The ITO, Ward-2, Bhuj V. Shri Hiralal Laxmidas Mota, Bhuj

ITA 188/RJT/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1110 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-05-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 04-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: MJ RANPURA
• Keywords: Search and seizure; Document seized; Documents seized
• Section: 153A; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.188/RJT/2011 / ASSTT. YEAR: 2003-04 ITO, WARD - 2 BHUJ. VS SHRI HIRALAL LAXMIDAS MOTA L/H. OF LATE SHRI LAXMIDAS RAJGOR NEW STATION ROAD BHUJ-KUTCH. / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI AVINASH KUMAR, AR ASSESSEE BY : SHRI M.J. RANPURA, CA / DATE OF HEARING : 21/05/2015 / DATE OF PRONOUNCEMENT: 29/05/2015 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE AGAINST ORDER OF THE CIT(A)-IV, AHMEDAB AD DATED 11.2.2011 FOR THE ASSTT.YEAR 2003-04. 2. THE SOLE GROUND OF THE APPEAL TAKEN BY THE REVEN UE IS THAT THE CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE PE NALTY UNDER SECTION 271(1)(C) OF THE ACT OF RS.9,46,000/-. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH WAS CA RRIED OUT IN THE CASE OF SHRI KUNVERJI N. PATEL AND OTHERS ON 11.10. 2006, AND CERTAIN PAPERS/DOCUMENTS RELATING TO THE ASSESSEE WERE FOUN D AND SEIZED. SUBSEQUENTLY, THE ASSESSEES STATEMENT WAS RECORDED , IN WHICH, HE DISCLOSED INCOME OF RS.30 LAKHS ON ADHOC BASIS SUBJECT TO THE CONDITIONS THAT NO PENALTY PROCEEDINGS ARE INITIATED AND IMMUN ITY FROM PENALTY PROVISION IS GRANTED. THEREAFTER, NOTICE UNDER SEC TION 153C WAS ISSUED AND THE ASSESSEE FILED RETURN FOR THE YEAR UNDER CO NSIDERATION PURSUANT ITA NO.188/RJT/2011 2 TO THE SAID NOTICE, WHEREIN, HE DISCLOSED ADDITIONA L INCOME OF RS.30 LAKHS. THE AO ACCEPTED THE RETURNED INCOME, AS THE ASSESSED INCOME WITHOUT ANY INQUIRY. 4. THEREAFTER, THE AO INITIATED PROCEEDINGS AS THE ADDITIONAL INCOME OF RS.30 LAKHS DISCLOSED BY THE ASSESSEE WAS CONSID ERED AS CONCEALED INCOME FOR THE YEAR UNDER CONSIDERATION, AND LEVIED PENALTY OF RS.9,46,000/-. 5. ON APPEAL, THE CIT(A) DELETED THE PENALTY BY FOL LOWING THE DECISION OF THE RAJKOT BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. BALAJI MULTIFLEX PVT. LTD. IN IT(SS) NO.64 AND 65/R JT/09 WHEREIN IT IS HELD AS UNDER: THE CONCLUSION THAT INCOME BELONGED TO THE ASSESSE E IS BASED ON THE OFFER OF THE ASSESSEE AND NOT ENTIRELY ON THE S EIZED DOCUMENTS. AS THE SAID OFFER IS SAID TO HAVE BEEN MADE TO AVOID LITIGATION AND IS AN ESTIMATE OF INCOME THAT MIGHT NOT HAVE BEEN TAXED AND AS NO ATTEMPT WAS MADE EVEN TO FIND OUT T HE LOCUS OF THE EARNING AND THE PERSON WHO CONCEALED SUCH EARNI NG, PENALTY U/S.271(1)(C) FAILS TO STAND. FURTHER, HE RELIED ON THE DECISION OF THIRD MEMBER OF AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL, WHEREIN IT WAS HELD AS UNDER: IN THE CASE OF KIRIT DAHYABHAI PATEL, SUBSTANTIAL INCRIMINATING DOCUMENTS WERE FOUND WHICH LEAD TO THE ADVERSE INFE RENCE THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS I NCOME. WHEREAS IN THE CASE OF THE PRESENT ASSESSEE, THERE IS NO INCRIMINATING MATERIAL WHICH DRAWS ADVERSE INFERENC E, WHERE THERE IS NO EVIDENCE OF CONCEALMENT THE VERY LEVIAB ILITY OF CONCEALMENT PENALTY DOES NOT ARISE. THIS ASPECT H AS BEEN WELL APPRECIATED BY THE HONBLE AM, WHO ALTHOUGH IN FAVO UR OF LEVYING PENALTY HAD, RELIED UPON THE DECISION OF HONBLE AL LAHABAD HIGH COURT IN THE CASE OF BHAIRAV LAL VERMA VS. UNION OF INDIA (1998) 146 CTR ALL 16, WHEREIN THE HONBLE COURT HAS HELD AS UNDER: AS A PRINCIPLE OF LAW, IT CANNOT BE HELD THAT THE DISCLOSURE OF THE CONCEALED INCOME AFTER THE RAID OR SEARCH CANNOT BE VOLUNTARY. IT IS A QUESTION WHICH HAS TO BE DECIDED BY THE DEPART MENT IN EACH CASE ON THE BASIS OF THE MATERIAL AVAILABLE ON THE RECORD. THE ITA NO.188/RJT/2011 3 CRITERIA FOR DECIDING THIS QUESTION IS TO FIND OUT AS TO WHETHER THE DEPARTMENT HAS ANY INCRIMINATING MATERIAL WITH REGA RD TO THE DISCLOSED INCOME. IF THE ANSWER IS AFFIRMATIVE, TH E DISCLOSURE CANNOT BE SAID TO BE VOLUNTARY. BUT IF THE DEPARTM ENT HAS NO INCRIMINATING MATERIAL WITH REGARD TO THE INCOME DI SCLOSED, THE DISCLOSURE IS LIABLE TO BE TREATED AS VOLUNTARY EVE N IF IT WAS MADE AFTER SEARCH. HE FURTHER RELIED ON THE DECISION OF HONBLE CALCU TTA HIGH COURT IN THE CASE OF CIT VS. SURESH CHAND BANSAL, 329 ITR 33 0 (CAL) WHEREIN IT WAS HELD AS UNDER: ADDITIONAL INCOME OFFERED BY ASSESSEE AFTER THE SE ARCH HAVING BEEN ACCEPTED IN ITS ENTIRETY WITHOUT DETAILED DISC USSION OF THE SEIZED DOCUMENTS AND WITHOUT MAKING ANY ATTEMPT TO OBTAIN THE EXPLANATION OF THE ASSESSEE, PENALTY U/S.271(1)(C) IS NOT LEVIABLE. THEREAFTER, THE CIT(A) HELD AS UNDER: 3.7 THEREFORE, IN VIEW OF THE FACTS OF THE CASE AN D BY FOLLOWING THE BINDING DECISION OF THE HON'BLE RAJKOT TRIBUNAL AS AFORESAID, IT IS HELD THAT THE APPELLANT HAD NOT CONCEALED THE PARTICULARS OF INCOME. THE DISCLOSURE OF ADDITIONAL INCOME IN THE RETURN FILED IN RESPONSE TO THE NOTICE ISSUED U/S. 153C OF THE ACT WAS VOLUNTARY AND THE SAME WAS ACCEPTED BY THE ASSESSING OFFICER IN ITS ENTIRETY WITHOUT LINKING IT TO ANY MATERIAL RECOVERED OR SEI ZED DURING THE COURSE OF SEARCH .AND WITHOUT MAKING ANY ATTEMPT TO OBTAIN THE EXPLANATION OF THE ASSESSEE. THE LD. COUNSEL HAD CA TEGORICALLY SUBMITTED THAT THE STATEMENT OF THE APPELLANT WAS R ECORDED DURING POST SEARCH INVESTIGATION AND DISCLOSED THE INCOME OF RS.30,00,000/- ON AD HOC BASIS ONLY WITH A VIEW TO AVOID LONG DRAWN LITIGATIONS AND BUY PEACE OF MIND. THE EXPLAN ATION-5 TO SEC. 271(1)(C) OF THE ACT CANNOT BE APPLIED IN THE CASE OF THE APPELLANT, AS THE ASSESSING OFFICER HAD NO WHERE ES TABLISHED THAT THE ASSESSEE WAS FOUND TO BE THE OWNER OF ANY MONEY , BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, WHICH HAD NOT BEEN ACCOUNTED FOR. EVEN IF, IT IS ACCEPTED THAT THE ASS ESSEE WAS FOUND IN POSSESSION OF UNEXPLAINED RECORDS IN THE COURSE OF SEARCH AND IN THE COURSE OF THE RECORDING OF THE STATEMENT IT WAS INTER ALIA DEPOSED THAT SUCH INCOME WAS UNRECORDED, THE DEEMIN G FICTION SHOULD BE THAT THE ASSESSEE CONCEALED THE INCOME RE PRESENTING THE QUANTUM OF SUCH INCOME/INVESTMENT AND THIS FICT ION COMES TO AN END WHEN THE CORRESPONDINQ AMOUNT WAS OFFERED FO R TAXATION AND THE SOURCE OF INVESTMENT WAS ALSO EXPLAINED. T HE ASSESSEE OFFERED THE AMOUNT OF ADDITIONAL INCOME FOR TAX IN THE RESPECTIVE ITA NO.188/RJT/2011 4 YEAR, WHICH HAD NOT BEEN CHALLENGED BY THE ASSESSIN G OFFICER. THEREFORE, THE BENEFIT OF EXPLANATION 5 IS AVAILABL E TO THE ASSESSEE ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE. THIS VIEW IS SUPPORTED BY THE FINDING OF THE HON'BLE TRI BUNAL RECORDED IN PARA-10 OF THEIR ORDER. IF, THE ASSESSING OFFICE R WAS OF THE VIEW THAT THE ADDITIONAL INCOME OF RS.30,00,000/- SO DIS CLOSED IS RELATED TO CERTAIN SEIZED DOCUMENTS HE WAS DUTY BOU ND TO LINK THIS ADDITIONAL INCOME TO THE SEIZED MATERIAL OR AT LEAST ASKED THE ASSESSEE TO EXPLAIN AS TO HOW THE ADDITIONAL INCOME WAS EARNED AND WHAT IS THE BASIS OF ITS CALCULATION. THE ASSES SING' OFFICER HAD NOT RECOURSED TO SUCH AN ACTION. THE APPELLANT'S ST AND IS THUS JUSTIFIED THAT THE ADDITIONAL INCOME WAS DISCLOSED TO BUY MENTAL PEACE AND TO AVOID LONG DRAWN LITIGATION. THE HON'B LE NAGPUR TRIBUNAL HAD RIGHTLY HELD IN THE CASE OF ACIT VS. MALU ELECTRODES P. LTD., 27 TTJ 599 (NAG.) AS RELIED UPON BY THE LD . COUNSEL, THAT IT IS POSSIBLE THAT THE ASSESSEE WOULD HAVE MADE TH E SURRENDER DUE TO A NUMBER OF POSSIBLE REASONS AND IN SUCH A S ITUATION, NO PENALTY CAN BE LEVIED. THE CHARGE AGAINST THE ASSES SEE IS CONCEALMENT OF PARTICULARS OF INCOME. WHERE THE CHA RGE IS OF CONCEALMENT, THE ASSESSING OFFICER HAS TO ESTABLISH THAT THE ASSESSEE HAS NOT DISCLOSED THE PARTICULARS OF INCOM E UNDER THE MAIN PROVISIONS OR THE CASE OF THE ASSESSEE FALLS W ITHIN THE SCOPE OF THE DEEMING FICTIONS CREATED UNDER THE EXP LANATIONS. THE BURDEN IS UPON THE ASSESSING OFFICER TO ESTABLISH T HE EXISTENCE OF THE CHARGE ON THE BASIS OF MATERIAL ON RECORD. REFE RENCE MAY BE MADE TO PARA-11 OF THE ORDER OF THE HON'BLE TRIBUNA L DATED 10.08.2010. THOUGH, THE MENS REA OF WILLFUL CONCEAL MENT IS NOT REQUIRED TO BE PROVED AS PER THE DECISION OF THE HO N'BLE SUPREME COURT IN DHARMENDRA TEXTILE PROCESSORS 306 ITR 277 (SC), THE ASSESSING OFFICER IS DEFINITELY REQUIRED TO PROVE T HAT THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PA RTICULARS OF INCOME. THE ASSESSING OFFICER COULD NOT ESTABLISH T HE CHARGE OF CONCEALMENT OF INCOME ON THE APPELLANT. CONSIDERING THESE SPECIFIC FACTS, NO PENALTY WAS LEVIABLE ON THE APPE LLANT FOR CONCEALMENT OF PARTICULARS OF INCOME OF THE ADDITIO NAL INCOME OF RS. 30,00,000/- SO DISCLOSED FOR THE YEAR UNDER CON SIDERATION, THE PENALTY SO LEVIED FOR RS. 9,46,000/- ON THE VOL UNTARILY DISCLOSED ADDITIONAL INCOME, BY CONSIDERING IT TO B E THE CONCEALED INCOME IS HEREBY DELETED. THE SECOND, THIRD AND FOU RTH GROUNDS OF THE APPEAL ARE ACCORDINGLY ALLOWED. 6. DR SUPPORTED THE ORDER OF THE AO. 7. AR SUPPORTED THE ORDER OF THE CIT(A). ITA NO.188/RJT/2011 5 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE, THE UNDISPUTED FACTS OF THE CASE ARE THAT IN PURSUANCE TO THE NOTICE ISSUED UNDER SECTION 153C, THE ASSESSEE FILE D RETURN OF INCOME WHEREIN HE DISCLOSED ADDITIONAL INCOME OF RS.30 LAK HS. THE ASSESSMENT WAS MADE BY THE AO AT THE RETURNED INCOME FILED BY THE ASSESSEE. THEREAFTER, THE AO LEVIED PENALTY ON ACCOUNT OF CON CEALMENT OF INCOME BY THE ASSESSEE FOR RS.30 LAKHS, WHICH WAS DISCLOSE D AS ADDITIONAL INCOME OF THE ASSESSEE, IN THE RETURN FILED IN PURS UANCE TO THE NOTICE ISSUED UNDER SECTION 153C OF THE ACT. 9. ON APPEAL, THE CIT(A) DELETED THE LEVY OF PENALT Y. 10. BEFORE US, THE DR ARGUED THAT THE CIT(A) WAS NO T JUSTIFIED IN DELETING THE PENALTY AND THAT HE SUPPORTED THE ORDE R OF THE AO. WE FIND THAT THE DR COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE CIT(A). 11. WE FIND THAT THE HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO.1181 OF 2010 WITH TAX APPEAL NO.1182 OF 2010 TO TAX APPEAL NO.1183 OF 2010 IN THE CASE OF KIRIT DAHYABHAI PATE L VS. ASSTT. COMMISSIONER OF INCOME-TAX, VIDE ORDER DATED 03/12/ 2014 HELD AS UNDER :- 13. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO CONSIDERING THE DECISIONS RELIED UPON BY LEARN ED SENIOR ADVOCATE FOR THE APPELLANT, WE ARE OF THE CONSIDERE D OPINION THAT THE VIEW TAKEN BY THE TRIBUNAL IS ERRONEOUS. THE CI T(A) RIGHTLY HELD THAT IT IS NOT RELEVANT WHETHER ANY RETURN OF INCOME WAS FILED BY THE ASSESSEE PRIOR TO THE DATE OF SEARCH AND WHE THER ANY INCOME WAS UNDISCLOSED IN THAT RETURN OF INCOME. IN VIEW OF SPECIFIC PROVISION OF SECTION 153A OF THE I.T. ACT, THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 15 3(A) OF THE I.T. ACT IS TO BE CONSIDERED AS RETURN FILED UNDER SECTI ON 139 OF THE ACT, AS THE ASSESSING OFFICER HAS MADE ASSESSMENT O N THE SAID RETURN AND THEREFORE, THE RETURN IS TO BE CONSIDERE D FOR THE PURPOSE OF PENALTY UNDER SECTION 271(1)(C) OF THE I .T. ACT AND THE PENALTY IS TO BE LEVIED ON THE INCOME ASSESSED OVER AND ABOVE THE INCOME RETURNED UNDER SECTION 153A. IF ANY. ITA NO.188/RJT/2011 6 12. THUS, WE FIND THAT THE ORDER OF THE CIT(A) IS S UPPORTED BY THE ABOVE DECISION OF THE HONBLE GUJARAT HIGH COURT, H ENCE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A), WHICH IS HERE BY CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 13. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 29 TH MAY, 2015 AT RAJKOT. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER