Siddhi Structures Pvt.Ltd., Baroda V. The ACIT.,Cent.Circle-2, Baroda

ITA 2438/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1836 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-12-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 18-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: MEHUL K PATEL
• Section: 271(1)(c); 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.2438-2439/AHD/2009 ASSESSMENT YEARS :2005-06 & 2006-07 DATE OF HEARING:16.12.09 DRAFTED:17.12.09 SIDDHI STRUCTURES PVT. LTD., KRISHNA COMPOUND, NEW KHANDERAO MARKET, PRATAPNAGAR, BARODA PAN NO.AAAC5590Q V/S . ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, BARODA (APPELLANT) .. (RESPONDENT) ITA NO.2440/AHD/2009 ASSESSMENT YEAR: 2004-05 SM. GEETA A PATEL, KRISHNA COMPOUND, NEW KHANDERAO MARKET, PRAAPNAGAR, BARODA PAN NO.AEQPP099L V/S . ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, BARODA (APPELLANT) .. (RESPONDENT) ASSESSEE BY:- SHRI MEHUL K PATEL, AR REVENUE BY:- SMT. NEETA SHAH, SR. DR DATE OF ORDER RESERVED: 16/12/2009 O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THESE THREE APPEALS BY TWO DIFFERENT ASSESSEE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-IV, AHMEDABAD IN APPEALS NO. CIT(A)-IV/51- 52/B/CC-2/08-09 & CIT(A)-IV/44.B/CC-2/08-09 OF EVE N DATE 25-02-2009. THE ASSESSMENTS WERE FRAMED BY THE ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- ITA NO.2438-40/AHD/2009 A.YS 05-06, 06-07 & 04-05 SIDDHI SRUCTURES P. LTD & SMT. GEETA A PATEL V. ACIT, CC-2, BARODA PAGE 2 2, BARODA U/S.153C R.W.S. 153A(B) R.W.S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER OF EVEN DATE 31-12-2007. THE ABOVE THREE PENALTY UNDER DISPUTE WERE LEVIED BY TH E ACIT, CENTRAL CIRCLE-2, BARODA U/S.271(1)(C) OF THE ACT. FIRST WE WILL DEAL WITH ASSESSEES APPEAL IN ITA NO .2438/AHD/2009. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT BY THE ASSESSING OFFICER. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT A S EARCH U/S.132 OF THE ACT WAS CARRIED OUT IN THE GROUP CASES OF ASHWIN K PATEL ON 24-11-2 005. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF CONSTRUC TION & DEVELOPMENT OF IMMOVABLE PROPERTIES. THE FIRST ADDITION MADE BY T HE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S.153C OF THE AC T WAS AN AMOUNT OF RS.2.10 LAKHS ADDED AS ADDITIONAL SALE CONSIDERATION NOT AC COUNTED FOR IN THE BOOKS OF ACCOUNT AND COUNT NOT DECLARE IN THE ORIGINAL RETUR N FILED U/S.139(1) OF THE ACT. ON THIS ADDITION, THE AO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT AND LEVIED THE PENALTY BY STATING THAT THIS UNDISCLOSED INCOME DOES NOT COME UNDER THE PURVIEW OF EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT AS THE ADMISSION OF UNDISCLOSED INCOME IN THE STATEMENT U/S.132(4) OF THE ACT AND T HE PAYMENT OF TAX ALONG WITH INTEREST ARE NOT FULFILLED BY THE ASSESSEE. THE SEC OND ADDITION MADE BY THE AO IS ON ACCOUNT OF CLAIM OF THE ASSESSEE IN THE ORIGINAL RE TURN OF VACANCY ALLOWANCE OF RS.51,200/- ADDED BY THE AO AS RENT AND THEREBY ALL OWING DEDUCTION OF 30% WORKED OUT THE ADDITION AT RS.35,480/-. THE AO LEVIED THE PENALTY ON THIS ACCOUNT ALSO. BEFORE THE CIT(A) AS WELL AS BEFORE US LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE HAS DECLARED THE SALE CONSIDERATION IN THE ORIGINAL RETURN. BUT THIS ADDITIONAL SALE CONSIDERATION WAS DECLARED TO BUY P EACE OF MIND AND TO AVOID LINGERING LITIGATION. HOWEVER, LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT THIS IS NOT A REAL INCOME OF THE ASSESSEE AND THE ASSESSEE HAS FILED COMPLETE DETAILS OF SALE CONSIDERATION IN THE ORIGINAL RETURN. THIS ADD ITION IS JUST ON DEBATABLE POINT AND NOTHING ELSE. AS REGARDS TO THE ADDITION OF RENTAL INCOME ON ACCOUNT OF VACANCY ALLOWANCE NOT ACCEPTED BY THE ASSESSING OFFICER, TH E LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE IS LEGALLY ENTITLED TO VAC ANCY ALLOWANCE IN RESPECT OF THE LET OUT PROPERTY FOR THE PERIOD WHEN THE PROPERTY WAS N OT LET OUT DURING THE YEAR UNDER CONSIDERATION AND THIS PLEA HAS BEEN TAKEN BY THE A SSESSEE FROM THE VERY BEGINNING. ITA NO.2438-40/AHD/2009 A.YS 05-06, 06-07 & 04-05 SIDDHI SRUCTURES P. LTD & SMT. GEETA A PATEL V. ACIT, CC-2, BARODA PAGE 3 THE CIT(A) ALSO HAS NOT ACCEPTED THE PLEA OF THE AS SESSEE AND CONFIRMED THE PENALTY BY GIVING FOLLOWING FINDING IN PARA-2.1& 2.2 OF HIS APPELLATE ORDER:- 2.1 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF LD. COUNSEL AS WELL AS GONE THROUGH THE RECORDS. ON PERUSAL OF ASSESSMENT ORDER IT HAS BEEN NOTICED THAT IN THE RETURN FILED U/S.153A THE ASSES SEE HAS DECLARED RS.2,10,000/- ON ACCOUNT OF ADDITIONAL SALE CONSIDE RATION AS AGAINST LOSS SHOWN AT RS.3,820/- IN THE ORIGINAL RETURN FILED U/ S.139(1). THE CONTENTIONS OF LEARNED COUNSEL THAT THAT THE RS.2,10,000/- ON ACCO UNT OF ADDITIONAL SALE CONSIDERATION WAS DISCLOSED BY THE ASSESSEE BEFORE THE SAME WAS DISCOVERED BY THE ASSESSING OFFICER AND THEREFORE I T CANNOT BE SAID TO BE THE AMOUNT OF TAX OUGHT TO BE EVADED CANNOT BE ACCEDED TO BECAUSE THE AMOUNT OF RS.2,10,000/- WAS DECLARED ONLY AFTER CONDUCT OF SEARCH U/S.132 I.E. WHEN THE DEPARTMENT HAD IN ITS POSSESSION & COLLECTED EV IDENCE AFTER SEARCH. HENCE, IT WAS DECLARED UNDER FORCIBLE CIRCUMSTANCES U/S.153A WHICH CANNOT BE SAID TO BE VOLUNTARILY AS THE APPELLATE PROCEEDI NGS WOULD HAD DECLARED THIS AMOUNT WHEN THE RETURN U/S.139(1) WAS FILED. FURTH ER, THE DISCLOSURE MADE BY SHRI ASHWIN K PATEL U/S.132(4) OF THE ACT AND IS TH EREFORE ENTITLED TO THE EXCEPTION TO LEVY OF PENALTY CONTAINED IN SECTION 2 71(1)(C) EXPLANATIONN-5 IS NOT APPLICABLE SINCE AXES ALONG WITH INTEREST WERE NOT PAID ON THE DISCLOSURE MADE BY SHRI ASHWIN K PATEL. 2.2 HOWEVER, THE APPELLANT IS REQUIRED TO FILE RETU RN OF INCOME U/S.139 AS PER THE SPECIFIED TIME LIMIT MENTIONED THEREIN. THE TAX PAYER IS BOUND TO DECLARE CORRECT INCOME AND PAY TAXES THEREON. BUT, HE TRUE INCOME WAS NOT DECLARED U/S.139 UNDER NORMAL CIRCUMSTANCES. THEREAFTER, IN COME TAX DEPARTMENT CONDUCT SEARCH U/S.132 ON THE BASIS OF WHICH THE AP PELLANT FILED RETURN OF INCOME U/S.153A AND ASSESSMENT WAS COMPLETED U/S.15 3A. HENCE, RETURN FILED U/S.153A WILL NOT PROTECT THE APPELLANT FROM IMPOSITION OF THE PENALTY U/S.271(1). THE PENALTY IS EXIGIBLE WHERE THE APPE LLANT HAD OFFERED THE ADDITIONAL CONCEALED INCOME IN THE RETURN FILED U/S .153A. IT IS ALSO EVIDENT AS ALSO ADMITTED BY THE APPELLANT THAT TRUE AND CORREC T INCOME WAS NOT DISCLOSED IN THE NORMAL RETURN FIELD U/S.139. THEREFORE, THE CONTENTIONS OF LD. COUNSEL CANNOT BE ACCEPTED ON THE GROUND THE PENALTY CANNOT BE IMPOSED SINCE CONCEALED INCOME WAS DECLARED AFTER SEARCH IN THE R ETURN FILED U/S.153A. SO, THE RETURN FILED U/S.153A OFFERING CONCEALED INCOME AFTER SEARCH CANNOT BE TREATED ON PAR WITH A NORMAL RETURN FILED U/S.139. HOWEVER, AS PER THE PROVISIONS CONTAINED IN EXPLANATION-5 ATTACHED TO S ECTION 271(1) IT IS MENTIONED THAT WHERE IN THE COURSE OF SEARCH INITIA TED U/S.132 BEFORE THE 1 ST DAY OF JUNE 2007, THE ASSESSEE IS FOUND TO BE THE O WNER OF ANY MONEY ETC. SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS O F HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME UNLESS:- 1. SUCH INCOME IS OR THE TRANSACTIONS ARE RECORDED. 2. HE MAKES THE STATEMENT DURING THE COURSE OF THE SEARCH THAT SUCH INCOME ETC. NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME. 3. ALSO SPECIFIED IN THE STATEMENT THE MANNER IN WH ICH SUCH INCOME HAS BEEN DERIVED. 4. PAYS TAXES TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF SUCH INCOME. ITA NO.2438-40/AHD/2009 A.YS 05-06, 06-07 & 04-05 SIDDHI SRUCTURES P. LTD & SMT. GEETA A PATEL V. ACIT, CC-2, BARODA PAGE 4 HENCE, BENEFIT OF IMMUNITY FROM IMPOSITION OF PENAL TY CAN BE GRANTED ONLY WHEN EXPLANATION-5 IS APPLICABLE AFTER FULFILLING T HE CONDITIONS MENTIONED ABOVE I.E. TAXES ARE PAID ON THE DECLARED UNDISCLOS ED INCOME ALONG WITH INTEREST THEREON. IN THE INSTANT CASE, BENEFIT OF I MMUNITY FROM IMPOSITION OF PENALTY U/S.271(1) CANNOT BE GRANTED UNDER EXPLANA TION-5 BECAUSE TAXES WERE NOT PAID ALONG WITH INTEREST ON UNDISCLOSED IN COME OF RS.1 CRORE DECLARED BY SHRI ASHWIN PATEL DURING THE COURSE OF SEARCH IN THE STATEMENT RECORDED U/S./132(4).THE CONTENTIONS OF LD. COUNSEL CAN NOT BE ACCEDED TO WHICH ARE HEREBY REJECTED. KEEPING IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, NO INTERFERENCE IS CALLED FOR AND THE PENALTY IMPOSED U/S.271(1) IS HEREBY CONFIRMED. HENCE, THE APPEAL IS DISMISSED . 3. AFTER HEARING THE RIVAL CONTENTIONS AND GOING TH ROUGH THE CASE RECORDS, WE FIND THAT THE ASSESSEE HAS DISCLOSED THE SALE CONSI DERATION IN THE ORIGINAL RETURN AND THIS ADDITIONAL SALE CONSIDERATION OF RS.2.10 LAKHS WAS DECLARED DURING THE COURSE OF SEARCH JUST TO AVOID LINGERING LITIGATION AND ON TH E INSISTENCE OF THE SEARCH PARTY, THE ASSESSEE HAS DISCLOSED THE SALE CONSIDERATION AND T HE ENTIRE FACTS RELATING TO THAT TRANSACTION WERE DECLARED IN THE ORIGINAL RETURN FI LED U/S.139(1) OF THE ACT. AS REGARDS TO VACANCY ALLOWANCE ALSO THE ASSESSEE HAS DISCLOSED PART OF THE RENTAL INCOME AND CLAIMED VACANCY ALLOWANCE IN RESPECT OF LET OUT PROPERTY FOR THE PERIOD WHEN THE PROPERTY WAS VACANT DURING THE YEAR UNDER CONSIDERATION. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE ADDITION IS MADE JUST ON THE BASIS OF ESTIMATES AND THE ASSESSEE HAS FILED COMPLETE PARTICULARS DURING THE COURSE OF ORIGINAL RETURN AND THIS WAS AVAILABLE BEFORE THE SEARCH PARTY. ACCORD INGLY, WE ARE OF THE VIEW THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY AND ACCORDING LY, WE DELETE THE SAME. THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. COMING TO ASSESSEES APPEAL IN ITA NO.2439 & 2440/A HD/2009. 4. IN THESE APPEALS OF THE ASSESSEE ONLY COMMON ISS UE IS AS REGARDS TO LEVY OF PENALTY ON ACCOUNT OF ADDITION MADE BY THE ASSESSIN G OFFICER TO THE RENT NOT RECEIVED DURING THE PERIOD WHEN THE PROPERTY WAS VA CANT. THE ASSESSEE CLAIMED THE VACANCY ALLOWANCE BUT WAS NOT ALLOWED. EXACTLY ON SIMILAR FACTS, WE HAVE DELETED THE PENALTY IN ITA NO.2438/AHD/2009 IN ASSESSEES OWN CASE. TAKING A CONSISTENT VIEW, WE DELETE THE PENALTY AND ALLOW THE APPEALS O F THE ASSESSEE. 5. APART FROM THIS, ONE MORE ISSUE IN THIS APPEAL O F ASSESSEE IN ITA NO.2440/AHD/2009 IS THAT AS REGARDS TO LEVY OF PENALTY IN LOSS TO L OSS CASE U/S.271(1) OF THE ACT. THE LD. COUNSEL FOR THE ASS ESSEE BEFORE US SATED THAT THE ITA NO.2438-40/AHD/2009 A.YS 05-06, 06-07 & 04-05 SIDDHI SRUCTURES P. LTD & SMT. GEETA A PATEL V. ACIT, CC-2, BARODA PAGE 5 ASSESSING OFFICER HAS REDUCED THE LOSS OF RS.6,92,1 87/- WITHOUT ANY IOTA OF EVIDENCE AND THERE IS NO REASON WHY THE LOSS HAS BEEN REDUCE D BY THE AO. HE REFERRED TO PARA-5 OF THE ASSESSMENT ORDER WHEREIN THE AO HAS MADE TH E DISALLOWANCE OF LOSS AND SAME READS AS UNDER:- 5. THE ASSESSEE HAS REDUCED LOSS IN THE RETURN FIL ED U/S.153A BY RS.9,030/- AS COMPARED TO THE LOSS DECLARED IN HE RETURN U/S.1 39(1). THEREFORE, IN VIEW OF EXPLANATION 4 BELOW SECTION 271(1)(C), PENALTY PROC EEDINGS U/S.271(1) IS HEREBY INITIATED. WE FIND THAT HONBLE APEX COURT HAS LAID DOWN THE L AW THAT THE PENALTY IN LOSS TO LOSS CASE WILL BE LEVIED IN VIEW OF THE DECISION IN THE CASE OF VIRUAT SOFT SYSTEMS LTD. V. CIT (2007) 289 ITR 83 (SC) AND CIT V. GOLD COIN HEALTH FOOD P. LTD. (2008) 304 ITR 308 (SC). BUT WE FIND THAT EXPLANATION OF THE ASSESSEE BEFORE US WAS THAT THERE IS NO REASON WHY THIS LOSS WAS DISALLOWED AND ADDED TO THE RETURN OF INCOME AND THERE IS NO REASON WHATSOEVER AND THERE IS NO BASIS FOR MAKING THIS DISALLOWANCE OF LOSS. ACCORDINGLY, LD. COUNSEL FOR THE ASSESSEE CLE ARLY STATED THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY. IN VIEW OF ABOVE FACTS A ND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS LEVI ED THE PENALTY ON DISALLOWANCE OF RETURN LOSS WHICH IS WITHOUT ANY BASIS ON MERITS AN D THERE IS NO WHISPER ABOUT ANY FACT THAT WHY THIS LOSS IS DISALLOWED. ACCORDINGLY , THIS IS NOT A FIT CASE OF LEVY OF PENALTY AND WE DELETE THE SAME. THIS ISSUE OF THE A SSESSEES APPEAL IS ALLOWED. 6. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 18/12/2009 SD/- SD/- (DR.O.K.NARAYANAN) (MAHAVIR SINGH) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, DATED :18/1/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-IV, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD