Dy. CIT, Aurangabad V. Shri Ravindra Champalal, Aurangabad

ITA 1427/PUN/2013

• Counselvise Citation: 142724514 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-10-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 08-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Search and seizure
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1427/PN/2013 (ASSESSMENT YEAR : 2010-11) DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, AURANGABAD. . APPELLANT VS. SHRI RAVINDRA CHAMPALAL KHINVASARA, 2, SURANA NAGAR, JALNA ROAD, AURANGABAD 431 001. PAN : ACQPK8748P . RESPONDENT DEPARTMENT BY : SHRI P. S. NAIK ASSESSEE BY : SHRI NIKHIL PATHAK DATE OF HEARING : 30-09-2014 DATE OF PRONOUNCEMENT : 28-11-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), AURANGABA D DATED 02.04.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 28.0 6.2012 PASSED BY THE ASSESSING OFFICER U/S 271AAA OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2010-11. 2. IN THIS APPEAL, THE SOLITARY DISPUTE RELATES TO THE ACTION OF THE CIT(A) IN DELETING THE PENALTY OF RS.45,00,000/- IMPOSED BY T HE ASSESSING OFFICER U/S 271AAA OF THE ACT. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT ASSESSEE I S AN INDIVIDUAL ENGAGED IN THE BUSINESS OF REAL ESTATE AND IS A PART OF THE TA PADIYA GROUP WHICH WAS SUBJECT TO A SEARCH AND SEIZURE ACTION U/S 132 OF T HE ACT ON 19.01.2010. IN THE COURSE OF SEARCH, ASSESSEE SURRENDERED AN INCOM E OF RS.4,50,00,000/- IN ITA NO.1427/PN/2013 THE COURSE OF A DEPOSITION MADE U/S 132(4) OF THE A CT. THE SAID DECLARATION WAS ON ACCOUNT OF THE INVESTMENT MADE BY THE ASSESS EE AS A CAPITAL CONTRIBUTION IN M/S NEELVASU HOLIDAY RESORTS & PROP ERTIES. SUBSEQUENTLY, ASSESSEE ALSO OFFERED THE SAID INCOME IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2010-11 ON 09.02.2011. THE ADDITIO NAL INCOME SO DECLARED IN THE STATEMENT U/S 132(4) OF THE ACT AND OFFERED IN THE RETURN OF INCOME SUBSEQUENTLY HAS BEEN ACCEPTED BY THE ASSESSING OFF ICER IN AN ASSESSMENT FINALIZED U/S 143(3) OF THE ACT DATED 29.12.2011. SUBSEQUENTLY, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 271AAA OF THE ACT AND VIDE ORDER DATED 28.06.2012 LEVIED PENALTY WITH RESPECT TO THE AFORESAID ADDITIONAL INCOME OF RS.4,50,00,000/-. THE ASSESSING OFFICER HELD THAT THE ASSESSEE DID NOT FULFILL ONE OF THE CONDITIONS PRESCRIBED IN SUB -SECTION (2) OF SECTION 271AAA OF THE ACT AND THEREFORE A PENALTY EQUIVALENT TO 10 % OF THE SURRENDERED INCOME WAS LEVIABLE, THEREBY RESULTING IN LEVY OF P ENALTY AMOUNTING TO RS.45,00,000/-. THE CIT(A) HAS NOT AGREED WITH THE STAND OF THE ASSESSING OFFICER BECAUSE ACCORDING TO HIM, ASSESSEE HAS COMP LIED WITH ALL THE CONDITIONS LAID DOWN IN SUB-SECTION (2) OF SECTION 271AAA OF THE ACT AND THEREFORE NO PENALTY WAS LEVIABLE U/S 271AAA OF THE ACT. 4. SECTION 271AAA OF THE ACT PRESCRIBES THAT IN A C ASE WHERE SEARCH HAS BEEN INITIATED U/S 132 ON OR AFTER THE 1ST DAY OF J UNE, 2007 BUT BEFORE THE 1ST DAY OF JULY, 2012, ASSESSEE SHALL PAY BY WAY OF PEN ALTY, A SUM EQUIVALENT TO 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PRE VIOUS YEAR. FURTHER, THE SPECIFIED PREVIOUS YEAR HAS BEEN DEFINED TO MEAN A PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FI LING OF THE RETURN U/S 139(1) OF THE ACT HAS NOT EXPIRED BEFORE THE DATE OF SEARC H AND ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE SAID YEAR BE FORE THE SAID DATE OR THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED. I N THE PRESENT CASE, SEARCH U/S 132(1) HAS BEEN CONDUCTED IN THE CASE OF ASSESS EE ON 19.01.2010 AND ITA NO.1427/PN/2013 THEREFORE THE PREVIOUS YEAR RELEVANT TO THE ASSESSM ENT YEAR UNDER CONSIDERATION I.E. 2010-11 IS THE SPECIFIED PREVIO US YEAR FOR THE PURPOSES OF SECTION 271AAA OF THE ACT. ON THIS ASPECT OF THE M ATTER, THERE IS NO DISPUTE. THE DISPUTE PERTAINS TO THE IMMUNITY FROM THE PENAL TY ENVISAGED BY WAY OF SUB-SECTION (2) OF SECTION 271AAA OF THE ACT, WHICH READS AS UNDER :- (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APP LY IF THE ASSESSEE,- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME A ND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. 5. A PERUSAL OF SUB-SECTION (2) OF SECTION 271AAA O F THE ACT REVEALS THAT NO PENALTY U/S 271AAA(1) IS IMPOSABLE IF ASSESSEE C OMPLIES WITH THREE CONDITIONS PRESCRIBED THEREIN. FIRSTLY, IF THE ASS ESSEE MAKES A STATEMENT U/S 132(4) OF THE ACT AND ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; SECONDLY, IF THE ASSESSEE SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED; AND, THIRDLY, ASSESSEE PAYS THE REQUIRED TAX, TOGETHER W ITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. ON FULFILLMENT OF ALL T HE THREE CONDITIONS, NO PENALTY IS IMPOSABLE U/S 271AAA OF THE ACT. 6. IN THE PRESENT CASE, ADMITTEDLY THE FIRST AND TH E SECOND CONDITION HAS BEEN COMPLIED WITH BY THE ASSESSEE INASMUCH AS THE ASSESSING OFFICER HAS ALSO CONCLUDED THAT IT IS ONLY THE THIRD CONDITION WHICH HAS NOT BEEN COMPLIED WITH BY THE ASSESSEE. THEREFORE, WE PROCEED TO EXA MINE THE EFFICACY OF THE STAND OF THE REVENUE THAT IN THE PRESENT CASE THE T HIRD CONDITION PRESCRIBED IN SUB-SECTION (2) OF SECTION 271AAA OF THE ACT HAS BE EN COMPLIED WITH. ITA NO.1427/PN/2013 7. IN ORDER TO APPRECIATE THE CHARGE MADE BY THE AS SESSING OFFICER IT WOULD BE APPROPRIATE TO NOTICE THAT THE UNDISCLOSED INCOME OF RS.4,50,00,000/- DECLARED IN THE STATEMENT MADE U/S 132(4) OF THE ACT WAS OFFERED IN THE RETURN OF INCOME FILED ON 09.02.2011 . IN THE RETURN OF INCOME SO FILED THE TAX AND THE INTEREST PAYABLE WAS RS.1,31, 09,218/-. THE ASSESSEE HAD PAID AN AMOUNT OF RS.1,26,64,814/- AND IN RESPECT O F THE BALANCE, ASSESSEE CONTENDED THAT THE CASH OF RS.11,00,000/- SEIZED IN THE COURSE OF SEARCH BE TREATED AS ADVANCE TAX. THE AFORESAID CLAIM WAS MA DE IN THE RETURN OF INCOME AND THE COMPUTATION OF INCOME FILED. IT ALSO TRANS PIRES FROM THE ORDERS OF THE AUTHORITIES BELOW THAT ASSESSEE COMMUNICATED HIS RE QUEST TO THE ASSESSING OFFICER ON 11.01.2012 AND 29.01.2013 TO TREAT THE C ASH SEIZED IN THE COURSE OF SEARCH AS AN ADVANCE TAX PAYMENT. 8. AS PER THE ASSESSING OFFICER, THE CASH SO SEIZED COULD BE ADJUSTED AS TAX PAYMENT ONLY AFTER COMPLETION OF ASSESSMENT IN TERMS OF SECTION 132B OF THE ACT. THEREFORE, ACCORDING TO THE ASSESSING OFF ICER, CASH SEIZED COULD NOT BE CONSIDERED AS ADVANCE TAX PAYMENT, AS CLAIMED BY THE ASSESSEE. ON THIS BASIS, THE ASSESSING OFFICER PROCEEDED TO HOLD THAT ASSESSEE CANNOT BE SAID TO HAVE PAID THE TAX, TOGETHER WITH INTEREST, FULLY ON THE INCOME SURRENDERED IN A STATEMENT MADE U/S 132(4) OF THE ACT. THEREFORE, THE ASSESSING OFFICER CONCLUDED THAT ASSESSEE HAS NOT COMPLIED WITH THE T HIRD CONDITION PRESCRIBED IN CLAUSE (III) OF SUB-SECTION (2) OF SECTION 271AA A OF THE ACT. IN THE COURSE OF HEARING BEFORE US, THE LD. DEPARTMENTAL REPRESENTAT IVE HAS REITERATED THE AFORESAID STAND OF THE ASSESSING OFFICER. THE LD. DEPARTMENTAL REPRESENTATIVE HAS POINTED OUT THAT IN TERMS OF THE AMENDMENT TO SECTION 132B OF THE ACT BY THE FINANCE ACT, 2013 W.E.F. 01. 06.2013 THE EXISTING LIABILITY WILL NOT INCLUDE ADVANCE TAX LIABILITY AND THEREFOR E THE SEIZED CASH COULD ONLY BE CONSIDERED AS TAX AFTER COMPLETION OF ASSESSME NT. THEREFORE, ACCORDING TO THE LD. DEPARTMENTAL REPRESENTATIVE AS ON THE DA TE OF FILING OF THE RETURN OF ITA NO.1427/PN/2013 INCOME, ASSESSEE CANNOT BE SAID TO HAVE PAID THE TA X, TOGETHER WITH INTEREST, IN RESPECT OF THE UNDISCLOSED INCOME SURRENDERED IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. 9. PER CONTRA , THE LD. REPRESENTATIVE FOR THE RESPONDENT-ASSESSE E POINTED OUT THAT THE CIT(A) MADE NO MISTAKE IN DELETING THE PENALTY BY RELYING UPON THE RATIO OF THE JUDGEMENT OF THE HONBLE SUPREME C OURT IN THE CASE OF ACIT VS. GEBILAL KANHAIALAL HUF, 348 ITR 561 (SC). ACCO RDING TO THE LD. REPRESENTATIVE, THE HONBLE SUPREME COURT WAS CONSI DERING A SIMILAR CONDITION CONTAINED IN EXPLANATION 5 TO SECTION 271 (1)(C) OF THE ACT AND IT WAS HELD THAT THERE WAS NO TIME LIMIT PRESCRIBED FOR PA YMENT OF SUCH TAX AND EVEN IF IT IS ACCEPTED THAT THE SEIZED CASH IS TO BE ADJ USTED IN RESPECT OF THE LIABILITY AFTER COMPLETION OF ASSESSMENT, THEN ALSO THE CONDI TION LAID DOWN IN CLAUSE (III) OF SUB-SECTION (2) OF SECTION 271AAA OF THE ACT STA NDS FULFILLED. IN SUM AND SUBSTANCE, THE LD. REPRESENTATIVE FOR THE RESPONDEN T-ASSESSEE HAS RELIED UPON THE ORDER OF THE CIT(A) IN SUPPORT OF THE CASE OF THE ASSESSEE. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN OUR OPINION, THE CIT(A) MADE NO MISTAKE IN APPLYING THE RATIO OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GEBILAL KANHAIALAL HUF (SUPRA) WHILE EXAMINING THE CONDITION PRESCRIBED IN CLAUSE (III) OF SUB-SEC TION (2) OF SECTION 271AAA OF THE ACT IN THE PRESENT CASE. IN THE CASE BEFORE TH E HONBLE SUPREME COURT, ISSUE RELATED TO A PENALTY IMPOSED U/S 271(1)(C) OF THE ACT ON AN AMOUNT OF INCOME SURRENDERED BY THE ASSESSEE IN A STATEMENT R ECORDED U/S 132(4) OF THE ACT. CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1) (C) OF THE ACT PRESCRIBED IMMUNITY FROM LEVY OF PENALTY U/S 271(1)(C) OF THE ACT WITH RESPECT TO AN INCOME SURRENDERED IN A STATEMENT U/S 132(4) OF THE ACT. ONE OF THE CONDITIONS PRESCRIBED THEREIN IS TO THE EFFECT THAT ASSESSEE PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME . THE REVENUE HAD ITA NO.1427/PN/2013 CONTENDED BEFORE THE HONBLE SUPREME COURT THAT ASS ESSEE THEREIN HAD FAILED TO MAKE PAYMENT OF TAX IN TIME. IN THIS CONTEXT, T HE HONBLE SUPREME COURT NOTED THAT THE CONDITION DID NOT PRESCRIBE ANY TIME LIMIT FOR PAYMENT OF SUCH TAX AND THAT THE ONLY REQUIREMENT STIPULATED IN THE THIRD CONDITION WAS FOR THE ASSESSEE TO PAY TAX TOGETHER WITH INTEREST . FACTUALLY, IT WAS CLEAR THAT THE SAID CONDITION STOOD FULFILLED AS ASSESSEE HAD PAID TAX WITH INTEREST UPTO THE DATE OF PAYMENT. THEREFORE, THE HONBLE SUPREME CO URT HELD THE ASSESSEE WAS ENTITLED TO THE IMMUNITY FROM PAYMENT OF PENALT Y IN TERMS OF CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. IN THE PRESENT CASE TOO WHEREIN THE ISSUE RELATES TO LEVY OF PENALTY U/S 271AAA OF THE ACT, THE CONDITION PRESCRIBED IN CLAUSE (III) OF SUB-SECTION (2) OF SE CTION 271AAA OF THE ACT IS PARI- MATERIA TO THE THIRD CONDITION PRESCRIBED IN CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. THEREFORE, IN OUR CO NSIDERED OPINION THE RATIO OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE C ASE OF GEBILAL KANHAIALAL HUF (SUPRA) IS SQUARELY APPLICABLE IN THE PRESENT C ASE ALSO. 11. IN THIS BACKGROUND, EVEN IF WE WERE TO GO ALONG WITH THE STAND OF THE ASSESSING OFFICER THAT THE CREDIT FOR THE SEIZED CA SH COULD BE GIVEN FOR TAX LIABILITY ONLY AFTER COMPLETION OF ASSESSMENT YET I T FOLLOWS THAT THE ASSESSEE HAS PAID TAX WITH INTEREST AS REQUIRED BY CLAUSE (I II) OF SUB-SECTION (2) OF SECTION 271AAA OF THE ACT. THE PHRASEOLOGY OF CLAU SE (III) OF SUB-SECTION (2) OF SECTION 271AAA OF THE ACT IS PARI-MATERIA WITH THE THIRD CONDITION IN CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE AC T; AND, THEREFORE FOLLOWING THE RATIO OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GEBILAL KANHAIALAL HUF (SUPRA), THE CIT(A) MADE NO MISTAKE IN HOLDING THAT ASSESSEE HAS FULFILLED THE CONDITION OF CLAUSE (III) OF SUB- SECTION (2) OF SECTION 271AAA OF THE ACT AND ACCORDINGLY THE PENALTY OF RS.45,00,000 /- LEVIED BY THE ASSESSING OFFICER HAS BEEN JUSTIFIABLY CANCELLED. THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED. ITA NO.1427/PN/2013 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER, 2014. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 28 TH NOVEMBER, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE