Anil Shantilal Gandhi, Nagpur V. Assistant Commissioner of Income-tax,

ITA 1209/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5046 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-10-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 03-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAWLI
• Keywords: Unexplained investment; Search and seizure
• Section: 143(3); 153A; 132; 12; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO S.1209 & 1210 /P U N/201 6 / ASSESSMENT YEAR S : 20 11 - 12 & 2007 - 08 A NIL SHANTILAL GANDHI, 502, HAREKRISHNA APARTMENT, NEAR BSNL OFFICE, RAMDASPETH, NAGPUR 440010 PAN : AEFPG4257A ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, NASHIK / RESPONDENT ASSESSEE BY : S HRI PRAMOD SHINGTE REVENUE BY : SHRI RAJESH GAWLI / DATE OF HEARING : 08 - 10 - 201 8 / DATE OF PRONOUNCEMENT : 10 - 10 - 201 8 / ORDER PER VIKAS AWASTHY, JM : ITA NO. 1209/PUN/2016 (A.Y. 2011 - 12) TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 12, PUNE DATED 11 - 03 - 2016 FOR THE ASSESSMENT YEAR 20 11 - 12. 2 ITA NO S. 1209 & 1210/PUN/2016, A.Y. 2011 - 12 & 2007 - 08 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE : A SEARCH AND SEIZURE ACTION U/S. 132 O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS CARRIED OUT IN THE CASE OF ASHOKA GROUP ON 20 - 04 - 2010. THE ASSESSEE IS ONE OF THE DIRECTORS OF ASHOKA GROUP OF COMPANIES AND HIS RESIDENTIAL PREMISES WAS ALSO COVERED UNDER THE SEARCH. DURING THE COURSE OF SEARCH GOLD JEWELLERY WEIGHING 2835.75 GMS AND SILVERWARE WEIGHING 57.2 KG WERE FOUND. DURING THE COURSE OF SEARCH THE ASSESSEE VOLUNTARILY OFFERED 30 KG OF SILVER AND 990 GMS JEWELLERY AS UNDISCLOSED INVESTMENT. DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ADDED REMAINING JEWELLERY AND SILVERWARE AS UNDISCLOSED INVESTMENT. THUS, THE ASSESSING OFFICER MADE ADDITION AS UNDER : JEWELLERY 1250 GRAMS @ RS.1,086 PER GRAM = RS.13,57,500/ - SILVER WARE 27.2 KGS @ RS.24,480 PKG = RS.6,65,856/ - AGGRIEVED BY THE ASSESSMENT ORDER DATED 26 - 03 - 2013 PASSED U/S. 143(3) R.W.S. 153B OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING CBDT INSTRUCTIONS NO. 1916 DATED 11 - 05 - 1994 DELETED THE ADDITION WITH RESPECT TO GOLD JEWELLERY. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION WITH REGARD TO SILVER UTENSILS WEIGHING 22.2 KG . THUS, RELIEF OF 5 KG SILVER WAS ALLOWED BY THE FIRST APPELLATE AUTHORITY. AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING ADDITION IN RESPECT OF SILVER WEIGHING 22.2 KG, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI PRAMOD SHINGTE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE BELONGS TO M ARWARI FAMILY AND THERE IS CUSTOM TO SERVE GUESTS AND RELATIVES DURING FESTIVALS AND VARIOUS FAMILY OCCASIONS IN SILVER 3 ITA NO S. 1209 & 1210/PUN/2016, A.Y. 2011 - 12 & 2007 - 08 UTENSILS. THE SILVER UTENSILS WERE RECEIVED BY THE ASSESSEES FAMILY ON VARIOUS SOCIAL OCCASIONS OVER THE PERIOD OF TIME. 4. ON THE OTHER HAND SHRI RAJESH GAWLI REPRESENTING THE DEPARTMENT STRONGLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). THE LD. DR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS BEEN QUITE CONSIDERATE IN GRANTING RELIEF TO THE ASSES SEE. THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF INVESTMENT IN HUGE QUANTITY OF SILVER ITEMS. THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE OR DERS OF AUTHORITIES BELOW . THE ASSESSEE IN APPEAL HAS RAISED SOLITARY ISSUE OF SUSTAINING ADDITION OF 22.2 KG SILVERWARE IN THE ASSESSMENT YEAR UNDER APPEAL. UNDISPUTEDLY, DURING SEARCH ACTION SILVER WARE/SILVER UTENSILS WEIGHING 57.2 KG WERE FOUND. THE ASSESSEE VOLUNTARILY OFF ERED 30 KG OF SILVER WARE AS UNDISCLOSED INVESTMENT. IN ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ADDED 27.2 KG SILVERWARE ON ACCOUNT OF UNEXPLAINED INVESTMENT. THE COMMISSIONER OF INCOME TAX (APPEALS) GRA NTED PART RELIEF OF 5 KG SILVER WARE TO THE ASSESSEE AND CONFIRMED THE ADDITION OF 22.2 KG SILVERWARE. TAKING INTO CONSIDERATION THE LIVING STANDARD, CUSTOM S ETC. OF THE ASSESSEES FAMILY , CONFIRMED THE ADDITION OF REMAINING 22.2 KG. AFTER TAKING INTO CONSIDERATION ENTIRE FACT S WE ARE OF CONSIDERED VIEW THAT THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMI NG ADDITION OF 22.2KG OF SILVER WARE ARE WELL REASONED AND HENCE , WARRANTS NO INTERFERENCE. ACCORDINGLY, THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) A RE CONFIRMED AND GROUNDS RAISED BY THE ASSESSEE IN APPEAL ARE DISMISSED. 4 ITA NO S. 1209 & 1210/PUN/2016, A.Y. 2011 - 12 & 2007 - 08 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED. ITA NO. 1210/PUN/2016 (A.Y. 2007 - 08) 7. THE ASSESSEE IN APPEAL HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 12, PUNE DATED 10 - 03 - 2016 FOR THE ASSESSMENT YEAR 2007 - 08 IN CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 8. THE LD. AR AT THE OUTSET SUBMITTED THAT THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT SUFFERS FROM TECHNICAL DEFECT , ON ACCOUNT OF CHARGE. THE LD. AR POINTED THAT WHILE RECORDING SATISFACTION IN THE ASSESSMENT ORDER DATED 26 - 03 - 2013 , PASSED U/S. 143(3) R.W.S. 153A THE ASSESSING OFFICER HAS MENTIONED BOTH THE CHARGES I.E. CONCEALMENT/FURNISHING INACCURATE PARTICULARS OF INCOME. IN ORDER LEVYING PENALTY , THE ASSESSING OFFICER HAS AGAIN MENTIONED BOTH THE LIMBS OF SECTION 271(1)(C) OF THE ACT. THE AMBIGUITY IN THE MIND OF ASSESSING OFFICER WITH REGARD TO CHARGE FOR LEVY OF PENALTY U/S. 271(1)(C) IS CONSPICUOUS ON BOTH THE STAGES. 9. THE LD. DR VEHEMENTLY OPPOSED THE ARGUMENTS RAISED BY THE LD. AR OF ASSESSEE. THE LD. DR POINTED THAT THIS ISSUE HAS BEEN RAISED BY THE ASSESSEE FOR THE FIRST TIME BEFO RE THE TRIBUNAL. 10. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PERUSED. THE ASSESSEE IN APPEAL HAS ASSAILED THE MANNER OF LEVY OF PENALTY. SINCE, THE ISSUE RAISED BY THE LD. AR IS LEGAL AND THE FACTS ARE ALREADY ON RECORD, IT HAS TO BE ADMITT ED IN THE LIGHT OF DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. COMMISSIONER OF INCOME TAX REPORTED AS 229 ITR 383. 5 ITA NO S. 1209 & 1210/PUN/2016, A.Y. 2011 - 12 & 2007 - 08 11. A PERUSAL OF ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS MADE ADDITION OF RS .6,53,764/ - ON ACCOUNT OF UNDISCLOSED PURCHASE OF NSCS, JEWELLERY, INVESTMENT IN LIC MARKET ETC. ON THE SAID ADDITION PENALTY U/S. 271(1)(C) HAS BEEN INITIATED. HOWEVER, WHILE RECORDING SATISFACTION THE ASSESSING OFFICER HAS MENTIONED BOTH THE CHARGES OF SECTION 271(1)(C) OF THE ACT. THE RELEVANT EXTRACT OF THE SATISFACTION RECORDED BY THE ASSESSING OFFICER READS AS UNDER : SINCE THE ASSESSEE HAS CONCEALED/FURNISHED INACCURATE PARTICULARS OF HIS INCOME, PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT ARE INITIATED SEPARATELY. 12. WHILE LEVYING PENALTY THE ASSESSING OFFICER HAS AGAIN MENTIONED BOTH THE CHARGES OF SECTION 271(1)(C) OF THE ACT. THE RELEVANT EXTRACT OF THE PENALTY ORDER READS AS UNDER : 03. . NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISH ON OR AFTER THE DATE OF SEARCH, SUCH ASSESSEE SHALL, FOR THE PURPOSES OF IMPOSITION OF PENALTY UNDER CLAUSE (C) OF SUB - SECTION (I) OF SECTION 271 BE DEEMED TO HAVE CON CEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 13. A PERUSAL OF SATISFACTION RECORDED BY THE ASSESSING OFFICER AND THE ORDER LEVYING PENALTY CLEARLY SHOWS THAT THERE WAS AMBIGUITY IN THE MIND OF ASSESSING OFFICER WITH REGARD TO CHARGE FOR WHICH PENALTY IS TO BE LEVIED U/S. 271(1)(C) OF THE ACT. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJUNATHA COTTON & GINNING FACTORY REPORTED AS 359 ITR 565 HAS HELD THAT THE CHARGE FOR WHICH PENALTY IS TO BE LEVIED HAS TO BE COMMUNICATED TO THE ASSESSEE IN AN UNAMBIGUOUS TERMS. IF THE CHARGE FOR LEVY OF PENALTY IS NOT DECIPHERABLE FROM SATISFACTION RECORDED, INITIATION OF PENALTY AND SUBSEQUENT PROCEEDINGS A RISING THEREFROM ARE BAD IN LAW. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS ERRED IN MENTIONING BOTH THE LIMBS OF SECTION 271(1)(C) WHILE RECORDING 6 ITA NO S. 1209 & 1210/PUN/2016, A.Y. 2011 - 12 & 2007 - 08 SATISFACTION AND THE AMBIGUITY CONTINUES EVEN AT THE TIME OF PASSING ORDER LEVYING PENALTY. THUS, THE ORDER LEVYING PENALTY IS BAD IN LAW AND THE SUBSE QUENT PROCEEDINGS ARISING THERE FROM ARE VITIATED. 14. IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. 15. TO SUM UP, ITA NO. 1209/PUN/2016 IS DISMISSED AND ITA NO. 1210/PUN/2016 IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 10 TH DAY OF OCTOBER, 201 8 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 10 TH OCTOBER, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 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