DCIT, Central Circle - 1(1), Kolkata V. Shri Gopal Krishna Agarwal , Kolkata

ITA 2224/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7085 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-01-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 25-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DHRUBAJYAATI ROY J
• Keywords: Search and seizure; Document seized; Documents seized
• Section: 143(3); 153A; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 2224 / KOL / 2018 ASSESSMENT YEAR :2013-14 DCIT, CENTRAL CIRCLE- 1(1), 3 RD FLOOR, AAYAKAR BHAWAN PURBA 110, SHANTIPALLY, E.M. BYPASS, KOLKATA-107 V/S . SHRI GOPAL KRISHAN AGARWAL, 29F, RAM KRISHNA SAMADHI MARG, KAKURGACHI, KOLKATA-54 [ PAN NO.ACGPA 0157 L ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI DHRUBAJYAATI ROY, JCIT-DR /BY RESPONDENT SHRI A.K. TULSYAN, FCA /DATE OF HEARING 16-01-2020 /DATE OF PRONOUNCEMENT 05-02-2020 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2013-14 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-20, KOLKATAS ORDER DATED 29.08.2018 PASSED IN CASH NO. CIT(A), KOLKAT-20/12433/2015-16 INVOLVING PENALTY PROCEEDINGS U/S 271AAB OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES SOLE SUBSTANTIVE GRIEVANCE PLEADED IN THE INSTANT APPEAL SEEKS TO REVERSE THE CIT(A) ACTION DELETING SEC. 2 71AAB PENALTY OF ITA NO.2224/KOL/2018 A.Y. 2013-14 DCIT, CC-1(1), KOL. VS. SH. GOPAL KRIS HNA AGARWAL P AGE 2 16052500/- IMPOSED BY THE ASSESSING OFFICER IN HIS ORDER DATED 22.09.2015. THE CIT(A)S DETAILED DISCUSSION TO THIS EFFECT REA DS AS UNDER:- 5. DISCUSSION, AND, DECISION: MY DISCUSSION WILL BE MOSTLY LIKE-WISE AS FOR THE AY 2012-13. 5.1 FOREMOST, THE SUBJECT MATTER WHAT IS THAT UNDISCLOSED INCOME ? IT IS ONLY A MERE STATEMENT. THOUGH THE STATEMENT I S RECORDED U/S. 132(4), BUT IN THE ABSENCE OF ANY IDENTIFIABLE INCOME OR ASSET, OR, SPECIFIC ENTRY FOUND IN ANY BOOKS OF ACCOUNT OR DOCUMENTS OR TRANSACTIONS - THE STATEMENT IS REDUCED TO BUT A MERE RECORDED STATEMENT. SUCH STATEMENTS OF DISCLOSURE ARE OBVIOUSLY TO COOPERATE FOR THE STATISTICAL SUCCESS OF THE SEARCH, AKA, TO BUY PEAC E. 5.2 AND THE ASSESSEE HAS RESPECTED HIS COOPERATION FOR HE HAS SHOWN IT IN THE RETURN OF INCOME FILED U/S. 153A. BUT IT IS MER ELY A TYPED LINE IN THE COMPUTATION OF INCOME. WHAT AND WHERE IS THAT INCOME? IT STILL IS IN THE V OID UNKNOWN, UNIDENTIFIABLE. 5.3 UNDISCLOSED INCOME FOR THE PURPOSE OF THE PENALTY IS DEFINED IN THE EXPLANATION (C) TO THE SAID SECTION 271AAB. IN THIS INSTANT CASE THE SAID EXPLANATION (C) CANNO T BE APPLIED FOR THERE IS NO FOUND AS A RESULT OF THE SEARCH THAT CAN BE IDENTIF IED OR LINKED TO THE PURPORTED DISCLOSURE EITHER MONEY, BULLION, JEWELLERY OR OTHE R VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT S OR TRANSACTIONS FOUND IN THE COURSE OF THE SEARCH. THUS, IN THE ABSENCE OF THE REQUISITE ESSENTIAL FAC TS FOR THE ATTRACTION OF THE PENALTY PROVISIONS ITSELF THERE IS NO LOCUS STANDI FOR CAUSE FOR THE PENALTY. / JCIT HAS REPRODUCED IN THE PENALTY ORDER ONLY THE C LAUSE (A) TO THE SUB- SECTION (1) TO THE SAID SECTION 271AAB BUT IS ONLY REGARDING THE QUANTUM. PRECEDING TO THE CLAUSE (A), IN THE OPENING OPERATI VE PHRASE OF THE SECTION IS THE WORD MAY . IT IS MAY BECAUSE THE EXPLANATION (C) DEFINITION OF UNDISCLOSED INCOME HAS TO FIRST FIND PLACE. AND AS DISCUSSED ABOVE, THE EXPLANATION (C) DOES NOT FIND PLACE IN THIS INSTANT CASE. SO, IN THE IMPUGNED PENALTY ORDER TO REPRODUCE THE CLAUSE (A) TO THE SUB- SECTION (1) TO THE SAID SECTION 271AAB WAS ONLY T O PUT IN SOME STUFFING FOR THE BODY OF THE PENALTY ORDER. 5.5 THE ACIT AO / JCIT HAS STARTED THE ARGUMENT FO R IMPOSING THE PENALTY THAT THE ASSESSEE HAD NOT FILED APPEAL AGAINST THE ASSESSMENT. THIS ARGUMENT IS OUT OF CONTEXT FOR WHEN THE ASSE SSEE HAD HONOURED THE 132(4) STATEMENT, OFFERED THE ADDITIONAL AMOUNT IN THE RETURN OF INCOME, AND ITA NO.2224/KOL/2018 A.Y. 2013-14 DCIT, CC-1(1), KOL. VS. SH. GOPAL KRIS HNA AGARWAL P AGE 3 THE ASSESSMENT HAS BEEN MADE ACCEPTING THE RETURNED INCOME THEN IT IS AN ILLOGICAL ARGUMENT THAT THE ASSESSEE HAS NOT FILED APPEAL AGAINST THE ASSESSMENT ORDER. IN THIS CONTEXT TO, THE ACIT AO HAS STATED IN THE O PENING 2 ND PARA OF THE IMPUGNED PENALTY ORDER THAT IN THE ASSESSMENT MADE THAT ADDITION OF THE INCOME STATED U/S. 132(4) AT 16,05,24,000/- WAS MADE. THIS IS NOT SO. THE ASSESSEE HAD SUO MOTO OFFERED THE SAID AMOUNT IN TH E RETURN OF INCOME FILED U/S. 153A AS IS EVIDENT FROM THE STATEMENT OF FAC TS TO THE APPEAL MEMORANDUM. IT IS HEREUNDER: GOPAL KRISH NA AGARWAL ASST. YEAR: 2013-14 STATEMENT OF FACTS BEFORE THE CIT(A)-20, KOLKATA A SEARCH & SEIZURE OPERATION UNDER SEC.132 OF THE I NCOME TAX ACT, 1961 WAS CARRIED OUT BY THE INVESTIGATION WING AT THE RESIDE NCE AS WELL AS BUSINESS PREMISES IN RESPECT OF MAHALUXMI GROUP AND OTHERS AND ALSO AT THE RESIDENCE OF ASSESSEE ON 03.07.2012 AND ON SUBSEQUE NT DATES. DURING THE COURSE OF SEARCH, VARIOUS DOCUMENTS AND BOOKS OF AC COUNT WERE FOUND AND SEIZED FROM THE OFFICE PREMISES OF ASSESSEE GROUP. THE ASSESSEE FILED HIS RETURN DECLARING TOTAL INCO ME OF RS.17,60,15,380/-. IN THE COURSE OF SEARCH AND SEIZURE OPERATIONS, THE AS SESSEE DISCLOSED AN ADDITIONAL INCOME OF RS.16,05,25,000/- AND THE SAME WAS DULY DISCLOSED IN HIS RETURN OF INCOME. ASSESSMENT UNDER SEC. 143(3) OF THE ACT WAS COMPLETED ON 31.03.2015 DETERMINING TOTAL INCOME OF RS.17,60 ,23,230/-. CONSEQUENTLY, PENALTY PROCEEDINGS UNDER SEC. 271AAB OF THE I. TAX ACT WAS INITIATED AND PENALTY OF RS.1,60,52,500/- BEING 10% OF THE INCOME DISCLOSED UNDER SEC. 132(4) OF THE ACT WAS LEVIED VIDE ORDER DT. 22.09.2 015. BEING AGGRIEVED, THE ASSESSEE HAS COME IN APPEAL ON THE FOLLOWING GROUNDS:- GROUNDS OF APPEAL 1) THAT THE AO WAS WRONG IN IMPOSING PENALTY OF RS. 1,60,52,500/- U/S 271AAB, BEING THE 10% OF THE INCOME DISCLOSED UNDER SEC. 132(4) OF THE ACT. THE PENALTY SO LEVIED IS WRONG AND NEED TO BE DELETED. 2) THE ASSESSEE CRAVES LEAVE TO ADD, ALTER, AMEND O R WITHDRAW ANY GROUND OR GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. SD/- ILLEGIBLE. THE APPELLANT HAD SUO-MOTO OFFERED THE INCOME STATE D HONOURING THE STATEMENT U/S. 132(4). 5.6 COMING BACK TO THE CRUX OF THE ISSUE REGARDIN G INCOME MERELY IN STATEMENT RECORDED THERE IS THE DECISION OF THE H ON'BLE SUPREME COURT IN SUDARSHAN SILK MILLS VS. CIT [2008 LL-0411 8.169 TA XMAN 321, 300 ITR ITA NO.2224/KOL/2018 A.Y. 2013-14 DCIT, CC-1(1), KOL. VS. SH. GOPAL KRIS HNA AGARWAL P AGE 4 205, 216 CTR 12] THAT PENALTY FOR CONCEALMENT PURP ORTED UNDISCLOSED INCOME OFFERED MERELY IN STATEMENT RECORDED DURING SEARCH IN THE ABSENCE OF ANY SPECIFIC EVIDENCE / ASSET / DOCUMENT / TRANSACT IONS FOUND DURING THE SEARCH IS NOT JUSTIFIED. 3. LEARNED CIT-DR VEHEMENTLY CONTENDS DURING THE CO URSE OF HEARING THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE IMPUGNED PENALTY. MORE PARTICULARLY, BY NOT DEALING WITH THE FACTUAL MATRIX OF THE RELEVANT ISSUE AND GOING BY HON'BLE APEX COURTS JUDGMENT IN SUDARSHAN SILK MILLS WHICH DOES NOT APPLY IN THE FACTS OF THE INSTANT CASE. 4. MR. TULSYAN STRONGLY SUPPORTED THE CIT(A)S ACTI ON DELETING THE IMPUGNED PENALTY IN VIEW OF THE FACT THAT THE ASSES SEES SEARCH STATEMENT MAKING DISCLOSING UNDISCLOSED INCOME OF 16,05,25,000/- HAD BEEN DULY COMPLIED WITH IN HIS RETURN AS ACCEPTED IN THE COUR SE OF ASSESSMENT. IT IS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAD WR ONGLY LEVIED THE IMPUGNED PENALTY IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E FOREGOING RIVAL PLEADINGS. THERE CAN HARDLY BE ANY DISPUTE THAT THE IMPUGNED PENAL PROVISION I.E. U/S 271AAB COMES INTO PLAY IN CASE OF A SEARCH INITIATED ON OR AFTER 01.07.2012. THIS STATUTORY PROVISION APPLIES IN CAS E OF AN UNDISCLOSED INCOME DEFINED IN SEC. 271AAB EXPLANATION (C). IT EMERGES FROM A PERUSAL OF THE CIT(A)S ORDER THAT HE HAS NOWHERE EXAMINED THE REL EVANT FACTS QUA ASSESSEES ALLEGED UNDISCLOSED INCOME AS TO WHETHER THE SAME REPRESENTED ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT IN THE LIGHT OF THE FOREGOING EXPLANATION. WE ALSO NOTICE THAT THEIR LORDSHIPS JU DGMENT IN SUDARSHAN SILK MILLS (SUPRA) DOES NOT DEAL WITH THE IMPUGNED STATU TORY PROVISION BUT INVOLVED SEC.271(1)(C) PENALTY PROCEEDINGS ONLY. WE THEREFOR E REVERSE THE CIT(A)S LOWER APPELLATE FINDINGS UNDER CHALLENGE TO THIS EF FECT IN PRINCIPLE. ITA NO.2224/KOL/2018 A.Y. 2013-14 DCIT, CC-1(1), KOL. VS. SH. GOPAL KRIS HNA AGARWAL P AGE 5 6. NEXT COMES YET ANOTHER MOST IMPORTANT ASPECT INV OLVED IN THE INSTANT LIS AS TO WHETHER THERE IS ANY UNDISCLOSED INCOME INVOLVED GOING BY SEC. 271AAB EXPLANATION (C) OR NOT. A PERUSAL OF THE CAS E FILE SUGGESTS THAT THE ASSESSEES SEC. 132(4) DISCLOSURE MADE DURING THE C OURSE OF SEARCH DATED 03.07.2012 DECLARED TOTAL INCOME OF 16,05,25,000/- INVOLVING CAPITAL INTRODUCED, PROFIT AS PER P&L ACCOUNT, CAPITAL IN T HE NAME OF SUNDRY CREDITORS, PROFIT ON SALES @ 5%, COMMODITY PROFIT WITH MISCELL ANEOUS AND OTHER INCOME ETC., INVOLVING CORRESPONDING SUM(S) OF 80000000/- 18708706/-, 86870789/-, 214739/-, 50146549/- AND 3784217; RESPECTIVELY. OUT OF THIS, THE ASSESSEES BOOKS HAD DULY RECORDED INITIA L CAPITAL, SUNDRY CREDITORS AND MISCELLANEOUS INCOME (SUPRA) TOTALING TO 914,55,006/- AND THE BALANCE AMOUNT OF 69069994/- ( INVOLVING COMMODITY PROFITS OF 501,46,549/-, OF PROFITS AS P&L ACCOUNT OF 187,07,706/-, ESTIMATED 5% PROFIT OF 214739/- ) STOOD NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT U/S. 271AAB EXPLANATION- (C)(A) OF THE ACT. MR. TULSIYAN FAILS TO DISPUTE TH AT THIS LATTER UNDISCLOSED INCOME COMPONENT HAS SEEN LIGHT OF THE DAY DUE TO S EARCH WHEREIN THE CORRESPONDING SEIZED DOCUMENTS HAVE BEEN MARKED AS PG-10 OF MRA-10 PAGES 29 TO 32 AND 84 TO 91 OF THE PT/1 AND PT/1 MN N-18B) / 1; RESPECTIVELY. WE THEREFORE CONCLUDE IN THESE PECULIAR FACTS AND C IRCUMSTANCES THAT THE ASSESSING OFFICER WAS VERY WELL JUSTIFIED IN INVOKI NG THE IMPUGNED PENAL PROVISION QUA THE ASSESSEES UNDISCLOSED INCOME OF 690,69,994/- THAN THE ENTIRE DISCLOSURE OF 16,05,25,000/-. WE MAKE IT CLEAR THAT REVENUE HAS F AILED TO PIN-POINT ANY MATERIAL IN THE NATURE OF SEIZED D OCUMENTS INDICATING THE REMAINING THREE COMPONENTS OF INITIAL CAPITAL, SUND RY CREDITORS AND MISCELLANEOUS INCOME (SUPRA) WHICH COULD BE HELD TO BE UNDISCLOSED INCOME GOING BY SEC.271AAB EXPLANATION (C) OF THE ACT. THE ASSESSING OFFICERS ACTION PENALIZING THE ASSESSEE QUA THE SAID DISCLOSED / DULY RECORDED INCOME IS FOUND TO BE NOT SUSTAINABLE THEREFORE. WE MAKE I T CLEAR THAT WE HAVE OURSELVES ASSUMED OUR JURISDICTION OF THE FINAL FAC T-FINDING AUTHORITY UNDER THE PROVISION OF THE ACT TO DECIDE UPON CORRECTNESS OF IMPUGNED ENTIRE PENALTY THAN REMITTING THE ISSUE BACK TO THE ASSESSING OFFI CER OR THE CIT(A) FOR AFRESH ITA NO.2224/KOL/2018 A.Y. 2013-14 DCIT, CC-1(1), KOL. VS. SH. GOPAL KRIS HNA AGARWAL P AGE 6 ADJUDICATION. THE ASSESSING OFFICER IS NOW DIRECTED TO FRAME CONSEQUENTIAL COMPUTATION OF THE IMPUGNED PENALTY AS PER LAW QUA THE ASSESSEES UNDISCLOSED INCOME OF 690,69,994/-ONLY. ORDERED ACCORDINGLY. 7. THIS REVENUES APPEAL IS PARTLY ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT 05/ 02/2020 SD/- SD/- ( &) (( &) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP SR.P.S. )- 05 / 02 /20 20 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, C.C.1(1), 3 RD FLOOR, AAYKAR BHAWAN PURBA 110, SHANTIPALLY E.M. BYPASS, KOL KATA-107 2. /RESPONDENT-SHRI GOPAL KRISHNA AGARWAL, 29F, RAM KR ISHNA SAMADHI MARG KAKURGACHI, KO LKAT-54 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. 8 ((4, 4, / DR, ITAT, KOLKATA 6. = / GUARD FILE. BY ORDER/ , /TRUE COPY/ 4,