The ITO, Ward-3(3)(1), Ahmedabad V. Shri Anilkumar G. Darji, Ahmedabad

ITA 3042/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8241 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained investment
• Section: 143(3); 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.3042 AND 3043/AHD/2016 / ASSTT. YEAR: 2007-08 AND 2008-09 ITO, WARD-3(3)(1) AMBAWADI AHMEDABAD 380 015. VS. SHRI ANILKUMAR G. DARJI 14, SHIVALIK VILLAGE AMBLI ROAD NR.RAJPATH CLUB AHMEDABAD 380 054. PAN : AAWPD 3288 R / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI PRASOON KABRA, SR.DR ASSESSEE BY : SHRI S.N. DIVETIA, AR ! / DATE OF HEARING : 27/04/2018 '#$ ! / DATE OF PRONOUNCEMENT: 10/05/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THESE TWO APPEALS BY THE REVENUE ARE AGAINST TWO SE PARATE ORDERS OF LD.CIT(A)-3, AHMEDABAD BOTH DATED 15.9.20 16 PASSED FOR THE ASSESSMENT YEARS 2007-08 AND 2008-2009. BOTH THE AP PEALS ARE DISPOSED OF BY THIS COMMON ORDER. 2. IN BOTH THE ASSESSMENT YEARS, THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN DELETING PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT OF RS.31,52 ,453/- FOR THE ASSTT.YEAR 2007-08; AND RS.91,67,077/- FOR THE ASST T.YEAR 2008-09. ITA NO.3042 /AHD/2016 & ANR. 2 3. WE TAKE FACTS FROM ITA NO.3042/AHD/2016 FOR THE ASSTT.YEAR 2007-08 FOR CONVENIENCE OF ADJUDICATION. BRIEFLY S TATED FACTS, LEADING TO IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) ARE T HAT A SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF SHRI VIKAS R. PATEL ON 4.3.2010 WHEREIN CERTAIN DOCUMENTS ALLEGED TO BE BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED. FROM THE SEIZED MATERIALS, AN MOU DATED 7-4-2007 PERTAIN ING TO LAND BEARING F.P.NO.32 OF T.P. NO.29 OF SURVEY NO.217/1 AND 216/ 2 ADMEASURING 2472 SQUARE METERS (2956 SQ.YARDS) AT CHANDLODIYA W AS NOTICED BY THE AO. AS PER THE SAID MOU, SHRI AMIT K. PATEL, SHRI NARENDRA R. PATEL AND THE ASSESSEE AGREED TO PURCHASE THE SAID PLOT OF LA ND FROM AND SHRI BRIJESH S. PATEL, SHRI MAHENDRA D. PATEL AT THE RAT E OF RS.10,171/- PER SQUARE YARD. AS PER THE STATEMENT OF SHRI VIKAS R. PATEL RECORDED DURING THE COURSE OF SEARCH, AN AMOUNT OF RS.2.5 CRORES IN CASH WAS MADE FOR THE ABOVE LAND DEALING. CONSEQUENTLY, THE AO TAKIN G COGNIZANCE OF SECTION 153C SET THE ASSESSMENT PROCEEDINGS IN MOTI ON AND NOTICE UNDER SECTION 153C OF THE ACT WAS ISSUED AFTER RECO RDING SATISFACTION NOTE. IN RESPONSE TO THAT THE ASSESSEE FILED RETUR N OF INCOME ON 24.10.2011 DECLARING TOTAL INCOME OF RS.96,910/-. THEREAFTER, NOTICES UNDER SECTION 143(2)/142(1) WERE ISSUED ON VARIOUS DATES AND ULTIMATELY ASSESSMENT UNDER SECTION 143(3) R.W.S. 1 53C OF THE ACT WAS PASSED ON 28.12.2011 DETERMINING TOTAL INCOME AT RS .57,58,111/- AFTER TAKING INTO CONSIDERATION UNEXPLAINED INVESTMENT IN THE LAND OF RS.18,87,067/- AND PROTECTIVE ADDITION OF RS.37,74, 134/- ON ACCOUNT OF UNEXPLAINED CASH FLOW, AS OBSERVED BY THE AO IN THE ASSESSMENT ORDER AT PARA NO.4.1 AND 4.2. ASSESSEE COULD NOT SUCCEED BEFORE THE FIRST APPELLATE AUTHORITY. THE AO SIMULTANEOUSLY INITIATE D PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 4. THE ISSUE OF VALIDITY OF PROCEEDINGS UNDER SECTI ON 153C WAS CHALLENGED BEFORE THE TRIBUNAL BY THE ASSESSEE IN I T(SS)A.NO.258 TO ITA NO.3042 /AHD/2016 & ANR. 3 260/AHD/2013 AND OTHERS, AND THE TRIBUNAL AFTER ELA BORATE DISCUSSION QUASHED ASSESSMENT FRAMED UNDER SECTION 143(3) R.W. S. 153C OF THE ACT; CONSEQUENTLY ADDITION MADE BY THE ASSESSEE STO OD CANCELLED. 5. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT SINCE ENTIRE ASSESSMENT FRAMED BY THE AO FOR THE ASSTT.YE ARS 2007-08 AND 2008-09 HAVE BEEN QUASHED BY THE TRIBUNAL ON LEGAL GROUND, AND THE AO FAILED TO RECORD HIS SATISFACTION FOR INITIATING PROCEEDINGS UNDER SECTION 153C, ORDER PASSED UNDER SECTION 271(1)(C) HAS NO MERIT FOR CONSIDERATION. THE LD.CIT(A) HAS RIGHTLY CANCELLED THE IMPUGNED PENALTY, AND THEREFORE, HIS ORDER MAY BE CONFIRMED. THE LD.DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE AO. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORD AND THE ORDER OF THE TRIBUNAL PASSED IN THE QUANTUM APPEAL OF THE ASSESSEE. WE FIND THAT THE LD.AO HAS TAKEN COG NIZANCE OF SECTION 153C OF THE ACT IN THE CASE OF ASSESSEE FOR THE ASS ESSMENT YEARS 2007- 08 AND 2008-09. THE ACTION UNDER SECTION 153C COUL D BE TAKEN AGAINST THE ASSESSEE IF ANY MATERIAL WAS FOUND DURING THE C OURSE OF SEARCH BELONGING TO THE ASSESSEE, AND IN THE ASSESSMENT PR OCEEDINGS OF THE SEARCHED PERSONS, THE AO OF THE SEARCHED PERSON IS SATISFIED WITH MATERIAL FOUND DURING THE COURSE OF SEARCH BELONGS TO OTHER PERSON AND DEMONSTRATE ESCAPEMENT OF INCOME. ON THE BASIS OF THAT, SATISFACTION ACTION AGAINST OTHER PERSON CAN BE TAKEN IN 153C PR OCEEDINGS. WHILE ADJUDICATING THIS ASPECT IN THE QUANTUM APPEAL OF T HE ASSESSEE, THE TRIBUNAL RECORDED A FINDING THAT NO SATISFACTION WA S RECORDED IN THIS CASE. THE RELEVANT PART OF THE TRIBUNALS ORDER AT PAGE NO.30 READS AS UNDER: 1. WE DRAW SUPPORT FROM OUR ABOVE EXTRACTED DECISI ON ON THE VERY ISSUE TO CONCLUDE THAT THE REVENUE HAS FAILED IN PROVING THE FACT THAT THE ASSESSING OFFICER RECORDED ANY SATISF ACTION WHETHER ITA NO.3042 /AHD/2016 & ANR. 4 COMMON OR SEPARATE IN CASE OF THE SEARCHED PERSON S HRI VIKAS R. PATEL BEFORE INITIATING SECTION 153C PROCEEDINGS UN DER CHALLENGE. WE ARE OF THE OPINION THAT THIS INACTION ON PART OF THE ASSESSING OFFICER VIOLATES LAW MANDATING RECORDING OF SATISFA CTION AS SETTLED BY HON'BLE SUPREME COURT IN CASE OF MANISH MAHESHWA RI AS WELL AS THAT OF LALITKUMAR M. PATEL (SUPRA). WE ACCORDINGLY QUASH THE IMPUGNED ASSESSMENTS FRAMED IN CASES OF ALL THE THR EE ASSESSEES IN ASSESSMENT YEARS 2007-08 AND 2008-09. FIRST ASSESSES SHRI ANIL R. DARJI SUCCEEDS IN HIS A PPEAL IT(SS)A 258 AND 259/AHD/2013. THE REVENUE'S APPEALS IN CASES OF THE OTHER TWO ASSESSEES I.E. SHRI AMIT K. PATEL AND SHRI NARENDRA R. PATEL IT(SS)A NOS. 254 & 256/AHD/2013 A RE DISMISSED AND CO NOS. 211 & 213/AHD/2013; RESPECTIV ELY CHALLENGING VALIDITY OF SECTION 153C PROCEEDINGS AR E ACCEPTED ON THE LEGAL ISSUE. THIS RENDERS ALL OTHER SUBMISSIONS ON 'BELONGING TO' ASPECT AND MERITS AS HAVING BEEN RENDERED INFRU CTUOUS. 7. IN VIEW OF ABOVE ORDER OF THE TRIBUNAL QUASHING THE ASSESSMENT ORDER FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 IMPUGNED ADDITION ON WHICH PENALTY UNDER SECTION 271(1)(C) O F THE ACT GETS EXTINGUISHED. FURTHER SUB-CLAUSE (III) OF SECTION 271(1)(C) PROVI DES MECHANISM FOR QUANTIFICATION OF PENALTY. IT CONTEM PLATES THAT THE ASSESSEE WOULD BE DIRECTED TO PAY A SUM IN ADDITION TO TAXES, IF ANY, PAYABLE HIM, WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE E VADED BY REASON OF CONCEALMENT OF INCOME AND FURNISHING OF I NACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, THE QUANTIF ICATION OF THE PENALTY IS DEPENDED UPON ADDITION MADE TO THE INCOM E OF THE ASSESSEE. SINCE BASIS FOR VISITING THE ASSESSEE WI TH PENALTY HAS BEEN EXTINGUISHED BY QUASHING THE ASSESSMENT ORDER ITSELF BY THE TRIBUNAL IN THE APPEAL OF ASSESSEE VIDE ORDER DATED 31/5/2016 (SUPRA), THE IMPUGNED PENALTY IN THE PRESENT CASE H AS NO LEG TO STAND. THE LD.CIT(A) HAS RIGHTLY DELETED THE PENAL TY. BOTH APPEALS OF THE REVENUE ARE DISMISSED. ITA NO.3042 /AHD/2016 & ANR. 5 6. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMIS SED. ORDER PRONOUNCED IN THE COURT ON 10 TH MAY, 2018 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 10/05/2018