The Dy. CIT, Central Circle-1, Baroda V. Shri Mahesh A. Kothari, Baroda

ITA 1095/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8340 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 29-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Section: 143(3); 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO. 1095/AHD/2016 / ASSESSMENT YEAR: 2012-13 DCIT, CENT.CIR.1 BARODA. VS SHRI MAHESH A. KOTHARI 2 ND FLOOR, KOTHARI CHAMBERS NR.GOVT. PRESS KOTHI, BARODA 390001. PAN : ADBPK 9610 Q / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI JAMES KURIAN, SR.DR ASSESSEE BY : SHRI S.N. SOPARKAR, AR / DATE OF HEARING : 25/04/2018 /DATE OF PRONOUNCEMENT : 17/05/2018 O R D E R REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-12, AHMEDABAD DATED 2.12.2015 PASSED FOR THE ASSTT.YEAR 2012-13. 2. GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT(A) H AS ERRED IN DELETING PENALTY OF RS.34,45,000/- WHICH WAS IMPOSE D BY THE AO UNDER SECTION 271AAA OF THE INCOME TAX ACT. 3. BRIEF FACTS OF THE CASE ARE A SEARCH UNDER SECTI ON 132 OF THE INCOME TAX ACT WAS CONDUCTED IN THE ANIL BHOLABHAI PATEL G ROUP OF CASES INCLUDING THE CASE OF THE ASSESSEE. IT WAS CONDUCT ED ON 9.8.2011. ITA NO.1095/AHD/2016 - 2 - THEREFORE, A STATEMENT OF SHRI ANIL BHOLABHAI PATEL WAS RECORDED UNDER SECTION 132(4) OF THE ACT AND HE ADMITTED UNDISCLOS ED INCOME OF RS.35 CRORES FOR THE WHOLE GROUP. HE ALLOCATED THE INCOM E ACCORDINGLY AMONGST DIFFERENT PERSONS OF THE FAMILY MEMBERS AND BUSINESS CONCERNS CONTROLLED BY HIM. THEY AGREED TO HIS STATEMENT. ACCORDING TO HIS STATEMENT A SHARE OF THE ASSESSEE WAS RS.3,44,50,00 0/-. THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE ASSTT.YEAR 2012- 13 ON 30.3.2013 SHOWING TOTAL INCOME AT RS.2,89,58,320/- AND AGRICU LTURE INCOME OF RS.1,50,000/- FOR THE ASSTT.YEAR 2012-13. THE LD.A O HAS PASSED ASSESSMENT ORDER ACCEPTING RETURN OF INCOME. DISCU SSION MADE IN THE ASSESSMENT ORDER READS AS UNDER: 2. IN RESPONSE TO THE NOTICES ISSUED U/S 143(2) & 1 42(1), SHRI MANISH SHAH, C.A., DULY AUTHORIZED REPRESENTATIVE OF THE A SSESSEE ATTENDED FROM TIME TO TIME AND EXPLAINED THE RETURN OF INCOME FIL ED. VARIOUS DETAILS CALLED FOR DURING THE COURSE OF ASSESSMENT PROCEEDI NGS WERE FILED AND THE ISSUES WHICH CAME UP WERE DISCUSSED WITH THE A. R. OF THE ASSESSEE. 3. THE ASSESSEE IN HIS RETURN OF INCOME HAS OFFERED ADDITIONAL INCOME OF RS. 3,44,50,000/- WHICH IS AS PER THE DISCLOSURE OF ADDITIONAL INCOME MADE DURING THE COURSE OF SEARCH PROCEEDINGS. THIS ADDIT IONAL INCOME HAS BEEN OFFERED DUE TO SEARCH ACTION AND THE FINDINGS THERE OF, THUS THE AMOUNT OF RS. 3,44,50,000/- IS UNDISCLOSED INCOME OF THE ASSE SSEE FOR THE SPECIFIED YEAR AS PER SECTION 271AAA OF THE ACT. THEREFORE, P ENALTY PROCEEDINGS U/S 271AAA ARE SEPARATELY INITIATED FOR THIS DEFAUL T. 4. CONSIDERING THE SUBMISSIONS AND EXPLANATION SUBM ITTED BY THE ASSESSEE AND THE DISCUSSION WITH THE A.R., THE TOTA L INCOME IS DETERMINED AS UNDER: 5. TOTAL INCOME AS PER RETURN OF INCOME FILE D U/S 139(1) : RS. 2,89,58,320/- 6. ASSESSED U/S 143(3) OF THE INCOME TAX ACT, 1961. CHARGE INTEREST U/S 234A, 234B, 234C OF THE IT.ACT AS APPLICABLE. GIVE CREDIT OF PREPAID TAXES AFTER DUE VERIFICATION. ISSUE DEMAND NOTICE A ND CHALLAN/REFUND ITA NO.1095/AHD/2016 - 3 - ORDER, AS THE CASE MAY BE. ISSUE NOTICE U/S 274 R.W .S. 271 AAA OF THE I.T.ACT. 7. THIS ORDER IS PASSED AFTER APPROVAL OF THE ADDL. CIT, CENTRAL RANGE, BARODA VIDE HIS APPROVAL NO. 240/31 DATED 21/03/201 4. 4. THE LD.AO HAS INITIATED PENALTY PROCEEDINGS UNDE R SECTION 271AAA OF THE ACT AND OBSERVED THAT DURING THE COUR SE OF SEARCH, AS PER THE ADMISSION OF SHRI ANIL BHOLABHAI PATEL, ASSESSE E HAD DISCLOSED AN AMOUNT OF RS.3,44,50,000/- ON ACCOUNT OF UNACCOUNTE D RECEIPTS DERIVED FROM LAND TRADING AND COMMISSION INCOME. THE AO WA S OF THE OPINION THAT THOUGH HE ASSESSEE HAS FULFILLED CONDITIONS EN UMERATED UNDER SECTION 271AAA OF THE ACT, BUT FAILED TO SUBSTANTIA TE THE MANNER IN WHICH SUCH INCOME WAS DERIVED. ACCORDINGLY, HE IMP OSED PENALTY AT THE RATE OF 10% OF THE UNDISCLOSED INCOME. ON APPE AL, THE LD.CIT(A) DELETED PENALTY. 5. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET CONTENDED THAT IN THE CASE OF SHIV INDUSTRIAL INFRASTRUCTURE SIMILAR PENALTY WAS IMPOSED BY THE AO AND STATEMENT OF SHRI ANIL BHOLABHAI WAS APP RECIATED BY THE TRIBUNAL. THE TRIBUNAL HAS UPHELD DELETION OF PENA LTY AT THE END OF THE CIT(A). HE PLACED ON RECORD COPY OF THE TRIBUNALS ORDER IN IT(SS)A. NO.88 & 482/AHD/2016. THE LD.DR, ON THE OTHER HAND , CONTENDED THAT THE ASSESSEE FAILED TO DISCLOSE MANNER IN WHICH SUC H INCOME WAS DERIVED AND ALSO SUBSTANTIATE SUCH MANNER. IN OTHER WORDS, ASSESSEE WAS TO PROVIDE DETAILS OF PERSONS FROM WHOM MONEY WAS RECE IVED IN THE LAND DEALING AS WELL AS COMMISSION INCOME SO THAT DEPART MENT COULD CONDUCT AN INQUIRY IN THEIR HANDS. SINCE HE FAILED TO DISC LOSE SUCH MANNER, THEREFORE, HE DESERVES TO BE VISITED WITH PENALTY. ITA NO.1095/AHD/2016 - 4 - 6. I HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GON E THROUGH THE RECORD. FOR APPRECIATING THE CONTROVERSY INVOLVED, IT IS INCUMBENT UPON US TO TAKE NOTE OF SECTION 271AAA. THE RELEVANT PA RT OF THIS SECTION READS AS UNDER: 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 B EEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSE SSEE 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 T HE 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, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH 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 R ESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). 7. A BARE PERUSAL OF THIS SECTION WOULD INDICATE TH AT SUB-SECTION (1) AUTHORISE THE AO TO LEVY PENALTY AT THE RATE OF 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. SUB-SECTION (2) PROVIDES CONDITIONS ON WHOSE FULFILLMENT THE ASSESSEE COULD BE ABSOLVED FROM THE LEVY OF PENALTY. A PERUSAL OF SUB-SECTION (2) WOUL D INDICATE THAT IT POSTULATES THREE CONDITIONS FOR AN ASSESSEE ON WHOS E FULFILLMENT HE WILL BE ABSOLVED FROM LEVY OF PENALTY. A PERUSAL OF THE ASSESSMENT ORDER WOULD INDICATE THAT THE AO HAS NO WHERE DIRECTED TH E ASSESSEE TO DISCLOSE MANNER OR TO SUBSTANTIATE SUCH MANNER SHOW ING THE EARNING OF UNDISCLOSED INCOME ADMITTED DURING THE COURSE OF SE ARCH. IT IS ALSO ITA NO.1095/AHD/2016 - 5 - PERTINENT TO OBSERVE THAT DURING THE COURSE OF SEAR CH STATEMENT OF ASSESSEE WAS NOT RECORDED. IT WAS OF ANIL BHOLABHA I PATEL AND NO SUCH SPECIFIC QUESTION WAS ASKED. THE LD.CIT(A) HAS REP RODUCED STATEMENT OF SHRI ANIL BHOLABHAI IN THE IMPUGNED ORDER AND OBSER VED THAT UNDER IDENTICAL CIRCUMSTANCES PENALTIES IMPOSED ON OTHER GROUP PERSONS HAVE BEEN DELETED. THUS, I AM OF THE VIEW THAT DEPARTME NT FAILED TO DEMONSTRATE THAT THE ASSESSEE WAS CONFRONTED WITH C ONDITIONS ENUMERATED IN SECTION 271AAA EITHER DURING THE COUR SE OF SEARCH OR DURING THE ASSESSMENT PROCEEDINGS. IN THE ABSENCE OF ANY SUCH DIRECTION FROM THE AO, IT COULD NOT BE EXPECTED FROM THE ASSE SSEE TO EXPLAIN THE MANNER IN WHICH SUCH INCOME WAS EARNED. THEREFORE, TO MY MIND THE ASSESSEE HAS FULFILLED ALL CONDITIONS CONTEMPLATED IN SUB-SECTION (2) OF SECTION 271AAA OF THE ACT AND NO PENALTY DESERVES T O BE IMPOSED UPON THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 17 TH MAY, 2018. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 17/05/2018