ACIT, Central Circle - 2(3), Kolkata, Kolkata V. Vijay Kumar Agarwal, Kolkata

ITA 1539/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1086 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 28-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure
• Section: 143(3); 132

Judgement Text

ITA NO. 1539/KOL/2017 A.Y. 2013-2014 VIJAY KUMAR AGARWAL 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA D BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1539/KOL/2017 ASSESSMENT YEAR: 2013-2014 ASSISTANT COMMISSIONER OF INCOME TAX,.............. .....................APPELLANT CENTRAL CIRCLE-2(3), KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, E.M. BYE-PASS KOLKATA-700 107 -VS.- VIJAY KUMAR AGARWAL,............................... .................................RESPONDENT 97, TOLLYGUNGE CIRCULAR ROAD, NEW ALIPORE, KOLKATA-700 053 [PAN: ADCPA 9881 G] APPEARANCES BY: SHRI C.J. SINGH, SR. D.R. , FOR THE APPELLANT SHRI AMIT AGARWAL, ADVOCATE, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : NOVEMBER 20, 2018 DATE OF PRONOUNCING THE ORDER : NOVEMBER 30, 2018 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ):- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-20, KOLKATA DA TED 11.04.2017, WHEREBY HE RESTRICTED THE PENALTY IMPOSED BY THE AS SESSING OFFICER UNDER SECTION 271AAB OF THE INCOME TAX ACT, 1961 IN RESPE CT OF THE UNDISCLOSED INCOME OF RS.3,95,58,272/- ONLY TO THE EXTENT TO WH ICH IT WAS IN RESPECT OF THE UNDISCLOSED INCOME OF RS.17,58,272/-. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L. A SEARCH AND SEIZURE ACTION WAS CONDUCTED AT THE RESIDENCE OF TH E ASSESSEE ON 13.02.2013 AS WELL AS ON SUBSEQUENT DATES. DURING T HE COURSE OF THE SAID ITA NO. 1539/KOL/2017 A.Y. 2013-2014 VIJAY KUMAR AGARWAL 2 ACTION, THE ASSESSEE SURRENDERED HIS UNDISCLOSED IN COME TO THE EXTENT OF RS.3,95,58,272/- IN THE STATEMENT RECORDED UNDER SE CTION 132(4) OF THE ACT. THEREAFTER THE RETURN OF INCOME FOR THE YEAR U NDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 10.02.2014 DECLARING TOTAL INCOME OF RS.3,88,57,160/-. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 13.10.2015, THE ENTIRE INCOME OF RS. 3,95,58,272/- SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SE ARCH WAS BROUGHT TO TAX BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS UNDER SECTION 271AAB WERE ALSO INITIATED BY THE ASSESSING OFFICER AND SINCE THE EXPLANATION OFFERED BY THE ASSESSEE IN RESPONSE TO THE SHOW-CAUSE NOTICE ISSUED DURING THE COURSE OF THE SAID PROCEEDINGS WAS NOT FOUND SATISFACTORY BY HIM, THE ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271AAB OF THE ACT AT THE RATE OF 30% OF THE UNDISCLOSED INCOME ADMITTED AND SURRENDERED UND ER SECTION 132(4) OF THE ACT. 3. THE PENALTY IMPOSED BY THE ASSESSING OFFICER UND ER SECTION 271AAB WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECOR D, THE LD. CIT(APPEALS) RESTRICTED THE PENALTY IMPOSED BY THE ASSESSING OFF ICER UNDER SECTION 271AAB ONLY TO THE EXTENT IT WAS IN RESPECT OF THE UNDISCLOSED INCOME OF RS.17,58,272/- FOR THE FOLLOWING REASONS GIVEN IN H IS IMPUGNED ORDER:- I HAVE CONSIDERED THE FINDINGS GIVEN BY THE AO IN THE PENALTY ORDER AND SUBMISSIONS MADE BY THE AR DURING THE APPELLATE PROCEEDING. I FIND THAT THE AO HAS TA KEN THE UNDISCLOSED INCOME OF THE ASSESSEE ON THE AMOUN T DECLARED SUO MOTO BY THE ASSESSEE (FOR WHICH NO EVIDENCE, PAPERS / DOCUMENTS, STOCK, CASH ETC WERE FOUND DURING THE SEARCH OPERATION) IN ORDER TO BUY PEACE OF MIND AND AVOID ANY FURTHER LITIGATION. THE ASSESSEE HAS BROUGHT ON RECORD THE CASE LAW OF DILIP N SHROFF VS CIT (2007) 291 ITR 519 (SC). IN THIS CASE LAW THE HON'B LE SUPREME COURT HAS HELD THAT IMPOSITION OF PENALTY I S NOT AUTOMATIC. LEVY OF PENALTY IS NOT ONLY DISCRETIONAR Y IN NATURE, BUT SUCH DISCRETION IS REQUIRED TO BE EXERC ISED ON ITA NO. 1539/KOL/2017 A.Y. 2013-2014 VIJAY KUMAR AGARWAL 3 THE PART OF THE ASSESSING OFFICER KEEPING THE RELEV ANT FACTORS IN MIND. THE AR HAS ALSO BROUGHT ON RECORD THE CASE OF PUBJAB TYRES (PUBJAB TYRES [1986] 162 ITR 5 17 (MADHYA PRADESH), THE HON'BLE HIGH COURT OF MADHYA PRADESH) IN WHICH IT WAS HELD THAT WHEN SURRENDER I S MADE TO PURCHASE PEACE OR FOR OTHER SIMILAR REASON, SURRENDER CANNOT AMOUNT TO ADMISSION, CONSTITUTING EVIDENCE OF CONCEALMENT IN PENALTY PROCEEDINGS. I HAVE CONSIDERED THE FINDINGS GIVEN BY THE AO IN T HE PENALTY ORDER AND SUBMISSIONS MADE BY THE AR DURING THE APPELLATE PROCEEDING. I FIND THAT THE AO HAS TA KEN THE UNDISCLOSED INCOME OF THE ASSESSEE FOUND DURING THE SEARCH OPERATION U/S 132 (FOR WHICH EVIDENCES, DOCUMENTS/PAPERS, STOCK, CASH ETC WERE FOUND) ALONG WITH THE AMOUNT DECLARED SUO MOTO BY THE ASSESSEE ( FOR WHICH NO EVIDENCE, PAPERS/DOCUMENTS, STOCK, CASH ET C WERE FOUND DURING THE SEARCH OPERATION) IN ORDER TO BUY PEACE OF MIND AND AVOID ANY FURTHER LITIGATION. THE ASSESSEE HAS BROUGHT ON RECORD THE CASE LAW OF DILI P N SHROFF VS CIT (2007) 291 ITR 519 (SC). IN THIS CASE LAW THE HON'BLE SUPREME COURT HAS HELD THAT IMPOSITION OF PENALTY IS NOT AUTOMATIC. LEVY OF PENALTY IS NOT ON LY DISCRETIONARY IN NATURE, BUT SUCH DISCRETION IS REQ UIRED TO BE EXERCISED ON THE PART OF THE ASSESSING OFFICE R KEEPING THE RELEVANT FACTORS IN MIND. THE AR HAS AL SO BROUGHT ON RECORD THE CASE OF PUBJAB TYRES (PUBJAB TYRES [1986] 162 ITR 517 (MADHYA PRADESH), THE HON' BLE HIGH COURT OF MADHYA PRADESH) IN WHICH IT WAS HELD THAT WHEN SURRENDER IS MADE TO PURCHASE PEACE OR FOR OTH ER SIMILAR REASON, SURRENDER CANNOT AMOUNT TO ADMISSIO N, CONSTITUTING EVIDENCE OF CONCEALMENT IN PENALTY PROCEEDINGS. THE AR HAS BROUGHT ON RECORD THE CASE LAW OF SUDHAR SAN SILK AND SAREES, 300 ITR 30 (SUPREME COURT) IN THIS CASE, THE HON'BLE SUPREME COURT HAS HELD THAT IF THE APPE LLANT OFFERS ANY AMOUNT FOR TAXATION FOR THE PURPOSE OF PURCHASING PEACE AND ASSESSMENT HAS BEEN MADE BASED UPON THE AFORESAID OFFERINGS, EVEN IF NO ASSURANCE IN WRITING IS GIVEN BY THE SEARCHING PARTY, IT MAY BE CLEARLY INFERRED THAT SUCH AN INDUCEMENT MUST HAVE BEEN GIV EN BY THE SEARCHING PARTY. WHEN ONLY PARTIAL EVIDENCE OR NO EVIDENCE IN SUPPORT OF CONCEALMENT WAS DETECTED DUR ING THE SEARCH, WHY WOULD A PERSON GO TO OFFER A HIGHER AMOUNT UNLESS HE WAS PROMISED SOME RECIPROCAL BENEF ITS LIKE NOT BEING VISITED BY PENALTY. THUS, IT WAS HEL D THAT ITA NO. 1539/KOL/2017 A.Y. 2013-2014 VIJAY KUMAR AGARWAL 4 WHERE ADDITIONS HAVE BEEN MADE BASED ON ASSESSEE'S OWN OFFERINGS, PENALTY PROVISION SHALL NOT LIE. I FIND THAT DURING THE SEARCH AND SEIZURE OPERATION IX] S 132 IN THIS CASE EVIDENCES REGARDING CONCEALMENT/UNDISCLOSED INCOME IN THE FORM OF CASH SEIZURE / PAPERS / DOCUMEN TS / STOCK ETC WERE FOUN D AND SEIZED OF THE VALUE OF RS.17 ,58,272/ - ONLY. NOTHI NG INCRIMINATING/ NO EVIDENCES WERE FOUND REGARDING RS.3,78,00,000/- WHICH WAS OFFERED FOR TAXATION BY THE ASSESSEE SUO MOTO IN ORDER TO BUY PEACE OF MIND. I ALSO FIND THAT NEITHER THE OFFICERS IN THE INVESTIGATION WING IN THE POST SEARCH INVESTIGATION NOR THE ASSESSING OFF ICER DURING ASSESSMENT PROCESS FOUND ANY DISCRIMINATING EVIDENCE OF UNDISCLOSED INCOME OTHER THAN THE STATE MENT OF THE ASSESSEE FOR MAKING THE ADDITION OF RS.3,78,00,000/-. FURTHER I FIND THAT THE AO HAS LEVIED PENALTY U/S 271AAB(1)(C). THIS SECTION READS LIKE SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. THUS, IT IS CLEAR THAT IN ORDER TO LEVY PENALTY TWO THINGS ARE ESSENTIAL: (1) UNDISCLOSED INCOME AND (2) SPECI FIED PREVIOUS YEAR. HERE IN THIS CASE RS.3,78,00,000 / - WAS OFFERED FOR TAXATION BY THE ASSESSEE SUO MOTO IN TH E STATEMENT RECORDED AT THE TIME OF SEARCH. FROM THE RATIO DECIDED BY THE HON'BLE SUPREME COURT IN THE CASE OF SUDARSHAN SILK & SARIES (SUPRA), IT IS CLEAR THAT O NLY THE STATEMENT OF THE ASSESSEE WITHOUT ANY CORROBORATING EVIDENCE CANNOT BE THE ONLY BASIS FOR LEVYING PENAL TY. HERE IT IS ALSO CLEAR THAT FROM THE STATEMENT OF TH E ASSESSEE ONE CANNOT POINT OUT WHICH AMOUNT OF UNDISCLOSED INCOME PERTAINS TO WHICH SPECIFIED PREV IOUS YEAR. IN THIS SITUATION, WHERE NOTHING IS CLEAR FRO M ASSESSEES STATEMENT RECORDED AT THE TIME OF SEARC H, THE ACTION OF THE AO TO LEVY PENALTY U/S 271AAB(I)(C) O N THE AMOUNT OFFERED BY THE ASSESSEE SUO MOTO TO BUY PEAC E OF MIND, CANNOT BE JUSTIFIED. THE HON'BLE SUPREME COUR T HAS ALSO CATEGORICALLY DECIDED THE RATIO THAT PENAL TY CANNOT BE LEVIED ON THE AMOUNT OFFERED BY THE ASSES SEE IN ORDER TO BUY PEACE OF MIND [IN THE CASE OF SUDAR SHAN SILK & SARIES (SUPRA)]. THUS, RESPECTFULLY FOLLOWIN G THE RATIO DECIDED BY THE HON'BLE SUPREME COURT, THE AO IS DIRECTED TO CALCULATE AND LEVY PENALTY U/S 271AAB(I )(C) ON RS.17,58,272/- ONLY. ACCORDINGLY, ASSESSEE'S APP EAL ON GROUNDS NO 1 AND 2 ARE PARTLY ALLOWED. ITA NO. 1539/KOL/2017 A.Y. 2013-2014 VIJAY KUMAR AGARWAL 5 AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE BEFORE US HAS RAISED A PRELIMINARY ISSUE THAT THE P ENALTY PROCEEDINGS HAVING BEEN INITIATED BY THE ASSESSING OFFICER AGAI NST A DEAD PERSON, INITIATION ITSELF WAS BAD-IN-LAW AND THE PENALTY IM POSED UNDER SECTION 271AAB IS NOT SUSTAINABLE. HE HAS POINTED OUT THAT THE NOTICE INITIATING PENALTY PROCEEDINGS UNDER SECTION 271AAB WAS ISSUED BY THE ASSESSING OFFICER ON 13.10.2015 IN THE NAME OF THE ASSESSEE, WHO HAD ALREADY EXPIRED ON 29.04.2015. HE HAS FILED A COPY OF THE R ELEVANT DEATH CERTIFICATE AND CONTENDED THAT THE PENALTY NOTICE T HUS WAS ISSUED BY THE ASSESSING OFFICER IN THE NAME OF A DEAD PERSON, WHI CH IS NOT ENFORCEABLE IN LAW. SINCE THIS CONTENTION OF THE LD. COUNSEL FO R THE ASSESSEE IS DULY SUPPORTED BY THE DECISION OF THE HONBLE MADRAS HIG H COURT IN THE CASE OF ALAMELU VEERAPPAN VS.- ITO (2018) 95 TAXMANN.COM 1 55 (MADRAS), WE ACCEPT THE SAME AND HOLD THAT THE PENALTY PROCEEDIN GS INITIATED BY THE ASSESSING OFFICER AGAINST A DEAD PERSON WAS NOT ENF ORCEABLE IN LAW AND THE PENALTY IMPOSED UNDER SECTION 271AAB IN PURSUAN CE OF SUCH INVALID INITIATION IS NOT SUSTAINABLE. WE ACCORDINGLY UPHOL D THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ALTHOUGH ON A DIFFERENT GRO UND AND DISMISS THIS APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 30, 2018. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER VICE -PRESIDENT (KZ) KOLKATA, THE 30 TH DAY OF NOVEMBER, 2018 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, E.M. BYE-PASS, KOLKATA-700 107 ITA NO. 1539/KOL/2017 A.Y. 2013-2014 VIJAY KUMAR AGARWAL 6 (2) SHRI VIJAY KUMAR AGARWAL, 97, TOLLYGUNGE CIRCULAR ROAD, NEW ALIPORE, KOLKATA-700 053 (3) COMMISSIONER OF INCOME TAX (APPEALS)-20, KOLK ATA, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.