The DCIT, Central Circle-1, Surat V. Shri Pravinkumar K.Bhakta, Vapi

ITA 2610/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67909 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 03-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: J P SHAH
• Keywords: Revised return

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NO.2610/AHD/2010 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2007-08) THE DY.CIT CENTRAL CIRCLE-1 SURAT / VS. PRAVINKUMAR K.BHAKTA C/O.ADITYA ALLUMINIUM PVT.LTD. CHIKHLI RAOD VYARA, DIST.TAPI SILVASSA, VAPI ( !./)* !./ PAN/GIR NO. : ABNPB 4798 G ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI J.P. JHANGID SR.DR ,-(+ / . / RESPONDENT BY : SHRI J.P. SHAH ' 0 / $1 / / / / DATE OF HEARING : 30/10/2013 23' / $1 / DATE OF PRONOUNCEMENT : 15/11/2013 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-II, AHMEDABA D (CIT(A) FOR SHORT) DATED 16/06/2010 PERTAINING TO ASSESSMENT Y EAR (AY) 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- I) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN GRAN TING EXEMPTION TO THE ASSESSEE UNDER EXPLANATION 5 TO SE CTION 271(1)(C) OF THE ACT, WHEN THE DISCLOSED INCOME DID NOT PERTAIN TO ANY MONEY, BULLION OR VALUATION FOUND DURING THE COURSE OF SEARCH. ITA NO.2610/AHD /2010 THE DY.CIT VS.PRAVINKUMAR K.BHAKTA ASST.YEAR 2007-08 - 2 - II) THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN AGREEING THAT THE ASSESSEE SATISFY ALL THE CONDITIONS STIPULATED IN E XPLANATION 5 BELOW SECTION 271(1)(C) WITHOUT APPRECIATING THE FA CT THAT THE DISCLOSURE IS MADE THOUGH STATEMENT RECORDED U/S.13 3A ON 15/11/2006 AND NOT IN THE STATEMENT RECORDED U/S.13 2(4) OF THE IT ACT (COPY ENCLOSED AS ANNEXUREA) III) THE LD.CIT(A) HAS ERRED IN HOLDING THAT EVEN IF THE MANNER OF INCOME IS NOT EXPLAINED, ASSESSEE IS ENTITLED FOR A VAILING IMMUNITY UNDER EXPLANATION 5 TO SECTION 271(1)(C) O F THE ACT AS PER DECISION IN THE CASE OF CIT VS. MAHENDRA C SHAH 299 ITR 305 (GUJ), IGNORING THAT THE ASSESSEE DID NOT DISCL OSED MANNER IN WHICH THE DISCLOSED IS EARNED U/S.132(4) ON BEING A SKED TO EXPLAIN THE SAME VIDE QUESTION NO.23 OF THE STATEME NT DATED 15/11/2006 U/S.132(4) AND NOR EXPLAINED IT SUBSEQUE NTLY. IV) THE LD.CIT(A) ERRED IN DELETING THE PENALTY BY RELY ING UPON THE DECISION IN THE CASE OF CIT VS. MISHRIMANI SONI 162 TAXMAN 53, IGNORING THAT THE FACTS OF THE CASE IN THE ABOVE CA SE LAW IS QUITE DISTINGUISHABLE FROM THE FACTS OF THE INSTANT CASE. V) THE LD.CIT(A) HAS ERRED IN HOLDING THAT PENALTY IS NOT LEVIABLE IN THIS CASE AS PER DECISION OF CIT VS. MISHRIOMANI SO NI 162 TAXMAN 53, WHEREIN IT WAS HELD THAT EXPLANATION 5 T O SECTION 271(1)(C) OF THE ACT DOES NOT MAKE ANY DISTINCTION BETWEEN TANGIBLE AND INTANGIBLE ASSETS, IGNORING THAT AMEND ED PROVISION EXPLANATION 5A TO SECTION 271(1)(C) WAS COME IN TO EFFECT IN THE FINANCE ACT 2009, MAKING IT APPLICABLE PROSPECTIVEL Y TO THE CASES IN WHICH SEARCH WAS CONDUCTED ON OR AFTER 01/ 06/2007 AND IN THE INSTANT CASE, THE SEARCH ACTION WAS CARRIED OUT ON 15/11/2006. VI) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. VII) IT IS THEREFORE PRAYED THAT THE ORDER OF THE CIT(A) BE VACATED AND THAT OF THE AO BE RESTORED TO THE ABOVE EXTENT. 2. SINCE THE ISSUES INVOLVED IN THESE GROUNDS OF AP PEAL ARE INTER- CONNECTED, THE SAME ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.2610/AHD /2010 THE DY.CIT VS.PRAVINKUMAR K.BHAKTA ASST.YEAR 2007-08 - 3 - 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2007-08 WAS FRAMED VIDE ORDER DATED 18/12/2008, ASSESSING TOTAL INCOME OF RS.11,10,400/-. WHILE FINALIZING THE ASSESSMENT ORD ER, PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WERE ALSO INIT IATED IN RESPECT OF UNDISCLOSED INCOME. IN THE PENALTY PROCEEDINGS, TH E ASSESSEE MADE VARIOUS SUBMISSIONS BEFORE THE ASSESSING OFFICER, W HO AFTER CONSIDERING THE SUBMISSIONS, LEVIED PENALTY U/S.271(1)(C) OF TH E ACT. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A)-I I AHMEDABAD, WHO AFTER CONSIDERING THE SUBMISSIONS, DELETED THE PENA LTY. NOW, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD.COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS AS WERE MADE BEFORE THE LOWER AUTHORITIES. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN THIS CASE IS SQUARELY C OVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT RENDERED IN T HE CASE OF CIT VS. MAHENDRA C.SHAH REPORTED AT 299 ITR 305 (GUJ.). HE SUBMITTED THAT THERE WAS A SURVEY ACTION AND THE STATEMENT WAS REC ORDED THEREBY THE ASSESSEE MADE DISCLOSURE, HOWEVER, THE SAID DISCLOS URE WAS RETRACTED BY WAY OF AFFIDAVIT BUT THE AO ASSURED HIM THAT NO PEN ALTY WOULD BE LEVIED, THEREFORE ASSESSEE FILED THE REVISED RETURN OF INCO ME AND DISCLOSED ADDITIONAL INCOME OF RS.9,01,193/- AS DISCLOSED U/S .132(4) OF THE ACT ON 12/12/2008 AND PAID TAXES THEREON. HE MADE SUBMISS ION THAT UNDER THESE ITA NO.2610/AHD /2010 THE DY.CIT VS.PRAVINKUMAR K.BHAKTA ASST.YEAR 2007-08 - 4 - FACTS, THE IMMUNITY AS PROVIDED UNDER EXPLANATION ( 5) TO SECTION 271(1)(C) WAS AVAILABLE AND PLACED RELIANCE ON VARI OUS DECISIONS. 5. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE ASSESSEE HAD DISCLOSED INCOME ON LY IN THE REVISED RETURN OF INCOME, THEREFORE IMMUNITY PROVIDED UNDER EXPLANATION(5) TO SECTION 271(1)(C) OF THE ACT IS NOT AVAILABLE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD.CIT(A) DECIDED THE ISSUE IN FAVOUR OF ASSESS EE ON THE BASIS THAT THE ASSESSEE SURRENDERED THE UNDISCLOSED INCOME DUR ING THE COURSE OF SEARCH IN HIS STATEMENT U/S.132(4) OF THE ACT AND O FFERED IT AS INCOME IN THE RETURN AND ALSO PAID THE TAX. HE HAS ALSO GIVE N A FINDING ON FACT THAT THE RETURNED INCOME WAS ACCEPTED. THEREFORE, RELYI NG ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT RENDERED IN THE CASE O F CIT VS. MISHRIMAL SONI REPORTED AT 162 TAXMAN 53 AND ALSO THE DECISIO N OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. MAHENDRA C.SHAH REPORTED AT 299 ITR 305 (GUJ.) ::172 TAXMAN 58, DELETED THE PE NALTY. THE REVENUE HAS MADE SUBMISSIONS THAT THE LD.CIT(A) HAS ERRED I N GRANTING EXEMPTION UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT WHEN THE DISCLOSED INCOME DID NOT PERTAIN TO MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND DURING THE COURSE OF SEARCH. IT IS ALSO THE GROUND OF THE REVENUE THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN AGREEING THAT ITA NO.2610/AHD /2010 THE DY.CIT VS.PRAVINKUMAR K.BHAKTA ASST.YEAR 2007-08 - 5 - THE ASSESSEE SATISFY ALL THE CONDITIONS STIPULATED IN EXPLANATION 5 BELOW SECTION 271(1)(C) OF THE ACT WITHOUT APPRECIATING T HE FACT THAT THE DISCLOSURE IS MADE THROUGH STATEMENT RECORDED U/S.1 33A OF THE ACT ON 15/11/2006 AND NOT IN THE STATEMENT RECORDED U/S.13 2(4) OF THE ACT. THIS GROUND OF THE REVENUE IS EX FACIE FALSE AND CONTRARY TO THE RECORDS. AS PER ANNEXURE-A, THE STATEMENT HAS BEEN RECORDED U/S .132 OF THE ACT AND NOT U/S.133A OF THE ACT AS CLAIMED. MOREOVER, THE AO CATEGORICALLY IN HIS ORDER HAS RECORDED A FINDING THAT THE STATEMENT U/S.132(4) OF THE ACT WAS RECORDED FROM THE ASSESSEE. HENCE, THERE IS NO SUBSTANCE IN THIS GROUND OF THE REVENUE. ANOTHER SUBMISSION OF REVEN UE IS THAT THE ASSESSEE HAS NOT EXPLAINED THE MANNER IN WHICH THE DISCLOSED INCOME WAS EARNED. THE HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. MAHENDRA C.SHAH(SUPRA) HAS OBSERVED THAT ACCORDING TO THE REVENUE, THE STATEMENT MADE U/S.132(4) OF THE ACT BY THE ASSESSE E AT THE TIME OF SEARCH DOES NOT CONTAIN ANY AVERMENT AS TO THE MANNER IN W HICH SUCH INCOME HAD BEEN DERIVED BY THE ASSESSEE. FURTHERMORE, THE RE IS NO PAYMENT OF TAX ALONG WITH THE RETURN OF INCOME WHICH WAS ORIGI NALLY FILED AND PAYMENT OF LAST TAX HAS BEEN MADE ONLY SUBSEQUENTLY AFTER DISCLOSING SUCH INCOME IN THE REVISED RETURN OF INCOME WHICH IS NOT WARRANTED BY THE LANGUAGE EMPLOYED IN EXCEPTION NO.2 SO AS TO BE ENTITLED TO IMMUNITY FROM PENALTY FOR CONCEALMENT. THE HONBLE HIGH COU RT AFTER OBSERVING THE CONTENTION OF THE REVENUE HELD THAT THE CONTENT IONS RAISED ON BEHALF OF THE REVENUE ARE NOT REQUIRED TO BE ACCEPTED FOR THE SIMPLE REASON THAT IN THE FIRST INSTANCE, THERE IS NO PRESCRIPTION AS TO THE POINT OF TIME WHEN THE TAX HAS TO BE PAID QUA THE AMOUNT OF INCOME DEC LARED IN THE STATEMENT MADE UNDER SECTION1 132(4) OF THE ACT. THE TRIBUNA L WAS JUSTIFIED IN ITA NO.2610/AHD /2010 THE DY.CIT VS.PRAVINKUMAR K.BHAKTA ASST.YEAR 2007-08 - 6 - HOLDING THAT THERE WOULD BE SUFFICIENT COMPLIANCE W ITH THE PROVISION IF TAX IS SHOWN TO HAVE BEEN PAID BEFORE THE ASSESSMEN T WAS COMPLETED. THE HONBLE HIGH COURT FURTHER HELD THAT IN SO FAR AS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIFY IN THE STATE MENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUC H INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT WHEN THE STATEMEN T IS BEING RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUT HORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ITS ENTI RETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SH ORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANS WER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND M AKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSIDERI NG THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED. THE HONBLE JURI SDICTIONAL HIGH COURT AFTER CONSIDERING THE JUDGEMENT OF HONBLE ALLAHAB AD HIGH COURT RENDERED IN THE CASE OF CIT VS. RADHA KISHAN GOEL ( 2005) 278 ITR 454, AFFIRMED THE VIEW OF THE TRIBUNAL AND ALSO FOLLOWED THE JUDGEMENT OF HONBLE ALLAHABAD HIGH COURT, HELD THAT EVEN IF TH E STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBST ANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO.2 IN EXPLANATION 5 IS COMMENDABLE. 6.1. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF CIT VS. MAHENDRA C.SH AH(SUPRA), WE DO ITA NO.2610/AHD /2010 THE DY.CIT VS.PRAVINKUMAR K.BHAKTA ASST.YEAR 2007-08 - 7 - NOT FIND ANY INFIRMITY IN THE ORDER OF LD.CIT(A), T HE SAME IS HEREBY UPHELD. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15 / 11 /2013 71.., .../ T.C. NAIR, SR. PS 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ ': / CONCERNED CIT 4. ':() / THE CIT(A)-II, AHMEDABAD 5. 8 #; ,$ , , / DR, ITAT, AHMEDABAD 6. ;<& =0 / GUARD FILE. 4' 4' 4' 4' / BY ORDER, -8$ ,$ //TRUE COPY// > >> >/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..5.11.13&7.11.13 (DICTATION-PAD 8+7PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 7.11.13 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.15.11.13 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15.11.13 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER