VIKRAM TANNAN, MUMBAI V. ASST CIT CEN CIR 20, MUMBAI

ITA 220/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0665 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 14-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AARJOO GARODIA
• Keywords: Business expenditure; Search and seizure; Salary income; Earning of tax free income; Competent authority
• Section: 153A; 132; 2; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 220 /MUM/20 1 6 ASSESSMENT YEAR: 2009 - 10 ITA NO. 221 /MUM/201 6 ASSESSMENT YEAR: 2010 - 11 & ITA NO. 222 /MUM/201 6 ASSESSMENT YEAR: 2011 - 12 SHRI VIKRAM TANNAN, CAPSULATION PREMISES, 1 ST FLOOR, SION TROMBAY ROAD, DEONAR, MUMBAI - 400088 PAN: AABPT3016G VS. THE ASST CIT, CEN TRAL CIRCLE - 20, AAYKAR BHAVAN, MAHARSHI KARVE ROAD, CHURCHGATE, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NITESH JOSHI ( A R) REVENUE BY : MS. AARJOO GARODIA ( D R) DATE OF HEARING: 07/12 /201 7 DATE OF PRONOUNCEMENT: 17 / 01 /201 8 O R D E R PER RAM LAL NEGI, JM THESE APPEAL S FIL ED BY THE ASSESSEE ARE DIRECTED AGAINST THE THREE ORDER S DATED 16.10.2015, 16.10.2015 AND 18.11.2015 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 51 , MUMBAI , FOR THE ASSESSMENT YEAR S 2009 - 20 10, 2010 - 11 AND 2011 - 20 12 RESPECTIVELY , WHEREBY THE LD. CIT (A) HAS DISMISSED ALL THE THREE APPEAL S FILED BY THE ASSESSEE AGAINST PENALTY ORDER S PASSED BY THE AO U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). SINCE, ALL THE THREE APPEAL S PERTAIN TO THE SAME ASSESSEE FOR DIFFERENT ASSESSMENT Y EARS AND THE ISSUES INVOLVED IN ALL THE APPEALS ARE SIMILAR , THE SAME WERE CLUBBED, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NO S . 220,221 & 222 /MUM/2016 ASSESSMENT YEAR S : 2009 - 10, 2010 - 11 & 20 11 - 12 ITA NO. 220 /MUM/201 6 (ASSESSMENT YEAR: 2009 - 2010 ) 2. BRIEF FACTS OF THE CASE A RE THAT A SEARCH U/S 132 OF THE ACT WAS CONDUCTED ON THE UNIVERSAL MEDICARE GROUP AND OTHE R GROUP CONCERNS AN D INDIVIDUALS. THE ASSESSEE DIRECTOR OF THE UNIVERSAL GROUP WAS COVERED UNDER SEARCH AND SEIZURE ACTION. ACCORDINGLY, NOTICE U/S 153 WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE THEREOF THE ASSESSEE FILED RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 6,85,06,800/ - AND EXEMPT INCOME OF RS. 5,51,26,023/ - AS AGAINST THE ORIGINAL RETURN OF INCOME AT RS. 6,66,11,691/ - , CURRENT LOSS OF RS. ( - ) 92,60,436/ - . THE ASSESSMENT U/S 153A READ WITH SECTION 143 (3) WAS COMPLETED ON 31.03.2014 DETERMINING THE TOTAL INCOME AT RS. 6,85,06,800/ - AFTER MAKING ADDITION OF RS. 15,38,500 / - MADE ON ACCOUNT OF INCOME FROM SALARY AND RS. 3,56,612/ - INCOME FROM OTHE R SOURCES. 3. PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE ACT WAS INITIATED FOR CONCEALING INCOME OF RS. 18,95,112/ - . AFTER HEARING THE CONTENTION OF THE ASSESSEE, THE AO IMPOSED PENALTY TO THE TUNE OF RS . 13,00,000 / - I.E. MORE THAN 2 00% OF THE TAX SOUGHT TO BE EVADED AFTER OBTAINING APPROVAL FROM THE COMPETENT AUTHORITY. THE ASSESSEE CHALLENGED THE SAID ORDER BY FILING APPEAL BEFORE THE CIT (A). THE LD. CIT (A) AFTER HEARING THE ASSESSEE DISMISSED THE APPEAL AND CONFIRMED THE PENALTY LEVIED BY THE AO. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE SAID ORDER RAISING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ASSESSING OFFICERS ACTION OF LEVYING PENALTY OF RS. 13,00,000/ - U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (ACT), IN RESPECT OF INCOME OF RS. 18,95,112. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DISREGARDING THE FACT THAT THE APPELLANT HAD SUO MOTO OFFERED INCOME OF RS. 18,95,112 TO TAX IN THE RETU RN OF INCOME FILED UNDER SECTION 153A, 3 ITA NO S . 220,221 & 222 /MUM/2016 ASSESSMENT YEAR S : 2009 - 10, 2010 - 11 & 20 11 - 12 WHICH WAS MISSED OUT IN THE RETURN OF INCOME FILED UNDER SECTION 139 (1) DUE TO GENUINE OVERSIGHT, AND THERE WAS NEITHER DELIBERATE OMISSION NOR FURNISHING OF ANY INACCURATE PARTICULARS ON THE PART OF THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE APPELLANT COMMITTED DELIBERATE ACT OF FURNISHING INACCURATE PARTICULARS OF INCOME. 4. THE PENALTY OF MORE THAN 200% OF ALLEGED AMOUNT OF TAX EVADED WAS EXCESSIVE AND NOT JUSTIFIED. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO BASIS FOR ISSUING NOTICE U/S 153A AND AS PER THE LAW LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. GURINDER SINGH BABA 386 ITR 483 PROCEEDINGS U/S 1 5 3A ARE BAD AND WITHOUT JURISDICTION AS NO ASSESSMENTS WERE PENDING AT THAT TIME AND NO INCRIMINATING EVIDENCE WAS FOUND DURING SEARCH. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THE APPELLANT/ASSESSEE HA S SUO MOTO OFFERED INCOME OF RS. 18,95,112/ - TO TAX IN THE RETURN OF INCOM E FILED U/S 153A, WHICH HAD BEEN MISSED OUT DUE TO OVERSIGHT, THE LD. CIT (A) OUGHT TO HAVE ALLOWED THE APPEAL OF THE ASSESSEE. IN ANY CASE PENALTY OF MORE THAN 100% OF THE ALLEGED AMOUNT OF TAX EVADED WAS EXCESSIVE AND NOT JUSTIFIED. 5. ON THE OTHER HAN D, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE ORDERS PASSED BY THE AUTHORITIES BELOW SUBMITTED THAT THE LD. CIT (A) HAS RIGHTLY DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE PENALTY AS THE ASSESSEE HAS DELIBERATELY CONCEALED HIS INCOM E FROM SALARY . E VEN IF, IT IS ASSUMED THAT NO SPECIFIC EVIDENCE WAS FOUND DURING SEARCH SHOWING THE SALARY INCOME IN QUESTION OF THE ASSESSEE, THE SAME COULD HAVE BEEN DETECTED DURING THE POST SEARCH INVESTIGATION. THE ASSESSEE OFFERED INTEREST INCOME ONLY AFTER THE FOREIGN BANK ACCOUNTS DETAILS WERE FOUND DURING THE COURSE OF SEARCH. IT IS IN THE SAME FOREIGN BANK ACCOUNT THAT THE SALARY IN QUESTION WAS CREDITED. 4 ITA NO S . 220,221 & 222 /MUM/2016 ASSESSMENT YEAR S : 2009 - 10, 2010 - 11 & 20 11 - 12 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO GONE THROUGH THE ENTIRE MATERIAL ON THE RECOR D INCLUDING THE CASES RELIED UPON BY THE PARTIES. WE NOTICE THAT THAT AO HAS MADE ADDITION OF RS. 15,38,500/ - ON ACCOUNT OF INCOME FROM SALARY AND RS. 3,56,612/ - UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER ON TH E GROUND THAT THE APPELLANT HAD SUO MOTO OFFERED INCOME OF RS. 18,98,112 TO TAX IN RETURN OF INCOME FILED U/S 153A WHICH HAD BEEN MISSED OUT DUE TO OVERSIGHT AND THERE WAS NO DELIBERATE OMISSION ON THE ASSESSEE. HENCE, THE CONTENTION OF THE ASSESSEE REGARD ING SUO MOTO ACTION IN OFFERING TAX IS BASELESS. A S POINTED OUT BY THE AO , DURING SEARCH DOCUMENTS RELATING TO FOREIGN BANKS WERE RECOVERED ON THE BASIS OF WHICH THE ASSESSEE OFFERED TAX ON INTEREST INCOME FROM FOREIGN BANK ACCOUNTS. THEREFORE , THERE IS NO MERIT IN THE CONTENTION OF THE ASSESSEE THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS SO FAR AS THE SAID INCOME IS CONCERNED . SO, FOR AS SALARY INCOME IS CONCERNED, SINCE NO MATERIAL WAS FOUND DURING SEARCH A CTION TO ESTABLISH THE SAID INCOME , IT CAN BE CONCLUDED THAT THE ASSESSEE HAS SUO MOTO OFFERED THE SAID INCOME TO TAX BY FILING RETURN U/S 153A OF THE ACT. HENCE, WE DELETE THE PENALTY LEVIED ON THE INCOME FROM SALARY OF RS. 15,38,500/ - HOWEVER, SUSTAIN PE NALTY ON INTEREST INCOME FROM FOREIGN BANK ACCOUNTS AMOUNTING TO RS.3,56,612/ - . SO FAR AS THE QUANTUM OF PENALTY IS CONCERNED WE AGREE WITH THE LD. COUNSEL FOR THE ASSESSEE THAT THE THERE IS NO REASON TO LEVY PENALTY EXCEEDING TWO TIMES OF THE TAX SOUGHT T O BE EVADED BY FURNISHING INACCURATE PARTICULARS OF THE INCOME. IN OUR CONSIDERED OPINION, MINIMUM PENALTY IS JUSTIFIED IN THIS CASE. WE, THEREFORE, MODIFY THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED ON SALARY INCOME AND COMPUTE THE PENALTY ON THE AMOUNT OF INCOME FROM FOREIGN BANK ACCOUNTS @ 100% OF THE TOTAL AMOUNT OF TAX SOUGHT TO BE EVADED. 5 ITA NO S . 220,221 & 222 /MUM/2016 ASSESSMENT YEAR S : 2009 - 10, 2010 - 11 & 20 11 - 12 TA NO. 221/MUM/2016 (ASSESSMENT YEAR: 2010 - 2011 ) IN THIS CASE, THE AO LEVIED PENALTY OF RS. 5,00,000/ - U/S 271 (1) (C) OF THE ACT IN RESPECT OF INCOME OF RS. 2,45,439/ - INTEREST INCOME FROM FOREIGN BANK ACCOUNTS AND RS. 4,89,739/ - EXCESS OF TRAVE L LERS CHEQUE S DEPOSITED IN FOREIGN BANK ACCOUNT. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BY FILI NG APPEAL BEFORE THE CIT (A). THE LD. CIT (A) AFTER HEARINGS THE ASSESSEE AFFIRMED THE ACTION OF THE AO AND DISMISSED THE ASSESSEES APPEAL. 2. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ASSESSING OFFICERS ACTION OF LEVYING PENALTY OF RS. 50,00,000/ - U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (ACT), IN RESPECT OF INCOME OF RS. 7,35,178. 2. THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DISREGARDING THE FACT THAT THE APPELLANT HAD SUO MOTO OFFERED INCOME OF RS. 7,35,178 TO TAX IN THE RETURN OF INCOME FILED UNDER SECTION 153A, WHICH WAS MISSED OUT IN THE RETURN OF INCOME FILED UNDER SECTION 139 (1) DUE TO GENUINE OVERSIGHT, AND THERE WAS NEITHER DELIBERATE OMISSION NOR FURNISHING OF ANY INACCURATE PARTICULARS ON THE PART OF THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE APPELLANT COMMITTED DELIBERATE AC T OF FURNISHING INACCURATE PARTICULARS OF INCOME. 4. THE PENALTY OF MORE THAN 200% OF ALLEGED AMOUNT OF TAX EVADED WAS EXCESSIVE AND NOT JUSTIFIED. 3. SO FAR AS THE INCOME FROM FOREIGN BANK ACCOUNT AMOUNTING TO RS. 2,45,439/ - IS CONCERNED, WE HAVE ALREADY DECIDED THIS ISSUE AGAINST THE ASSESSEE IN ASSESSEES OWN CASE FOR THE A.Y. 2009 - 10 DISCUSSED ABOVE. WE THEREFORE, HOLD THAT THE ASSESSEE IS LIABLE FOR PENALTY U/S 271 (1) (C) FOR CONCEALING THE PARTICULARS OF INCOME EARNED AS INTEREST FROM FOREIGN BANK 6 ITA NO S . 220,221 & 222 /MUM/2016 ASSESSMENT YEAR S : 2009 - 10, 2010 - 11 & 20 11 - 12 AC COUNTS. AS REGARDS, SECOND ISSUE PERTAINING TO EXCESS OF TRAVEL L ER CHEQUE S THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED THAT DUE TO OVERSIGHT THIS INCOME COULD NOT BE BROUGHT TO TAX AND THAT THE ASSESSEE HAD SUO MOTO OFFERED INCOME OF RS. 7,35,178/ - T O TAX IN THE RETURN OF INCOME FILED U/S 153A OF THE ACT. THE CONTENTION OF THE ASSESSEE THAT THE SAID INCOME WAS NOT BROUGHT TO TAX UNDER THE IMPRESSION THAT THIS AMOUNT WAS NOT LIABLE TO TAX BEING THE NATURE OF REIMBURSEMENT OF EXPENSES. THE TRAVELLER CHE QUES WERE GIVEN BY THE COMPANY FOR EXPENSES TO BE INCURRED BY THE ASSESSEE IN THE OVERSEAS TRIPS. THE ASSESSEE DEPOSITED THE UNUSED CHEQUES IN HIS PERSONAL ACCOUNTS IN FOREIGN BANK. SINCE, THE COMPANY HAD CLAIMED THE ENTIRE EXPENDITURE AS BUSINESS EXPENSES , THE ASSESSEE WAS UNDER OBLIGATION TO DECLARE THE SAID INCOME IN THE RETURN. SINCE, THE ASSESSEE DECLARED THE SAID INCOME AT THE TIME OF FILING RETURN U/S 153A, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME IN ITS RETURN FILED U/S 139 (1) OF THE ACT. THEREFORE, HE IS LIABLE FOR PENALTY U/S 271 (1) (C). SO FAR AS THE AMOUNT OF PENALTY IS CONCERNED, WE ARE OF THE CONSIDERED VIEW THAT PENALTY OF MORE THAN 200% OF THE TOTAL AMOUNT OF TAX SOUGHT TO BE EVADED IS EXCES SIVE AND NOT JUSTIFIED. WE THEREFORE, MODIFY THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) AND DIRECT THE AO TO COMPUTE THE AMOUNT OF PENALTY @ 100% OF THE TOTAL AMOUNT SOUGHT TO BE EVADED BY THE ASSESSEE BY FURNISHING INACCURATE PARTICULARS OF INCOME. I TA NO. 22 2 /MUM/2016 (ASSESSMENT YEAR: 20 11 - 201 2 ) THE FACTS OF THIS APPEAL ARE IDENTICAL TO THE FACTS OF THE ASSESSEES OWN CASE FOR THE A.Y. 2010 - 11 DISCUSSED ABOVE EXCEPT THE AMOUNT OF INCOME DISCLOSED BY THE ASSESSEE IN RETURN OF INCOME FILED U/S 153A . THE LD. CIT (A) CONFIRMED THE PENALTY IMPOSED BY THE AO U/S 271 (1)(C) OF THE ACT. 2. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE SAID ORDER RAISING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - 7 ITA NO S . 220,221 & 222 /MUM/2016 ASSESSMENT YEAR S : 2009 - 10, 2010 - 11 & 20 11 - 12 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) ERRED IN UPHOLDING THE ASSESSING OFFICERS ACTION OF LEVYING PENALTY OF RS. 3,00,000 - U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (ACT), IN RESPECT OF INCOME OF RS. 5,16,416. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DISREGARDING THE FACT THAT THE APPELLANT HAD SUO MOTO OFFERED INCOME OF RS. 5,16,416 TO TAX IN THE RETURN OF INCOME FILED UNDER SECTION 153A, WHICH WAS MISSED OUT IN THE RETURN OF INCOME FILED UNDER SECTION 139 (1) DUE TO GENUINE OVERSIGHT, AND THERE WAS NEITHER DELIBERATE OMISSION NOR FURNISHING OF ANY INACCURATE PARTICULARS ON THE PART OF THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE APPELLANT COMMITTED DELIBERATE ACT OF FURNISHING INACCURATE PARTICULARS OF INCOME. 4. THE PENALTY OF MORE THAN 200% OF ALLEGED AMOUNT OF TAX EVADED WAS EXCESSIVE AND NOT JUSTIFIED . 3. THE FACTS AND THE ISSUES INVOLVED IN THIS APPEAL ARE IDENTICAL TO THE FACTS AND THE ISSUES INVOLVED IN THE ASSESSEES OWN CASE FOR THE A.Y. 2010 - 11. SINCE, WE HAVE M ODIFIED THE ORDER OF THE LD. CIT (A) IN ASSESSEES OWN CASE FOR THE A.Y. 2010 - 11, CONSISTENT WITH OUR OWN FINDINGS, WE MODIFY THE IMPUGNED ORDER IN THIS CASE AND DIRECT THE AO TO COMPUTE THE AMOUNT OF PENALTY @ 100% OF THE TOTAL AMOUNT OF TAX SOUGHT TO BE EVADED BY FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE RESULT, APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT YEAR S 2009 - 2010, 2010 - 2011 AND 2011 - 2012 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY , 2018 . S D/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 17 / 01 / 2018 ALINDRA, PS 8 ITA NO S . 220,221 & 222 /MUM/2016 ASSESSMENT YEAR S : 2009 - 10, 2010 - 11 & 20 11 - 12 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / I TAT, MUMBAI