The DCIT, Central Circle-1, Surat V. Ashirwad Corporation, Surat

ITA 1615/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89583 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: KK SHAH
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.) I.T. A. NO. 1615/AHD/2011 (ASSESSM ENT YEAR: 2008-09) THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, SURAT V/S M/S. ASHIRWAD CORPORATION 3 RD FLOOR, DEEPA COMPLEX, ADAJAN ROAD, SURAT (APPELLANT) (RESPONDENT) PAN: AALFA2043C APPELLANT BY : SMT. SONIA KUMAR, SR. D.R. RESPONDENT BY : SHRI K.K. SHAH, A.R. ( )/ ORDER DATE OF HEARING : 03-06-201 5 DATE OF PRONOUNCEMENT : 05 -06-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER. 1. THE PRESENT APPEAL IS AGAINST THE ORDER OF CIT (A)- II, AHMEDABAD DATED 01- 04-2011 FOR THE ASSESSMENT YEAR 2008-09 WHEREBY THE PENALTY OF RS 1,50,,00,000/- LEVIED U/S. 271AAA BY THE A.O. WAS DELETED BY CIT (A). 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER:- 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECT. A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT WAS CARRIED OUT AT TH E BUSINESS PREMISES OF THE ITA NO 1615 /AHD/2011 . A.Y. 2008-0 9 2 ASSESSEE. DURING THE COURSE OF SEARCH, ASSESSEE HAD DISCLOSED RS. 19,05,90,680/- AS UNACCOUNTED INCOME FROM ON MONEY IN A.Y. 07-08 & 08-09. FOR THE YEAR UNDER CONSIDERATION, ASSESSEE HAD INCLUDED RS. 15 CRORE AS THE INCOME AND INCLUDED IT IN THE RETURN OF INCO ME THAT WAS FILED BY THE ASSESSEE. THEREAFTER THE ASSESSMENT WAS FRAMED U/S. 143(3) R.W.S. 153A ON 31.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT R S. 16,57,09,030/-. ON THE UNDISCLOSED INCOME OF RS. 15 CRORE, A.O VIDE PE NALTY ORDER DATED 29,06,2010 LEVIED PENALTY OF RS. 1,50,00,000/- U/S. 271AAA OF THE ACT. AGGRIEVED BY THE PENALTY ORDER OF A.O., ASSESSEE CA RRIED THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 01.04.2011 DELETED THE PENALTY BY HOLDING AS UNDER:- 4.I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS. I AGREE WITH THE APPELLANT'S VIEWS FOR THE FOLLOWING REASONS:- THE A.O. HAS LEVIED THE PENALTY U/S. 271 AAA OF THE ACT MERELY BECAUSE THE FIRST TWO CONDITIONS OF SECTION 271AAA (2) ARE NOT FULFILLED BY THE APPELLANT. THE PROVISIONS, OF SECTION 271 AAA (2) OF THE ACT IS REPRODUCED AS UND ER: (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT U NDER SUB-SECTION (4) OF SECTION 132, ADMITS THE .UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. (II)SUBSTANTIATES THE MANNER IN WHICH THE U NDISCLOSED INCOME WAS DERIVED AND (III) PAYS THE TAX, TOGETHER WITH INTEREST , IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. THE APPELLANT HAS CATEGORICALLY STATED IN Q/ A. NO. 46 OF THE STATEMENT ON 15.02.2008 U/S. 132 (4) OF THE ACT, THAT THE INCOME SO DISCLO SED IS EARNED OUT OF 'ON MONEY' BOOKING OF ASHIRWAD RESIDENCY PROJECT.. THUS THE APPELLANT, HAD DISCLOSED THE AMOUNT IN THE STATEMENT U/S. 132 (4) OF THE ACT DURING THE SEARCH PROCEEDINGS WHICH IS THE MAIN REQUIREMENT OF THE PROVISIONS AND ALSO GAVE THE MAN NER OF EARNING. THE APPELLANT HAD SUBSTANTIATED THE UNDISCL OSED INCOME BY QUANTIFYING THE AMOUNT OF RS.15 CRORES HAVING EARNED OUT OF 'ON MONEY' BOO KING OF ASHIRWAD RESIDENCY PROJECT. THE APPELLANT DID NOT GIVE ANY GENERAL STATEMENT THAT IT WOULD SHOW SOME UNDISCLOSED INCOME IN THE RETURN OF INCOME. THE APPELLANT HAD BROADLY QUANTIFIED THE NET UNDISC LOSED INCOME TAKING INTO ACCOUNT THE SEIZED RECORDS LIKE ANNEXURE B-1, B-2 & B-5. THE A PPELLANT HAS ALSO ADMITTED 'ON MONEY' BOOKING IN HIS Q/A. NO. 36 & 37 ON HIS STATE MENT ON 15.02.2008 U/S. 132 (4) OF THE ACT. EVEN THE FINDINGS BY THE LEARNED DCIT ON P AGE 4-5 AND 19 OF THE ASSESSMENT ORDER FURTHER JUSTIFY THE MANNER OF EARNING AS WELL AS SUSTAINING THEREOF. THE A.O. HIMSELF HAS CALCULATED THE 'ON MONEY' ON T HE BASIS OF CERTAIN SEIZED RECORDS AND FURTHER ESTIMATED 16 % NET PROFIT ON SUCH ON M ONEY (WHICH WAS REDUCED TO 15 %) ITA NO 1615 /AHD/2011 . A.Y. 2008-0 9 3 AND THE SAME AMOUNT WAS OFFERED FOR THE INCOME DISC LOSED IN THE STATEMENT U/S. 132 (4) OF THE ACT AND, THEREFORE, THE UNDISCLOSED INCOME GETS SUBSTANTIATED. AT THE TIME OF SEARCH, AS WELL AS, DURING THE COURS E OF ASSESSMENT PROCEEDINGS, IT WAS REPEATEDLY SUBMITTED, BY THE APPELLANT THAT THE SOU RCE OF DISCLOSURE OF UNACCOUNTED INCOME HAS BEEN THE ON-MONEY EARNED FROM THE BOOKIN G AND SALE OF ENTIRE 161 RESIDENTIAL BUNGALOWS IN THE PROJECT SITE N AME ASHIRWAD RESIDENCY. HENCE, THE REQUIREMENT OF SPECIFYING THE MANNER IN WHICH IT HA S BEEN EARNED AND SUBSTANTIATING THE SAID FACT BOTH HAS BEEN COMPLIED BY THE APPELLANT. EVEN THE A.O. IN-PRINCIPLE ACCEPTED THE DISCLOSURE IN SUBSTANCE AND THE METHOD OF EARNING THAT INCOME, WHICH HAS BEEN FURTHER PROJECT ED BY THE A.O. IN MAKING FURTHER ADDITION OF RS. 1,01,67,720/-, WHICH SUGGESTS THA T THE REQUIREMENT OF PROVISIONS OF SECTION 271AAA(2) HAS BEEN DULY FULFILLED B Y THE APPELLANT. ACCORDINGLY THE CASE OF THE APPELLANT FALLS UNDER THE EXCLUSIONS PROVISIO NS OF SECTION 271AAA(2) OF THE ACT. NO BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS (OTHER THAN CASH SEIZED OF RS. 10/- LACS) WAS FOUND AND, THEREFORE, THE DISCLOSURE OF INCOME OUGHT NOT TO BE TREATED AS UNDISCLOSED INCOME AS DEFINED IN THE EXPLANATION OF 271AAA OF THE ACT. HAD THERE BEEN ANY MONEY, BULLION OR JEWELLERY FOUND DURING THE S EARCH, THE APPELLANT WAS REQUIRED TO SHOW AND ESTABLISH THE NEXUS THAT SUCH ASSETS ARE A CQUIRED OUT OF INCOME EARNED BEING CLAIMED TO BE EARNED FROM THE SOURCE AND GIVE THE M ANNER OF EARNING THIS INCOME AND SUBSTANTIATE THE SAME. BUT HERE IT IS NOT THE CASE. HERE, THE EVIDENCE HAS BEEN FOUND THAT INCOME IS EARNED FROM THE BUSINESS OF CONSTRUCTION AND CHARGI NG ON MONEY ON THIS SALE OF FLATS AND THE APPELLANT IS ALSO ACCEPTING THE FACT AND OFFERED THE SAID INCOME AND SPECIFIED THE SAME MANNER AND IT GETS SUBSTANTIATED BY THE INCRIMINATING DOCUMENTS FOUND DURING THE SEARCH ITSELF. THE ASSESSING OFFIC ER HAS NOT FOUND ANY OTHER SOURCE OF INCOME APART FROM THIS. HENCE, THE REQUIRED CONDITI ONS ARE FULFILLED. IN VIEW OF THESE FACTS, IT IS HELD THAT THE ASSESSI NG OFFICER WAS NOT JUSTIFIED IN LEVYING THE PENALTY U/S.271 AAA OF THE ACT AND THE SAME IS DELE TED. 4. AGGRIEVED BY THE ORDER OF CIT (A), THE REVENUE IS N OW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN LAW AND IN FACTS IN DELETING THE PENALTY U/S. 271AAA AM OUNTING TO RS. 1.5 CRORES. 5. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER PLACED RELIANCE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C. SHAH (2008) 299 ITR 305 (GUJ). ITA NO 1615 /AHD/2011 . A.Y. 2008-0 9 4 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY O F PENALTY U/S. 271AAA. WE FIND THAT LD. CIT(A) WHILE DELETING THE PENALTY HAS NOTED THAT ASSESSEE HAD DISCLOSED THE AMOUNT IN THE STATEMENT MADE U/S. 132 (4), HAS SUBSTANTIATED THE UNDISCLOSED INCOME BY QUANTIFYING THE AMOUNT OF RS. 15 CRORE AND THUS THE REQUIREMENT OF SPECIFYING THE MANNER FOR WHICH THE INCOME HAS BEEN EARNED HAS BEEN COMPLIED BY THE ASSESSEE. HE HAS FURTHER G IVEN A FINDING THAT THE A.O IN PRINCIPLE HAS ACCEPTED THE DISCLOSURE AND TH E METHOD OF EARNING THE INCOME. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATE RIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A). CONSIDERING THE AFORESAID FACTS, WE ARE OF THE VIEW THAT LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY AND THEREFORE WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. C IT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 05- 06 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD