M/s. PAN Realtors Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2459/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2866 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 27-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Business income; Search and seizure
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F , NEW DELHI BEFORE SMT. BEENA A PILLAI, JUDICIAL MEMBER AND SHRI MAHARISHI PRASHANT, ACCOUNTANT MEMBER ITA NO. 2459 /DEL/201 5 AY: 20 12 - 13 PAN REALTORS PVT.LTD. S - 406, LGF, GREATER KAILASH II NEW DELHI 110 048 PAN: AAFCP2034D VS . DCIT, C.C. 3 NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE . DEPARTMENT BY : SH. SURENDER PAL, SR. D.R. DATE OF HEARING : 3 1 .10.2018 DATE OF PRONOUNCEMENT : 01.11.2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER OF LD.CIT(APPEALS) - XXVI , NEW DELHI DATED 27.02.2015 FOR A.Y 20 12 - 13 ON THE FOLLOWING GROUNDS OF APPEAL: 1. THE NOTICE U/S 271AAA IN GENERAL TERMS WITHOUT SPECIFYING DEFAULT (Q OR R) AS ISSUED IS IMPROPER AND IS NOT IN ACCORDANCE WITH THE REQUIREMENTS OF LAW SO AS TO ENABLE THE A.O. TO CONTINUE VALID PEN ALTY PROCEEDINGS AND ANY SUCH CONSEQUENT ORDER IS, THEREFORE, BAD IN LAW. 2. THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN INITIATING PENALTY PROCEEDINGS U/S 271AAA AND AS SUCH THE CONSEQUENT ORDER IS CONTRARY TO LAW, FACTS AND MATERIAL ON REC ORD. 3. THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN IMPOSING PENALTY OF RS.50 LAKHS ON THE AMOUNT OFFERED IN THE RETURN OF INCOME AND ACCEPTED WITHOUT DISPUTE. 4. THE APPELLANT DENIES LIABILITY TO PENALTY OF RS.50 LAKHS AS DETERMINED AND COM PUTED BY THE LD.AO AND THE MANNER IN WHICH ITA NO.2459/DEL/15 A.Y.:2012 - 13 PAN REALTORS P LTD. 2 IT HAS BEEN SO DETERMINED OR SO COMPUTED WITHOUT DETERMINING ANY UNDISCLOSED INCOME IN THE ASSESSMENT ORDER. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: A SSESSEE FILED ITS RETURN OF INCOME ON 29/09/12 DECLARING TO TAL INCOME OF RS.13,17,38,210/ - . A SEARCH AND SEIZURE ACTION WAS CARRIED OUT AT BUSINESS AND RESIDENTIAL PREMISES OF NIRALA GROUP OF COMPANIES ALONG WITH THAT OF ASSESSEE. THE CASE WAS TRANSFERRED TO CENTRAL CIRCLE 3, AND NOTICE UNDER SECTION 143 (2)/142 ( 1) WAS ISSUED TO ASSESSEE. 2.1 . ASSESSEE WAS CALLED UPON TO FURNISH RETURN OF INCOME IN RESPONSE TO WHICH ASSESSEE FILED RETURN OF INCOME AS THE ORIGINAL RETURN OF INCOME. LD.AO OBSERVED THAT ASSESSEE HAD SHOWN BUSINESS INCOME FROM CONSTRUCTION OF HOUSES, FLATS, BUILDINGS FARMHOUSES, COMMERCIAL CENTRES ETC. VARIOUS DETAILS WERE CALLED FOR AND CASE WAS DISCUSSED WITH R EPRESENTATIVE. 2.2 . FURTHER, ASSESSEE DECLARED AN ADDITIONAL BUSINESS INCOME OF RS. 10 CRORES FOR F INANCIAL Y EAR 2010 - 11 AND 2011 - 12 BY SH. SUDESH KUMAR GARG, MAIN PERSON OF THE GROUP AND D IRECTOR OF ASSESSEE BEFORE I NVESTIGATION W ING. LD.AO INITIATED AND LEVIED 10% PENALTY UNDER SECTION 271 AAA OF THE OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) , AS ASSESSEE DID NOT EX PLAIN MANNER IN WHICH UNDISCLOSED INCOME OF RS. 5 CRORE HAS BEEN DERIVED, AND INCLUDED IN COMPUTATION OF INCOME, ACCOMPANYING RETURN IN COMPLIANCE TO NOTICE ISSUED. 2.3 . AGGRIEVED BY PENALTY ORDER PASSED BY LD. AO, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (A) WHO CONFIR MED THE PENALTY LEVIED BY LD. A O. ITA NO.2459/DEL/15 A.Y.:2012 - 13 PAN REALTORS P LTD. 3 3. AGGRIEVED BY THE ORDER OF LD. CIT (A) ASSESSEE HAS PREFERRED APPEAL BEFORE US. 3.1 . AT THE OUTSET NONE HAS APPEARED ON BEHALF OF ASSESSEE. CONSIDERING SMALLNESS OF CASE AND IN THE INTEREST OF JUSTICE WE DEEM IT FIT AND PROPER TO DECIDE THIS ISSUE WITHOUT KEEPING IT PENDING. 3.2. LD. SR. DR AT THE OUTSET PLA CED RELIANCE UPON THE ORDERS PASSED BY AUTHORITIES BELOW. 4. WE HAVE PERUSED THE ORDERS PASSED BY AUTHORITIES BELOW. LD.CIT (A) HAS OBSERVED IN HIS ORDER THAT THERE HAS BEEN NO EVIDENCE OR INCRIMINATING DOCUMENTS FOUND OR SEIZED, BELONGING TO ASSESSEE, THAT COULD HAVE ESTABLISHED GENERATION OF UNDISCLOSED INCOME. FURTHER IN ASSESSMENT ORDER PASSED, LD. AO HAS NOT COMPUTED ANY UNDISCLOSED INCOME, IN TH E HANDS OF ASSESSEE. IT IS PERTINENT TO OBSERVE THAT PENALTY UNDER SECTION 271AAA HAS BEEN INITIATED BY LD. AO MERELY ON THE GROUND THAT A SUM OF RS.10 CRORE S HAS BEEN OFFERED AS ADDITIONAL INCOME, UNDER THE HEAD, OTHER INCOME, POST - SEARCH. IN OUR CONSIDER ED OPINION THE NECESSARY REQUIREMENT UNDER SECTION 271 AAA OF THE A CT DOES NOT STAND FULFILLED IN THE PRESENT FACTS OF THE CASE. THE MAIN INGREDIENT FOR INITIATING THE PENALTY IS THERE MUST BE AN UNDISCLOSED INCOME IN RELATION TO THE SEIZED MATERIALS FOR T HE YEAR UNDER CONSIDERATION. ADMITTEDLY FROM THE ASSESSMENT ORDER PASSED THERE IS NO SUCH INDICATION OF ANY SEIZED MATERIAL RELEVANT TO THE YEAR UNDER CONSIDERATION WHICH COULD HAVE ANY LINK WITH THE DISCLOSURE MADE BY ASSESSEE. EVEN OTHERWISE THE DISCLOSU RE OF RS. 10 CRORE S HAS BEEN MADE BY THE D IRECTOR OF ASSESSEE IN RESPECT OF ALL THE COMPANIES OF NIRALA GROUP FOR A.Y. 2011 - 12 AND ITA NO.2459/DEL/15 A.Y.:2012 - 13 PAN REALTORS P LTD. 4 2012 - 13. THEREFORE RS.10 CRORES CANNOT BE ATTRIBUTED TO ASSESSEE ALONE FOR THE YEAR UNDER CONSIDERATION AS HAS BEEN DONE BY LD.AO. WE DO NOT FIND ANY JUSTIFICATION IN THE ACTION OF THE AUTHORITIES BELOW THAT COULD UPHOLD THE PENALTY SO LEVIED . WE ARE THERE FORE DELETING THE PENALTY LEVIED BY LD.AO. 4.1. ACCORDINGLY THE GROUNDS RAISED BY ASSESSEE STAND ALLOWED. 5. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 0 1 S T NOVEMBER, 2018. S D / - S D / - (MAHARISHI PRASHANT) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 0 1 S T NOVEMBER, 2018 *GMV COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA NO.2459/DEL/15 A.Y.:2012 - 13 PAN REALTORS P LTD. 5 DATE DRAFT DICTATED ON 01.11.18 DRAFT PLACED BEFORE AUTHOR DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.