Income-tax Officer, V. Shri Ketan Vinodkumar Shah, Jalna

ITA 157/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7149 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 04-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NIRUPAMA KOTRU
• Keywords: Income from undisclosed sources; Loose papers
• Section: 142(1); 153A; 132; 144

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.157/PUN/2016 / ASSESSMENT YEAR : 2005-06 INCOME - TAX OFFICER, WARD-1, JALNA. . / APPELLANT V/S SHRI KETAN VINODKUMAR SHAH, PLOT NO.1-28/4088/6, NATH NAGAR, MANTHA ROAD, JALNA 431 203. PAN : ACYPS9942F. . / RESPONDENT / APPELLANT BY : MRS. NIRUPAMA KOTRU / RESPONDENT BY : NONE / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL OF THE REVENUE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A)-1, AURANGABAD DT.27.11.2015 FOR THE ASSESSMENT YEAR 2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- / DATE OF HEARING : 14.11.2017 / DATE OF PRONOUNCEMENT: 15.11.2017 2 2.1. ASSESSEE IS AN INDIVIDUAL STATED TO BE HAVING INCOME FRO M SALARY, BANK INTEREST ETC. A SEARCH ACTION U/S 132 OF T HE ACT WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESS EE ON 21.02.2017 WHEREIN IT WAS NOTICED BY THE DEPARTMENT THAT ASSESSEE WAS GENERATING UNACCOUNTED INCOME AND PLOUGHIN G SUCH INCOME BACK BY MANEUVERING ARTIFICIAL PURCHASE / SALE TRANSACTIONS IN UNQUOTED EQUITY SHARES. CONSEQUENT UPO N SEARCH, A NOTICE U/S 153A OF THE ACT WAS ISSUED ON 20. 10.2008 REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME. AO NO TED THAT ASSESSEE DID NOT FILE RETURN OF INCOME AND DID NOT R ESPOND TO THE NOTICE. NOTICE U/S 142(1) OF THE ACT WAS ALSO ISSU ED BUT THERE WAS NO COMPLIANCE BY THE ASSESSEE. ACCORDINGLY, ASSESSMENT WAS FRAMED U/S 144 OF THE ACT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND UN-DISCLOSED INCOME ON TH E BASIS OF ENTRIES IN THE LOOSE PAPERS SEIZED AS PER ANNEX URE A-I, AMOUNTING TO RS.19,98,50,000/- WAS MADE ON PROTECTIVE BAS IS. ON THE AFORESAID ADDITION, AO VIDE ORDER DT.28.03.2014 HELD T HAT ASSESSEE WAS LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT. HE ACCORDINGLY LEVIED PENALTY OF RS.6,73,70,490/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A ), WHO VIDE ORDER DT27.11.2015 DELETED THE PENALTY BY HOLDING AS UNDER : 5. I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE A PPELLANT. IN THIS CASE, THE QUANTUM APPEAL HAS BEEN ALLOWED I N THE FAVOUR OF THE ASSESSEE FOR THE YEAR UNDER REFERENCE BY THE HON'BLE ITAT, MUMBAI 'A BENCH' VIDE ITS ORDER ITA N OS. 2321 & 2322/MUM/2013 DATED 26.06.2015. THE FINDINGS OF T HE ITAT IN PARA 10, 11 TO 11.3 ARE REPRODUCED AS UNDER : '10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO TH E RIVAL CONTENTIONS. WE HAVE ALSO CAREFULLY PERUSED T HE ORDERS OF THE AUTHORITIES BELOW AND WITH THE ASSIST ANCE OF THE LD. COUNSEL WE HAVE GONE THROUGH THE DOCUMENTARY EVIDENCE REFERRED TO AND BROUGHT TO OUR NOTICE. 3 11. THE BASIS FOR MAKING THE ADDITION OF RS. 19.98 CRORES IS THE LOOSE PAPER MENTIONED AT PARA-2 (SUPR A), WE FAILED TO PERSUADE OURSELVES TO MAKE ANY SENSE O UT OF THE NOTINGS IN THIS LOOSE PAPER. MERELY BY MAKIN G ADDITIONS OF ALL THE FIGURES MENTIONED IN THE LOOSE PAPER WOULD NOT JUSTIFY THE ADDITION OF RS. 19.98 CRORES. SECONDLY, THE ENTIRE ADDITION HAS BEEN MADE ON THE PRESUMPTION MENTIONED U/S 132 (4A) OF THE ACT. HOWEVER, WE FAILED TO UNDERSTAND HOW THIS PRESUMPTION IS APPLICABLE ON THE FACTS OF THE CASE, FIRSTLY, THE LOOSE PAPER WAS FOUND IN THE PREMISES OF SHRI SANJAY SHAH I.E. IT WAS NOT FOUND IN THE PREMISES OF THE ASSESSEE. SECONDLY, IT WAS IN THE POSSESSION OF SHRI SANJAY SHAH SO OBVIOUSLY IT CANNOT BE IN POSSESSION OF THE ASSESSEE. THEREFORE, THE PROVISIONS OF SEC. 132(4A) OF THE ACT IS NOT APPLIC ABLE AS THE PAPER WAS NOT FOUND FROM THE POSSESSION OF THE ASSESSEE. 11.1. THE MOST IMPORTANT FACT TO BE CONSIDERED AT T HIS POINT OF TIME IS THAT THE ASSESSEE WAS STAYING IN U SA FOR ALMOST 5 YEARS FROM 29.11.2004 TO 19.01.2009. T HE SEARCH WAS CONDUCTED ON 21.02.2007 WHICH MEANS THAT ON THE DATE OF SEARCH, THE ASSESSEE WAS NOT EV EN PRESENT IN INDIA. LASTLY, CONCLUDING OBSERVATIONS O F THE AO AS MENTIONED IN PARA-5 (SUPRA) CLEARLY SUGGEST T HAT THE ADDITIONS HAVE BEEN MADE ON PROTECTIVE BASIS SO THIS IS A PROTECTIVE ASSESSMENT. HOWEVER, THERE IS NO REFERENCE ABOUT ANY CASE/ASSESSEE, IN WHOSE HANDS SUBSTANTIVE ADDITIONS HAVE BEEN MADE. EVEN BEFORE U S, THE LD. DR FAILED TO BRING ANY DOCUMENTARY EVIDENCE TO SHOW IN WHOSE HANDS SUBSTANTIVE ADDITIONS HAVE BEEN MADE. 11.2. THOUGH THE ASSESSMENTS WERE MADE ON PROTECTIV E BASIS, THE SAME HAS BEEN CONFIRMED BY THE FIRST APPELLATE AUTHORITY ALSO. THE HON'BLE ALLAHABAD HIG H COURT IN THE CASE OF SMT. DURGAWATI SINGH (SUPRA) H AS HELD THAT 'IT IS SETTLED THAT WHEN THERE IS A DOUBT AS TO WHICH PERSON AMONGST THE TWO WAS LIABLE TO BE ASSESSED, PARALLEL PROCEEDINGS MAY BE TAKEN AGAINST BOTH AND ALTERNATIVE ASSESSMENTS MAY ALSO BE FRAMED . IT IS ALSO EQUALLY TRUE THAT WHILE A PROTECTIVE ASSESSMENT IS PERMISSIBLE, IT IS NOT OPEN TO THE IN COME- TAX APPELLATE AUTHORITIES CONSTITUTED UNDER THE ACT TO MAKE A PROTECTIVE ORDER' 11.3. CONSIDERING ALL THESE FACTS IN TOTALITY, WE D O NOT FIND ANY REASON OF ADDITION IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. WE, ACCORDINGLY SET A SIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO DE LETE THE IMPUGNED ADDITION GROUND NO.1 TO 11 ARE ALLOWED '. THE HON'BLE ITAT, MUMBAI HAS ALLOWED RELIEF TO THE APPELLANT AGAINST THE ORDER OF CIT(APPEALS) ON ACCOUNT OF ADD ITION OF RS.19,98,50,000/- ON THE GROUND THAT PROVISIONS OF SECTION 132(4A) WERE NOT APPLICABLE IN THE INSTANT CASE AS LOOSE PAPERS WERE NOT SEIZED FROM THE POSSESSION OF THE A SSESSEE AND DURING THE RELEVANT YEAR, HE WAS RESIDING IN USA. E VEN ON THE DATE OF SEARCH I.E. 21.02.2007, THE ASSESSEE WAS NO T EVEN PRESENT IN INDIA. SINCE THE QUANTUM APPEAL HAS BEEN ALLOWED IN THE FAVOUR OF THE ASSESSEE, NO PENALTY IS LEVIABLE IN RESPECT OF 4 ADDITIONS MADE BY THE AO. IT WAS HELD BY HON'BLE RA JASTHAN HIGH COURT IN THE CASE OF CIT VS. COSMOPOLITAN TRAD ING CORPORATION (274 ITR 640) AND HONOURABLE PUNJAB & H ARYANA HIGH COURT IN THE CASE OF CIT VS. PRAKASH INDUSTRIE S LTD (322 ITR 622) THAT WHEN THE ENTIRE ADDITION HAD BEEN DELETED IN THE QUANTUM APPEAL, NO REASON SURVIVES FOR SUSTAINING T HE PENALTY. ACCORDINGLY I DIRECT THE AO TO CANCEL THE ORDER LEV YING PENALTY OF RS.6,73,70,490/- U/S 271(1)(C) OF THE INCOME TAX AC T. 3. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EA RN ED CIT(A), AURANGABAD HAS ERRED IN DELETING THE PENALT Y OF RS . 6,73 , 70 , 490/ - IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME- TAX ACT, 1961. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A), AURANGABAD HAS ERRED IN NOT CONSIDERING THE FINALITY OF THE ORDER OF QUANTUM APPEAL OF THE ASSESSEE FOR ASS ESSMENT YEA R UNDE R CONSIDERATION. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT ( A) , AURANGABAD HAS ERRED IN DECIDING THE MATTER PREMATURELY . UNDER SUCH C I RCUMSTANCES, HE SHOULD HAVE CONFIRMED THE PENALTY ALSO. 4. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A), AURANGABAD BE QUASHED AND THAT THE ORDER OF THE AO BE RESTORED . 4. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF T HE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED ON HIS BEHALF. WE THEREFORE PROCEED TO DISPOSE OF THE APPEAL EX -PARTE QUA THE ASSESSEE ON THE BASIS OF SUBMISSIONS OF LD.D.R. AND MATERIAL ON RECORD. 5. BEFORE US, LD.D.R. TOOK US THROUGH THE ORDER OF AO AND SUPPORTED THE ORDER OF AO. 6. WE HAVE HEARD THE LD.D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD.CIT(A) WHILE DELETING THE PENALTY HAS NOTED THAT THE QUANTUM ADDITION THAT WAS MADE IN THE CASE OF 5 ASSESSEE ON WHICH THE IMPUGNED PENALTY HAS BEEN LEVIED WAS ITSELF DELETED BY THE MUMBAI TRIBUNAL VIDE ORDER DT.26.06.2015 . SINCE THE QUANTUM ADDITION ITSELF HAS BEEN DELETED BY THE TRIBUNAL, THE VERY BASIS OF LEVY OF PENALTY DOES NOT SURVIV E AND THEREFORE NO PENALTY ON THE SAID ADDITION WAS LEVIABLE. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO CONTR OVERT THE FINDINGS OF LD.CIT(A) NOR HAS POINTED OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A). THUS, THE GROUNDS OF THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON THE 15 TH DAY OF NOVEMBER, 2017. SD/- SD/- ( VIKAS AWASTHY ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; ! DATED : 15 TH NOVEMBER, 2017. YAMINI ' # $%& '#$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(APPEAL)-1, AURANGABAD. PR.CIT-1, AURANGABAD. &() $$*+,' *+, / DR, ITAT, B PUNE; )-.// GUARD FILE. / BY ORDER , // TRUE COPY // 012$3*4 / SR. PRIVATE SECRETARY ' *+, / ITAT, PUNE.