DCIT CEN CIR 4(4) CEN RG 4, MUMBAI V. VELJI RUPSHI FARIA, MUMBAI

ITA 1849/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1684 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 16-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Search and seizure; Initiation of penalty proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI M ANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO. 1849 / MUM/2017 ( ASSESSMENT YEAR : 20 08 09 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 4(4) CENTRAL RANGE 4, MUMBAI . APPELLANT V/S VELJI RUPSHI FARIA MAHAVIR GENERAL STORE 154, BORA BAZAR STREET FORT, MUMBAI 400 001 PAN AAIPS5194D . RESPONDENT REVENUE BY : SHRI RAJEEV GUBGOTRA ASSESSEE BY : SHRI KIRIT SHETH DATE OF HEARING 31.07.2018 DATE OF ORDER 31.08.2018 O R D E R PER SAKTIJIT DEY, J.M. A FORESAID APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST ORDER DATED 28 TH DECEMBER 2016, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 52, MUMBAI, DELETING PENALTY OF ` 74,00,477 IMPOSED UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) FOR THE ASSESSMENT YEAR 2008 09 . 2 VELJI RUPSHI FARIA 2 . THE ONLY EFFECTIVE GROUND RAISED BY TH E ASSESSEE READS AS UNDER: I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE PENALTY OF ` 74,00,477 LEVIED U/S 271AAA. 3 . BRIEF FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL. PURSUANT TO A SEARCH AND SEIZURE OPERATION UNDER SECTION 132(1) OF THE ACT IN CERTAIN BUSINESS CONCERNS , WHEREIN , THE ASSESSEE IS STATED TO BE THE KEY PERSON, T HE ASSESSING OFFICER INITIATED PROCEEDINGS UNDER SECTION 153C OF THE ACT AGAINST THE ASSESSEE. PURSUANT TO THE NOTICE ISS UED UNDER SECTION 153C OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REFERRING TO THE INCRIMINATING MATERIAL FOUND IN COURSE OF SEARCH AND SEIZURE OPERATION MADE A NUMBER OF ADDITION S AS A RES ULT OF WHICH THE TOTAL INCOME WAS DETERMINED AT ` 7,40,04,778. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER ALSO INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 271AAA OF THE ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED FOR IMPO SITION OF PENALTY UNDER SECTION 271AAA OF THE ACT, THOUGH, THE ASSESSEE FILED ITS EXPLANATION ON 22 ND MARCH 2013, HOWEVER, THE ASSESSING OFFICER REJECTING THE EXPLANATION OF THE ASSESSEE PROCEEDED TO PASS AN ORDER ON 13 TH MARCH 2014, IMPOSING PENALTY OF ` 74,00,477 UNDER SECTION 271AAA OF THE ACT. BEING 3 VELJI RUPSHI FARIA AGGRIEVED OF THE PENALTY ORDER SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4 . THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND HAVING FOUN D THAT SEARCH AND SEIZURE OPERATION UNDER SECTION 132(1) OF THE ACT WAS NOT CARRIED OUT IN CASE OF THE ASSESSEE , FOLLOWED THE DECISION OF THE TRIBUNAL, AHMEDABAD BENCH, IN CASE OF DCIT V/S M/S. K.G. DEVELOPERS, ITA NO.1139/AHD./ 2012, DATED 13 TH SEPTEMBER 2013, AND DELETED THE PENALTY IMPOSED. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE GROUND RAISED. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTING THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) ALSO RELIED UPON THE FOLLOWING DECISIONS: I ) DCIT V/S M/S. K.G. DEVELOPERS, ITA NO.1139/AHD./ 2012, DATED 13.09.2013; II ) DCIT V/S JAIN CO. DEVELOPERS PVT. LTD., ITA NO.6379/DEL./2016 DATED 12.02.2018; AND III ) DCIT V/S SAM INDIA ABH IMANYU HOUSING, ITA NO.12 57/DEL./ 2015, DATED 05.02.2016. 7 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. FROM THE GROUND RAISED BY THE DEPARTMENT, IT IS EVIDENT, THE 4 VELJI RUPSHI FARIA DEPARTMENT ACCEPTS THE FACT THAT THE ASSESSING OFFICER HAS IMPOSED PENALTY UNDER SECTION 271AAA OF THE ACT. THAT BEING THE CASE, WE PROCEED TO EXAMINE THE VALIDITY OF THE PROCEEDING INITIATED UNDER SECTION 271AAA OF THE ACT. A READING OF THE AFORESAID PROVISION MAKES IT CLEAR THAT ONLY IN CASE OF A PERSON IN WHOSE CASE S EARCH AND SEIZURE OPERATION UNDER SECTION 132(1) OF THE ACT IS CARRIED OUT ON OR AFTER 1 ST DAY OF 2007 BUT BEFORE THE 1 ST DAY OF JULY 2010, PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE ACT CAN BE INITIATED. THUS, AS PER THE AFORESAID STATUTORY PROVISION , THE PRIMARY CONDITION FOR INITIATING PENALTY PROCEEDING IS , A PERSON CONCERNED MUST HAVE BEEN SUBJECTED TO A SEARCH AND SEIZURE OPERATION UNDER SECTION 132(1) OF THE ACT. UNDISPUTEDLY, IN THE FACTS OF THE PRESENT CASE, NO SEARCH AND SEIZURE OPERATION UND ER SECTION 132(1) OF THE ACT WAS CARRIED OUT IN CASE OF THE ASSESSEE. THIS FACT IS CLEARLY EVIDENT FROM THE INITIATION AND COMPLETION OF PROCEEDINGS UNDER SECTION 153C OF THE ACT. THUS, THE PRIMARY CONDITION OF SECTION 271AAA OF THE ACT REMAINS UNSATISFIED . EVEN OTHERWISE ALSO, IF PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE ACT IS INITIATED AG AINST A PERSON WHO IS NOT SUBJECTED TO SEARCH ACTION UNDER SECTION 132(1) OF THE ACT, THE PROVISION ITSELF BECOMES UNWORKABLE AS NO DECLARATION UNDER SECTION 132(4 ) OF THE ACT IS POSSIBLE FROM ANY PERSON OTHER THAN THE PERSON AGAINST WHOM THE SEARCH AND SEIZURE UNDER SECTION 132(1) IS CARRIED OUT. THUS, IN SUCH 5 VELJI RUPSHI FARIA CIRCUMSTANCES, SUB SECTION (2) TO SECTION 271AAA OF THE ACT CANNOT BE GIVEN EFFECT TO. IN VIEW OF THE AFOR ESAID, WE AGREE WITH THE LEARNED COMMISSIONER (APPEALS) THAT INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE ACT IN THE INSTANT CASE IS INVALID. OUR AFORESAID DECISION GET S SUPPORT FROM THE DECISIONS RELIED UPON BY THE LEARNED AUTHORISED REPR ESENTATIVE. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE LEARNED COMMISSIONER (AP PEALS) BY DISMISSING THE GROUND RAISED BY THE REVENUE. 8 . IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.08.2018 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 31.08.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI