JAGDISHCHANDRA B. MUNDRA, MUMBAI V. DCIT CEN CIR 4(3), MUMBAI

ITA 1227/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5717 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2014-2015
• Appeal Filed On: 21-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AARJU GARODIA
• Keywords: Unexplained investment; Search and seizure
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1227/MUM/2017 ASSESSMENT YEAR: 2014 - 15 SHRI JAGDISHCHANDRA B. MUNDRA , A1 - 32/603, 604 YOGI PARK, YOGI, EKSAR ROAD, BORIVALI (W), MUMBAI - 400093. VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 4(3) , AIR INDIA BUILDING, MUMBAI. PAN NO. AANPM8039N APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS. AARJU GARODIA, DR DATE OF HEARING : 03/07/2018 DATE OF PRONOUNCEMENT : 11/07/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 201 4 - 1 5 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) - 52 [IN SHORT CIT(A) ], MUMBAI AND ARISES OUT OF THE PENALTY LEVIED U/S 271AAB OF THE INCOME TAX ACT 1961, (THE ACT). THOUGH THE CASE WAS FIXED FOR HEARING ON 03.07.2018, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED ON THE ABOVE DATE. HENCE, WE DECIDE THE APPEAL AFTER HEARING THE LD. DR AND EXAMINING THE RELEVANT MATERIALS ON RECORD. SHRI JAGDISHCHANDRA B. MUNDRA ITA NO. 1227/MUM/2017 2 2. THE GROUND S OF APPEAL READ AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY LEVIED @ 10% U/S 271AAB OF THE INCOME TAX ACT, 1961 OF RS.2,70,000/ - ON THE GROUND THAT APPELLANT HAS UNDISCLOSED INVESTMENT IN JEWELLERY TO THE TUNE OF RS.27,00,00 0/ - . IT IS SUBMITTED THAT LD. CIT(A) AND ASSESSING OFFICER FAILED TO CONSIDER TH E SUBMISSION MADE DURING THE APPELLATE AND ASSESSMENT PROCEEDINGS RESPECTIVELY. IT IS PRAYED TO YOUR HONOUR TO DELETE THE PENALTY AND NECESSARY DIRECTION SHOULD HE GIVEN IN THIS REGARD. 2. THE LD. CIT(A) FURTHER ERRED IN ENHANCING THE PENALTY BY RS.5,40,00 0/ - BEING DIFFERENCE BETWEEN PENALTY LEVIED @ 30% OF RS.27,00,000/ - BY INVOKING CLAUSE (C) TO SUBSECTION (1) OF SECTION 271 AAB OF INCOME TAX ACT, 1961. IT IS SUBMITTED THAT SUCH ACTION OF ENHANCEMENT WAS CONSIDERED BY DRAWING INFERENCE THAT THE APPELLANT DID NOT DISCLOSE THE AMOUNT OF ADDITION OF RS. 27,00,000/ - WHILE FILING RETURN OF INCOME. IT IS PRAYED TO YOUR HONOUR TO CANCEL SUCH ENHANCEMENT OF PENALTY AND NECESSARY DIRECTION SHOULD BE GIVEN IN THIS REGARD. 3. A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT IN THE CASE OF BALALJI G ROUP ON 30.04.2013 BY THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) - IX(1), MUMBAI. THE ASSESSEE - GROUP WAS ENGAGED IN THE BUSINESS OF PRODUCTION OF TV SERIALS AND FILMS. IN THE INSTANT CASE, THE ASSESSEE FILE D HIS RETURN OF INCOME ON 31.07.2014 , SUBSEQUENT TO THE SEARCH, DECLARING TOTAL INCOME AT RS.14,75,550/ - . DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES AND BANK LOCKERS THE FOLLOWING JEWELLERY WAS FOUND SHRI JAGDISHCHANDRA B. MUNDRA ITA NO. 1227/MUM/2017 3 S. NO. PARTICULARS WEIGHT AMOUNT(RS.) 1. DIAMOND JEWELLERY 51.70 GMS 2,70,705 2. GOLD JEWELLERY 755.50 GMS 18,88,820 3. GOLD BAR 700.00 GMS 19,25,000 4. SILVER ITEMS 14.98 KG 5.04,990 TOTAL 45,89,515/ - THE ASSESSING OFFICER ( AO ) REFERRED TO THE CBDT INSTRUCTION NO. 1916 DATED 11.05.1994 AND OBSERVED THAT GOLD JEWELLERY OF 500 GMS FOR MARRIED WOMAN, 250 GMS FOR UNMARRIED DAUGHTERS AND 100 GMS FOR MALE ARE TREATED AS EXPLAINED. ACCORDINGLY, IN THE CASE OF THE PRESENT ASSESSEE GOLD JEWELLERY OF 775 GMS WAS TREATED AS EXPLAINED. HO WEVER, THE AO TREATED THE GOLD BARS, DIAMOND JEWELLERY AND SILVER ITEMS AS UNEXPLAINED, SINCE THE ASSESSEE WAS NOT HAVING ANY EVIDENCE TO PROVE THE SOURCE OF INVESTMENT. THUS, RS.27,00,000/ - WAS HELD BY THE AO AS UNEXPLAINED. DURING THE COURSE OF STATEMENT RECORDED U/S 132(4) ON 18.06.2013, THE ASSESSEE ACCEPTED THE DISCREPANCY AND REQUESTED THE AO NOT TO SEIZE THE SAID JEWELLERY , FOR WHICH HE SUBMITTED PAY ORDERS OF RS.27,00,000/ - . IN THE ASSESSMENT ORDER DATED 18.05.2015, THE AO MADE AN ADDITION OF RS.27, 00,000/ - AS UNEXPLAINED INVESTMENT TO THE TOTAL INCOME OF RS.14,75,550/ - SHOWN BY THE ASSESSEE. THUS THE TOTAL ASSESSED INCOME COMES TO RS.41,75,550/ - . IN THE PENALTY PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE IN HIS STATEMENT RECORDED ON 21.05.2013 HA D ADMITTED JEWELLERY WORTH RS.27,00,000/ - AS UNDISCLOSED INVESTMENT. HOWEVER, THE ASSESSEE FAILED TO FURNISH THE RELEVANT BANK STATEMENT AS MOST OF THESE PAYMENTS WERE SHRI JAGDISHCHANDRA B. MUNDRA ITA NO. 1227/MUM/2017 4 MADE IN CASH. THUS THE AO CAME TO A CONCLUSION THAT THE INVESTMENT MADE BY THE ASSESSEE IN JEWELLERY REMAINED UNEXPLAINED. ON THE BASIS OF THE ABOVE FACTS , THE AO LEVIED A PENALTY OF RS.2,70,000/ - (10% OF RS.27,00,000/ - ) U/S 271AAB OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CI T(A) REFERRED TO EXPLANATION 5A TO SECTION 271(1) AND HELD THAT AS THE ASSESSEE FAILED TO INCLUDE THE INCOME OF RS.27,00,000/ - IN THE RETURN FILED SUBSEQUENT TO SEARCH AND ALSO FAILED TO PAY TAXES ON THE ABOVE AMOUNT OF RS.27,00,000/ - , THEREFORE, HE IS LI ABLE FOR PENALTY @ 30% AS AGAINST @ 10% LEVIED BY THE AO. ACCORDINGLY, THE LD. CIT(A) ENHANCE D THE PENALTY TO RS.8,10,000/ - FROM RS.2,70,000/ - . 5. BEFORE US, THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). IT IS SUBMITTED THAT AS THE ASSESSEE DID NOT DISCLOSE THE AMOUNT OF RS.27,00,000/ - WHILE FILING THE RETURN OF INCOME SUBSEQUENT TO SEARCH NOR PAID DUE TAXES ON THE ABOVE AMOUNT, THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 6. WE HAVE HEARD THE LD. DR AN D PERUSED THE RELEVANT MATERIALS ON RECORD. IN THE INSTANT CASE A SEARCH AND SEIZURE ACTION WAS CONDUCTED BY THE REVENUE IN THE CASE OF THE ASSESSEE - GROUP ON 30.04.2013. WE FIND THAT SECTION 271AAB IS APPLICABLE IF - (A) A SEARCH IS INITIATED U/S 132 ON OR AFTER JULY 1, 2012 ; (B) THERE IS SOME UNDISCLOSED INCOME ; AND (C) UNDISCLOSED INCOME PERTAINS TO A SPECIFIED PREVIOUS YEAR. SHRI JAGDISHCHANDRA B. MUNDRA ITA NO. 1227/MUM/2017 5 IF THE ABOVE CONDITIONS ARE SATISFIED, THEN 10% TO 90% OF UNDISCLOSED INCOME O F THE SPECIFIED PREVIOUS YEAR IS CONCEALMENT PENALTY WHICH CAN BE IMPOSED BY THE AO IN ADDITION TO TAX. IF SECTION 271AAB IS APPLICABLE, PENALTY U/S 271(1)(C) CANNOT BE IMPOSED. PENALTY U/S 271AAB IS DETERMINED ON THE FOLLOWING BASIS : PENALTY AT THE RAT E OF 10 PER CENT OF UNDISCLOSED INCOME - IF THE FOLLOWING CONDITIONS ARE SATISFIED THE TAXPAYER WILL HAVE TO PAY PENALTY AT THE RATE OF 10 PER CENT OF UNDISCLOSED INCOME A. UNDISCLOSED INCOME IS ADMITTED DURING THE COURSE OF THE SEARCH IN A STATEMENT UNDER S ECTION 132(4); B. THE TAXPAYER SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; C. THE TAXPAYER PAYS TAX TOGETHER WITH INTEREST; D. HE FURNISHES HIS RETURN OF INCOME DECLARING THE UNDISCLOSED INCOME; AND E. THE RETURN OF INCOME IS SUBMITTED BEFORE THE DUE DATE UNDER SECTION 139(1) OR THE DATE ON WHICH THE PERIOD SPECIFIED IN THE NOTICE ISSUED UNDER SECTION 153A EXPIRES. PENALTY AT THE RATE OF 20 PERCENT OF UNDISCLOSED INCOME - IF THE FOLLOWING CONDITIONS ARE SATISFIED THE TAXPAYER WILL HAVE TO PAY PENALTY AT THE RATE OF 20 PER CENT OF UNDISCLOSED INCOME A. UNDISCLOSED INCOME IS NOT ADMITTED DURING THE COURSE OF THE SEARCH IN A STATEMENT UNDER SECTION 132(4) B. THE TAXPAYER PAYS TAX TOGETHER WITH INTEREST ON UNDISCLOSED INCOME; C. HE FURNISHES HIS RETURN OF INCOME DECLARING THE UNDISCLOSED INCOME; AND D. THE RETURN OF INCOME IS SUBMITTED BEFORE THE DUE DATE UNDER SECTION 139(1) OR THE DATE ON WHICH THE PERIOD SPECIFIED IN THE NOTICE ISSUED UNDER SECTION 153A EXPIRES SHRI JAGDISHCHANDRA B. MUNDRA ITA NO. 1227/MUM/2017 6 PENALTY AT THE RATE OF 30 TO 90 PER CENT OF UNDISCLOSED INCOME IN ANY OTHER CASE PENALTY SHALL BE NOT LESS THAN 30 PER CENT (BUT NOT MORE THAN 90 PER CENT) OF THE UNDISCLOSED INCOME OF THE 'SPECIFIED PREVIOUS YEAR. 6.1 IN THE INSTANT CASE, THE FACT REMAINS THAT THE ASSESSEE DID NOT DISCLOSE THE ABOVE AMOUNT OF RS.27,00,000/ - WHILE FILING THE RETURN OF INCOME SUBSEQUENT TO SEARCH NOR PAID TAXES ON THE ABOVE AMOUNT. IN VIEW OF THE PROVISIONS OF SECTION 271AAB DELINEATED AT PARA 6 HEREINBEFORE, WE UPHOLD THE ORDER OF THE LD. CIT(A). 7. IN THE RESUL T, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/07/2018 . SD/ - SD/ - ( JOGINDER SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 11/07/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI