Sh. Sat Paul Bansal, Chandigarh V. ACIT, CC-II, Chandigarh

ITA 1680/CHANDI/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1526 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 20-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH CIT DR
• Keywords: Search and seizure; Loose papers; Document seized; Documents seized; Set aside
• Section: 153A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH B, CHANDIGARH .., ! '# #$ %, & '( BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO. 1680/CHD/2017 ASSESSMENT YEAR : 2014-15 SHRI SAT PAUL BANSAL H.NO. 749, SECTOR 8, CHANDIGARH THE ACIT, CC - II CHANDIGARH PAN NO: ABEPB7985N APPELLANT RESPONDENT ITA NO. 1703/CHD/2017 ASSESSMENT YEAR : 2014-15 SHRI RAJNEESH BANSAL H.NO. 749, SECTOR 8, CHANDIGARH THE ACIT, CC - II CHANDIGARH PAN NO: ABEPB7983L APPELLANT RESPONDENT !' ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE #!' REVENUE BY : SHRI MANJIT SINGH, CIT DR $ %! & DATE OF HEARING : 29/08/2019 '()*! & DATE OF PRONOUNCEMENT : 04/09/2019 ')/ ORDER PER N.K. SAINI, VICE PRESIDENT THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE SEPARATE ORDERS EACH DT. 30/11/2017 OF THE LD. CIT(A)-3, GUR GAON. 2. SINCE THE ISSUES INVOLVED IN BOTH THESE APPEALS ARE COMMON AND THE APPEALS WERE HEARD TOGETHER SO THESE ARE BEING DISP OSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. AT THE FIRST INSTANCE WE WILL DEAL WITH THE APPE AL IN ITA NO. 1680/CHD/2017 FOR THE A.Y. 2014-15 WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED: 2 1. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY U/S 271AAB OF THE IT. ACT AMOUNTING TO RS. 25,00,000/-. 2. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY U/S 271AAB OF THE IT. ACT IN A CASE WHERE THE REASONS MENTIONE D IN THE NOTICE U/S 271AAB ARE NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 271AAB. 3. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIRM ING THE PENALTY U/S 271AAB OF THE IT. ACT IN A CASE WHERE THE REASONS M ENTIONED IN THE NOTICE U/S 271AAB ARE DIFFERENT THAN THE REASONS MENTIONED IN THE PENALTY ORDER U/S 271AAB. 4. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY U/S 271AAB OF THE IT. ACT IN THE ABSENCE OF UNDISCLOSED INCOME . 5. THAT WITHOUT PREJUDICE TO ABOVE GROUNDS OF APPEALS; THE APPELLANT DISPUTES THE QUANTUM OF PENALTY LEVID. 6. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION OR AMENDMENT IN THE GROUNDS OF APPEAL TILL THE DISPOSAL OF THE SAME. 4. GROUND NO. 2 & 3 WERE NOT PRESSED AND GROUND NO. 6 IS GENERAL IN NATURE, THEREFORE THESE GROUNDS DO NOT REQUIRE ANY COMMENT ON OUR PART. 5. VIDE GROUND NO. 1, 4 & 5 THE GRIEVANCE OF THE AS SESSEE RELATES TO THE CONFIRMATION OF PENALTY LEVIED BY THE A.O. UNDER SE CTION 271 AAB OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). 6. FACTS OF THE CASE IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE RESID ENCE / BUSINESS PREMISES OF THE ASSESSEE ON 17/11/2013. AFTER THE SEARCH THE AS SESSEE OFFERED AN ADDITIONAL INCOME OF RS. 2.50 CR. TO COVER ALL POSSIBLE DISCRE PANCIES AS PER SEIZED DOCUMENTS OR POSSIBLE MISTAKE / DISCREPANCIES IN TH E RETURN TO BE FILED. THE ASSESSEE DISCLOSED THE SURRENDERED INCOME AS INCOME FROM OTHER SOURCES IN HIS RETURN OF INCOME FILED ON 30/11/2014. THE A.O. OBSE RVED THAT THE ASSESSEE DID NOT SUPPLY DETAILS OF BROKERAGE / COMMISSION INCOM E / INCOME FROM OTHER SOURCES AND ALSO FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE DISCLOSED INCOME WAS DERIVED. THE A.O. INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 3 271AAB OF THE ACT AND SUBSEQUENTLY LEVIED THE PENAL TY OF RS. 25,00,000/- BY STATING THAT THE ASSESSEE SUOMOTO MADE THE SURRENDE R AND HONORED THE SURRENDER MADE IN HIS RETURN OF INCOME AND ALSO PAI D THE TAXES THEREON. ACCORDINGLY THE IMPUGNED PENALTY WAS LEVIED. 7. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FURNISHED THE WRITTEN SUBMISSIONS. THE LD. CIT(A) S UMMARIZED THE CONTENTION OF THE ASSESSEE AS UNDER: I) THE REASONS MENTIONED IN THE NOTICE U/S 271AAB A RE REASONS FOR LEVY OF PENALTY U/S 271AAB IN THE PENALTY ORDER ARE DIFFERENT. II) THE REASONS MENTIONED IN THE NOTICE ARE NOT IN ACCORDANCE WITH THE PRE- REQUISITE OF SECTION 271AAB. III) THE AMOUNT OF ADDITIONAL INCOME OFFER ED DO NOT REPRESENT THE UNDISCLOSED OF THE APPELLANT, IV) THE ADDITIONAL INCOME HAS NOT BEEN OFFERED IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. 7.1 THE LD. CIT(A) HOWEVER DID NOT FIND MERIT IN TH E SUBMISSIONS OF THE ASSESSEE AND SUSTAINED THE PENALTY LEVIED BY THE A.O. BY OBS ERVING AS UNDER: THE CONTENTIONS OF THE APPELLANT CANNOT BE ACCEPT ED BECAUSE:- A) IN THE ASSESSMENT ORDER U/S 153A PASSED BY THE AO I N THIS CASE, IT WAS SPECIFICALLY STATED BY THE AO THAT THE APPELLANT FAILED TO SPECIFY AND SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND THEREAFTER PENALTY PROCEEDIN GS U/S 271AAB OF THE ACT ARE INITIATED SEPARATELY. THUS, T HE REASONS MENTIONED IN THE ASSESSMENT ORDER ARE RELATED TO TH E INITIATION OF PENALTY U/S 271AAB AND HENCE THE CONTENTIONS OF THE APPELLANT WITH REGARD TO NOTICE U/S 271AAB OF THE ACT ARE INA DVERTENT AND HENCE THE PLEA OF THE APPELLANT WITH REGARD TO PENA LTY NOTICE ISSUED ARE NOT ACCEPTED. B) THE PLEA OF THE APPELLANT THAT AMOUNT OF INCOME OFF ERED DOES NOT REPRESENT THE UNDISCLOSED INCOME OF THE APPELLANT C ANNOT BE ACCEPTED BECAUSE OF THE FOLLOWING REASONS:- I) IN THE STATEMENT OF SH. SATPAL BANSAL RECORDED U /S 132 (4) DURING THE COURSE OF REVOCATION OF RESTRAINT ORDER DATED 25.11.2013 THIS QUESTION ASKED AND ITS REPLY IS RELEVANT.:- 4 'QUES DO YOU WANT TO SAY ANYTHING.? ANS. DURING THE COURSE OF SEARCH AND SEIZURE VARIOU S DOCUMENTS/LOOSE PAPERS/REGISTERS SEIZED AND IMPOUNDED BY YOUR DEPAR TMENT AND DURING THE COURSE OF POST SEARCH ENQUIRIES, CERTAIN DISCRE PANCIES ARE POINTED OUT BY THE SEARCH TEAM. AT THIS JUNCTURE, I AM NOT IN A POSITION TO COMMENT ON THESE DISCREPANCIES. HOWEVER, TO BUY PEACE AND AVOI D ANY LITIGATION, 1 HEREBY OFFER TO SURRENDER ADDITIONAL INCOME OF RS. 30 CR OVER AND ABOVE, THE RETURNED INCOME IN THE HANDS OF GROUP CONCERNS / DIRECTORS / PARTNERS/FIRMS / PROPRIETARY AND OTHER SISTER CONCE RNS AND RELATIVES.' II) FURTHER, A-LETTER DATED 03.02.2014 ADDRESSED TO DDIT(INV), PANCHKULA AND SIGNED BY ALL ENTITIES / INDIVIDUALS WHO HAD SU RRENDERED BIFURCATION OF RS. 30 CR WAS GIVEN WHICH INCLUDED RS. 2,50,00,000 IN THE HANDS OF APPELLANT TO COVER ALL POSSIBLE DISCREPANCIES AS PE R SEIZED DOCUMENTS OR OTHER POSSIBLE MISTAKES/ DISCREPANCIES IN THE RETUR N TO BE FILED. III) IT WAS FURTHER STATED IN THE AFORESAID LETTER THAT THE DISCLOSURE IN THE HANDS OF DIFFERENT CONCERNS LIKE PARTNERSHIP CONCER NS OR INDIVIDUALS AS STATED ABOVE IS BEING MADE SINCE THEY ARE ALL GROUP CONCERNS AND THIS OFFER IS BEING MADE AS PER PROVISIONS OF INCOME TAX ACT AND SUBJECT TO NO PENALTY AND PROSECUTION. THUS, IT IS APPARENT THAT THE ADDITIONAL INCOME OFF ERED REPRESENTS THE UNDISCLOSED INCOME OF THE APPELLANT, AS THE VERY BA SIS OF THE SURRENDER WAS THE DISCREPANCIES POINTED OUT BY THE SEARCH TEA M AS STATED BY SH. SATPAL BANSAL IN HIS STATEMENT. C) THE CONTENTION OF THE APPELLANT THAT ADDITIONAL INCOME HAS NOT BEEN OFFERED IN THE STATEMENT RECORDED U/S 132(4) O F THE ACT IS ALSO NOT FACTUALLY CORRECT AS THE STATEMENT WAS RECORDED DUR ING THE COURSE OF SEARCH WHILE REVOKING THE RESTRAINT ORDER DATED 29. 11.2013 , WHICH IMPLIES THAT THE SEARCH HAD NOT CONCLUDED. HOWEVER, IF THE PLEA OF THE APPELLANT REGARDING ADD ITIONAL INCOME HAS NOT BEEN OFFERED IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT IS ACCEPTED, THEN THE APPELLANT WILL BE LIABLE TO A PE NALTY @ 20% U/S 271AAB OF THE ACT AND NOT 10% AS IMPOSED BY THE AO. THIS IS NOT DONE AS THE CONTENTION OF THE APPELLANT REGARDING THE SAME ITSELF IS NEITHER AS PER THE FACTS OF THE CASE NOR THE PROVISION OF LAW. 5. IN VIEW OF THE ABOVE DISCUSSION, FACTS AND PROVI SION OF LAW, THE PENALTY IMPOSED BY THE A.O. IS CONFIRMED. 8. NOW THE ASSESSEE IS IN APPEAL. 9. LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED VIDE ORDER DT. 01/07/2019 IN ITA N O. 1679/CHD/2017 FOR THE A.Y. 2014-15 IN CASE OF SHRI SANDEEP BANSAL, CHANDIGARH VS. ACIT, CC-II, CHANDIGARH, 5 COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACE D ON RECORD. IT WAS FURTHER SUBMITTED THAT COMMON SEARCH WAS CARRIED OUT ON THE RESIDENCES / BUSINESS PREMISES OF THE ASSESSEES BELONGING TO THE SAME FAM ILY AND SURRENDER WAS ALSO MADE ON THE BASIS OF STATEMENT OF THE ASSESSEE MADE FOR POUL MERCHANT GROUP. IT WAS FURTHER SUBMITTED THAT NO INCRIMINATING MATE RIAL WAS FOUND DURING THE COURSE OF SEARCH THEREFORE THE INCOME SURRENDERED B Y THE ASSESSEE WAS NOT HIS CONCEALED INCOME. IT WAS STATED THAT AFTER CONSIDER ING ALL THE RELEVANT FACTS THE SIMILAR PENALTY LEVIED BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) WAS DELETED BY THE ITAT VIDE AFORESAID REFERRED TO ORDER DT. 01 /07/2019 IN THE CASE OF SH. SANDEEP BANSAL VS. ACIT, CC-II, CHANDIGARH. 10. IN HIS RIVAL SUBMISSIONS THE LD. CIT DR STRONGL Y SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND REITERATED THE OBSERVATIONS M ADE BY THE LD. CIT(A) IN PARA-4 OF THE IMPUGNED ORDER. IT WAS FURTHER SUBMIT TED THAT THE ASSESSEE HIMSELF ADMITTED THE UNDISCLOSED INCOME IN HIS STATEMENT DU RING THE COURSE OF SEARCH AND ALSO SUBSTANTIATE THE MANNER IN WHICH THE UNDIS CLOSED INCOME WAS DERIVED, THEREAFTER HE OFFERED THE ADDITIONAL INCOME ON THE BASIS OF DISCREPANCY POINTED OUT BY THE SEARCH TEAM, THEREFORE THE PENALTY WAS R IGHTLY LEVIED BY THE A.O. UNDER SECTION 271AAB OF THE ACT WHICH IS MANDATORY IN NATURE AND THE LD. CIT(A) WAS FULLY JUSTIFIED IN UPHOLDING THE SAME. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THA T THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE CASE OF SHRI SANDEEP BANSAL VS. ACIT, CC-II, CHANDIGARH (SUPRA), THEREFORE THE ISSUE IS S QUARELY COVERED BY THE AFORESAID ORDER DT. 01/07/2019 PASSED IN ITA NO. 16 79/CHD/2017 FOR THE A.Y. 2014-15, WHEREIN RELEVANT FINDINGS HAVE BEEN GIVEN VIDE PARA 11 & 12 OF THE SAID ORDER WHICH READ AS UNDER: 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE DE CISION OF THE ITAT 6 CHANDIGARH BENCH IN THE CASE OF M/S SEL TEXTILES LI MITED (SUPRA). WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD.COUNSEL FOR THE ASSSESSEE THAT THE INCOME SURRENDERED IN THE PRESENT CASE OF RS.15.36 CRORES DID NOT REPRESENT UNDISCLOSED INCOME AS DEFINED IN SECTION 271AAB OF THE ACT FOR THE PURPOSE OF LEVY OF PENALTY THEREON. AS IS EVIDENT FROM THE STA TEMENT OF SHRI SATPAL BANSAL RECORDED DURING SEARCH THE ASSESSEE WAS UNABLE TO O FFER ANY EXPLANATION AT THAT POINT OF TIME REGARDING THE DISCREPANCY FOUND AND H AD MADE THE SURRENDER ONLY TO BUY PEACE OF MIND. EVEN IN THE SURRENDER LETTER FILED THEREAFTER GIVING BIFURCATION OF THE SURRENDER MADE IN THE HANDS OF D IFFERENT ASSESSEES, THE ASSESSEE HAD ADMITTED THAT IT HAD BEEN UNABLE TO GO THOUGH THE VOLUMINOUS DOCUMENTS IMPOUNDED DURING SEARCH AND WAS, THEREFOR E, TENTATIVELY SURRENDERING THE AMOUNTS IN DIFFERENT HANDS, WHICH IN THE HANDS OF THE ASSESSEE AMOUNTED TO RS.5.65 CRORES TO COVER UP ANY POSSIBLE DISCREPANCY. CLEARLY, THERE WAS NOTHING CONCRETE REPRESENTING ANY TRANSACTION N OT RECORDED IN THE BOOKS OF THE ASSESSEE, WHICH THE DEPARTMENT HAD FOUND IN THE DOCUMENTS IMPOUNDED AND ON ACCOUNT OF WHICH, THEREFORE, THE SURRENDER W AS MADE. EVEN THE REVENUE HAS NOT POINTED OUT WHAT DISCREPANCIES WERE NOTED I N THE DOCUMENTS IMPOUNDED, TO WHICH THE SURRENDER COULD BE ATTRIBUT ED. THEREFORE, CLEARLY FOR ALL PURPOSES THE SURRENDER WAS A GENERAL SURRENDER TO B UY PEACE OF MIND ONLY AND WAS NOT BACKED BY ANY DOCUMENTARY EVIDENCE OR OTHER WISE REPRESENTING ANY ASSET OR ANY TRANSACTION NOT RECORDED IN THE BOOKS OF THE ASSESSEE. THEREFORE, BY ANY STRETCH OF LOGIC, THE SURRENDER MADE BY THE ASS ESSEE COULD NOT BE SAID TO BE UNDISCLOSED INCOME OF THE ASSESSEE. WE FIND THAT TH E ITAT CHANDIGARH BENCH IN THE CASE OF M/S SEL TEXTILES LIMITED (SUPRA) HAD DE LETED IDENTICAL PENALTY LEVIED AFTER FINDINGS THAT THE INCOME SURRENDERED DID NOT REPRESENT ANY UNDISCLOSED INCOME OF THE ASSESSEE. THE I.T.A.T. DISCUSSED VARI OUS DECISIONS OF THE COORDINATE BENCHES IN THIS REGARD, WHEREIN IT WAS HELD THAT TH E PENALTY U/S 271AB OF THE ACT WAS NOT AUTOMATIC AND BINDING ON THE A.O. AND WAS LE VIABLE ONLY IF UNDISCLOSED INCOME REPRESENTED BY ANY ASSET OR ENTRY OR TRANSAC TION IN ANY DOCUMENT WHICH WAS NOT REFLECTED IN THE BOOKS OF THE ASSESSEE, WAS FOUND DURING THE COURSE OF SEARCH. IT WAS CATEGORICALLY HELD IN THE SAID DECIS ION THAT BALD OFFER MADE BY THE ASSESSEE TO PAY TAX ON ADDITIONAL INCOME IN THE STA TEMENT U/S 132(4) OF THE ACT, COULD NOT BE CONSIDERED AS UNDISCLOSED INCOME WITHI N THE MEANING OF SECTION 271AAB OF THE ACT. 12. IN VIEW OF THE FACTS AS DISCUSSED ABOVE BY US T HAT EXCEPT FOR GENERAL SURRENDER MADE BY THE ASSESSEE THERE WAS NO INCRIMI NATING MATERIAL REPRESENTING UNDISCLOSED INCOME FOUND DURING THE COURSE OF SEARC H AND, THEREFORE, WE HOLD THAT THIS WAS NOT A FIT CASE FOR LEVY OF PENALTY U/ S 271AAB OF THE ACT. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT DELETION OF PENALTY LEVIED IN THE PRESENT CASE AMOUNTING TO RS.5.65 CRO RES. GROUND OF APPEAL NO.4 RAISED BY THE ASSESSEE IS ALLOWED. SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DT. 01/07/2019 IN ITA NO. 1679/CHD/2017 FOR THE A.Y. 2014-15 IN THE C ASE OF SHRI SANDEEP BANSAL VS. ACIT, CC-II, CHANDIGARH, THE IMPUGNED PENALTY L EVIED BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) IS DELETED. 7 12. THE FACTS IN THE CASE OF SHRI RAJNEESH BANSAL, CHANDIGARH VS. ACIT, CENTRAL CIRCLE- II IN ITA NO. 1703/CHD/2017 ARE IDENTICAL A S WERE INVOLVED IN THE CASE OF SHRI SAT PAUL BANSAL, CHANDIGARH VS. ACIT, CC-II, C HANDIGARH , THEREFORE OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER SHA LL APPLY MUTATIS MUTANDIS IN THIS CASE ALSO. 13. IN THE RESULT, APPEALS OF THE ASSESSEES ARE ALL OWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 04/09/2019) SD/- SD/- #$ % .., (SANJAY GARG ) ( N.K. SAI NI) & '(/ JUDICIAL MEMBER ! / VICE PRESIDENT AG DATE: 04/09/2019 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR