SHANKARLAL VIRJI THAKKAR, MUMBAI V. ACIT, CENTRAL CIRCLE-1, THANE

ITA 1947/MUM/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9376 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 28-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Assessee Lawyers: VEERKUMAR C SHAH
• Keywords: Loose papers; Revised return
• Section: 143(3); 274; 132; 139

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMB AI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAMLAL NEGI, JUDICIAL MEMBER ITA NO.1947/MUM/2018 (ASSESSMENT YEAR 2012-13) SHANKARLAL VIRJI THAKKAR, 601, B, GARIMA TOWER, NEAR GURUKUL BUS STOP, PANCHPAKHADI, THANE(W)- 400602. P AN: AAACD1753G VS ACIT, CC-1, ROOM NO. 10, A WING, 6 TH FLOOR, ASHAR I.T. PARK, ROAD NO. 16-Z, WAGLE INDUSTRIAL ESTATE, THANE (W)- 400604. ASSESSEE RESPONDENT ASSESSEE BY : SHRI VEERKUMAR C. SHAH (AR) REVENUE BY : SHRI T.S. KHALSA (DR) DATE OF HEARING : 09.03.2021 DATE OF PRONOUNCEMEN T : 25.05.2021 ORDER PER SHAMIM YAHYA, AM; 1. THIS IS AN APPEAL BY THE ASSESSEE ARISING OUT OF TH E ORDER DATED 31.01.2018 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-11, MU MBAI [FOR SHORT THE LD. CIT(A)] AND PERTAINS TO ASSESSMENT YEAR 2012-13 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT (APPEAL) ERRED IN DISMISSING THE APPEAL AND IN CONFIRMING THE PENALTY LEVIED AT RS. 50,000/- U/S. 271AAA OF THE INCOME TA X ACT, 1961 WHICH WAS WORKED OUT BY THE LEARNED ASSESSING OFFICER AFTER C ONSIDERING INCOME AS ORIGINAL RETURN OF INCOME AND ASSESSED INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT (APPEAL) ERRED CONFIRMING THE PENALTY WHICH WAS LEVIED WITHOUT ITA NO. 1947 MUM 2018-SHANKARLAL VIRJI THAKKAR. 2 CONSIDERING THE REVISED RETURN OF INCOME FILED BY T HE ASSESSEE AND FURTHER ERRED IN CONFIRMING THE PENALTY UNDER SECTION 271AA A OF THE INCOME TAX ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LEARNED CIT (APPEAL) ERRED IN CONFIRMING THE PENALTY LEVIED WHI CH IS LEVIED WITHOUT ISSUING ANY SPECIFIC ALLEGATION IN THE SHOW CAUSE N OTICE MADE BY THE ASSESSING OFFICER WHO HAD ISSUED THE VAGUE NOTICE A ND HENCE ORDER OF PENALTY IS NOT SUSTAINABLE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF WHOLESALE TRADING OF FOOD GRAINS. THE SEARCH ACTION WAS CARRIED OUT ON 22.02:2012 AT THE PREMISES OF THE ASSESSEE. THE ASSESSEE AND HIS FAMILY MEMBERS DECLARED 1.11 CRORES AS ADDITIONAL I NCOME VIDE LETTER DATED 16.05.2012. OUT OF THE SAID DECLARATION OF RS.5 LAC S WAS OFFERED IN THE HANDS OF THE ASSESSEE. ASSESSEE FILED THE REVISED RETURN ON 07.03.2013 SHOWING TOTAL-INCOME OF RS.16,24,750/- INCLUDING RS.05 LACS FOR DISCLOSURE MADE PERTAINING TO CERTAIN DOCUMENTS, LOOSE PAPERS AND M ATERIALS SEIZED AT THE PREMISES OF THE ASSESSEE. THE ASSESSMENT WAS COMPLE TED U/S 143(3) OF IT ACT 1961 IN WHICH AO HAS INITIATED PENALTY U/S 271AAA O N THE ISSUE OF UNDISCLOSED INCOME OF RS.05 LACS. DURING THE COURSE OR PENALTY PROCEEDING THE AO HELD THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME IS DERIVED. THUS, THE CONDITION PRESCRIBED IN SECTION 271AAA(2)(II) IS NOT SATISFIED. THEREFORE AO LEVIED PENALTY U/S 271AAA OF IT ACT 1961. ITA NO. 1947 MUM 2018-SHANKARLAL VIRJI THAKKAR. 3 3. BEFORE THE LD. CIT(A), THE ASSESSEE CLAIMED THAT TH ROUGH SEARCH WAS CARRIED OUT ON 22.02.2012 AND NO STATEMENT WAS GIVEN UNDER SECTION 132(4) ADMITTING ANY ADDITIONAL INCOME, A LETTER GIVEN TO ADIT ON 16.05.2012 SHOULD BE TREATED AS SUFFICIENT COMPLIANCE OF PROV ISION OF SECTION 271AAA(2). THE ASSESSEES SUBMISSION NOTED BY LD. C IT(A) IS AS UNDER: 1) THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FOO D GRAINS TRADING. 2) THE SEARCH & SURVEY ACTION WAS EARNED OUT CM 22/ 2/2012 AT THE PREMISE OF THE ASSESSEE . THE ASSESSEE AND HIS FAMILY MEMBERS DECLARED 1.11 CRORES AS ADDITIONAL INCOME VIDE LETTER DT. 1615/2012 ADDRESS ED TO THE ADDL. DIRECTOR OF INCOME TAX (INV), THANE. OUT OF THE SAID DECLARATIO N OF 5 LAKHS WAS, OFFERED IN THE HANDS OF ASSESSEE , SHRI SHANKARLAL V. THAKKAI: THE ASSESSEE FILED THE REVISED RETURN ON 0.7.0.3.20.14 SHOWING TOTAL INCOM E OF RS.16,24,750/- INCLUDING RS.5,00,000/- FOR DISCLOSURE MADE PERTAIN ING TO JEWELLERY AND CASH FOUND AT THE PREMISES OF THE ASSESSEE. FURTHER, SUC H INCOME WAS EARNED BY THE ASSESSEE FROM FOOD GRAINS TRADING BUSINESS WHICH W AS UNACCOUNTED WHILE FILING THE ORIGINAL RETURN. BUT THE ASSESSING OFFIC ER LEVIED PENALTY UNDER SECTION 271AAA FOR THE REASON THAT THE ASSESSEE COU LD NOT SUBSTANTIATE THE SOURCE OF SUCH INCOME. IT IS PERTINENT HERE TO MAKE A REFERENCE TO CLAUSE (2) OF SECTION 271MA FOR WHICH THE PROVISIONS AS CONTAINED IN SECTION 271AAA ARE REPRODUCED HEREIN BELOW FOR READY REFERENCE: . SECTION 271AAA STATES AS UNDER: PENALTY WHERE SEARCH HAS BEEN INITIATED.- (L) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYT HING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CAS E WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM ITA NO. 1947 MUM 2018-SHANKARLAL VIRJI THAKKAR. 4 COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCL OSED INCOME OF THE SPECIFIED PREVIOUS YEAR. . (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE,- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME END SPECIFIES TH E MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. SINCE THE ASSESSEE HAS ADMITTED THE INCOME IN THE COURSE OF SEARCH: HE HAS RETURNED THE 'UNDISCLOSED INCOME BY WAY OF REVISED RETURN; HE HAS NOT EXPLAINED THE NATURE OF SOURCES OF UNDISCLOSED INCOME AS NO S UCH STATEMENT WAS RECORDED DURING THE COURSE OF SCRUTINY ASSESSMENT AND THE AS SESSEE HAD PAID THE TAX TOGETHER WITH INTEREST. HENCE THE PENALTY LEVIED IS BAD IN LAW. THE SAME WAS HELD IN FOLLOWING CASES: 1. AACT, CENTRAL CIRCLE-Z, JAIPUR VS. AJIT SINGH (I TAT JAIPUR BENCH) 2. NEERAT SINGAL VS. ACIT, CENTRAL CIRCLE-13, NEW D ELHI (ITAT DELHI BENCH 'E 3. NAVAL KISHORE AGRAWAL VS. ACIT, CENTRAL CIRCLE-( I), (ITAT, NAGPUR BENCH) AS THE SOURCE OF INCOME IS UNACCOUNTED CAST I RECEI PTS FROM FOOD GRAINS TRADING BUSINESS, THE PENALTY MAY KINDLY BE WAIVED. FURTHER IN THE CASE OF M/S NAVAL KISHORE AGARWAL V/S ASST COMM OF INCOME TAX, CENTRA CIRCLE -1(1), NAGPUR, THE ITAT, NAGPUR BENCH, IT WAS HELD THAT WH EN DURING THE COURSE OF SEARCH THE ASSESSEE HAS DULY DISCLOSED THE UNDISCLO SED INCOME AND EXHIBITED THE NATURE THEREOF THE PENALTY U/S 271 AAA CANNOT B E LEVIED IF NO FURTHER QUERY WHATSOEVER HAS BEEN ASKED BY THE REVENUE REGARDING FURTHER CLARIFYING THE MANNER OF EARNING OF INCOME OR SUBSTANTIATING THE S OURCE THEREOF. 3) WE HUMBLY SUBMIT THAT THE PENALTY LEVIED ULS.271 AAA IS NOT SUPPORTED BY FACTS AND IN LAW AND MAY KINDLY BE DELETED.' ITA NO. 1947 MUM 2018-SHANKARLAL VIRJI THAKKAR. 5 4. THE LD. CIT(A) WAS NOT CONVINCED. SHE DID NOT ACCEP T THE LETTER GIVEN ON 16.05.2012 AS RECORDING TO STATEMENT U/S. 132(4) UP ON SEARCH ON 22.02.2012, SHE HELD AS UNDER: 5. I HAVE GONE THROUGH THE PENALTY ORDER AS WELL AS THE SUBMISSION MADE BY THE ASSESSEE . IF WE GO BY THE ASSESSMENT ORDER IT IS N OTICED THAT DURING THE COURSE OF THE SEARCH ASSESSEE HAS ADMITTED AND OFFERED AN AMO UNT OF RS.05 LACS AS ADDITIONAL INCOME AND THE SAME IS DISCLOSED IN THE RETURN OF INCOME. DURING THE COURSE OF SEARCH ACTION, STATEMENT WAS RECORDED U/S 132(4) WHEREIN ASSESSEE HAS NOT SPECIFIED OR SUBSTANTIATED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. THE ASSESSEE VIDE LETTER DATED 16.05.2012 ADDRESSED TO ADDL. DIT(INV), THANE HAS ADMITTED AND OFFERED THE INCOME OF RS.5,0 0,000/- WHICH IS ALMOST THREE MONTHS AFTER THE DATE OF SEARCH. DURING THE C OURSE OF ASSESSMENT PROCEEDING ALSO ASSESSEE HAS NOT - GIVEN ANY EXPLA NATION OF THE UNDISCLOSED INCOME, LET ALONE SPECIFY OR SUBSTANTIATE THE MANNE R OF EARNING SUCH INCOME. 6. BESIDES, ON THE FACTS OF THE CASE I DO AGREE WIT H THE AO LEVYING THE PENALTY THAT THERE WAS NO DETAILS REGARDING SOURCE OF THE U NACCOUNTED INCOME DURING THE SEARCH AND THE MANNER OF EARNING THE SAME WAS-NOT D ISCLOSED; EVEN DURING ASSESSMENT AS WELL AS PENALTY PROCEEDINGS THERE IS NOT EVEN A WHIFF OF EXPLANATION PUT FORWARD BY THE ASSESSEE REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. IN MY VIEW THE ASSESSEE H AS THEREFORE NOT SATISFIED ALL THE THREE CONDITIONS REQUIRED FOR IMMUNITY FROM PEN ALTY U/S 271AAA. HENCE THE PENALTY LEVIED BY THE AO IS CONFIRMED. 5. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BEFOR E US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECO RD. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF ITAT IN ITA N O. 1945/MUM/2018 AND 1946/MUM/2018 FOR AY 2011-12 & 2012-13 IN CASE SHRI JITENDRA VIRJI ITA NO. 1947 MUM 2018-SHANKARLAL VIRJI THAKKAR. 6 THAKKAR ASSESSEES BROTHER AND CLAIMED THAT SINCE F ACTS ARE IDENTICAL, THE PENALTY IS TO BE DELETED. 7. PER CONTRA, LD. DR SUBMITTED THAT IN THIS CASE ASSE SSEE HAS NOT ADMITTED ANY UNDISCLOSED INCOME IN THE COURSE OF SEARCH U/S 132( 4), HENCE, THE PROVISION OF SECTION 271AAA(2) ARE NOT COMPLIED WITH. HENCE, THE PENALTY IS RIGHTLY LEVIED. HE FURTHER RELIED UPON THE SEVERAL CASE LAW . 8. UPON CAREFUL CONSIDERATION, WE NOTE THAT THE PROVIS IONS OF SECTION 271AAA PROVIDE AS UNDER: 271AAA. PENALTY WHERE SEARCH HAS BEEN INITIATED.( 1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UND ER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I ) IN THE COURSE OF THE SEARCH, IN A STATEMENT U NDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MAN NER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II ) SUBSTANTIATES THE MANNER IN WHICH THE UNDISC LOSED INCOME WAS DERIVED; AND (III ) PAYS THE TAX, TOGETHER WITH INTEREST, IF AN Y, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF TH E UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, S O FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A ) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEA R REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER V ALUABLE ARTICLE OR THING OR ANY ITA NO. 1947 MUM 2018-SHANKARLAL VIRJI THAKKAR. 7 ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS (A ) NOT BEEN RECORDED ON OR BEFORE THE D ATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B ) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE DATE OF THE SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEA R REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECOR DED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE REL ATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED; (B ) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARC H, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNIS HED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED.. 9. FROM THE ABOVE IT IS CLEAR THAT THE PENALTY IS NOT TO BE LEVIED IF IN THE COURSE OF SEARCH IN A STATEMENT U/S 132(4) ASSESSEE ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH THE INCOME HAS BE EN EARNED. 10. IN THE PRESENT CASE, THERE IS NO STATEMENT U/S 132( 4) BY THE ASSESSEE DURING COURSE OF SEARCH ON 22.02.2012 ADMITTING ANY ADDITI ONAL INCOME. AS SUCH THE QUESTION OF SPECIFYING THE NATURE IN WHICH SUCH INC OME HAS BEEN EARNED DOES NOT ARISE. THE LETTER GIVEN ON 16.05.2012 TO ADIT I S CERTAINLY NOT A STATEMENT U/S 132(4) IN THE COURSE OF SEARCH. HENCE, AS PER T HE SANGUINE PROVISIONS OF THE ACT, ASSESSEE HAS NOT COMPLIED WITH THE PROVISI ON OF SECTION 271AAA SUB-SECTION (2) TO COME OUT OF THE REGOURS OF THE P ENAL PROVISIONS OF SECTION ITA NO. 1947 MUM 2018-SHANKARLAL VIRJI THAKKAR. 8 271AAA. THE DECISION OF ITAT REFERRED BY LD. COUNSE L OF THE ASSESSEE IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE AS IN T HAT CASE IT HAS BEEN DULY NOTED THAT ASSESSEE HAS MADE DUE DISCLOSURE U/S 132 (4). THE HONBLE DELHI HIGH COURT DECISION RELIED THEREIN OF PCIT VS. EMI RATE TECHNOLOGY PVT. LTD. (399 ITR 189) IS ALSO NOT SUPPORTING ASSESSEE CASE IN PRESENT CASE. AS THAT DECISION PROVIDED THAT IF MANNER OF EARNING UN DISCLOSED INCOME WAS NOT ASKED DURING THE SEARCH ADVERSE INFERENCE AGAINST A SSESSEE CANNOT BE TAKEN. IN THE PRESENT CASE ASSESSEE IN THE COURSE OF SEARC H ON 22.02.2012, MADE NO DISCLOSURE OF UNDISCLOSED INCOME U/S 132(4). HENCE, THE SAID DECISION IS NOT HELPFUL TO THE ASSESSEE. 11. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT WE UPHOLD THE ORDER OF LEARNED CIT(A). 12. I THE RESULT, APPEAL BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 25.05.2 021. SD/- SD/- RAMLAL NEGI SHAMIM YAHYA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATE: 25.05.2021 SK/PS COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT ITA NO. 1947 MUM 2018-SHANKARLAL VIRJI THAKKAR. 9 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./AS ST. REGISTRAR ITAT, MU MBAI