The Dy. CIT, Central Circle-1, Baroda V. Shri Mahendrabhai J. Shah, Baroda

ITA 1101/AHD/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 8329 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2018
• 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
• Department Lawyers: ALBINUS TIRKEY
• Keywords: Income from undisclosed sources
• Section: 132

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 1097/AHD/2016 ( ASSESSMENT YEAR : 2012-13) DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1, AAYKAR BHAVAN, RACE COURSE CIRCLE, BARODA / VS. M/S SHREE KRISHNA DEVELOPERS 329/1, 329/2, OPP. SUN CITY, NEAR DARBAR CHOWKDI, MANJALPUR, BARODA-390011 ./ ./ PAN/GIR NO. : ABAFS7482B ( APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO. 1101/AHD/2016 ( ASSESSMENT YEAR : 2012-13) DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1, AAYKAR BHAVAN, RACE COURSE CIRCLE, BARODA / VS. SHRI MAHENDRABHAI J. SHAH GOKUL 5, SAPTARISHI CORNER, OPP. SAIMANDIR APARTMENT, KARELIBAUG, BARODA- 390018 ./ ./ PAN/GIR NO. : AFOPS8292K ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI ALBINUS TIRKEY, SR. D.R. / RESPONDENT BY : SMT. URVASHI SHODHAN, A.R. NONE (IN ITA NO.1101/AHD/ 2016) DATE OF HEARING 25/09/2018 !'# / DATE OF PRONOUNCEMENT 04/10/2018 ITA NO.1097 & 1101/AHD/16 [DCIT VS. M/S. SHREE KRIS HNA DEVELOPERS & SHRI MAHENDRABHAI J. SHAH] A.Y. 2012-1 3 - 2 - / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS HAVE BEEN FILED AT THE INSTAN CE OF THE REVENUE AGAINST THE ORDERS OF THE COMMISSIONER OF I NCOME TAX (APPEALS)-12, AHMEDABAD (CIT(A) IN SHORT), BOTH D ATED 2.12.2015 ARISING IN THE PENALTY ORDER DATED 21.08.2014 & 16. 07.2014; RESPECTIVELY PASSED BY THE ASSESSING OFFICER (AO) U NDER S. 271AAA OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AS SESSMENT YEAR 2012-13 IN BOTH APPEALS. SINCE, BOTH APPEALS RAISE SIMILAR GRIEVANCE, THESE ARE BEING DISPOSED OF BY COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1097/AHD/2016 (SHREE KRISHNA DEVELOPERS) 2. BY WAY OF ITS GROUNDS OF APPEAL, THE REVENUE HA S IMPUGNED THE ACTION OF THE CIT(A) IN DELETING THE PENALTY OF RS.28 LAKHS IMPOSED BY THE AO ON THE GROUND THAT THE ASSESSEE H AS FAILED TO COMPLY WITH THE CONDITIONS SPECIFIED UNDER S.271AAA (2) OF THE ACT FOR EXONERATION OF PENALTY LEVIABLE. 3. BRIEFLY STATED, A SEARCH UNDER S. 132 OF THE ACT WAS CONDUCTED ON THE GROUP CASES OF ANILBHOLABHAI PATEL GROUP INC LUDING THE CASE OF THE CAPTIONED ASSESSEE ON 09.08.2011. DURING THE COURSE OF SEARCH OPERATION, THE ASSESSEE DISCLOSED AN AMOUNT OF RS.2,80,00,000/- ON ACCOUNT OF UNACCOUNTED RECEIPTS DERIVED FROM LAND TRADING AND COMMISSION INCOME. THE ASSESSEE W HILE FILING THE RETURN OF INCOME, DULY ADMITTED AND OFFERED THE AFO RESAID UNDISCLOSED INCOME DECLARED AT THE TIME OF SEARCH A ND PAID TAXES ITA NO.1097 & 1101/AHD/16 [DCIT VS. M/S. SHREE KRIS HNA DEVELOPERS & SHRI MAHENDRABHAI J. SHAH] A.Y. 2012-1 3 - 3 - THEREON. CONSEQUENT UPON THE RETURN FILED BY INCLU DING THE ADDITIONAL INCOME AFORESTATED, THE RETURN OF INCOME WAS SUBJECTED TO SCRUTINY ASSESSMENT. THE DISCLOSURE SO MADE WAS ACC EPTED BY AO AS SUCH. WHILE PASSING THE ASSESSMENT ORDER, THE AO I NVOKED THE PROVISIONS OF SECTION 271AAA OF THE ACT AND IMPOSED PENALTY @10% ON THE UNDISCLOSED INCOME OF THE SPECIFIED PRE VIOUS YEAR AT RS.28 LAKHS. CONSEQUENTLY, THE PENALTY OF RS.28 LA KHS WAS IMPOSED UNDER S. 271AAA OF THE ACT VIDE PENALTY ORD ER DATED 21.08.2014 CONCERNING AY 2012-13 IN QUESTION. 4. AGGRIEVED BY THE IMPOSITION OF PENALTY, THE ASSE SSEE PREFERRED APPEAL BEFORE THE CIT(A). 5. IN THE FIRST APPEAL, THE CIT(A) FOUND MERIT FOR NON-IMPOSITION OF PENALTY AS PLEADED BY THE ASSESSEE. THE CIT(A) TOOK NOTE OF THE CASE MADE OUT BY THE AO THAT WHILE THE ASSESSEE HAS OFFERED THE UNDISCLOSED INCOME AND HAS PAID TAXES THEREON, IT H AS FAILED TO SPECIFY ANY PARTICULARS/DETAILS/SPECIFICATION OF SU CH UNACCOUNTED INCOME AND CONSEQUENTLY, HAS FAILED TO SPECIFY THE MANNER OF DETERMINING UNDISCLOSED INCOME AND SUBSTANTIATION T HEREOF. THE CIT(A) ACCORDINGLY DELETED THE PENALTY IMPOSED AFTE R ANALYZING THE FACTUAL POSITION IN THE LIGHT OF JUDICIAL PRECEDENT S. WITHOUT REPRODUCING THE TEXT OF THE ORDER OF THE CIT(A), IT IS OBSERVED THAT THE CIT(A) ESSENTIALLY HELD THAT THE CASE OF THE AS SESSEE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C. SHAH & SIDHNATH GOEL AN D CONCLUDED THAT THE ASSESSEE HAS MADE EFFECTIVE AND SUFFICIENT COMPLIANCE TO THE IMMUNITY CONDITIONS OF SECTION 271AAA(2)(II) OF THE ACT ALSO. THE CIT(A) ACCORDINGLY DELETED THE PENALTY IMPOSED UNDE R S.271AAA OF THE ACT. ITA NO.1097 & 1101/AHD/16 [DCIT VS. M/S. SHREE KRIS HNA DEVELOPERS & SHRI MAHENDRABHAI J. SHAH] A.Y. 2012-1 3 - 4 - 6. AGGRIEVED BY THE ACTION OF CIT(A) TOWARDS CANCEL LATION OF PENALTY IMPOSED BY THE AO, THE REVENUE PREFERRED AP PEAL BEFORE THE TRIBUNAL. 7. THE LEARNED DR FOR THE REVENUE SUBMITTED THAT TH E CONDITIONS WITH REGARD TO PROVIDING THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AND SUBSTANTIATION THEREO F HAS NOT BEEN DONE BY THE ASSESSEE AS CONTEMPLATED BY SECTION 271 AAA(2) OF THE ACT. THE LEARNED DR THUS SUBMITTED THAT IN VIEW OF THE NONFULFILLMENT OF MANDATORY CONDITIONS AS PROVIDED IN THE EXIT CLAUSE, THE ASSESSEE CANNOT BE EXONERATED FROM THE LIABILITY OF PENALTY UNDER S. 271AAA OF THE ACT. THE LEARNED DR ACCORDINGLY SUBMITTED THAT THE PENALTY ORDER OF THE CIT(A) CANC ELLING PENALTY WRONGLY REQUIRES TO BE SET ASIDE AND THE PENALTY OR DER PASSED BY THE AO REQUIRES TO BE RESTORED. 8. LEARNED AR, ON THE OTHER HAND, REFERRED TO THE R ELEVANT EXTRACT OF THE STATEMENT RECORDED UNDER S.132(4) OF THE AC T AS REPRODUCED IN THE ORDER OF THE CIT(A) AT PARA NO.3 OF ITS ORDE R AND SUBMITTED THAT THE MANNER OF DERIVING UNDISCLOSED INCOME WAS ANSWERED IN A PLAUSIBLE MANNER. NO SPECIFIC QUESTIONS WERE ASKED TO THE ASSESSEE REGARDING THE SUBSTANTIATION OF THE MANNER WHILE RE CORDING THE STATEMENT UNDER S.132(4) OF THE ACT OR AT ANY LATER STAGE IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE LEARNED AR T HUS SUBMITTED THAT WITHOUT BEING PUT TO ANY QUERY ON THIS SUBJECT IT WAS NOT POSSIBLE FOR THE ASSESSEE TO VISUALIZE THE SAME. T HE LEARNED AR ADVERTED OUR ATTENTION TO THE DECISION OF THE CO-OR DINATE BENCH OF THE TRIBUNAL IN THE CASE OF (I) DCIT VS. ANILBHOLAB HAI PATEL ITA NO.481/AHD/2016 ORDER DATED 09.08.2018 (SAME GROUP CASE) (II) SHRI JAGDISHBHAI B CHANDARANA VS. ACIT ITA NO. 2199 /AHD/2016 ITA NO.1097 & 1101/AHD/16 [DCIT VS. M/S. SHREE KRIS HNA DEVELOPERS & SHRI MAHENDRABHAI J. SHAH] A.Y. 2012-1 3 - 5 - ORDER DATED 13.02.2018 AND (III) DCIT VS. SHRI HIMA NSHU B JOSHI & ORS. ITA NO. 1089/AHD/2016 & ORS. ORDER DATED 21.02 .2018 WHEREIN AS PER THE RATIO LAID DOWN BY THE HONBLE G UJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C SHAH [2008] 299 ITR 305 (GUJ) TO THE EFFECT THAT THE OBLIGATION DOES NOT FA LL UPON THE ASSESSEE TO EXPLAIN THE MANNER AND SUBSTANTIATION THEREOF AN D IN THE ABSENCE OF ANY SPECIFIC QUERY POSED BY THE REVENUE IN THIS REGARD, THE EMBARGO UNDER SECTION 271AAA(2)(I)&(II) OF THE ACT WOULD NOT APPLY. THE LEARNED AR THUS SUBMITTED THAT THE CIT( A) HAS APPRECIATED THE FACTS IN PROPER PERSPECTIVE AND THE ACTION OF THE CIT(A) IS IN SYNC WITH SEVERAL JUDICIAL PRECEDENTS IN THIS REGARD. THE LEARNED AR ACCORDINGLY SUBMITTED THAT NO INTERF ERENCE WITH THE ORDER OF THE CIT(A) IS CALLED FOR. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE PENALTY ORDER PASSED BY THE AO AND THE APPELLATE ORDER PASSED THEREON BY THE CIT(A) AND THE CASE LAWS CITE D ACROSS THE BAR. THE SHORT CONTROVERSY THAT ARISES FOR DETERMINATION IN THE PRESENT CASE IS WHETHER THE ASSESSEE, IN THE FACTS OF THE C ASE, HAS FULFILLED THE CONDITIONS FOR EXCLUSION FROM CLUTCHES OF PENAL TY UNDER S.271AAA OF THE ACT OR NOT. THE THRUST OF THE CASE OF THE AO IS THAT THE ASSESSEE HAS FAILED TO SPECIFY THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AS WELL AS FAIL ED TO SUBSTANTIATE THE MANNER AS CONTEMPLATED UNDER S.271 AAA(2) OF THE ACT. IT IS THE CASE OF THE ASSESSEE ON THE OTHER H AND THAT THE ORDER OF THE AO IMPOSING PENALTY WAS NOT SUSTAINABLE AS RIGH TLY HELD BY THE CIT(A) SINCE THE PREREQUISITES SPECIFIED UNDER S.27 1AAA(2) OF THE ACT ARE BROADLY COMPLIED TO CLAIM IMMUNITY FROM THE IMPOSITION OF PENALTY. IN THIS REGARD, WE STRAIGHTWAY FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE ITA NO.1097 & 1101/AHD/16 [DCIT VS. M/S. SHREE KRIS HNA DEVELOPERS & SHRI MAHENDRABHAI J. SHAH] A.Y. 2012-1 3 - 6 - HONBLE GUJARAT HIGH COURT IN THE CASE OF MAHENDRA C SHAH (SUPRA) AND ALSO BY THE RATIO OF THE DECISION OF THE HONBL E GUJARAT HIGH COURT IN CASE OF PR.CIT VS. MUKESHBHAI RAMANLAL PRA JAPTI [2017] 398 ITR 170 (GUJ). IN THE ABSENCE OF ANY EVIDENCE ON RECORD TO SHOW THAT ANY SPECIFIC QUERY WAS MADE TO THE ASSESS EE IN THIS REGARD, THE ALLEGATION FOR NON-FULFILLMENT OF CONDI TION OF SECTION 271AAA(2) OF THE ACT DOES NOT SURVIVE. IN VIEW OF THE BINDING PRECEDENT, THE ONUS WOULD SHIFT ON THE ASSESSEE TO SPECIFY THE MANNER OF EARNING UNDISCLOSED INCOME AND SUBSTANTIA TION THEREOF ONLY UPON REQUISITE INQUIRY IN THIS REGARD. IN THE ABSENCE OF ANY SPECIFIC INQUIRY, THE ASSESSEE CANNOT BE BLAMED FOR NON-FURNISHING OF MANNER OF EARNING UNDISCLOSED INCOME AND SUBSTAN TIATION THEREOF SUE MOTU. IT WAS NOT SHOWN TO US AS TO WHETHER SUCH QUERY WAS PUT EVEN IN THE COURSE OF ASSESSMENT PROCEEDINGS. IN T HE ABSENCE OF ANY INQUIRY, THE ASSESSEE CANNOT BE BLAMED FOR NON-SATI SFACTION OF THE EXIT CLAUSE PROVIDED UNDER S.271AAA(2) OF THE ACT. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE IMMUNI TY PROVIDED UNDER ERSTWHILE PROVISIONS OF SECTION 271AAA(1) OF THE ACT CANNOT BE DENIED. THE CIT(A), IN OUR VIEW, HAS CORRECTLY RECORDED THE FINDING OF FACTS AND LAW ENUNCIATED IN THIS REGARD AND HAS COME TO A RIGHTEOUS CONCLUSION. THE ORDER OF CIT(A) IS ALSO IN PARITY WITH THE DECISION OF CO-ORDINATE BENCH IN ANIL BHOLABHAI PAT EL (SUPRA). THUS, WE DECLINE TO INTERFERE. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ITA NO. 1101/AHD/2016 (SHRI MAHENDRABHAI J. SHAH) 11. THE IMPUGNED APPEAL ALSO ARISES FROM SAME SEARC H PROCEEDINGS ON ANILBHOLABHAI GROUP UNDER S.132 OF THE ACT WHERE THE IMPUGNED ASSESSEE WAS ALSO COVERED. THE REVENUE IN THE CAPT IONED APPEAL HAS ITA NO.1097 & 1101/AHD/16 [DCIT VS. M/S. SHREE KRIS HNA DEVELOPERS & SHRI MAHENDRABHAI J. SHAH] A.Y. 2012-1 3 - 7 - CHALLENGED THE ACTION OF THE CIT(A) IN DELETING THE PENALTY OF RS.22,50,000/- IMPOSED BY THE AO UNDER S.271AAA OF THE ACT. THE FACTS AND CIRCUMSTANCES OF THE CASE ARE STRIKINGLY SIMILAR TO THE FACTS INVOLVED IN THE CASE OF SHREE KRISHNA DEVELOPERS IT A NO.1097/AHD/2016 (SUPRA). THEREFORE, OUR OBSERVATIO NS AND CONCLUSION THEREON SHALL APPLY MUTATIS MUTANDIS TO THE FACTS OF THE PRESENT CASE. CONSEQUENTLY, WE DECLINE TO INTERFER E WITH THE ORDER OF THE CIT(A) DELETING THE PENALTY IMPOSED BY THE A O UNDER S.271AAA OF THE ACT. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 13. IN THE COMBINED RESULT, BOTH CAPTIONED APPEALS OF THE REVENUE ARE DISMISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 04/10/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 04/ 10 /2018