The ACIT, Central Circle-1, Surat V. M/s. Swapna Enterprise, Surat

ITA 1355/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6265 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 07-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAPNESH SHETH
• Section: 142(1); 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.1355/AHD/2014 &' ( )*(/ ASSTT. YEAR: 2011-12 ACIT, CENT.CIR.1 SURAT. VS. M/S.SWAP N A ENTERPRISE A-2, 101-102, MAHALAXMI ARCADE ADAJAN, SURAT. PAN : ABEFS 6673 A. ( APPLICANT ) ( RESPONENT ) REVENUE BY : SHRI JAMES KURIAN, SR.DR ASSESSEE BY : SHRI SAPNESH SHETH, AR / DATE OF HEARING : 30/03/2017 / DATE OF PRONOUNCEMENT: 10/04/2017 78/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-II, AHMEDABAD DATED 12.2.2014 PASSED FOR THE ASSTT.YEAR 2011-12. 2. SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS.1,50,00,000/- WHICH WAS IMPOSED BY THE AO UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS FIR M ENGAGED IN THE BUSINESS OF DEVELOPMENT HOUSING PROJECTS. A SEARCH UNDER SE CTION 132 OF THE INCOME TAX ACT 1961 WAS CARRIED OUT AT THE BUSINESS AS WEL L AS RESIDENTIAL PREMISES OF INFRASTRUCTURE GROUP OF CASES ON 19.1.2011. DURING THE COURSE OF SEARCH A ITA NO.1355/AHD/2014 2 STATEMENT OF SHRI ALPESHBHAI G. KOTADIA WAS RECORDE D ON 20.1.2011. IN HIS STATEMENT HE HAS ADMITTED RS.15 CRORES AS UNDISCLOS ED INCOME. A NOTICE UNDER SECTION 142(1) OF THE INCOME TAX ACT WAS ISSU ED ON 11.10.2011 WHICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THIS NOTICE, THE ASSESSEE HAS FURNISHED RETURN OF ITS INCOME ON 29.9.2011 DECLARI NG TOTAL INCOME AT RS.17,11,33,110/-. THE AO HAD ISSUED NOTICE UNDER SECTION 143(2), AND THEREAFTER ACCEPTED THE RETURN OF INCOME. THE DISCU SSION MADE BY THE AO IN THE ASSESSMENT ORDER READS AS UNDER: 4. THE ASSESSEE IS INTO BUILDING ACTIVITIES AND HA S UNDERTAKEN A BUILDING PROJECT M THE NAME OF GREEN CITY. DURING T HE COURSE OF SEARCH ACTION A DIARY BS-1 CONTAINING THE NAME OF M/S. SWA PNA ENTERPRISE HAVE BEEN FOUND AND SEIZED WHICH CONSISTS OF ON-MON EY PAYMENTS RECEIVED BY THE ASSESSEE TO THE TUNE OF RS. 15,00,0 0,000/-. THE ASSESSEE HAS ADMITTED UNDISCLOSED INCOME OF RS.15,00,00,000/ - FOR TAXATION IN THIS A.Y. 5. THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE OFFER ED INCOME OF RS.15,00,00,000/- AND MANNER IN WHICH THE SAID INCO ME WAS DERIVED. THE ASSESSEE HAS FAILED IN SUBSTANTIATING THE MANNE R IN WHICH THE ADMITTED UNDISCLOSED INCOMES WERE DERIVED. IN VIEW OF THE ABOVE IT IS CLEAR THAT THE ASSESSEE IS NOT FULFILLED THE CONDIT IONS LAID DOWN IN SECTION 271AAA(2) OF THE IT. ACT, 1961 FOR IMMUNITY FROM THE PENALTY U/S 271AAA. HENCE, IT IS A FIT CASE FOR INITIATING PENALTY PROCEEDINGS U/S 271AAA OF THE I.T. ACT. CONSEQUENTLY, PENALTY PROCE EDINGS U/S 271AAA OF THE I.T. ACT, 1961 ARE ON THE ISSUE OF OFFERED U NDISCLOSED INCOME OF RS.15,00,00,000/- 4. KEEPING IN VIEW THE DETAILS FILED, THE TOT AL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER: RETURNED INCOME RS. 17,11,33,110/- ADDITION NIL ASSESSED INCOME . RS. 17,11,33,110/ ITA NO.1355/AHD/2014 3 5. ASSESSED U/S.143(3) OF THE IT. ACT. ISSU E D.N. & CHALLAN ACCORDINGLY. PENALTY PROCEEDINGS U/S 271AAA OF THE IT. ACT, 1961 ARE INITIATED ON THE ISSUE OF OFFERED UNDISCLOSED INC OME OF RS.15,00,00,000/-. THIS ORDER HAS BEEN PASSED WITH THE PREVIOUS APPROVAL OF THE ADDL. CIT, CENTRAL RANGE, SURAT VID E LETTER NO. SRT/ADDL.CIT/CR/APPROVAL/153D/CC-1 /2012-13 DTD.22. 03.2013. 4. THE LD.AO HAS INITIATED PENALTY PROCEEDINGS UNDE R SECTION 271AAA OF THE ACT. HE WAS OF THE OPINION THAT THE ASSESSEE F AILED TO DISCLOSE THE MANNER OF EARNING THIS UNDISCLOSED INCOME OF RS.15 CRORES. SIMILARLY, IT HAS FAILED TO SUBSTANTIATE THAT MANNER AND THEREFORE IT DESERVES TO BE VISITED WITH PENALTY. ACCORDINGLY, A PENALTY AT THE RATE OF 10% OF UNDISC LOSED INCOME ADMITTED HAS BEEN COMPUTED AT RS.1.50 CRORES UNDER SECTION 271AA A OF THE ACT. DISSATISFIED WITH THE LEVY OF PENALTY, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) HAS RECORDED A FINDING THAT THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED THE MANNER OF EARNING SUCH INCOME AND ALSO SUBSTANTIATED THAT MANNER. 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD. FOR APPRECIATING THE CONTROVERSY INVOLVED, IT IS INCUMBENT UPON US TO TAKE NOTE OF SECTION 271AAA. THE RELEVANT PART OF THIS SECTION READS AS UNDER: 271AAA. PENALTY WHERE SEARCH HAS BEEN INITIATED.( 1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HA S BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYA BLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCL OSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I ) IN THE COURSE OF THE SEARCH, IN A S TATEMENT UNDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; ITA NO.1355/AHD/2014 4 (II ) SUBSTANTIATES THE MANNER IN WHICH T HE UNDISCLOSED INCOME WAS DERIVED; AND (III ) PAYS THE TAX, TOGETHER WITH INTERES T, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN R ESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). 6. A BARE PERUSAL OF THIS SECTION WOULD INDICATE TH AT SUB-SECTION (1) AUTHORISE THE AO TO LEVY PENALTY AT THE RATE OF 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. SUB-SECTION (2) PR OVIDES CONDITIONS ON WHOSE FULFILLMENT THE ASSESSEE COULD BE ABSOLVED FROM THE LEVY OF PENALTY. A PERUSAL OF SUB-SECTION (2) WOULD INDICATE THAT IT POSTULATE S THREE CONDITIONS FOR AN ASSESSEE ON WHOSE FULFILLMENT HE WILL BE ABSOLVED F ROM LEVY OF PENALTY. IN THE PRESENT CASE, IN THE ASSESSMENT ORDER THE AO HI MSELF DID NOT DISPUTE THAT DURING THE COURSE OF SEARCH, IT WAS ADMITTED BY SHR I ALPESHBHAI KOTADIYA THAT THIS INCOME WAS EARNED BY ACCEPTING ON-MONEY IN ITS BUILDING PROJECT GREEN CITY. THIS MANNER HAS ALSO BEEN DISCLOSED. IT HA S ALSO BEEN POINTED OUT THAT THE UNDISCLOSED INCOME WAS RECEIVED BY THE ASSESSEE AS ON-MONEY. THUS, TAKING INTO CONSIDERATION FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD.CIT(A) HAS RIGHTLY DELETED THE PENALTY, AND ACCO RDINGLY, WE DISMISS THE APPEAL OF THE REVENUE. 7. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE COURT ON 10 TH APRIL, 2017 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 10/04/2017