ACIT CEN CIR 20, MUMBAI V. PRAKASH SAMANT, MUMBAI

ITA 1681/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92612 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 31-07-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 09-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: HARI S RAHEJA
• Section: 5(2); 153A; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 1681 & 1682/MUM/2012 ( / ASSESSMENT YEAR S : 2003 - 04 & 2004 - 05 THE ACIT, CENTRAL CIRCLE - 20, AAYAKAR BHAVAN, MUMBAI - 400 020 / VS. SHRI PRAKASH SAMANT, SUNDARA NARAYAN NIWAS, OPP.IIT MAIN GATE NO. 2, POWAI, MUMBAI - 400 076 ./ ./ PAN/GIR NO. : AAEPS 0065P ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI NEIL PHILIP / RESPONDENT BY : SHRI HARI S. RAHEJA / DATE OF HEARING : 21 . 0 5 .2015 / DATE OF PRONOUNCEMENT : 29 .0 5 .2015 / O R D E R PER N.K. BILLAIYA, AM: TH ESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAINST TWO SEPARATE ORDER S OF THE LD. CIT(A) - 39 , MUMBAI DT. 2 6 . 12 .201 1 PERTAINING TO ASSESSMENT YEAR S 2003 - 04 AND 2004 - 05. COMMON GRIEVANCES ARE INVOLVED IN BOTH THESE APPEALS, THEREFORE THEY WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA. NO S . 1681 & 1682/M/2012 2 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIE D U/S. 271(1)(C) OF THE ACT BY NOT APPRECIATING THE FACT THAT THE ASSESSEE IS NOT ENTITLED TO BENEFIT OF EXPLANATION 5(2) TO SECTION 271(1)(C) OF THE ACT FOR THE EARLIER ASSESSMENT YEARS FOR WHICH THE DUE DATE FOR FILING THE RETURN OF INCOME IS OVER. 3. THE FACTUAL MATRIX CAN BE WELL UNDERSTOOD BY THE FOLLOWING CHART. S. NO. A.Y DUE DATE FILED ON SEARCH ON 153A INCOME AS PER ORIGINAL RETURN INCOME AS PER RETURN U/S. 153A 1 2003 - 04 30.11.03 28.11.03 29.7.07 1.11.07 10,74,062 30,74,062 2. 2004 - 05 31.10.2004 31.10.04 29.7.07 1.11.07 9,33,720 22,83,723 3. FOR A.Y. 2003 - 04, IT CAN BE SEEN THAT ADDITIONAL INCOME DECLARED IS RS. 20 LAKHS AS AGAINST SPECIFIC MATERIAL FOUND AT RS. 6,07,032/ - WHICH MEANS THAT THE ADDITIONAL DECLARATION WITHOUT REFERENCE TO ANY MATERIAL WAS RS. 13,92,968/ - . SIMILARLY FOR A.Y. 2004 - 05, ADDITIONAL INCOME DECLARED IS RS. 13.50 LAKHS. THE UNDISPUTED FACT IS THAT NO OTHER ADDITIONS HAVE BEEN MADE BY THE AO WHILE COMPLETING THE ASSESSMENT ON RESPECTIVE YEARS WHICH MEANS THAT THE DIFFERENCE BETWEEN THE RETURN INCOME AND ASSESSED INCOME IS NIL. A FURTHER PERUSAL OF THE FACT SHOWS ON RECORD THAT THE ASSESSEE HAS COMPLIED WITH ALL THE REQUIREMENTS OF EXPLANATION 5(2) TO SEC. 271(1)(C) OF THE ACT WHICH MEANS THAT THE ASSESSEE HAS DISCLOSED ADDITIONAL INCOME IN HIS STATEMENT RECORDED U/S. 132(4) OF THE ACT, AS EXPLAINED THE MANNER BY WHICH IT HAS EARNED THE UNDISCLOSED INCOME AND HAS ALSO PAID THE TAXES THEREON. 3.1. WE FIND THAT THE ONLY REASON GIVEN BY THE AO WHILE LEVYING P ENALTY U/S. 271(1)(C) OF THE ACT IS THAT THE ASSESSEE IS NOT ENTITLED TO THE BENEFIT OF EXPLANATION - 5 FOR EARLIER YEARS. IN SUPPORT OF HIS CONTENTION, THE AO HEAVILY RELIED UPON THE DECISION OF THE HONBLE BOMBAY HIGH ITA. NO S . 1681 & 1682/M/2012 3 COURT IN THE CASE OF SHERATON APPAR ELS VS ACIT 256 ITR 20. THE REVENUE FURTHER RELIED UPON THE DECISION IN THE CASE OF SHRI KIRIT DAHYABHAI PATEL 125 TTJ 145. 4. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN OUR CONSIDERED OPINION, THE DECISION RELIED UPON BY T HE AO IN THE CASE OF SHERATON APPARELS (SUPRA) IS MISPLACED INASMUCH AS IN THAT CASE THE ISSUE BEFORE THE HONBLE COURT WAS TO DECIDE WHETHER A DIARY COULD BE TREATED AS BOOKS OF ACCOUNT FOR THE PURPOSE OF EXPLANATION 5(1)(II) TO SEC. 271(1)(C) OF THE A CT. SUCH IS NOT THE CASE IN HAND THEREFORE THIS DECISION OF THE HONBLE BOMBAY HIGH COURT CANNOT SUPPORT THE AO. FURTHER, THE DECISION IN THE CASE OF SHRI KIRIT DAHYABHAI PATEL HAS BEEN OVER RULED BY THE HONBLE HIGH COURT OF GUJARAT VIDE ITS JUDGEMENT D T. 3.12.2014 IN ITA NOS. 1181, 1182 & 1185 OF 2010. THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS S.D.V. CHANDRU 266 ITR 175 SQUARELY APPLY ON THE FACTS OF THE CASE. THE FACTS IN THAT CASE ARE AS UNDER: EXPLANATION 5 TO SECTION 271(1)(C) OF THE INCOME - TAX ACT, 1961, PROVIDES THAT IN THE CIRCUMSTANCES SET OUT IN PARAS. (1) AND (2) OF THAT EXPLANATION, THE ASSESSEE IS NOT TO BE REGARDED AS HAVING CONCEALED HIS INCOME. WHILE CLAUSES (A) AND (B) MAKE A CLEAR DISTINCTION BE TWEEN THE PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH AND A PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH, PARA. (2) IN EXPLANATION 5 DOES NOT MAKE ANY SUCH DISTINCTION. IT REFERS TO THE STATEMENT GIVEN BY THE ASSESSEE AT THE TIME OF THE SEARCH UNDER SECTION 132(4) WITH REGARD TO THE ASSETS FOUND AT THE TIME OF SEARCH BEING THE STATEMENT TO THE EFFECT THAT SUCH ASSETS HAVE BEEN ACQUIRED OUT OF HIS UNDISCLOSED INCOME AND THE SPECIFICATION BY THE ASSESSEE IN SUCH STATEMENT W ITH REGARD TO THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED, AND THE SUBSEQUENT PAYMENT BY THE ASSESSEE OF THE TAX ON SUCH UNDISCLOSED INCOME TOGETHER WITH INTEREST. THE WORDS IN PARA. (2), . . . HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN D ISCLOSED IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN ITA. NO S . 1681 & 1682/M/2012 4 SUB - SECTION (1) OF SECTION 139 , IS NOT TO BE READ AS REFERRING TO INCOME SO FAR NOT DISCLOSED IN RESPECT OF THE PREVIOUS YEAR WHICH IS TO END AFTER THE DATE OF THE SE ARCH. THE WORDS USED ARE INCOME WHICH HAS NOT BEEN SO FAR DISCLOSED IN HIS RETURN OF INCOME. THE ADDITIONAL WORDS WHICH REFER TO THE TIME SPECIFIED IN SECTION 139(1) ARE ONLY A REITERATION OF THE LEGAL REQUIREMENT REGARDING THE TIME WITHIN WHICH RETURNS SHOULD NORMALLY BE FILED. IN CASES WHERE THE ASSESSEE HAD NOT DISCLOSED HIS INCOME IN THE RETURNS FILED FOR THE PREVIOUS YEAR WHICH HAD ENDED PRIOR TO THE DATE OF THE SEARCH AND IN THE STATEMENT GIVEN UNDER SECTION 132(4) , THE ASSESSEE ADMITS THE RECEIPT OF UNDISCLOSED INCOME FOR THOSE YEARS AND ALSO SPECIFIES THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED, AND THEREAFTER PAYS THE TAX ON THAT UNDISCLOSED INCOME WITH INTEREST, SUCH UNDISCLOSED INCOME WOULD GET IMMUNISED FROM THE LEVY OF PENALTY. THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE ON FEBRUARY 13, 1990. A STATEMENT OF THE ASSESSEE WAS RECORDED, UNDER SECTION 132(4) OF THE ACT, AT THE TIME OF SEARCH. THEREAFTER, THE ASSESSEE FILED HIS RETURNS FOR THE EARLIER YEARS AND ADMITTED A LARGER INCO ME AND ALSO PAID THE TAX TOGETHER WITH INTEREST. THE ASSESSING OFFICER LEVIED PENALTY. THE TRIBUNAL CANCELLED THE PENALTY. ON A REFERENCE : AND ON THESE FACTS IT WAS HELD THAT THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE PENALTY WAS NOT LEVIABLE. THE LD . CIT(A) HAS VERY RIGHTLY AND CORRECTLY FOLLOWED THIS DECISION OF THE HONBLE MADRAS HIGH COURT. WE, THEREFORE DECLINE TO INTERFERE WITH THE DECISION OF THE LD. CIT(A). 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE FOR BOTH THE YEARS UNDER CONSIDE RATION ARE DISMISSED. O R DER PRONOUNCED IN THE OPEN COURT ON 29 TH MAY , 2015 SD/ - SD/ - ( JOGINDER SING ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 29 TH MAY , 2015 . . ./ RJ , SR. PS ITA. NO S . 1681 & 1682/M/2012 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI