DCIT, Gurgaon V. M/s. Gupta Metal Sheets (P) Ltd., New Delhi

ITA 2062/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2942 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SATYEN SETHI ADV SH A T PANDA

Judgement Text

ITA NO. 2062/DEL/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO.-2062/DEL/2016 ( ASSESSMENT YEAR: 2010-11) DCIT CENTRAL CIRCLE 1, GURGAON. VS GUPTA METAL SHEETS (P) LTD. 5948-49, BASTI HARPHOOL, SADR THANA ROAD NEW DELHI AABCG0343G ASSESSEE BY SH. SATYEN SETHI, ADV. SH. A.T. PANDA, ADV. REVENUE BY SH. MUNISH KUMAR GUPTA, CIT DR ORDER PER K. NARSIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 05.02.2016 IN APPEAL N O. 35/CIT(A)(C)/GGN/2014-15 PASSED BY THE LD. COMMISSI ONER OF INCOME TAX (APPEALS)-3, GURGAON, (FOR SHORT CALLED AS THE LD. CIT (A)) REVENUE PREFERRED THIS APPEAL. 2. BRIEFLY STATED FACTS ARE THAT, PURSUANT TO THE S EARCH OPERATION U/S 132(1) OF THE INCOME TAX ACT, 1961 (F OR SHORT CALLED AS THE ACT) IN THE PREMISES OF THE ASSESSE E ON 30.07.2009, THE ASSESSEE SURRENDERED A SUM OF RS. 7 CRORES FOR THE AY 2010-11. WHILE FRAMING THE ASSESSMENT ORDER , LD. AO CONSIDERED A SUM OF RS. 5,94,89,848/- OUT OF THE SU RRENDERED AMOUNT, AS UNDISCLOSED INCOME PERTAINING TO THE AY 2010-11 DATE OF HEARING 20.12.2017 DATE OF PRONOUNCEMENT 26.12.2017 ITA NO. 2062/DEL/2016 2 AND PASSED THE ORDER U/S 153 OF THE ACT. LD. AO AL SO PROCEEDED U/S 271AAA OF THE ACT AND LEVIED A PENALTY OF RS. 6 3,34,543/-. 3. IN APPEAL LD. CIT (A) FOUND THAT THE REVENUE NEV ER ASKED ANY QUESTION REGARDING THE MANNER OF EARNING THE IN COME, AS SUCH, THE ASSESSEE CANNOT BE EXPECTED TO SUBSTANTIA TE THE MANNER OF EARNING OF INCOME. WHILE FOLLOWING THE D ECISION REPORTED IN THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. MAHENDRA C. SHAH 299 ITR 307 AND THE DECISIONS OF THE TRIBUNAL IN DCIT VS. HARMOHINDER SINGH CHADHA IN IT A NO. 188/CHD./2015 AND DCIT VS. AMARJIT GOYAL IN ITA NOS . 1080 TO 1082/CHD./2013 LD. CIT(A) HELD THAT IF NO QUESTION IS ASKED DURING THE STATEMENT RECORDED U/S 132(4) OF THE ACT AND IF THE TAX ARE PAID ON THE SURRENDERED INCOME, THEN THE AS SESSEE CANNOT BE EXPECTED TO FURTHER SUBSTANTIATE THE MANN ER OF EARNING INCOME, AND NO PENALTY COULD BE LEVIED. CHA LLENGING THIS, THE REVENUE IS IN THIS APPEAL BEFORE US. 4. IT IS THE ARGUMENT OF THE LD. DR THAT THE ASSESS EE HAD FAILED TO SUBSTANTIATE WITH EVIDENCE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED SO AS TO QUALIFY FOR NON LEVY OF PENALTY WITHIN THE MEANING OF SUB-SECTION (2) OF SE CTION 271AAA OF THE ACT, AS SUCH, THE PENALTY LEVIED BY THE LD. AO SHOULD NOT HAVE BEEN DELETED BY THE LD.CIT (A). PER CONTRA, I T IS THE ARGUMENT OF THE LD.AR THAT IT IS CONSISTENTLY HELD BY DIFFERENT HIGH COURTS THAT IF NO QUERY IS RAISED BY THE ASSES SING OFFICER REGARDING THE MANNER OF DERIVATION OF THE UNDISCLOS ED INCOME, THE STATUTORY REQUIREMENTS OF SECTION 271AAA HAD NO T BEEN MET BY THE DEPARTMENT, AS SUCH, NO PENALTY COULD BE LEV IED. HE PLACED RELIANCE ON THE DECISION IN PCIT VS. MUKESH BHAI RAMAN ITA NO. 2062/DEL/2016 3 LAL PRAJAPATI TAX APPEAL NO. 434 OF 2017 DECIDED BY THE HONBLE GUJARAT HIGH COURT ON 24.07.2017 AND THE DECISION O F THE HONBLE JURISDICTIONAL HIGH COURT IN PCIT VS. EMIRA TES TECHNOLOGY PVT. LTD. (2017) 399 ITR 189 (DEL) IN SU PPORT OF HIS CONTENTIONS. 5. WE HAVE PERUSED THE RECORD. THE OBSERVATION OF THE LD. CIT (A) THAT IN THIS MATTER THE ASSESSEE WAS NEVER ASKED BY THE REVENUE ANY QUESTION REGARDING THE MANNER OF EARNIN G UNDISCLOSED INCOME, IS NOT CONTROVERTED BEFORE US B Y THE REVENUE. IT, THEREFORE, GOES UNDISPUTED THAT THE P ENALTY IS LEVIED BECAUSE THE ASSESSEE HIMSELF VOLUNTARILY DID NOT REVEAL THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARN ED. HOWEVER, THE LAW LAID DOWN BY THE JURISDICTIONAL HI GH COURT IN THE CASE OF EMIRATES TECHNOLOGIES PVT. LTD. (SUPRA) , THE HONBLE GUJARAT HIGH COURT IN CIT VS. MAHENDRA C. SHAH (SUP RA) AND PCIT VS. MUKESH BHAI RAMANLAL PRAJAPATI (SUPRA) IS OTHERWISE. 6. IN CIT VS. MAHENDRA C. SHAH (SUPRA) FOLLOWED IN PCIT VS. MUKESH BHAI RAMANLAL PRAJAPATI (SUPRA), THE HONBLE GUJARAT HIGH COURT OBSERVED AS FOLLOWS: 15. IN SO FAR AS THE ALLEGED FAILURE ON THE PART OF T HE ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFI CE IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZE D OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN TH E PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AN D 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 STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRS T INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSW ER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVIS IONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED , AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF CIT V. RADHA KISHAN GOEL (SUPRA). ITA NO. 2062/DEL/2016 4 SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERA TE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMENT UNDER SECTION 132(4) OF THE ACT . THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLAHABAD HIGH COUR T TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER I N WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO. 2 IN EXPLA NATION 5 IS COMMENDABLE. 7. IN EMIRATES TECHNOLOGY PVT. LTD. THE HONBLE JUR ISDICTIONAL HIGH COURT HELD AS FOLLOWS: 3. THE COMMISSIONER OF INCOME TAX (APPEALS) IN PA RA 4.7 OF THE ORDER DATED NOVEMBER 4,2013 NOTED THAT NO SPECI FIC QUERY HAD BEEN PUT TO THE ASSESSEE BY DRAWING HIS ATTENTIO N TO SECTION 271AAA OF THE ACT ASKING HIM TO SPECIFY THE MANNER IN WHICH THE UNDISCLOSED INCOME, SURRENDERED DURING TH E COURSE OF SEARCH, HAD BEEN DERIVED. THE COMMISSIONER OF I NCOME TAX (APPEALS), THEREFORE, RELYING ON THE DECISIONS OF TH IS COURT HELD THAT THE JURISDICTIONAL REQUIREMENT OF SECTION 271A AA WAS NOT MET. 4. THE ABOVE VIEW HAS BEEN CONCURRED WITH BY THE I NCOME TAX APPELLATE TRIBUNAL. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COURT IS OF THE VIEW THAT THE CONCURRENT DECISION OF THE COMMISS IONER OF INCOME TAX (APPEALS) AND THE INCOME TAX APPELLATE T RIBUNAL REPRESENT A PLAUSIBLE VIEW WHICH CANNOT BE SAID TO BE PERVERSE. 8. IN VIEW OF THIS ESTABLISHED LEGAL POSITION, WE A RE OF THE CONSIDERED OPINION THAT THE LD. CIT (A) IS RIGHT IN APPLICATION OF THE CASE LAW TO THE FACTS OF THE CASE AND IN DELETI NG THE PENALTY. WE, THEREFORE, CONSEQUENTLY FIND THAT THE APPEAL OF THE ASSESSEE IS DEVOID OF MERITS AND DISMISSED THE SAME. ITA NO. 2062/DEL/2016 5 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.12.2017 SD/- SD/- (N.K. SAINI) (K. NARSIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 26.12.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI