Shri Mohammed Siddique Ismail Juneja, Bhuj V. The Assistant Commissioner of Income Tax, Central Circle-2, RAJKOT-GUJARAT

ITA 275/RJT/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94068 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: MJ RANPURA
• Keywords: Search and seizure
• Section: 27; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.275/RJT/2012 / ASSTT. YEAR: 2009-10 MOHAMMED SIDDIQUE ISMAL JUNEJA UNNATI SALES O/S.SAROT GATE BHUJ, KUTCH. VS ACIT, CENT.CIR.2 RAJKOPT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M.J. RANPURA, CA REVENUE BY : SHRI AVINASH KUMAR, AR / DATE OF HEARING : 18/05/2015 / DATE OF PRONOUNCEMENT: 22/05/2015 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE AGAINST ORDER OF THE CIT(A)-IV, AHMEDABAD DATED 22.3.2012 FOR THE ASSTT.YEAR 2009-10. 2. THE SOLE GROUND OF APPEAL RAISED BY THE ASSESSEE IS THAT THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS NOT EL IGIBLE TO AVAIL IMMUNITY U/S.271AAA(2) OF THE ACT, AND THEREBY CONF IRMING THE LEVY OF PENALTY U/S.271AAA OF THE ACT OF RS.1,00,000/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF TRADING IN CEMENT UNDER THE NAME AND STYLE UNNATI SALES WHEREIN HE HAS DEALERSHIP OF BINANI CE MENT. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE RESIDE NTIAL PREMISES OF THE ASSESSEE UNDER SECTION 132 OF THE I.T,.ACT, 1961 ON 15.9.2008. IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, THE ASSESSEE DURING THE COURSE OF SEARCH, ADMITTED UNDISCLOSED I NCOME OF RS. ITA NO.275/RJT/2012 2 RS.10.00 LAKHS. THE SAME WAS ASSESSED BY THE AO UN DER SECTION 153A(A) OF THE ACT ON 30.3.2010. THEREAFTER, THE AO LEVIED PENALTY OF RS.1,00,000/- UNDER SECTION 271AAA OF THE ACT BEING 10% OF SUCH INCOME ON THE GROUND THAT AS PER EXPLANATION-(B) TO SECTION 271AAAA THE PREVIOUS YEAR RELEVANT TO THE ASSTT.YEAR 2009-1 0 WHICH HAS ENDED BEFORE THE DATE OF SEARCH BUT THE DATE OF FILING TH E RETURN OF INCOME UNDER SECTION 139(1) OF SUCH YEAR HAS NOT EXPIRED B EFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETUR N OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE. THE AO OBSERVE D THAT IN THE CASE OF THE ASSESSEE, SEARCH HAD TAKEN PLACE ON 15.9.2008 A ND THE LAST DATE OF FILING OF THE RETURN OF INCOME UNDER SECTION 139(1) WAS 30.9.2009, AND SUCH INCOME WAS NOT SHOWN IN THE RETURN FILED U/S.1 39(1). THE UNDISCLOSED INCOME ADMITTED WAS RS.10 LAKHS. TEN P ERCENT OF SUCH INCOME WORKS OUT TO RS.1.00 LAKH. 4. ON APPEAL, THE CIT(A) CONFIRMED LEVY OF PENALTY BY OBSERVING AS UNDER: 6.6 IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED O PINION THAT SO FAR AS THE MANNER OF EARNING THE INCOME AND SUBSTAN TIATING THE SAME IS CONCERNED, THE APPELLANT HAS, IN MY VIEW, S PECIFIED THE MANNER OF EARNING THE UNDISCLOSED INCOME AS WELL AS SUBSTANTIATED THE SAME TO THE EXTENT OF QUESTIONS H AVING BEEN ASKED IN THIS REGARD IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE APPELLANT HAS FAILED TO RESPOND TO ANY OF THE QUESTIONS RELATING TO THE MANNER AS WELL AS SUBSTANTIATING THE SAME EVEN DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. IN VIEW OF THIS, THE APPELL ANT HAS FULFILLED THE FIRST TWO CONDITIONS FOR AVAILING OF IMMUNITY F ROM PENALTY PROCEEDINGS U/S 271AAA OF THE ACT. 6.7 SO FAR AS TAX PAYMENT TOGETHER WITH INTEREST I S CONCERNED, IT IS NOTED THAT THE APPELLANT HAS FAILED TO MAKE THE PAYMENT OF TAX AND INTEREST AS DISCLOSED IN THE RETURN OF INCOME W HILE FILING THE RETURN OF INCOME. THE SAID TAX AND INTEREST HAS NOT BEEN PAID EVEN BY THE TIME OF ASSESSMENT ORDER IS FINALIZED. IN FA CT, NO SUCH TAX AND INTEREST HAS BEEN PAID AS NOTED BY THE AO EVEN BY THE DATE BY WHICH THE PENALTY ORDER HAS BEEN PASSED U/S 271A AA OF THE ACT ON 29-09-2010. ITA NO.275/RJT/2012 3 6.8 IT IS SUBMITTED BY THE APPELLANT THAT THE SAID TAX TOGETHER WITH INTEREST HAVE BEEN PAID ON 17-03-2011 AND APPELLANT CLAIMS THE IMMUNITY RELYING ON THE DECISION OF HON'BLE ITAT, CALCUTTA BENCH IN THE CASE OF DCIT VS. PIONEER MARB LES & INTERIORS PVT. LTD. IN ITA NO.1326/KOL./2011. 6.9 IT IS TRUE THAT THERE IS NO PRE-CONDITION THAT TAX ALONG WITH INTEREST MUST BE PAID BEFORE FILING OF RETURN OR AN Y OTHER SPECIFIED DATE. FURTHER, IT NEEDS TO BE NOTED THAT THERE CANN OT BE AN INDEFINITE PERIOD FOR PAYMENT OF SUCH TAX AND IN TEREST FOR THE PURPOSE OF AVAILING OF IMMUNITY FROM PENALTY U/S 27 1AAA OF THE ACT. IN RESPECT OF THE SIMILAR PROVISIONS IN THE CO NTEXT OF IMMUNITY FROM PENALTY PROCEEDINGS U/S 271(1)(C) R.W. EXPLANA TION 5, THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF MAHEND RA C. SHAH [2008] 299 ITR 305 (GUJ) HAS HELD' AS UNDER: 'THERE IS NO PRESCRIPTION AS TO THE POINT OF TIME W HEN THE TAX HAS TO BE PAID QUA THE AMOUNT OF INCOME DECLARED IN THE STATEMENT MADE UNDER SECTION 132(4). THE TRIBUNAL WAS JUSTIFI ED IN HOLDING THAT THERE WOULD BE SUFFICIENT COMPLIANCE OF THE PR OVISION IF TAX IS SHOWN TO HAVE BEEN PAID BEFORE THE ASSESSMENT WAS C OMPLETED. HOWEVER, THE OUTER LIMIT HAS TO BE THE POINT OF TIM E WHEN THE ASSESSMENT PROCEEDINGS ARE UNDERTAKEN BY THE ASSESS ING OFFICER BECAUSE THE OPENING PORTION OF SECTION 271 (1) REQU IRES THE ASSESSING OFFICER TO RECORD SATISFACTION IN THE COU RSE OF SUCH PROCEEDINGS, AND THE SATISFACTION HAS TO BE AS REGA RDS THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, A SATISFACTI ON AS TO CONCEALMENT CAN BE ARRIVED AT THE EARLIEST POINT OF TIME ONLY IN THE COURSE OF ASSESSMENT PROCEEDINGS AND FOR THAT P URPOSE, THE ASSESSING OFFICER IS REQUIRED TO VERIFY AND ASCERTA IN WHETHER THE INCOME HAS BEEN DECLARED AND TAX HAS BEEN PAID THER EON. ' 6.10 THEREFORE, IN VIEW OF THE ABOVE DECISION, IT I S CLEAR THAT FOR THE PURPOSE OF AVAILING OF IMMUNITY UNDER IDENTICAL SITUATION, THE TAX ALONG WITH INTEREST MUST BE PAID BY THE TIME AS SESSMENT ORDER IS PASSED. IT WILL NOT SERVE THE PURPOSE IF T HE TIME LIMIT FOR PAYMENT OF TAX AND INTEREST IS STRETCHED TOO FAR BE YOND THE SAID DATE OF PASSING THE ASSESSMENT ORDER. COMING TO THE DECISION IN THE CASE OF PIONEER MARBLES & INTERIORS PVT. LTD. I N ITA NO.1326/KOL/2011 OF THE HON'BLE ITAT KOLKATA BENCH AS RELIED UPON BY THE APPELLANT, THE BRIEF FACTS OF THIS CASE ARE. THAT WHILE FILING THE INCOME TAX RETURN, DUE TO AN INADVERTENT MISTAKE, THE ASSESSEE DID NOT COMPUTE INTEREST UNDE R SECTION 234C. IT WAS FOR THIS REASON THAT THE SELF ASSESSME NT TAXES WERE UNDERPAID BY RS 46,132 BUT THE ASSESSEE PAID OVER T HE SHORTFALL, WITHIN PERMISSIBLE TIME, UPON RECEIVING THE NOTICE OF DEMAND ITA NO.275/RJT/2012 4 UNDER SECTION 156 OF THE ACT. THE HON'BLE ITA T, AF TER ANALYZING THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF MAHENDRA C. SHAH [2008] 299 ITR 305 (GUJ), HAS HELD AS UNDER: 'SECTION 271 AAA, AS THE STATUTE UNAMBIGUOUSLY PROV IDES, DOES NOT REQUIRE ANY SUBJECTIVE SATISFACTION OF THE ASSE SSING OFFICER TO BE ARRIVED AT DURING THE ASSESSMENT PROCEEDINQS AND, THEREFORE, THE OUTER LIMIT OF PAYMENT BEFORE THE CO NCLUSION OF- ASSESSMENT PROCEEDINGS WILL NOT COME INTO PLAY. IN OUR CONSIDERED VIEW, THEREFORE, ON THE FACTS OF THE PRESENT CASE WHEREIN ENTIRE TAX AND INTEREST HAS BEEN DULY PAID WELL WITHIN THE TIME LIMIT FOR PAYMENT OF NOTICE OF DEMA ND UNDER SECTION 156 AND WELL BEFORE THE PENALTY PROCEEDINGS WERE CONCLUDED, THE ASSESSEE COULD NOT BE DENIED THE IMM UNITY UNDER SECTION 271AAA(2) ONLY BECAUSE ENTIRE TAX, AL ONG WITH INTEREST, WAS NOT PAID BEFORE FILING OF INCOME TAX RETURN OR, FOR THAT PURPOSE, BEFORE CONCLUDING THE ASSESSMENT PRO CEEDINGS. 6.1 THEREFORE, EVEN IF THE DECISION GIVEN BY THE HO NBLE ITAT KOLKATA IS FOLLOWED, THE OUTER LIMIT OF PAYMENT OF TAX AND INTEREST HAS BEEN EXTENDED TO THE TIME LIMIT FOR PAYMENT AS PER NOTICE OF DEMAND U/S 156 OF THE IT ACT. IN THE PRESENT CASE, ASSESSMENT ORDER HAS BEEN PASSED ON 30-03-2010. HOW EVER, THE PAYMENT OF SUCH TAX AND INTEREST HAS BEEN MADE ONLY ON 17-03- 2011 AFTER ALMOST A YEAR. 6.12 TAKING ANY VIEW OF THE MATTER, I AM OF THE CON SIDERED OPINION THAT THE APPELLANT HAS FAILED TO FULFILL TH E THIRD CONDITION OF MAKING THE PAYMENT OF TAX AND INTEREST WELL WITHIN THE TIME PERIOD AS PER DECISIONS OF THE HON'BLE GUJARAT HIGH COURT AND HON'BLE ITAT, CALCUTTA. SINCE ONE OF THE CONDITIONS HAS NOT BEEN SATISFIED, THE APPELLANT IS NOT ELIGIBLE TO AVAIL O F IMMUNITY FROM PENALTY U/S 271AAA OF THE ACT. IN VIEW OF THE ABOVE , I AM OF THE CONSIDERED OPINION THAT THE APPELLANT IS NOT ELIGIB LE FOR IMMUNITY FROM PENALTY U/S 271AAA OF THE ACT AND, THEREFORE, PENALTY LEVIED BY THE AO FOR RS.1,00,000/- U/S 271AAA IS HEREBY CO NFIRMED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE THE ASSESSING OFFICER LEVIED PENALTY OF RS.1 L AKH UNDER SECTION 271AAA OF THE ACT IN RESPECT OF UNDISCLOSED INCOME OF RS.10 LAKHS WHICH WAS DISCLOSED BY THE ASSESSEE DURING THE COURSE OF THE SEARCH WHICH TOOK PLACE ON 15-9-2008. ITA NO.275/RJT/2012 5 6. ON APPEAL COMMISSIONER OF INCOME TAX APPEALS CON FIRMED THE ACTION OF THE ASSESSING OFFICER AS BECAUSE THE ASSE SSEE HAS NOT PAID TAX AND INTEREST ON THE DISCLOSED INCOME BEFORE THE DAT E OF THE PASSING OF THE PENALTY ORDER UNDER SECTION 271AAA ON 29-09-201 0. 7. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE AR GUED THAT IN THE INSTANT CASE IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS PRESCRIBED UNDER SECTION 271AAA FOR IMMUNITY FROM PENALTY EXCEPT IN RESPECT OF PAYMENT OF TAX AND INT EREST. THE AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ENTIRE TAX ALONG WITH DUE INTEREST THEREON WAS PAID BY THE ASSESSEE ON 17-03-2011. HE CONTENDED THAT SECTION 271AAA DID NOT PRESCRIBE ANY TIME FOR PAYME NT OF TAX AND INTEREST. SECTION 271AAA (2) READS AS UNDER: . (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME A ND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. 8. HE THEREFORE SUBMITTED THAT AS TAX ALONG WITH IN TEREST HAS BEEN PAID BY THE ASSESSEE AND THEREFORE PENALTY LEVIED I S LIABLE TO BE DELETED. HE RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VERSUS GEBILAL KANHAILAL HUF (2012) 348 ITR 56 1 WHEREIN IN RESPECT OF SIMILAR CONDITION PRESCRIBED UNDER EXPLA NATION 5 TO SECTION 271 (1) (C) IT WAS HELD THAT: ..THE ONLY CONDITION WHICH WAS REQUIRED TO BE FULF ILLED FOR GETTING THE IMMUNITY, AFTER THE SEARCH PROCEEDINGS GOT OVER, WAS THAT THE ASSESSEE HAD TO PAY THE ITA NO.275/RJT/2012 6 TAX TOGETHER WITH INTEREST IN RESPECT OF SUCH UNDIS CLOSED INCOME UP TO THE DATE OF PAYMENT. CLAUSE (2) DID NOT PRESCRIBE THE TIME L IMIT WITHIN WHICH THE ASSESSEE SHOULD PAY TAX ON INCOME DISCLOSED IN THE STATEMENT UNDER SECTION 132(4) . THE ASSESSEE WAS ENTITLED TO IMMUNITY UNDE R CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C). 9. THE DEPARTMENTAL REPRESENTATIVE HAS NOT DISPUTED THE FACT THAT ENTIRE TAX AND INTEREST ON THE DISCLOSED INCOME OF RS. 10 LAKHS WAS PAID BY THE ASSESSEE ON 17-03-2011. IN THE ABOVE CIRCUMS TANCES IN VIEW OF THE ABOVE DECISION OF THE HONOURABLE SUPREME COURT THE PENALTY LEVIED UNDER SECTION 271AAA OF RS.1 LAKH IS LIABLE TO BE D ELETED. WE ORDER ACCORDINGLY. THUS THE APPEAL OF THE ASSESSEE IS ALL OWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 22 ND MAY, 2015 AT RAJKOT. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 22/5/2015