Shri Jayantibhai Thakkar, Bhuj V. The Assistant Commissioner of Income Tax, Central Circle-2, RAJKOT-GUJARAT

ITA 263/RJT/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0188 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-06-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 03-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Keywords: Income from undisclosed sources; Bonafide mistake; Reassessment proceedings
• Section: 153A; 147; 148; 139

Judgement Text

ITA NO S . 262 TO 268 / RJT/201 2 ASSESSME NT YEA RS : 20 0 2 - 03 TO 2008 - 09 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E - COURT AT AHMEDABAD) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD , ACCOUNTANT MEMBER I TA NO S . 262, 263, 264, 265, 266, 267 & 268 /RJT/201 2 ASSESSMENT YEARS: 20 0 2 - 0 3 ,2003 - 04,2004 - 0 5 , 2005 - 06, 2006 - 07, 2007 - 08 & 2008 - 09 RESPECTIVELY SHRI JAYANTIBHAI THAKKAR, VS. ASSTT. COMMISSIONER OF INCOME TAX, DUMARA, CENTRAL CIRCLE - 2, RAJKOT. TAL. ABDASA, BHUJ, KUTCH. [PAN: A FPPT 6238 P ] (APPELLANT) (R ESPONDENT) APPELLANT BY : SHRI M. J. RANPURA, C.A. RESPONDENT BY : SHRI YOGESH PANDEY, CIT (D.R.) DATE OF HEARING : 28 .0 6 .2016 DATE OF PRONOUNCEMENT : 23 .0 8 .2016 O R D E R PER BENCH: 1. THIS IS A BATCH OF SEVEN APPEALS. THE ASSESSEE HAS FILED T HESE APPEALS FOR ASSESSMENT YEARS 200 2 - 03 TO 2008 - 09 AGAINST A COMMON ORDER OF THE CIT(A) - I V , AHMEDABAD DATED 22 ND MARCH, 2012 IN APPEAL NOS .CIT(A) - I V /90 - R/CC - 2/10 - 11, CIT(A) - IV/241 - R/CC - 2/10 - 11, CIT(A) - IV/242 - R/CC - 2/10 - 11, CIT(A) - IV/243 - R/CC - 2/10 - 11, CIT (A) - IV/244 - R/CC - 2/10 - 11, CIT(A) - IV/245 - R/CC - 2/10 - 11 & CIT(A) - IV/246 - R/CC - 2/10 - 11 IN IMPOSING PENALTIES UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ). 2. THE ASSESSEE S SOLE SUBSTANTIVE GROUND PLEADED IN EACH OF THESE APPEALS C HALLENGES THE LOWER APPELLATE ORDER CONFIRMING THE ASSESSING OFFICER S ACTION IN IMPOSING SECTION 271(1)(C) PENALTIES OF RS.6,03,534/ - , RS.10,09,310/ - , RS.11,94,600/ - , ITA NO S . 262 TO 268 / RJT/201 2 ASSESSME NT YEA RS : 20 0 2 - 03 TO 2008 - 09 PAGE 2 OF 7 RS.17,89,725/ - , RS.19,07,400/ - , RS.14,17,875/ - AND RS.1,17,52,042/ - IN THE IMPUGNED SEVE N ASSESSMENT YEARS FROM 2002 - 03 TO 2008 - 09; RESPECTIVELY. 2.1 WE NOTICE FROM A COMBINED PERUSAL OF THE INSTANT CASE FILES THAT THE CIT(A) HAS PASSED A COMMON ORDER UNDER CHALLENGE. WE ALSO PROPOSE TO DECIDE ALL THESE APPEALS BY A COMMON ADJUDICATION IN TH ESE PECULIAR FACTS. 3. THIS ASSESSEE AN INDIVIDUAL DEALS IN LAND. THERE IS NO DISPUTE ABOUT HIM BEING NOT ASSESSED TO TAX EARLIER THAN THE IMPUGNED ASSESSMENT YEARS. HE ALSO DID NOT FILE HIS RETURNS IN ALL THE IMPUGNED SEVEN ASSESSMENT YEARS AT FIRST INSTANCE. THE DEPARTMENT CARRIED OUT A SEARCH ON 15.09.2008 IN CASE OF SHRI MOHAMMAD SIDDIQUE JUNEJA. IT CAME ACROSS A DIARY CONTAINING UNRECORDED LAND TRANSACTIONS PERTAINING TO ASSESSMENT YEAR 2002 - 03. THE ASSESSEE THEREAFTER GOT HIS STATEMENT RECORD ED OWNING UP THE ENTIRE ALLEGED SEIZED MATERIAL. THE ASSESSING OFFICER ISSUED SECTION 148 NOTICE ON 01.12.2008 FOR ASSESSMENT YEAR 2002 - 03. THE ASSESSEE FILED HIS RETURN ON 05.08.2009 STATING INCOME OF RS.20.59 LAKHS. THIS FOLLOWED INITIATION OF SECTION 153C PROCEEDINGS VIDE HIS SEPARATE NOTICES; ALL DATED 23.04.2009 IN THE LATTER SIX ASSESSMENT YEARS. THE ASSESSEE FILED HIS CORRESPONDING RETURNS ON 24.12.2009 STATING INCOMES OF RS.26.50 LAKHS, RS.25 LAKHS, RS.31.25 LAKHS, RS.30 LAKHS, RS.60 LAKHS AND R S.1.40 CRORES; RESPECTIVELY. THE ASSESSING OFFICER COMPLETED ASSESSMENTS ON 22.12.2009 IN RELATION TO ASSESSMENT YEAR 2002 - 03 AND ON 30.03.2010 WITH RESPECT TO THE LATTER SIX ASSESSMENT YEARS ACCEPTING THE RETURNED INCOMES. HE INITIATED THE IMPUGNED PENA LTY PROCEEDINGS ALLEGING CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AT ASSESSEE S BEHEST IN ALL THESE SEARCH EPISODE. THERE IS NO DISPUTE THAT THE QUANTUM PROCEEDINGS ATTAINED FINALITY AT THIS STAGE. 4. WE COME TO THE IMPUGNED PENALT Y PROCEEDINGS IN FIRST ASSESSMENT YEAR 2002 - 03 INVOLVING SECTION 148 PROCEEDINGS AS AGAINST THE LATTER ASSESSMENT YEARS HAVING THE VERY ITA NO S . 262 TO 268 / RJT/201 2 ASSESSME NT YEA RS : 20 0 2 - 03 TO 2008 - 09 PAGE 3 OF 7 PROCEEDINGS FRAMED UNDER SECTION 153C OF THE ACT. THE ASSESSING OFFICER REFERRED TO THE ABOVE STATED SEARCH AS FOLLOWED BY QUANTUM DEVELOPMENTS TO HOLD THAT THIS ASSESSEE HAD IN FACT CONCEALED HIS TAXABLE INCOME TO IMPOSE THE PENALTY IN QUESTION OF RS.6,03,534/ - . 5. IT IS EVIDENT TO US FROM THE SIX LATTER ASSESSMENT YEARS HE HAS PENALTY ORDER THAT THE ASSESSING OFFICER INVOKED SECTION 271(1)(C) OF THE ACT TO PENALISE THE ASSESSEE FOR RS.10,09,310/ - , RS.11,94,600/ - RS.17,89,725/ - , RS.19,07,400/ - , RS.44,17,875/ - AND RS.1,17,52,042/ - IN THE SIX ASSESSMENT YEARS FROM 2003 - 04 TO 2008 - 09. 6. THE ASSESSEE PREFERRED SEVEN SEP ARATE APPEALS. THE CIT(A) CONFIRMS ASSESSING OFFICER S ACTION IN ALL THE SEVEN IMPUGNED ASSESSMENT YEARS AS FOLLOWS : - (I) THE APPELLANT HAS DISCLOSED UNACCOUNTED INCOME IN THE RETURNS FILED IN RESPONSE TO NOTICE U/S 153C/148 OF THE ACT ON THE BASIS OF THE INCRIMINATING SEIZED MATERIAL. THIS UNACCOUNTED INCOME WAS NOT OFFERED FOR TAXATION SINCE RETURN WAS NOT FILED U/S 139 OF THE ACT AND THE APPELLANT HAS FAILED TO ESTABLISH THAT SU CH OMISSION WAS A BONAFIDE MISTAKE AND NOT DELIBERATE. (II) SUCH DISCL OSURE OF UNACCOUNTED INCOME IS NOT VOLUNTARY. IT IS ON ACCOUNT OF THE SEARCH AND ON THE BASIS OF SCRUTINY OF SEIZED MATERIAL, UNACCOUNTED INCOME HAS BEEN DISCLOSED IN DIFFERENT ASSESSMENT YEARS. (III) THERE IS NO CONCEPT OF ANY IMMUNITY FROM PENA L PROVIS IONS OF SECTION 271(1)(C) R/W EXPLANATION 5A IN RESPECT OF SEARCH INITIATED ON OR AFTER 01 - 06 - 2007. (IV) RETURNS FILED IN RESPONSE TO NOTICE U/S 153A /153C OF THE ACT DISCLOSING UNACCOUNTED INCOME, SUBSEQUENT TO THE DATE OF SEARCH WITH A VIEW TO PRE - EMPT ANY ACTION BY THE DEPARTMENT ON THE BASIS OF SEIZED MATERIAL CANNOT ABSOLVE THE APPELLANT FROM, THE RIGOUR OF PENALTY U/S 271(1)(C) OF THE ACT READ WITH EXPLANATION 5A. (V) ONCE THERE IS A DISCLOSURE OF INCOME IN RESPONSE TO NOTICE U/S 153A/153C / 148 OF THE ACT, THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE FAILURE TO FILE HIS RETURN OF INCOME DESPITE HAVING TAXABLE WAS NOT DUE TO FRAUD OR NEGLECT. (VI) THE RETURNED INCOME FILED IN RESPONSE T O NOTICE U/S 153C /148 OF THE ACT DISCLOSING UNACCOUNTED INCOM E SUBSEQUENT TO THE DATE OF SEARCH CLEARLY PROVES THE FACT THAT THE OMISSION OF NOT FILING ORIGINAL RETURNS U/S 139 OF THE ACT WAS DELIBERATE AND CONSCIOUS SINCE THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE ITA NO S . 262 TO 268 / RJT/201 2 ASSESSME NT YEA RS : 20 0 2 - 03 TO 2008 - 09 PAGE 4 OF 7 OMISSION TO FILE THE ORIGINAL RETURN WAS ON ACCO UNT OF ANY BONAFIDE INADVERTENCE OR MISTAKE . (VII) ONCE RETURN OF INCOME IS FILED IN RESPONSE TO NOTICE U/S 153A/153C OF THE ACT, ONLY PENDING ASSESSMENT OR REASSESSMENT PROCEEDINGS DO ABATE AND NOT ALL THE PAST ACTIONS. TO HOLD OTHERWISE WILL LEAD TO ABSURDITY WHICH CANNOT BE ACCEPTED. [K. GOVINDAN & SONS VS. CIT (2001) 247 ITR 192 (SC)] (VIII) EXPLANATION 5A TO SECTION 271(1 )(C) OF THE ACT IS SQUARELY APPLICABLE TO 153C CASES ALSO. THERE IS NO REQUIREMENT AS PER EXPLANATION 5A THAT SEARCH SHOULD BE INITIATED IN ASSESSEE'S CASE ONLY. 6.26 IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME IN RESPECT OF UNACCOUNTED INCOME DISCLOSED IN THE RETURNS FILED IN RESPONSE TO NOTICE U/S 153C OF THE ACT FOR THE AYS 2003 - 04 TO 2008 - 09 AND IS, THEREFORE, LIABLE TO PENALTY U/S 271(1)(C) READ WITH EXPLANATION 5A OF THE ACT. IT IS, HOWEVER, NOTED THAT PENALTY U/S 271(1)(C) HAS BEEN LEVIED BY THE AO AT THE RATE OF 125% OF THE TAX SOUGHT TO BE EVADED IN AY 2003 - 04 AND THE QUANTUM OF PENALTY HAS BEEN INCREASED EVERY YEAR BY 25%. THIS WAY THE QUANTUM OF PENALTY LEVIED IN AY 2008 - 09 IS AT THE RATE OF 250%. CONSIDERING THE TOTALITY OF CIRCUMSTANCES INCLUDING THE FACT OF MAKING ADEQUATE DISCLOSURE ON THE BASIS OF SEIZED INCRIMINATING DOCUMENTS, I AM OF THE VIEW THAT TH E QUANTUM OF PENALTY U/S 271(1 )(C) OF THE ACT SHOULD BE RESTRICTED TO 125% OF THE TAX SOUGHT TO BE EVADED IN EACH ASSESSMENT YEAR. ACCORDINGLY, PENALTY LEVIED BY THE AO U/S 271(1)(C) IS RESTRICTED TO 125% OF TAX SOUGHT TO BE EVADED IN AYS 2003 - 04 TO 2008 - 09. 6.27 SO FAR AS AY 2002 - 03 IS CONCERNED, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME IN RESPECT OF UNACCOUNTED INCOME DISCLOSED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT AND IS, THEREFORE, LIABLE T O PENALTY U/S 271(1)(C) READ WITH EXPLANATION 3. ACCORDINGLY, PENALTY LEVIED U/S 271(1)(C) BY THE AO AT THE I MINIMUM RATE IS CONFIRMED. 7. LEARNED COUNSEL REPRESENTING ASSESSEE OPENS U P HIS ARGUMENTS IN ASSESSMENT YEAR 2002 - 03 FIRST INVOLVING SECTION 147 /148 PROCEEDINGS. HIS CASE IS THAT THIS ASSESSEE HAD NOT PREVIOUSLY BEEN ASSESSED TO TAX SINCE HE HAD ONLY AGRICULTURAL INCOME NOT TAXABLE UNDER THE PROVISIONS OF THE ACT. THE SAME IS STATED TO BE SUFFICIENT CAUSE FOR THE PURPOSE OF REVERSING BOTH THE LOWER AUTHORITIES ACTION IN IMPOSING THE IMPUGNED PENALTY. SHRI YOGESH PANDEY, LEARNED C . I . T . ( D.R. ) AT THIS STAGE VEHEMENTLY ARGUES THAT SECTION 271 EXPLANATION 3 OF THE ACT TO THIS E FFECT STANDS AMENDED VIDE FINANCE ACT 2002 W.E.F. 01.04.2003. W E NOTICE AT THIS STAGE THAT THE FIRST YEAR FOR THE FIRST PURPOSE OF IMPUGNED ITA NO S . 262 TO 268 / RJT/201 2 ASSESSME NT YEA RS : 20 0 2 - 03 TO 2008 - 09 PAGE 5 OF 7 EXPLANATION 3 APPLICATION IS ASSESSMENT YEAR 2003 - 04 AND NOT THE ONE IN QUESTION I.E. 2002 - 03. SHRI PANDEY HAS NOT OTHERWISE OPPOSED ASSESSEE S ARGUMENTS ON FACTS THAT HE HAD NOT BEEN PREVIOUSLY ASSESSED TO TAX SINCE HAVING AGRICULTURAL INCOME ONLY. WE ACCEPT ASSESSEE S CONTENTION ACCORDINGLY TO CONCLUDE THAT HIS CASE IS COVERED UNDER THE UN - AMENDED SECTION 271(1) EX PLANATION 3 OF THE ACT AS APPLICABLE IN ASSESSMENT YEAR 2002 - 03. WE REVERSE ACTION OF THE LOWER AUTHORITIES IMPOSING SECTION 271(1)(C) PENALTY OF RS.6,03,534/ - . 7.1 ITA NO.262/RJT/2012 FOR ASSESSMENT YEAR 2002 - 03 IS ACCEPTED. 8. WE REVERT BACK TO THE RE MAINING SIX ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 INVOLVING THE ABOVE STATED CORRESPONDING PENALTIES. THE CIT(A) INVOKED EXPLANATION 5A TO SECTION 271(1) OF THE ACT TO TREAT ASSESSEE S INCOMES DECLARED AS ASSESSED AS AN INSTANCE OF CONCEALMENT. WE FIND THA T A CO - ORDINATE BENCH OF THIS TRIBUNAL IN IT(SS)A NOS.16 TO 20/RJT/2013 ORDER DATED 06.05.2013 IN CASE OF KIRIT KUMAR C. THACKER VS. JCIT DECIDES IDENTICAL ISSUE INVOLVING THE ABOVE STATED EXPLANATION IN HIS FAVOUR AS UNDER : - 9. IN THE SUBMISSION MADE BY THE LD. CIT - DR AND EXTRACTED BY US, THE STAND OF THE REVENUE IS THAT HAD THE SEARCH BEEN NOT CARRIED UPON THE ASSESSEE, THEN, HE WOULD NOT HAVE DISCLOSED THIS ADDITIONAL INCOME. THEREFORE, EXISTENCE OF MONEY, BULLION, JEWELLERY AND OTHER VALUABLE ARTICL ES OUGHT TO BE ASSUMED, WHICH HAS PERSUADED THE ASSESSEE TO DISCLOSE ADDITIONAL INCOME. IN OTHER WORDS, THE STAND OF THE REVENUE IS THAT DISCLOSURE OF ADDITIONAL INCOME IS TO BE EQUATED WITH INFERENTIAL VALUABLES MUST HAVE BEEN AVAILABLE AT THE TIME OF SEA RCH. THE STAND OF THE LD.CIT(A) IN THE IMPUGNED ORDER WAS ALSO ON THIS LINE. THE LD.DR IN HIS SUBMISSION HAS FURTHER CONTENDED THAT, IF CONCEALMENT IS NOT ESTABLISHED BY DEEMING FICTION AVAILABLE IN THE EXPLANATION - 5A, THEN, THE CONCEALMENT OUGHT TO BE CO NSTRUED UNDER THE MAIN PROVISION. AS FAR AS THE FIRST FOLD OF STAND POINT IS CONCERNED, THAT HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE CASE OF SHRI MANSUKHBHAI R. SORATHIA (SUPRA). THE TRIBUNAL HAS HELD THAT DEEMED CONCEALMENT OF INCOME OUGHT TO BE SUPPOR TED BY AVAILABILITY OF MONEY, BULLION, JEWELLERY NOT BY AN INFERENCE OF EXISTENCE OF MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLES OR ENTRY. AS FAR AS SECOND FOLD OF SUBMISSION RAISED BY THE LD.CIT(DR) IN THE WRITTEN SUBMISSIONS IS CONCERNED, WE FIND THAT THE CASE OF THE ASSESSEE DOES NOT FALL UNDER THE MAIN PROVISION. THERE IS NO ADDITION TO THE INCOME OF THE ASSESSEE. RETURNED INCOME HAS BEEN ACCEPTED AS IT IS. ONLY BY VIRTUE OF EXPLANATION - 5, THIS ADDITIONAL INCOME DECLARED BY THE ASSESSEE CAN BE CATEGO RIZED UNDER THE DEEMED CONCEALMENT. IN ITA NO S . 262 TO 268 / RJT/201 2 ASSESSME NT YEA RS : 20 0 2 - 03 TO 2008 - 09 PAGE 6 OF 7 THE MAIN PROVISION, THE CASE OF THE ASSESSEE CANNOT BE BROUGHT. AS FAR AS FACTS IN THE PRESENT CASE ARE CONCERNED, THEY ARE IDENTICAL TO THE CASE OF SHRI MANSUKHBHAI R. SORATHIA VS. JCIT (OSD)(SUPRA). THE ASSESSEE HAS PLACED ON RECORD COPY OF THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE INCOME TAX ACT. WE HAVE PERUSED THE ASSESSMENT ORDER. THE AO HAS NOWHERE MADE A MENTION OF ANY SEIZED MATERIAL. THUS, ON FACTS THERE IS NO DISPARITY. THEREFORE, RESPECTFULLY FOLLO WING THE ORDER OF THE ITAT IN THE CASE OF SHRI MANSUKHBHAI R. SORATHIA (SUPRA), ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED AND DELETE THE IMPUGNED PENALTY FOR THE RESPECTIVE ASSESSMENT YEARS. 9. WE AFFORDED SUFFICIENT OPPORTUNITY TO SHRI YOGESH PANDEY, LEARNED C . I . T . ( D . R. ) . HE STRONGLY SUPPORTS THE CIT(A) S ORDER TO PRAY FOR REJECTION OF THE INSTANT APPEALS. WE PUT UP A SPECIFIC QUERY AS TO WHETHER THERE IS ANY DISTINCTION ON FACTS IN THE INSTANT CASE VIZ - A - VIZ THOSE INVOLVED IN THE ABOVE STATED TRIBU NAL S DECISION. HE STATES VERY C LEARLY THAT THERE IS NO EXCEPTION IN THE FACTS OF THE TWO ASSESSMENT YEARS IN QUESTION. WE DRAW SUPPORT FROM THE ABOVE STATED PRECEDENT TO HOLD THAT BOTH THE LOWER AUTHORITIES NOWHERE RECORD A FINDING OF FACTS QUOTING ANY MONEY, BULLION, JEWELLERY EXCEPT DRAWING INFERENCE FROM ASSESSEE S DOCUMENTS AS ACCEPTED IN SEARCH ASSESSMENTS FRAMED HEREINABOVE. WE ACCORDINGLY ACCEPT ASSESSEE S ARGUMENTS TO DELETE THESE REMAINING SIX PENALTIES RELEVANT FOR THE LATTER CORRESPONDING AS SESSMENT YEARS AS WELL. 10. IN THE RESULT, THE ASSESSEE SUCCEEDS IN ALL OF HIS SEVEN APPEALS. P RONOUNCED IN THE OPEN COURT TODAY ON THE 23 RD DAY OF AUGUST, 2016. SD/ - SD/ - MANISH BORAD S.S. GODARA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 23 RD DAY OF A UGUST , 2016 PBN/* ITA NO S . 262 TO 268 / RJT/201 2 ASSESSME NT YEA RS : 20 0 2 - 03 TO 2008 - 09 PAGE 7 OF 7 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT