The ACIT, Central Circle-4, Surat V. M/s. Patel P. Alpeshkumar & CO., Surat

ITA 2889/AHD/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2305 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL DHAKA
• Assessee Lawyers: KUSHAL GHEEWALA
• Keywords: Search and seizure
• Section: 131; 132; 234B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NOS.2888 & 2889/AHD/2014/SRT / ASSESSMENT YEAR: 2012-13 ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, SURAT. VS. M/S. PATEL P. ALPESHKUMAR & CO., 13, ADINATH COMPLEX, HARIPURA BJHAWANI WARD, SURAT - 395 003. [PAN: AAJFP 5337J] ( / APPELLANT) ( !' /RESPONDENT) / ASSESSEE BY : SHRI KUSHAL GHEEWALA, C.A., /REVENUE BY : SHRI ANIL DHAKA, SR. D.R /DATE OF HEARING : 05-04-2018 /DATE OF PRONOUNCEMENT : 06-04-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE CH ALLENGING THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-II, AHMEDABAD (CIT(A) FOR SHORT) DATED 06.08.2014 & 11.08.2014 FOR THE ASSESS MENT YEAR (AY) 2012- 13. 2. THE GROUNDS RAISED BY THE REVENUE IN ITA NO.2888 /AHD/2014/SRT READ AS FOLLOWS: 1. WHETHER, IN CURRENT SET OF FACTS AND CIRCUMSTANC ES THE LD. CIT(A) WAS CORRECT IN LAW IN RULING THAT THE SEIZED CASH CAN B E ADJUSTED .AGAINST THE ADVANCE TAX LIABILITY AND THEREFORE RULING THAT INT EREST U/S 234B AND 234C 2 ITA NOS.2888 & 2889/AHD/2014/SRT (A.Y: 2012-13) M/S. PATEL P. ALPESHKUMAR & CO. CANNOT BE CHARGED IN THE CASE OF THE ASSESSEE FOR T HE YEAR UNDER CONSIDERATION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 3. THE GROUNDS RAISED BY THE REVENUE IN ITA NO.2889 /AHD/2014/SRT READ AS FOLLOWS: 1. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND LAW, THE LD, CIT(A) WAS RIGHT IN DELETING THE PENALTY LEVIED U/S 271AAA OF THE LT. ACT BY IGNORING THE FACT THAT ASSESSEE HAS NOT SATISFIE D THE CONDITION LAID DOWN IN SECTION 271AAA(2)(I)&(II) OF THE LT. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. ITA NO.2888/AHD/2014/SRT: 4. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBU NAL. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD. CIT(A) W AS NOT CORRECT IN LAW IN HOLDING THAT THE SEIZED CASH CAN BE ADJUSTED AGAINS T THE ADVANCE TAX LIABILITY AND THEREFORE, INTEREST U/S. 234B AND 234C OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) CANNOT BE CHARGED FOR THE YEAR UND ER CONSIDERATION. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER (AO) WAS RI GHT IN CHARGING INTEREST WHEREAS THE LD. CIT(A) HAS GRANTED RELIEF TO THE AS SSESSEE WITHOUT ANY BASIS THEREFORE, IMPUGNED ORDER MAY KINDLY BE SET ASIDE B Y RESTORING THAT OF THE AO ON THE ISSUE OF CHARGING INTEREST. 5. REPLYING TO THE ABOVE, THE LD. ASSESSEES REPRES ENTATIVE (AR) SUBMITTED THAT DREW OUR ATTENTION TOWARDS PARA 6 & 7 OF FIRST APPELLATE ORDER 3 ITA NOS.2888 & 2889/AHD/2014/SRT (A.Y: 2012-13) M/S. PATEL P. ALPESHKUMAR & CO. AND SUBMITTED THAT THE ASSESSEE SUBMITTED AN APPLIC ATION REQUESTING FOR APPROPRIATION OF MONEY/CASH SEIZED DURING THE COURS E OF SEARCH AND SEIZURE OPERATION, TOWARDS ADVANCE TAX LIABILITY THEREFORE, IT WAS THE RESPONSIBILITY OF THE AO TO ADJUST THE SEIZED CASH AGAINST THE ADVANC E TAX LIABILITY FROM THE DATE OF SAID APPLICATION THEREFORE, INTEREST U/S. 2 34B AND 234C OF THE ACT CAN BE CHARGED ONLY AFTER GIVING CREDIT OF ADVANCE TAX BASED ON THE DATE OF APPLICATION. 6. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, WE MAY POINT OUT THAT UNDISPUTEDLY THE ASSESSEE FILED APPLICATION TO THE AO REQUESTING HIM TO ADJUST SEIZED CASH AMOUNT AGAINST THE ADVANCE TAX L IABILITY AND ACCORDINGLY AO WAS REQUIRED TO ADJUST THE SEIZED CASH AGAINST T HE ADVANCE TAX LIABILITY FROM THE DATE OF APPLICATION AND THUS, INTEREST U/S . 234B AND 234C CAN BE CHARGED ONLY AFTER GIVING CREDIT OF ADVANCE TAX BAS ED ON THE DATE OF SUCH APPLICATION. OUR VIEW ALSO GETS STRONG SUPPORT FROM VARIOUS DECISIONS INCLUDING DECISION OF HONBLE DELHI HIGH COURT IN T HE CASE OF CIT VS. K.K. MARKETING [2005] 278 ITR 596 (DEL.) AND THE DECISIO N OF ITAT AHMEDABAD IN ITA NO.2085 & 2086/AHD/2012 ORDER DATED 25.10.2013 AS RELIED BY THE LD. CIT(A) WHILE GRANTING RELIEF TO THE ASSESSEE. CONS EQUENTLY, WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE IMPUGNED FIRST APPELLATE ORDER AND THUS, WE UPHOLD THE SAME. ACCORDINGLY, GROUNDS OF REVENUE STAND DISMISSED. ITA NO.2889/AHD/2014/SRT: 7. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBU NAL. THE LD. DEPARTMENTAL 4 ITA NOS.2888 & 2889/AHD/2014/SRT (A.Y: 2012-13) M/S. PATEL P. ALPESHKUMAR & CO. REPRESENTATIVE (DR) SUBMITTED THAT THE AO WAS RIGHT IN IMPOSING PENALTY U/S. 271AAA OF THE ACT AS THERE WERE CONTRADICTORY STATE MENT OF THE ASSESSEE REGARDING THE SOURCE OF CASH FOUND AND SEIZED DURIN G SEARCH OPERATION. THE LD. DR ALSO SUBMITTED THAT THE ASSESSEE FAILED TO S PECIFY THE MANNER AND DETAILS OF RECEIPT OF SAID CASH AND ALSO SHOWN HIS INABILITY TO SUBSTANTIATE THE MANNER IN WHICH CASH WAS SEIZED AND FOUND TO BE TRE ATED AS UNEXPLAINED INCOME U/S. 69A OF THE ACT. THE LD. DR SUBMITTED T HAT THE IMPUGNED ORDER MAY KINDLY BE SET ASIDE BY RESTORING THE PENALTY OR DER. 8. REPLYING TO THE ABOVE, THE LD. ASSESSEES REPRES ENTATIVE (AR) SUPPORTED THE FIRST APPELLATE ORDER AND SUBMITTED T HAT THE ASSESSEE BROADLY EXPLAINED THE SOURCE OF EARNING CASH IN THE COURSE OF STATEMENT RECORDED DURING THE SEARCH. THE LD. AR SUBMITTED THAT THERE WAS NO SPECIFIC QUESTION TO MR. KANTAJI PRADANJI THAKUR DURING HIS STATEMENT HAD ALREADY DISCLOSED THE NAMES WHICH WERE AVAILABLE TO THE APPELLANT AND THE AMOUNT OF THOSE PARCELS FROM WHICH AMOUNT WAS DISCLOSED BY THE PART NER THEREFORE, APPELLANT SATISFIED THE CONDITIONS REQUIRED U/S. 271AAA (2)(I I) OF THE ACT THUS, PENALTY CANNOT BE LEVIED ON THE ASSESSEE AND LD. CIT(A) WAS RIGHT IN DELETING THE SAME. 9. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, WE MAY POINT OUT THAT THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSES SEE WITH THE FOLLOWING OBSERVATIONS AND CONCLUSION: 6.3.1 THE SUBMISSIONS ARE CONSIDERED. IT IS SEEN T HAT DURING THE COURSE OF SEARCH, THE STATEMENT OF MR KANTAJI PRADHANJI THAKU R WAS RECORDED U/S 132(4) AND IN THE COURSE OF STATEMENT GIVEN UNDER S ECTION 132(4) ON 5 ITA NOS.2888 & 2889/AHD/2014/SRT (A.Y: 2012-13) M/S. PATEL P. ALPESHKUMAR & CO. 29/04/2011, NO UNDISCLOSED INCOME WAS ADMITTED. THE SUMMON UNDER SECTION 131 WAS ISSUED ON 29/04/2011, THE DATE OF S EARCH, TO THE FIRM ASKING FOR COMPLIANCE ON 02/05/2011. THE UNDISCLOSE D INCOME WAS ADMITTED BY THE FIRM AT RS. 2.6 CR. VIDE LETTER DAT ED 02/05/2011 ADDRESSED TO DDIT, NEW DELHI. THEREAFTER THE PARTNER PRESENTED H IMSELF FOR RECORDING OF STATEMENT ON 12/08/2011. IT IS APPRECIATED THAT AT THE TIME OF SEARCH, NO PARTNER WAS PRESENT AT THE PREMISES SINCE THE SEARC H TOOK PLACE AT DELHI AND THE PARTNERS WERE RESIDING AT SURAT. IN THE WRI TTEN SUBMISSION FILED IMMEDIATELY IN RESPONSE TO NOTICE UNDER SECTION 131 , THE INCOME WAS DISCLOSED. IN THE ASSESSMENT COMPLETED, THE SAID DI SCLOSED INCOME WAS ACCEPTED. IN ANSWER TO Q. NO.7, THE PARTNER STATED THAT SH KANTA IS SALARIED EMPLOYEE WITH SALARY OF RS. 4000 P.M. NOT MUCH AWAR E OF THE BUSINESS. IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT ADDITIONAL INCOME ADMITTED HAS TO BE TREATED AS DIS CLOSED DURING THE COURSE OF PROCEEDINGS UNDER SECTION 132 ONLY, SINCE THE NO TICE UNDER SECTION 131 WAS ISSUED DURING THOSE PROCEEDINGS ONLY. THE PARTN ER ALSO EXPLAINED THAT SUCH INCOME WAS DERIVED FROM COURIER BUSINESS OF TH E FIRM. THUS THE INGREDIENT OF SECTION 271AAA(1)(I) ARE SATISFIED. 6.3.2 THE PARTNERS SHRI ROHIT PATEL STATED IN RESPO NSE TO QUESTION NUMBER 8 THAT THIS MONEY IS RECEIVED IN DIFFERENT PARCELS F OR COURIER AND SOME OLD PARCELS WHICH WERE NOT CLAIMED FOR LAST 4 MONTHS WERE OPENED. SINCE THE PARTIES WERE NOT TRACEABLE SO THIS INCOME WAS OFFERED FOR TAXATION. IN RESPONSE TO QUESTION NUMBER 10 ASKING ABOUT PROOF OF EARNING AND BOOKS OF ACCOUNT, HE STATED THAT HE DOE S NOT HAVE ANY PROOF OR BOOKS OF ACCOUNTS FOR RS. 2.6 CRORES SEIZED BY THE DEPTT. AND OFFERED THE SUM AS INCOME OF THE CURRENT YEAR. IN THE LIGHT OF THESE FACTS IT IS TO BE SEEN WHETHER THE CONDITION GIVEN IN SECTION 271AAA(2)(II ) IS TO BE TREATED AS SATISFIED. CONSIDERING THE GUJARAT HIGH COURT DECISION IN CIT V. MAHENDRA C. SHAH (172 TAXMAN 58), THE PROVISION NEEDS TO BE LIBERALLY INTERPRETED. THE APPELLANT HAD BROADLY EXPLAINED, IN THE COURSE OF A STATEMENT, THE SOURCE OF EARNING THE MONEY. THE INCOME BEING UNACC OUNTED, NO BOOKS OF ACCOUNTS OR OTHER RECORDS ARE EXPECTED TO BE MAINTA INED. THUS THE CONDITION GIVEN IN SUB SECTION (2) OF SECTION 271AA A IS TAKEN AS FULFILLED, AS UNDISCLOSED INCOME WAS ADMITTED IN THE PROCEEDINGS IN CONTINUATION TO SEARCH PROCEEDINGS UNDER SECTION 132. FURTHER, THE APPELLANT BROADLY EXPLAINED THE MANNER OF EARNING INCOME. IN THE STAT EMENT RECORDED UNDER SECTION 132(4), MR KANTAJI PRADHANJI THAKUR HAD ALR EADY DISCLOSED THE NAMES WHICH WERE AVAILABLE TO THE APPELLANT AND THE AMOUNT IN THOSE PARCELS WAS DISCLOSED BY THE PARTNER. THUS, IN MY V IEW, THE APPELLANT SATISFIES THE CONDITIONS GIVEN UNDER SECTION 271AAA (2)(II). 10. IN VIEW OF ABOVE, WE NOTE THAT NO PARTNER OF TH E ASSESSEE WAS PRESENT AT THE PREMISES DURING THE COURSE OF SEARCH AS THE SEARCH TOOK PLACE AT DELHI AND PARTNERS WERE RESIDING AT SURAT. THE INCOME WA S DISCLOSED BY THE ASSESSEE IN RESPONSE TO THE NOTICE U/S. 131 OF THE ACT. SUBSEQUENTLY, STATEMENT OF PARTNER WAS RECORDED WHEREIN REPLY TO Q. NO.7 HE STATED THAT 6 ITA NOS.2888 & 2889/AHD/2014/SRT (A.Y: 2012-13) M/S. PATEL P. ALPESHKUMAR & CO. SHRI KANTA IS SALARIED EMPLOYEE WITH SALARY OF RS. 4,000/- PER MONTH AND HE IS NO MUCH AWARE ABOUT THE BUSINESS OF THE ASSESSEE . THE LD. AR FURTHER SUBMITTED THAT THE ADDITIONAL INCOME ADMITTED DURIN G THE SEARCH HAS TO BE TREATED AS DISCLOSED DURING THE COURSE OF PROCEEDIN GS U/S. 132 OF THE ACT AS NOTICE U/S. 131 OF THE ACT WAS ISSUED DURING THESE PROCEEDINGS ONLY. THE PARTNER OF THE ASSESSEE FIRM SHRI ROHIT PATEL, ALSO EXPLAINED THAT SUCH INCOME WAS DERIVED FROM THE COURIER BUSINESS AND TH US, REQUIREMENT OF S. 271AAA (1)(I) OF THE ACT ARE SATISFIED. IN REPLY T O Q. NO.8 SHRI PATEL SUBMITTED THAT MONEY HAS BEEN RECEIVED IN DIFFERENT PARCELS FROM COURIER AND SOME OLD PARCELS WHICH WERE NOT CLAIMED FOR THE LAS T FOUR MONTHS WERE ALSO OPENED AND THE RECIPIENT OF PARCEL WERE NOT TRACEAB LE HENCE, THE MONEY CAME OUT FROM THE PARCELS WAS OFFERED FOR TAXATION. AS PER SUB SECTION (2) OF THE ACT S. 271AAA OF THE ACT PROVISION OF SUB SECTI ON (1) WILL NOT APPLY I.E., PENALTY WILL NOT BE IMPOSED IF THE ASSESSEE IN THE COURSE OF SEARCH IN THE STATEMENT U/S. 132(4) OF THE ACT ADMITS THE UNDISCL OSED INCOME AND SPECIFIES THE MANNER IN WHICH THE SUCH INCOME HAS BEEN DERIVE D; SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE U NDISCLOSED INCOME. 11. IN THE PRESENT CASE SEARCH OPERATION WAS CONDUC TED AT DELHI THEREFORE, NO PARTNER OF THE FIRM PARTICIPATED IN T HE SEARCH AND SEIZURE OPERATION. HOWEVER, IN RESPONSE TO NOTICE U/S. 131 OF THE ACT THE INCOME WAS DISCLOSED AND SUBSEQUENTLY, IN THE STATEMENT RE CORDED U/S. 132(4) OF THE ACT SHRI ROHIT PATEL PARTNER OF THE FIRM ADMITTED T HE UNDISCLOSED INCOME AND 7 ITA NOS.2888 & 2889/AHD/2014/SRT (A.Y: 2012-13) M/S. PATEL P. ALPESHKUMAR & CO. WE SAFELY PRESUME THAT IT WAS DONE IN THE PROCEEDIN GS IN CONTINUATION TO SEARCH PROCEEDINGS U/S. 132 OF THE ACT. UNDISPUTED LY THE AMOUNT OF CASH SEIZED WAS ALSO INCLUDING AMOUNT RECOVERED FROM THE UNCLAIMED PARCELS WHEREIN RECIPIENT/ADDRESSEE OF THE PARCELS WERE NOT TRACEABLE AND THE ASSESSEE FIRM DISCLOSE THE AMOUNT RECOVERED FROM TH E PARCELS AS HIS OWN UNDISCLOSED INCOME WHICH CLEARLY SUBSTANTIATE THE M ANNER IN WHICH SUCH INCOME WAS DERIVED. IT IS NOT A CASE OF THE AO THA T THE ASSESSEE DID NOT PAY TAX INTEREST ON THE UNDISCLOSED INCOME AND HENCE, W E ARE SATISFIED THAT THE LD. CIT(A) WAS RIGHT IN HOLDING THAT THE INGREDIENT S OF SUB SECTION (2) OF S. 271AAA OF THE ACT ARE SATISFIED AND HENCE, PENALTY IS NOT LEVIABLE. WE ARE IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE LD. FIRS T APPELLATE AUTHORITY AND THERE IS NO VALID REASON TO INTERFERE WITH THE SAME . ACCORDINGLY, GROUNDS OF THE REVENUE BEING BREFT OF MERITS ARE DISMISSED. 12. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 0 6 TH APRIL, 2018. / SURAT ; DATED : 06 TH APRIL, 2018 EDN ! $ / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. # ( ) / THE CIT(A)- II, AHMEDABAD; 4. PRL. CIT, SURAT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE. / BY ORDER, // TRUE COPY // ) / ASSISTANT REGISTRAR , / ITAT, SURAT SD/ SD/- ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) /JUDICIAL MEMBER