M/S. Jai Salasar Balaji Pvt. Ltd., Kolkata V. DCIT, CC-XIII, Kolkata, Kolkata

ITA 2142/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1826 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-11-2014
• Court: TRIBUNAL
• Department Lawyers: BANIBRATA DUTTA A DDL
• Assessee Lawyers: A K TULSIYAN
• Keywords: Search and seizure
• Section: 153A; 32; 27; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO. 2142/KOL/20 14 ASSESSMENT YEAR : 2009-1 0 M/S. JAI SALASAR BALAJI PVT. LTD. -VS.- D. C.I.T., CENTRAL CIRCLE-XIII, KOLKATA KOLKATA [PAN : AAACJ 6970 D] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI A.K.TUL SIYAN, FCA FOR THE RESPONDENT : SHRI BANI BRATA DUTTA, A DDL. CIT(DR) DATE OF HEARING : 12.04.2017. DATE OF PRONOUNCEMENT : 03.05.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 23.09.2014 OF C.I.T.(A)-CENTRAL-II, KOLKATA RELATING TO A.Y.2009 -10. 2. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE ORDER OF CIT(A) WHEREBY THE CIT(A) CONFIRMED THE ORDER OF AP IMPOSING PENALTY O N THE ASSESSEE U/S 271(1)(C) OF THE INCOME TAX 1961 (ACT). 3. THE FACTS AND CIRCUMSTANCES UNDER THE PENALT Y WAS IMPOSED ON THE ASSESSEE BY THE AO ARE AS FOLLOWS :- THERE WAS A SEARCH AND SEIZURE OPERATION C ONDUCTED BY THE REVENUE U/S 132 OF THE ACT IN JAI BALAJI GROUP. THE ASSESSEE WAS ALSO A PA RT OF THE JAI BALAJI GROUP AND THE ASSESSEES BUSINESS PREMISES WAS ALSO SEARCH BY THE REVENUE ON 09.06.2011. IN THE COURSE OF SEARCH THE ASSESSEE MADE DISCLOSURE OF RS .46 LAKHS IN THE STATEMENT OF THE DIRECTOR RECORDED U/S 132(4) OF THE ACT. THE DIRECT OR OF THE ASSESSEE MADE A DISCLOSURE OF RS.46 LAKHS AS UNDISCLOSED INCOME AND AGREED TO DISCLOSE THE SAID SUM IN THE RETURN OF INCOME TO BE FILED FOR A.Y.2009-10.THE BREAK-UP OF THE DISCLOSURE OF UNDISCLOSED INCOME CAN BE SUMMED UP IN THE FORM OF THE FOLLOWIN G CHART :- 2 ITA NO.2142/KOL/2014 M/.S JAI SALASR BALAJI PVT. LTD. A.YR.2009-10 2 SL.NO. PARTICULARS REFERENCE FINANCIAL YEAR AMOUNT (RS.) 1. SHORTAGE OF STOCK (AT MANGALPUR, RANIGUNJ) AS PER SHOW CAUSE NOTICE, DISCLOSING THE SAME TO AVOID LITIGATION AND TO BUY PEACE, WITHOUT ADMITTING ANY IRREGULARITIES. SCHEDULE-5 2008-09 64,827 2. SALE OF SCRAP AS PER SHOW CAUSE NOTICE, DISCLOSING THE SAME TO AVOID LITIGATION AND TO BUY PEACE, WITHOUT ADMITTING ANY IRREGULARITIES. SCHEDULE-5 2008-09 4,479,491 3. MISC (NET) TO COVER UP PROBABLE ERRORS & OMISSIONS 2008-09 55,682 4,600,000 IT IS NOT DISPUTED THAT FOR THE RELEVANT ASSESSMENT YEAR 2009-10 THE RETURN OF INCOME WAS FILED U/S 139(1) OF THE ACT PRIOR TO THE SEARCH AND THE INCOME DECLARED IN THE COURSE OF SEARCH HAD NOT BEEN INCLUDED IN SUCH RETURN OF I NCOME. HOWEVER, AFTER THE SEARCH NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESS EE AND THE RETURN FILED IN RESPONSE TO THE SAID NOTICE THE ASSESSEE HAD DECLARED A SUM OF RS.46 LAKHS WHICH WAS SURRENDERED AS UNDISCLOSED INCOME IN THE COURSE OF SEARCH U/S 1 32 OF THE ACT. THE AO BROUGHT TO TAX A SUM OF RS.46 LAKHS IN THE YEAR PASSED U/S 153A OF THE ACT. HE INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE U/S 271(1)(C) OF T HE ACT R.W. EXPLANATION TO SECTION 5A OF THE ACT FOR IMPOSING PENALTY. 4. IN THE PENALTY PROCEEDINGS, THE ASSESSEE TOO K A STAND THAT THE SURRENDER WAS VOLUNTARY AND WITH A VIEW TO PURCHASE PEACE AND THE REFORE NO PENALTY SHOULD BE IMPOSED. THE AO HOWEVER IMPOSED PENALTY ON THE GROU ND THAT BUT FOR THE SEARCH U/S 132 OF THE ACT THE INCOME IN QUESTION WOULD NOT HAV E BEEN OFFERED TO TAX BY THE 3 ITA NO.2142/KOL/2014 M/.S JAI SALASR BALAJI PVT. LTD. A.YR.2009-10 3 ASSESEE AND ACCORDINGLY THE AO IMPOSED PENALTY ON T HE ASSESEE WHICH IS 100% OF THE TAX SOUGHT TO BE EVADED. 5. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRME D THE ORDER OF AO AND IN DOING SO THE CIT(A) ALSO PLACED RELIANCE ON EXPLANATION 5A T O SECTION 271(1)(C) OF THE ACT. THE FOLLOWING WERE THE OBSERVATIONS OF CIT(A) :- 5.1 ON PERUSAL OF EXPLANATION SA OF SECTION 271(1) (C) SUBSTITUTED BY THE FINANCE (NO.2) ACT, 2009 APPLICABLE WITH RETROSPECTIVE EFFE CT FROM 01.06.2007, IT IS APPARENT THAT IN A CASE OF AN ASSESSEE WHERE THE SE ARCH IS INITIATED ON OR AFTER 1ST DAY OF JUNE, 2007 AND SUCH AN ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR HAVING ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENT S AND RELATES TO ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SA ID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN, THEN, NOTWITHSTANDING THAT S UCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S. 271(1)(C), BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. IN THE CASE OF APPELLANT, THERE IS NO DISPUTE THAT THE SEA RCH WAS CONDUCTED AFTER 01.06.2007 AND THE INCOME RELATES TO THE PREVIOUS Y EAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH. THE APPELLANT HAD FILED ITS RETURN OF INCOME U/S 139(1) OF THE ACT FOR SUCH PREVIOUS YEAR BUT DID NOT DECLARE SUCH INCOME THEREIN. UNDER THE CIRCUMSTANCES, EVEN IF THE APPELLANT COMPANY HAS DE CLARED THE UNDISCLOSED INCOME IN THE RETURN FILED U/S 153A, IT WILL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF ITS INCOME FOR THE A.Y. 2009-10 FOR THE PURPOSE OF IMPOSITION OF PENALTY. AS PER EXPLANATION SA TO SECTION 271(1)(C), NO IMMUNITY HA S BEEN PROVIDED FROM THE PENALTY IF THE UNDISCLOSED INCOME WAS DECLARED U/S 132(1) IN THE COURSE OF SEARCH PROCEEDINGS AS PROVIDED E:ARLIER BY EXPLANATION 5 O F THIS SECTION. THE APPELLANT HAS ARGUED THAT THE ADDITIONAL INCOME OF RS.46 LAKHS WA S DECLARED VOLUNTARILY. HOWEVER, I AM OF THE OPINION THAT IT IS NOT TRUE BE CAUSE THE ADDITIONAL INCOME WAS DECLARED IN CONSEQUENCE TO THE SEARCH OPERATION AND BY THAT TIME THE APPELLANT HAD ALREADY FILED ITS RETURN U/S 139(1) WITHOUT DISCLOS ING THE INCOME IN THE SAID RETURN. IN VIEW OF ABOVE, I AM OF THE OPINION THAT THE AO W AS JUSTIFIED IN IMPOSING THE PENALTY U/S,271(1)(C) OF THE ACT. 6. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 4 ITA NO.2142/KOL/2014 M/.S JAI SALASR BALAJI PVT. LTD. A.YR.2009-10 4 7 . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BE FORE US THAT THE SHOW CAUSE NOTICE ISSUED U/S 274 OF THE ACT BEFORE IMPOSING PENALTY D OES NOT CONTAIN THE SPECIFIC CHARGE AGAINST THE ASSESSEE NAMELY AS TO WHETHER THE ASSES SEE WAS GUILTY OF HAVING CONCEALED PARTICULARS OF INCOME OR HAVING FURNISHED INACCURAT E PARTICULARS OF INCOME. A COPY OF THE SHOW CAUSE NOTICE U/S 274 OF THE ACT IS PLACED AT PAGE-1 OF THE ASSESSEES PAPER BOOK AND PERUSAL OF THE SAME REVEALS THAT AO HAS NO T STRUCK OUT THE IRRELEVANT PORTION IN THE SHOW CAUSE NOTICE AND THEREFORE THE SHOW CAU SE NOTICE DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE AS TO WHETHER THE CHARG E IS OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. 8. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTEN TION TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS E MERALD MEADOWS IN ITA NO.380 OF 2015 DATED 23.11.2015 WHEREIN THE HONBLE KARNAT AKA HIGH COURT FOLLOWING ITS OWN DECISION IN THE CASE OF CIT VS MANJUNATHA COTTON AN D GINNING FACTORY (2013) 359 ITR 565 TOOK A VIEW THAT IMPOSING OF PENALTY U/S 271(1) (C) OF THE ACT IS BAD IN LAW AND INVALID FOR THE REASON THAT THE SHOW CAUSE NOTICE U /S 274 OF THE ACT DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE AS TO WHETHER IT IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. COUNSEL FURTHER BROUGHT TO OUR NOTICE THAT AS AGAINST THE DECISION OF THE HON BLE KARNATAKA HIGH COURT THE REVENUE PREFERRED AN APPEAL IN SLP IN CC NO.11485 OF 2016 A ND THE HONBLE SUPREME COURT BY ITS ORDER DATED 05.08.2016 DISMISSED THE SLP PREFER RED BY THE DEPARTMENT. THE LD. COUNSEL ALSO BROUGHT TO OUR NOTICE THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS SHRI SAMSON PERINCHERY IN ITA NO .1154 OF 2014 DATED 05.01.2017 WHEREIN THE HONBLE BOMBAY HIGH COURT FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNAT HA COTTON AND GINNING FACTORY (SUPRA) CAME TO THE CONCLUSION THAT IMPOSITION OF P ENALTY ON DEFECTIVE SHOW CAUSE NOTICE WITHOUT SPECIFYING THE CHARGE AGAINST THE AS SESSEE CANNOT BE SUSTAINED. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF ITAT IN THE CASE OF SUVAPRASANNA BHATTACHARYA VS ACIT IN ITA NO.1303/KOL/2010 DATED 06.11.2015 WHEREIN IDENTICAL 5 ITA NO.2142/KOL/2014 M/.S JAI SALASR BALAJI PVT. LTD. A.YR.2009-10 5 PROPOSITION HAS BEEN FOLLOWED BY THE TRIBUNAL. THE LD. DR RELIED ON THE ORDER OF THE CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE ALREADY OBSERVED THAT THE SHOW CAUSE NOTICE ISSUED IN THE PRESENT CASE U/S 27 4 OF THE ACT DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE AS TO WHETHER IT IS FOR CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE SH OW CAUSE NOTICE U/S 274 OF THE ACT DOES NOT STRIKE OUT THE INAPPROPRIATE WORDS. IN THE SE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IMPOSITION OF PENALTY CANNOT BE SUSTAINED. THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE WHICH IS BASED ON THE DECISIONS REFERRED T O IN THE EARLIER PART OF THIS ORDER HAS TO BE ACCEPTED. WE THEREFORE HOLD THAT IMPOSITION O F PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED AND THE SAME IS DIRECTED TO BE CANCELL ED. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 03.05.2017. SD/- SD/- [DR.ARJUN LAL SAINI] [ N.V.VASUDEVA N ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 03.05.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. M/S. JAI SALASAR BALAJI PVT. LTD., 5, BENTICK ST REET, KOLKAT-700001. 2D.C.I.T., CENTRAL CIRCLE-XIII, KOLKATA. 3. CIT(A)-CENTRAL-II, KOLKATA 4. C.I.T.-CENT RAL-II, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES 6 ITA NO.2142/KOL/2014 M/.S JAI SALASR BALAJI PVT. LTD. A.YR.2009-10 6