Sri Mayank Daga, Kolkata V. DCIT, CC-XI, KOLKTA, Kolkata

ITA 2050/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1581 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Accommodation entries
• Section: 143(3); 142(1); 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI A.T.VARKEY, JM & SHRI M.BALAG ANESH, AM ] I.T.A NO.2050/KOL/201 4 ASSESSMENT YEAR : 2011-1 2 SRI MAYANK DAGA -VS.- D.C.I.T., CENTRA L CIRCLE-XI, KOLKATA KOLKATA [PAN : AFJPD 3170 L] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI MANISH TIWARI , FCA FOR THE RESPONDENT : NONE DATE OF HEARING : 15.06.2017. DATE OF PRONOUNCEMENT : 07.07.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL-I , KOLKATA [ IN SHOR T THE LD CIT(A)] IN APPEAL NO. 206/CC-XI/CIT(A)C-I/13-14 DATED 19.09.2014 AGAINST THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XI, KOL KATA [ IN SHORT THE LD AO] UNDER SECTION 271 AAA OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT ] DATED 23.12.2013 FOR THE ASST YEAR 2011-12. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY U/S 271AAA OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT A SEARCH A ND SEIZURE OPERATION WAS CONDUCTED U/S 132 OF THE ACT ON 17.3.2011 AT VARIOUS BUSINESS PRE MISES OF MAYANK DAGA GROUP OF CASES ON THE STRENGTH OF WARRANT ISSUED IN HIS NAME . DURING SEARCH AT THE OFFICE PREMISES OF THE ASSESSEE AT NO.7, RABINDRA SARANI, 5 TH FLOOR, CASH OF RS 2,41,10,500/- 2 ITA NO.2050/KOL/2014 SRI MAYANK DAGA A.YR.2011-12 2 WAS FOUND OUT OF WHICH RS 2,40,00,000/- WAS SEIZED BY THE DEPARTMENT. APART FROM THE ABOVE, THERE WERE SEIZURE OF INCRIMINATING DOCUMENT S NO. MD/1 & MD/2 AND INVENTORY OF SEVERAL BANK ACCOUNTS IN THE NAME OF THIRD PARTI ES. IN THE COURSE OF POST SEARCH OPERATION, THE ASSESSEE OWNED UP FOUR BANK ACCOUNTS IN THE NAME OF THIRD PARTIES AS UNDER ASSESSEES CONTROL AND MANAGEMENT. THE ASSES SEE MADE A STATEMENT IN RESPONSE TO SUMMONS U/S 131 OF THE ACT ON THE DATE OF SEARCH UNDER CONFUSED MIND BECAUSE THE SAME PREMISES WAS SEARCHED PREVIOUSLY IN NOVEMBER 2 009 WHEN HIS FATHER MAN MOHAN DAGA MADE CONFESSIONAL STATEMENT TO DISCLOSE RS 2 C RORES U/S 132(4) OF THE ACT. HOWEVER, IN THE COURSE OF POST SEARCH ENQUIRY, ADI (INV.) OBTAINED FURTHER STATEMENTS U/S 131 OF THE ACT FROM THE ASSESSEE AS WELL AS FRO M HIS FATHER MAN MOHAN DAGA. DURING SUCH POST SEARCH ENQUIRY, THE ASSESSEE MADE A DISCLOSURE OF RS 1,05,10,500/- U/S 132(4) OF THE ACT INCLUDING CLARIFICATION OF VARIOU S POINTS OF CONTROVERSIES WHICH WAS CONFIRMED BY HIS FATHERS STATEMENT ALSO. THE RETUR N OF INCOME FOR THE ASST YEAR 2011- 12 WAS FILED ON 23.2.2012 ADMITTING TOTAL INCOME OF RS 2,45,02,260/- WHICH INCLUDED THE CASH FOUND AT THE TIME OF SEARCH AMOUNTING TO R S 2,41,10,500/-. IN OTHER WORDS, EVEN THOUGH THE ASSESSEE MADE DISCLOSURE OF UNDISCLOSED INCOME U/S 132(4) OF THE ACT TO THE TUNE OF RS 1,05,10,500/-, AT THE TIME OF FILING THE RETURN, THE ASSESSEE HAD OFFERED THE ENTIRE CASH FOUND IN THE SUM OF RS 2,41,10,500/- AT THE TIME OF SEARCH. IT WAS ALSO EXPLAINED THAT THE CASH FOUND ON SEARCH AND OFFERED TO TAX U/S 132(4) OF THE ACT REPRESENTED COMMISSION EARNED IN PROVIDING ACCOMMOD ATION ENTRIES. MOREOVER, AFFIDAVITS OF THE ASSESSEE AS WELL AS MAN MOHAN DAG A DULY NOTARIZED WERE FILED IN SUPPORT OF THE SAME. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 25.3.2013 DETERMINING TOTAL INCOME AT RS 62,11,79,480/- AND T HE SAME WAS LATER REDUCED TO RS 2,45,18,678/- AFTER APPEAL EFFECT U/S 251 OF THE AC T VIDE ORDER DATED 30.9.2013. IN OTHER WORDS, THE TOTAL INCOME DETERMINED IN THE SUM OF RS 2,45,18,678/- ADMITTEDLY INCLUDED A SUM OF RS 2,41,10,500/- RETURNED BY THE ASSESSEE, REPRESENTING THE CASH FOUND AT THE TIME OF SEARCH. THE LD AO LEVIED PENALTY U/S 271AA A OF THE ACT IN THE SUM OF RS 24,11,050/- FOR THE SAID SUM OF RS 2,41,10,500/- ON THE GROUND THAT THE ASSESSEE HAD NOT 3 ITA NO.2050/KOL/2014 SRI MAYANK DAGA A.YR.2011-12 3 MADE CORRECT DISCLOSURE U/S 132(4) OF THE ACT PURSU ANT TO THE SEARCH AND HAD ALSO NOT SUBSTANTIATED THE MANNER IN WHICH THE SAID CASH WAS FOUND AT THE TIME OF SEARCH. ACCORDINGLY THE LD AO HELD THAT THE ASSESSEE IS NOT ENTITLED FOR IMMUNITY U/S 271AAA(2) OF THE ACT AS THE CUMULATIVE THREE CONDIT IONS STIPULATED THEREIN WERE NOT SATISFIED BY THE ASSESSEE. 4. THE ASSESSEE STATED THAT HE SATISFIED ALL THE TH REE CONDITIONS AS SPECIFIED IN SECTION 271AAA(2) OF THE ACT IN THE FOLLOWING MANNER:- A) INITIALLY THE ASSESSEE EXPLAINED THAT PART OF TH E CASH FOUND AT THE TIME OF SEARCH REPRESENTS CASH BELONGING TO ASSESSEES FATHER WHO HAD OFFERED DISCLOSED CERTAIN SUMS DURING PREVIOUS SEARCH CONDUCTED ON HIM AND PART OF THE CASH WAS OFFERED AS UNDISCLOSED INCOME U/S 132(4) OF THE ACT. B) THE ASSESSEE HAD ALSO SUBSTANTIATED THE MANNER I N WHICH CASH WAS EARNED BY THE ASSESSEE WITH SPECIFIC REFERENCE TO HIS BUSINESS AN D ACTIVITIES CARRIED ON BY HIM. C) WITH REGARD TO PAYMENT OF TAXES ON SUCH UNDISCLO SED INCOME, HE STATED THAT THE SAME MAY BE APPROPRIATED FROM THE CASH SEIZED IN THE SUM OF RS 2,40,00,000/- . IT WAS ALSO STATED THAT IN FACT THE ASSESSEE IS IN A MUCH BETTER FOOTING IN AS MUCH AS THE ASSESSEE HAD OFFERED A SUM OF RS 2,41,10,500/- AS H IS UNDISCLOSED INCOME IN THE RETURN FILED. THE SAID PLEADING WAS NOT ACCEPTED BY THE L D AO AND ALSO BY THE LD CITA. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON T HE FOLLOWING GROUNDS:- 1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. CIT(A) HAS ERRED IN HOLDING THAT JUDICIAL DECISIONS RELIED BY THE APPEL LANT ARE NOT RELEVANT TO THE FACTS OF THE CASE AND THEREBY CONFIRMING THE PENALTY ORDE R. 2.) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. CIT(A) IS WRONG AND UNJUSTIFIED IN DISMISSING THE ASSESSEE'S APPEAL AND CONFIRMING THE ACTION OF ASSESSING OFFICER WHO IMPOSED PENALTY OF RS. 24,11, 050/- U/S 271AAA OF INCOME TAX ACT, 1961. 3.) THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, ADDUCE OR AMEND ANY GROUND OR GROUNDS ON OR BEFORE THE DATE OF HEARING OF THE APP EAL. 4 ITA NO.2050/KOL/2014 SRI MAYANK DAGA A.YR.2011-12 4 5. NONE APPEARED ON BEHALF OF THE REVENUE WHEN THE CASE WAS CALLED FOR HEARING. THE REVENUE HAD NOT EVEN SOUGHT AN ADJOURNMENT BEFORE U S ON THE DATE OF HEARING. HENCE WE PROCEED TO DISPOSE OFF THIS APPEAL AFTER HEARING THE LD AR. 6. WE HAVE HEARD THE LD AR AND PERUSED THE MATERIAL S AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE PAPER BOOK SUBMITTED BY THE LD AR COMPRISING OF (I) COPY OF SUBMISSIONS MADE BEFORE THE LD CITA (ENCLOSED IN PA GES 1 TO 9 OF PB) ; (II) COPY OF LETTER FILED BEFORE THE LD AO IN COURSE OF ASSESSME NT PROCEEDING TO EXPLAIN THE SEIZED CASH (ENCLOSED IN PAGES 10 TO 11 OF PB) ; (III) COP Y OF LETTER IN RESPONSE TO NOTICE U/S 142(1) OF THE ACT REGARDING OFFER OF UNDISCLOSED IN COME (ENCLOSED IN PAGES 12 TO 13 OF PB) ; (IV) COPY OF LETTER DATED 11.1.2013 TO SUBMIT AFFIDAVIT OF THE ASSESSEE AND HIS FATHER MAN MOHAN DAGA CONFIRMING DISCLOSURE U/S 132 (4) OF THE ACT (ENCLOSED IN PAGES 14 TO 17 OF PB) ; (V) COPY OF ASSESSEES STATEMENTS U/S 131 OF THE ACT DATED 18.3.2011 AND 9.5.2011 (ENCLOSED IN PAGES 18 TO 32 OF PB) ; ( VI) COPY OF STATEMENT U/S 131 OF THE ACT DATED 9.5.2011 OF MAN MOHAN DAGA (FATHER ) (ENC LOSED IN PAGES 33 TO 38 OF PB) ; (VII) COPY OF REPLY DATED 9.12.2013 IN REPLY TO PEN ALTY PROCEEDINGS U/S 271AAA OF THE ACT (ENCLOSED IN PAGES 39 TO 40 OF PB) ; (VIII) COP Y OF ORDER U/S 251 /143(3) OF THE ACT DATED 30.9.2013 (ENCLOSED IN PAGE 41 OF PB) ; (IX) COPY OF ITR , COMPUTATION OF INCOME, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR AY 20 11-12 (ENCLOSED IN PAGES 42 TO 47 OF PB) AND (X) COPY OF NOTICE U/S 271AAA OF THE ACT DA TED 25.3.2013 (ENCLOSED IN PAGE 48 OF PB). WE FIND THAT THOUGH THE ASSESSEE HAD NOT PROPERLY M ADE FULL DISCLOSURE OF UNDISCLOSED INCOME U/S 132(4) OF THE ACT PURSUANT TO THE SEARCH , HE HAD DULY OFFERED THE ENTIRE CASH FOUND AT THE TIME OF SEARCH (RS 2,41,10,500/-) IN T HE RETURN FILED BY HIM. HENCE THE ULTIMATE PURPOSE OF OFFERING THE SAID UNDISCLOSED I NCOME HAD BEEN COMPLIED WITH BY THE ASSESSEE. HENCE IT COULD BE CONCLUDED THAT FOR THE PURPOSE OF CLAIMING IMMUNITY FROM 5 ITA NO.2050/KOL/2014 SRI MAYANK DAGA A.YR.2011-12 5 PENALTY, THE FIRST CONDITION PRESCRIBED IN SECTION 271AAA(2) OF THE ACT IS TO BE TREATED AS COMPLIED BY THE ASSESSEE. 6.1. PURSUANT TO THE QUESTIONS POSED BY THE INVESTI GATION WING AFTER THE SEARCH AND DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD DUL Y EXPLAINED THE MANNER IN WHICH THE UNDISCLOSED INCOME HAD BEEN EARNED BY THE FAMIL Y INCLUDING THE ASSESSEE IN THE FOLLOWING MANNER:- AS MENTIONED BEFORE THE SEARCH PARTY, THE ASSESSEE REITERATE THAT APART FROM HIS REGULAR BUSINESS HE WAS ALSO ENGAGED IN PROVIDING A CCOMMODATION ENTRIES TO PERSONS WHO DESIRED SO. HE USED TO TAKE CASH / CHEQ UE FROM VARIOUS BENEFICIARIES, DEPOSIT THEM IN THOSE BANK ACCOUNT C ONTROLLED BY HIM AND ISSUE THEM CHEQUES IN THE NAME OF THE CONCERNS AS STATED BY THE BENEFICIARIES. IN DOING THIS, HE USED TO GET MEAGER COMMISSION. SINCE ALL THESE BANK ACCOUNTS WERE OPENED FOR A VERY SMALL PERIOD OF TIME AND WERE PRI MARILY USED FOR ACCOMMODATION ENTRY BUSINESS HENCE THE ASSESSEE NEV ER MAINTAINED THE DETAILS OF BENEFICIARIES WHO GAVE CASH / CHEQUES AND TOOK CHEQ UES IN TURN. APART FROM THIS, THE ASSESSEE HAD DULY EXPLAINED TH E ENTIRE CASH FOUND IN THE TIME OF SEARCH TOGETHER WITH THE MANNER OF EARNING THE SAME BY ENGAGING IN BUSINESS OF PROVIDING ACCOMMODATION ENTRIES IN LIEU OF COMMISSI ON INCOME @ 0.2% OF TRANSACTIONS AND ALSO EXPLAINED THE CONTENTS OF THE SEIZED DOCUM ENTS MARKED MD /1 (PAGES 1 TO 26) AND MD/2 (PAGES 1 TO 11). HENCE WE ARE CONVINCED THAT THE ASSESSEE HAD DULY SUBSTANTIATED THE MANNER OF DERIVING THE UNDISCLOSE D INCOME AND ACCORDINGLY THE SECOND CONDITION PRESCRIBED U/S 271AAA(2) OF THE ACT HAS B EEN COMPLIED WITH BY THE ASSESSEE. 6.2. WITH REGARD TO PAYMENT OF TAX DUE ON THE UNDIS CLOSED INCOME, THE ASSESSEE DULY STATED THAT THE CASH SEIZED IN THE SUM OF RS 2,40,0 0,000/- AT THE TIME OF SEARCH MAY KINDLY BE ADJUSTED TOWARDS THE UNDISCLOSED INCOME O F RS 2,41,10,500/-. HENCE THE ASSESSEE HAD DULY MADE SATISFACTORY ARRANGEMENTS FO R PAYMENT OF TAXES THEREON ON THE 6 ITA NO.2050/KOL/2014 SRI MAYANK DAGA A.YR.2011-12 6 UNDISCLOSED INCOME. ACCORDINGLY, IT COULD BE SAFELY CONCLUDED THAT THE ASSESSEE HAD DULY COMPLIED WITH THE THIRD CONDITION PRESCRIBED U /S 271AAA(2) OF THE ACT. 6.3. HENCE THE ASSESSEE HAD DULY COMPLIED WITH THE THREE CUMULATIVE CONDITIONS PRESCRIBED U/S 271AAA(2) OF THE ACT AND HENCE IS EN TITLED FOR IMMUNITY FROM LEVY OF PENALTY FOR THE UNDISCLOSED INCOME OF RS 2,41,10,50 0/- REPRESENTING THE CASH FOUND IN THE SEARCH. 6.4. IN VIEW OF THE AFORESAID FINDINGS, WE DEEM IT FIT AND APPROPRIATE TO CANCEL THE PENALTY LEVIED ON THE ASSESSEE U/S 271AAA(2) OF THE ACT IN THE SUM OF RS 24,11,050/- AND ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 07.07.2017 SD/- SD/- [A.T.VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.07.2017 [RG PS] COPY OF THE ORDER FORWARDED TO: 1. SRI MAYANK DAGA, 66/2, NIMTALLA GHAT STREET, KOL KATA-700006. 2. D.C.I.T., CENTRAL CIRCLE-XI, KOLKATA. 3. C.I.T.(A)-CENTRAL-I, KOLKATA. 4. C.I.T.-CENTRAL-I, KOLKATA 5.. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 7 ITA NO.2050/KOL/2014 SRI MAYANK DAGA A.YR.2011-12 7