DCIT, Cen. Cir.1, Nashik, Nashik V. M/s. S.P.Bothra & Sons,

ITA 127/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49798 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 21-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANDEEP PRADHAN
• Keywords: Opportunity of being heard
• Section: 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SU DHIR JUDICIAL MEMBE R AND SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER SR. NO. ITA NO. ASSTT.YEAR APPELLANT V/S RESPONDENT 1 126/PN/2010 2003 - 04 DCIT, CENT.CIR.1, NASIK M/S. S.P.BOTHRA & SONS, LAXMI SURAJ NIWAS,SHIVAJI ROAD, VAIJAPUR, DIST. AURANGABAD 2 127/PN/2010 2004 - 05 - DO - - DO - 3 128/PN/2010 2005 - 06 - DO - - DO - 4 129/PN/2010 2006 - 07 - DO - - DO - 5 130/PN/2010 2004 - 05 - DO - SHRI NANDLAL SURAJMAL BOTHRA, NANDLAL BUIL DING, GUJRATHI GALLI, VAIJAPUR, DIST. AURANGABAD 6 131/PN/2010 2003 - 04 - DO - - DO - 7 132/PN/2010 2007 - 08 - DO - - DO - 8 133/PN/2010 2003 - 04 - DO - SHRI INDERCHAND SURAJMAL BOTHRA, NANDLAL BUILDING, GUJRATHI GALLI, VAIJAPUR, DIST. AURANGABAD 9 134/PN/2010 2005 - 06 - DO - - DO - 10 135/PN/2010 2003 - 04 - DO - M/S.SURAJMAL PANNALAL BOTHRA, AT VAIJAPUR, DIST. AURANGABAD 11 136/PN/2010 2004 - 05 - DO - - DO - 12 137/PN/2010 2005 - 06 - DO - - DO - 13 138/PN/2010 2006 - 07 - DO - - DO - 14 140/PN/2010 2005 - 06 - DO - SHRI SUBHAS HCHANDRA SURAJMAL BOTHRA, LAXMI SURAJ NIWAS, SHIVAJI ROAD, VAIJAPUR, DIST. AURAN GABAD A SSESSEE BY : SR.1 TO 4 - SHRI S.N. DOSHI M/S. SP BOTHRA & SONS ETC., A.Y. 2003 - 04, 2004 - 05 ETC. 2 SR.5 TO 7 - NONE SR.8 TO 9 - SHRI NIKHIL PATHAK SR.10 TO 13 - NONE SR.14 SHRI S.N. DOSHI DEPARTMENT BY : SHRI SANDEEP PRADHAN ORDER PER BENCH IN ALL THESE APPEALS PREFERRED BY REVENUE, VALIDITY OF ACTION OF THE LD CIT(A) IN DELETING THE PENA LTY LEVIED U/S. 271(1)(C ) HAS BEEN QUESTIONED. 2. THE A.O. IMPOSED PENALTY U/S. 271(1)( C) IN THE PRESENT GROUP CASES ON THE ADDITION OF UNDISCLOSED INCOME MADE ON THE BASIS OF DECLARATION MADE DURING THE COURSE OF SEARCH ON 22.11.2006. DURING THE COUR SE OF SEARCH, THE ASSESSEE HAD DECLARED ADDITIONAL INCOME ON ACCOUNT OF COMMISSION RECEIVED FROM THE FARMERS FOR GETTING THEIR PRODUCE SOLD IN THE MARKET. IN THE RETURN FILED IN RESPONSE TO THE NOTICE U/S. 153A, THE ASSESSEE RETURNED THE TOTAL INCOME I.E. INCOME RETURNED IN THE ORIGINAL RETURN OF INCOME FILED BEFORE THE DATE OF SEARCH AND THAT DECLARED DURING THE COURSE OF SEARCH ACTION U/S. 132(4) OF THE ACT. THE LD. CIT(A) FOLLOWING THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SMT. SA RLA AHUJA, ITA NO. 1301/PN/2006, HAS DELETED THE PENALTY. HE HAS QUOTED THE RATIO LAID DOWN IN THE SAID CITED DECISION OF SMT. SARLA AHUJA THAT AT THIS STAGE IT IS ALSO PERTINENT TO NOTE THAT BY VIRTUE OF PROVISIONS CONTAINED IN SECTION 153A OF THE ACT , ASSESSMENT PROCEEDINGS PENDING ON THE DATE OF SEARCH SHALL STAND ABATED AND IN THAT VIEW OF THE MATTER THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 153A CANNOT BE THE SUBJECT MATTER OF IMPOSING PENALTY U/S. 271(1)(C ) WHILE COMPLETING THE ASSESSMENT U/S. 153A(B) OF THE ACT. M/S. SP BOTHRA & SONS ETC., A.Y. 2003 - 04, 2004 - 05 ETC. 3 3. THE REVENUE IN THE PRESENT APPEALS HAS QUESTIONED THE ABOVE ACTION OF THE LD. CIT(A). THE LD. D.R CONTENDED THAT CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C ) EXEMPTS ONLY THAT PART OF I NCOME FROM THE PENAL PROVISIONS, WHICH IS COVERED BY THE STATEMENTS U/S. 132(4) , AND W HERE THE ASSETS HAVE BEEN ACQUIRED BY THE ASSESSEE OUT OF HIS INCOME WHICH IS NOT DISCLOSED IN THE RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED I N SECTION 139(1). HE SUBMITTED FURTHER THAT THE ADDITION MADE BY THE A.O ON ACCOUNT OF G.P. ON SUPPRESSED SALES IS NOT MADE ON THE BASIS OF ESTIMATE ONLY BUT ON CONCRETE EVIDENCE OF CONCEALMENT DETECTED FROM THE SEIZED MATERIAL. 4. THE LD. A.R ON THE O THER HAND SUBMITTED THAT INCOME DECLARED DURING THE COURSE OF SEARCH REPRESENTED THE COMMISSION EARNED FROM THE FARMERS FOR GETTING THEIR PRODUCE SOLD IN THE MARKET. HE SUBMITTED THAT EVEN IF FOR THE SAKE OF ARGUMENT THE CONTENTION OF THE LD. D.R IS ACCE PTED FOR THE MOMENT THAT ADDITION MADE BY THE A.O ON ACCOUNT OF G.P. ON SUPPRESSED SALES IS NOT MADE ON ESTIMATION ONLY, THEN IT IS APPARENT FROM THE FIRST APPELLATE ORDER IN QUESTION THAT THE LD. CIT(A) HAS NOT EXAMINED THIS MATERIAL ASPECT OF THE ISSUE AS TO HOW FAR THE ESTIMATED INCOME HAS DIRECT RELEVANCE TO THE SEIZED MATERIAL. THE LD. CIT(A) HAS NOT LOOKED INTO THIS ASPECT FROM THIS ANGLE IN VIEW OF EXPLANATION 1 TO SECTION 271(1)(C ) OF THE ACT. THE LD. A.R ACCORDINGLY PRAYED THAT THE ISSUE MAY BE RESTORED TO THE FILE OF LD. CIT(A) FOR EXAMINING THE SAME ON MERIT AND DECIDE IT IN ACCORDANCE WITH LAW. M/S. SP BOTHRA & SONS ETC., A.Y. 2003 - 04, 2004 - 05 ETC. 4 5. CONSIDERING THE ABOVE SUBMISSION, WE FIND THAT THIS BENCH HAD OCCASION TO DECIDE CASES OF DCIT VS. SHRI OMKARESHWAR R. KALANTRI & OTHERS IN ITA NO S .1004/PN/2009 AND OTHERS , ORDER DATED 5 TH FEB., 2010 WHEREIN AFTER DISCUSSING THE ISSUE OF VALIDITY OF THE FIRST APPELLATE ORDER IN DELETING PENALTY LEVIED U/S. 271(1)(C ) RELYING UPON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SM T. SARLA AHUJA (SUPRA), THE LEVY OF PENALTY BY THE A.O WAS RESTORED. THE BENCH IN THAT CASES HELD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN APPLYING AN EXTRACT OF THE DECISION IN THE CASE OF SMT. SARLA AHUJA BUT THE APPLICABILITY OF THE SAID DECISION SHOU LD HAVE BEEN SEEN IN THE ENTIRITY OF THE DECISION AND THE CONTEXT IN WHICH IT WAS PASSED. UNDISPUTEDLY, AN ASSESSEE UNDER EXPLANATION 5 TO S. 271(1)(C ) IS ENTITLED TO SOME RELIEF WHICH ARE PROVIDED THEREIN IN SOME CIRCUMSTANCES, WHICH WE HAVE OCCASION TO DISCUSS IN DETAIL IN THE CASE OF SHRI OMKARESHWAR R. KALANTRI & ORS. (SUPRA). IN BRIEF SUCH RELIEF CAN BE PROVIDED TO THE ASSESSEE LEVIED WITH PENALTY ONLY WHEN SUCH ASSET REVEALED IN SEARCH HAS BEEN ACQUIRED BY HIM BY UTILIZING, WHOLLY OR IN PART, HIS INCOME FOR ANY PREVIOUS YEAR AS PER SITUATION SHOWN IN CLAUSES (A) & (B) TO THE EXPLANATION 5 AND THE TRANSACTION RESULTING IN SUCH INCOME ARE RECORDED IN A CASE FALLING UNDER C LAUSE (A) BEFORE THE DATE OF SEARCH, AND IN A CASE FALLING UNDER C LAUSE (B) ON OR BEFORE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM IN REGULAR COURSE FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE SAID DATE. THE OTHER CIRCUMSTANCE WHEREIN RE LIEF CAN BE GRANTED HAS BEEN PROVIDED IN CLAUSE (2) TO EXPLANATION 5, WHICH IS REPRODUCED AS UNDER : M/S. SP BOTHRA & SONS ETC., A.Y. 2003 - 04, 2004 - 05 ETC. 5 (2) H E, IN THE COURSE OF THE SEARCH, MAKES A STATEMENT UNDER SUB - SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING FOUND IN HIS POSSESSION OR UNDER HIS CONTROL, HAS BEEN AC QUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SUB - SECTION (1) OF SECTION 139 , AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME.] . 6. THE LD. D.R. IN HIS CONTENTION DISCUSSED HEREINABOVE , HAS TALKED ABOUT THE SITUATION ENUMER ATED IN CLASE (2) TO THE EXPLANATION 5 , UNDER WHICH , CASE S OF THE PRESENT ASSESSEE S DOES NOT FALL FOR THE RELIEF , AS IT IS NOT THEIR CASE HEREIN THAT THEY HAD NOT DISCLOSED THE INCOME SINCE SCHEDULED DATE U/S. 139(1) OF THE ACT FOR FILING OF THE RETURN W AS STILL TO EXPIRE. THUS WE ARE OF THE VIEW THAT BEFORE GRANTING RELIEF TO THE ASSESSEE RELYING UPON THE DECISIO N IN THE CASE OF SMT. SARLA AHUJA (SUPRA), THE LD. CIT(A) HAS NOT EXAMINED THE APPLICABILITY OF THE DECISION IN ITS ENTIRITY IN THE FACTS AN D CIRCUMSTANCES OF THE PRESENT CASE. WE ARE OF THE VIEW THAT THE DECISION OF THE BENCH IN THE CASE OF DCIT VS. SHRI OMKARESHWAR R. KALANTRI & ORS. (SUPRA) WILL BE HELPFUL TO THE LD. CIT(A) TO ARRIVE AT PROPER CONCLUSION IN THE PRESENT CASE ON THE ISSUE.WE FURTHER AGREE WITH THE SUBMISSION OF THE LD. AR THAT WHILE DECIDING THE VALIDITY OF LEVY OF PENALTY IN THE PRESENT CASE, THE LD. CIT(A) HAS NOT EXAMINED THIS IMPORTANT ASPECT OF THE CASE AS TO WHAT EXTENT THE DECLARED INCOME, CLAIMED TO HAVE BEEN BASED ON ESTIMATION, IS HAVING DIRECT RELEVANCE TO THE SEIZED MATERIAL. UNDER THESE CIRCUMSTANCES AND TO M/S. SP BOTHRA & SONS ETC., A.Y. 2003 - 04, 2004 - 05 ETC. 6 MEET THE END OF JUSTICE, WE RESTORE THE MATTER TO THE FILE OF THE LD. CIT(A) FOR HIS FRESH ADJUDICATION OF THE VALIDITY OF LEVY OF PENALTY U/S. 271(1)( C ) IN VIEW OF THE ABOVE OBSERVATION, AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE PARTIES. THE GROUNDS ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 7. IN RESULT APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 31ST MAY 2011. SD/ - SD/ - ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER (I.C. SUDHIR) JUDICIAL MEMBER PUNE: DATED: 31ST MAY , 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APP ELLA NT 2. T HE RESPONDENT 3. THE CIT - (CENTRAL), NAGPUR 4. THE CIT(A) - I, NASHIK 4 . THE D.R. ITAT, A BENCH, PUNE 5 . GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE