DCIT CENTRAL CIRCLE-1, Nashik V. SHRI YOGESH TOTARAM PATIL, Nashik

ITA 194/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9838 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-07-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 10-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJIB JAIN
• Keywords: Unexplained expenditure; Business expenditure; Search and seizure
• Section: 69C; 153A; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 194/PN/2011 (ASSTT. YEAR : 2 002-03) DY. COMMISSIONER OF INCOME TAX, APPELLANT CENTRAL CIRCLE- 1, 3 RD FLOOR, KENDRIYA RAJASWA BHAVAN RAM GANESH GADKARI CHOWK, OLD AGRA ROAD NASHIK 422002 V. SHRI YOGESH TOTARAM PATIL RESPONDENT M/S. AKAR CONSTRUCTION, INDRAYANI BUNGLOW, SHRIRANG NAGAR, GANGAPUR ROAD, NASHIK PAN : ACLPP9752B APPELLANT BY : SHRI. NIKHIL PATHAK RESPONDENT BY : SHRI.RA JIB JAIN DATE OF HEARING : 13/09/ 12 DATE OF PRONOUNCEMENT : 12-11-12 O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL, THE REVENUE HAS CHALLENGED THE IM PUGNED ORDER OF THE LD. CIT(A) I, NASHIK DATED 19/11/2010 FOR THE A.Y. 2002-03 DELETING THE PENALTY LEVIED BY THE A.O. U/S. 271(1) (C ) OF THE ACT. 2. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GR OUNDS : (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE ENTIR E PENALTY LEVIED BY THE AO AT RS. 6,49,108/- U/S. 271(1)(C) OF THE I.T. ACT FOR A.Y. 2002-2003 IGNORING THE FACT THAT PENALTY AT MINIMUM RATE OF R S.4,89,855/- OUT OF RS. 6,49,108/- WAS ATTRIBUTED TO THE INCOME SURRENDERED , BY THE ASSESSEE IN THE RETURN FILED U/S. 153A AFTER SEARCH AND SEIZURE OPERATION. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) ERRED ON PLACING RELIANCE ON EXPLANATION 1B TO SECT ION 271(1)(C ), AS THIS IS A CASE INVOLVING SEARCH & SEIZURE ACTION. (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) ERRED IN IGNORING THE DUE PROVISIONS OF LAW AS PER EXPLANATION 5 TO SECTION 271(1)(C ) OF THE ACT, AS PER WHICH THE ASSESSEE IS LIABLE TO PENALTY ON THE UNDISCLOSED INCOME, AS THE A.Y. 2002-03 PERTAINS T O THE PERIOD PRIOR TO THE DATE OF SEARCH. 2 ITA NO. 194/PN/2011 SHRI YOGESH TOTARAM PATIL A.Y.2002-03 (IV) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT NO PEN ALTY U/S. 271(1)(C) IS TO BE LEVIED IN RESPECT OF INCOME WHICH HAS ALREADY BE EN DECLARED BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 153A OF THE I.T. ACT, THEREBY IGNORING THE RATIO OF THE DECISION OF HONB LE JURISDICTIONAL ITAT, PUNE A BENCH IN THE CASE OF NARAYANDAS M. THAKKAR IN ITAT NO. 872 TO 874/PN/09/ AND KARSANDAS M. THAKKAR IN ITAT NO. 875 TO 879/PN/09 IN THE ORDER DATED 05.02.2010. 2. BRIEFLY STATED, THE FACTS ARE AS UNDER. THE ASS ESSEE IS A GOVERNMENT CONTRACTOR. THERE WAS SEARCH AND SEIZUR E ACTION U/S. 132 OF THE ACT IN THE CASE OF AMBA GROUP OF CASES ON 24 TH JANUARY, 2004. NOTICE WAS ALSO ISSUED TO THE ASSESSEE U/S. 153A AS HE WAS ALSO COVERED IN THE SAID SEARCH OPERATION. THE ASSESSEE FILED T HE RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 153A DECLARING INCOME OF RS . 39,15,370/- WHICH INCLUDED INCOME OFFERED TO TAX ON ACCOUNT OF UNVOUC HED UNEXPLAINED EXPENDITURE OF RS. 16,87,500/- WHICH WAS DECLARED I N THE STATEMENT RECORDED DURING THE COURSE OF SEARCH U/S. 132(4) OF THE ACT. THE A.O HAS MADE THE ADDITION OF RS. 4,33,770/-. THE LD CIT(A) GAVE RELIEF OF RS. 50,000/-, BUT THE TRIBUNAL DELETED THE ENTIRE ADDIT ION. THE A.O. LEVIED PENALTY OF RS. 6,49,108/- U/S. 271(1)(C ) OF THE AC T, BUT INCOME OFFERED TO TAX BY THE ASSESSEE IN RETURN FILED U/S. 153A AT RS . 16,87,500/- AND ALSO ON THE ADDITION OF RS. 4,33,770/- SUSTAINED IN FIRS T APPEAL BY THE LD CIT(A). THE ASSESSEE CHALLENGED THE IMPUGNED ORDER OF THE PENALTY BEFORE THE LD CIT(A), WHO DELETED THE SAME. THE OP ERATIVE PART OF THE ORDER OF THE LD CIT(A) IS AS UNDER : 7. I HAVE CAREFULLY CONSIDERED THE IMPUGNED PENALTY ORDER, APPELLATE ORDER IN QUANTUM APPEAL AND SUBMISSIONS OF THE APPE LLANT. THE APPELLANT HAS FILED EXPLANATION THAT THE NOTINGS OF UNRECORDE D UNVOUCHED BUSINESS EXPENDITURE WAS FOUND WITH MR. GABHANE AND MR. CHOK SHI AND NOT WITH THE APPELLANT AND HENCE PROVISIONS OF SECTION 132(4 A) OF THE ACT ABOUT PRESUMPTION OF OWNERSHIP OF THE SAID NOTINGS SEIZED AND THE PRESUMPTION THAT THE CONTENTS OF THE PAPERS ARE TRUE IS APPLICA BLE ONLY IN THE CASES OF SHRI GABHANE AND SHRI CHOKSI AND NOT TO THE CASE O F THE APPELLANT. THE APPELLANTS CLAIM THEREFORE, THAT THE INCOME OFFERE D TO TAX WAS ONLY TO BUY PEACE OF MIND AND THE POSITIVE INCOME WAS NOT PROVE D TO THE HILT BY THE A.O. IS FOUND TO BE CORRECT. FURTHER, THE APPELLAN T HAS ALSO EXPLAINED THAT AS THE ADDITION IS ON ACCOUNT OF UNDISCLOSED U NVOUCHED BUSINESS EXPENDITURE, NO REAL INCOME HAS BEEN EARNED AND THE ADDITION U/S. 69C IS ONLY DUE TO DEEMING PROVISION. THE EXPLANATION OFF ERED BY THE APPELLANT IS A BONAFIDE EXPLANATION AND NOT FOUND TO BE FALSE . FURTHER, THE APPELLANT HAS FULLY CO-OPERATED WITH THE DEPARTMENT IN OFFERING TO TAX THE ABOVE ALLEGED UNEXPLAINED EXPENDITURE TO TAX, THOUG H THE SOURCE WAS NOT PROVED TO THE HILT TO HAVE BEEN ACTUALLY EXPENDED B Y THE APPELLANT. IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND PARTICUL ARLY IN VIEW OF THE EXPLNATION=1B TO SECTION 271(1)(C) OF THE ACT I AM OF THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN LEVYING PENA LTY U/S. 271(1)(C ) ON THE 3 ITA NO. 194/PN/2011 SHRI YOGESH TOTARAM PATIL A.Y.2002-03 AMOUNT OF RS. 16,87,500/- OFFERED TO TAX BY THE APP ELLANT IN RETURN OF INCOME FILED. NOW THE REVENUE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE LD. COUNSEL SUBMITS THAT THE IDENTICAL ADDITION WAS MADE IN THE A.Y. 2003-04, BUT NO PENALTY IS LEVIED. HE SUB MITS THAT THERE SHOULD BE CONSISTENCY IN THE APPROACH OF THE A.O. IF THE A DDITIONS ARE MADE ON THE SAME SET OF FACTS FOR NOT OPTING THE LEVY OF PE NALTY IN ONE YEAR AND FOR LEVYING THE PENALTY IN ANOTHER YEAR IS NOT JUST IFIED. HE FURTHER SUBMITS THAT EXPLANATION 5A TO SEC. 271(1)(C ) IS NOT APPLI CABLE TO THE A.Y. 2002- 03 AND IDENTICAL ISSUE HAS ALREADY BEEN CONSIDERED BY THE B BENCH OF PUNE TRIBUNAL IN THE CASE OF CHANDAN K. SHEWANI, ITA NOS. 235 & 236/PN/2010, ORDER DATED 29 TH AUGUST,2012. THE FINDINGS OF THE TRIBUNAL ORDER READS AS UNDER : 13. IN THE A.Y. 2003-04, IT IS ADMITTED FACTUAL PO SITION THAT THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FI LED IN RESPONSE TO NOTICE U/S. 153A IS RS. 37,99,170/-. IN THIS YEAR, THE ASSESSEE FILED THE RETURN OF INCOME ON 29.4.2005 I.E. WITHIN 2 YEARS F ROM THE END OF THE A.YS. 2003-04 AS PER THE TIME LIMIT PRESCRIBED U/S . 153(1) FOR COMPLETING THE ASSESSMENT U/S. 143 OR 144 OF THE ACT. WHI LE COMPLETING THE ASSESSMENT, THE A.O MADE THE MERE ADDITION OF RS. 5 0,000/- BUT OTHERWISE, THE RETURN OF INCOME WAS ACCEPTED. AS INTERPRETED BY THE DIFFERENT JUDICIAL PRONOUNCEMENT, THE EXPRESSION T AX SOUGHT TO BE EVADED APPEARING IN CLAUSE (C) IN SEC. 271(1) IS T O BE UNDERSTOOD AS A DIFFERENCE BETWEEN THE INCOME DECLARED BY THE ASSES SEE IN THE RETURN OF INCOME AND INCOME FINALLY ASSESSED. AFTER INTRODUC TION OF SEC. 153A W.E.F. 1.6.2003, THERE IS NO SPECIFIC PENALTY PROV ISION TO DEAL WITH THE ASSESSMENT FRAMES IN CONSEQUENCES OF SEARCH AND SEI ZURE ACTION U/S. 132 OF THE ACT. EXCEPT RS. 75,807/- DECLARED BY THE AS SESSEE AS A CASH, THERE IS NO DECLARATION BASED ON ANY MONEY, BULLION, JEWE LLERY OR OTHER VALUABLE ARTICLES OR THING IN THE NATURE OF ASSETS. AS DISC USSED IN THE ASSESSEES APPEAL FOR A.Y. 2002-03, EXPLANATION 5A IS APPLICAB LE FROM 1.6.2007 AND HENCE, IN THIS YEAR, WE ARE ONLY CONCERNED WITH EXP LANATION-5 AS THE DATE OF SEARCH IS PRIOR TO 1.6.2007. EXCEPT THE ESTIMAT ED ADDITION OF RS. 50,000/-, NO ADDITION IS MADE BY THE A.O. THE A.O HAS ACCEPTED THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF IN COME FILED IN RESPONSE TO NOTICE U/SEC. 153A AND IN RESPECT OF SAID INCOME . EXPLANATION-5 CANNOT BE APPLIED. MOREOVER, NO OTHER INCOME IS ADDED WHI CH IS BASED ON ANY INCRIMINATING MATERIAL WHICH CAN BE SUBJECTED TO TH E PENAL CONSEQUENCES. IT IS TRUE THAT THE ASSESSEE FILED THE RETURN OF IN COME FOR THE A.Y. 2003-04 ONLY AFTER SEARCH ACTION BY THE DEPARTMENT, BUT, AS THERE IS NO SPECIFIC PROVISION TO LEVY THE PENALTY ON THE INCOME DECLARE D BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 153A, E XCEPT EXPLANATION-5, WE HAVE TO APPLY PROVISIONS OF SEC. 271(1)(C ) AS ARE APPLICABLE IN THE NORMAL ASSESSMENTS. 4 ITA NO. 194/PN/2011 SHRI YOGESH TOTARAM PATIL A.Y.2002-03 4. WE HAVE ALSO HEARD THE LD. D.R. WE FIND THAT DU RING THE COURSE OF THE SEARCH, THE ASSESSEE MADE DECLARATION IN THE ST ATEMENT RECORDED U/S. 132(4) OF THE ACT. ADMITTEDLY, THAT WAS NOT BASED ON ANY MONEY, BULLION, JEWELLERY OR ANY OTHER ASSET BUT WHICH WAS IN RES PECT OF BOGUS EXPENDITURE CLAIMED BY THE ASSESSEE. THE ASSESSEE DECLARED THE INCOME IN THE RETURN FILED U/S. 153A AND ALSO PAID THE TAX ES. ON THE IDENTICAL FACTS, THE ASSESSEE ALSO MADE THE DECLARATION IN TH E A.Y. 2003-04. IN OUR OPINION, THE ASSESSEE MADE THE VOLUNTARY DECLARATIO N IN THE RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S. 153A. MOREOVER, THE PRINCIPLES LAID DOWN BY THE ITAT B BENCH, PUNE, IN THE CASE OF CHANDAN K. SHEWANI (SUPRA) ARE SQUARELY APPLICABLE TO THE ASSESSEES CASE AS A DMITTEDLY, THE PENALTY IS LEVIED ON THE INCOME DECLARED BY THE ASSESSEE AN D NOT ON THE ADDITION MADE BY THE A.O. ANOTHER ASPECT TO BE CONSIDERED H ERE IS THAT EXPLANATION-5A IS NOT APPLICABLE TO THE A.Y. 2002-0 3 AND HENCE, THE INCOME DECLARED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 153A CANNOT BE TREATED AS DEEMED TO BE CONCEALED INCOME. MOR EOVER, THOUGH THE ASSESSEE HAD DECLARED THE INCOME ON THE IDENTICAL R EASONS IN THE A.Y. 2003-04, BUT NO PENALTY IS LEVIED. IN THE A.Y. 20 03-04, THE ASSESSEE HAS DISCLOSED THE ADDITIONAL INCOME OF RS. 10,15,500/- ON ACCOUNT OF UNVOUCHED PAYMENT OF EXPENDITURE OF M/S. AMBA CONST RUCTION. ON THE SAID DISCLOSURE, NO PENALTY IS LEVIED BY THE A.O. I N THE A.Y. 2003-04. WE ARE, THEREFORE, OF THE OPINION THAT THE A.O. SHOULD NOT HAVE TWO DIFFERENT APPROACHES, MORE PARTICULARLY, WHILE CONSIDERING TH E LEVY OF PENALTY. WE FIND NO JUSTIFICATION TO SUPPORT THE ACTION OF A.O TO LEVY THE PENALTY FOR THE A.Y. 2002-03. WE FIND NO REASON TO INTERFERE W ITH THE ORDER OF THE LD CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 12TH NOVEMBER 2012. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (R.S.PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 12TH NOVEMBER, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 5 ITA NO. 194/PN/2011 SHRI YOGESH TOTARAM PATIL A.Y.2002-03 2. THE RESPONDENT 3. THE CIT-(CENTRAL), NAGPUR 400 001 4. THE CIT(A)-I, NASHIK 5. THE D.R. B BENCH, PUNE 6. GUARD FILE /- TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE