The DCIT, Central Circle-2, Vadodara V. Dr. Pushpaben N. Patel, Baroda

ITA 2987/AHD/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5328 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 16-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SEWAK
• Assessee Lawyers: CROSSOBJECTOR
• Keywords: Search and seizure
• Section: 142(1); 132; 139

Judgement Text

SMC-ITA NO. 2987/AHD/2016 & CO 2/AHD/2017 DCIT VS. DR. PUSHPABEN N PATEL AY : 2013-14 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ] ITA NO. 2987/AHD/2016 & CO NO.2/AHD/2017 ASSESSMENT YEAR : 2013-14 DY. COMMISSIONER OF INCOME-TAX ............A PPELLANT CENTRAL CIRCLE-2, VADODARA VS. DR. PUSHPABEN N PATEL .....................RESPONDENT & ASHWAMESH-III, NEAR DODSAL COLONY, CROSS-OBJECTOR MUJMAHUDA, BARODA [PAN : ADKPP 1987 A] APPEARANCES BY: SHIVA SEWAK, FOR THE APPELLANT SAMIR PARIKH, FOR THE RESPONDENT & CROSS-OBJECTOR DATE OF CONCLUDING THE HEARING : 09.10.2018 DATE OF PRONOUNCING THE ORDER : 15.10.2018 O R D E R 1. THIS SET OF APPEAL AND CROSS-OBJECTION ARE DIREC TED AGAINST THE ORDER DATED 2 ND AUGUST 2016 PASSED BY THE CIT(A) DELETING PENALTY OF RS.22,23,090/- IMPOSED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE INCO ME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2013-14. 2. GRIEVANCE RAISED BY THE APPELLANT IS AS FOLLOWS: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS.22,23,0 90/- U/S.271(L)(C) OF THE ACT WITHOUT APPRECIATING THE FACT THAT HAD THERE BE EN NO SEARCH ACTION, FOREIGN BANK ACCOUNT AND THE INCOME OF RS.72,35,974 /- DERIVED FROM IT WOULD HAVE REMAINED UNDETECTED AND WHOLE AMOUNT WOU LD HAVE ESCAPED FROM THE GAZE OF TAX. FURTHER, ASSESSEES INTENTION TO AVOID DISCLOSING SUCH BANK ACCOUNT AND INCOME EARNED THEREON IS CLEAR FRO M THE FACT THAT THE ASSESSEE HAD NOT FILED HER RETURN OF INCOME FOR A.Y . 2013-14 WITHIN THE DUE DATE BUT FILED THE RETURN IN RESPONSE TO THE NOTICE U/S.142(L) OF THE ACT ISSUED TO HER AND THE ASSESSEE HAD NEVER SHOWN SUCH INCOME FROM ANY FOREIGN BANK ACCOUNT PRIOR TO THE SEARCH ACTION. 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE NOTED. THE ASSESSEE WAS SUBJECTED TO A SEARCH AND SEIZURE OPERATION ON 29.09.2011. SO FAR AS THE PRESENT YEAR IS CONCERNED, THE ASSESS EE DISCLOSED AN INCOME OF RS.72,35,974/- BEING MONEY RECEIVED, AS A BENEFICIA RY, FROM ATHENA TRUST SET UP SMC-ITA NO. 2987/AHD/2016 & CO 2/AHD/2017 DCIT VS. DR. PUSHPABEN N PATEL AY : 2013-14 PAGE 2 OF 5 BY DR. ATUL PATEL. THIS AMOUNT IS SHOWN BY THE ASS ESSEE AS HER INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER, HOWEVER, PRO CEEDED TO LEVY PENALTY UNDER SECTION 271(1)(C) ON THE GROUND THAT THE FACT OF TH IS TRUST WAS BROUGHT TO LIGHT BY THE SEARCH AND SEIZURE OPERATION, BUT FOR WHICH THE ASS ESSEE WOULD NEVER HAVE DECLARED THIS INCOME. THE REASONING ADOPTED BY THE ASSESSING OFFICER WAS AS FOLLOWS:- 4. I HAVE GONE THROUGH THE SUBMISSION MA DE BY ASSESSEE, BUT IT IS NOT ACCEPTABLE FOR FOLLOWING REASONS: 1. AS CAN BE SEEN, THE TRUST WAS SETTLED IN 04.11.1 981 AND SINCE THEN TILL THE DISSOLUTION OF THE TRUST, THE ASSESSEES WERE BE NEFICIARIES OF THE TRUST AND HELD THE FOREIGN BANK ACCOUNT IN THE NAME OF TH E TRUST. BUT ASSESSEE NEVER DISCLOSED ANY DETAILS WITH REGARD TO HOLDING OF FOREIGN BANK ACCOUNT AND INCOME EARNED THEREON IN HIS/HER RETURN OF INCO ME BEFORE THE INITIATION OF SEARCH U/S 132 OF THE ACT, WHICH SHOWS THE WILLF UL OMISSION OF RELEVANT ENTRY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 2. ALL THE FOUR ASSESSES, WHO ARE BENEFICIARIES OF THE ATHENA TRUST, CLOSED DOWN THE ACCOUNT OF THE TRUST HELD IN HSBC BANK ON 08.03.2013 AND THE ENTIRE CAPITAL BALANCE AND INTEREST INCOME HAS BEEN DISTRIBUTED AMONGST THE BENEFICIARIES IN F.Y.2012-13. THE DETAILS ARE AS F OLLOWS: NAME OF BENEFICIARIES INCOME RETURNED (A.Y.2013-14) DATE OF TILING AMOUNT RECEIVED ON DISTRIBUTION DR. ATUL THAKOREBHAI PATEL 1,02,78.220/- 02.12.2013 70,83, 565/- DR. JITENDRA THAKOREBHAI PATEL 1,09,95,930/- 27.11.2013 8,.40,654/- PUSHPABEN N. PATEL 81,14,450/- 27.11.2013 72,35,974/- DR. VANDANABEN U. PATEL 77,49,800/- 27.11.2013 58,14,365/- THE RETURN OF INCOME OF THE ASSESSEE FOR A.Y.2013-1 4 WAS DUE ON 31.07.2013. BUT THE ASSESSEES DID NOT FILE HER RETU RN OF INCOME FOR A.Y.2013-14 WITHIN DUE DATE I.E. 31.07.2013. HENCE NOTICE U/S 142(1) WAS ISSUED ON 11.11.2013 TO THE ASSESSEE TO FILE THE IN COME TAX RETURN FOR A.Y.2013-14. THUS, THE ASSESSEE HAS FILED HER INCOM E TAX RETURN ON 27.11.2013 WHICH IS ONLY AFTER ISSUE OF NOTICE U/S 142(1) AND THE ASSESSEE HAS DISCLOSED THE ABOVE MENTIONED BALANCE DISTRIBUT ED FROM HSBC, GENEVA IN HER RETURN OF INCOME FOR A.Y.2013-14. BUT THE INCOME SHOWN BY ASSESSEE OUT OF THE HSBC, FOREIGN BANK ACCOUNT IN A .Y. 2013-14 CANNOT BE TREATED AS VOLUNTARY DISCLOSURE ON ITS PART AS THE ABOVE DISCLOSURE HAD BEEN DONE ONLY AFTER SEARCH ACTION. ASSESSEE HAS NEVER B EFORE SEARCH SHOWN IN HER RETURN OF INCOME THE EXISTENCE OF ANY SUCH FORE IGN BANK ACCOUNT OR INCOME THERE FROM VOLUNTARILY. ASSESSEE NEVER INTEN DED TO DISCLOSE THE FOREIGN BANK ACCOUNT AND INCOME EARNED THEREON IN H ER RETURN OF INCOME. IT WAS ONLY WHEN THE SEARCH HAD TAKEN PLACE IN THE DOC TOR GROUP OF CASES AND THEY WERE CONFRONTED WITH THE INFORMATION OF HA VING THE HSBC FOREIGN SMC-ITA NO. 2987/AHD/2016 & CO 2/AHD/2017 DCIT VS. DR. PUSHPABEN N PATEL AY : 2013-14 PAGE 3 OF 5 BANK ACCOUNT IN GENEVA, THEY HAD NO OPTION BUT TO D ISCLOSE THE ABOVE FACT DURING THE SEARCH PROCEEDINGS. HAD THEY INTENDED TO SHOW THE FOREIGN BANK INCOME IN THEIR RETURN OF INCOME, INTERIM WITHDRAWA LS WOULD HAVE BEEN SHOWN. BUT THE FACT THAT EVEN INTERIM WITHDRAWALS M ADE BY TWO ASSESSEES OF THE GROUP WERE NOT SHOWN IN THEIR RETURN OF INCO ME EMPHASIZES THE ASSESSEES' WILLFUL ACT OF CONCEALMENT OF INCOME. 4. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). LEARNED CIT(A), IN A VERY WELL REASONED AND ERUDITE ORDER, DELETED THE PENALTY BY OBSERVING, INTER ALIA, AS FOLLOWS:- 7. I HAVE PERUSED THE RELEVANT ORDERS AND THE AUT HORITIES RELIED UPON BY THE AR AND HAVE GIVEN CAREFUL CONSIDERATION TO THE MATERIAL AVAILABLE ON RECORD IN THE CONTEXT OF THE ISSUE TO BE ADJUDICATE D. THE RELEVANT FACTS, AS ALREADY NOTED, ARE NOT IN DISPUTE. THE APPELLANT FI LED A REGULAR RETURN OF INCOME U/S 139 FOR AN ASSESSMENT YEAR FALLING SUBSE QUENT TO SEARCH- RELEVANT ASSESSMENT YEAR. THE INCOME AS RETURNED BY THE APPELLANT CAME TO BE ACCEPTED BY THE AO AFTER SCRUTINY IN AN ORDER OF ASSESSMENT U/S 143(3). OBVIOUSLY AND CLEARLY THERE IS NO 'ADDITION ' MADE BY THE AO TO THE INCOME RETURNED BY THE APPELLANT. THUS, CLEARLY, AT LEAST PRIMA FACIE, IT IS EVIDENT THAT THERE IS NEITHER ANY CONCEALMENT OF IN COME NOR ANY INACCURATE FURNISHING OF PARTICULARS OF INCOME NOTICED OR BROU GHT OUT BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AS INDEED THE RE CANNOT BE ANY, WHEN THE INCOME RETURNED BY THE ASSESSEE IS ACCEPTE D AS SUCH. THE AO HOWEVER, WHILE INITIATING PENAL PROCEEDINGS U/S 271 (1)(C) CONJECTURES AND BASELESSLY PRESUMES THAT 'BUT FOR THE SEARCH ACTION THE INCOME NOW OFFERED WOULD NOT HAVE BEEN DISCLOSED BY THE ASSESSEE'. SUC H AN OBSERVATION OF THE AO IS NOT ONLY WHOLLY UNFOUNDED, IRRELEVANT AND UNCALLED FOR, EVEN IF TRUE, IN MY CONSIDERED OPINION, THE FACT AS TO WHY AND HOW-COME AND WITH WHAT MOTIVATION THE ASSESSEE HAS RETURNED ANY AMOUN T AS HIS INCOME IN THE RETURN OF INCOME IS A WHOLLY IRRELEVANT CONSIDE RATION FOR INITIATING AND LEVYING PENALTY U/S 271(1)(C) WHILE COMPLETING ASSE SSMENT WITHOUT MAKING ANY ADDITION/DISALLOWANCE ON REGULAR RETURN OF INCO ME. THIS IS MORE SO WHEN AO HAS NOT INVOKED EXPLANATION 5A, WHICH OF CO URSE IS NOT INVOKABLE ALSO. AS SUCH, IN A SERIES OF DECISIONS, INCLUDING APEX COURT'S, IT HAS BEEN CATEGORICALLY RULED, AND WHICH INDEED IS EXPRESS LA W, THAT FOR BOTH, INITIATION AND LEVY, OF PENALTY U/S 271(L)(C), THE ONUS OF BRI NGING THE CASE STRICTLY WITHIN THE EXPRESS LANGUAGE OF PENAL PROVISIONS IS ON THE AO. THE FACT OF 'CONCEALING THE INCOME' OR 'FURNISHING OF INACCURAT E PARTICULARS OF INCOME' BY THE APPELLANT MUST BE ESTABLISHED ON RECORD RATH ER THAN MERELY CONJECTURED BY THE AO. AS HAS CLEARLY BEEN LAID DOW N IN RELIANCE PETROPRODUCTS AND DR. SATISH GUPTA, (SUPRA), THE RE FERENCE AND INITIAL POINT FOR AO TOWARDS THIS ENDEAVOR HAS TO BE THE RETURN F ILED BY THE APPELLANT, AND THE 'CONCEALMENT' OR 'INACCURACY' HAS TO BE DEMONST RATED TO BE THERE IN THE RETURN FILED AND CERTAINLY NOT IN THE CONJECTURAL H YPOTHESIS AS ATTEMPTED BY THE AO. THE LEGISLATURE, IN ITS OWN WISDOM, HAS CLE ARLY CARVED OUT AN EXPRESS AND ONLY EXCEPTION WHERE 'NOTWITHSTANDING T HE FACT THAT SUCH AMOUNT IS DISCLOSED BY THE ASSESSEE IN ANY RETURN F ILED SUBSEQUENT TO THE SEARCH' THEN ALSO, A COMPONENT OF INCOME ALREADY RE TURNED CAN STILL BE SUBJECT MATTER OF PENALTY U/S 271(1)(C) IN THE PRES ENT PROCEEDING. THIS HAS SMC-ITA NO. 2987/AHD/2016 & CO 2/AHD/2017 DCIT VS. DR. PUSHPABEN N PATEL AY : 2013-14 PAGE 4 OF 5 BEEN PROVIDED IN DEEMING FICTION OF EXPLANATION 5A. NOT ONLY EXPLANATION 5A HAS NOT BEEN INVOKED BY THE AO, IT IS CLEARLY NO T SO INVOKABLE TOO. FOR EXPLANATION 5A TO APPLY, AS RIGHTLY SUBMITTED BY TH E LD. AR, THERE MUST BE (I) WARRANT EXECUTED IN CASE OF THE ASSESSEE, (II) ASSESSMENT MUST HAVE BEEN FRAMED U/S 1S3A/153C, AND (III) ASSESSMENT YEA R MUST BE THAT FOR WHICH THE RETURN WAS ALREADY FILED OR WAS DUE TO BE FILED BEFORE THE DATE OF THE SEARCH. 5. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE ME. 6. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 7. I FIND THAT, AS LEARNED CIT(A) RIGHTLY CONCLUDES , THERE WAS NO CONCEALMENT OF INCOME BY THE ASSESSEE NOR WAS THERE ANY FURNISH ING OF INACCURATE PARTICULARS. THE INCOME WAS DULY DISCLOSED BY THE ASSESSEE AND O FFERED TO TAX. THE CONJECTURES DRAWN BY THE ASSESSEE CANNOT JUSTIFY IM POSITION OF PENALTY. IN VIEW OF THESE DISCUSSIONS, I DEEM IT FIT AND PROPER TO CONF IRM THE WELL REASONED ORDER OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 8. IN THE RESULT, THE APPEAL IS DISMISSED. 9. AS FOR THE CROSS-OBJECTION, IT DOES NOT REQUIRE ANY ADJUDICATION AND IS DISMISSED AS SUCH. 10. IN THE RESULT, THE CROSS-OBJECTION IS ALSO DISM ISSED. 11. TO SUM-UP, THE APPEAL AS ALSO THE CROSS-OBJECTI ON ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF OCTOBER, 2018. SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) AHMEDABAD, THE 15 TH DAY OF OCTOBER, 2018 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD