Sanjay Kumar Agarwal, Sikkim V. DCIT, CC-XXII, KOLKATA, Kolkata

ITA 1119/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1624 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 22-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure
• Section: 143(3); 153A; 132; 139

Judgement Text

I.T.A. NO. 1119/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1119/KOL/ 2014 ASSESSMENT YEAR: 2010-2011 SANJAY KUMAR AGARWAL,.............................. ............................APPELLANT C/O. SOCIETY HARDWARE STORES, P.S. ROAD, GANGTOK, SIKKIM [PAN: ATEPA 8461 G] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. ..................RESPONDENT CENTRAL CIRCLE-XXII, KOLKATA, 110, SHANTI PALLY, E.M. BYE PASS, AAYAKAR BHAWAN POORVA, KOLKATA-700 107 APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, FOR THE ASSESSEE SHRI SALLONG YADEN, ADDITIONAL CIT, D.R., FOR THE D EPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 07, 2017 DATE OF PRONOUNCING THE ORDER : JUNE 14, 2017 O R D E R PER SHRI P.M. JAGTAP, A.M. .: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL-III, KOLKATA DATED 11.04.2014, WHEREBY HE CONFIRMED THE PENALTY OF RS. 36,675/- IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271AAA OF THE A CT. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO BELONGS TO BEGRAJ GROUP. A SEARCH AND SEIZURE ACTION UNDER S ECTION 132 WAS CONDUCTED IN THE CASES BELONGING TO THE SAID GROUP INCLUDING THE CASE OF THE ASSESSEE. CONSEQUENT TO THE SAID ACTION, A NOTI CE UNDER SECTION 153A OF THE INCOME TAX ACT WAS ISSUED BY THE ASSESSING O FFICER TO THE ASSESSEE. I.T.A. NO. 1119/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 2 OF 5 AS NOTED BY THE ASSESSING OFFICER, THE ASSESSEE, HO WEVER, HAD MEANWHILE FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION UNDER SECTION 139 OF THE ACT ON 23.12.2011 DECLARING TOTAL INCOME OF RS.22,93,520/-. IN THE SAID RETURN, SET OFF OF RS.3,66,754/- WAS CLAIM ED BY THE ASSESESE ON ACCOUNT OF BROUGHT FORWARD LOSSES. IN THE ABSENCE O F ANY EVIDENCE TO SUPPORT AND SUBSTANTIATE THE SAID CLAIM, THE ASSESS ING OFFICER DISALLOWED THE SAME IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 30.12.2011. HE ALSO IMPOSED PENALTY OF RS.36, 675/- UNDER SECTION 271AAA OF THE ACT BEING 10% OF THE SUM OF RS.3,66,7 54/- DISALLOWED BY HIM ON ACCOUNT OF ASSESSEES CLAIM FOR SET OFF OF B ROUGHT FORWARD LOSSES. 3. THE PENALTY IMPOSED BY THE ASSESSING OFFICER UND ER SECTION 271AAA WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND SINCE THE SUBMISSION MADE BY THE A SSESSEE IN SUPPORT OF HIS CASE ON THE ISSUE OF IMPOSITION OF PENALTY U NDER SECTION 271AAA WAS NOT FOUND ACCEPTABLE BY HIM, THE LD. CIT(APPEAL S) CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECT ION 271AAA AFTER RECORDING HIS OBSERVATIONS/FINDINGS AS UNDER:- COMING BACK TO SECTION 271AAA WITH WHICH WE ARE CONCERNED HERE, THE LD. AR IN THE SUBMISSIONS HAS A LSO TRIED TO TWEAK ON LEGAL INTERPRETATION OF THE WORDS AND P HRASES IN THE SECTION 271AAA, VIZ.- UNDISCLOSED INCOME, AND SPECIFIED PREVIOUS YEAR. I DO NOT FIND ANY FORCE IN THE ARS INTERPRETATIONS, AS THE CASE OF THE APPELLANT IS CL EARLY COVERED AS UNDISCLOSED INCOME UNDER EXPLANATION ( A)(II) BEING ENTRY IN BOOKS OF ACCOUNT OR OTHER DOCUMENTS WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO AT THE SEARCH NOT BEEN CONDUCTED. AS REGARDS SPECI FIED PREVIOUS YEAR, THE SEARCH ACTION BEING INITIATED O N THE 22.03.2010, THE FY 2009-10 IS CLEARLY THE SPECIFIE D PREVIOUS YEAR AS PER EXPLANATION (B)(II). THUS, FOREMOST ON THE FACT ITSELF, THE APPELLANT H AS NOT EVEN OFFERED ANY EXPLANATION TO WHAT THE BROUGH T FORWARD LOSSES ARE/FROM WHERE THEY HAVE BEEN ARRIVE D AT. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. I.T.A. NO. 1119/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 3 OF 5 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS PER THE P ROVISIONS CONTAINED IN SUB-SECTION (1) OF SECTION 271AAA, THE ASSESSING OF FICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISIONS OF THE ACT, DIRECT THAT, IN A CASE WHERE SEARCH WAS INITIATED U NDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007 BUT BEFORE 1 ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION T O TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PERCENT OF T HE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. THE TERM UNDISCLOS ED INCOME FOR THE PURPOSES OF SECTION 271AAA IS DEFINED IN EXPLANATIO N (A) AS UNDER:- (A) UNDISCLOSED INCOME ,MEANS- (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS- (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. 6. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT THE PENALTY UNDER SECTION 271AAA IS IMPOSED IN THE CASE OF THE ASSESSEE ON ACCOUNT OF ADDITION MADE BY THE ASSESSING OFFICER BY WAY OF DISALLOWANCE OF ASSESSEES CLAIM FOR SET OFF OF BROUGHT FORWARD LOS SES, WHICH CANNOT BE CONSIDERED AS INCOME OF THE ASSESSEE REPRESENTED EI THER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN I.T.A. NO. 1119/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 4 OF 5 THE COURSE OF A SEARCH UNDER SECTION 132. ALTHOUGH THE LD. D.R. HAS RELIED ON THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) TO CO NTEND THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS COVERED B Y CLAUSE (II) OF EXPLANATION (A) TO SECTION 271AAA, WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE DISALLOWANCE OF ASSESSEES CLAIM FOR SET OFF OF BROUGHT FORWARD LOSSES CANNOT BE CONSIDE RED AS INCOME BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOK S OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE AS ENVISA GED IN CLAUSE (II) OF EXPLANATION (A). MOREOVER, IT IS NOT A CASE WHERE T HE SAME IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD TH E SEARCH NOT BEEN CONDUCTED. EVEN THE ASSESSING OFFICER HIMSELF HAS N OT MADE OUT SUCH A CASE EITHER IN THE ASSESSMENT ORDER OR EVEN IN THE PENALTY ORDER. WE, THEREFORE, FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE DISALLOWANCE OF ASSESSEES CLAIM FOR SET O FF OF BROUGHT FORWARD LOSSES CANNOT BE TREATED AS UNDISCLOSED INCOME FO R THE PURPOSE OF IMPOSING PENALTY UNDER SECTION 271AAA. ACCORDINGLY, WE CANCEL THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIR MED BY THE LD. CIT(APPEALS) AND ALLOW THIS APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 14, 2017 . SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT ME MBER KOLKATA, THE 14 TH DAY OF JUNE, 2017 COPIES TO : (1) SHRI SANJAY KUMAR AGARWAL, C/O. SOCIETY HARDWARE STORES, P.S. ROAD, GANGTOK, SIKKIM (2) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XXII, KOLKATA, 110, SHANTI PALLY, E.M. BYE PASS, AAYAKAR BHAWAN POORVA, KOLKATA-700 107 (3) COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL- III, KOLKATA; I.T.A. NO. 1119/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 5 OF 5 (4) COMMISSIONER OF INCOME TAX ,KOLKAT A (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/DDO INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.