1)(C). IN CIT VS. M AHENDRA C. SHAH [2008] 215 CTR 493 (GUJ.), IT WAS HELD THE ASSESSEE HAVING DEC LARED THE VALUE OF DIAMONDS IN HIS STATEMENT UNDER SECTION 132(4) AND PAID TAXE S THEREON BEFORE ASSESSMENT, WAS ENTITLED TO IMMUNITY FROM PENALTY UNDER SECTION 271(L)(C) UNDER EXPLANATION 5 THEREOF EVEN THOUGH THE STATEMENT DID NOT SPECIFY T HE MANNER IN WHICH THE INCOME REPRESENTING VALUE OF DIAMONDS WAS DERIVED. WITH RESPECT TO SUCH REQUIREMENT IN RELATION TO SECTION 271AAA, IT HAS B EEN HELD IN THE CASE OF PRAMOD KUMAR JAIN V. DY. CIT [2013] 33 TAXMANN.COM 651 (CTK.) THAT THE DISCLOSURE OF INCOME UNDER SECTION 132(4) DURING TH E SEARCH HAVING BEEN MADE AND THE ASSESSEE HAVING SURRENDERED CERTAIN INCOME FOR THE RELEVANT ASSESSMENT YEARS IN THE STATEMENTS DURING THE COURS E OF SEARCH AND FILED RETURNS DECLARING THE SAME PURSUANT TO NOTICE UNDER SECTION 153A AND WHICH RETURNS HAVE BEEN ACCEPTED BY THE AO, LEVY OF PENALTY UNDER SECTION 271 AAA WAS NOT JUSTIFIED ON THE GROUND THAT THE ASSESSEE HAS THOUG H MADE DISCLOSURE BUT FAILED 6 TO SPECIFY THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED. HON'BLE TRIBUNAL FURTHER HELD THAT NO DEFINITION COULD BE GIVEN TO T HE 'SPECIFIED MANNER' AND THERE IS NO PRESCRIBED METHOD GIVEN IN THE STATUTE TO INDICATE THE MANNER IN WHICH INCOME WAS GENERATED. IT HAS BEEN HELD IN THE CASE OF ASHOK KUMAR SHARMA V. DY. CIT [2013] 33 TAXMANN.COM 652 (CTK.) THAT WHEN ASSESSEE DISCLOSED CONCEALED INCOME WHILE GIVING STATEMENT UNDER SECTION 132(4) DURING THE CO URSE OF SEARCH AND PAID TAX THEREON AND SHOWED THE SAID UNDISCLOSED INCOME IN T HE RETURN UNDER THE HEAD 'INCOME FROM BUSINESS' AND WHICH UNDISCLOSED INCOME HAS BEEN ACCEPTED BY THE DEPARTMENT, PENALTY UNDER SECTION 271 AAA IS NO T LEVIABLE. 11. IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS WE FIN D THAT THE ASSESSEE HAS SPECIFIED AND SUBSTANTIATED THE MANNER OF EARNING T HE INCOME AND HAS NOT VIOLATED ANY OF THE CONDITIONS SPECIFIED U/S 271AAA (2), FOR GRANTING IMMUNITY FROM PENALTY. 12. WE THEREFORE HOLD THAT NO PENALTY U/S 271AAA CO ULD BE LEVIED IN THE PRESENT CASE. ACCORDINGLY WE UPHOLD THE ORDER OF TH E LD. CIT(A) DELETING THE PENALTY. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 14. IN THE RESULT, ALL THE APPEALS FILED BY THE REV ENUE ARE DISMISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :18/11/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR