ACIT, Central Circle-2(3), Kolkata, Kolkata V. M/s Badrinath Infrastructure pvt. Ltd., Kolkata

ITA 154/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5879 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 31-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Revised return
• Section: 27; 132

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 154 / KOL / 20 17 ASSESSMENT YEAR :2013-14 ACIT, CENTRAL CIRCLE- 2(3), ROOM NO. 403, 4 TH FLOOR, AAYAKAR BHAWAN, POORVA, 110, SHANTI PALLY; E.M. BYE-PASS, KOLKATA-107 V/S . M/S BADRINATH INFRASTRUCTURE PVT. LTD., 107, PARK STREET, KOLKATA-16 [ PAN NO.AACCV 5513 E ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI P.K. SRIHARI, CIT-DR /BY RESPONDENT NONE /DATE OF HEARING 09-07-2018 /DATE OF PRONOUNCEMENT 27-07-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2013-14 C HALLENGES THE COMMISSIONER OF INCOME TAX (APPEALS)-20, KOLKATAS ORDER DATED 08.11.2016, PASSED IN CASE NO.1136/CIT(A)-20/CC-2(3)/15-16, REV ERSING ASSESSING OFFICERS ACTION IMPOSING PENALTY OF 85,97,925/- IN HIS ORDER DATED 29.09.2015, INVOLVING PROCEEDINGS U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. HEARD LEARNED CIT DEPARTMENTAL REPRESENTATIVE VE HEMENTLY CONTENDING THAT THE CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE IMPUGNED IMPOSED PENALTY BY THE ASSESSING OFFICER T HEREBY INVOKING SECTION 271(1)(C) EXPLANATION 5A OF THE ACT. CASE FILE PERU SED. ITA NO.154/KOL/2017 A.Y 2013-14 ACIT, CC-2(3), KOL. VS. M/S BADRINATH IN FRASTRUCTURE PVT. LTD. PAGE 2 3. WE ADVERT TO THE RELEVANT FACTS. THERE IS NO DIS PUTE ABOUT THE IMPUGNED SEARCH DATED 13.02.2013 CARRIED OUT IN ASSESSEES C ASE I.E. M/S AGARWAL GOURISARIA GROUP. HE APPEARS TO HAVE MADE HIS DISCL OSURE OF 2,65,00,000/- DURING THE COURSE THEREOF IN HIS SEARCH STATEMENT R ECORDED U/S 132(4) OF THE ACT. THE ASSESSING OFFICER FRAMED HIS ASSESSMENT ON 31.03.2015 ACCEPTING THE ABOVE UNDISCLOSED INCOME. HE FURTHER LEVIED THE IMPUGNED PENALTY OF 85,97,925/- IN HIS ORDER DATED. 29.09.2015 AFTER HO LDINGS THAT THE ABOVE UNDISCLOSED INCOME ATTRACTED SECTION 271(1)(C) EXPL ANATION 5A OF THE ACT CONTAINING THE DEEMING FICTION OF CONCEALMENT OF PA RTICULARS AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME QUA THE ABOVE UNDISCLOSED INCOME. 4. THE CIT(A) REVERSES THE ASSESSING OFFICERS ACTI ON IMPOSING THE IMPUGNED PENALTY AS FOLLOWS:- THE AO IN THE ASSESSMENT ORDER HAS LEVIED PENALTY U /S. 271(1)(C) BY GIVING HIS FINDINGS AS UNDER:- THE ASSESSEE ATTRACTS THE CONDITIONS CONTAINED IN E XPLNATION-5 TO THE SECTION 271(1)(C)OF THE INCOME TAX ACT, 1961 FOR IMPOSITION OF PENALTY. IT IS SEEN FROM RECORDS THAT THE SAME HAS BEEN TAKEN INTO ACCOUNT B Y THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD OTHER BUSINESS INCOME . HENCE, IT IS FIT CASE FOR IMPOSING PENALTY U/S.271(1)(C) DURING THE APPELLATE PROCEEDINGS THE AR HAS MADE OR AL SUBMISSIONS AND ALSO FILED WRITTEN SUBMISSIONS WHICH ARE AS UNDER: WE RE-ITERATE THAT SUCH OFFERING OF RS.2,65,00,000 /- WAS MADE SUO MOTO AND TO BUY PEACE AND AS SUCH NO PENALTY U/S. 2 71(1)(C) SHOULD BE IMPOSED. THE SIMILAR VIEW HAS ALSO BEEN EXPRESSED B Y THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF GIRISH DEVCHAN D RAJANI [2013] 33 TAXMANN.COM 174(GUJARAT) WHERE IT HAD BEEN HELD THA T WHERE ASSESSEE TO BUY PEACE AND TO AVOID PROTRACTED LITIG ATION FILED REVISED RETURN DISCLOSING ADDITIONAL INCOME, IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) UPON ASSESSEE ON PLEA THAT HE HAD FURNISH ED INACCURATE PARTICULARS OF INCOME WAS NOT JUSTIFIED. FURTHER, IN THE CASE OF PUNJAB TYRES [1986] 162 IT R 517 (MADHYA PRADESH), THE HON'BLE HIGH COURT OF MADHYA PRADESH ALSO HELD THAT WHEN SURRENDER IS MADE TO PURCHASE PEACE OR FOR OTH ER SIMILAR REASON, SURRENDER CANNOT AMOUNT TO ADMISSION, CONSTITUTING EVIDENCE OF CONCEALMENT IN PENALTY PROCEEDINGS. WE ALSO RELY ON THE JUDGEMEKNT OF THE SUPREME COURT OF INDIA IN THE CASE OF DILIP N. SHROFF V.JT. CIT [2007] 291 ITR 51 9 ()SC) WHEREIN IT WAS HELD THAT IMPOSITION OF PENALTY IS NOT AUTOMATI C. LEVY OF PENALTY IS NOT ONLY DISCRETIONARY IN NATURE, BUT SUCH DISCRETI ON IS REQUIRED TO BE ITA NO.154/KOL/2017 A.Y 2013-14 ACIT, CC-2(3), KOL. VS. M/S BADRINATH IN FRASTRUCTURE PVT. LTD. PAGE 3 EXERCISED ON THE PART OF THE ASSESSING OFFICER, KEE PING THE RELEVANT FACTORS IN MIND. IN THIS REGARD, WE WOULD LIKE TO STATE THAT ASSESSM ENT HAS BEEN COMPLETED BASED ON THE EXPLANATIONS GIVEN AND DOCUM ENTS PRODUCED DURING THE COURSE OF ASSESSMENT WITHOUT MAKING ANY FURTHER ADDITION ON THE GROUND OF DISCLOSURE. WE HAD BEEN A CO-OPERA TIVE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. I HAVE CONSIDERED THE FINDINGS OF THE AO AND THE WR ITTEN SUBMISSIONS ORAL SUBMISSION AS WELL AS VARIOUS CASE LAWS BROUGHT ON RECORD BY THE AR. I FIND THAT DURING THE SEARCH OPERATION NO EVIDENCE, DOCUM ENTS/PAPERS REGARDING CONCEALED INCOME WERE FOUND. BUT IN ORDER TO BUY PE ACE OF MIND THE ASSESSEE VOLUNTARILY OFFERED RS.265000000/-. DURING THE POS SEARCH INVESTIGATION OR DURING THE ASSESSMENT PROCEEDING T HE DEPARTMENT COULD NOT BRING/FIND ANY EVIDENCE OR PROVE OF CONCEALED INCOM E OTHER THAN THE STATEMENT OF THE ASSESSEE IN WHICH THE ASSESSEE VOL U9NTARILY OFFERED RS.26500000/- IN ORDER TO BUY PEACE OF MIND. BUT TH E AO HAS TREATED THIS AMOUNT AS CONCEALED INCOME AND LEVIED PENALTY THERE ON THOUGH NO EVIDENCE/INCRIMINATING DOCUMENTS HAVE BEEN FOUND OR BROUGHT ON RECORD BY THE AO. FURTHER THE AO HAS REFERRED TO EXPLANATION- 5A TO SECTION 271(1)(C). EXPLANATION 5A TO SECTION 271(1)(C) READS AS UNDER: - WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SE CTION 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUDU8ND TO BE THE OWNER OF- I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSET S) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PR EVIOUS YEAR; OR II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF A CCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH E NTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEA R, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND- A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEA R HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR B) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN NOTWITHSTANDING THAT SUCH INCOME IS DECLARED B Y HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENAL TY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION, BE D EEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME IT IS CLEAR FROM THE PLAIN READING OF EXPLANATION 5 A TO SECTION 271(1)(C) THAT TWO PRE-REQUISITES ARE ESSENTIAL 1) FOR ANY PREVIOUS YEAR MONEY, BULLION, JEWELLERY OR OTHER VALUABLE THINGS SHOULD BE CLAIMED AS INCOME BY THE ASSESSEE. ITA NO.154/KOL/2017 A.Y 2013-14 ACIT, CC-2(3), KOL. VS. M/S BADRINATH IN FRASTRUCTURE PVT. LTD. PAGE 4 2) ANY INCOME BASED ANY ENTRY IN BOOKS OF ACCOUNT S HOULD BE CLAIMED/REPRESENT INCOME OF THE ASSESSEE. HERE IN THIS CASE DURING THE SEARCH NO MONEY, BULLI ON, JEWELLERY OR ANY INCOME BASED ON ENTRY IN THE BOOKS OF ACCOUNT WAS FOUND DU RING SEARCH OPERATION U/S. 132 OF THE IT ACT, SO THE APPLICATION OF EXPLA NATION 5A TO SECTION 271(1)(C) IS NOT APPLICABLE HERE. FURTHER THE AR HAS BROUGHT ON RECORD THE CASE LAW OF SUDHARSAN SILK AND SAREES, 300 ITR 30 (SUPREME COUR T) IN THIS CASE, THE HON'BLE SUPREME COURT HAS HELD THAT IF THE APPELLAN T OFFERS ANY AMOUNT FOR TAXATION FOR THE PURPOSE OF PURCHASING PEACE AND AS SESSMENT HAS BEEN MADE BASED UPON THE AFORESAID OFFERINGS, EVEN IF NO ASSU RANCE IN WRITING IS GIVEN BY THE SEARCHING PARTY, IT MAY BE CLEARLY INFERRED THA T SUCH AN INDUCEMENT MUST HAVE BEEN GIVEN BY THE SEARCHING PARTY. WHEN ONLY P ARTIAL EVIDENCE OR NO EVIDENCE IN SUPPORT OF CONCEALMENT WAS DETECTED DUR ING THE SEARCH, WHY WOULD A PERSON GO TO OFFER A HIGHER MOUNT UNLESS HE WAS PROMISED SOME RECIPROCAL BENEFITS LIKE NOT BEING VISITED BY PENAL TY. THUS, IT WAS HELD THAT WHERE ADDITIONS HAVE BEEN MADE BASED ON ASSESSEES OWN OFFERINGS, PENALTY PROVISION SHALL NOT LIE. I HAVE CONSIDERED FINDINGS OF THE AO IN THE PENALTY ORDER AND THE LEGAL POSITION AS WELL AS VARIOUS CAS E LAWS BROUGHT ON RECORD BY THE AR. I THINK THE AO IN THE PENALTY ORDER AND THE LEGAL POSITION AS WELL AS VARIOUS CASE LAWS BROUGHT ON RECORD BY THE AR. I TH INK THE AO HAS NOT APPLIED. EXPLANATION 5A TO SECTION 271(1)(C) APPROP RIATELY HERE IN THIS CASE. FURTHER THE RATIO DECIDED BY THE HON'BLE SUPREME CO URT IN THE CASE OF SUDHARSANA SILK AND SAARIES (SUPRA) THAT ON THE AMO UNT OFFERED BY THE ASSESSEE TO PURCHASE PEACE OF MIND, PENALTY CANNOT BE LEVIED, CLEARLY MAKES IT A CASE WHERE THE ACTION OF THE AO OF LEVYING PEN ALTY U/S. 271(1)((C) CANNOT BE JUSTIFIED. ACCORDINGLY, ASSESSEES APPEAL ON GRO UNDS NO 1, 2 AND 3 ARE ALLOWED. 5. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE VEHEMENTLY SEEKING TO REVIVE THE IMPUGNED PENALTY. HE RELIES T O RELY UPON THE ASSESSEES SEARCH STATEMENT SO AS TO INVOKE TO U/S 271(1)(C) E XPLANATION 5A OF THE ACT ON THE GROUND THAT THE SAID UNDISCLOSED INCOME IS A CL EAR-CUT CASE OF APPLICATION OF DEEMING FICTION THEREIN. WE FIND NO SUBSTANCE IN REVENUES INSTANT ARGUMENT. WE MAKE IT CLEAR THAT WE ARE DEALING WITH A PENALTY PROVISION IN TAX STATUTE LIABLE TO BE STRICTLY CONSTRUED. THE REVENU E HAS GOT NO MATERIAL OR EVIDENCE APART FROM ASSESSEES SEARCH STATEMENT QUA HIS UNDISCLOSED INCOME. LEGISLATURE HAS MADE IT CLEAR IN SECTION 27 1(1)(C) EXPLANATION- 5A(1)(III) THAT THE SAME IS APPLICABLE IN CASE AN A SSESSEE IS FOUND TO BE OWNER OF MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTI CLE OR THING ACQUIRED BY UTILIZING SUCH AN INCOME OR ANY ENTRY IN BOOKS OF A CCOUNT OR DOCUMENTS ONLY AND NOT OTHERWISE. THERE IS NO MATERIAL IN THE CASE FILE INDICATING THE SAID ITA NO.154/KOL/2017 A.Y 2013-14 ACIT, CC-2(3), KOL. VS. M/S BADRINATH IN FRASTRUCTURE PVT. LTD. PAGE 5 CRUCIAL CONDITIONS TO HAVE BEEN SATISFIED AT THE RE VENUES BEHEST WHILST INVOKING THE IMPUGNED PENALTY PROVISION. THIS FORMS THE SOLE REASON FOR THE CIT(A) TO REVERSE THE ASSESSING OFFICERS ACTION IM POSING THE PENALTY IN QUESTION. WE DO NOT INTERFERE WITH THE CIT(A)S WEL L REASONED FINDINGS THEREFORE. THE REVENUE FAILS IN ITS SOLE SUBSTANTIV E GROUND RAISED IN THE INSTANT APPEAL. 6. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 27/07/2018 SD/- SD/- ( %) (' %) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 27 / 07 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ACIT, CENTRAL CIRCLE-2(3), ROOM NO.403, 4 TH FLOOR, AAYAKAR BHAWAN POORVA, 110, SHAN TI PALLY; E.M. BYE-PASS, KOLKATA-107 2. /RESPONDENT-M/S BADRINATH INFRASTRUCTURE PVT. LTD. 107, PARK STREET, KOLKATA-16 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,