PARAG M. SANGHVI, MUMBAI V. DCIT CEN CIR 38, MUMBAI

ITA 1232/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2497 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-07-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 23-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENADR
• Section: 143(3); 153A; 132

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NOS.1232 TO 1235/MUM/2012 ASSESSMENT YEARS- 2003-04 & 2005-06 TO 2007-08 SHRI PARAG M SANGHVI 2203, WINDSOR TOWER, SHASTRI NAGAR, ANDHERI (W), MUMBAI-400053 / VS. DCIT, CENTRAL CIRCLE-38, MUMBAI-400038 ( /ASSESSEE) ( ! / REVENUE) PAN. NO. ATYPS3041A / ASSESSEE BY SHRI J.P. BAIRAGRA ! / REVENUE BY SHRI O.P. MEENA-DR ' !# $ % / DATE OF HEARING : 17/11/2015 $ % / DATE OF ORDER: 23/11/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) ALL THESE APPEALS ARE BY THE ASSESSEE FOR ASSESSME NT YEARS 2003-04, 2005-06 TO 2007-08 CONFIRMING IMPOSI TION OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) AGAINST THE IMPUGNED ORDERS D ATED 15/12/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. PARAG M. SHANGHVI ITA NO.1232 TO 1235/MUM/2012 2 2. DURING HEARING OF THESE APPEALS, THE LD. COUNSE L FOR THE ASSESSEE, SHRI J. P. BAIRAGRA, CONTENDED THAT I DENTICAL ISSUES AROSE IN THE CASE OF SMT. SARLA M. SANGHVI W HICH IS BORNE OUT FROM IDENTICAL FACTS (ITA NO.1230 & 1231/MUM/2012) ORDER DATED 01/09/2015. THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY SHRI O.P. MEENA, LD. DR. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 01/0 9/2015 FOR READY REFERENCE AND ANALYSIS:- THESE TWO APPEALS BY THE ASSESSEE IN RESPECT OF A. Y.RS 2002-03 AND 2007-08 ARE DIRECTED AGAINST THE COMMON ORDER O F THE LD. CIT(A)-37, MUMBAI DT. 15.12.2011. 2. THE COMMON GRIEVANCE IN BOTH THESE YEARS IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED U /S. 271(1)(C) OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT A SEARCH ACTION U/S. 132 OF THE ACT WAS INITIATED IN THE CAS E OF M/S. K. SERA SERA PRODUCTION LTD ON 12.9.2007. THE ASSESSE ES SON SHRI PARAG SANGHAVI WAS ON THE BOARD OF THE COMPANY IN E ARLIER YEARS AND THEREFORE ASSESSEE AND HER FAMILY MEMBERS WERE ALSO COVERED IN THE SEARCH PROCEEDINGS. 3.1. PURSUANT TO SEARCH, NOTICE U/S. 153A WAS ISSUE D ON 24.9.2008 CALLING FOR RETURN OF INCOME. RETURN OF INCOME WAS PARAG M. SHANGHVI ITA NO.1232 TO 1235/MUM/2012 3 FILED ON 22.7.2009 RETURNING TOTAL INCOME AT RS. 2, 68,197/- FOR A.Y. 2003-04 AND RS. 3,57,520/- FOR A.Y. 2007-08. THE ASSESSMENT WAS MADE U/S. 143(3) R.W. SEC. 153A BY O RDER DT. 22.12.2009 WHEREIN THE RETURNED INCOME OF THE ASSES SEE WAS ACCEPTED AS THE ASSESSED INCOME. 3.2. THE ASSESSING OFFICER INITIATED PENALTY PROCEE DINGS U/S. 271(1)(C) OF THE ACT FOR NOT FILING THE RETURN OF I NCOME UNDER THE NORMAL PROVISIONS OF THE ACT. THE ASSESSEE WAS ASKED TO SHOW REASONS WHY PENALTY U/S. 271(1)(C) SHOULD NOT BE LEVIED FOR CONCEALING INCOME WITHIN THE MEANING OF EXPLANA TION 5A OF 271(1)(C) OF THE ACT. ON RECEIVING NO PLAUSIBLE RE PLY, THE AO LEVIED PENALTY IN BOTH THE YEARS UNDER CONSIDERATIO N. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THE ASSESSED INCOME IS SAME AS THE RETURNED INCOME, THERE IS NO ADDITION MADE BY THE AO WHICH COULD JUSTIFY THE LEV Y OF PENALTY. THE LD. COUNSEL HEAVILY RELIED UPON THE DECISION OF THE TRIBUNAL PUNE BENCH IN THE CASE OF SMT. PRAMILA D. ASHTEKAR VS ITO 154 TTJ 46, TRIBUNAL JODHPUR BENCH IN THE CASE OF DEVID AS SUKHANI VS DCIT 158 TTJ 42 AND TRIBUNAL NAGPUR BENCH IN THE CASE OF DCIT VS PURTI SAKHAR KARKHANA 153 TTJ 12. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE FINDINGS OF THE LOWER AUTHOR ITIES BUT COULD NOT BRING ANY DISTINGUISHED DECISION. PARAG M. SHANGHVI ITA NO.1232 TO 1235/MUM/2012 4 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND THE DECISIONS BROUGHT TO OUR NOTICE. THE UNDISPUTED FACT IS THAT THE RETURNED INCOME OF THE ASSESSEE HA S BEEN ACCEPTED BY THE AO WHILE MAKING THE IMPUGNED ASSESS MENT ORDER. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THA T NONE OF THE INCOME RELATES TO ANY INCRIMINATING DOCUMENTS F OUND DURING THE COURSE OF THE SEARCH PROCEEDINGS, WHERE THERE IS ANY ADDITION OVER AND ABOVE INCOME DECLARED BY THE ASSE SSEE IN THE RETURN OF INCOME FILED, IN RESPONSE TO NOTICE U/S. 153A, NO PENALTY U/S. 271(1)(C)CAN BE IMPOSED ON THE ASSESSE E. WE DRAW SUPPORT FROM THE DECISION OF THE TRIBUNAL PUNE BENCH (SUPRA.) 7.1. MOREOVER, THERE IS NO FINDING RECORDED BY THE AO THAT AMOUNTS ON WHICH PENALTY U/S. 271(1)(C) WAS LEVIED WERE NOT DISCLOSED IN THE RETURN FILED BY THE ASSESSEE U/S. 153A OF THE ACT. IN OUR CONSIDERED OPINION, IMPUGNED PENALTY ORDER H AS TO BE SET ASIDE. WE DRAW SUPPORT FROM THE DECISION OF TH E TRIBUNAL JODHPUR BENCH (SUPRA). 7.2. THE RETURNED INCOME FILED U/S. 153A IS ACCEPTE D BY THE AO AND THERE IS NO VARIATION IN ASSESSED INCOME AND RETURNED INCOME, THEREFORE PENALTY U/S. 271(1)(C) CANNOT BE IMPOSED. FOR THIS PROPOSITION, SUPPORT IS DRAWN FROM THE DEC ISION FROM NAGPUR BENCH (SUPRA). CONSIDERING THE FACTS IN TOT ALITY, IN THE LIGHT OF THE JUDICIAL DECISIONS DISCUSSED HEREINABO VE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT IN RESPECT OF BOTH THE YEARS UNDER APPEAL. PARAG M. SHANGHVI ITA NO.1232 TO 1235/MUM/2012 5 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, CONCLUSION DRAWN IN THE AFORESAID ORDER OF THE TRIB UNAL AND THE ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSELS , IF KEPT IN JUXTAPOSITION AND ANALYZED, WE NOTE THAT THE RET URNED INCOME FILED U/S 153A OF THE ACT WAS ACCEPTED BY TH E ASSESSING OFFICER AND THERE WAS NO VARIATION IN THE ASSESSED INCOME VIS--VIS RETURNED INCOME, THEREFORE, FOLLOW ING THE AFORESAID CASE OF THE TRIBUNAL DATED 01/09/2015, WH O IS THE RELATIVE OF THE ASSESSEE, AS CLAIMED BY LD. AR AND CONSIDERING THE DECISION OF THE JODHPUR BENCH IN DE VIDAS SUKHANI VS DCIT 158 TTJ 42 AND NAGPUR BENCH IN DCIT VS PURTI SAKHAR KARKHANA 153 TTJ 12, PUNE BENCH IN SMT . PRAMILA D. ASTHEKAR VS ITO (154 TTJ 46) (PUNE TRIB. ) ; 61 SOT 113 (PUNE), WE FIND MERIT IN THE ARGUMENT OF TH E ASSESSEE AND ALLOW THE APPEAL OF THE ASSESSEE ON TH E GROUND THAT NO ADDITION WAS MADE IN ORDER U/S 143(3) R.W.S . 153A OF THE ACT FOR A.Y. 2003-04, 2005-06 AND 2006-07. THE LD. ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY . 2.3. SO FAR AS, A.Y. 2007-08 IS CONCERNED, WE NOTE THAT THE ORIGINAL RETURN WAS FILED ON 31/03/2008, WHEREI N, THE TOTAL INCOME WAS DECLARED AT RS.15,03,615/-. IN TH E RETURN FILED U/S 153A OF THE ACT, THE INCOME DECLARED WAS PARAG M. SHANGHVI ITA NO.1232 TO 1235/MUM/2012 6 RS.17,21,560/- MEANING THEREBY ADDITIONAL INCOME OF RS.2,17,945/- WAS MADE AND CONSEQUENTLY ADDITION OF RS.1,40,000/- WAS MADE IN ORDER U/S 143(3) R.W.S. 1 53A. THE DIFFERENCE OF TAX PAYABLE COMES TO RS.1,20,482/ - BETWEEN THE ORIGINAL RETURN AND RETURN MADE U/S 153 A OF THE ACT. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED THAT THE RETURN OF INCOME FILED ON 24/08/2009 WAS A CCEPTED BY THE LD. DCIT WHILE PASSING ORDER U/S 143(3) OF T HE ACT DATED 23/12/2009 AND ONLY ADDITION RETAINED WAS TO THE TUNE OF RS.1,40,000/- ON ACCOUNT OF UNSECURED LOANS TAKEN FROM VIDYA SING ON THE PLEA THAT THE ASSESSEE DID N OT FURNISH LOAN CONFIRMATION. FACT REMAINS THAT THE LO AN WAS TAKEN BY ACCOUNT PAYEE DEMAND DRAFT AND REFLECTED I N THE BOOKS OF ACCOUNTS. IN VIEW OF THIS FACT, IT MAY BE A CASE OF UPHOLDING QUANTUM BUT AUTOMATICALLY DOES NOT JUSTIF Y IMPOSITION OF PENALTY U/S 271(1)(C) BY TAKING RECO URSE TO EXPLANATION-1 BELOW SECTION 271(1)(C) OF THE ACT, T HEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENAL TY FOR THIS ASSESSMENT YEAR ALSO. FINALLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 17/11/2015. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; ' DATED : 23/11/2015 PARAG M. SHANGHVI ITA NO.1232 TO 1235/MUM/2012 7 F| P.S/. .. !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / 0 ( )* ) / THE CIT, MUMBAI. 4. / / 0 / CIT(A)- , MUMBAI 5. 2!3- , / )*%) 4 , / DR, ITAT, MUMBAI 6. 56 / GUARD FILE. ! / BY ORDER, .2* - //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI.