The ACIT, Central Circle 1, Baroda V. Shri Dwarkadas P. Patel, HUF, Baroda

ITA 2059/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0304 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 03-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Income from undisclosed sources; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 2059/AHD/2013 / ASSESSMENT YEAR : 2010-11 ACIT, CENTRAL CIRCLE-1, BARODA VS DWARKADAS P. PATEL (HUF), 1, DAYALBAUG SOCIETY, MANJALPUR NAKA, BARODA PAN : AACHP 3814 K / (APPELLANT) / (RESPONDENT) REVENUE BY : SMT. SONIA KUMAR, SR DR ASSESSEE BY : SHRI P M MEHTA WITH SHRI G M THAKOR, ARS / DATE OF HEARING : 03/10/2016 / DATE OF PRONOUNCEMENT: 05/10/2016 / O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV, AH MEDABAD DATED 20.05.2013 FOR ASSESSMENT YEAR 2010-11. 2. THE SOLITARY GROUND RAISED IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.1 0,27,890/- FOR AY 2010-11 LEVIED U/S 271AAA OF THE IT ACT, DESPITE ASSESSEE H AVING NOT SATISFIED THE CONDITIONS MENTIONED IN CLAUSE (I) & (II) OF SECTIO N 271AAA(2) OF THE ACT. 3. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 4. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, VEHEMENTLY CONTENDS THAT THE ASSESSEES CASE IS FULLY COVERED UNDER THE EXEMPTIONS PROVIDED BY SECTION 271AAA WHICH HAS BEEN CLEARLY O BSERVED BY THE LD. CIT(A), BY FOLLOWING OBSERVATIONS:- 6.2 FROM THE PERUSAL OF THE STATEMENT RECORDED U/ S 132(4) OF THE ACT DURING THE COURSE OF SEARCH AS WELL AS POST-SEARCH SUBMISS ION MADE BEFORE THE DY. DIRECTOR OF INCOME-TAX (INV.), BARODA, IT IS QUITE EVIDENT THAT THE APPELLANT SMC-ITA NO. 2059/AHD/2013 ACIT VS. DWARKADAS P PATEL-HUF AY : 2010-11 2 HAS ADMITTED THE FACT OF UNDISCLOSED ASSETS FOUND D URING THE COURSE OF SEARCH AS WELL AS EARNING OF UNDISCLOSED INCOME ON THE BAS IS OF ENTRIES MADE IN THE SEIZED PAPERS. IT IS ALSO CLEARLY ADMITTED BY THE A PPELLANT THAT SUCH UNDISCLOSED ASSETS / INCOME OF RS. 1,02,78,900/- IS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THEREFORE, SUCH INCOME WITH REFE RENCE TO THE UNDISCLOSED ASSETS FOUND DURING THE COURSE OF SEARCH AS WELL AS UNDISCLOSED TRANSACTIONS FOUND AS PER THE INCRIMINATING DOCUMENTS SEIZED DUR ING THE COURSE OF SEARCH IS UNDOUBTEDLY THE UNDISCLOSED INCOME OF THE ASSESS EE, SINCE SUCH UNDISCLOSED ASSET / INCOME FOUND DURING THE COURSE OF SEARCH IS COVERED AS PER THE DEFINITION OF 'UNDISCLOSED INCOME'. 6.3 SO FAR AS THE SUBMISSION MADE SUBSEQUENT TO THE SEARCH PROCEEDINGS WHICH INCLUDED THE HEADWISE, YEARWISE AND ASSETWISE DETAILS OF THE DISCLOSURE OF UNACCOUNTED INCOME BASED ON THE SCRUTINY OF SEIZ ED INCRIMINATING DOCUMENTS, BEFORE THE DY. DIRECTOR OF INCOME-TAX (I NV.), BARODA IS CONCERNED, THE SAME MAY BE TREATED AS DISCLOSURE MA DE AS PER STATEMENT U/S 132(4) OF THE ACT ONLY, MAINLY IN VIEW OF THE FACT THAT PROPER SCRUTINY OF SEIZED MATERIAL IS ALWAYS NOT POSSIBLE FOR MAKING D ISCLOSURE DURING THE COURSE OF SEARCH. EVEN OTHERWISE, THE DISCLOSURE OF UNDISCLOSED INCOME OF RS.1,02,78,900/- DURING THE COURSE OF SEARCH IN THE CASE OF THE APPELLANT IS DULY ACCEPTED BY THE AO AS NOTED IN THE ASSESSMENT ORDER. 6.4 SO FAR AS THE MANNER OF EARNING OF THE SAID UND ISCLOSED INCOME AND SUBSTANTIATING THE SAME IS CONCERNED, I AGREE WITH THE AO THAT THE APPELLANT IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT HAS NOT SPECIFIED THE MANNER OF EARNING SUCH INCOME AND HAS NOT SUBSTANTIATED TH E SAME AS WELL. 6.5 HOWEVER, SO FAR AS SPECIFYING AND SUBSTANTIATIN G THE MANNER IN WHICH INCOME HAS BEEN EARNED IS CONCERNED, THERE IS NOTHI NG ON RECORD TO SUGGEST THAT ANY SUCH QUESTION WAS ASKED TO THE APPELLANT E ITHER IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT OR EVEN DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. IT IS NOTED THAT THE APPELLANT HAS RES PONDED TO ALL THE QUESTIONS ASKED U/S 132(4) OF THE IT ACT RELATING TO HIS FINA NCIAL AFFAIRS. UNLESS SPECIFIC QUESTION IS ASKED TO THE APPELLANT EITHER IN THE ST ATEMENT RECORDED U/S 132(4) OR EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS , IT MAY NOT BE PROPER TO ATTRIBUTE THE FAILURE, IF ANY, FOR NOT SPECIFYING A ND SUBSTANTIATING THE MANNER IN WHICH INCOME WAS EARNED, TO THE APPELLANT. IN TH IS REGARD THE DECISION OF THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF MA HENDRA C. SHAH [2008] 299 ITR 305 (GUJ) WHICH IS IN THE CONTEXT OF IMMUNI TY FROM PENALTY U/S 271 (1)(C) READ WITH EXPLANATION 5 IS REPRODUCED AS UNDER: '15. INSOFAR AS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT RE GARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFI CE IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORI ZED OFFICER IT IS SMC-ITA NO. 2059/AHD/2013 ACIT VS. DWARKADAS P PATEL-HUF AY : 2010-11 3 INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN TH E PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE ST ATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STAT EMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXAC T FORMAT STIPULATED BY THE PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF RADHA KISHAN GOEL (SUPRA) SECONDLY, CONSIDERING THE SOCIA L ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDI TIONS STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMENT UNDER SECTIO N 132(4) OF THE ACT. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLA HABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT S PECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLA RED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WAR RANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO.2 IN EXPLANATION 5 IS COMMENDABLE.' 6.6 IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OP INION THAT SO FAR AS THE MANNER OF EARNING THE INCOME AND SUBSTANTIATING THE SAME IS CONCERNED, THE APPELLANT HAS, IN MY VIEW, NOT SPECIFIED THE MANNER OF EARNING THE UNDISCLOSED INCOME AS WELL AS SUBSTANTIATED THE SAM E SINCE NO QUESTION AS REGARDS SPECIFICATION OF MANNER OF EARNING THE UNDI SCLOSED INCOME AND SUBSTANTIATION THEREOF WAS PUT FORTH IN THE STATEME NT RECORDED U/S 132(4) OF THE ACT. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE APPELLANT HAS FAILED TO RESPOND TO ANY OF THE QUESTIONS RELATING TO THE MAN NER OF EARNING UNDISCLOSED INCOME AS WELL AS SUBSTANTIATING THE SAME EVEN DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS. IN VIEW OF THIS, THE APPELL ANT IS DEEMED TO HAVE FULFILLED THE FIRST TWO CONDITIONS FOR AVAILING OF IMMUNITY FROM PENALTY PROCEEDINGS U/S 271AAA OF THE ACT. THERE IS NO DISP UTE ABOUT THE THIRD CONDITION AS THE APPELLANT HAS PAID TAX WITH INTERE ST ON THE UNDISCLOSED INCOME. THUS, THE APPELLANT HAS FULFILLED ALL THE C ONDITIONS REQUIRED FOR IMMUNITY FROM LEVY OF PENALTY U/S 271AAA OF THE ACT . 4.1 SINCE THE LD. CIT(A) HAS REFERRED TO THE ENTIRE MATERIAL ON RECORD, INCLUDING THE STATEMENT OF THE ASSESSEE AND THE REL IEF HAS BEEN GRANTED BY RELYING ON HONBLE GUJARAT HIGH COURT JUDGMENT IN T HE CASE OF MAHENDRA C. SHAH (SUPRA), THERE IS NO INFIRMITY IN THE ORDE R OF THE LD. CIT(A). 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE LD. CIT(A) SMC-ITA NO. 2059/AHD/2013 ACIT VS. DWARKADAS P PATEL-HUF AY : 2010-11 4 HAS RECORDED CLEAR FINDING OF FACTS THAT DURING THE COURSE OF SEARCH ITSELF THE ASSESSEE HAD ACCEPTED THE ABOVE UNDISCLOSED INCOME AND EXPLAINED THE SOURCE THEREOF TO BE BUSINESS OPERATIONS OF THE ASS ESSEE. NO FURTHER QUESTIONS WERE ASKED FROM THE ASSESSEE AND IT IS CL EAR FROM QUESTION AND ANSWER NO.10 OF HIS STATEMENT AT PAPER-BOOK PAGE NO .44. IN VIEW THEREOF, I SEE NO INFIRMITY IN THE ORDER OF LD. CIT(A) IN DELE TING THE PENALTY RELYING ON HONBLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF MAHENDRA C. SHAH (SUPRA) AND THE ORDER OF THE LD. CIT(A) IS ACCORDIN GLY UPHELD. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 5 TH OCTOBER, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 05/10/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD