M/s. Siddharth Infratech P.Ltd, Jalgaon V. Assistant Commissioner of Income tax,

ITA 116/PUN/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9350 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-01-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 16-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: HARI KRISHAN
• Keywords: Search and seizure; Loose papers; Set aside
• Section: 274; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI ANIL CHATURVEDI , AM AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO. 116 /PUN/20 17 / ASSESSMENT YEAR : 2011 - 12 M/S. SIDDHARTH INFRATECH P. LTD. 47, RAMDAS COLONY, NR. SAGAR PARK, JALGAON - 425001. PAN : AANCS1550K ....... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, NASHIK. / RESPONDENT A SSESSEE BY : SHRI HARI KRISHAN REVENUE BY : SHRI S.P. WALIMBE / DATE OF HEARING : 0 9 .01.2020 / DATE OF PRONOUNCEMENT : 10 .01.2020 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS) - 12, PUNE DATED 02.09.2016 FOR THE ASSESSMENT YEAR 2011 - 12 AS PER THE GROUNDS OF APPEAL ON RECORD. 2. THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS THE IMPOSITION OF PENALTY U/S.271AAA OF THE INCOME TAX ACT, 1961 (HEREINAFTER 2 ITA NO. 116 /PUN/20 17 A.Y. 2011 - 12 REFERRED TO AS THE ACT) AMOUNTING TO RS.5,00,000/ - BY THE ASSESSING OFFICER AND AS CONFIRMED BY THE LD. CIT(APPEALS). 3. AT THE OUTSET, WE NOTICE THAT THE PRESENT APPEAL IS TIME BARRED BY 31 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT ALONG WITH CONDONA TION OF DELAY PETITION. WE HAVE GONE THROUGH THE CONDONATION PETITION AS WELL AS THE AFFIDAVIT AND HAVE FOUND THAT REASONS SPECIFIED THEREIN ARE JUSTIFIED AND THAT THE DELAY CANNOT BE ATTRIBUTED TO THE DELIBERATE CONDUCT OF THE ASSESSEE NEITHER THROUGH INT ENTION NOR THROUGH ACTION. THE REASONS FOR DELAY IN FILING THE APPEAL LATE WERE BEYOND THE CONTROL OF THE ASSESSEE AND EVEN THE LD. DR STATED THAT HE HAS NO OBJECTION, IF THE DELAY IS CONDONED. IN VIEW OF THE MATTER, WE CONDONE THE DELAY AND PROCEED TO HE AR THE APPEAL ON MERITS. 4. THE BRIEF FACTS IN THIS CASE ARE THAT A SEARCH AND SEIZURE ACTION WAS CONDUCTED IN THE KOTECHA GROUP OF CASES ON 09.08.2011. THE ASSESSEE WAS COVERED IN THIS ACTION. THE CASE OF THE ASSESSEE WAS CENTRALIZED VIDE ORDER OF THE CO MMISSIONER OF INCOME TAX - II, NASHIK DATED 02.12.2011. IN RESPONSE TO THE OFFICE NOTICE ISSUED U/S.153A OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME ON 18.09.2012 OFFERING FOR TAX INCOME TO THE TUNE OF RS.299,65,546/ - . THE ORDER U/S.143(3) R.W.S.153A OF THE ACT WAS PASSED ON 27.03.2014 ASSESSING THE INCOME OF THE ASSESSEE OF RS.2,99,65,546/ - . ON PERUSAL OF THE DETAILS FILED DURING THE POST SEARCH ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT: (I) THE RETURN FILED ON 18.09.2012 WAS THE FIRST RETURN FILED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. (II) OUT OF THE TOTAL INCOME OF RS.2,99,65,546/ - OFFERED FOR TAX, SUM OF RS.50,00,000/ - WAS OFFERED AS THE ADDITIONAL UNDISCLOSED INCOME. 3 ITA NO. 116 /PUN/20 17 A.Y. 2011 - 12 NOTICE U/S.271AAA R.W.S. 274 OF THE ACT WAS ISSUED ON 27.03.2013 A ND THE SAME WAS DULY SERVED ON THE ASSESSEE. THE CONTENTIONS OF THE ASSESSEE IN RESPECT OF NON - LEVY OF PENALTY WERE BROADLY AS FOLLOWS: (I) THE SUM OF RS. 50,00,000/ - WAS MADE BY SHRI SUNIL KOTECHA, THE DIRECTOR OF THE ASSESSEE COMPANY WHICH WAS A PART OF THE TOTAL SUM OF RS. 6,00,00,000/ - DECLARED BY HIM IN THE HANDS OF VARIOUS ENTITIES OF HIS GROUP. (II) THE TOTAL DISCLOSURE OF RS. 6,00,00,000/ - (OF WHICH THE SAID RS. 50,00,000/ - IS A PART) WAS IN RESPECT OF CERTAIN ASSETS FOUND DURING THE SEARCH, THE SOURCES IN RESPECT OF WHICH SHRI SUNIL KOTECHA WAS NOT IN A POSITION TO EXPLAIN. (III) THE DECLARATION OF ADDITIONAL INCOME WAS MADE MERELY TO COVER UP CERTAIN MISTAKES AND INCORRECT ACCOUNTING OF TRANSACTIONS IN RESPECT OF THE ASSESSEE. (IV) NO UNDISCLOSED INCOME HAS BEEN POINTED OUT AT ANY STAGE OF THE SEARCH OR ASSESSMENT PROCEEDINGS. (V) THE ADDITIONAL INCOME OFFERED IS NEITHER REPRESENTED BY ANY ASSET OR ANY ENTRY MADE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. (VI) THE ADDITIONAL INCOME HAS BEEN DECLARED BY THE ASSESSEE TO COOPERATE WITH THE DEPARTMENT AND TO AVOID PROTRACTED LITIGATION. THESE CONTENTIONS OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE ASSESSING OFFICER AND PENALTY TO THE TUNE OF RS.5,00,000/ - ( BEING 10% OF RS.50,00,000/ - ) U/S.271AAA OF THE ACT WAS IMPOSED. 5. THE LD. CIT(APPEALS) OBSERVED THAT RS.6,00,00,000/ - WAS DECLARED BY THE ASSESSEE DURING THE TIME OF SEARCH BY SHRI SUNIL KOTECHA WHO IS THE DIRECTOR IN THE ASSESSEE COMPANY AND IN RESPECT OF THE ASSES SEE FOR THE YE AR UNDER CONSIDERATION I.E. A.Y.2011 - 12, RS.50,00,000/ - WAS DISCLOSED AS ADDITIONAL IN COME TO COVER UP THE DISCREPANCIES . IT WAS ALSO OBSERVED BY THE LD. CIT(APPEALS) THAT THE SAME WAS NOT LINKED TO ANY SPECIFIC LOOSE PAPER OR INVESTMENT MADE BY THE ASSESSEE. THE ISSUE THAT UNDISCLOSED INCOME OF RS.50,00,000/ - PERTAINED TO THE YEAR UNDER CONSIDERATION REACHED FINALITY AS THE ASSESSING OFFICER ACCEPTED THE RETURN INCOME U/S.153A OF THE ACT. IN THE 4 ITA NO. 116 /PUN/20 17 A.Y. 2011 - 12 ORDER OF THE LD. CIT(APPEALS), HE HAS REFERRED TO SUBSEQUENT ASSESSMENT YEAR I.E. A.Y. 2012 - 13 WHEREIN ON THE BASIS OF LOOSE PAPERS NO.7 SEIZED VIDE BUNDLE NO. B - 1 FROM THE RESIDENCE OF THE DIRECTOR, SHRI SUNIL KOTECHA, THE ASSESSING OFFICER MADE SUBSTANTIVE ADDITION AND AS EVIDENT FROM PARA 3.2 OF TH E CIT(APPEALS)S ORDER, THE INCOME DISCLOSED OF RS.50,00,000/ - STANDS LINKED TO THE SPECIFIC LOOSE PAPERS SEIZED DURING THE SEARCH I.E. LOOSE PAPER NO.7 IN ASSESSMENT YEAR 2012 - 13 . THAT THE LOOSE P APER NO.7 TALKS OF SOME TRANSACTIONS/ASSETS AND THE LD. CIT (APPEALS) HELD THAT THE SUM OF RS.50,00,000/ - DISCLOSED DURING THE RELEVANT YEAR I.E. A.Y.2011 - 12 IS LINKED TO THIS LOOSE PAPER I.E. LOOSE PAPER NO.7 SEIZED FROM BUNDLE NO. B - 1 IN A.Y.2012 - 13 AND IT QUALIFIES AS UNDISCLOSED INCOME FOR THIS RELEVANT YEAR . THEREFORE, THE LD. CIT(APPEALS) HELD THAT THE ASSESSING OFFICER WAS FULLY JUSTIFIED IN LEVYING PENALTY U/S.271AAA OF THE ACT AND THE SAME WAS UPHELD. 6. THAT BEFORE THE BENCH, THE LD. AR OF THE ASSESSEE VEHEMENTLY ARGUED THAT IN THE ENTIRE STATEMENT RECORDED IN THE PROCEEDINGS U/S.132(4) OF THE ACT, THERE WAS NO SPECIFIC QUESTION ASKING TO MR. SUNIL KOTECHA, DIRECTOR OF THE ASSESSEE C OMPANY REGARDING THE SAID SEIZED LOOSE PAPER NO.7 IN BUNDLE NO. B - 1. THE LD. AR FURTHER DEMONS TRATED BY FILING COPY OF THE STATEMENT OF MR. SUNIL KOTECHA AT PAGES 24 TO 35 OF THE PAPER BOOK WHEREIN THERE WAS NO MENTION OF SUCH SEIZED LOOSE PAPER NO.7 NOR ANY QUESTION PUT TO HIM FOR CLARIFICATION AND RATHER TOWARDS QUESTION NO.19 WHERE HE WAS ASKED DO YOU WANT TO SAY ANYTHING ELSE ON YOUR OWN?. MR. SUNIL KOTECHA HAD VOLUNTARILY DISCLOSED THE AMOUNT OF RS.6 CRORES AS ADDITIONAL INCOME OVER AND ABOVE THE BOOK RESULT IN THE HANDS OF BUSINESS CONCERN, FAMILY MEMBERS AND OUT OF WHICH, AS EVIDENT FROM P ARA 3.2 OF THE CIT(APPEALS)S ORDER, FACTS RECORDED THAT RS.50,00,000/ - WAS DISCLOSED FOR ASSESSMENT YEAR 2011 - 12 IN THE CASE OF THE ASSESSEE COMPANY. THE LD. AR OF THE ASSESSEE INVITED OUR ATTENTION TO PAGE 51 OF THE PAPER BOOK WHEREIN COMPUTATION OF INCO ME HAS BEEN PLACED FOR 5 ITA NO. 116 /PUN/20 17 A.Y. 2011 - 12 THE ASSESSMENT YEAR 2011 - 12 THEREIN, RS.50,00,000/ - HAS BEEN DI SCLOSED IN THE RETURN OF INCOME AND THE SAME WAS ACCEPTED BY THE DEPARTMENT SINCE THE DEMAND NO TICE ISSUED U/S.156 OF THE ACT A S PLACED AT PAGE 56 OF THE PAPER BOOK WHICH SHOWS NIL DEMAND. THE LD. AR STATED THAT DURING THE COURSE OF PROCEEDINGS U/S. 132(4) OF THE ACT, NO QUESTION WAS PUT FORTH REGARDING SEIZED LOOSE PAPER NO.7 AND WHEN IT IS RECORDED ON FACTS THAT SUCH SEIZED LOOSE PAPER PERTAINS TO ASSESSMENT YEAR 2012 - 13 THEN ON THAT BASIS ADDITION CANNOT BE MADE FOR ASSESSMENT YEAR 2011 - 12. THAT FURTHER, OUT OF THE TOTAL DISCLOSED INCOME , RS.50,00,000/ - FOR THE RELEVANT ASSESSMENT YEAR HAS BEEN OFFERED TO TAX IN THE RETURN OF INCOME WHICH HAS BEEN ACCEPTED BY THE DEPART MENT. 6.1 THE LD. AR FURTHER RELIED ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN ITA NO.1436/PN/2013 & ORS. FOR ASSESSMENT YEAR 2010 - 11 ORDER DATED 26.06.2015 WHEREIN IT HAS BEEN OBSERVED BY THE TRIBUNAL WHILE OBSERVING THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL, DELHI BENCH IN THE CASE OF NEERAT SINGHAL VS. ACIT, 146 ITD 152 ( DELHI TRIB.) THAT LEVY OF PENALTY U/S.271AAA IS NOT JUSTIFIED IN ABSENCE OF ANY QUERY RAISED BY THE AUTHORIZED OFFICER DURING THE COURSE OF RECORDING OF STATEMENT U/S.132(4) ABOUT THE MANNER IN WHICH UNDISCLOSED INCOME HAS BEEN DERIVED AND ABOUT ITS SUBSTANTIATION. THE PUNE BENCH OF THE TRIBUNAL HAD GIVEN RELIEF TO TH E ASSESSEE. 6.2 REVERTING TO THE FACTS OF THE PRESENT CASE, THE LD. AR OF THE ASSESSEE CONTENDED THAT AS DEMONSTRATED BY HIM, IN THE ENTIRE PROCEEDINGS U/S.132(4) OF THE ACT, NO QUESTION WAS RAISED BY THE REVENUE AUTHORIT IES REGARDING SEIZED LOOSE PAPER N O. 7 PROCURED FROM BUNDLE NO. B - 1. IN ABSENCE OF SUCH SPECIFIC QUERY, IT IS NOT CORRECT FOR THE LD. CIT(APPEALS) TO LINK THAT LOOSE PAPER FOR MAKING ADDITION IN THE RELEVANT ASSESSMENT YEAR I.E. A.Y.2011 - 12 6 ITA NO. 116 /PUN/20 17 A.Y. 2011 - 12 WHEREAS ALREADY FOR ASSESSMENT YEAR 2012 - 13 SUBSTA NTIVE ADDITIONS HAVE BEEN MADE ON THE BASIS OF THAT LOOSE PAPER WHICH IS AN UNDISPUTED FACT. 7. PER CONTRA, THE LD. DR PLACED STRONG RELIANCE ON THE FINDINGS OF THE SUB - ORDINATE AUTHORITIES. 8. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS. WE FIND THAT DURING THE COURSE OF SEARCH, MR. SUNIL KOTECHA, DIRECTOR OF THE ASSESSEE C OMPANY HAD DISCLOSED RS.6 CRORES IN ORDER TO COVER UP VARIOUS DISCREPANCIES FOUND DURING THE COURSE OF SEARCH AND OUT OF THAT, RS. 50,00,000/ - HAS BEEN ADDITIONALLY DISCLOSED IN RESPECT OF THE RELEVANT ASSESSMENT YEAR 2011 - 12 IN RESPECT OF THE ASSESSEE COMPANY . THE SAID INCOME HAS BEEN TAKEN INTO ACCOUNT IN THE RETURN OF INCOME FILED AND TH E SAME HAS BEEN ACCEPTED BY THE DEPARTMENT AS DEMONSTRATED BY THE LD. AR OF THE ASSESSEE AS PER THE RELEVANT DOCUMENTS I.E. COMPUTATION OF INCOME, DEMAND NOTICE ANNEXED IN THE PAPER BOOK FILED BEFORE US. WE ALSO OBSERVE THAT THE LD. CIT(APPEALS) HAS BASED HIS DECISION BY LINKING THE SEIZED LOOSE PAPER NO.7 OF BUNDLE NO. B - 1 WHICH WAS ACTUALLY SEIZED IN ASSESSMENT YEAR 2012 - 13 FROM THE RESIDENCE OF THE MR. SUNIL KOTECHA FOR WHICH SUBSTANTIVE ADDITION WAS ALSO MADE BY THE ASSESSING OFFICER AND THEREFORE, RS.5 0,00,000/ - DISCLOSED FOR ASSE SSMENT YEAR 2011 - 12 IS JUSTIFIABLE FOR THE PENALTY LEVIED U/S.271AAA AS PER THE ORDER OF THE LD. CIT(APPEALS). WE HAVE PERUSED IN GREAT LENGTH THE FINDINGS OF THE LD. CIT(APPEALS) AND OTHER RELEVANT DOCUMENTS ON RECORD AND WE F IND THAT THE SEIZED LOOSE PAPER NO.7 PERTAINS TO THE ASSESSMENT YEAR 2012 - 13 AND THEREFORE, IT CANNOT BE LINKED TO THE INCOME DISCLOSED FOR THE ASSESSMENT YEAR 2011 - 12. THAT FURTHER, NO QUERY OR QUESTION WERE PUT FORTH BY THE REVENUE AUTHORIT IES TO THE ASS ESSEE IN THE ENTIRE PROCEEDINGS U/S.132(4) OF THE ACT WITH REGARD TO SEIZED LOOSE PAPER NO.7 AND AS THE CO - ORDINATE BENCH OF THE TRIBUNAL, DELHI IN THE CASE OF 7 ITA NO. 116 /PUN/20 17 A.Y. 2011 - 12 NEERAT SINGHAL VS. ACIT (SUPRA.) HAS TAKEN A VIEW THAT IN SUCH SCENARIO, PENALTY U/S.271AAA CANN OT BE LEVIED AND THE SAME IS BEING UPHELD BY THE PUNE BENCH OF THE TRIBUNAL IN ITA NO.1436/PN/2013 (SUPRA.), WE ARE OF CONSIDERED VIEW THEREFORE THAT THE FINDINGS ARRIVED AT BY THE LD. CIT(APPEALS) IS NOT CORRECT IN LAW AS WELL AS IN FACTS. 9. IN VIEW OF THE AFORESAID DISCUSSION AND ON EXAMINATION OF FACTS ON RECORD, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY U/S.271AAA OF THE ACT FROM THE HANDS OF THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE AS SESSEE IS ALLOWED. ORDER PRO NOUNCED ON 10 TH DAY OF JANUARY , 20 20 . SD/ - SD/ - ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 10 TH JANUARY, 2020. SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 12, PUNE. 4. THE PR. CIT, CENTRAL, NAGPUR. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 8 ITA NO. 116 /PUN/20 17 A.Y. 2011 - 12 DATE 1 DRAFT DICTATED ON 0 9 .01.2020 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 10 . 01 .20 20 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER