B Rajeswara Rao, Hyderabad V. ACIT., Central Circle-1, Hyderabad

ITA 1532/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91708 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: P RAVI SESHAGIRI RAO
• Keywords: Search and seizure; Block assessment; Reassessment proceedings
• Section: 153A; 147; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA.NO. A.Y. APPELLANT RESPONDENT 1531/H/2014 2003-04 MR. B. RAJESWARA RAO, HYDERABAD PANAEUPB6934J THE ACIT, CENTRAL CIRCLE- 1, HYDERABAD. 1532/H/2014 2004-05 1533/H/2014 2005-06 1534/H/2014 2006-07 FOR ASSESSEE : MR. P. RAVISESHAGIRI RAO FOR REVENUE : MR. R. CLEMENT RAMESH KUMAR DATE OF HEARING : 28.05.2015 DATE OF PRONOUNCEMENT : 29.05.2015 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. : THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-1, HYDERABAD DATED 31.07.20 14 FOR THE A.YS. 2003-04 TO 2006-2007. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THE APPEALS ARE HEARD TO GETHER AND ARE BEING DISPOSED OF BY SINGLE CONSOLIDATED ORDER. 2. THE FACTS OF THE CASE IN BRIEF AS APPEARING FROM THE PENALTY ORDER ARE THAT DURING THE COURSE OF SEA RCH, IT WAS FOUND THAT THE APPELLANT AND HIS FAMILY MEMBERS HAVE CERTAIN UNDISCLOSED INCOME. IN HIS STATEMENT, THE APPELLANT STATED THAT CONSIDERING THE ISSUES EMANAT ING FROM THE SEIZED MATERIAL AND TIME FACTOR INVOLVED, A SUM OF RS.266.92 LAKHS WAS OFFERED FOR THE A.YS. 2003-0 4 TO 2007-08. THE SAID INCOME COMPRISED OF DEPOSITS AND INTEREST THEREON KEPT IN KRANTHI COOPERATIVE BANK. A SUM 2 ITA.NO.1531 TO 1534/HYD/2014 MR. B. RAJESWARA RAO, HYDERABAD. OF RS.3,27,941 FOR A.Y. 2003-04, RS.9,40,OOO FOR A. Y. 2004-05, RS.I0,39,015 FOR A.Y. 2005-06 AND RS.1,00, 000 FOR A.Y. 2006-07 WAS OFFERED AS INCOME FROM UNDISCL OSED SOURCES. THE INCOME HAS BEEN DETECTED CONSEQUENT TO THE SEARCH AND THE APPELLANT HAS NOT FILED HIS RETURNS OF INCOME OFFERING THE ABOVE INCOME ORIGINALLY. SINCE THE INCOME IS OFFERED AS A CONSEQUENCE TO THE DETECTION DURING THE COURSE OF POST SEARCH, THE CONDITIONS LA ID DOWN IN SUB-SECTION (1)(C), EXPLANATION-1 AND 5A AR E SATISFIED AND THEREFORE THE ASSESSING OFFICER TREAT ED THE ASSESSEE AS ASSESSEE IN DEFAULT FOR THE PURPOSE OF SECTION 271(1)(C) AND LEVIED THE PENALTY. 3. DURING THE COURSE OF APPEAL PROCEEDINGS BEFORE THE LD. CIT(A), THE AUTHORIZED REPRESENTATIVE OF TH E ASSESSEE SUBMITTED AS FOLLOWS. THAT THE ORIGINAL RE TURNS OF INCOME WERE FILED IN ACCORDANCE WITH THE PROVISI ONS OF SECTION 139 OF THE ACT. ACCORDING TO THE SECOND PRO VISO TO SUB-SECTION (1) OF SEC.153A, WHERE THERE WAS INITIA TION OF PROCEEDINGS AFTER SEARCH U/S.132, THE ASSESSMENT FO R THE SIX ASSESSMENT YEARS PRIOR TO THE FINANCIAL YEAR DU RING THE COURSE OF WHICH SEARCH WAS CONDUCTED SHALL ABAT E. THEREFORE, ALL THE PROCEEDINGS INCLUDING THE RETURN S OF INCOME FILED GET ABATED AND THERE WOULD NOT BE ANY PROCEEDINGS PENDING. THEREFORE, THE ASSESSING OFFIC ER CANNOT CONSIDER THE RETURNS OF INCOME PENDING AS ON THE DATE OF SEARCH FOR LEVYING OF PENALTY. 3.1. IT WAS FURTHER SUBMITTED BY THE LD. AUTHORISE D REPRESENTATIVE BEFORE THE LD. CIT(A) THAT IN SO FAR AS THE PROCEEDINGS U/S.153A ARE CONCERNED, THE ASSESSEE ADMITTED THE INCOMES AS MENTIONED ABOVE AND THE 3 ITA.NO.1531 TO 1534/HYD/2014 MR. B. RAJESWARA RAO, HYDERABAD. ASSESSING OFFICER ACCEPTED THE INCOMES ADMITTED. THEREFORE, THERE IS NO CONCEALMENT OF INCOME DURING THE COURSE OF PROCEEDINGS U/S.153A OF THE ACT. AS ALL T HE PROCEEDINGS PENDING PRIOR TO THE DATE OF SEARCH GET ABATED THE MOMENT SEARCH WAS CONDUCTED, THE EARLIER RETURN S OF INCOME CANNOT BE CONSIDERED FOR THE PURPOSE OF ARRI VING AT THE CONCEALMENT. IN SO FAR AS THE RETURNS OF INC OME FILED IN RESPONSE TO NOTICE U/S.153A IS CONCERNED, THE SAME WAS ACCEPTED AND THEREFORE, THERE IS NO CONCEALMENT OF INCOME. 3.2. WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT HE ACCEPTED FO R ADMISSION OF ADDITIONAL INCOME DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS ITSELF. SUCH AMOUNT WAS ADMI TTED IN THE RETURNS OF INCOME FILED IN RESPONSE TO NOTIC E U/S.153A OF THE ACT. THE PENALTY PROCEEDINGS WERE I NITIATED DURING THE ASSESSMENT PROCEEDINGS U/S.153A OF THE A CT THOUGH THERE WAS NO CONCEALMENT. IN SUPPORT OF ITS CONTENTION THE ASSESSEE RELIED ON THE DECISION OF S UPREME COURT IN THE CASE OF CIT VS SURESH CHANDRA MITTAL R EPORTED IN 251 ITR 9 AND ALSO THE DECISION OF COORDINATE BE NCH OF HYDERABAD TRIBUNAL IN THE CASE OF K.DEEDAR AHMED VS ITO REPORTED IN 97 ITD 240. 3.4. THE LD. CIT(A) AFTER HEARING THE SUBMISSIONS OF THE AUTHORISED REPRESENTATIVE HELD AS UNDER : 07.1. SINCE THE ORIGINAL RETURN WAS FILED BEFORE THE DATE OF SEARCH AND THE INCOME OFFERED IN THE RETURN FILED U/S.1S3A HAS NOT BEEN DECLARED IN THAT ORIGINAL RETURN, BY VIRTUE OF EXPLANATION SA, THE APPELLANT SHALL BE DEEMED TO HAVE CONCEALED THE 4 ITA.NO.1531 TO 1534/HYD/2014 MR. B. RAJESWARA RAO, HYDERABAD. PARTICULARS OF HIS INCOME AND ACCORDINGLY, IT DOES NOT ALTER THE POSITION EVEN IF THERE IS NO CHANGE IN THE INCOME ADMITTED IN RETURN U/S.153A AND THE FINAL ASSESSMENT ORDER. THE INCOME HAS BEEN DETECTED CONSEQUENT TO THE SEARCH AND THE APPELLANT HAS NOT FILED HIS RETURNS OF INCOME OFFERING THE ABOVE INCO ME ORIGINALLY. SINCE THE INCOME IS OFFERED AS A CONSEQ UENCE TO THE DETECTION DURING THE COURSE OF POST SEARCH, THE CONDITIONS LAID DOWN IN SUB-SECTION (L)(C), EXPLANA TION-L AND 5A ARE VERY MUCH APPLICABLE TO THE APPELLANT AN D THE ASSESSING OFFICER HAS RIGHTLY LEVIED THE PENALT Y U/S. 271(1)(C). IN VIEW OF THE ABOVE, THE PENALTY LEVIED U/S.271(1)(C) BY THE A.O. FOR A.YS. 2003-04 TO 2006 -07 IS CONFIRMED. 4. AGGRIEVED, THE ASSESSEE FILED THE PRESENT APPEA LS BEFORE THE TRIBUNAL AND HAS RAISED A SOLITARY GROUN D IN ALL THE ASSESSMENT YEARS UNDER CONSIDERATION THAT THE LD. C IT(A) HAS ERRED IN CONFIRMING LEVY OF PENALTY UNDER SECTION 2 71(1)(C) OF THE I.T. ACT, 1961. 5. THE LEARNED D.R. ON THE OTHER HAND HAS RELIED O N THE ORDERS OF LD. CIT(A) AND A.O. 6. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE S OLITARY ISSUE IN THE PRESENT APPEALS IS SQUARELY COVERED BY THE O RDER OF THE COORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF MR. KIRAN SHAH VS. ACIT, CENTRAL 15 & 16, MUMBAI IN ITA.NO.59 19 TO 5925/MUM/2011 DATED 08.01.2014 WHEREIN THE TRIBUNAL WHILE ALLOWING THE APPEALS OF THE ASSESSEE HELD AS UNDER : 13. . IT WOULD BE PERTINENT TO REFER TO THE DECIS ION OF THE DELHI BENCH IN THE CASE OF PREM ARORA VS. DCIT (SUPRA) WHEREIN IT HAS BEEN HELD AS UNDER : ON BARE READING OF SECTION 153A IT IS SEEN THAT TH IS SECTION STARTS WITH A NON OBSTANTE CLAUSE RELATING TO NORMAL ASSESSMENT PROCEDURE COVERED BY SECTIONS 139 , 5 ITA.NO.1531 TO 1534/HYD/2014 MR. B. RAJESWARA RAO, HYDERABAD. 147, 148, 149, 151 AND 153 IN RESPECT OF SEARCHES M ADE AFTER 31.5.2003. THE SECTIONS, SO EXCLUDED, RELATE TO FILING OF RETURN, ASSESSMENT AND REASSESSMENT PROCEEDINGS. FURTHER, SECTION 153A INTENDS TO ASSESS OR REASSESS TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDIN G THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MA DE. THUS, THE LEGISLATIVE INTENTION IS NOT TO ASSESSEE ESCAPED INCOME AS IN SECTION 147 OR UNDISCLOSED INCOME AS W AS ASSESSED U1S. 158BC. THE FIRST PROVISO TO SEC. 153A MAKES IT CLEAR THAT NOTICE U/S. 153A WILL BE FOR EA CH OF SUCH SIX ASSESSMENT YEARS FOR ASSESSMENT OR RE- ASSESSMENT OF TOTAL INCOME. SECOND PROVISO TO SECTI ON 153A PROVIDES THAT SUCH NOTICE WILL HAVE THE EFFECT OF ABATING ALL THE PENDING ASSESSMENT OR REASSESSMENT PROCEEDINGS, SO AS TO AVOID MULTIPLICITY OF PROCEED INGS, WHICH WAS A FEATURE OF BLOCK ASSESSMENT. THUS, THERE IS COMPLETE DETACHMENT OF ASSESSMENT PROCEEDINGS U/S. 143 OR 147 FROM SEARCH PROCEEDINGS U/S. 153A. WHEN SCHEME OF SEARCH ASSESSMENT AS DESIGNED BY THE LEGISLATURE DOES NOT PRESCRIBE TO T AKE INTO ACCOUNT THE EARLIER ASSESSMENT PROCEEDINGS WHETHER ABATED OR NOT, IT WILL NOT BE PROPER OR JUSTIFIED T O REFER TO RETURNED INCOME U/S. 139 FOR THE PURPOSE OF IMPOSIT ION OF PENALTY U/S. 271 (1)(C). IT FOLLOWS THAT THE CONCEA LMENT OF INCOME HAS TO BE SEEN WITH REFERENCE TO ADDITIONAL INCOME BROUGHT TO TAX OVER AND ABOVE INCOME RETURNED BY TH E ASSESSEE IN RESPONSE TO NOTICE ISSUED U/S. I53A. ACCORDINGLY, FOR THE PURPOSE OF IMPOSITION OF PENAL TY U/S.271(1)(C) RESULTING AS A RESULT OF SEARCH ASSES SMENTS MADE U/S. 153A, THE ORIGINAL RETURN OF INCOME FILED U/S. 139 CANNOT BE CONSIDERED. FURTHER, IN CASE OF SEARCH INITIATED AFTER 1.6.2003 A RETURN OF INCOME IS ALWAYS FILED ON ISSUE OF NOTICE U/S. 153A . AS HELD ABOVE THE PENALTY U/S. 271(1)(C) IS IMPOSSIBLE WHEN THERE IS VARIATION IN ASSESSED AND RETURN INCOME. IF THERE I S NO VARIATION, THERE WILL BE NO CONCEALMENT. WHEN THERE IS NO CONCEALMENT, QUESTION OF LEVY OF PENALTY U/S. 271(1 )(C) WILL NOT ARISE. THIS IS SETTLED POSITION OF LAW. THE CON CEPT OF VOLUNTARY RETURN OF INCOME MAY BE IMPORTANT IN PENA LTY PROCEEDINGS INITIATED IN COURSE OF NORMAL ASSESSMEN T PROCEEDINGS MADE U/S.1 43(3) OR 147 BUT NOT UNDER SECTION 153A. FROM ABOVE DISCUSSION IT FOLLOWS THAT WHERE R ETURNED INCOME FILED UNDER SECTION 153A IS ACCEPTED BY THE AO, THERE WILL BE NO CONCEALMENT OF INCOME AND, CONSEQUENTLY, PENALTY 6 ITA.NO.1531 TO 1534/HYD/2014 MR. B. RAJESWARA RAO, HYDERABAD. U/S. 271(1)(C) CANNOT BE IMPOSED. 14. . 15. 15.1.. 15.2. CONSIDERING THE FACTS UNDER APPEAL WITH THE J UDICIAL DECISIONS RELIED UPON AND CITED HEREINABOVE, WE DO NOT FIND ANY SUBSTANCE FOR THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. THE A.O. IS DIRECTED TO DELETE THE PENALTY SO LEVIED IN ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. THE APPEA LS FILED BY THE ASSESSEE FOR ALL THE ABOVE ASSESSMENT YEARS ARE ALLOWED. 7. RESPECTFULLY FOLLOWING THE ORDER OF THE COORDIN ATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF MR. KIRAN SHA H (SUPRA), WE ALLOW THE APPEALS OF THE ASSESSEE BY DELETING TH E PENALTY LEVIED FOR ALL THE ASSESSMENT UNDER CONSIDERATION I.E., A. YS. 2003-04 TO 2006-07. 8. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.05.2015. SD/- SD/- (INTURI RAMA RAO) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 29 TH MAY, 2015 VBP/- COPY TO 1. MR. B. RAJESWARA RAO, HYDERABAD C/O. MR. S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. THE ACIT, CENTRAL CIRCLE-1, AAYAKAR BHAVAN, BASH EER BAGH, HYDERABAD. 3. CIT(A)-I, HYDERABAD 4. CIT-(CENTRAL), HYDERABAD 5. D.R. I.T.A.T. B BENCH, HYDERABAD. 6. GUARD FILE