MANOHAR SHETTY, V. ASST CIT CEN CIR 34, MUMBAI

ITA 293/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3590 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 12-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Penny stocks
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.C.SHARMA (AM) AND SHRI RAM LAL NEGI ( JM) ITA NO. 293 TO 295/MUM/2012 ASSESSMENT YEAR: 2004-05 TO 2006-07 MR. MANOHAR SHETTY . RADHA CHHAYA, ULIYARGOLI, KAUP, DIST- UDPI. VS. THE A CIT CENTRAL CIRCLE - 34, 1 ST FLOOR, AYAKAR BHAVAN, MUMBAI- 400020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. HARI S. RAHEJA. RESPONDENT BY : SHRI. N.P.SINGH DATE OF HEARING: 03/12/2015 DATE OF PRONOUNCEMENT: 02/03/2016 O R D E R PER RAM LAL NEGI, JM THESE APPEALS ARE DIRECTED AGAINST THE THREE O RDERS PASSED BY THE LD. CIT(A)-37, MUMBAI DATED 30/07/2010 CONFIRMING THE P ENALTY ORDERS PASSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ( IN SHOR T THE ACT), BY THE AO FOR THE A.Y. 2004-05,2005-06 & 2006-07. SINCE ALL THE THREE APPEALS PERTAIN TO THE SAME ASSESSEE AND THE ISSUES INVOLVED ARE COMMON, A LL THE THREE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION WAS CARRIED OUT ON 26/07/2007 IN THE RESIDENTIAL AND BUSINESS P REMISES OF RAVI SHETTY GROUP OF CONCERNS. THE ASSESSEE IS ONE OF THE ENTIT IES OF RAVI SHETTY GROUP OF 2 ITA NO. 293-295/MUM/2012 ASSESSME NT YEAR: 2004-05 TO 2006-07 CONCERNS ENGAGED IN THE BUSINESS OF RUNNING HOTELS, LIQUOR BARS, RESTAURENTS ETC. DURING THE COURSE OF SEARCH IT WAS REVEALED TH AT THE ASSESSEE GROUP HAS GOT CAPITAL GAINS ON ACCOUNT OF SALE OF SHARES WHICH AR E IN THE NATURE OF PENNY STOCKS. SEARCH/SURVEY ACTION AFORESAID LED TO SEIZU RE OF RS. 24,00,000/- AND JEWELLARY OF RS. 17,11,299/-. THE ASSESSEE GROUP IN THEIR LETTER DT. 27/09/2007 U/S 132(4) OF THE ACT ADMITTED UNDISCLOSED INCOME O F RS. 2 CRORES IN THE VARIOUS HANDS AS HEADS. 2.1 ACCORDINGLY, THE ASSESSEE SHRI. MANOHAR SUNDER SHETTY DECLARED UNDISCLOSED INCOME TO THE TUNE OF RS. 9,00,000/- FO R THE A.Y. 2004-05 IN THE RETURN OF INCOME FILED U/S. 153A OF THE ACT AND THE SAME WAS ACCEPTED AND ORDER U/S 153A R.W.S.143(3) OF THE ACT WAS PASSED D ETERMINING THE TOTAL INCOME AT RS. 22,00,440/-. PENALTY PROCEEDINGS U/S 271(1)( C) OF THE ACT WAS ALSO INITIATED AND IMPOSED PENALTY OF RS. 2,97,000/- U/S 271(1)(C) R.W. EXPLANATION- 1 OF THE ACT, HOLDING THAT THE ASSESSEE HAD FURNISH ED INACCURATE PARTICULARS OF INCOME. 2.2 THE LD. CIT(A) DISMISSED THE APPEAL FILED BY TH E ASSESSEE AGAINST THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER AND C ONFIRMED THE FINDINGS OF THE AO. AGGRIEVED BY THE IMPUGNED ORDER PASSED BY THE C IT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 2.3 THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER OF FOLLOWING EFFECTIVE GROUNDS. THE LEARNED COMMISSIONER OF INCOME TAX(A) ERRED IN CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) OF RS. 2,97,000/- ON T HE GROUNDS AS CONTAINED IN THE APPELLATE ORDER OR OTHERWISE. 2.4 BEFORE US THE COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE ASSESSEE HAS MADE THE DECLARATION WITH THE INTENTION TO CO-OPERA TE WITH THE DEPARTMENT AND 3 ITA NO. 293-295/MUM/2012 ASSESSME NT YEAR: 2004-05 TO 2006-07 TO AVOID PROTRACTED LITIGATION. THE DECLARATION WAS JUST TO BUY THE PEACE. THE APPELLANT HAS REVISED HIS RETURN OF INCOME BY INCOR PORATING THE AMOUNT IN QUESTION IN VIEW THE DECLARATION LETTER MADE U/S 13 2(4) OF THE ACT WHILE COMPLETING THE ASSESSMENT. THE ASSESSING OFFICER HA S ACCEPTED THE DECLARATION MADE BY THE ASSESSEE AND HAS NOT MADE ANY FURTHER A DDITIONS. THE ASSESSEE HAS ALSO CO-OPERATED WITH THE DEPARTMENT DURING THE SEARCH AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE APPELLANT HAS ALSO PAID TAXES WITH INTEREST ON THE DISCLOSED INCOME. THE LD. COUNSEL R ELYING UPON THE JUDGMENT DELIVERED BY THE HON,BLE SUPREME COURT IN CIT VS. SURESH CHANDRA MITTAL (2000) 251 ITR 9 (SC) SUBMITTED THAT IN THE LIGHT O F THE RATIO LAID DOWN IN THE SAIS CASE THE PENALTY LEVIED U/S 271(1)(C) MAY BE D ELETED. 2.5 ON THE OTHER HAND THE LD. DR RELYING UPON THE CONCURRENT FINDINGS OF AO AND THE CIT(A) SUBMITTED THAT THE CIT(A) HAS RIGHTL Y CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER AS PER THE PROVISI ONS OF LAW. THE DR FURTHER SUBMITTED THE FACTS OF THE PRESENT CASE ARE DIFFERE NT FROM THE FACTS OF THE CASES RELIED UPON BY THE ASSESSEE, THEREFORE, THE SAME AR E DISTINGUISHABLE. MOREOVER THE JUDGMENTS RELIED UPON PERTAIN TO THE PRE AMENDM ENT PERIOD. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE PARTIES AND ALSO PERUSED THE RECORD IN THE LIGHT OF THEIR CONTENTIONS. THE H ON,BLE SUPREME COURT IN CIT VS. SURESH CHANDRA MITTAL (2000) 251 ITR 9 (SC) HAS UPHELD THE DECISION OF HONBLE HIGH COURT OF MADHYA PRADESH WHEREIN IT WAS HELD THAT THE INITIAL BURDEN LIES ON THE REVENUE TO ESTABLISH THAT THE AS SESSEE HAD CONCEALED THE INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF S UCH INCOME. THE BURDEN SHIFTS TO THE ASSESSEE ONLY IF HE FAILS TO OFFER AN Y EXPLANATION FOR THE UNDISCLOSED INCOME OR OFFERS AN EXPLANATION WHICH I S FOUND TO BE FALSE BY THE ASSESSING AUTHORITY. IN THE AFORESAID CASES THE TRI BUNAL MADE THE REFERENCE TO THE HONBLE HIGH COURT AND HAS ALONG WITH STATEMENT OF THE CASE, FOR OPINION OF THIS COURT ON THE FOLLOWING QUESTION: 4 ITA NO. 293-295/MUM/2012 ASSESSME NT YEAR: 2004-05 TO 2006-07 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, TRIBUNAL WAS JUSTIFIED IN CANCELLING THE PENALTY LEVIED UNDER S. 271(1)(C) OF THE IT ACT, 1961 ?' 4. THE HONBLE HIGH COURT ANSWERED THE SAME IN AFFI RMATIVE HOLDING AS UNDER:- IN THE PRESENT CASE, THOUGH IT IS TRUE THAT ASSES SEE HAD NOT SURRENDERED AT ALL AND THAT HE HAD DONE SO ON THE PERSISTENT QUERI ES MADE BY AO BUT ONCE THE REVISED ASSESSMENT WAS REGULARISED BY THE REVEN UE AND ONCE THE ASSESSING AUTHORITY HAD FAILED TO TAKE ANY OBJECTIO N IN THE MATTER, THE DECLARATION OF INCOME MADE BY THE ASSESSEE IN HIS R EVISED RETURNS AND HIS EXPLANATION THAT HE HAD DONE SO TO BUY PEACE WITH T HE DEPARTMENT AND TO COME OUT OF VEXED LITIGATION COULD BE TREATED AS BO NA FIDE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, TRIBUNAL WAS JUSTIFIED IN CANCELLING THE PENALTY LEVIED BY AO AND AFFIRMED BY CIT(A) IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS REFERENCE IS ACCORD INGLY ANSWERED IN AFFIRMATIVE HOLDING THAT TRIBUNAL WAS JUSTIFIED IN DOING SO. 5. FOLLOWING THE RATIO LAID DOWN BY THE HONBLE SU PREME COURT IN CIT VS. SURESH CHANDRA MITTAL (SUPRA) WE SET ASIDE THE IMPUGNED ORDER PASSED BY T HE LD.CIT(A) AND ALLOW THE GROUND OF APPEAL OF THE ASS ESSEE. 6. THE APPEALS PERTAINING TO THE SUBSEQUENT ASSESS MENT YEARS 2005-06 AND 2006-07 HAVE ALSO BEEN FILED BY THE ASSESSEE ON THE IDENTICAL GROUNDS (EXCEPT THE AMOUNT OF PENALTY CONFIRMED BY THE CIT(A) THE F ACTS OF THE PRESENT APPEALS ARE SIMILAR TO THE FACTS OF THE CASE PERTAINING TO THE ASSESSMENT YEAR 2004-05 AND SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSE E FOR THE ASSESSMENT YEAR 2004-05 AND DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE, WE SET ASIDE THE IMPUGNED ORDERS PASSED BY THE LD. CIT(A) PERTAI NING TO THE ASSESSMENT YEARS 2005-06 AND 2006-07 ALSO AND ALLOW THE APPEAL S OF THE ASSESSEE. 5 ITA NO. 293-295/MUM/2012 ASSESSME NT YEAR: 2004-05 TO 2006-07 7. IN THE RESULT, ALL THE THREE THE APPEALS FILED B Y THE ASSESSEE FOR THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07ARE AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND MARCH, 2016 SD/- SD/- ( R.C.SHARMA ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 02/03/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA