DCIT, Central Circle-4, Hyderabad V. Smt. Rajubai Agarwal, Hyderabad

ITA 265/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53841 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-07-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 18-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K A SAI PRASAD
• Assessee Lawyers: DIWAKAR PRASAD
• Keywords: Search and seizure
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, A.M. & SMT. ASHA VIJAYARAGHAVAN, J.M. ITA NO.265/HYD/2011 ASSESSMENT YEAR 2008-09 THE DCIT, CENTRAL CIRCLE - 4, HYDERABAD VS SMT. RAJUBAI AGARWAL, HYDERABAD (PAN ABQPA3725R) APPELLANT RESPONDENT APPELLANT BY : SHRI DIWAKAR PRASAD RESPONDENT BY : SHRI K.A. SAI PRASAD DATE OF HEARING : 22.11.2011 DATE OF PRONOUNCEMENT : 27.12.2011 ORDER PER ASHA VIJAYARAGHAVAN, JM: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER PASSED BY THE CIT(A) VII, HYDERABAD DATED 7.12.201 0 AND PERTAINS TO THE ASSESSMENT YEAR 2008-09. 2. BRIEF FACTS OF THE CASE ARE THAT DURING THE CO URSE OF SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE IT ACT IN THE RES IDENCE OF SHRI SATYANARAYANA AGARWAL, LOOSE SHEETS WERE FOUND AND SEIZED. SHRI RAJENDER KUMAR GUPTA S/O SHRI SATYANARAYANA AGARWAL WAS CONF RONTED WITH THE LOOSE SHEET BUNDLE. DURING THE COURSE OF SWORN DEP OSITION, SHRI RAJENDER KUMAR GUPTA DEPOSED THAT THE LOOSE SHEET BUNDLE CON TAINS DETAILS OF HOUSE RENOVATION DONE. IT WAS FURTHER DEPOSED THAT AN AM OUNT OF RS.15 LAKHS WAS INCURRED FOR HOUSE RENOVATION DURING THE FINANCIAL YEAR 2006-07 AND 2007- 08 AND THAT AN AMOUNT OF RS.7 LAKHS IS ONLY REFLECT ED IN THE BOOKS OF ACCOUNTS AS WITHDRAWALS. THE DIFFERENCE OF RS.8 LA KHS WAS DISCLOSED AS ADDITIONAL INCOME IN THE HANDS OF SMT. RAJUBAI AGAR WAL IN WHOSE NAME THE ITA NO.265/H/2011 SMT. RAJUBHAI AGARWAL, HYD. 2 HOUSE IS REGISTERED FOR THE FINANCIAL YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR 2008-09 OVER AND ABOVE THE REGULAR INCOME. 3. IN ADDITION TO THE ABOVE, THE ASSESSEE OFFERED RS.3 LAKHS TOWARDS UNEXPLAINED CASH DURING THE COURSE OF SEARCH AND SE IZURE OPERATION. THE ASSESSING OFFICER TREATED RS.11 LAKHS AS UNDISCLOSE D INCOME. 4. PENALTY PROCEEDINGS WERE INITIATED ON THE GROUN D THAT THE PARTICULARS WAS NOT SHOWN BY THE ASSESSEE IN HIS ORIGINAL RETUR N OF INCOME AND THE FACT OF INVESTMENT BY THE ASSESSEE IN THE HOUSE RENOVATI ON WOULD NOT HAVE COME OUT BUT FOR THE SEARCH OPERATION. MOREOVER, IT WAS HELD THAT SUBSTANTIAL EVIDENCES WERE NOT PRODUCED WITH RESPECT TO THE SOU RCE OF INCOME. THEREFORE PENALTY WAS LEVIED U/S 271(1)( C) OF THE IT ACT FOR CONCEALMENT OF PARTICULARS OF RS.11 LAKHS FOR THE ASSESSMENT YEAR 2007-08 AMOUNTING TO RS.3,02,852/-. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A). IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE THE CIT(A) THAT IN ASSESSEES CASE THE ASSESSING OF FICER SHOULD HAVE DEALT AS PER SECTION 271AAA OF THE IT ACT AND NOT AS PER SEC TION 271(1) (C) OF THE ACT. FURTHER, IT IS SUBMITTED BY THE AR THAT SINCE SEARC H HAD TAKEN PLACE ON 1.2.2008, THE ASSESSEE HAD SUFFICIENT TIME TO DISCL OSED ANY INCOME WHICH WOULD NOT HAVE BEEN DISCLOSED IN NORMAL COURSE. TH EREFORE, BEFORE FILING THE ORIGINAL RETURN OF INCOME, THE ASSESSEE HAD TIME TO DISCLOSE ANY INCOME. THEREFORE, THE ASSESSEE HAS DISCLOSED RS.11 LAKHS A ND FILED THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S 153C OF THE ACT. HENCE, THE AR SUBMITTED THAT THE ASSESSEE IS NOT LIABLE FOR LEVY OF PENALTY BECAUSE THE ASSESSING OFFICER HAS NOT FOUND ANYTHING TO MAKE AN ADDITION AND UNDISCLOSED INCOME WAS ADMITTED BY FILING THE RETURN OF INCOME SINCE T HE ASSESSEE HAD SUFFICIENT TIME TO FILE EVEN REGULAR RETURN OF INCOME. IN VIE W OF THE FACT THAT THERE WAS ITA NO.265/H/2011 SMT. RAJUBHAI AGARWAL, HYD. 3 A SEARCH ON 1.2.2008 AND THERE WAS SUFFICIENT TIME FOR FINANCIAL YEAR CLOSING AS WELL AS TIME FOR FILING OF THE RETURN OF INCOME. 6. THE CIT(A) CONSIDERING THE SUBMISSIONS OF THE A R HELD AS FOLLOWS: IT IS SEEN THAT THE PENALTY ORDER PASSED BY THE AS SESSING OFFICER U/S 271 (1)(C) IS NOT APPLICABLE IN ASSESSEES CASE. T HE PENALTY ORDERS SHOULD HAVE BEEN PASSED U/S 271AAA(2) OF THE ACT AN D IF AT ALL PENALTY LEVIABLE UNDER THIS SECTION IS 10% OF THE UNDISCLOS ED INCOME OF THE SAID PREVIOUS YEAR. THEREFORE, IN ASSESSEES CASE IT IS FURTHER SEEN THAT THE SEARCH WAS ON 1.2.2008. HENCE, THE FINANCIAL YEAR HAS NOT ENDED IN ASSESSEES CASE AND ASSESSEE HAD SUFFICIENT TIME TO FILE THE RETURN OF INCOME DISCLOSING THE INCOME AS ASSESSEE WANTED. T HEREFORE, THE ASSESSEE HAD DISCLOSED RS.11 LAKHS AS ADDITIONAL IN COME AND FILED THE RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S 153C OF THE ACT. THE SUBMISSION MADE BY THE AR AS ABOVE HAS BEEN VER IFIED. THE OBSERVATIONS OF THE ASSESSING OFFICER ARE ALSO PERU SED. HAVING VERIFIED THE FACTS AND CIRCUMSTANCES OF THE CASE, IT APPEARS TO ME THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER IS NOT IN O RDER IN VIEW OF THE ARS SUBMISSIONS. THEREFORE, THE PENALTY LEVIED BY THE ASSESSING OFFICER IS CANCELLED ON TECHNICAL GROUNDS AS WELL A S ON MERITS. 7. AGGRIEVED THE DEPARTMENT IS IN APPEAL BEFORE US AND RAISED THE FOLLOWING GROUNDS OF HIS APPEAL: 1. THE CIT(A) CANCELLED PENALTY U/S 271(1) (C) ON THE GROUND THAT IS SHOULD HAVE BEEN PASSED U/S 271AAA OF THE ACT. THE ASSESSING OFFICER HAD ESTABLISHED THAT THE UNDISCLOSED INCOME ADMITTED BY THE ASSESSEE WAS A RESULT OF SEARCH AND SEIZURE OPERATI ON, HENCE PENALTY U/S 271(1) (C) OF THE IT ACT WAS JUSTIFIED. ITA NO.265/H/2011 SMT. RAJUBHAI AGARWAL, HYD. 4 2. THE CIT(A)S ORDER IS NOT ACCEPTABLE BECAUSE TH E CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD CONCEALED THE PART ICULARS OF ITS INCOME HENCE ATTRACTING PENALTY U/S 271 (1) (C) OF THE ACT . 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE ARE OF THE OPINION THAT THE PENALTY ORDER SHOULD HAVE BEEN PASSED U/S 2711AAA(1) OF THE ACT WHICH READS AS F OLLOWS: (1) THE ASSESSING OFFICER MAY, WITHSTANDING ANYTHIN G CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHER E SEARCH HAS BEEN INITIATED U/S 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PERCENT OF THE UNDISCLOSED INCOME OF TH E SPECIFIED PREVIOUS YEAR. FURTHER, IF AT ALL PENALTY IS LEVIABLE IT WOULD BE 10% OF THE UNDISCLOSED INCOME OF THE SAID PREVIOUS YEAR. 9. FURTHER, THE SEARCH WAS CONDUCTED ON 1.2.2008 A ND HENCE THE ASSESSEE HAD SUFFICIENT TIME TO FILE THE RETURN OF INCOME AND THEREFORE THE ASSESSEE HAS DISCLOSED RS.11 LAKHS AS ADDITIONAL IN COME AND FILED THE RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S 153C OF THE ACT. HENCE THERE IS NO MERIT IN LEVYING THE PENALTY U/S 271(1)(C) OF THE A CT BY THE ASSESSING OFFICER. HENCE WE CONFIRM THE ORDER OF THE CIT(A) AND DISMIS S THE REVENUE APPEAL. 10. IN THE RESULT, REVENUE APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27.12.2011 SD/- SD/- (CHANDRA POOJARI) ( (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO.265/H/2011 SMT. RAJUBHAI AGARWAL, HYD. 5 DATED THE DECEMBER, 2011 COPY FORWARDED TO: 1. THE DCIT, CENTRAL CIRCLE, HYDERABAD 2. SMT. RAJUBAI AGARWAL, H NO.15-2-449/5, KISHAN GUNJ, HYDERABAD 3. THE CIT(A)- VII, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/