Vinit Ranawat, Mumbai V. Assistant Commissioner of Income-tax,

ITA 1700/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1561 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 09-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Document seized; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO S . 1 700 & 1701 /PN/20 1 4 / ASSESSMENT YEAR S : 200 8 - 0 9 & 2009 - 10 SHRI VINIT RANAWAT, SHRI VINIT RANAWAT, A - 404, ADINATH APARTMENT, 281, TARDEO ROAD, MUMBAI - 400034 . / APPELLANT PAN: AA NPR6221P VS. THE ASST. COMMISSIONER OF INCOME TAX , CIRCLE 1(1), PUNE . / RESPONDENT / APPELLANT BY : S HRI PRAMOD SHINGTE / RESPOND ENT BY : SHRI ANIL CHAWARE / DATE OF HEARING : 11 .0 7 .201 6 / DATE OF PRONOUN CEMENT: 14 . 0 7 .201 6 / ORDER / ORDER PER SUSHMA CHOWLA, JM: BOTH THE APPEAL S FILED BY THE SAME ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - II , PUNE , DATED 0 6 . 0 5 .201 4 RELATING TO ASSESSMENT YEAR S 200 8 - 0 9 AND 2009 - 10 AGAINST LEVY OF PENALT Y UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 1961 (IN SHORT THE ACT) . ITA NO S. 1700 & 1701 /PN/201 4 SHRI VINIT RANAWAT 2 2. BOTH THE APPEALS RELATING TO THE SAME ASSESSEE ON IDENTICAL ISSUE S WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEV ER, REFERENCE IS BEING MADE TO THE FACTS IN ITA NO.1700/PN/2014 TO ADJUDICATE THE ISSUE. 3 . THE ASSESSEE IN ITA NO. 1 700 /PN/201 4 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) E RRED IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S.271(1)(C) FOR RS.1,36,673/ - . 2 . THE ID. CIT(A) FAILED TO APPRECIATED THAT: A ) THE APPELLANT HAS NEITHER CONCEALED THE PARTICULARS OF HIS INCOME NOR FURNISHED ANY INACCURATE PARTICULARS OF SUCH INCOME; B ) UNDI SPUTEDLY THE ADDITION OF RS. 4,02,097/ - MADE TO INCOME OF THE APPELLANT REPRESENTS INCOME EARNED BY LATE SHRI NAVRATAN APPELLANT REPRESENTS INCOME EARNED BY LATE SHRI NAVRATAN MULCHAND RANAWAT, FATHER OF THE APPELLANT, ON THE PLEA THAT HE IS LEGAL REPRESENTATIVE OF HIS FATHER AND AS SUCH NO PENALTY U/S.271(1)( C) COULD BE LEVIED AS THE ADDITION ITSELF IS UNWARRANTED; C ) MERE REJECTION OF BONAFIDE EXPLANATION PER SE WILL NOT BE SUFFICIENT TO ATTRACT PENALTY U/S.271(1)(C); AND D ) THE PENALTY LEVIED BY THE AO IS CONTRARY TO THE FACTS OF THE CASE AND LAW. 3. IN REAC HING TO THE CONCLUSION AND CONFIRMING THE PENALTY THE ID. 3. IN REAC HING TO THE CONCLUSION AND CONFIRMING THE PENALTY THE ID. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS, CONSIDERATIONS, PRINCIPLES AND EVIDENCES WHILE HE WAS OVERWHELMED, INFLUENCED AND PREJUDICED BY IRRELEVANT CONSIDERATIONS AND FACTORS. 4. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS.1,36,673/ - . 5. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE RMD GUTKHA GROUP OF CASES ON 20.01.2010. SIMULTAN EOUSLY, ITA NO S. 1700 & 1701 /PN/201 4 SHRI VINIT RANAWAT 3 WARRANT OF AUTHORIZATION UNDER SECTION 132(1) OF THE ACT WAS ALSO EXECUTED IN THE CASE OF ASSESSEE. THEREAFTER, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED ON 14.09.2010 . THE ASSESSEE IN RESPONSE , FILED THE RETURN OF INCOME ON 20.10.2010 DISC LOSING INCOME OF RS.12,12,644/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSEE WAS CONFRONTED WITH THE LOOSE DOCUMENTS AS PER PAGE NUMBERS 12, 13 AND 15 OF BUNDLE NO.1 , IMPOUNDED FROM THE BUSINESS PREMISES OF M/S. SAGHAVI DHANRUPJI DEVAJI & CO ., A PARTNERSHIP FIRM IN WHICH THE ASSESSEE WAS PARTNER. THE SAID DOCUMENTS PERTAIN TO UNACCOUNTED LOAN TRANSACTIONS , A S PER THE ASSESSING OFFICER A ND THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO THE INCOME ARISING THEREFROM SHOULD NOT BE TAXED. IN REPL Y, THE ASSESSEE POINTED OUT THAT THE DOCUMENTS SEIZED PERTAINED TO THE FINANCE BROKERAGE BUSINESS OF HIS FATHER LATE SHRI NAVRATAN MULCHAND RANAWAT, WHICH WAS CARRIED OUT DURING THE COURSE OF FINANCIAL YEARS 2007 - 08 AND 2008 - 09. THE MODUS OPERANDI OF THE BUSINESS WAS ALSO EXPLAINED BY THE ASSESSEE. FURTHER, THE ASSESSEE IN ORDER TO BUSINESS WAS ALSO EXPLAINED BY THE ASSESSEE. FURTHER, THE ASSESSEE IN ORDER TO AVOID LITIGATION AND TO BUY PEACE OF MIND, OFFERED THE BROKERAGE INCOME THAT WOULD HAVE BEEN EARNED BY HIS FATHER LATE SHRI NAVRATAN MULCHAND RANAWAT, IN HIS FINANCE BROKERAGE BUSINESS @ 15% OF INTEREST PAID FOR THE FINANCIAL YEARS ENDING 31.03.2008 AND 31.03.2009. THE AMOUNT OF BROKERAGE OFFERED TO TAX WAS RS. 4,02,098/ - RELATING TO ASSESSMENT YEAR 2008 - 09 AND RS. 3,45,598/ - RELATING TO ASSESSMENT YEAR 2009 - 10. THE ASSESSEE POI NTED OUT THAT HE HAD VOLUNTARILY OFFERED THE AFORESAID INCOME TO AVOID LITIGATION AND TO BUY PEACE WITH THE DEPARTMENT. THE SAID SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED BY THE ASSESSING OFFICER UNDER PARA 4 AT PAGES 2 AND 3 OF THE ASSESSMENT ORDER PASS ED UNDER SECTION 143(3) OF THE ACT. THE ASSESSING OFFICER IN THIS REGARD NOTES AS UNDER: - IT IS ALSO OBSERVED THAT THE TRANSACTIONS IN THE DOCUMENTS SEIZED PERTAIN TO LATE SHRI NAVRATAN MULCHAND RANAWAT AS MENTIONED BY THE ASSESSEE AND THE ACCOUNTANT SHR I KANSINGH CHARAN IN THEIR STATEMENTS RECORDED ITA NO S. 1700 & 1701 /PN/201 4 SHRI VINIT RANAWAT 4 U/S.132(4) OF THE ACT. AND THE EXPLANATION AS GIVEN TO THE ASST. DIRECTOR OF INCOME TAX, INVESTIGATION UNIT - 11(2), PUNE VIDE ASSESSEE LETTER DATED 15/04/2010. 6. THE ASSESSING OFFICER TREATED THE UNEXPLAI NED BROKERAGE OF RS.4,02,097/ - AS INCOME OF THE ASSESSEE, BEING THE LEGAL REPRESENTATIVE OF LATE SHRI NAVRATAN MULCHAND RANAWAT. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED SEPARATELY FOR CONCEALMENT OF INCOME. IN RESPONSE TO TH E NOTICE ISSUED WITH REGARD TO PENALTY PROCEEDINGS, THE ASSESSEE EXPLAINED FACTUAL MATRIX AND THE MODUS OPERANDI OF THE BUSINESS OF FINANCE BROKERAGE, WHICH WAS CARRIED OUT BY HIS FATHER, WHO HAD EXPIRED. HE ALSO POINTED OUT THAT IN ORDER TO AVOID LITIGAT ION AND TO BUY PEACE, HE HAD OFFERED GROSS RECEIPT AS INCOME WITHOUT REDUCING ANY EXPENDITURE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ADDITION WAS MADE IN THE CASE OF ASSESSEE ONLY BECAUSE OF DISCOVERY AND SEIZURE OF DOCUMENTS IN THIS REGARD DURIN G THE COURSE OF SEARCH / SURVEY AND THE ASSESSEE HAD CHOSEN TO OFFER THE SAID UNACCOUNTED BROKERAGE INCOME ONLY DURING SEARCH ASSESSMENT PROCEEDINGS. THEREFORE, THE ASSESSEE WAS HELD TO HAVE CONCEALED ITS INCOME UNDER THE PROVISIONS OF SECTION 271(1)(C) O F THE ACT AND PENALTY OF RS.1,36,673/ - WAS LEVIED. 7. THE CIT(A) UPHELD THE LEVY OF PENALTY AGAINST THE ASSESSEE. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 9. SHRI PRAMOD SHINGTE APPEARED ON BEHALF OF THE ASSESSEE AND SHRI ANIL CHAWARE A PPEARED ON BEHALF OF THE REVENUE AND PUT FORWARD THEIR SUBMISSIONS. ITA NO S. 1700 & 1701 /PN/201 4 SHRI VINIT RANAWAT 5 10 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST CONFIRMATION OF PENALTY LEVIED FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. CONSEQUENT TO SEARCH OPERATION ON RMD GUTKHA GROUP OF CASES AND ALSO UPON THE ASSESSEE, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCO ME OF RS.12,12,644/ - , WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HOWEVER, CERTAIN DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH, WHICH RELATED TO FINANCE BROKERAGE BUSINESS CARRIED ON BY THE ASSESSEES FATHER SHRI NAVRATAN MULCHAND RANAWAT . THE ASSESSEE WHILE EXPLAINING THE NATURE OF ENTRIES ON THE SAID DOCUMENTS POINTED OUT THAT IT RELATED TO THE FINANCE BROKERAGE INCOME EARNED BY HIS FATHER. HOWEVER, TO AVOID LITIGATION AND TO BUY PEACE, THE ASSESSEE OFFERED ADDITIONAL INCOME IN HIS HANDS ON ACCOUNT OF HIS FATHER. THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT ACCEPTED THE FACT THAT THE TRANSACTION IN THE DOCUMENTS SEIZED PERTAIN ASSESSMENT ACCEPTED THE FACT THAT THE TRANSACTION IN THE DOCUMENTS SEIZED PERTAIN TO SHRI NAVRATAN MULCHAND RANAWAT WHICH WAS MENTIONED NOT ONLY BY THE ASSESSEE BUT ALSO THE ACCOUNTANT SHRI KAN SINGH CHARAN IN THEIR STATEMENTS RECORDED UNDER SECTION 132(4) OF THE ACT. THE EXPLANATION WAS GIVEN TO THE ADIT VIDE LETTER DATED 15.04.2010 AND THEREAFTER, SIMILAR EXPLANATION WAS FILED BEFORE THE ASSESSING OFFICER. IN THE ABOVE SAID FACTS AND CIRCUMST ANCES OF THE CASE, WHERE THE ADDITIONAL INCOME ASSESSED IN THE HANDS OF ASSESSEE REPRESENTS THE INCOME EARNED BY HIS FATHER AND HE HAD OFFERED THE SAME AS HIS LEGAL REPRESENTATIVE, CAN THE ASSESSEE BE HELD TO HAVE CONCEALED THE PARTICULARS OF INCOME, IN OR DER TO ATTRACT THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ADDITIONAL INCOME ASSESSED IN THE HANDS OF ASSESSEE ADMITTEDLY WAS NOT HIS INCOME, BUT WAS OFFERED BY HIM ON BEHALF OF HIS FATHER AS HIS LEGAL REPRESENTATIVE. THE FATHER OF ASSESSEE H AD ALREADY DEMISED AND IN SUCH CIRCUMSTANCES, WE FIND NO MERIT IN HOLDING THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME. ITA NO S. 1700 & 1701 /PN/201 4 SHRI VINIT RANAWAT 6 THE INCOME RELATES TO THE FATHER AND AFTER THE DEMISE OF HIS FATHER, THERE IS NO MERIT IN LEVY OF PENALTY FOR CONCEALM ENT IN THE HANDS OF ASSESSEE, WHO WAS THE LEGAL REPRESENTATIVE OF HIS FATHER. IN VIEW THEREOF, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED . 1 1 . THE FACTS A ND ISSUE IN ITA NO. 1 701 /PN/201 4 ARE IDENTICAL TO THE FACTS AND ISSUE IN ITA NO. 1 700 /PN/201 4 AND OUR DECISION IN ITA NO. 1 700 /PN/201 4 SHALL APPLY MUTATIS MUTANDIS TO ITA NO. 1 701 /PN/201 4 . 1 2 . IN THE RESULT, BOTH THE APPEAL S OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 14 TH D AY OF JU LY , 201 6 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) ( R.K. PANDA ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 14 TH J U LY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - II , PUNE ; 4. / THE CIT (CENTRAL) , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SEC RETARY , / ITAT, PUNE