DCIT, CIR-2, SILIGURI, Siliguri V. Shri Suresh Karmakar, Siliguri

ITA 1399/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1134 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 20-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH MISHRA
• Assessee Lawyers: S M SURANA
• Keywords: Retraction; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A NO. 1399/KOL/20 15 ASSESSMENT YEAR : 2010-1 1 DCIT, CIRCLE-2, SILIGURI -VS- SHRI SURES H KARMAKAR [PAN: ALIPK 6761 D] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI AVINASH MISHR A, CIT FOR THE RESPONDENT : SHRI S.M. SURANA, ADVOCA TE DATE OF HEARING : 04.10.2017 DATE OF PRONOUNCEMENT : 01.11.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-20, KOLKATA [IN SHORT THE LD CI T(A)] IN APPEAL NO247/CIT(A)- 20/CC-2(2)/13-14 DATED 28.08.2015 AGAINST THE ORDER PASSED BY THE DCIT, CENTRAL CIRCLE-XXVIII, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 27.12.2011 FO R THE ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY IMPOSED U/S 271AA A OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE WAS SUBJECTED TO SEARCH & SEIZURE OPERATION ON 08.01.2010. THE ASSESSEE BELONGS TO BI DHAN JEWELLERS GROUP OF CASES. THE ASSESSEE IS A PROPRIETOR OF M/S BIDHAN JEWELLERIES. AT THE TIME OF SEARCH, THE ASSESSEE 2 ITA NO.1399/KOL/2015 SURESH KARMAKAR A.YR.2010-11 2 GAVE A STATEMENT U/S 132(4) WHEREIN HE ADMITTED A S UM OF RS. 3 CRORES AS AN UNDISCLOSED INCOME. THE ASSESSEE ALSO EXPLAINED VIDE REPLY TO Q UESTION NO. 4 OF THE STATEMENT RECORDED ON THE DATE OF SEARCH THAT HE HAD DERIVED THIS UNDISCLOSED INCOME OF RS. 3 CRORES OUT OF UNACCOUNTED SALE OF JEWELLERY MADE TH ROUGH ESTIMATE SLIP THAT WERE ISSUED TO THE CUSTOMERS AND THE ASSESSEE HAD ALSO STATED T HE APPLICATION OF UNDISCLOSED INCOME IN CERTAIN PROPERTIES, UNACCOUNTED STOCK AND CASH B ALANCE. IN OTHER WORDS, THE ASSESSEE DULY SUBSTANTIATED THE MANNER OF DERIVING THE UNDIS CLOSED INCOME TOGETHER WITH APPLICATION THEREON IN THE STATEMENT RECORDED UNDER 132(4) OF THE ACT ON THE DATE OF SEARCH ITSELF. THE ASSESSEE HOWEVER, DID NOT COME F ORWARD TO OFFER THE SAME IN THE ORIGINAL RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2010-11 ON 30.08.2011. THIS RETURN WAS ALSO FOLLOWED BY REVISED RETURN. EVEN IN THIS REVISED RETURN, THE ASSESSEE DID NOT OFFER THIS UNDISCLOSED INCOME OF RS. 3 CRORES. HOWEVER, THE ASSESSEE LATER ON FILED SECOND REVISED RETURN ON 01.11.2011 WHEREIN HE DULY OFFERED ADDITIONAL INCOME RS. 2,90,74,000/- FOR ASSESSMENT YEAR 2010-11 AND RS. 9 ,26,000/- FOR ASSESSMENT YEAR 2008- 09. THE ASSESSEE ALSO FILED REVISED RETURN FOR ASSE SSMENT YEAR 2008-09 INCLUDING THE ADDITIONAL INCOME OF RS. 9,26,000/-. THE ASSESSEE P AID THE TAXES TOGETHER WITH INTEREST ON THIS ADDITIONAL INCOME OF RS. 3 CRORES FOR THE R ESPECTIVE ASSESSMENT YEARS BEFORE THE DATE OF FILING THE SECOND REVISED RETURN OF INCOME ON 01.11.2011. THE ASSESSEE FILED A WRITTEN SUBMISSION VIDE LETTER DATED 14.11.2011 GIV ING DETAILS OF UNDISCLOSED INCOME PERTAINING TO VARIOUS FINANCIAL YEARS, AMONG OTHER DETAILS BEFORE THE LD. AO. THE ASSESSMENT WAS COMPLETED BASED ON THE SECOND REVISE D RETURN FILED BY THE ASSESSEE ON 01.11.2011. PENALTY PROCEEDINGS U/S 271AAA OF THE A CT WAS INITIATED BY THE LD. AO. IN THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSEE EXP LAINED THAT THE ASSESSEE HAD SATISFIED ALL THE THREE CONDITIONS CONTEMPLATED IN 271AAA(2) OF THE ACT AND HENCE, IS ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY THEREON. THE LD. AO H OWEVER OBSERVED THAT SINCE THE ASSESSEE HAD RETRACTED FROM HIS 132(4) DISCLOSURE S TATEMENT BY NOT OFFERING THE INCOME OF RS. 3 CRORES IN THE ORIGINAL RETURN OF INCOME, T HE ASSESSEE HAD NOT COMPLIED WITH THE CONDITION OF 271AAA(2) OF THE ACT. THE LD. AO ALSO OBSERVED THAT THE TAXES WERE PAID 3 ITA NO.1399/KOL/2015 SURESH KARMAKAR A.YR.2010-11 3 BY THE ASSESSEE BELATEDLY I.E. AFTER THE DATE OF FI LING OF ORIGINAL RETURN OF INCOME HENCE, HE HELD THAT THE ASSESSEE IS NOT ENTITLED FOR IMMUN ITY PROVIDED IN 271AAA(2) OF THE ACT. BASED ON THESE FINDINGS, HE LEVIED A PENALTY OF RS. 30,36,743/- FOR THE ASSESSMENT YEAR 2010-11. 4. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD SA TISFIED ALL THREE CONDITIONS PROVIDED U/S 271AAA(2) OF THE ACT. THE LD. CIT(A) ALSO PLACE D RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS. GEBIL AL KANHAIALAL HUF, REPORTED IN 348 ITR 561 (SC) WHEREIN IT WAS HELD THAT THERE WAS NO TIME LIMIT PRESCRIBED IN THE STATUTE FOR PAYMENT OF TAX AND INTEREST ON THE UNDI SCLOSED INCOME OFFERED U/S 132(4) OF THE ACT IN THE CONTEXT OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. THE HONBLE SUPREME COURT ACCORDINGLY HELD THAT THE ASSESSEE IS INDEED FOR IMMUNITY PROVIDED IN CLAUSE 2 OF EXPLANATION 5 TO SECTION 271(1)(C) OF T HE ACT. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) WAS JUSTIFIED IN LAW, WHILE DELETING THE PENALTY IMPOSE D U/S 271AAA OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT THE ASSESSEE CANNO T BE CHARGED WITH FILING INACCURATE PARTICULARS OF ITS INCOME. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN FACT FACTS IN OBSERVING THAT THE ASSESSEE HAS FULFI LLED THE CONDITION PRESCRIBED FOR NON-LEVY OF PENALTY U/S 271AAA OF THE ACT. 3. RELIANCE IS PLACED ON THE RATIO OF JUDGMENT IN C ASE OF MAK DATA PVT. LTD. VS. CIT 358 ITR 593 (SC). 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER THE GROUNDS OF APPEAL, IF ANY. 5. THE LD. DR VEHEMENTLY RELIED ON THE ORDER OF THE LD. AO. IN RESPONSE TO THIS, THE LD. AR STATED THAT THERE IS NO REQUIREMENT IN LAW PROVI DED IN SECTION 271AAA(2) OF THE ACT THAT THE ASSESSEE SHOULD OFFER THE UNDISCLOSED INCO ME DECLARED UNDER 132(4) OF THE ACT IN THE RETURN OF INCOME. IT ONLY SAYS THAT THE ASSE SSEE SHOULD ADMIT THE UNDISCLOSED 4 ITA NO.1399/KOL/2015 SURESH KARMAKAR A.YR.2010-11 4 INCOME AT THE TIME OF SEARCH; SUBSTANTIATE THE MANN ER IN WHICH SUCH UNDISCLOSED INCOME WAS DERIVED BY THE ASSESSEE; AND PAY THE TAX TOGETH ER WITH INTEREST ON SUCH UNDISCLOSED INCOME. IF THESE CUMULATIVE CONDITIONS ARE SATISFIE D, THE ASSESSEE IS ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY U/S 271AAA(2) OF THE ACT. IN THE INSTANT CASE, ALL THE THREE CONDITIONS ARE SATISFIED BY THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE ASSESSEE HAD SATISFIED ALL THE THREE CONDITIONS PRESCRIBED IN 271AAA(2) OF THE ACT . THE ASSESSEE HAD EVEN THOUGH RETRACTED THE 132(4) STATEMENT BY NOT OFFERING THE UNDISCLOSED INCOME IN THE ORIGINAL RETURN OF INCOME AND IN THE FIRST REVISED RETURN OF INCOME, BUT HAD VOLUNTARILY OFFERED THE UNDISCLOSED INCOME IN THE SECOND REVISED RETURN OF INCOME FILED ON 01.11.2011 (WHICH IS WITHIN THE TIME LIMIT PRESCRIBED U/S 139( 5) OF THE ACT). IT IS NOT IN DISPUTE THAT THE LD. AO HAD TAKEN DUE COGNIZANCE OF THE SECOND R EVISED RETURN OF INCOME FILED BY THE ASSESSEE, WHILE COMPLETING THE ASSESSMENT FOR T HE ASSESSMENT YEAR 2010-11. WHILE THIS IS SO, IT CANNOT BE SAID THAT THE ASSESSEE HAD NOT OFFERED THE UNDISCLOSED INCOME IN THE RETURN FILED BEFORE THE LD. AO. THIS CANNOT BE TREATED AS A RETRACTION BY THE ASSESSEE FROM HIS DISCLOSURE STATEMENT. MOREOVER, WE FIND TH AT SECTION 271AAA(2) NOWHERE MANDATES REQUIREMENT OF OFFERING THE UNDISCLOSED IN COME IN THE RETURN OF INCOME TO BE FILED BY THE ASSESSEE. FOR THE SAKE OF CONVENIENCE THE PROVISION OF 271AAA(2) ARE REPRODUCED HEREUNDER. : (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APP LY IF THE ASSESSEE,- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER S UB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME. WE ALSO FIND WHEREVER THE LEGISLATURE IN ITS WISDOM HAD MANDATED OFFER OF UNDISCLOSED INCOME IN THE RETURN OF INCOME FILED BY THE ASSESSE E, THE SAME HAS BEEN SPECIFICALLY PROVIDED IN THE ACT ITSELF AS IS PROVIDED IN SECTIO N 271AAB OF THE ACT. HENCE, WE FIND 5 ITA NO.1399/KOL/2015 SURESH KARMAKAR A.YR.2010-11 5 THAT THE ASSESSEE HAD DULY COMPLIED WITH ALL THE TH REE CUMULATIVE CONDITIONS SUPPORTED IN SECTION 271AAA(2) OF THE ACT IN THE INSTANT CASE AND ACCORDINGLY, WE HOLD THAT THE ASSESSEE IN INDEED ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY U/S 271AAA OF THE ACT. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THIS REGARD. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 01.11.2017 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BALAGA NESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 01.11.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-2, SILIGURI, AAYAKAR BHAWAN, B-WI NG, GROUND FLOOR, PARIBAHAN NAGAR, MATIGARA, SILIGURI-734010. 2. SHRI SURESH KARMAKAR, C/O BIDHAN JEWELLERS, HILL CART ROAD, SILIGURI-734001 3..C.I.T.- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S