SHRI PAWAN MUNDRA, KOTA V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTA

ITA 1101/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8813 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 09-09-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: C M BIRLA
• Keywords: Unexplained investment; Initiation of penalty proceedings; Revised return; Documents seized
• Section: 143(3); 153A; 69B; 274

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 1101/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2013-14 SH. PAWAN MUNDRA 524-A, TALWANDI, KOTA CUKE VS. DCIT, CENTRAL, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ADGPM6757R VIHYKFKHZ@ APPE LLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. C. M. BIRLA (CA) JKTLO DH VKSJ LS @ REVENUE BY : MS. CHANCHAL MEENA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 23/07/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 24/07/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-2, UDAIPUR DATED 28.06.2019 WHEREIN THE ASSESSEE HAS R AISED THE FOLLOWING REVISED GROUNDS OF APPEAL:- 1. THAT AS THE LEARNED AO HAS NOT INITIATED PENALT Y U/S 271AAB ON INCOME SHOWN SUO-MOTTO AT RS. 5,20,000/- THEREFORE PENALTY ON IT AMOUNTING TO RS. 1,56,000/- BEING UNSUSTAINABLE NEE DS DELETION. 2. THAT AS SOURCE OF RS. 80,000/- IS WELL EXPLAINED DURING ASSESSMENT PROCEEDINGS, PENALTY U/S 271AAB ON IT AMOUNTING TO RS. 24,000/- ALSO BEING NOT LEVIABLE NEEDS DELETION. 2. REGARDING GROUND NO. 1, THE LD AR DRAWN OUR REFE RENCE TO THE FINDINGS OF THE ASSESSING IN THE ASSESSMENT ORDER PASSED U/S 143(3) R/W 153A DATED 29.01.2016 WHICH READ AS UNDER:- ITA NO. 1101/JP/2019 SH. PAWAN MUNDRA, KOTA VS. DCIT, CENTRAL, KOTA 2 7. UNDISCLOSED INCOME ADMITTED AND DECLARED IN THE RET URN OF INCOME DURING THE COURSE OF POST SEARCH PROCEEDINGS, THE A SSESSEE HAD ADMITTED AN INCOME OF RS. 6,00,000/- ON A/C OF UNDI SCLOSED INVESTMENT IN LAND AS PER DOCUMENTS SEIZED FROM RES IDENCE OF SHRI B.D. MUNDRA AT 524A, TALWANDI, KOTA AND INVENTORISE D AS EXHIBIT-13, PAGE 45-49 OF ANNEXURE-AS, WHICH IS A COPY OF REGIS TERED SALE/PURCHASE DEED DATED 05.04.2012, REGARDING INDU STRIAL LAND PURCHASED BY THE ASSESSEE. THIS DISCLOSURE WAS MADE THROUGH A CHART FURNISHED BY SHRI ANIL MUNDRA, BROTHER OF THE ASSESSEE DURING THE COURSE OF POST SEARCH PROCEEDING ON 18.11.2013. 7.1 HOWEVER, THE ASSESSEE HAD OFFERED INCOME OF RS. 5,20,000/- IN THE REVISED RETURN FILED ON 09.11.2013 FOR TAXATION . 7.2 OUT OF UNDISCLOSED INCOME ADMITTED OF RS. 6,00 ,000/- BY THE ASSESSEE, INCOME OF RS. 5.20 LAKH HAS BEEN ADMITTED AND DECLARED IN THE REVISED RETURN FILED. THE ASSESSEE WAS ASKED TO FURNISH JUSTIFICATION FOR NOT OFFER BALANCE UNDISCLOSED INV ESTMENT IN LAND OF RS. 80,000/-. NO REPLY HAS BEEN FURNISHED BY THE AS SESSEE ON THIS ISSUE THEREFORE, AN ADDITION OF RS. 80,000/- U/S 69 B OF THE IT ACT, 1961 HAS BEEN MADE TO THE TOTAL INCOME OF THE ASSES SEE. 7.3 IT IS WORTHWHILE TO MENTION HERE THAT THE ADDI TION MADE OF RS. 80,000/-COVERED UNDER THE PROVISION OF SECTION 69B OF THE INCOME TAX ACT, 1961 AS THESE REPRESENTS UNDISCLOSED INVES TMENT WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT AND ASSESSEE H AS FAILED TO OFFER ANY EXPLANATION ABOUT THE SOURCE OF THE SAME THEREFORE AS PER SECTION 115BBE(1)(A) THE INCOME OF RS. 80,000/- LIA BLE FOR TAX @ ITA NO. 1101/JP/2019 SH. PAWAN MUNDRA, KOTA VS. DCIT, CENTRAL, KOTA 3 30%. PENALTY PROCEEDINGS U/S 271AAB IS INITIATED SE PARATELY BY WAY OF ISSUE OF NOTICE U/S 274 R.W.S 271AAB OF THE ACT. 3. IT WAS SUBMITTED BY THE LD AR THAT ON PERUSAL OF THE AFORESAID FINDINGS OF THE AO, IT IS CLEAR THAT THE PENALTY PROCEEDINGS HA VE ONLY BEEN INITIATED IN THE CONTEXT OF INCOME OF RS. 80,000/- BROUGHT TO TAX U/ S 69B OF THE ACT AND AS FAR AS THE INCOME OF RS. 5.20 LAKH OFFERED BY THE ASSES SEE IN THE REVISED RETURN E- FILED ON 09.11.2013, THE PENALTY PROCEEDINGS WERE N OT INITIATED. IT WAS ACCORDINGLY SUBMITTED THAT THE PENALTY SO LEVIED BY THE AO U/S 271AAB THEREFORE DESERVES TO BE DELETED. 4. REGARDING THE PENALTY LEVIED BY THE AO ON ADDIT ION OF RS. 80,000/- MADE U/S 69B OF THE ACT, OUR REFERENCE WAS DRAWN TO THE WORKING OF INVESTMENT IN THE INDUSTRIAL LAND AS PER REVISED RE TURN OF INCOME AS UNDER: CASH AVAILABLE AS ON 31.03.2013 RS. 82,561 ADD: UNDISCLOSED INCOME RS. 5,20,000 RS. 6,02,561 LESS : INVESTMENT IN INDUSTRIAL LAND RS. 6,00,000 REVISED CASH IN HAND ON 31.03.2013 RS. 2,561 5. IT WAS SUBMITTED BY THE LD AR THAT THE AO HAS NO T DISPUTED THE AMOUNT OF INVESTMENT FOR PURCHASE OF INDUSTRIAL LAND AMOUN TING TO RS. 6,00,000/- APPEARING IN THE REVISED BALANCE-SHEET. THE AO HAS ALSO NOT DISPUTED THE FACT THAT AVAILABLE CASH IN HAND AND ADDITIONAL INCOME S HOWN OF RS. 5.2 LAKH IS SUFFICIENT TO MEET COST OF INVESTMENT OF 6,00,000/- . HIS ONLY GRIEVANCE IS THAT OUT OF RS. 6,00,000/-, THE ASSESSEE HAS SHOWN UNDIS CLOSED INCOME OF RS. 5,20,000/- ONLY AND HAS USED CASH IN HAND OF RS. 80 ,000/-. IT WAS SUBMITTED THAT WHERE THE ASSESSEE HAS CASH IN HAND OF RS. 80, 000/- WHICH IS NOT DISPUTED ITA NO. 1101/JP/2019 SH. PAWAN MUNDRA, KOTA VS. DCIT, CENTRAL, KOTA 4 BY THE LD. AO, THE ASSESSEE CANNOT BE DEPRIVED TO U SE IT. THOUGH THE ADDITION OF RS. 80,000/- IS MADE BY LD. AO WHICH IS SUSTAINE D BY LD. CIT(A) AND THE SAME HAS NOT BEEN CHALLENGED IN SECOND APPEAL BEFOR E THE TRIBUNAL GIVEN THE QUANTUM OF ADDITION, HOWEVER, SUCH CONTROVERSIAL AD DITION IS NOT JUSTIFIABLE AS PER PROVISIONS OF SECTION 69B OF THE ACT AND THEREF ORE, DOES NOT JUSTIFY LEVY OF PENALTY U/S 271AAB OF THE ACT. 6. PER CONTRA, THE LD. DR AGAIN DRAWN OUR REFERENC E TO PARA 7 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE ADDITIONAL INCOME OF RS. 5.20 LAKH WAS OFFERED SUBSEQUENT TO THE DATE OF SEARCH CONDUC TED ON 13.08.2013 AND EVEN THOUGH THE ASSESSEE HAS FILED REVISED RETURN O F INCOME ON 09.11.2013 GIVEN THAT SUCH UNDISCLOSED INCOME WAS PURSUANT TO SEARCH CONDUCT ON 13.08.2013, THE ASSESSEE IS LIABLE FOR PENALTY U/S 271AAB OF THE ACT. IT WAS FURTHER SUBMITTED THAT GIVEN THAT THE ASSESSEE HAS ORIGINALLY ADMITTED UNDISCLOSED INCOME OF RS. 6,00,000/-, ONLY ADDITION AL OF RS. 5.20 LAKH WAS OFFERED IN THE REVISED RETURN, BALANCE ADDITION OF RS. 80,000/- WAS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS ACCOR DINGLY SUBMITTED THAT THE PENALTY PROCEEDINGS U/S 271AAB WERE INITIATED FOR T HE WHOLE OF THE UNDISCLOSED INCOME OF RS. 6,00,000/- AND IT IS INCORRECT ON THE PART OF THE LD. AR TO STATE THAT THE PENALTY HAS BEEN INITIATED ONLY IN RELATIO N TO THE ADDITIONAL INCOME OF RS. 80,000/- BROUGHT TO TAX BY THE ASSESSING OFFICE R. FURTHER, OUR REFERENCE WAS DRAWN TO THE FINDINGS OF THE LD CIT(A) WHICH RE AD AS UNDER:- 6.3 THE INCOME OF RS. 6,00,000/- BEING UNEXPLAINED INVESTMENT IN LAND, IN RESPECT OF WHICH PENALTY HAS BEEN LEVIED, WAS DETECTED BECAUSE A COPY OF REGISTERED SALE/PURCHASE DEED DATED 05.04 .2012, REGARDING PURCHASE OF INDUSTRIAL LAND BY THE ASSESSEE FOR RS. 6,00,000/- WAS FOUND DURING SEARCH. THE INVESTMENT WAS NOT RECORDED IN T HE BOOKS OF ACCOUNT ON OR BEFORE THE DATE OF SEARCH. THEREFORE THE INCO ME OF RS. 6,00,000/- ITA NO. 1101/JP/2019 SH. PAWAN MUNDRA, KOTA VS. DCIT, CENTRAL, KOTA 5 FALLS WITHIN THE DEFINITION OF UNDICLOSED INCOME AS GIVEN IN CLAUSE (C) OF EXPLANATION TO SECTION 271AAB (REPRODUCED IN THE PR ECEDING PARA). ACCORDINGLY, IT IS HELD THAT PENALTY U/S 271AAB IS LEVIABLE ON THE INCOME OF RS. 6,00,000/-. THE ISSUE WHETHER PENALTY IS LEV IABLE AT 10% OR 30% OF UNDISCLOSED INCOME IS DISCUSSED SEPARATELY IN TH E SUCCEEDING PARAS. 6.4 THREE DIFFERENT RATES FOR LEVY OF PENALTY ARE P ROVIDED IN SECTION 271AAB, 10% OF UNDISCLOSED INCOME IN CASES FALLIN G UNDER CLAUSE (A), 20% OF UNDISCLOSED INCOME IN CASES FALLING UNDER CLAUSE (B), AND 30% OF UNDISCLOSED INCOME IN CASES NOT FALLING UNDER CLAUSE (A) OR (B). 6.5 FOR A CASE TO FALL UNDER CLAUSE (A), THE FOLLOW ING CONDITIONS MUST BE MET (I) THE ASSESSEE ADMITS THE UNDISCLOSED INCOME IN A STATEMENT U/S 132(4) DURING SEARCH AND SPECIFIED THE MANNER IN WH ICH SUCH INCOME HAS BEEN DERIVED (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED (III) THE ASSESSEE ON OR BEFORE THE SPECIFIED DATE - (A) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME; AND (B) FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED PR EVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN. 6.6 THE ASSESSEE HAS LAID MUCH STRESS ON THE FACT T HAT OUT OF THE INCOME OF RS. 6,00,000/- IN RESPECT OF WHICH PENALT Y U/S 271AAB HAS BEEN LEVIED, INCOME OF RS. 5,20,000/- WAS OFFERED T O TAX IN THE RETURN OF INCOME FILED BEFORE ISSUE OF NOTICE U/S 153A. THERE IS NO DISPUTE ABOUT THIS FACT, AND THEREFORE IN RESPECT OF THE INCOME O F RS.5,20,000/-, WHICH WAS DECLARED IN THE ROI FILED BEFORE ISSUE OF NOTICE U/S 153A, ITA NO. 1101/JP/2019 SH. PAWAN MUNDRA, KOTA VS. DCIT, CENTRAL, KOTA 6 THE ASSESSEE SATISFIES THE CONDITION '(III)' ABOVE. HOWEVER, AT NO STAGE, INCLUDING IN THE PRESENT APPELLATE PROCEEDINGS, HAS THE ASSESSEE SPECIFIED THE MANNER IN WHICH THE INCOME OF RS.5,20 ,000/-WAS DERIVED, MUCH LESS SUBSTANTIATE SUCH MANNER. THEREF ORE CONDITIONS (II) AND (II) ABOVE, ALSO REQUIRED TO BE MET FOR LEVY OF PENALTY AT THE LOWER RATE OF 10%, UNDER CLAUSE (A) OF SECTION 271AAB(1), ARE NOT SATISFIED IN THE ASSESSEE'S CASE. ACCORDINGLY, IT IS HELD THA T IN RESPECT OF THE INCOME OF RS.5,20,000/- PENALTY IS LEVIABLE AT 30% UNDER CLAUSE (A) OF SECTION 271AAB(1) . 6.7 AS REGARDS INCOME OF RS. 80,000/- IN ADDITION T O THE FACT THAT AT NO STAGE, INCLUDING IN THE PRESENT APPELLATE PROCEEDIN GS, HAS THE ASSESSEE SPECIFIED THE MANNER IN WHICH THE INCOME OF RS. 80, 000/- WAS DERIVED, MUCH LESS SUBSTANTIATE SUCH MANNER, THIS INCOME WAS NOT OFFERED TO TAX IN THE RETURN OF INCOME FILED U/S 153A. THEREFORE, NONE OF THE CONDITIONS FOR LEVY OF PENALTY AT THE LOWER RATE OF 10%, UNDER CLAUSE (A) OF SECTION 271AAB (1), ARE SATISFIED. ACCORDINGLY, IT IS HELD THAT IN RESPECT OF THE INCOME OF RS. 80,000/- PENALTY IS LEVIABLE AT 30% U NDER CLAUSE (A) OF SECTION 271AAB(1). 6.8 IN VIEW OF THE ABOVE DISCUSSION PENALTY OF RS. 1,80,000/-, LEVIED BY THE A.O U/S 271AAB(1)(C), IS HEREBY CONFIRMED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. REGARDING THE FIRST CONTENTION OF THE L D AR THAT THE PENALTY U/S 271AAB HAS BEEN INITIATED ONLY IN RESPECT OF RS 80, 000/-, WE HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND ARE UNABLE TO AGREE TO THE CONTENTION SO ADVANCED BY THE LD AR. THE SUM AND SUBSTANCE OF PARA 7 OF THE ASSESSMENT ORDER WHERE READ IN TOTALITY WILL SHOW CLEARLY THAT THE PENALTY HAS BEEN INITIATED ITA NO. 1101/JP/2019 SH. PAWAN MUNDRA, KOTA VS. DCIT, CENTRAL, KOTA 7 IN RESPECT OF RS 6,00,000/- ADMITTED BY THE ASSESSE E PURSUANT TO SEARCH CONDUCTED ON 13.08.2013. GIVEN THAT THE ASSESSEE H AD ONLY DISCLOSED A SUM OF RS 5.2 LACS IN THE REVISED RETURN FILED ON 9.11.201 3, SUBSEQUENT TO DATE OF SEARCH AND THEREAFTER, IN THE RETURN FILED ON 16.02 .2015 IN RESPONSE TO NOTICE U/S 153A, THE ASSESSING OFFICER HAS BROUGHT THE BAL ANCE AMOUNT OF RS 80,000/- TO TAX DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, AS FAR AS INITIATION OF PENALTY PROCEEDINGS U/S 271AAB IS CON CERNED, THE SAME HAS BEEN INITIATED ON THE WHOLE OF THE SUM OF RS 6 LACS ADMI TTED BY THE ASSESSEE PURSUANT TO SEARCH. 8. REGARDING THE SECOND CONTENTION OF THE LD AR TH AT THE ASSESSEE HAD CASH IN HAND OF RS 80,000/- AS ON 31.03.2013 AND THE SAM E HAS BEEN UTILIZED IN MAKING THE INVESTMENT FOR PURCHASE OF LAND. IN OUR VIEW, WHAT NEEDS TO BE SEEN IS THE SOURCE OF INVESTMENT AT THE POINT IN TI ME WHEN THE INVESTMENT WAS MADE. IN THE INSTANT CASE, THE SALE DEED HAS BEEN REGISTERED ON 5.4.2012, THEREFORE, WHAT NEEDS TO BE SEEN IS WHETHER THE ASS ESSEE WAS HAVING SUFFICIENT CASH IN HAND ON OR BEFORE 5.4.2012 REFLECTED IN ITS BOOKS OF ACCOUNTS TO MAKE SUCH INVESTMENT, HOWEVER, THERE IS NOTHING ON RECOR D TO SUBSTANTIATE THE SAME. THEREFORE, WE ARE UNABLE TO AGREE TO THE CONTENTION SO RAISED BY THE LD AR AND CONFIRM THE FOLLOWING FINDINGS OF THE LD CIT(A) WHI CH READS AS UNDER: AS REGARDS INCOME OF RS. 80,000/- IN ADDITION TO T HE FACT THAT AT NO STAGE, INCLUDING IN THE PRESENT APPELLATE PROCEEDIN GS, HAS THE ASSESSEE SPECIFIED THE MANNER IN WHICH THE INCOME OF RS. 80, 000/- WAS DERIVED, MUCH LESS SUBSTANTIATE SUCH MANNER, THIS INCOME WAS NOT OFFERED TO TAX IN THE RETURN OF INCOME FILED U/S 153A. THEREFORE, NONE OF THE CONDITIONS FOR LEVY OF PENALTY AT THE LOWER RATE OF 10%, UNDER CLAUSE (A) OF SECTION 271AAB (1), ARE SATISFIED. ACCORDINGLY, IT IS HELD THAT IN RESPECT OF THE ITA NO. 1101/JP/2019 SH. PAWAN MUNDRA, KOTA VS. DCIT, CENTRAL, KOTA 8 INCOME OF RS. 80,000/- PENALTY IS LEVIABLE AT 30% U NDER CLAUSE (A) OF SECTION 271AAB(1). IN THE RESULT, BOTH THE GROUNDS TAKEN BY THE ASSESS EE ARE DISMISSED AND THE MATTER IS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/07/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24/07/2020 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SH. PAWAN MUNDRA, KOTA 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CENTRAL, KOTA 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1101/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR