INCOME -TAX-OFFICER, Buldhana V. SHRI YAHAABHAI TAHERALI BOHRA, Buldhana

ITA 232/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1625 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 17-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: S C THAKAR; C J THAKAR
• Section: 143(3); 5(2); 153A; 132

Judgement Text

1 ITA NO. 232/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO.232/NAG/2014 ASSESSMENT YEAR : 2003 - 04. THE INCOME - TAX OFFICER, SHRI YAHAABHAI TAHERALI BOHRA, KHAMGAON. VS. KHAMGAON. PAN AIFPB 2196P. APPELLANT. RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI C.J. THAKAR & SH RI S.C. THAKAR. DATE OF HEARING : 20 - 08 - 2015 DATE OF PRONOUNCEMENT : 30 TH OCT., 2015 O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 30 - 12 - 2013. REVENUE HAS CHALLENGED THE DELETION OF PENALTY LEVIED U/S 271(1)(C) AS PER THE FOLLOWING GROUND: ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE CIT(A) ERRED IN CANCELLING THE PENALTY U/S. 271(1)(C) OF THE ACT BY MISINTERPRETING THE PROVISIONS OF PART (2) OF EXPLANATION 5 OF THE ACT AS PER WHICH THE IMMUNITY UNDER THIS EXPLANATION 5 IS AVAILABLE TO THE ASSESSEE ONLY IF THE ASSESSEE FILD IS RE TURN OF INCOME WITHIN THE DUE DATE PROVIDED UNDER SECTION 139(1) AND PAYS THE TAX ALONG WITH INTEREST WHEREAS IN THE INSTANT CASE THE DUE DATE FOR FILING RETURN FOR A.Y. 2003 - 04 WAS 31.07.2004 BUT THE ASSESSEE FILED RETURN OF INCOME OF 28.05.2005. 2. WHI LE LEVYING THE PENALTY U/S 271(1)(C) VIDE ORDER DATED NIL (HOWEVER CIT(APPEALS) HAS REFERRED THE DATE AS 31 - 05 - 2010) IT WAS OBSERVED THAT A SEARCH U/S 132 WAS CARRIED OUT ON THE ASSESSEE ON 30 TH MAY, 2004 WHICH WAS CONCLUDED 2 ITA NO. 232/NAG/2014 ON 31 ST MAY, 2004. THEREAFTER A RETURN U/S 153A WAS FILED FOR ASSESSMENT YEAR 2003 - 04 ON 28 - 02 - 2005 DECLARING AN INCOME OF RS.24,22,840/ - . AN ASSESSMENT U/S 153A READ WITH SECTION 143(3) WAS COMPLETED FOR ASSESSMENT YEAR 2003 - 04 ON 22 - 11 - 2006 AND THE TOTAL INCOME WAS ASSESSED AT RS.2 6,55,340/ - . IN THE DECLARED INCOME THERE WERE TWO ADDITIONS MADE BY THE AO, ONE WAS IN RESPECT OF ESTIMATED INCOME OF BUSINESS ACTIVITY AT RS.2 LAKHS AND THE OTHER WAS EXTRACT HOUSEHOLD EXPENSES OF RS.32,500/ - . THAT ORDER OF THE AO WAS CHALLENGED BEFORE TH E LEARNED CIT(APPEALS) - I, NAGPUR AND VIDE AN ORDER DATED 29 - 11 - 2007 A PART RELIEF WAS GRANTED. THE OBSERVATION IN RESPECT OF BOTH THE ADDITIONS BY LEARNED CIT(APPEALS) WHILE GRANTING PART RELIEF WAS AS UNDER : 3.7 ASSTT. YEAR 2003 - 04 SIMILARLY, HOUSEHOLD EXPENSES IN AY 2003 - 04, AS DECLARED BY THE ASSESSEE ARE CONSIDERED LOW BY THE AO. ADDITION OF RS.32,500/ - IS MADE ON THIS ACCOUNT ESTIMATING THE HOUSEHOLD EXPENSES AT RS.70,000/ - . AS DISCUSSED ABOV E EVEN THIS FIGURE IS NOT CONSIDERED SUFFICIENT BY ME. FOR AY 1999 - 2000 MONTHLY CONTRIBUTION OF THE APPELLANT IS TAKEN AT RS.6,000/ - PER MONTH, IN AY 2003 - 04 SAME IS ESTIMATED AT RS.10,000/ - PER MONTH. THUS APPELLANTS ANNUAL CONTRIBUTION COMES TO RS.1,20,000/ - WHE3REAS AO HAS ESTIMATED THE S AME AT RS.70,000/ - ONLY. THUS INCOME ADDED FROM SUPPRESSED BUSINESS ACTIVITIES AT RS.2,00,000/ - IS SUSTAINED AT RS.50,000/ - AS ADDITION ON ACCOUNT OF HOUSEHOLD EXPENSES OVER AND ABOVE THE AMOUNT OF RS.70,000/ - ESTIMATED BY THE AO. THE APPELLANT GETS A RELI EF OF RS.1,50,000/ - FROM INCOME ESTIMATED BY THE AO FROM BUSINESS ACTIVITIES FOR WHICH NO BASIS HAS BEEN PROVIDED IN THE IMPUGNED ORDER. 2.1 AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE ITAT, NAGPUR AND VIDE ITSSA NOS. 22 TO 24/NAG/2008 FOR ASSESSM ENT YEARS 1999 - 2000 , 2003 - 04 & 2004 - 05 AND ITSSA NOS. 73 TO 76/NAG/2008 FOR ASSESSMENT YEARS 2000 - 01 TO 2002 - 03 AND 2005 - 06 VIDE ORDER DATED 13 - 05 - 2009 THE HOUSEHOLD EXPENDITURE AS ESTIMATED BY THE AO WERE SUSTAINED. HOWEVER, THE APPEAL OF THE ASSESSEE W AS PARTLY ALLOWED. WHILE LEVYING THE PENALTY, AS PER THE IMPUGNED PENALTY ORDER, THE MAIN REASON GIVEN BY THE AO WAS THAT THE RETURN WAS FILED U/S 153A OF I.T. 3 ITA NO. 232/NAG/2014 ACT, HENCE NO BENEFIT AS PRESCRIBED U/S 271(1)(C) EXPLANATION 5 WAS AVAILABLE TO THE ASSESSEE. IT WAS MENTIONED BY THE AO THAT THE ASSESSEE HAD NOT FILED THE RETURNS TILL THE SEARCH WAS CONDUCTED. RESULTANTLY A PENALTY AT THE RATE OF 150% OF THE TAX SOUGHT TO BE EVADED OF RS.11,19,198 WAS LEVIED ON THE ASSESSEE. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY IT WAS VEHEMENTLY PLEADED THAT A STATEMENT WAS RECORDED U/S 132(4) OF I.T. ACT AND THE INCOME WAS DECLARED ACCORDINGLY. THEREFORE, THE QUESTION OF LEVY OF PENALTY WAS COVERED U/S 271(1)(C) EXPLANATION 5 CLAUSE (II) OF THE AC T. A DECISION OF CIT VS. SURESHCHANDRA MITTAL 251 ITR 9 (SC) WAS CITED AND AFTER CONSIDERING THE FACTS , LEARNED CIT(APPEALS) HAS DIRECTED TO DELETE THE PENALTY AS UNDER : CONSIDERING THE DE TAILED AND REASONED FINDINGS OF MY LEARNED PREDECESSOR ON SIMIL AR FACTS AS STATED ABOVE, I AM OF THE VIEW THAT SINCE A DISCLOSURE HAS BEEN MADE U/S 132(4) IN THE APPELLANTS GROUP FOLLOWING WHICH RETURN OF INCOME HAS BEEN FILD FOR AY 2003 - 04 OFFERING THE SAID INCOME AND PAYING THE TAXES THEREON, THE PROVISIONS OF EXP LANATION 5(2) APPLY, IN THE APPELLANTS CASE. AS REGARDS PENALTY LEVIED ON ADDITION TO HOUSEHOLD EXPENSES IT IS SEEN THAT THIS WAS MADE ON ESTIMATE AND NOT BASED ON ANY SPECIFIC DOCUMENTS FOUND AT THE TIME OF SEARCH. THEREFORE, IN MY CONSIDERED OPINION THE RE IS NO GROUND FOR LEVY OF PENALTY ON ACCOUNT OF ADDITION TO HOUSEHOLD EXPENSES. 4. FROM THE SIDE OF THE REVENUE LEARNED D.R. MR. NARENDRA KANE APPEARED AND PLEADED THAT FOR THE YEAR UNDER CONSIDERATION DUE DATE OF FILING OF RETURN HAD ALREADY EXPIRED. T HEREFORE, THE RETURN FILED U/S 153A WAS IN CONSEQUENCE OF THE SEARCH OPERATION, HENCE IN THE NATURE OF CONCEALED INCOME. THE UNDISCLOSED INCOME WAS UNEARTHED BY THE REVENUE DEPARTMENT. HENCE THE PENALTY WAS RIGHTLY IMPOSED. 5. ON THE OTHER HAND, LEARNED A. R. MR. C.J. THAKAR APPEARED AND PLEADED THAT CONSEQUENCE UPON A SEARCH, TOTAL INCOME SURRENDERED BY THE GROUP WAS TO THE TUNE OF RS.6.09 CRORES WHICH WAS TAXED IN DIFFERENT YEARS COVERING ALL THE 4 ITA NO. 232/NAG/2014 INVESTMENTS AND EXPENDITURE INCURRED BY THE FAMILY. THE YEAR WISE RETURN FILED AFTER THE SEARCH WAS NOT DISTURBED BY THE AO . THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE BECAUSE THE INCOME DECLARED DURING THE COURSE OF SEARCH WAS DULY OFFERED AND ACCEPTED BY THE AO. HOWEVER, ONLY AN ESTIMATED INCOME FOR HOUSEHOL D EXPENSES WAS TAXED. 6. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE SIDES AND UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE RELIEF GIVEN BY LEARNED CIT(APPEALS ) DESERVES TO BE ACCEPTED. THE ADMITTED FACTUAL POSITION IS THAT A SUBSTANTIAL AMOUNT WAS OFFERED DURING THE COURSE OF SEARCH AND ON THAT BASIS THE ASSESSEE HAS FILED THE RETURN FOR EACH YEAR WHILE DISCLOSING THE RESPECTIVE INCOME OF THOSE YEARS WHICH WAS ALSO ACCEPTED BY THE AO. THE REASON FOR MAKING A DDITION WAS THE ESTIMATION OF HOUSEHOLD EXPENSES. AS FAR AS THE QUANTUM OF THE HOUSEHOLD EXPENDITURE WAS CONCERNED, FIRSTLY AN AMOUNT WAS ESTIMATED BY THE AO WHICH WAS LATER ON REDUCED BY LEARNED CIT(APPEALS) AND FINALLY IT WAS AGAIN CHANGED BY THE TRIBUN AL AS REFERRED ABOVE. THEREFORE, THE QUANTUM OF HOUSEHOLD EXPENDITURE HAD A CHEQUERED HISTORY FOR THE YEAR UNDER CONSIDERATION. THE QUANTUM OF ADDITION IN QUESTION KEPT ON CHANGING BY SEVERAL ORDERS AS DISCUSSED ABOVE. AS FAR AS THE POSITION OF THE DECLARA TION OF INCOME OF THE SURRENDERED AMOUNT WAS CONCERNED, WE HAVE NOTED THAT IN SEVERAL DECISIONS IT WAS HELD THAT IF THE OFFERED AMOUNT WAS BONAFIDE AND ACCEPTED BY THE AO ON WHICH AT THE TIME OF FILING OF THE RETURN TAXES HAVE BEEN PAID THEN THE EXCEPTION AS CAR VE D OUT IN EXPLANATION 5 TO SECTION 271(1)(C) WAS REQUIRED TO BE INVOKED. WE HAVE NOTED THAT IN THE CASE OF CIT VS. D.V. CHANDRU 266 ITR 175 (MAD) IT WAS HELD THAT DISCLOSURE OF LARGE INCOME IN THE RETURNS FOR EARLIER YEARS FILED AFTER THE SEARCH, TH EREFORE, CLAUSE (2) OF EXPLANATION 5 DID NOT MAKE ANY DISTINCTION, HENCE DIRECTED TO DELETE THE PENALTY. LIKEWISE IN THE CASE OF CIT VS. KANHAIYALAL 299 ITR 19 (RAJ.) IT WAS HELD THAT THE IMMUNITY CONFER RED UNDER CLAUSE (2) OF THE EXPLANATION 5 CANNOT BE WITHDRAWN IF THE DECLARED INCOME U/S 5 ITA NO. 232/NAG/2014 132(4) WAS RETURNED BY THE ASSESSEE AND OTHER CONDITIONS SUCH AS PAYMENT OF TAXES ETC. H AVE BEEN COMPLIED WITH. THERE ARE SEVERAL OTHER DECISIONS ALSO PLACED BEFORE US. HOWEVER, PLACING RELIANCE ON THE CASE LAWS AS DISC USSED ABOVE, WE HEREBY CONFIRM THE DELETION OF PENALTY. RESULTANTLY THE GROUND RAISED BY THE REVENUE IS HEREBY DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF OCT., 2015. SD/ - SD/ - ( SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER. JUDICIAL MEMBER NAGPUR, DATED: 30 TH OCT., 2015. COPY FORWARDED TO : 1. SHRI YAHAABHAI TAHERALI BOHRA, PLOT NO. - 7, TANK ROAD, KHAMGAON, DIST. BULDHANA. 2. I.T.O., KHAMGAON. 3. C.I.T., CONCERNED 4. CIT(APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE