The DCIT, Central Circl;e 2(2), Ahmedabad V. Shri Mukesh R. Prajapati, Ahmedabad

ITA 2036/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9985 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 31-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT JAVERI
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO.2036/AHD/2013 (ASSESSMENT YEAR:2010-11) DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 2(2), AHMEDABAD APPELLANT VS. SHRI MUKESH R. PRAJAPATI, 15, VIRAT COMPLEX, OPP. SHAKUNTAL BUNGLOWS, SOLA ROAD, GHATLODIA, AHMEDABAD 380061 RESPONDENT PAN: ACXMP5273C / BY REVENUE : SHRI JAYANT JAVERI, SR. D.R. /BY ASSESSEE : SHRI SUNIL H. TALATI, A.R. /DATE OF HEARING : 08.11.2016 /DATE OF PRONOUNCEMENT : 21.11.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2010-11 A RISES AGAINST THE CIT(A)-III, AHMEDABADS ORDER DATED 20.05.2013 IN A PPEAL NO. CIT(A)- III/13/ACIT/CC-2(2)/12-13, DELETING PENALTY OF RS.3 0,54,750/- IN PROCEEDINGS UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO.2036/AHD/2013 (DCIT VS. SHRI MUKESH R. PRAJA PATI) A.Y. 2010-11 - 2 - 2. RELEVANT FACTS OF THE CASE ARE IN A VERY BRIEF C OMPASS. THE DEPARTMENT CARRIED OUT A SEARCH IN ASSESSEES CASE ON 08.12.20 09. THE ASSESSEE APPEARS TO HAVE DISCLOSED A SUM OF RS.3,05,47,500/- IN HIS STATEMENT RECORDED U/S.132(4) OF THE ACT. THERE IS NO DISPUTE THAT HE THEREAFTER FILED RETURN DECLARING TOTAL INCOME AS RS.3,11,74,590/- AND ALSO PAID TAX AS WELL AS INTEREST THEREUPON. THE ASSESSING OFFICER FRAMED C ONSEQUENTIAL ASSESSMENT ON 23.12.2011 ACCEPTING THE SAID RETURNED INCOME. HE HOWEVER INITIATED THE IMPUGNED SECTION 271AAA PENALTY PROCEEDINGS. 3. THE ASSESSEE APPEARS TO HAVE FILED REPLY ON 07.0 6.2012 REITERATING THE FACT THAT HE HAD COMPLIED WITH ALL NECESSARY IMMUNI TY CONDITIONS U/S.271AAA OF THE ACT. HE FURTHER PLEADED THAT HE HAD DISCLOSED ALL RELEVANT PARTICULARS REGARDING UNACCOUNTED INVESTMENTS REGAR DING LAND PURCHASED AT CHILODA TO THE TUNE OF RS.2,50,39,102/- ALONG WITH BALANCED DISCLOSURE OF RS.55,08,398/- IN ORDER TO COVER ANY INCRIMINATING MATERIAL OR OTHER HEAD OF INCOME; IF FOUND LATER ON. THE ASSESSING OFFICER Q UOTED SECTION 271AAA(2)(I & II) CLAUSES TO CONCLUDE THAT THE ASSE SSEE SEARCH STATEMENT HAS NEITHER SPECIFIED THE MANNER OF HAVING DERIVED THE ABOVE SUMS OF INCOME NOR SUBSTANTIATED THE SAME IN COURSE THEREOF. HE ACCOR DINGLY LEVIED THE IMPUGNED PENALTY @10% OF THE ABOVE STATED UNDISCLOS ED INCOME COMING TO RS.30,54,750/- U/S.271AAA OF THE ACT. 4. THE CIT(A) REVERSES ASSESSING OFFICERS ACTION A S UNDER: 6. BEFORE TAKING A DECISION IN THIS CASE IT WILL B E WORTHWHILE TO GO THROUGH THE RELEVANT JUDICIAL DECISIONS IN THIS REGARD. (I) THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CI T VS. SDV CHANDRU (2004) 266 ITR 175 (MAD) HELD THAT 'IT IS F URTHER SUBMITTED THAT 'PARA (2) IN EXPLANATION 5 DOES NOT MAKE ANY DISTINCTION BETWEEN THE PREVIOUS YEAR WHICH HAS END ED BEFORE THE DATE OF SEARCH AND THE PREVIOUS YEAR WHICH IS TO EN D ON OR AFTER THE DATE OF SEARCH AND THEREFORE, WHEN THE ASSESSEE FIL ED HIS RETURN FOR EARLIER YEARS ADMITTING A LARGE INCOME AND ALSO PAI D TAX TOGETHER ITA NO.2036/AHD/2013 (DCIT VS. SHRI MUKESH R. PRAJA PATI) A.Y. 2010-11 - 3 - WITH INTEREST AFTER HIS STATEMENT WAS RECORDED U/S. 132(4) HE WAS ENTITLED TO IMMUNITY UNDER EXPLANATION 5 TO SEC. 27 1 (1) (C) AND PENALTY WAS NOT LIABLE FOR ALL THE YEARS.' (II) THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C. SHAH (2008) 299 ITR 305 (GUJ) HELD THAT 'ASSESSE E HAVING DECLARED THE VALUE OF DIAMONDS IN HIS STATEMENT UND ER S. 132(4) AND PAID TAXES THEREON BEFORE ASSESSMENT, WAS ENTITLED TO IMMUNITY FROM PENALTY UNDER S. 271(1)(C) UNDER EXPLANATION-5 THER EOF EVEN THOUGH THE STATEMENT DID NOT SPECIFY THE MANNER IN WHICH T HE INCOME REPRESENTING VALUE OF DIAMONDS WAS DERIVED.' (III) HON'BLE ITAT AHMEDABAD, IN THE CASE OF MAHEN DRA CHIMANLAL SHAH VS. ACIT (1994) 51 ITD 244 (AHD) AS HELD THAT IT IS PRIMARILY DUTY OF THE AUTHORIZED OFFICER TO EXPLAIN THE MEANING AND SCOPE OF EXPLANATION 5 TO SEC. 271 (1) (C) WHILE RE CORDING THE ADMISSION OF PERSON CONCERNED UNDER SECTION 132(4) AND AT LEAST ASK SOME QUESTION RELATING TO THE MANNER IN WHICH S UCH INCOME WAS DERIVED BY THE ASSESSEE. AUTHORIZED OFFICER NOT PUT TING ANY QUESTION REGARDING MANNER IN WHICH INCOME WAS DERIVED' ARID CANCELLED PENALTY, WHICH IS UPHELD BY HON'BLE GUJARAT HIGH CO URT 299 ITR 305 (GUJ). (IV) HON'BLE ITAT KOLKATA, IN THE CASE OF PIONEER M ARBLES & INTERIORS PVT LTD. IN ITA NO. 1326/KOL/2011 HAS ALSO DELETED PENALTY U/S. 271 AAA CONSIDERING THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN 299 ITR 305 (GUJ) OBSERVED IN PARA 8 '......... WE MUST, HOWEVER, POINT OUT THAT EVEN AFTER MAKING THESE SPECIFIC OBS ERVATIONS. THEIR LORDSHIPS HAD TO TREAT THE CONCLUSION OF ASSESSMENT PROCEEDINGS AS OUTER LIMIT FOR MAKING PAYMENT OF TAX AND INTEREST BUT THAT WAS BECAUSE OF THE PECULIAR NATURE OF PENALTY PROVISION S UNDER SECTION 271(1)(C) WHEREIN ASSESSING OFFICER HAS TO RECORD T HE SATISFACTION IN THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF - SO METHING WHICH IS NOT A CONDITION PRECEDENT FOR IMPOSITION OF PENALTY UNDER SECTION 271 AAA. THEIR LORDSHIPS HAD HELD THAT '...HOWEVER, THE OUTER LIMIT HAS TO BE THE POINT OF TIME WHEN THE ASSESSMENT PRO CEEDINGS ARE UNDERTAKEN BY THE ASSESSING OFFICER BECAUSE THE OPE NING PORTION OF SECTION 271(1) OF THE ACT REQUIRES THE ASSESSING OF FICER TO RECORD SATISFACTION IN THE COURSE OF SUCH PROCEEDINGS, AND THE SATISFACTION HAS TO BE AS REGARDS THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME.' SECTI ON 271AAA, AS THE STATUTE UNAMBIGUOUSLY PROVIDES, DOES NOT REQUIR E ANY SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER TO BE ARRIVED AT DURING THE ASSESSMENT PROCEEDINGS, AND, THEREFORE, THE OUTER L IMIT OF PAYMENT BEFORE THE CONCLUSION OF ASSESSMENT PROCEEDINGS WIL L NOT COME INTO PLAY. (PG. NO. 33 TO 39) 7. HON'BLE ITAT 'A' BENCH, AHMEDABAD M ADE THE FOLLOWING OBSERVATION IN THE CASE OF DR. MUKESH S SHAH IN ITA NO. 1942/AHD/2012 : ITA NO.2036/AHD/2013 (DCIT VS. SHRI MUKESH R. PRAJA PATI) A.Y. 2010-11 - 4 - '5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS UNDISPUTED FACT THAT IN THIS CASE A S EARCH OPERATION TOOK PLACE AT THE PREMISES OF THE ASSESSEE DURING WHICH THE AS SESSEE DECLARED UNACCOUNTED INCOME OF RS.45,00,000/- WHICH WAS ALSO SHOWN IN THE RETURN OF INCOME AND WAS ALSO ACCEPTED BY THE LEARNED AO. IT IS ALSO A FACT THAT THE ASSESSEE HAD PAID TAX ALONG WITH INTEREST FROM THE SEIZED CASH. NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SUBSTA NTIATE THAT THE AUTHORIZED OFFICER HAD ASKED ANY QUESTION TO THE AS SESSEE TO SUBSTANTIATE THE UNACCOUNTED INCOME AND THAT WAS NOT DISCLOSED B Y THE ASSESSEE. THUS, IT IS AN UNDISPUTED FACT THAT NEITHER AT THE STAGE OF RECORDING OF STATEMENT OF THE ASSESSEE NOR AT THE STAGE OF ASSESSMENT PROCEED INGS THE ASSESSEE WAS ASKED EITHER BY THE AUTHORIZED OFFICER OR BY THE LEARNED AO TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERI VED. 6. IN THE CASE OF RADHAKRISHNAN GOYAL VS CIT [(2005 ) 278 ITR 454 (ALL.)] THE ALLAHABAD HIGH COURT HAS HELD THAT U/S 132(4) OF THE ACT UNLESS THE AUTHORIZED OFFICER PUTS A SPECIFIC! QUESTION WI TH REGARD TO THE MANNER IN WHICH INCOME HAS BEEN DERIVED, IT IS NOT EXPECTED F ROM THE PERSON TO MAKE A STATEMENT IN THIS REGARD AND IN CASE IN THE STATE MENT THE MANNER IN WHICH THE INCOME HAS BEEN DERIVED HAS NOT BEEN STATED BUT HAS BEEN SUBSEQUENTLY STATED THAT AMOUNTS COMPLIANCE WITH THE EXPLANATION 5 (2) OF THE ACT. 7. THE LEARNED CIT(A) WHILE DELETING THE PENALTY HA S GIVEN A FINDING THAT THE ASSESSEE HAD ADMITTED THE INCOME AT THE TI ME OF SEARCH AND DISCLOSED THE SAME IN THE RETURN OF INCOME FILED U/ S 153 OF THE ACT AND PAID TAX AND ALSO DISCLOSED THE MANNER IN WHICH THE INCO ME WAS EARNED. NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE T O CONTROVERT THE FINDINGS OF THE LEARNED CIT(A). IN VIEW OF THE AFOR ESAID FACTS, WE FIND NO REASONS TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A) AND THUS, THE GROUND OF APPEAL OF THE REVENUE IS HEREBY DISMISSED . 8. WHEN THE CASE OF APPELLANT IS EXAMINED IN VIEW O F THIS LEGAL POSITION, IT IS FOUND THAT DURING THE COURSE OF SEARCH HE MADE DISC LOSURE OF RS.3,05,47400/-. SUBSEQUENTLY RETURN WAS FILED IN RESPONSE TO NOTICE ISSUED U/S. 153 A DECLARING TOTAL INCOME OF RS.3,11,74,590/-. CONSIDERING THE FACTS OF THE CASE THAT UNDISCLOSED INCOME HAS BEEN ADMITTED IN THE STATEMENT RECORDED U/S. 132(4) AND THE SAME HAS BEEN OFFERED FOR TAXATION IN THE RETUR N FILED FOR A.Y. 2010-11, TAX ALONG WITH INTEREST THEREON HAS BEEN DULY PAID AND NO FURTHER QUESTION HAS BEEN ASKED BY THE DEPARTMENT REGARDING MANNER OF EARNING SUCH INCOME, I HOLD THAT LEVY OF PENALTY U/S. 271 AAA IS NOT JUSTIFIED. PENA LTY OF RS.30,54,750/- IS DIRECTED TO BE DELETED. GROUNDS NO.1 TO 3 OF THE APPEAL ARE THUS ALLOWED. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL SUBMISSIONS. THE REVENUES ONLY ARGUMENT IS THAT THE ASSESSEES SEAR CH STATEMENT NEITHER SPECIFIED THE MANNER OF HAVING DERIVED THE ABOVE IN COME DISCLOSED DURING SEARCH NOR SUBSTANTIATED THE SAME. WE FIND THAT HO NBLE JURISDICTIONAL HIGH COURT IN (2008) 299 ITR 305 (GUJARAT) CIT VS. MAHEN DRA C. SHAH TAKES NOTE ITA NO.2036/AHD/2013 (DCIT VS. SHRI MUKESH R. PRAJA PATI) A.Y. 2010-11 - 5 - OF CIT VS. RADHA KISHAN GOEL (2005) 278 ITR 454 (AL L) TO CONCLUDE THAT IT IS INCUMBENT FOR THE AUTHORIZED OFFICER IN THE COURSE OF SEARCH IN THESE CIRCUMSTANCES TO PUT SPECIFIC QUERRIES REGARDING TH E MANNER AND SUBSTANTIATION OF HAVING DERIVED THE INCOME DISCLOS ED IN QUESTION. LD. DEPARTMENTAL REPRESENTATIVE FAILS TO POINT OUT ANY EXCEPTION THERETO IN THE COURSE OF HEARING. HE DOES NOT LEAD US TO ANY MATE RIAL IN THE CASE FILE TO PROVE THAT THE INCUMBENT OFFICER HAD PUT SUCH SPECI FIC QUERIES TO ASSESSEE DURING HIS SEARCH STATEMENT. WE ACCORDINGLY FIND N O REASON TO INTERFERE IN THE CIT(A)S ORDER UNDER CHALLENGE. 6. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 21 ST DAY OF NOVEMBER, 2016.] SD/- SD/- (N. K. BILLAIYA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 21/11/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0