SHRI JAWAHARLAL GUPTA, Nagpur V. A.C.I.T. Central Cir. 1(3), Nagpur

ITA 29/NAG/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2187 (ITAT-NAGPUR)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 24-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAOWALI
• Keywords: Revised return

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH: NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER (S.M.C.) I.T.A. NO. 29 /NAG/20 1 6 ASSESSMENT YEAR: 200 3 - 0 4 SHRI JAWAHARLAL GUPTA MASKASATH, ITWARI, NAGPUR PAN:A BRPG8150D VS ASST. COMMISSIONER OF IN COME TAX , CIR - 1(3), AYAKAR BHAWAN, CIVIL LINES, TELANKHEDI RD, NAGPUR - 0 1 (APPELLANT) (RESPONDENT) APPELLANT BY SHRI UMANG AGRAWAL , A.R. RESPONDENT BY SHRI RAJESH GAOWALI , D.R. DATE OF HEARING: 16 - 0 5 - 201 6 DATE OF PRONOUNCEMENT: - 13 /0 6 /2016 O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF LD. CIT - (A ) - 3 , NAGPUR DATED 19 .0 1 .201 6 . THE APPELLANT HAS CHALLENGED THE CONFIRMATION OF PENALTY LEVIED U/S.271(1)(C) OF RS.80,000/ - . 2. FACTS IN BRIEF, AN ASSESSMENT WAS MADE U/S.153A VIDE ORDER DATED 3 0 TH NOVEMBER , 2009 , ACCORDING TO WHICH A SEARCH U/S.132 WAS CONDUCTED ON 22 ND JANUARY 2008. THEREAFTER A NOTICE U/S.153A WAS ISSUED AND IN COMPLIANCE A RETURN WAS FIL ED DECLARING OF INCOME OF RS.7,31 6/ - DA TED 14.11.2008, HOWEVER , THE SAME WAS REVISED ON 23.10.2009 AND THE INCOME WAS DECLARED AT RS.2,99,846/ - . AN OBSERVATION HAS BEEN MADE BY THE AO THAT THE APPELLANT HAS DISCLOSED AN AMOUNT OF RS.3 LACS WHICH WAS S URRENDERED B Y THE ASSESSEE. FINALLY THE SAME INCOME WAS DETERMINED BY THE AO AS DECLARED BY THE ASSESSEE. - 2 - ITA NO. 29 /NAG/201 6 3. A PENALTY WAS LEVIED U/S.271(1)(C) WHEREIN THE M AIN ALLEGATION OF THE AO WAS THAT THE IMPUGNED INCOME OF RS.3 LACS WAS S URRENDER ED ONLY WHEN A SEARCH WAS CONDUCTED. IT HAS ALSO BEEN MENTIONED BY THE AO THAT THE ASSESSEE HAD DELIBERATELY N OT DISCLOSED THE S URRENDERED AMOUNT WHEN THE RETURN WAS FILED. ACCORDING TO AO EVEN THE ASSESSEE HAS NOT DISCLOSED THE SAID S URRENDERED AMOUNT WHEN THE RETURN WAS FILED IN COMPLIANCE OF NOTICE U/S.153A , HOWEVE R, IT WAS DISCLOSED ONLY THROUGH A REVISED RETURN. FINALLY A PENALTY OF RS.80,000/ - WAS IMPOSED. 4. THE APPELLANT HAS CHALLENGED THE PENALTY PROCEEDINGS HOWEVER THE LD.CIT (A) WAS NOT CONVENIENCED AND UPHELD THE ACTION OF THE AO IN THE FOLLOWING MANNER: - 9. IN THIS CASE, THE ASSESSEE HAS ADMITTED THE UNDISCLOSED INCOME DURING SEARCH AND HAS DECLARED THE SAME IN THE RETURN FILED AFTER THE SEARCH. THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF S UCH INCOME IN TERMS OF EXPLANATION 3A REFERRED ABOVE CONSIDERING THAT UNACCOUNTED ADVANCES MADE BY THE ASSESSEE WERE DELIBERATELY KEPT OUTSIDE THE BOOKS OF ACCOUNT. 10. THEREFORE, IN VIEW OF THE DISCUSSION ABOVE AND CONSIDERING THE PROVISIONS OF EXPLANATIO N 5A TO SECTION 271(1) OF THE INCOME TAX ACT, IT IS HELD THAT THE ASSESSEE IS LIABLE TO PENALTY U/S.271(1) (C) OF THE INCOME TAX ACT. THEREFORE, PENALTY LEVIED OF RS.80,000/ - BY THE AO IS CONFIRMED. 5. IN THE LIGHT OF ABOVE FACTUAL BACKGROUND I HEARD BOT H THE SIDE. AT THE OUTSET IT IS WORTH TO MENTION THAT A NEW SECTION 271AAA WAS INTRODUCED BY FINANCE ACT,2007 W.E.F. 01.04.2007 IN RESPECT OF PENALTY W H ERE SEARCHED HAS BEEN INITIATED U/S.132 ON OR AFTER 1 ST DAY OF JUNE 2007 BUT BEFORE 1 ST DAY OF JULY 2012 . IT IS PRESCRIBED THAT THE ASSESSEE SHALL PAY BY WA Y OF PENALTY @10% OF THE UNDISCLOSED INCOME. SINCE IN THIS CASE THE ADMITTED FACTUAL POSITION IS THAT THE SEARCH U/S.132 WAS CONDUCTED ON 22.01.2008, THEREFORE THE PROVISION OF SECTION 271 AAA SHOULD HAVE BEEN APPLIED BY THE AO WHILE LEVYING THE PENALTY. 6. AS PER SUB - SECTION ( 2 ) OF SECTION 271 AAA AN EX CEP TION HAS BEEN PRESCRIBED THAT IF THE ASSESSEE IN THE COURSE OF SEARCH HAS MADE A STATEMENT U/S.132(4) AND ADMITTED A N UNDISCLOSED INCOME AND SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND TH EREUPON PAY THE TAX TOGETHER WITH INTEREST, THEN THE - 3 - ITA NO. 29 /NAG/201 6 PROVISION OF LEVY OF PENALTY SHOULD NOT BE ATTRACTED. IF WE CONSIDER THESE PROVISION THEN THE CASE OF THE REVEN UE IS NOT THAT THE ASSESSEE HA S NOT PAID THE TAX OR THE INCOME DISCLOSED OF RS.3 LAC WAS NOT AS PER STATEMENT U/S.132(4) RECORDED AT THE TIME SEARCH. 6.1 IN ADDITION T O MY ABOVE OBSERVATION, IT IS WORTH TO MENTION THAT IN THE LIGHT OF THE ADMITTED FACTUAL POSITION AS DISCUSSED ABOVE T HE PENALTY U/S.271(1)(C) SHOULD NOT HAVE BEEN LEVIED CONSIDERING THE CONDITION PRESCRIBE S UNDER EX PLANATION 5A OF SECTION 271(1)(C ) OF I.T. ACT , HOWEVER, THE LEVY OF PENALTY IS NOT AUTOMATIC. ON THIS ISSUE FEW CASE LAWS HAS BEEN CITED BY LD. AR LISTED BEL OW : - 1. SUDARSHAN SILK & SAREES VS. CIT (2008) 300 DTR 0205 2. CIT VS. JASWANT RAI (1997) 142 CTR 0049 3. CIT VS. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 0565 4. PARAG SANGHVI VS. DCIT (2015) 45 CCH 0253 MUM TRIB. 5. MAHAVIR BUILDER VS. INCOME TAX OFFICER ( 2014) 41 CCH 0381 MUM TRIB. 6.2 ON THE OTHER HAND, FROM THE SIDE OF THE REVENUE THE LD. DR HAS CITED T WO DECISION AS UNDER: - 1. [2013] 30 TAXMANN.COM 10 (DELHI) HIGH COURT OF DELHI SHOURYA TOWERS (P.) LTD. V. DEPUTY COMMISSIONER OF INCOME TAX. 2. [2010] 40 S OT 543 (MUM.) IN THE ITAT MUMBAI BENCH A AJIT B. ZOTA V. ASSISTANT COMMISSIONER OF INCOME TAX*, CENTRAL CIRCLE - 35, MUMBAI. 7. AS FAR AS THE DECISION AS CITED BY LD. DR OF SHOURYA TOWERS (SUPRA) IS CONCERNED THE HONBLE COURT H AS ACCEPT ED THAT AN ESCAPE RO UTE HAS BEEN PROVIDED UNDER E XPLANATION BY SECTION 271(1)(C). ACCORDING TO THE HONBLE COURT THE ESCAPE ROUTE IS AVAILABLE IF THE ASSESSEE IN HIS STATEMENT HAS OFFERED THE UNDISCLOSED INCOME AND THEREAFTER PAY TH E TAX ON THE SAID INCOME. IN THE SAID CASE ON BEING ISSUED WITH THE NOTICE U/S.153A ASSESSEE DID NOT FILED ANY R ETURN AND MERELY REQUESTED BY LETTER TH AT THE SEIZ U R E BE TREATED IN ITS RETURN FILED IN RESPONSE TO NOTICE U/S.153A. THIS IS THE DISTINGUISHABLE FEATURE , HENCE THE CITED CASE LAWS DO NOT APPLIED ON THE ASSESSEE. - 4 - ITA NO. 29 /NAG/201 6 8. AS FAR AS THE DECISION OF JAWAHARLAL GUPTA (SUPRA) AS CITED BY LD. DR IS CONCERNED THE ASSESSEE HAD FILED THE RETURN AFTER THE SEARCH BUT DID NOT DISCLOSE THE INCOME FROM SPECULATE D PROFIT AS PRESCRIBED UNDER EXPLANATION TO SECTIO N 271(1)(C), THEREFORE THE IM M UNITY GR ANTED AGAINST THE LEVY OF PENALTY WAS DENIED. ON THE OTHER HAND IN THE CASE OF SUDARSHAN SILK & SAREES (SUPRA) THE HONBLE SUPREME COURT HAS FOUND THAT A REVISED RETURN WAS FILED BY THE ASSESSEE DECLARING ADDITIONAL IN COME WHICH WAS ACCEPTED IN - T OTO. ON THE BASIS OF TH O S E ADMITTED FACTUAL POSITION THE HONBLE COURT HAS H ELD THAT THE FINDING OF FACT AS RECORDED BY THE TRIBUNAL COULD NOT BE CHALLENGED ON THE GROUND OF PERVERS ITY . ON THE OTHER HAND IN THE CASE OF JASWANT R AI (SUPRA) THE HONBLE PUNJAB & HARYANA COURT HAS HELD THAT THE ASSESSMENT WAS MADE ON THE INCOME AS AGREED BY THE ASSESSEE AND CONSIDERING THE PECULIARITY OF THE FACT THE PENALTY WAS DELETED. THE BOMBAY TRIBUNAL IN THE CASE OF PARAG SANGHVI (SUPRA) HELD T HAT THE RETURN INCOME FILED U/S.153A WAS ACCEPTED BY THE AO AND THERE WAS NO VARIATION IN THE ASSESSED INCOME AS THE RETURN INCOME BY ASSESSEE , THEREFORE WHEN THE CONDITIONS LAID DOWN AS PER THE EXPLANATION TO 271(1) (C) HAVE BEEN FULFILLED THEN THE PENALT Y WAS WRONGLY IMPOSED. 9. I HEREBY CONCLUDE THAT RESPECTFULLY FOLLOWING THE ABOVE C ITED PRECEDENTS AS WELL AS THE REASONS ASSIGNED HEREIN ABOVE THIS IS NOT A FIT CASE FOR CONFIRMATION OF PENALTY U/S. 271(1)(C). AS A RESULT THE FINDING OF LD. CIT(A) IS HEREB Y REVERSE D AND THE GROUND OF THE ASSESSEE IS ALLOWED. AO IS DIRECTED TO DELETE THE PENALTY. 10. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . ORDER PRONOU NCED IN THE OPEN COURT ON THIS 13 TH DAY OF JUNE , 2016 . SD/ - (MUKUL K. SHRAWAT) JUDICIAL MEMBER NAGPUR, DATED: - 13 / 0 6 /2016 MANGESH BODKHE/ PS - 5 - ITA NO. 29 /NAG/201 6 COPY FORWARDED TO : 1. SHRI JAWAHARLAL GUPTA MASKASATH, ITWARI, NAGPUR - 440002 2. ASST. COMMISSIONER OF INCOME TAX, CIR - 1(3), AYAKAR BHAWAN, CIVIL LINES, TELANKHEDI RD, NA GPUR - 01 3. C.I.T., (CENTRAL) , NAGPUR 4. CIT ( APPEALS) - 3 , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR MANGESH BODKHE/ PS