D.C.I.T CC - V,kolkata, Kolkata V. Salsar Stock Broking Ltd, Kolkata

ITA 1082/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5077 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 08-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Court: TRIBUNAL
• Assessee Lawyers: K K CHHAPARIAFCA LD A
• Keywords: Unexplained investment; Business income; Depreciation; Search and seizure; Document seized; Transactions in derivatives; Tax effect; Revised return; Documents seized
• Section: 143(3); 153A; 27; 2; 139

Judgement Text

ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, K OLKATA BEFORE : SHRI N.V.VASUDEVAN, JUDICIAL MEMBER , AND SHRI M. BALAGANESH, ACCOUNTAN T MEMBER ITA NO. 1082/KOL/2013 A.Y : 2009-10 D.C.I.T, CC-V, KOLKATA VS. M/S. SALASAR STOCK BR OKING LTD PAN: AADCS80 20Q (APPELLANT) (RE SPONDENT) FOR THE APPELLANT/DEPARTMENT: MD. GH AYAS UDDIN ANSARI, JCIT, LD. SR.DR FOR THE RESPONDENT/ASSESSEE: SHR I K.K. CHHAPARIA, FCA, LD.AR DATE OF HEARING: 08-04-2016 DATE OF PRONOUNCEMENT: 15- 4 -2 016 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORD ER OF THE LEARNED CIT(A), CENTRAL-I, KOLKATA IN APPEAL NO. 348/CC-V/CIT(A)C- I/12-13 DATED 4.2.2013 AGAINST THE ORDER OF THE LEARNED AO FOR THE ASST YEAR 2009- 10 LEVYING PENALTY U/S 271AAA OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL I S AS TO WHETHER THE PENALTY U/S 271AAA OF THE ACT COULD BE LEVIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - (1) THAT THE LD. CIT(A) ERRED IN DELETING THE PENAL TY U/S. 271AAA. (2) THAT THE LD. CIT(A) ERRED IN HOLDING THAT ADDI TIONAL INCOME DISCLOSED U/S. 132(4) DID NOT QUALIFY AS UNDISCLOSE D INCOME WITHIN THE MEANING OF SECTION 271AAA. (3) THAT THE LD. CIT(A) ERRED IN ALLOWING RELIEF T O THE ASSESSEE BY NOT CONSIDERING THE FACT THAT THE PROVISIONS OF CLA USE (II) OF SUB- ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 2 SECTION (2) OF SEC. 271AAA HAS NOT BEEN FULFILLED I N THE ASSESSEES CASE. 4. THE BRIEF FACTS OF THIS CASE ARE THAT A SEAR CH AND SEIZURE OPERATION WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 11.9.20 09. IN THE COURSE OF SEARCH AND SEIZURE OPERATION IN THE OFFICE PREMISES OF THE ASS ESSEE JOINTLY HELD WITH M/S SHREE SALASAR PROPERTIES & FINANCE PVT LTD AND M/S KRISHN A TRADE & COMMERCE PVT LTD, THE FOLLOWING BOOKS AND DOCUMENTS WERE FOUND / SEIZ ED :- ANNEXURE WITH DATE DESCRIPTION FOUND SEIZED A DT. 12 - 9 - 09 BOOKS OF A/CS SSB - 1 TO SSB - 15 SSB - 1 TO SSB - 15 C DT. 12-9-09 CASH RS. 14,82,430/- RS.14.50 LAKHS 2 DT. 12-9-09 INVENTORY OF BANK A/C 25 BANK A/C S NOT SEIZED THE ASSESSEE FILED ITS RETURN OF INCOME ON 25.9.200 9 DECLARING TOTAL LOSS OF RS. 6,71,01,221/- . PURSUANT TO THE SEARCH, NOTICE U/S 153A OF THE ACT WAS SERVED UPON THE ASSESSEE. THE ASSESSEE FILED THE RETURN OF INCOME IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT ON 31.5.2010 DECLARING TOTAL LOSS OF RS. 4,71,01,221/- WHEREIN THE ASSESSEE INCLUDED THE DISCLOSURE MADE DURING THE COURSE OF S EARCH OPERATIONS OF RS. 2,00,00,000/-. PURSUANT TO THE SEARCH, THE ASSESS EE FILED A DISCLOSURE PETITION BEFORE THE ADIT (INVESTIGATION), UNIT-III(4), DISCLOSING A DDITIONAL INCOME OF RS. 2,00,00,000/- FOR THIS YEAR AS THE ASSESSEE MAY NOT BE ABLE TO INSTANTLY PRODUCE ALL THE RELEVANT DOCUMENTATION REQUIRED BY THE DEPARTMENT W ITH REGARD TO MONIES RECEIVED FROM VARIOUS PARTIES INCLUDING ADVANCES, MARGIN MON EY AND DEPOSITS. THE ASSESSEE EXPLAINED THAT IT WAS CARRYING ON THE ACTIVITY OF S ALE AND PURCHASE OF SHARES FOR ITS OWN AND ALSO CARRIED ON THE SAME ON BEHALF OF THE CLIEN TS TO EARN BROKERAGE. THE LEARNED AO FOUND THAT CLOSING BALANCE OF MARGIN MONEY, OUT OF RECEIPTS FROM VARIOUS CLIENTS AS ADVANCE / DEPOSIT DURING THE YEAR WAS RS. 1,45,5 0,000/- AS ON 31.3.2009 FROM SEVEN CLIENTS, THREE OF WHICH BELONGS TO THE GROUP. TH E ASSESSEE HAD THE FOLLOWING INCOME AND LOSSES DURING THE YEAR :- ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 3 SHARE TRADING RS. (-) 7,04,47,593/- F&O INCOME RS. 1,12,23,048/- INTRA DAY TRADING INCOME RS. 79,46,637/- BROKERAGE INCOME RS. 19,26,662/- MUTUAL FUND TRADING RS. 55,94,908/- OTHER INCOME (INCLUDING DISCLOSURE) RS. 4,60,28 ,734/- -------------------------- RS. 22, 72,396/- AFTER DEDUCTING ADMINISTRATIVE COST OF RS. 3,70,13, 193/- , FINANCE CHARGES OF RS. 1,05,57,283/- AND DEPRECIATION OF RS. 22,28,085/-, THE ASSESSEE FURNISHED A LOSS RETURN OF RS. 4,71,01,220/-. THE ASSESSMENT WAS COMPLE TED U/S 153A / 143(3) OF THE ACT ON 11.5.2011 BY TREATING THE SHARE TRADING LOSS AS SPE CULATION LOSS IN TERMS OF EXPLANATION TO SECTION 73 OF THE ACT AND AFTER MAKING MINOR DIS ALLOWANCES AND DETERMINING TOTAL INCOME OF RS. 1,73,55,290/-. PENALTY PROCEEDINGS U /S 271AAA OF THE ACT WAS INITIATED BY THE LEARNED AO. 5. THE ASSESSEE PLEADED BEFORE THE LEARNED AO TH AT THE ASSESSEE HAD MADE DISCLOSURE PETITION U/S 132(4) OF THE ACT SOON AFTE R THE SEARCH. THE ASSESSEE PLEADED THAT THE SAID DISCLOSURE OF RS. 2,00,00,000/- FOR T HE ASST YEAR 2009-10 AND RS. 2,00,00,000/- FOR THE ASST YEAR 2010-11 WAS MADE TO AVOID LONG DRAWN LITIGATION AND TO BUY PEACE AS THE ASSESSEE WAS INSTANTLY NOT ABLE TO PRODUCE ALL THE RELEVANT DOCUMENTATION OR PAPER WORK AS REQUIRED BY THE DEPA RTMENT. IT WAS ALSO PLEADED THAT THE DISCLOSURE PETITION ALSO STATED THAT THE ASSESS EE HAS BEEN CARRYING ON BONAFIDE AND REGULAR TRANSACTIONS. IT WAS FURTHER PLEADED THAT THIS CLAIM ABOUT THE BONAFIDE AND REGULAR TRANSACTIONS ALSO GETS STRENGTHENED FROM TH E FACT THAT DURING THE COURSE OF SEARCH ASSESSMENT PRCOEEDINGS, THE LEARNED AO COULD NOT FIND ANY INFIRMITY IN THE BOOKS OF ACCOUNTS. THE ASSESSEE PLEADED THAT IT IS ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY AS ALL THE CONDITIONS STIPULATED IN SECTION 271AAA(2) OF THE ACT HAVE BEEN SATISFIED. THE LEARNED AO DID NOT AGREE WITH THE C ONTENTIONS OF THE ASSESSEE AND PROCEEDED TO LEVY PENALTY U/S 271AAA OF THE ACT IN THE SUM OF RS. 20,00,000/- FOR THE ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 4 ASST YEAR 2009-10 ON THE CONTENTION THAT THE ADDITI ONAL DISCLOSURE OF RS. 2,00,00,000/- WAS NOT RETURNED BY THE ASSESSEE IN THE RETURN FILE D U/S 139(1) OF THE ACT BUT INCLUDED ONLY IN THE RETURN FILED U/S 153A OF THE ACT. THE PENALTY WAS ALSO LEVIED ON THE GROUND THAT BUT FOR THE SEARCH, THE ASSESSEE WOULD NOT HAV E COME FORWARD WITH THE ADDITIONAL DISCLOSURE. MOREOVER, IT WAS OBSERVED BY THE LEARN ED AO THAT THE ASSESSEE HAD NOT SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED BY THE ASSESSEE AND ACCORDINGLY HELD THAT ASSESSEE IS NOT ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY. 6. ON FIRST APPEAL, THE ASSESSEE ARGUED THAT THE C ONTENTION OF THE LEARNED AO THAT THE DISCLOSURE MADE U/S 132(4) OF THE ACT WAS NOT INCLU DED IN THE RETURN FILED U/S 139(1) OF THE ACT WAS NOT ONLY FACTUALLY INCORRECT BUT ALSO M ISLEADING. IT WAS ARGUED THAT THE SEARCH GOT CONCLUDED ON 7.11.2009 BEING THE LAST DA TE OF PANCHANAMA DRAWN BY THE AUTHORIZED OFFICER AND THE DISCLOSURE U/S 132(4) OF THE ACT WAS MADE BY THE ASSESSEE ON 7.11.2009 ON WHICH DATE, THE RETURN OF INCOME U/ S 139(1) OF THE ACT HAD ALREADY BEEN FILED. HENCE THE ASSESSEE CANNOT BE EXPECTED TO OFFER THE ADDITIONAL INCOME IN THE RETURN FILED U/S 139(1) OF THE ACT FOR THE ASST YEA R 2009-10. IT WAS ALSO ARGUED THAT IN ORDER TO AVAIL THE IMMUNITY PROVIDED IN SECTION 271 AAA(2) OF THE ACT, IT IS NOT NECESSARY THAT THE DISCLOSURE U/S 132(4) SHOULD BE INCLUDED IN THE RETURN FILED U/S 139(1). IT WAS ARGUED THAT IT WOULD SUFFICE IF THE ADDITIONAL INCOME DISCLOSED U/S 132(4) WAS INCLUDED IN THE RETURN FILED U/S 153A OF THE ACT AND TAX ALONG WITH INTEREST WAS PAID THEREON. IT WAS ALSO ARGUED THAT THERE IS ABSOLUTELY NO REFERENCE TO ANY SEIZED MATERIAL BROUGHT ON RECORD BY THE LEARNED AO WITH R EGARD TO THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE AND HENCE THE ENTIRE ADDITI ON HAS BEEN ACCEPTED BY THE LEARNED AO ONLY BASED ON THE OFFER MADE VOLUNTARILY BY THE ASSESSEE AND NOT WITH REFERENCE TO ANY SEIZED MATERIALS. IT WAS ALSO ARGUED BY DRAWI NG ATTENTION TO THE DISCLOSURE PETITION U/S 132(4) OF THE ACT THAT THE ASSESSEE HA D BEEN CARRYING OUT REGULAR AND BONAFIDE TRANSACTIONS WHICH HAS NOT BEEN DISAPPROVE D BY THE LEARNED AO AND DISCLOSURE WAS PERTAINING TO THE TRANSACTIONS WHERE BY IT HAD RECEIVED MONEY BY WAY OF ADVANCE, MARGIN MONEY AND DEPOSITS WHICH MIGHT NOT BE SATISFACTORILY PROVED BY ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 5 PROPER DOCUMENTATION AND PAPER WORK AT THIS JUNCTUR E AND ACCORDINGLY HAD COME FORWARD TO MAKE ADDITIONAL DISCLOSURE OF RS. 2 CROR ES FOR ASST YEAR 2009-10 AND RS 2 CRORES FOR ASST YEAR 2010-11 TO AVOID UNNECESSARY L ONG DRAWN LITIGATION AND TO BUY PEACE WITH THE DEPARTMENT. IT WAS ALSO ARGUED THAT THE DISCLOSURE MADE U/S 132(4) OF THE ACT DOES NOT REPRESENT ANY UNDISCLOSED ASSET OR UNRECORDED ENTRY IN THE BOOKS OF ACCOUNTS OR FALSE EXPENSES AND ACCORDINGLY THE SAID OFFER IS COMPLETELY OUTSIDE THE SCOPE OF DEFINITION OF UNDISCLOSED INCOME DEFINED I N SECTION 271AAA OF THE ACT. THE ASSESSEE ALSO PLACED RELIANCE ON CERTAIN DECISIONS BEFORE THE LEARNED CITA IN SUPPORT OF ITS PROPOSITIONS. WITHOUT PREJUDICE, IT WAS FU RTHER ARGUED THAT THE ASSESSEE IS STILL ENTTIELD FOR IMMUNITY FROM LEVY OF PENALTY EVEN IF THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE MAMNER IN WHICH THE UNDISCLOSED IN COME ADMITTED U/S 132(4) OF THE ACT HAD BEEN DERIVED. FOR THIS PROPOSITION, RELIA NCE WAS PLACED ON THE DECISION OF THE CO-ORDINATE BENCH OF AHMEDABAD TRIBUNAL IN THE CAES OF DCIT VS SULCHANAD EVI A AGARWAL IN ITA NO. 1052/AHD/2012 DATED 20.7.2012 . THE LEARNED CIT(A) BASED ON THE AFORESAID SUBMISSIONS DULY APPRECIATED THE CONT ENTIONS OF THE ASSESSEE AND DELETED THE PENALTY. AGGRIEVED, THE REVENUE IS IN APPEAL B EFORE US. 7. THE LEARNED DR VEHEMENTLY RELIED ON THE ORDER OF THE LEARNED AO. IN ADDITION, HE ARGUED THAT THE ASSESSEE HAD ONLY TRIED TO REDUC E HIS LOSS BY RS 2 CRORES BY OFFERING THE SAME AS ADDITIONAL INCOME U/S 132(4) AND IT NEV ER HAD ANY INTENTION TO PAY TAX ON THE SAME. IN RESPONSE TO THIS, THE LEARNED AR RE ITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND ALSO STATED THAT THE ASSESSE E HAD INFACT ALSO PAID TAXES ON THE ADDITIONAL DISCLOSURE OF RS 2 CRORES MADE AND ACCOR DINGLY HE ARGUED THAT THE STATEMENT OF THE LEARNED DR IS FACTUALLY INCORRECT AS COULD B E EVIDENT FROM THE ASSESSMENT ORDER ITSELF. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. THE LEARNED AR STATED THAT THE LEARNED AO HAD NOT INITIATED ANY PENALTY PROCEEDINGS U/S 271AAA OF THE ACT FOR THE ASST YEAR 2010-11, BEING THE YEAR OF ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 6 SEARCH, FOR THE ADDITIONAL DISCLOSURE MADE U/S 132( 4) OF THE ACT IN THE SUM OF RS. 2 CRORES, IN VIEW OF THE FACT THAT THE SAME WAS OFFER ED IN THE RETURN FILED U/S 139(1) OF THE ACT. IN THIS REGARD, IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAD TIME TO FILE ITS RETURN U/S 139(1) OF THE ACT AND HENCE ASSESSEE TRUE TO HIS DI SCLOSURE PETITION THOUGHT IT FIT TO OFFER THE ADDITIONAL INCOME OF RS. 2 CRORES IN THE RETURN FILED U/S 139(1) OF THE ACT. BUT WHAT IS TO BE UNDERSTOOD HERE IS ORIGINALLY THE DISCLOSURE WAS MADE U/S 132(4) OF THE ACT WHICH WAS FOLLOWED BY RETURN U/S 139(1) OF THE ACT. WE FIND THAT THE ASSESSEE HAD NOT DISCLOSED THE ADDITIONAL INCOME IN THE RETU RN FILED U/S 139(1) OF THE ACT FOR THE ASST YEAR 2009-10 FOR THE REASON THAT THE ASSESSEE HAD FILED RETURN U/S 139(1) OF THE ACT PRIOR TO THE DATE OF DISCLOSURE U/S 132(4) OF T HE ACT. THE ASSESSEE HAD MADE DISCLOSURE PETITION U/S 132(4) OF THE ACT SUBSTANTI ATING THE REASONS FOR OFFERING THE ADDITIONAL INCOME . FOR THE SAKE OF CONVENIENCE, T HE DISCLOSURE PETITION U/S 132(4) OF THE ACT IS REPRODUCED HEREUNDER:- DISCLOSURE PETITION U/S 132(4) OF THE ACT IN THE CA SE OF M/S SALASAR STOCK BROKING LTD TO THE LD. A.D.I.T. (INV) UNIT - III (4) AAYAKAR BHAWAN ANNEXE P-L3, CHOWRINGHEE SQUARE, KOLKATA - 700 069 RESPECTED SIR, RE : DISCLOSURE CONSEQUENT TO SEARCH AND SEIZURE OP ERATIONS CARRIED OUT BY THE INCOME TAX DEPARTMENT ON OUR PREMISES ON 11 TH SEPTEMBER' 2009/12 TH SEPTEMBER' 2009 WE ARE MEMBERS OF NATIONAL STOCK EXCHANGE - CAPITAL MARKET, F&O AND CURRENCY DERIVATIVES, MUMBAI STOCK EXCHANGE - CAPIT AL MARKET, F&O AND CURRENCY DERIVATIVES, NSDL, MCX - CURRENCY DERIVATI VES, CALCUTTA STOCK EXCHANGE - CAPITAL MARKET. WE HAVE DONE TRANSACTION S ON BEHALF OF VARIOUS CLIENTS AND ON OUR SELF ACCOUNT. DURING THE COURSE OF OUR TRANSACTIONS WITH VARIOUS PARTIES, WE HAVE RECEIVED MONEY FROM VARIOU S PARTIES INCLUDING ADVANCES, MARGIN MONEY AND DEPOSITS. YOUR GOODSELF HAS RAISED A QUERY ON ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 7 EXPLAINING THE SOURCES OF ALL SUCH ADVANCES AND DE POSITS AND IT APPEARS THAT YOU HAVE RAISED DOUBTS ON THE GENUINENESS OF CERTAI N TRANSACTIONS EARNED OUT BY US INCLUDING THE RECEIPT OF FUNDS INTO OUR COMPA NY. WE HAVE BEEN CARRYING OUT REGULAR AND BONAFIDE TRANSACTIONS. HOWEVER, WE ARE NOT ABLE TO INSTANTLY PRODUCE ALL THE RELEVANT DOCUMENTATION OR PAPER WOR K WHICH MAY BE REQUIRED BY THE DEPARTMENT. HENCE TO DEMONSTRATE OUR CO-OPE RATIVE ATTITUDE AND TO AVOID UNNECESSARY LONG DRAWN LITIGATIONS WITH THE DEPARTMENT AND TO BUY PEACE, WE ARE OFFERING AN ADDITIONAL INCOME OF RS. 2,00,00,000/- FOR FINANCIAL YEAR 2008-09 AND RS. 2,00,00,000/- FOR FI NANCIAL YEAR 2009-10 RESPECTIVELY. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS PERT AINING TO THE COMPANY WERE INVENTORIZED AT OUR OFFICE PREMISES AT 4A, CLI VE ROW, SUIT NO. 411, 301A, 301B, 301C KOLKATA - 700 001 . BASED ON VARIO US SEIZED DOCUMENTS, WE HEREBY OFFER A SUM OF RS. 7,00,00,000/- AS OUR INCO ME FOR THE FINANCIAL YEAR 2009-2010 UPTO THE PERIOD OF SEARCH. REFERENCE MAY BE MADE TO SEIZED DOCUMENT, SSB/6, PAGE I TO 25 AND 35-36. THE AFORES AID INCOME HAVE BEEN DEPLOYED IN THE WORKING CAPITAL OF THE COMPANY INCL UDING SECURITIES AND MARGIN MONEY WITH STOCK EXCHANGES. WE SHALL FILE RETURN ACCORDINGLY IN ACCORDANCE WITH LAW AFTER MAKING TECHNICAL ADJUSTMENTS (IF ANY). WE HAVE TRIED TO PR OJECT A FULL AND TRUE PICTURE ON AN ESTIMATED BASIS OF ALL THE INCOME AND WE ASSU RE YOU THAT WE SHALL MAKE FULL AND TRUE DISCLOSURE IN THE RETURN ACCORDINGLY AND PAY TAXES THEREON. WE ALSO UNDERSTAND THAT WE SHALL NOT BE PENALIZED I N ANY MANNER FOR MAKING THE ABOVE STATEMENTS. THANKING YOU, FOR SALASAR STOCK BROKING LIMITED R.K. SARAOGI (DIRECTOR). 8.1. FROM THE ABOVE DISCLOSURE STATEMENT , WE FIND THAT THE ASSESSEE HAD SUBSTANTIATED THE FACT THAT THE INCOME IN THE FORM OF ADVANCES, M ARGIN MONEY AND DEPOSITS ETC WHICH MIGHT NOT BE PROVED TO THE SATISFACTION OF TH E DEPARTMENT WITH PROPER DOCUMENTATION AND PAPER WORK. WE ALSO FIND THAT E VEN THE LEARNED AO HAD ACCEPTED THE SAID OFFER FOR THE SAID REASON IN HIS ASSESSMEN T ORDER. WE FIND THAT THE ASSESSEE ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 8 HAD NOT RETRACTED FROM THE DISCLOSURE PETITION . W E FIND THAT THE ASSESSEE HAD DULY OFFERED THE ADDITIONAL INCOME OF RS. 2,00,00,000/- IN THE CASE OF M/S SALASAR STOCK BROKING LTD FOR THE ASST YEAR 2009-10 IN THE RETURN FILED U/S 153A OF THE ACT AND PAID TAXES THEREON. IN THE DISCLOSURE PETITION ITSELF , WE FIND THAT THE ASSESSEE HAD CLEARLY DEMONSTRATED THE INABILITY TO SUBSTANTIATE THE MANN ER OF DERIVING THE UNDISCLOSED INCOME IN THE CASE OF M/S SALASAR STOCK BROKING LTD . WE FIND THAT THE OFFER OF RS. 2 CRORES HAS BEEN MADE VOLUNTARILY BY THE ASSESSEE IN THE DISCLOSURE PETITION U/S 132(4) FOLLOWED BY FILING OF RETURN U/S 153A OF THE ACT. IT IS ALSO PERTINENT TO NOTE THAT THIS OFFER HAS BEEN VOLUNTARILY BY THE ASSESSEE WITHOUT ANY INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH. HENCE IT GOES TO PR OVE BEYOND DOUBT THAT THE OFFER OF UNDISCLOSED INCOME OF RS. 2 CRORES WAS MADE VOLUNTA RILY BY THE ASSESSEE WITHOUT ANY DETECTION BY THE DEPARTMENT AND ACCORDINGLY THE ARG UMENT OF THE LEARNED DR THAT BUT FOR THE SEARCH, THIS INCOME WOULD NOT HAVE BEEN OFF ERED DOES NOT HOLD ANY WATER AND DESERVES TO BE DISMISSED. IT IS ALREADY WELL SET TLED THAT THOUGH THE INCOME IS NOT DISCLOSED IN THE RETURN FILED U/S 139(1) OF THE ACT , BUT DULY DISCLOSED IN THE PETITION FILED U/S 132(4) OF THE ACT FOLLOWED BY THE FILING OF RETURN IN RESPONSE TO SECTION 153A OF THE ACT AND TAXES PAID THEREON, THEN THE ASSESS EE WOULD NOT BE INVITED WITH THE LEVY OF PENALTY. WE FIND THAT IF THE ARGUMENT OF THE LE ARNED DR THAT SINCE THE ASSESSEE HAD NOT OFFERED THE SAID INCOME IN RETURN FILED U/S 139 (1) OF THE ACT THEREBY LEVY OF PENALTY IS IN ORDER IS TO BE ACCEPTED, THEN IT WOULD MAKE T HE IMMUNITY PROVISIONS CONTEMPLATED U/S 271AAA(2) OF THE ACT REDUNDANT. THE LEGISLATUR E IN ITS WISDOM HAD GIVEN A THOUGHTFUL CONSIDERATION ON THE FACTS AND CIRCUMSTA NCES UNDER WHICH THE ASSESSEE WOULD NOT BE INVITED WITH THE LEVY OF PENALTY PURSU ANT TO THE SEARCH SUBJECT TO FULFILLMENT OF CERTAIN CONDITIONS STIPULATED IN THE SAID SECTION . HENCE IN VIEW OF THE ABOVE, WE HOLD THAT THE LEVY OF PENALTY IS NOT AUTO MATIC AND ASSESSEE IS CLEARLY ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY. ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 9 8.2. WE ALSO FIND THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SUDARSHAN SILKS & SAREES VS CIT REPORTED IN (2008) 300 ITR 205 (SC) SUPPORTS THE CASE OF THE ASSESSEE. THE BRIEF FACTS OF THIS ARE AS BELOW:- 3. A SEARCH WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 14 AND 15-10- 1987 AND INCRIMINATING DOCUMENTS EVIDENCING CONCEAL MENT OF INCOME BY THE ASSESSEE WERE UNEARTHED APART FROM CASH AND JEWELLE RY FOUND AT THE TIME OF SEARCH. IT WAS FOUND THAT THE APPELLANT WAS MAINTAI NING DOUBLE SET OF BOOKS AND WAS ACCOUNTING FOR ONLY 50 PER CENT OF SALES IN THE REGULAR SET OF BOOKS. THIS FACT WAS ADMITTED BY SHRI 1.S. RAMESH, A PARTNER OF THE FIRM IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. SHRI 1.S. RAMESH IS THE PERSON-IN- CHARGE OF THE ENTIRE GROUP. THE TOTAL TURNOVER SUPP RESSED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1987-88 WAS FOUND TO BE TO THE TUNE OF RS. 44,07,783. THESE HAVE BEEN DISCUSSED IN DETAIL IN THE ORDER OF ASSES SMENT. ASSESSING OFFICER ESTIMATED THAT THE SALES OF THE ASSESSEE WERE RS. 5 0,000 PER DAY, WHEREAS THE ACCOUNTED SALES WERE NOT FOUND EVEN 50 PER CENT OF THE TOTAL SALES. APART FROM THIS, IT WAS FOUND THAT CERTAIN PURCHASES WERE ALSO NOT BEING ACCOUNTED FOR. SIMILARLY CERTAIN PAYMENTS MADE WERE NOT BEING ACCO UNTED FOR. ALL THESE WERE POINTED OUT TO THE ASSESSEE. THE ASSESSEE CAME FORW ARD WITH OFFER OF ADDITIONAL INCOME. ASSESSEE FILED A REVISED RETURN ON 31-3-198 9 DECLARING A TOTAL INCOME FOR THIS YEAR AT RS. 3,74,226 AS AGAINST THE EARLIE R AMOUNT OF RS. 43,650. THIS WAS ACCEPTED AND AFTER VERIFICATION THE ASSESSMENT WAS COMPLETED ON 29-12- 1989. 4. DURING THE COURSE OF RECORDING THE STATEMENT UN DER SECTION 132(4) OF THE ACT, SHRI RAMESH AGREED TO DECLARE SUCH ADDITIONAL INCOME AS HAD BEEN ESTIMATED BY THE SEARCH PARTY IN THE OFFICE OF THE APPELLANT AND ITS SISTER CONCERNS. ON THE BASIS OF THESE CALCULATIONS, REVIS ED RETURNS WERE FILED BY THE APPELLANT FOR ALL THE YEARS UNDER APPEAL. THE INCOM E AS PER REVISED RETURNS WERE ALSO ACCEPTED IN TOTO. IN THE COURSE OF ASSESS MENT PROCEEDINGS, PENAL ACTION UNDER SECTION 271(1)(C) OF THE ACT WAS INITI ATED AND, AFTER CONSIDERING THE REPLY FILED BY THE APPELLANT, THE LEARNED ASSIS TANT COMMISSIONER OF INCOME- TAX/ASSESSING OFFICER CHOSE TO LEVY MAXIMUM PENALTY UNDER SECTION 271(1)(C). WHILE LEVYING THE PENALTY, THE ASSESSING OFFICER RE PELLED THE CONTENTION OF THE APPELLANT THAT A PROMISE HAD BEEN MADE NOT TO LEVY THE PENALTY, AS THERE WAS NO EVIDENCE TO THIS EFFECT ON RECORD. IT WAS ALSO HELD THAT THE APPELLANT WAS NOT ENTITLED TO THE IMMUNITY GIVEN UNDER SECTION 132(4) READ WITH SECTION 271(1)(C) OF THE ACT. THE LEARNED CIT(A) DELETED THE LEVY OF PENALTY U/S 271(1)(C ) OF THE ACT. ON SECOND APPEAL BY THE REVENUE, THE TRIBUNAL HELD AS FOLLOWS :- ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 10 'ALTHOUGH THERE IS NOTHING ON RECORD TO SHOW THAT H E WAS GIVEN AN ASSURANCE THAT NO PENALTY WOULD BE LEVIED, THE FACT HOWEVER CLEARLY SUGGEST THAT SUCH AN INDUCEMENT MUST HAVE BEEN GIVE N BY THE SEARCHING PARTY. WHEN ONLY PARTIAL EVIDENCE IN SUPPORT OF CON CEALMENT FOR A VERY LIMITED PERIOD WAS DETECTED DURING THE SEARCH, WHY WOULD A MAN GO TO OFFER MUCH HIGHER AMOUNTS FOR A LARGE NUMBER OF YEA RS UNLESS HE WAS PROMISED SOME RECIPROCAL BENEFIT LIKE NOT BEING VIS ITED WITH PENALTY? THE LEARNED DR HAS TRIED TO ARGUE BEFORE US THAT A CHAN GE OF HEART MIGHT HAVE TAKEN PLACE AS A RESULT OF WHICH SRI RAMESH CAME FO RWARD WITH ALL THE DISCLOSURES FOR DIFFERENT YEARS VOLUNTARILY. BUT LO OKING INTO THE HARD FACTS OF LIFE AND THE GENERAL EXPERIENCE OF MANKIND, ESPE CIALLY WITH REGARD TO FINANCIAL AFFAIRS, IT WOULD BE DIFFICULT TO ACCEPT SUCH A PROPOSITION. EVIDENTLY, HUGE AMOUNT OF UNEXPLAINED INVESTMENTS I NCLUDING UNEXPLAINED STOCK WAS FOUND AT THE TIME OF SEARCH. ULTIMATELY, ALMOST THE SAME AMOUNT OF INCOME WAS OFFERED BY THE ASSESSEES OVER A NUMBE R OF YEARS. AS THE TAX RATES OVER THE ENTIRE PERIOD WAS MORE OR LESS THE S AME, THE TAX EFFECT, EITHER FROM THE POINT OF VIEW OF THE DEPARTMENT, OR THE ASSESSEE WOULD HAVE MORE OR LESS THE SAME, HAD THE ENTIRE UNDISCLO SED ASSETS BEEN SUBJECTED TO TAX IN THE YEAR OF SEARCH OR THE ENTIR E INCOME WAS SPREAD OVER A NUMBER OF YEARS AS HAS BEEN DONE IN THE PRESENT A SSESSMENTS. IN VIEW OF THE DEPOSITION GIVEN UNDER SECTION 132(4) FOLLOWED BY THE COOPERATING ATTITUDE OF THE ASSESSEE IN PAYING UP THE TAX, IT W OULD BE CLEAR THAT NO PENALTY UNDER SECTION 271(1) WOULD HAVE BEEN LEVIAB LE HAD THE ENTIRE UNDISCLOSED INCOME BEEN ASSESSED IN THE YEAR OF SEA RCH. INSTEAD OF GOING FOR THAT SIMPLE WAY, SRI RAMESH WENT INTO THE QUEST ION OF ADMITTING UNDISCLOSED INCOME ON ESTIMATED BASIS FOR THE DIFFE RENT PAST YEARS. HE MUST HAVE FELT THAT IN THAT PROCESS ALONE, HE WOULD AVOID THE LEVY OF PENALTY BY THE DEPARTMENTAL AUTHORITIES. THE FACTS AND CIRCUMSTANCES STRONGLY INDICATE THAT AN INDUCEMENT AND AN ALLUREM ENT HAD BEEN PROVIDED TO HIM AT THE TIME OF SEARCH IN THAT MATTER. AGAIN, ALTHOUGH INCRIMINATING MATERIALS WERE FOUND OUT DURING THE SEARCH, SUCH MATERIALS WERE HOWEVER ULTIMATELY NOT USED BY THE DEPARTMENTAL AUTHORITIES IN MAKING THE ASSESSMENTS. THE ASSESSME NTS WERE MADE TOTALLY ON THE BASIS OF ESTIMATION INCOME FOR THE EARLIER Y EARS AS DISCLOSED IN THE REVISED RETURNS. THE REVISED RETURNS SHOULD THEREFO RE BE CONSIDERED AS HAVING BEEN FILED IN GOOD FAITH. SO FAR AS ASSESSME NT OF THE UNDISCLOSED INCOME IS CONCERNED, SUCH REVISED RETURNS WOULD BE SUFFICIENT EVIDENCE FOR THAT PURPOSE. HOWEVER, FOR LEVYING PENALTY, SOME FU RTHER AND STRONGER EVIDENCES WERE SURELY REQUIRED. IN THE CASES RELIED UPON BY THE LEARNED DR, THE SEARCH ITSELF DISCOVERED THE UNDISCLOSED IN COME. IN THE INSTANT CASES, THE SEARCH MERELY LED TO CERTAIN CLUES TO TH E UNDISCLOSED INCOME AND BUT FOR THE STATEMENT MADE BY SRI RAMESH, IT WO ULD PERHAPS HAVE NOT ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 11 BEEN POSSIBLE FOR THE DEPARTMENT TO ASSESS THE UNDI SCLOSED INCOME OVER ALL THESE YEARS IN THE WAY IN WHICH SUCH ASSESSMENT S HAVE BEEN MADE. THE ONLY WAY FOR THE DEPARTMENT IN SUCH A CASE WOULD HA VE BEEN TO ASSESS THE ENTIRE AMOUNT OF UNDISCLOSED INVESTMENTS FOR THE YE AR OF SEARCH AS HAS BEEN DISCUSSED BY US ABOVE, THE DEPTT. COULD NOT HA VE BEEN IN A POSITION TO LEVY PENALTY FOR CONCEALMENT IN SUCH A CASE. WE ARE THEREFORE OF THE OPINION THAT THE CASE LAWS AS CITED BY THE DEPARTME NT, DO NOT EXACTLY SUPPORT ITS CASE, SO FAR AS THE PRESENT APPEALS ARE CONCERNED. ON THE OTHER HAND, MOST OF THE JUDGMENTS CITED BY THE LEARNED CO UNSEL FOR THE ASSESSEE SUPPORT THE CASE OF THE ASSESSEE THAT ON ACCOUNT OF STRONG CIRCUMSTANTIAL EVIDENCES BEING THERE ABOUT INDUCEMENT HAVING BEEN GIVEN BY THE DEPARTMENTAL AUTHORITIES FOR NOT LEVYING PENALTY IN CASE OF DISCLOSURE OF INCOME OVER THE EARLIER YEARS, NO PENALTY CAN ACTUA LLY BE LEVIED BY THE DEPARTMENT.' THESE FINDINGS HAVE BEEN FINALLY APPROVED BY THE HO NBLE SUPREME COURT BY OBSERVING AS UNDER:- 17. ACCORDINGLY, THE ORDERS UNDER APPEAL ARE SET AS IDE AND THAT OF THE CIT(APPEALS) AND TRIBUNAL RESTORED. IT IS HELD THA T IN THE FACTS AND CIRCUMSTANCES OF THE CASE, PENALTY UNDER SECTION 27 1(1)(C ) WAS NOT EXIGIBLE. THE APPEALS ARE ACCEPTED WITH COSTS. 8.3. WE FIND THAT THE FOLLOWING DECISIONS SUPPORT THE CASE OF THE ASSESSEE :- A) DECISION OF CO-ORDINATE BENCH OF CUTTACK TRIBUNA L IN THE CASE OF PRAMOD KUMAR JAIN VS DCIT REPORTED IN (2013) 33 TAXMANN.COM 651 (CUTTACK TRIB.) 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIAL AVAILABLE ON RECORD. ON CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT NO DEFINITIO N COULD BE GIVEN TO THE 'SPECIFIED MANNER' INSOFAR AS THE VERY STATEMENT ON OATH U/S. 132(4) SPECIFIES THE MANNER ON WHICH THE ASSESSEE IS PREPA RED TO PAY TAX THEREON. THE INSCRIBING IN THE BOOKS OF ACCOUNT WAS TAKEN CA RE OF BY THE ASSESSEE WHEN HE FILED THE RETURNS IN PURSUANCE TO NOTICE U/ S. 153A ACCOUNTING THE ASSETS. THEREFORE, THE CASE LAWS CITED AT THE BAR C LEARLY INDICATE THAT THE PENALTY IS NOT AUTOMATIC IF ONE OF THE PURPORTED CO NDITION IS NOT FULFILLED ALTHOUGH ALL THE CONDITIONS HAVE BEEN AGREED TO OF HAVING FULFILLED BY THE ASSESSING OFFICER INSOFAR AS THE TAX AND INTEREST H AS BEEN RECOVERED. PENALTY HAS BEEN LEVIED AFTER THE TAX HAS BEEN RECO VERED THEREFORE ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 12 ANSWERS THE QUERIES RAISED BY THE LEARNED DR FOR TH AT THE SAID PROVISIONS BECOME REDUNDANT WAS NOT THE INTENTION OF THE LEGIS LATION. THE MANNER, DURING THE SEARCH OPERATION, IS NOTED BY THE SEARCH PARTY WHICH THE ASSESSING OFFICER HAS ACCEDED TO. THEREFORE, FOLLOW ING THE DECISIONS AS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE , WHEREIN THE TRIBUNAL WAS PLEASED TO CONSIDER CANCELLING THE PENALTY SO L EVIED ARE ALSO APPLICABLE TO THE ASSESSEES' CASES BEFORE US INSOFA R AS THERE IS NO PRESCRIBED METHOD TO INDICATE THE MANNER IN WHICH I NCOME WAS GENERATED WHEN THE DEFINITION OF 'UNDISCLOSED INCOME' HAS BEE N DEFINED IN THE ACT ITSELF WHEN NO INCOME OF THE SPECIFIED PREVIOUS YEA R REPRESENTED 'EITHER WHOLLY OR PARTLY' WHICH ONUS LAY UPON THE ASSESSEE STOOD DISCHARGED. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW TH AT THE LEVY OF PENALTY U/S. 27LAAA IN THE INSTANT CASES ARE NOT JUSTIFIED AND AS SUCH, WE CANCEL THE PENALTY SO LEVIED U/S. 271 AAA FOR THE AYS UNDE R CONSIDERATION IN THE CASE OF RESPECTIVE ASESSEES. IN THE RESULT, ALL THE APPEALS FILED BY THE A SSESSES ARE ALLOWED. B) DECISION OF CO-ORDINATE BENCH OF NAGPUR TRIBUNAL IN THE CASE OF CONCRETE DEVELOPERS VS ACIT REPORTED IN (2013) 34 TAXMANN.CO M 62 (NAGPUR-TRIB.) SECTION 271AAA OF THE INCOME-TAX ACT, 1961 - PENA LTY - WHERE SEARCH HAS BEEN INITIATED - ASSESSMENT YEAR 2009-10 - WHETHER WHERE DURING COURSE OF SEARCH ASSESSEE ADMITTED UNDISCLOS ED INCOME, PAID TAX TOGETHER WITH INTEREST, FILED RETURN SHOWING SAID I NCOME AS BUSINESS INCOME AND ASSESSING OFFICER HAD ACCEPTED SAME, IT COULD NOT BE SAID THAT ASSESSEE HAD NOT SPECIFIED MANNER OR COULD NOT SUBS TANTIATE MANNER IN WHICH INCOME WAS DERIVED - HELD, YES - WHETHER, THE REFORE, PENALTY UNDER SECTION 271AAA WAS NOT LEVIABLE AS ASSESSEE'S CASE FELL UNDER SUB- SECTION (2) OF SECTION 271AAA - HELD, YES [PARA 9] [IN FAVO UR OF ASSESSEE] 9. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCE S AND SPECIFIC FINDINGS GIVEN BY US AND IN VIEW OF THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR IMMUNITY FROM LEVY OF PENA LTY U/S 271AAA(2) OF THE ACT AND ACCORDINGLY THE PENALTY LEVIED BY THE LEARNED AO IS CANCELLED. THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO.1082/KOL/2013-B-AM M/S. SALASAR STOCK BROKING LTD 13 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15-4-2016. 1.. THE APPELLANT/DEPARTMENT: THE DCIT, CC-V, KOLK ATA AAYKAR BHAWAN POORVA 3 RD FLOOR, 110 SHANTIPALLY, KOLKATA-107. 2 THE RESPONDENT/ASSESSEE: M/S. SALASAR STOCK BROKI NG LTD, MUKTI CHAMBER, 4A CLIVE ROW, KOLKATA-700001. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS SD/- (N.V.VASUDEVAN, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE: DATE 15 -4 -2016 COPY OF THE ORDER FORWARDED TO:-