The DCIT, Central Circle-4, Surat V. Shri Ghanshyam B.Bhaiya, Surat

ITA 1143/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63000 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 28-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y C SURTI
• Keywords: Business income; Income from undisclosed sources
• Section: 132

Judgement Text

ITA NO 1143 /AHD/2012 A.YR.. 2009 -10 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AH MEDABAD (BEFORE SHRI D.K.TYAGI JM & SHRI ANIL CHATURVEDI A. M.) I.T.A. NO.11 43/AHD/2012. (ASSESSMENT YEAR: 2009 -10 ) THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, AAYAKAR BHAVAN, MAJURA GATE, SURAT. (APPELLANT) VS. SHRI GHANSHYAM B. BHAIYA. 41, SHREEKUJ, ANCHAL PLOTS, NR. H3 HOSPITAL, CITY LIGHT ROAD, SURAT. (RESPONDENT) PAN: AGDPB 5905G APPELLANT BY : MR.Y.C. SURTI, SR.D.R. RESPONDENT BY : NONE. ( )/ ORDER DATE OF HEARING : 30-7-2012 DATE OF PRONOUNCEMENT : 12 -10 -2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF LD. CIT (A)-II, AHMEDABAD DATED 19-3-2012 FOR THE ASSESSMENT YEAR 2 009-10. 2. NO ONE APPEARED ON BEHALF OF THE RESPONDENT AND THEREFORE THE MATTER WAS DECIDED ON THE BASIS OF MATERIAL ON RECO RD. 3. THE ONLY EFFECTIVE GROUND IN ITS APPEAL RAISED B Y THE REVENUE READS AS UNDER:- ITA NO 1143 /AHD/2012 A.YR.. 2009 -10 2 THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN D IRECTING THE A.O. TO DELETE THE PENALTY OF RS.3,00,000/- LEVIED BY THE A .O. U/S. 271AAA OF THE ACT. 4. IN THE PRESENT CASE A SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE ASSESSEES RESIDENTIAL PREMISES. ASSESSEE FILED RETURN OF INCOME INCLUDING UNDISCLOSED INCOME OF RS.30 LAKHS ON ACCOUNT OF UNACCOUNTED INCOME, INVESTMENTS, ADVANCES, ASSETS E TC. THE A.O. INITIATED PENALTY U/S. 271AAA OF THE ACT OF RS.3 LAKHS IN RES PECT OF UNDISCLOSED INCOME OF RS.30 LAKHS. A.O. WAS OF THE VIEW THAT TH E ASSESSEE CANNOT CLAIM IMMUNITY FROM PENALTY AS HE DID NOT FULFILL T HE REQUIRED CONDITIONS LAID DOWN U/S. 271AAA(2) OF THE ACT. ACCORDING TO A.O. T HE ASSESSEE HAD FULFILLED ONLY ONE CONDITION NAMELY PAYMENT OF TAX WITH INTEREST WITH RESPECT TO UNDISCLOSED INCOME BUT DID NOT FULFILL THE OTHER TWO CONDITIONS NAMELY NOT SPECIFYING IN THE STATEMENT RECORDED U/S. 132(4), THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED AND SUBSTANTIATED TH E MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO THE A.O. AND ACCORDINGLY VIDE ORDER DATED 26-12-2011 HE LEVIED PENALTY OF RS.3 LAKHS U/ S. 271AAA OF THE ACT. THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF A.O. C ARRIED THE MATTER BEFORE THE CIT (A). 5. BEFORE CIT (A), THE ASSESSEE SUBMITTED THAT THE INCOME DISCLOSED BY THE ASSESSEE IS NOT UNDISCLOSED INCOME AS DEFINED I N EXPLANATION 1 TO SEC. 271AAA OF THE ACT. ALTERNATIVELY, THE ASSESSEE SUBM ITTED THAT EVEN IF THE DISCLOSED INCOME IS TREATED AS UNDISCLOSED INCOME A S PER SECTION 271AAA, THE ASSESSEE HAS FULFILLED ALL THE THREE CONDITIONS PRESCRIBED UNDER SECTION ITA NO 1143 /AHD/2012 A.YR.. 2009 -10 3 271AAA OF THE ACT AND THEREFORE, NO PENALTY BE LEVI ED. ASSESSEE ALSO RELIED ON THE DECISION OF CIT VS. MAHENDRA D. SHAH (208) 289 ITR 305 (GUJ.) AND CIT VS. RADHA KRISHNA GOYAL (2005) 278 I TR 454 (ALL.). 6. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE CIT (A) DELETED THE PENALTY BY HOLDING AS UNDER:- 5.4. AFTER GOING THROUGH THE STATEMENT RECORDED UN DER SECTION 132(4) OF THE I.T. ACT AND THE PRINCIPLES LAID BY T HE HONBLE GUJARAT HIGH COURT AND ALLAHABAD HIGH COURT, IT IS HELD THA T THE A.O. HAS WRONGLY REJECTED THE ASSESSEES ARGUMENTS. THE HON BLE COURTS HAVE LAID DOWN THE PRINCIPLE THAT THE AUTHORIZED OFFICER IS TO EXPLAIN THE PROVISION TO THE ASSESSEE AND ASK THE RELEVANT QUES TIONS ON THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED A ND IN THE PRESENT CASE IT IS APPLICABLE FOR SECTION 271AAA IN STEAD OF EXPLANATION 5 OF SEC.271(1). IN THE WHOLE STATEMENT RECORDED UNDER SECTION 132(4) ON 20-1-2009, THE AUTHORIZED OFFICER HAS NOT ASKED ANY FURTHER QUESTION BUT WAS SATISFIED WITH THE MAN NER THE INCOME WAS EARNED BY THE ASSESSEE. THE LD. DCIT HAS NEVER GIVEN THE APPELLANT ASSESSMENT YEAR SHOW CAUSE NOTICE OR AN O PPORTUNITY DURING THE COURSE OF ASSESSMENT PROCEEDINGS WITH RE GARD TO HIS RESERVATION AND CONTRARY OPINION ABOUT THE EXPLANAT IONS, INFORMATION AND SPECIFIC MANNER IN WHICH THE UNACCOUNTED INCOME HAS BEEN DERIVED BY THE APPELLANT. THEREFORE, IN ABSENCE THE REOF, IT IS A CONSTRUCTIVE AND UNDISPUTED ACCEPTANCE OF THE SAID DISCLOSURE, THE SPECIFIC MANNER THEREOF AND THE SUBSTANTIATION THER EOF BY THE APPELLANT. CLAUSE (III) LAYS DOWN THE THIRD CONDITION REGARDIN G THE PAYMENT OF TAX ALONG WITH INTEREST ON UNDISPUTED INCOME ADMITTED I N THE COURSE OF SEARCH. IT IS UNDISPUTED FACT THAT THE TAX AND INTE REST HAD BEEN PAID BY THE ASSESSEE. THE A.O. HIMSELF STATED THE SAME IN T HE PENALTY ORDER. ON THE BASIS OF PRINCIPLES LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT AND BY THE ALLAHABAD HIGH COURT IN THE ABOVE CITED CASES THE ASSESSEE HAD MADE DISCLOSURE OF UNACCOUNTED INCOME WHILE RECORDING A STATEMENT UNDER SECTION 132(4) OF THE I NCOME TAX ACT ITA NO 1143 /AHD/2012 A.YR.. 2009 -10 4 AND PAID THE TAXES WITH INTEREST. THE RETURNED INCO ME INCLUDED DISCLOSURE AMOUNT OF RS.30,00,000/- MADE DURING SEA RCH WHILE RECORDING STATEMENT U/S. 132(4) OF THE ACT. THE A.O . HAS NOT MADE ANY COMMENT OR OBSERVATION ABOUT THE SOURCE AND NAT URE OF INCOME, MANNER IN WHICH INCOME WAS DERIVED OR SUBSTANTIATIN G THE MANNER. THIS SHOWS THAT THE A.O. HIMSELF WAS SATISFIED ABOU T THE INCOME OFFERED IN RETURN OF INCOME. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CAS E AND THE PRINCIPLES LAID DOWN IN THE DECISIONS BY THE HONBL E HIGH COURTS NARRATED ABOVE IN PARAS- 4.1 AND 5.3 OF THIS ORDER, IT IS HELD THAT THE A.O. WAS NOT JUSTIFIED IN LEVYING THE PENALTY U/S.2 71AAA OF THE ACT AND HENCE THE SAME IS DELETED. 7. AGGRIEVED BY THE ORDER OF CIT (A), THE REVENUE I S NOW IN APPEAL BEFORE US. 8. BEFORE US THE LD. D.R. SUBMITTED THAT THE CIT (A ) HAS WRONGLY DELETED THE PENALTY LEVIED AND THEREFORE THE ORDER OF A.O. BE UPHELD. 9. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATER IAL AND DOCUMENTS ON RECORD. IN THE PRESENT CASE PENALTY HAS BEEN LE VIED U/S. 271AAA. IN ORDER TO ATTRACT THE PENALTY U/S. 271AAA THREE COND ITIONS SHOULD BE SATISFIED FIRST THERE SHOULD HAVE BEEN SEARCH BETWEEN LST JUN E, 2007 AND 1 ST JULY, 2012, SECOND THERE SHOULD BE UNDISCLOSED INCOME AND THE THIRD UNDISCLOSED INCOME SHOULD RELATE TO SPECIFIED PREVI OUS YEAR. AS PER SUB- SECTION 2 OF SEC. 271AAA, IF 3 CONDITIONS SPECIFIED THEREIN ARE FULFILLED THEN AN ASSESSEE IS NOT LIABLE TO PENALTY. THE 3 CONDITI ONS ARE (1) THE ASSESSEE IN THE STATEMENT RECORDED U/S. 132(4) ADMITS UNDISC LOSED INCOME AND SPECIFIES THE MANNER IN WHICH IT WAS DERIVED. (2) SUBSTANTIATES THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED AND (3) PAY S TAX TOGETHER WITH ITA NO 1143 /AHD/2012 A.YR.. 2009 -10 5 INTEREST ON THE UNDISCLOSED INCOME. CIT (A) IN HIS ORDER HAS GIVEN A FINDING THAT THE ASSESSEE HAD ADMITTED RS.30 LAKHS AS UNDIS CLOSED INCOME AND ALSO SPECIFIED THE MANNER IN WHICH IT WAS DERIVED. ACCORDINGLY CONDITION NO.1 WAS SATISFIED. THE ASSESSEE HAD ALSO SPECIFIED THE MANNER IN WHICH RS.30 LAKHS WAS EARNED BEING UNDERSTATEMENT OF INCO ME EARNED FROM CURRENT YEARS BUSINESS. CIT(A) HAS FURTHER HELD TH AT THE ASSESSEE HAS EXPLAINED THE SOURCE OF DISCLOSURE OF UNACCOUNTED I NCOME WAS CURRENT YEARS BUSINESS INCOME AND ACCORDINGLY THE REQUIREM ENT OF SPECIFYING THE MANNER IN WHICH IT HAS BEEN EARNED AND SPECIFYING T HE FACT HAS DULY COMPLIED WITH BY THE ASSESSEE. 3 RD CONDITION SPECIFIES PAYMENT OF TAX ALONG WITH THE UNDISCLOSED INCOME ADMITTED IN THE C OURSE OF SEARCH. THE ASSESSEE HAS PAID THE TAX WHICH IS ALSO CONFIRMED B Y THE A.O. IN HIS ORDER. CIT (A) HAS THUS GIVEN THE FINDING THAT THE ASSESSE E HAS MADE PAYMENTS WHILE RELYING ON THE STATEMENT RECORDED U/S.132 (4) AND PAID THE TAXES WITH INTEREST. CIT (A) HAS FURTHER OBSERVED THAT THE A.O . HAD NOT MADE ANY COMMENT OR OBSERVATION ABOUT THE SOURCE AND NATURE OF INCOME, MANNER IN WHICH INCOME WAS DERIVED OR SUBSTANTIATING THE MAN NER WHICH SHOWS THAT A.O. WAS SATISFIED WITH THE INCOME OFFERED IN RETUR N OF INCOME. CIT (A) HAS ALSO RELIED ON THE DECISION OF CIT VS. MAHENDRA SHA H (2008) 299 ITR 305 (GUJ.) AND CIT VS. RADHA KRISHA GOEL (2005) 278 ITR 454. 10. THE LD. D.R. COULD NOT CONTROVERT THE ABOVE FIN DINGS OF THE CIT (A). IN VIEW OF THESE FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT (A). WE THUS UPHOLD HIS ORDER DELETING THE PENALTY. ITA NO 1143 /AHD/2012 A.YR.. 2009 -10 6 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON 12 10 - 2012. SD/- SD/- (D.K.TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACC OUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-II, AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 31 - 7 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 21,24 / 9 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 8 -10 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 12 - 10 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 12 - 10 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 3 -10 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..