The ACIT, Valsad Circle, Valsad V. Smt. Kashmira Shailesh Patel, Valsad

ITA 2101/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6293 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 14-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILESH D RATHOD
• Keywords: Income from undisclosed sources; Loose papers
• Section: 143(3); 27; 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.2101/AHD/2014 / ASSTT. YEAR: 2009-2010 ACIT, VALSAD CIRCLE VALSAD. VS. SMT.KASHMIRA SHAILESH PATEL BHAGWATI TITHAL ROAD VALSAD 396 001. PAN : AAZPP 9940 K / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI KAILESH D. RATHOD, SR.DR ASSESSEE BY : SHRI RAJESH UPADHYAY ! / DATE OF HEARING : 10/03/2017 '#$ ! / DATE OF PRONOUNCEMENT: 03/04/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-II, AHMEDABAD DATED 15.5.2014 PASSED FOR THE ASSESSMENT YEAR 2009-10. 2. SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE LD .CIT(A) HAS DELETED PENALTY OF RS.10,47,500/-IMPOSED BY THE AO UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961. ITA NO.2101/AHD/2014 2 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND OP ERATION WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 24.9.2008. SHE HAS FILED HER RETURN OF INCOME ON 29.9.2009 DECLARING TOTAL INCOM E AT RS.121,78,685/-. THE STATEMENT OF HER HUSBAND SHRI SHAILESH G. PATEL WAS RECORDED UNDER SECTION 132 (4) OF THE ACT. IN HIS STATEMENT, HE HAS DECLARED UNDISCLOSED INCOME OF RS.2.00 CRORES A ND OFFERED TAX ON THAT. WHILE ALLOCATING THIS AMOUNT OF RS.2.00 CORE S, HE OFFERED A SUM OF RS.1,04,75,000/- IN THE HANDS OF THE ASSESSEE. THE LD.AO HAS PASSED ASSESSMENT ORDER UNDER SECTION 143(3) ON 30.12.2010 AND DETERMINED TAXABLE INCOME OF THE ASSESSEE AT RS.122,59,795/- A S AGAINST DISCLOSED INCOME OF RS.121,78,65/-. THE LD.AO HAS MADE ADDIT ION OF RS.71,330/- AND RS.9,780/- BY MAKING A DISALLOWANCE OUT OF VEHI CLE EXPENSES AND SALE CONSIDERATION SHOWN LESS. THE AO INITIATED PE NALTY PROCEEDINGS UNDER SECTION 271AAA. HE OBSERVED THAT THE ASSESSE E FAILED TO DISCLOSE MANNER AND SUBSTANTIATE MANNER DURING THE COURSE OF SEARCH AS WELL AS IN THE ASSESSMENT PROCEEDINGS. ACCORDINGLY, HE IMP OSED A PENALTY OF RS.10,47,500/- AT THE RATE OF 10% OF THE ALLEGED UN DISCLOSED INCOME. 4. ON APPEAL, THE LD.CITA) HAS DELETED PENALTY BY O BSERVING AS UNDER: 4. I HAVE CAREFULLY PERUSED THE PENALTY ORDER AS WE LL AS THE SUBMISSIONS MADE BY THE AR. IT IS OBSERVED THAT THE RE WAS A SEARCH ACTION IN THE CASE OF SHRI SHAILESHBHAI PATE L AND HIS FAMILY MEMBERS [SHRI SHAILESH G. PATEL IS THE HUSBAND OF T HE APPELLANT] ON 24-9-2008 AND DURING THE STATEMENT RECORDED U/S. 132[4] OF THE I. T. ACT, AN ADDITIONAL INCOME OF RS. 104,75,0 00/- WAS DECLARED BY THE APPELLANT WHICH WAS SHOWN IN THE RE TURN OF INCOME FILED AFTER THE SEARCH. IT IS SEEN THAT THE A.O. HAS LEVIED THE PENALTY HOLDING THAT THE FIRST TWO CONDITIONS P RESCRIBED 271AAA[2] ARE NOT FULFILLED I.E. THE ASSESSEE NEITH ER HAS STATED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED NO R ANY SPECIFIC DETAILS OF UNDISCLOSED INCOME WERE GIVEN. MOREOVER, THE ASSESSEE, ACCORDING TO THE A.O., DID NOT SUBSTANTIA TE THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. HOWEVER, THE A.O. ADMITTED THAT SINCE THE TAXES AND INTEREST ON THE D ISCLOSED INCOME WERE PAID, THE THIRD CONDITION OF SECTION 271 AAA[2 ] IS FULFILLED. ITA NO.2101/AHD/2014 3 IT HAS ALSO BEEN SUBMITTED BY THE AR THAT IN THE ST ATEMENT U/S. 132[4] ON PAGE NO. 8, THE APPELLANT CLEARLY ST ATED THAT AMOUNT OF RS. 98,74,830/-REPRESENTED HER PROFIT EAR NED DURING THE YEAR UNDER CONSIDERATION ON SALE OF PLOT OF LAN D, WHICH WAS NOT DISCLOSED EARLIER AND ON PAGE NO. 9 OF THE SAID STATEMENT, IT WAS STATED BY HER THAT RS. 6,00,110/- REPRESENTED T HE PROFIT EARNED ON SALE OF ANOTHER PLOT OF LAND SOLD TO SHRI ASHOKBHAI RASIKBHAI PATEL AND SHRI NIKULBHAI DILIPBHAI PATEL. THIS INCOME WAS ALSO UNACCOUNTED AND UNDISCLOSED BUT THE APPELL ANT ADMITTED THAT IT PERTAINED TO A.Y. 2008-09. IT HAS ALSO BEEN ADMITTED BY THE APPELLANT IN HER STATEMENT THAT RS. 98,74,830/- WAS RECEIVED BY CHEQUE WHICH WAS DEPOSITED IN THE BANK ACCOUNT O F HER SON SHRI NISHIT SHAILESHBHAI PATEL AND THIS AMOUNT WAS TRANSFERRED TO STATE BANK OF SAURASHTRA AND FIXED DEPOSITS WERE MA DE FROM THAT AMOUNT. THE AR HAS CONTENDED THAT ALL THE THREE CONDITIONS ARE FULFILLED AND NO PENALTY U/S. 271AAA IS ATTRACTED IN VIEW OF THE JUDGEMENTS RELIED UPON:- 1. ASHOKKURNAR SHARMA & ORS. V. DCIT [2012] 149 TTJ 33 TRI. CUTTAK 2. DCIT V. PIONEER MARBLES AND INTERIORS PVT. LTD. 14 ITR 608 KOLKATA. 3. PRAMODKUMAR JAIN V. DCIT, 149 TTJ 36 CUTTAK. ON CAREFUL PERUSAL OF THE FACTS, IT IS OBSERVED THA T -THE CONDITIONS ENVISAGED IN SECTION 271AAA[2] ARE FULFILLED IN THE CASE. THE PROVISIONS OF SECTION 271 AAA ARE REPRODUCED AS UND ER- 271 AAA. [1] THE ASSESSING OFFICER MAY, NOTWITHSTAN DING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SEC. 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007 [BUT BEFORE THE 1 ST DAY OF JULY 2012] THE ASSESSEE SHALL PAY BY WAY OF PENA LTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN P ER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. [2] NOTHING CONTAINED IN SUB SECTION [1] SHALL APPLY IF THE ASSESSEE I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UN DER SUB SECTION [4] OF SEC.132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MAN NER IN WHICH SUCH INCOME HAS BEEN DERIVED; II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME. IT IS OBSERVED THAT IN THE CAPTIONED CASE, THERE WA S A SEARCH U/S. 132 OF THE I. T. ACT AND THE STATEMENT WAS RECORDED U/S. 1 32[4] WHEREIN THE APPELLANT DECLARED UNACCOUNTED INCOME WHICH WAS UND ISCLOSED EARLIER ITA NO.2101/AHD/2014 4 AND FOR THE YEAR UNDER CONSIDERATION, THE APPELLANT HAS DECLARED RS.98,74,830/- WHICH WAS DERIVED BY HER AS PROFIT O N SALE OF LAND. IT WAS STATED HER THAT SHE HAD PURCHASED A PLOT OF LAND ON 29-1-2007 FROM DR. UDAYKANT G. MISTRY AND SOME CONSTRUCTION WAS ALSO D ONE THEREON AND TOTAL COST INCURRED BY HER WAS RS. 40,80,631/- WHIC H INCLUDED EXPENSES INCURRED FOR STAMP AND REGISTRATION. THE DETAILS OF THE SAID TRANSACTION WERE FOUND TO BE ENTERED ON PAGE NO. 32 TO 52 OF AN NEXURE B.F. 3 OF THE PANCHNAMA. SHE HAS CLEARLY STATED THEREAFTER, THAT THE SAID PLOT OF LAND WAS SOLD TO SHRI ASHOKBHAI RASIKBHAI PATEL AND SHRI RASIKBHAI V. PATEL VIDE SALE DEED DT 29-1-2008 FOR RS. 50,34,000/- BY CHEQUE AND RS. 98,74,830/- WAS ALSO RECEIVED FROM SHRI RASIKBHAI, WHICH WAS NOT MENTIONED IN THE SALE DOCUMENT. THIS AMOUNT WAS DEP OSITED BY HER IN THE BANK ACCOUNT OF HER SON SHRI NISHIT SHAILESH PA TEL IN HIS BANK A/C WITH ICICI BANK AND THE SAID AMOUNT WAS LATER ON TR ANSFERRED TO STATE BANK OF SAURASHTRA AND F.DS. WERE MADE OUT OF THAT. THUS, IT IS CLEAR THAT THE APPELLANT NOT ONLY STATED THE MANNER IN WH ICH THE ADDITIONAL INCOME WAS DERIVED BUT THE SAME WAS ALSO SUBSTANTIA TED WITH ENTRIES MADE IN THE LOOSE PAPERS FOUND DURING THE COURSE OF THE SEARCH. THE SOURCE OF INCOME EARNED AND ITS APPLICATION HAS ALS O BEEN CLEARLY STATED AND THE A.O. HAS ALREADY ADMITTED THAT TAXES AND IN TEREST THEREON HAVE BEEN PAID BY THE APPELLANT. THUS, IT IS OBSERVED THAT THE CONDITIONS OF 271AAA[ 2] OF THE I. T. ACT ARE FULFILLED IN THIS CASE AND PENALTY U/S. 271AAA IS N OT ATTRACTED. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS:- RELIANCE IS PLACED ON FOLLOWING COURT DECISIONS WHE RE THE HON'BLE COURTS HAVE HELD THAT:- I) ................IF NO SPECIFIC QUESTION IS POSED BY THE AUTHORIZED OFFICER DURING THE SEARCH ABOUT THE MANNER OF EARNING OF DECLARED INCO ME, THERE WOULD BE SUBSTANTIAL COMPLIANCE IF THE INCOME IS DECLARED AN D TAXES THEREON PAID. [MAHENDRA C SHAH [2008] 299 ITR 305 GUJ] II) IT IS NOT EXPECTED FROM A PERSON TO MAKE STAT EMENT SUO-MOTO ABOUT THE MANNER OF EARNING THE INCOME UNLESS HE IS SPECIFICA LLY ASKED BY THE AUTHORIZED OFFICER BUT EVEN IF IT IS STATED SUBSEQUENTLY, THAT WILL AMOUNT TO THE COMPLIANCE OF EXPLANATION 5[2] OF SEC. 271(1)(C). IN ABSENCE OF A NY SPECIFIC STATEMENT ABOUT MANNER OF EARNING INCOME, IT CAN BE INFERRED THAT U NDISCLOSED INCOME WAS DERIVED FROM BUSINESS WHICH HE WAS CARRYING ON OR FROM OTHE R SOURCES. THE OBJECTION OF PROVISION IS ACHIEVED BY MAKING STATEMENT ADMITTING NON DISCLOSURE OF MONEY, BULLION, JEWELRY, ETC. [RADHAKISHANGOYAL278ITR454-ALLD.H.C.] IT IS SEEN THAT THE JUDGEMENTS OF MAHENDRA C SHAH A ND RADHAKISHAN GOYAL BOTH WERE DELIVERED IN THE CONTEXT OF SEC. 271(1)(C) EXP LANATION 5[2] BUT THE PROVISIONS ARE AKIN TO SEC. 271AAA[2]. THERE ARE VARIOUS OTHER COURT DECISIONS ALSO WHICH SUPPORT THIS VIEW THAT IF ASSESSEE DECLARES VOLUNTARILY, ADDITIONAL INCOME DURING THE STATEMENT ITA NO.2101/AHD/2014 5 U/S. 132[4] AND STATES THE MANNER OF EARNING SAID I NCOME SUPPORTED BY IDENTIFIED ASSETS AND TAXES ALONG WITH INTEREST PAI D THEREON, THE CONDITIONS OF SEC. 271AAA[2] WILL BE TREATED AS FUL FILLED AND PENALTY U/S. 271AAA SHALL NOT BE LEVIABLE FOR E.G. I) SULOCHANADEVI AAGARWAL ITANO. 1052/AHD/2012. II) ITOV. SHILPABEN N GUPTA-1784/AHD/2012 III) PROMODKUMAR JAIN V. DCIT-131 TO 133/CTK/2012 IV) DCIT V. PIONEER MARBLES AND INTERIORS P. LTD. 1 326/KOL/2011 III) ................IF NO SPECIFIC QUESTION IS POSED BY THE AUTHORIZED OFFICER DURING THE SEARCH ABOUT THE MANNER OF EARNING OF DE CLARED INCOME, THERE WOULD BE SUBSTANTIAL COMPLIANCE IF THE INCOME IS DECLARED AND TAXES THEREON PAID. [MAHENDRA C SHAH [2008] 299 ITR 305 GUJ] IV) IT IS NOT EXPECTED FROM A PERSON TO MAKE STATEM ENT SUO-MOTO ABOUT THE MANNER OF EARNING THE INCOME UNLESS HE IS SPECI FICALLY ASKED BY THE AUTHORIZED OFFICER BUT EVEN IF IT IS STATED SUBSEQU ENTLY, THAT WILL AMOUNT TO THE COMPLIANCE OF EXPLANATION 5[2] OF SEC. 271(1 )(C). IN ABSENCE OF ANY SPECIFIC STATEMENT ABOUT MANNER OF EARNING INCO ME, IT CAN BE INFERRED THAT UNDISCLOSED INCOME WAS DERIVED FROM B USINESS WHICH HE WAS CARRYING ON OR FROM OTHER SOURCES. THE OBJECTIO N OF PROVISION IS ACHIEVED BY MAKING STATEMENT ADMITTING NON DISCLOSU RE OF MONEY, BULLION, JEWELRY, ETC. [RADHAKISHANGOYAL 278ITR454-ALLD.H.C.] IT IS SEEN THAT THE JUDGEMENTS OF MAHENDRA C SHAH A ND RADHAKISHAN GOYAL BOTH WERE DELIVERED IN THE CONTEXT OF SEC. 27 1(1)(C) EXPLANATION 5[2] BUT THE PROVISIONS ARE AKIN TO SEC. 271AAA[2]. THERE ARE VARIOUS OTHER COURT DECISIONS ALSO WHICH SUPPORT THIS VIEW THAT IF ASSESSEE DECLARES VOLUNTARILY, ADDITIO NAL INCOME DURING THE STATEMENT U/S. 132[4] AND STATES THE MAN NER OF EARNING SAID INCOME SUPPORTED BY IDENTIFIED ASSETS AND TAXE S ALONG WITH INTEREST PAID THEREON, THE CONDITIONS OF SEC. 271AA A[2] WILL BE TREATED AS FULFILLED AND PENALTY U/S. 271AAA SHALL NOT BE LEVIABLE FOR E.G. V) SULOCHANADEVI A AGARWAL ITA NO. 1052/AHD/2012. VI) ITOV. SHILPABENNGUPTA-1784/AHD/2012 VII) PROMODKUMAR JAINV. DCIT-131 TO 133/CTK/2012 VIII) DCIT V. PIONEER MARBLES AND INTERIORS P. LTD. 1326/KOL/2011 SIMILAR VERDICT HAS BEEN GIVEN IN FOLLOWING RECENT COURT DECISIONS:- A) NEERAT SINGHAL V. ACIT, C.C.13, NEW DELHI [2013] 37 TAXMAN.COM 189 DEL. TRI. B) CONCRETE DEVELOPERS V. ACIT, C.C. 2[2], [2013] 3 4 TAXMAN.COM 62 NAGPUR THUS, TAKING INTO ACCOUNT, THE ENTIRE FACTS AND CIR CUMSTANCES OF THE CASE AS WELL AS THE LEGAL POSITION, I AM OF THE VIE W THAT THE ASSESSING ITA NO.2101/AHD/2014 6 OFFICER WAS NOT JUSTIFIED THE PENALTY U/S. 271AAA. THE SAME IS DIRECTED TO BE DELETED. THE APPELLANT GETS RELIEF. THE GROUNDS OF APPEAL ARE DISPOSED OFF ACCORDINGLY. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED. 5. THE LD.DR. WHILE IMPUGNING THE ORDER OF THE CIT( A) CONTENDED THAT THE ASSESSEE HAS NOT MADE ANY DISCLOSURE DURIN G THE COURSE OF SEARCH, BECAUSE HER STATEMENT WAS NOT RECORDED UNDE R SECTION 132(4) OF THE ACT. THE AMOUNT OF RS.1,04,75,000/- RECEIVE D BY THE ASSESSEE AS ON-MONEY WAS DEPOSITED IN THE BANK ACCOUNT OF HE R SON. IT IS NOT DEMONSTRATED WHETHER THE ASSESSEE WAS THE VENDOR OF THE PLOT OR NOT. THUS, SHE FAILED TO SUBSTANTIATE THE MANNER OF ALLE GED UNDISCLOSED INCOME. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LD.CIT(A). 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. STATEMENT OF SHRI SHAILESH G. PA TEL RECORDED DURING THE COURSE OF SEARCH IS AVAILABLE ON PAGE NO.17 OF THE PAPER BOOK. VIDE QUESTION NO.13 HE WAS CONFRONTED WITH A PAGE NO.33 OF ANNEXURE BS-5 WHEREIN AN ENTRY OF RS.98,74,830/- WAS RECORDED. I T WAS A DEPOSIT THROUGH CHEQUE ON 19.8.2008. THE CHEQUE NUMBER HAS ALSO BEEN CONFRONTED TO THE ASSESSEE. IN RESPONSE TO THIS QU ESTION, SHRI SHAILESH PATEL HAS GIVEN A COMPLETE LIST OF INVESTMENT AND H OW HE HAS EARNED THAT MONEY. HE HAS MADE DISCLOSURE OF RS.2.00 CROR ES. HE HAS SPECIFICALLY DISCLOSED THAT ON-MONEY OF RS.1,04,75, 000/- WAS RECEIVED FOR SALE OF A PLOT WHOSE SALE DEED WAS REGISTERED S HOWING A CONSIDERATION OF RS.50,34,000/-. ON-MONEY RECEIVED WAS OFFERED FOR TAXATION IN THE HANDS OF THE ASSESSEE. NO DOUBT, S UB-CLAUSE (II) OF SECTION 271AAA POSTULATES THREE CONDITIONS REQUIRED TO BE FULFILLED BY THE ASSESSEE IN ORDER TO ABSOLVE HERSELF FROM THE R IGOURS OF PENALTY. THIS CONDITION HAS BEEN REPRODUCED BY THE LD.CIT(A) IN THE IMPUGNED ORDER EXTRACTED (SUPRA). THE AO DID NOT DISPUTE WI TH REGARD TO ITA NO.2101/AHD/2014 7 FULFILLMENT OF CONDITIONS UNDER CLAUSE (I) AND (III ) OF SUB-SECTION (2). HIS AREA OF GRIEVANCE IS THAT THE ASSESSEE FAILED TO FU LFILL THE CONDITIONS MENTIONED IN SUB-CLAUSE (II) THAT IS MANNER OF EARN ING SUCH INCOME AND ALSO FAILED TO SUBSTANTIATE THE MANNER. A PERUSAL OF THE STATEMENT OF SHRI SHAILESH G. PATEL WHO HAS MADE A DISCLOSURE WO ULD INDICATE THAT NOT ONLY HE DISCLOSED THE INCOME, BUT ALSO SUBSTANT IATED THE MANNER OF EARNING INCOME BY POINTING OUT THAT IT WAS ON-MONEY ; IT WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THIS DEPOSITION COUL D NOT BE REFUTED BY THE REVENUE AND THE ASSESSEE DOES NOT DESERVE TO BE VISITED WITH PENALTY. THE LD.CIT(A) HAS RIGHTLY APPRECIATED THE FACTS AND RIGHTLY DELETED THE PENALTY. WE DO NOT SEE ANY REASON TO I NTERFERE IN THE ORDER OF THE LD.CIT(A), HENCE, THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 3 RD APRIL, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER