ACIT Central Cir.-1(2), Pune V. Radiant Constructions, Pune

ITA 1261/PUN/2010

• Counselvise Citation: 126124514 RSA 2010
• Duration Of Justice: 1 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 27-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MS ANN KAPTHUAMA
• Keywords: Document seized; Difference of opinion; Revised return
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K.PANDA, ACCOUNTANT MEMBER. ITA.NO.1261/PN/2010 (ASSTT. YEAR : 2005-06) ACIT, CENTRAL CIRCLE-1(2), PUNE. .. APPELLANT VS. RADIANT CONSTRUCTIONS, 150, M.G.ROAD, PUNE. .. RESPONDENT APPELLANT BY : DR. MS.ANN KAPTHUAMA RESPONDENT BY : SHRI NIKHIL PATHAK DATE OF HEARING : 11.07.2012 DATE OF PRONOUNCEMENT : 26.07.2012 ORDER PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) ON THE POINT OF PENALTY U/S.271(1)(C) OF THE ACT. 2. IN CONSEQUENCE TO THE ASSESSMENT PROCEEDINGS, PE NALTY PROCEEDINGS U/S.271(1)(C) WERE INITIATED FOR CONCEA LING PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF SUC H INCOME. AFTER CONSIDERING THE OBJECTIONS ON BEHALF OF THE ASSESSE E, ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS COMMITTED TH E DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) FOR CONCEALING THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. ACCORDINGLY, PENALTY OF RS.7,80,489/- WAS LEVIED WH ICH WAS DELETED BY THE CIT(A). THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF THE REVENUE. THE LD. DR SUBMITTED THAT CIT(A) WAS NOT JUSTIFIED IN CANCELLING THE PENALTY LEVIED U/S.271(1)(C) EVEN TH OUGH THE ASSESSEE 2 FAILED TO FILE RETURN OF INCOME WITHIN THE TIME LIM IT PRESCRIBED U/S.139(1) OF THE ACT. HAD THERE BEEN NO SEARCH, T HE ASSESSEE FIRM WOULD NOT HAVE MADE THE DISCLOSURE. 3. ON THE OTHER HAND, THE LD. AUTHORISED REPRESENTA TIVE RELIED ON THE DECISION OF THE CIT(A) AND SUBMITTED THAT TH E ASSESSEES CASE IS COVERED BY THE ORDER OF THE ITAT IN ITA.NO.827 & 828/PN/2009 DATED 25.05.2011, WHEREIN ISSUE WAS RESTORED TO THE ASSESSING OFFICER BY OBSERVING AS UNDER: 7. AFTER GOING THROUGH THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT INITI ALLY THE ASSESSING OFFICER LEVIED THE PENALTY BY INVOKING EX PLANATION 5 TO SECTION 271(1)(C) OF THE ACT WHICH WAS DELETED BY T HE CIT(A) RELYING ON THE DECISION OF PUNE BENCH OF THE TRIBUN AL IN THE CASE OF SARLA M. AHUJA (SUPRA). HOWEVER, SUBSEQUENTLY TH E DECISION OF THE TRIBUNAL IN THE CASE OF SARLA M. AHUJA (SUPRA) HAS BEEN REVERSED BY DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF OMKARESHWAR R. KALANTRI (SUPRA). IN FACT, EXPLANAT ION 5 IS INVOKED FOR MONIES, BULLIONS, JEWELLERY OR VALUABLE ARTICLES OR THINGS WHICH IS NOT THE CASE IN THE INSTANT CASE, B ECAUSE THE ADDITION IS MADE ON THE BASIS OF CERTAIN UNACCOUNTE D EXPENDITURE WHICH IS THE BASIS FOR PENALTY IN QUEST ION. NOW THE QUESTION ARISES UNDER WHAT PROVISIONS OF SECTION 27 1(1)(C) OF THE ACT PENALTY CAN BE INVOKED ON ACCOUNT OF ADDITIONAL INCOME ON ACCOUNT OF CERTAIN UNVOUCHED EXPENDITURE WHICH HAS NOT BEEN ADJUDICATED BY THE ASSESSING OFFICER OR THE CIT(A). THIS NEEDS PROBE INTO MATTER. MOREOVER, THE LEARNED AR FOR AS SESSEE WAS FAIR ENOUGH TO REQUEST FOR REMAND OF THIS MATTER TO ASSESSING OFFICER TO APPRECIATE THE FACTS ON MERITS. IN THE I NTEREST OF JUSTICE THEREFORE, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SAME AS PER FACT AND LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSE E. SINCE WE ARE RESTORING THIS ISSUE TO THE ASSESSING OFFICER O N THE PRELIMINARY ISSUE, SO WE ARE REFRAINED TO COMMENT O N THE MERITS OF THE ISSUE AT HAND. 8. AS REGARDS APPEAL IN ITA NO. 828/PN/2009 FOR A.Y . 2003-04, FACTS ARE SIMILAR TO THOSE IN ITA NO. 827/PN/828 FO R A.Y. 2002- 03. SO FOLLOWING THE REASONING MENTIONED IN THE PR ECEDING PARAGRAPHS, WE RESTORE THIS ISSUE TO THE FILE OF T HE ASSESSING OFFICER FOR THIS YEAR AS WELL, WITH A DIRECTION TO DECIDE THE SAME AS PER FACT AND LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. SINCE WE ARE RESTORING THIS ISSUE TO THE ASSESSING OFFICER ON THE PRELIMINARY ISSUE, SO WE ARE REFRAIN ED TO COMMENT ON THE MERITS OF THE ISSUE AT HAND FOR THIS YEAR AS WELL. 3 9. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. 4. AFTER GOING THROUGH THE ABOVE SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ASSESSEE FIRM IS ENGAGED I N BUSINESS OF BUILDING DEVELOPMENT. FOR THE ASSESSMENT YEAR UNDE R CONSIDERATION, THE ASSESSEE HAD NOT FILED RETURN TI LL DATE OF SEARCH, I.E., 21.09.2006 EVEN THOUGH DUE DATE SPECIFIED U/S .139(1) HAD EXPIRED. AS PER THE DETAILS AVAILABLE IN THE ASSES SMENT ORDER, ONE OF THE PARTNERS OF THE FIRM, DURING EXAMINATION ON OAT H, WAS ASKED ABOUT THE DELAY IN FILING THE RETURN FOR A.Y. 2005- 06. IN RESPONSE TO THE SAME, HE HAD EXPLAINED THAT DELAY WAS CAUSED DU E TO DIFFERENCE IN OPINION REGARDING TAXABILITY OF RECEIPT OF RS.61 .10 LAKHS FOR AHMEDNAGAR PROPERTY. IT WAS FURTHER NOTED THAT ASS ESSEE WAS CONSIDERING TO TREAT THE RECEIPT AS NON-TAXABLE CAP ITAL RECEIPT BUT WAS FINALLY OFFERED AS INCOME AS PER THE ADVICE OF SEARCH PARTY. THE ASSESSING OFFICER HAS NOT ANALYSED AND CONTROVERTED THE FACTS MENTIONED BEFORE HIM WHICH IS PART OF THE PENALTY O RDER. IN FACT ASSESSEE HAD CONTENDED BEFORE THE ASSESSING OFFICER THAT PENALTY WAS NOT LEVIABLE BECAUSE THE DISCLOSURE IS VOLUNTAR Y, IS BASED ON ISSUES WHERE TWO OPINIONS ARE AVAILABLE AND EXCEPTI ON TO THE EXPLANATION 5 IS APPLICABLE. THE ASSESSING OFFICER HAS NOT DISCUSSED ALL THE CONTENTIONS RAISED ON BEHALF OF T HE ASSESSEE BUT HAS ONLY STATED THAT EXCEPTION TO EXPLANATION (5) I S NOT APPLICABLE AS DUE DATE FOR FILING THE RETURN U/S.139(1) HAS EX PIRED AND HE WAS SATISFIED THAT THE ASSESSEE HAD COMMITTED THE DEFAU LT BECAUSE ASSESSEE WOULD NOT HAVE MADE THE DISCLOSURE HAD THE RE BEEN NO SEARCH IN HIS PREMISES. IN FACT THE ASSESSEE CONTE NDED THAT SRI MAHAMOOD M.MUSAVI, THE PARTNER OF THE FIRM, ON ADVI CE OF THE SEARCH PARTY HAS DECLARED THE ABOVE TRANSACTION AS INCOME OF ASSESSEE FIRM AND ACCORDINGLY FILED RETURN AFTER PA YING TAXES. THE STAND OF THE ASSESSEE HAS BEEN THAT NOTHING INCRIMI NATING WAS FOUND DURING THE SEARCH AND ASSESSMENT WAS MADE ON THE BASIS OF OFFER OF ASSESSEE. OTHERWISE, IT WOULD NOT HAVE BE EN TAXED. IT IS WELL SETTLED THAT PENALTY CANNOT BE LEVIED IF TWO V IEWS ARE POSSIBLE 4 ON PARTICULAR ISSUE. THE EXPLANATION (5) IS APPLIC ABLE WHERE IN COURSE OF SEARCH (SEARCH INITIATED U/S.132 BEFORE 1 ST DAY OF JUNE, 2007) ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONE Y, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS AND ASSESSEE CLAIMS THAT SUCH ASSETS HAD BEEN ACQUIRED BY HIM BY UTILIS ING (WHOLLY OR IN PART) IS INCOME). THEREFORE, EXPLANATION (5) CAN O NLY BE INVOKED IF ASSETS DESCRIBED IN SUCH EXPLANATION IS FOUND AND A SSESSEE EXPLAINED IT IN THE MANNER PRESCRIBED IN SUCH EXPLA NATION. IN PRESENT CASE, THERE IS NOTHING IN THE PENALTY ORDER TO SUGGEST THAT ANY ASSET WAS FOUND OR SEIZED WHICH WAS EXPLAINED I N THE MANNER DESCRIBED IN EXPLANATION (5). THEREFORE, IT CANNOT BE SAID TO HAVE ANY APPLICATION IN THE PRESENT CASE EITHER FOR OR A GAINST ASSESSEE. REFERENCE TO THE TRANSACTION RELATING TO AHMEDNAGAR PROPERTY HAS BEEN CLAIMED BY THE ASSESSEE TO BE VOLUNTARY AND NO T BASED ON ANY DOCUMENT SEIZED OR FOUND DURING COURSE OF SEARCH AS SUBMITTED BY THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS AND DESCRIBED IN PENALTY ORDER WHICH HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER. EVEN IN PENALTY ORDER THE ASSESSING OFFIC ER HAS NOT REFERRED TO ANY MATERIAL WHICH WAS FOUND DURING SEARCH OR EV EN OTHERWISE BASED ON WHICH OPINION FORMED THAT ASSESSEE HAS CON CEALED INCOME CAN BE JUSTIFIABLE. FURTHER, EXPLANATION (5) WAS I NSERTED IN SECTION TO FASTEN THE ASSESSEE WITH LEVY OF PENALTY U/S.271 (1)(C) IN CIRCUMSTANCES WHEREIN ASSETS, ETC., ARE FOUND AND A SSESSEE MAKE ATTEMPT TO EXPLAIN THE SAME OUT OF DISCLOSED INCOME EXCEPT FOR CIRCUMSTANCES MENTIONED IN THE EXPLANATION CLAUSES OF THIS EXPLANATION. THERE IS NOTHING ON RECORD TO SUGGEST THAT ASSESSING OFFICER HAS HELD THE PENALTY LEVIABLE UNDER DEEMING PROVISIONS CONTAINED IN EXPLANATION (5) TO SECTION 271(1)(C). IN THE CASE BEFORE US, THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY EVIDENCE DURING SEARCH WAS FOUND BASED ON WHICH ANY CONCEALMENT OF INCOME COULD BE COMPUTED. THE ASSESSING OFFICER HAS NEITHER DES CRIBED ANY EVIDENCE IN THE ASSESSMENT ORDER OR IN PENALTY ORDE R. IN VIEW OF ABOVE, THE ASSESSEE HAS SHOWN INCOME IN RETURN WHIC H HAS BEEN ACCEPTED AS IT IS BY ASSESSING OFFICER WITHOUT ANY DISCUSSION. EVEN IN PENALTY ORDER, THERE IS NO REFERENCE TO ANY ASSE TS OR DOCUMENTS 5 FOUND AND PENALTY ORDER HAS BEEN PASSED ON STATEMEN T GIVEN AND ARGUMENT ADVANCED THAT SUCH DECLARATION WOULD NOT H AVE COME HAD THERE BEEN NO SEARCH. IT IS UNDISPUTED THAT RETURN WAS NOT FILED TILL THE DATE OF SEARCH, AND THEREFORE, RETURN FILED U/S .153A IS FIRST RETURN FILED BY THE ASSESSEE FOR THIS ASSESSMENT YE AR. THE TIME FOR FILING THE RETURN WAS STILL THERE. IN ABSENCE OF RE TURN WHERE SUCH INCOME HAS NOT BEEN SHOWN IT CANNOT BE SAID THAT IN ACCURATE PARTICULARS OF INCOME WERE FILED IN THE ORIGINAL RE TURN OF INCOME. HOWEVER, SINCE INCOME HAS BEEN DECLARED AS UNDISCLO SED INCOME BY THE ASSESSEE, THEN ASSESSMENT U/S.153A(B) R.W.S. 14 3(3) CAN BE SEEN TO BE LEGALLY CORRECT. NOW QUESTION COMES WHE THER THE STATEMENT CAN BE UTILISED FOR LEVYING PENALTY OR NO T. IT IS SETTLED LEGAL POSITION THAT ASSESSMENT PROCEEDINGS AND PENA LTY PROCEEDINGS ARE DIFFERENT FROM EACH OTHER HAVING DIFFERENT LEGA L IMPLICATIONS. EVEN IF LEVY OF PENALTY U/S.271(1)(C) IS CONSIDERED AS CIVIL LIABILITY, THERE IS NO DISPUTE THAT IT IS PENAL IN NATURE AND THEREFORE EVIDENCE OF DEFAULT HAS TO BE SEEN BEFORE LEVYING THE SAME O NLY BECAUSE ASSESSEE DECLARES SOME INCOME THE SAME WOULD NOT CO NSTITUTE VALID EVIDENCE FOR LEVY OF PENALTY FOR CONCEALMENT. MORE OVER, THE DECLARATION IS ITSELF UNDISPUTED BASED ON ANY EVIDE NCE DISCOVERED DURING SEARCH OR IS NOT PASSED ON ISSUE WHERE MORE THAN ONE OPINION ARE POSSIBLE. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SURESH CHAND MITTAL (2000) 251 ITR 9 (SC) WHERE IN THE ASSESSEE INITIALLY FILED RETURN WITH MEAGER INCOME, SUBSEQUE NTLY FILED REVISED RETURN SHOWING HIGHER INCOME AFTER SEARCH AND NOTIC E FOR REOPENING THE ASSESSMENT. THE ASSESSEE CLAIMED THAT HE HAD O FFERED ADDITIONAL INCOME TO BUY PEACE OF MIND AND AVOID LI TIGATION. THE TRIBUNAL CANCELLED THE PENALTY HOLDING THAT BURDEN OF PROVING CONCEALMENT WAS NOT DISCHARGED BY THE DEPARTMENT. HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NAVNEETLA L KOCHALAL (1995) 213 ITR 69 (GUJ.) WHEREIN DURING ASSESSMENT PROCEED INGS, THERE WAS A DISPUTE REGARDING SOURCE OF INVESTMENT IN MAC HINERY. THE ASSESSEE AGREED TO INCLUSION OF CERTAIN AMOUNTS IN HIS ASSESSMENT. THE REVENUE DID NOT DISCHARGE THE BURDEN OF PROVING THAT AMOUNT REPRESENTED CONCEALED INCOME OF THE RELEVANT ACCOUN TING YEAR. 6 ACCORDINGLY, IT WAS HELD THAT PENALTY COULD NOT BE IMPOSED. THIS VIEW IS ALSO FORTIFIED BY THE DECISION IN THE CASE OF BHAUSAHEB P. SANGLE (SUPRA). IN VIEW OF THE ABOVE FACTS AND LEGA L DISCUSSION, CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY IN QUE STION. THE SAME IS UPHELD. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 26 TH DAY OF JULY, 2012. SD/- SD/- ( R.K.PANDA ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 26 TH JULY, 2012. COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ACIT, CENTRAL CIRCLE-2, PUNE. 3. THE CIT(A)-IV, PUNE. 4. THE CIT CONCERNED. 5. THE DR A BENCH, PUNE. 6. GUARD FILE. BY ORDER SR.PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.