Kailash Aggarwal, Ludhiana V. DCIT, CC-1, Ludhiana

ITA 1587/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6403 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-07-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 21-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A , CHANDIGARH , ! ' # $ % & ' , ' BEFORE SMT.DIVA SINGH, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.1587/CHD/2018 / ASSESSMENT YEAR : 2014-15 KAILASH AGGARWAL, # 3301/2, GURDEV NAGAR, LUDHIANA. THE D.C.I.T., CENTRAL CIRCLE-I, LUDHIANA. ./PAN NO: AENPA4308J /APPELLANT /RESPONDENT & ./ ITA NO.1588 & 1589/CHD/2018 / ASSESSMENT YEARS : 2013-14 & 2014-15 ARK IMPORTS PRIVATE LIMITED, 228-G, INDUSTRIAL AREA-A, CHEEMA CHOWK, LUDHIANA. THE D.C.I.T., CENTRAL CIRCLE-I, LUDHIANA. ./PAN NO: AAJCA5899B /APPELLANT /RESPONDENT /ASSESSEE BY: SHRI SANJAY SOOD, CA. ! / REVENUE BY: SMT.CHANDERKANTA, SR.DR ' # $ /DATE OF HEARING : 11.07.2019 %&'( $ /DATE OF PRONOUNCEMENT: 31.07.2019 ITA NOS.1587 TO 1589/CHD/2018 A.YS.2013-14 & 2014-15 2 /ORDER PER BENCH : ALL THE ABOVE APPEALS HAVE BEEN PREFERRED BY DIFFE RENT ASSESSEES AGAINST SEPARATE ORDERS OF THE COMMISSIO NER OF INCOME TAX (APPEALS)-2, JALANDHAR [(IN SHORT CIT(A )] ,ALL DATED 17.10.2018, PASSED U/S 250(6) OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). 2. IT WAS COMMON GROUND BETWEEN THE PARTIES THAT THE ISSUE INVOLVED IN ALL THE APPEALS WAS IDENTICAL , RELATING TO PENALTY LEVIED U/S 271AAB1)(C) OF THE A CT AND EMANATED FROM IDENTICAL SET OF FACTS. THESE APPEALS WERE THEREFORE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. FOR THE S AKE OF CONVENIENCE, WE SHALL BE DEALING WITH THE APPEAL OF THE ASSESSEE IN ITA NO.1587/CHD/218 AND THE DECISION RENDERED THEREIN WILL APPLY MUTATIS MUTAND IS TO OTHER APPEALS ALSO. ITA NO.1587/CHD/2018: (A.Y 2014-15) 3. BRIEF FACTS RELATING TO THE CASE ARE THAT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER(A.O) NOTICED THAT AT THE TIME OF SEARCH PROCEEDINGS THE ASSESSEE ITA NOS.1587 TO 1589/CHD/2018 A.YS.2013-14 & 2014-15 3 HAD ADMITTED UNDISCLOSED INCOME AMOUNTING TO RS.10,00,000/- U/S 132(4) OF I.T. ACT, 1961. CONSEQ UENTLY PENALTY PROCEEDINGS U/S 271AAB WERE INITIATED ON 31.03.2016 AND A SHOW CAUSE NOTICE U/S 274 R.W.S. 2 71AAB OF I.T.ACT,1961 WAS ISSUED TO THE ASSESSEE AS TO WH Y PENALTY U/S 271AAB OF THE ACT , BE NOT IMPOSED ON THE SAME . IN RESPONSE THE ASSESSEE FILED REPLY STATING THAT DURI NG THE COURSE OF SEARCH, THE ASSESSEE HAD OFFERED AN ADDIT IONAL INCOME OF RS.10 LACS ON ACCOUNT OF BUSINESS TRANSAC TIONS WHICH WERE NOT RECORDED IN THE REGULAR BOOKS OF ACC OUNTS. THE ASSESSEE HAD FURTHER STATED THAT THIS ADDITIONA L INCOME WAS OFFERED ON THE GROUNDS THAT NO PENALTY WOULD BE IMPOSED. THE REPLY OF THE ASSESSEE WAS CONSIDERED B UT NOT FOUND TENABLE BY THE AO. AS PER THE AO, THE ASSESSE E HAD SURRENDERED INCOME ONLY AFTER SEARCH AND THIS DISCL OSURE FELL WITHIN THE MEANING OF UNDISCLOSED INCOME AS PER T HE PROVISIONS OF SECTION 271AAB OF THE ACT. HE FURTHER NOTED THAT NO TAX HAD BEEN PAID ON THE SURRENDERED INCOME . HE THEREFORE HELD THAT PENALTY PROVISIONS U/S 271AAB(1 ) OF THE ACT WERE APPLICABLE IN THE CASE AND ACCORDINGLY LEV IED PENALTY @ 30% OF THE UNDISCLOSED INCOME OF RS. 10 LACS, AMOUNTING TO RS.3,00,000/-. ITA NOS.1587 TO 1589/CHD/2018 A.YS.2013-14 & 2014-15 4 4. BEFORE THE LD.CIT(A), THE ASSESSEE REITERATED TH E CONTENTIONS MADE BEFORE THE AO. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE UPHELD THE PENALTY SO LEVIED HOLDING AT PARA 4.9 OF HIS ORDER AS UNDER: 4.9 THE APPELLANT HAS FAILED TO FURNISH ANY EVIDEN CE ON RECORD EITHER BEFORE THE AO OR IN THE COURSE OF PRE SENT PROCEEDINGS TO THE EFFECT AS TO HOW THE CASE OF THE APPELLANT IS COVERED UNDER CLAUSE (A) OR UNDER CLAU SE (B) OF SECTION 271AAB(L) OF THE IT ACT. THEREFORE, I HOLD THAT CASE OF THE ASSESSEE IS COVERED UNDER THE PROVISIONS OF SECTION 271AAB (L)(C) AND THE PENALTY @ MINIMUM 30% OR MAXIMUM 90% IS ATTRACTED. THEREFORE, UNDER THE FACT S AND CIRCUMSTANCES OF THE CASE, THE PENALTY OF RS.3,00,0 00 IMPOSED BY THE AO U/S 271AAB (L)(C) OF THE IT ACT I N THIS CASE IS FOUND SUSTAINABLE AS PER LAW AND HENCE CONF IRMED. 5. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT NO PENALTY WAS LEVIABLE IN THE PRESENT CASE AT ALL SINCE THERE WAS NO UNDISCLOSED INCOME OF THE ASSESSEE, AS DEFINED IN SECTION 271AAB OF THE ACT, FOR THE PURPOSE OF LE VY OF PENALTY. THE LD.COUNSEL FOR THE ASSESSEE POINTED OU T THAT EVEN BEFORE THE LD.CIT(A) THE ASSESSEE HAD VEHEMENT LY ARGUED THAT PENALTY U/S 271AAB WAS NOT AUTOMATIC AN D THAT THERE HAD TO BE UNDISCLOSED INCOME FOUND, AS DEFINE D IN THE SECTION, FOR THE LEVY OF PENALTY. OUR ATTENTION WAS DRAWN TO THE SUBMISSIONS MADE BEFORE THE LD.CIT(A) REPRODUCE D AT PARA 4.1 OF THE ORDER. DRAWING OUR ATTENTION TO THE SAME IT WAS POINTED OUT THAT THE ASSESSEE HAD RELIED UPON T HE ITA NOS.1587 TO 1589/CHD/2018 A.YS.2013-14 & 2014-15 5 DECISION OF THE KOLKATTA BENCH OF THE ITAT IN THE C ASE OF SSP STEEL AND POWER LIMITED VS CCIT 171 TTJ 749 IN SUPP ORT OF ITS AFORESAID CONTENTION. LD.COUNSEL FOR THE ASSESS EE STATED THAT THE LD.CIT(A) DID NOT DEAL WITH THIS CONTENTIO N OF THE ASSESSEE AT ALL AND MERELY UPHELD THE PENALTY LEVIE D STATING THAT THE ASSESSEE HAD NOT JUSTIFIED HOW ITS CASE FE LL WITHIN CLAUSE (A) OR (B) OF SECTION 271AAB(1) OF THE ACT, WHEN THE CONTENTION OF THE ASSESSEE BEFORE HIM WAS THAT IT D ID NOT FALL /DID NOT QUALIFY FOR LEVY OF PENALTY U/S 271AAB AT ALL IN THE ABSENCE OF ANY UNDISCLOSED INCOME FOUND. LD.COUNSEL FURTHER DREW OUR ATTENTION TO THE DECISION OF THE C HANDIGARH BENCH OF THE ITAT IN THE CASE OF M/S SEL TEXTILES L IMITED VS DCIT, FOR THE PROPOSITION CANVASSED BY HIM THAT PEN ALTY U/S 271AAB WAS NOT AUTOMATIC AND THERE HAD TO BE UNDISC LOSED INCOME AS DEFINED UNDER THE SECTION FOR ATTRACTING THE LEVY OF PENALTY. 6. THE LD.COUNSEL FOR THE ASSESSEE FURTHER CONTENDE D THAT IN ANY CASE, THE LEVY OF PENALTY @ 30% WAS HARSH AN D UNJUSTIFIED AND FURTHER POINTED OUT THAT IN THE CAS E OF OTHER GROUP CONCERNS OF THE ASSESSEE WHICH WERE ALSO COV ERED IN THE SEARCH ACTION, PENALTY HAD BEEN LEVIED/CONFIRM ED @ 10% OF THE UNDISCLOSED INCOME ONLY, IN SIMILAR FACT S AND ITA NOS.1587 TO 1589/CHD/2018 A.YS.2013-14 & 2014-15 6 CIRCUMSTANCES. IT WAS THEREFORE PLEADED THAT CONSID ERING THE SIMILARITY OF FACTS AND CIRCUMSTANCES OF THE GROUP CONCERNS WITH THE ASSESSEE THE PENALTY LEVIED IN THE PRESENT CASE @ 30% WAS UNJUSTIFIED AND OUGHT TO BE RESTRICTED TO 1 0% ONLY. 7. THE LD. DR COUNTERED BY STATING THAT SINCE THE ASSESSEE HAD SUO MOTO MADE THE SURRENDER, THE SAME TANTAMOUNTED TO UNDISCLOSED INCOME OF THE ASSESSEE AND PENALTY, THEREFORE, HAD BEEN RIGHTLY LEVIED. THE LD . DR FURTHER REBUTTED THE CONTENTION OF THE LD.COUNSEL F OR THE ASSESSEE THAT THE PENALTY BE LEVIED @ 10% AS AGAINS T 30% LEVIED IN THE PRESENT CASE, POINTING OUT THAT THE A SSESSEE HAD FAILED TO PAY TAXES ON ITS SURRENDER INCOME ON ACCOUNT OF WHICH AS PER THE PROVISIONS OF SUB-CLAUSE (C) OF SUB- SECTION (1) OF SECTION 271AAB OF THE ACT, THE ASSES SEE WAS LIABLE TO PAY PENALTY @ 30% ONLY. 8. TO THIS, THE LD.COUNSEL FOR THE ASSESSEE COUNTER ED BY STATING THAT DURING SEARCH THE ASSETS OWNED BY THE ASSESSEE HAD BEEN SEIZED AND IT WAS VIRTUALLY LEFT WITH NO M ONEY TO PAY TAX AND FURTHER THAT IT HAD PLEADED WITH THE DE PARTMENT TO RELEASE ITS ASSETS SO AS TO FACILITATE PAYMENT OF TAXES. HE THEREFORE STATED THAT THE FAILURE TO PAY TAXES COU LD NOT BE ITA NOS.1587 TO 1589/CHD/2018 A.YS.2013-14 & 2014-15 7 ATTRIBUTED TO THE ASSESSEE AND THUS PENALTY LEVIED @ 30% WAS UNJUSTIFIED. 9. WE HAVE CONSIDERED THE CONTENTIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE ARE IN AGREEMENT WITH THE LD.COUNSEL FOR THE ASSESSEE THAT THE LD.CIT(A) WHILE ADJUDICATING THE APPEAL HAD FAILED TO DEAL WITH THE CONTENTION OF THE ASSES SEE THAT NO PENALTY U/S 271AAB OF THE ACT WAS LEVIABLE SINCE THERE WAS NO UNDISCLOSED INCOME OF THE ASSESSEE AS DEFINE D IN THE SECTION. THE LD.CIT(A) WE FIND ,DESPITE SPECIFIC ARGUMENTS/CONTENTION MADE BY THE ASSESSEE THAT NO P ENALTY WAS LEVIABLE, HAS RESTRICTED HIS DECISION TO THAT THE ASSESSEE HAS BEEN UNABLE TO MAKE OUT A CASE OF LEVY OF PENALTY @ 10%/20% AS PER CLAUSE (A)/(B) OF SECTION 271AAB(1) OF THE ACT. THE LD.COUNSEL FOR THE ASSESS EE HAS ALSO DRAWN OUR ATTENTION TO VARIOUS DECISIONS OF TH E ITAT HOLDING THAT PENALTY U/S 271AAB IS NOT AUTOMATIC AN D THERE HAS TO BE UNDISCLOSED INCOME AS DEFINED UNDER THE S ECTION FOR THE LEVY OF PENALTY. 10. WE THEREFORE CONSIDER IT FIT TO RESTORE THE ISS UE BACK TO THE LD.CIT(A) TO ADJUDICATE THE MATTER AFRESH IN A CCORDANCE WITH LAW ,AFTER CONSIDERING ALL THE SUBMISSIONS OF THE ITA NOS.1587 TO 1589/CHD/2018 A.YS.2013-14 & 2014-15 8 ASSESSEE. THE LD.CIT(A) IS DIRECTED TO PASS A SPEAK ING ORDER, AFTER CONSIDERING ALL NECESSARY FACTS RELEVANT TO T HE ISSUE, I.E. THE SURRENDER LETTER OF THE ASSESSEE ,THE STAT EMENT RECORDED DURING SEARCH U/S 132(4) MAKING THE SURREN DER AND ANY OTHER RELEVANT MATERIAL/FACTS, FOR DECIDING THE ISSUE. NEEDLESS TO ADD THE ASSESSEE BE GRANTED PROP ER OPPORTUNITY OF HEARING. THE APPEAL OF THE ASSESSEE IS THEREFORE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, ALL THE THREE APPEALS OF THE ASS ESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- # $ % & ' (DIVA SINGH ) (ANNAPURNA GUPTA) ! ' /JUDICIAL MEMBER () ' /ACCOUNTANT MEMBER # /DATED: 31 ST JULY, 2019 * * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35# / GUARD FILE &) ' / BY ORDER, / ASSISTANT REGISTRAR ITA NOS.1587 TO 1589/CHD/2018 A.YS.2013-14 & 2014-15 9