ANAND SANCHETI, Nagpur V. D.C.I.T. CENTRAL CRICLE2(3), Nagpur

ITA 305/NAG/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4510 (ITAT-NAGPUR)
• Duration Of Justice: 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 30-11-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AGNES P THOMAS
• Keywords: Search and seizure; Salary income; Reasonable cause
• Section: 273B; 37; 132; 139

Judgement Text

1 ITA NO. 305/NAG/2015 . IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO.305/NAG/2015. ASSESSMENT YEAR : 2008 - 09. SHRI ANAND SANCHETI, DY. COMMISSIONER OF INCOME - TAX, NAGPUR. VS. CENTRAL CIRCLE - 2(3), NAGPUR. PAN ABJPS0675H. APPELLANT. RESPONDENT. APPELLANT BY : SHRI MUKESH AGRAWAL.. RE SPONDENT BY : SMT. AGNES P. THOMAS. DATE OF HEARING : 19 - 09 - 2016 DATE OF PRONOUNCEMENT : 22 ND SEPT., 2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - III, NAGPUR DATED 13 - 10 - 2015 AND PERTAINS TO ASSESSMENT YEAR 2008 - 09 . THE GROUND OF APPEAL READS AS UNDER : THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT APPEALS ER RED IN CONFIRMING PENALTY OF R.2,66,700/ - LEVIED BY AO U/S 271AAA OF I.T. ACT. THE LEVY OF PENALTY IS UNJUSTIFIED , ARBITRARY AND DESERVES TO BE DELETED. 2. THE ASSESSEE IN THIS CASE IS AN INDIVIDUAL EARNING SALARY. DURING THE COURSE OF SEARCH OPERATION S AT THE RESIDENTIAL PREMISES, CASH AND JEWELLERY WERE FOUND AND SEIZED. FOR THE LEVY OF PENALTY U/S 271AAA THE AO OBSERVED AS UNDER : THE RETURNED INCOME OF THE ASSESSEE OF RS.43,36,490/ - INCLUDES AN INCOME OF RS.26,67,000/ - UNDER THE HEAD OTHER INCOME . THIS OTHER INCOME IS ON ACCOUNT OF EXCESS GOLD AND DIAMOND JEWELLERY FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS AS DISCUSSED ABOVE. DURING 2 ITA NO. 305/NAG/2015 . THE COURSE OF STATEMENT U/S 132(4) THE ASSESSEE HAD ADMITTED EXCESS JEWELLERY IN HIS POSSESSION SUBJE CT TO CERTAIN RECONCILIATION. THE AMOUNT OF EXCESS JEWELLERY OFFERED AFTER SUCH RECONCILIATION IS RS.26,67,000/ - . THE ASSESSEE WOULD NOT HAVE OFFERED THE EXCESS JEWELLERY IN HIS RETURN OF INCOME BUT FOR THE SEARCH AND SEIZURE OPERATIONS. AS SUCH PENALTY PROCEEDINGS U/S 271AAA ARE SEPARATELY INITIATED AGAINST THIS AMOUNT OF RS.26,67,000/ - . 3. UPON ASSESSEES APPEAL LEARNED CIT(APPEALS) UPHELD THE AOS ACTION HOLDING AS UNDER : ON PERUSAL OF THE CASES RELIED UPON BY THE ASSESSEE, IT IS SEEN THAT THE PRESENT CASE IS DISTINGUISHABLE ON FACTS FROM THE CASES RELIED UPON BY THE APPELLANT. ONE OF THE EXCEPTIONAL CONDITIONS FOR WAIVER OF PENALTY U/S 271AAA IS THE DISCLOSURE BY THE ASSESSEE OF THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED. FURTHER, THE ASSESSEE IS ALSO MANDATED TO SUBSTANTIATE THE MANNER IN WHICH SUCH UNDISCLOSED INCOME WAS EARNED. IN THE CASE OF THE APPELLANT, AFTER CONSIDERING THE ASSESSMENT ORDER AND THE ASSESSEES SUBMISSION, IT IS SEEN THAT THE ASSESSEE HAS NEITHER DISCLOSED THE MANNER IN WHICH THE UNDISCLOSED INCOME OF RS.26,67,000/ - WAS EARNED NOR SUBSTANTIATE SUCH MANNER. THE ASSESSEE IS AN INDIVIDUAL AN D THE AND MANNER OF EARNING THE UNDISCLOSED INCOME CAN NOT BE ASCERTAINED UNLESS THE ASSESSEE SPECIFICALLY REVEALS THAT BEFORE THE AO. IN THE RETURN FILED BY THE ASSESSEE, THE UNDISCLOSED INCOME OF RS.26,67,000/ - HAS SIMPLY BEEN SHOWN AS OTHER SOURCES. T HEREFORE, THERE WAS NO WAY THE AO COULD HAVE DECIPHERED THE MANNER OF EARNING THE UNDISCLOSED INCOME OF THE ASSESSEE. ACCORDINGLY, THE PENALTY LEVIED OF RS.2,66,700/ - BY THE AO IS HELD TO BE IN ORDER. THE ORDER OF THE AO IS CONFIRMED. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 4. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT PENALTY U/S 271AAA SHOULD NOT BE LE VIED IN THIS 3 ITA NO. 305/NAG/2015 . CASE. FOR THIS PROPOSITION, HE MADE THE REFERENCE TO FOLLOWING CASE LAWS AS UNDER : 1. CIT VS. MAHENDRA C. SHAH 299 ITR 305 (GUJ.). 2. CIT VS. RADHAKISAN GOEL 278 ITR 454 (ALL.). 3. CONCRETE DEVELOPERS VS. ACIT 34 TAXMANN.COM 62 (NAGPUR TR IB.) 4. ACIT VS. V. NANDINI REALTORS PVT. LTD. (ITA NO. 415/NAG/2015) NAGPUR TRIB.). 5. THE ABOVE JUDGMENTS OF HONBLE GUJARAT AND ALLAHABAD HIGH COURTS HAVE BEEN FOLLOWED BY VARIOUS TRIBUNALS AND HELD THAT IF THE ASSESSEE HAS DECLARED INCOME IN 132(4) STATEMENT, SHOWED IN THE RETURN OF INCOME AND PAID TAXES ON IT, THEN IT IS SUFFICIENT COMPLIANCE NOT TO LEVY PENALTY U/S 271AAA. ASSESSEE NEED NOT EXPLAIN THE MANNER IN WHICH SUCH INCOME WAS EARNED. 32 CCH 260 DCIT V. RAJENDRA PRASAD DHOKNLA. (AHD. TRIB.) 77 DTR 244 PRAMOD KUMAR JAIN V. DCIT (CTK. TRIB.). 146 ITD 152 (DEL.) NEERAT SINGH V/S ACIT. ITA NO.3371/DEL/2011 SMT. RAJ RANI GUPTA V. DCIT. (DEL.ITAT) ITA NO.5261/DEL/2013 BRIJ BHUSHAN SINGAL V. DEPT.OF I.T.(DEL.ITAT). ITA NO.1052/AHD/2012 DCIT V. SULOCHANADEVI AGRAWAL (AHD. TRIB.). ITA NO.6763/MUM/2011 ACIT V. KANAKIA SPACES PVT.LTD. (MUM. TRIB.). LEARNED COUNSEL FURTHER PLACED RELIANCE UPON THE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S NANDINI REALTORS PVT. LTD . IN ITA NO. 415/NAG/2015 VIDE ORDER DATED 6 TH MAY, 2916 WHERE SIMILAR PENALTY U/S 271AAA WAS DELETED BY THE TRIBUNAL. 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. I MAY GAINFULLY REFER TO THE PROVISIONS OF SECTION 271AAA AS UNDE R : 4 ITA NO. 305/NAG/2015 . S ECTION 271AAA OF INCOME - TAX ACT, 1961 DEALS WITH PENALTY WHERE SEARCH HAS BEEN INITIATED (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB - SECTION (1) SHALL APPLY IF THE ASSESSEE, O (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB - SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; O (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; AND O (III) PAYS THE TAX, TOGETHER WIT H INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SUB - SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB - SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION. EXPLANATION. FOR THE PURPOSES OF THIS SECTION, O (A) UNDISCLOSED INCOME MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YE AR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; O R (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED; O (B) SPECIFIED PREVIOUS YEAR MEANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB - SEC TION (1) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED.] 5 ITA NO. 305/NAG/2015 . 7. I MAY ALSO REFER TO PROVISIONS OF SECTION 273B WHICH PROVIDES THAT PENALTY NEED NOT BE IMPOSED IN CERTAIN CASES AS UNDER : 273B. NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIONS OF 32 [CLAUSE ( B ) OF SUB - SECTION (1) OF] 33 [ SECTION 271 , SECTION 271A , 34 [ SECTION 271AA ,] SECTION 271B 34 [, SECTION 271BA ], 35 [ SECTION 271BB ,] SECTION 271C , 36 [ SECTION 271CA ,] SECTION 271D , SECTION 271E , 37 [ SECTION 271F , 38 [ SECTION 271FA ,] 39 [SECTION 271FB,] 40 [ SECTION 271G ,]] 41 [ SECTION 271H ,] CLAUSE ( C ) OR CLAUSE ( D ) OF SUB - SECTION (1) OR SUB - SECTION (2) OF SECTION 272A , SUB - SECTION (1) OF SECTION 272AA ] OR 42 [ SECTION 272B OR] 43 [SUB - SECTION (1) 44 [OR SUB - SECTION (1A)] OF SECTION 272BB OR] 45 [SUB - SECTION (1) OF SECTION 272BBB OR] CLAUSE ( B ) OF SUB - SECTION (1) OR CLAUSE ( B ) OR CLAUSE ( C ) OF SUB - SECTION (2) OF SECTION 273 , NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE 46 FOR THE SAID FAILURE.] A READING OF THE ABOVE MAKES IT CLEAR THAT THE PROVISIONS OF THE AC T MAKE IT CLEAR THAT THE ASSESSEE SHALL BE EXONERATED FROM THE PENALTY IN THIS REGARD, IF INTER ALIA, IN THE COURSE OF SURVEY IN THE STATEMENT UNDER SUB - SECTION (4) OF SECTION 32 ADMITS THE UNDISCLOSED INCOME AND S PECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. 8. IN THE PRESENT APPEAL BEFORE THE ITAT IT IS CLEAR THAT THE ASSESSEE HAS NOT SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND FURTHER THERE IS NO SUBSTANTIATION OF THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. 9. THE CASE LAWS FROM THE HONBLE GUJARAT AND ALLAHABAD HIGH COURT WERE NOT IN THE CONTEXT OF SECTION 271AAA PENALTY. HENCE THEY DO NOT SUPPORT THE CASE OF THE ASSESSEE. THE OTHER CASE LAWS REFERRED FROM TRIBUNAL ARE ON DIFFERENT SET OF FACTS. 10 . IN THE CASE LAW OF CONCR ETE DEVELOPERS VS. ACIT OF NAGPUR BENCH CITED ABOVE, THE SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT AT BUSINESS PREMISES OF THE ASSESSEE WHO WAS ENGAGED IN THE BUSINESS. IN THE PRESENT APPEAL BEFORE 6 ITA NO. 305/NAG/2015 . THE ITAT THE ASSESSEE IS AN INDIVIDUAL AND EARNING ON LY SALARY INCOME. FURTHER MORE IN THE SAID DECISION THE TRIBUNAL HAS NOTED THE ASSESSEES STATEMENT AND FOUND THAT THE SAME CLEARLY SHOWED THAT THE ASSESSEE HAS REQUESTED TO COVER HIS CASE UNDER THE EXCEPTION CLAUSE OF SUB - SECTION (II) OF SECTION 271AAA OF THE ACT. THE TRIBUNAL OPINED THAT THIS PART OF THE STATEMENT SHOULD BE READ AS HARMONIOUSLY AND SHOULD BE TAKEN AS ASSESSEE SATISFIED THE CONDITION FOR NOT LEVYING THE PENALTY U/S 271AAA. IN THE PRESENT APPEAL I DO NOT FIND THAT THERE COULD BE ANY HARMONI OUS READING OF THE ASSESSEE S STATEMENT VIS - A - VIS LEVY OF PENALTY U/S 271AAA. IN THE CASE LAW FROM AHMADABAD TRIBUNAL IN THE CASE OF RAJENDRA PRASAD DHOKNIA (SUPRA) THE ASSESSEE HAS STATED THAT THE ASSESSEE WAS DISCLOSING RS.50 LAKHS REPRESENTING NET ON - MONEY RECEI PT ON LAND DEALINGS AS INCOME. THE TRIBUNAL FOUND THAT THE ASSESSEE HAS CLEARLY SPECIFIED THAT INCOME IS EARNED BY WAY OF GETTING ON MONEY IN LAND DEALINGS. THE CASE LAW FROM CUTTACK TRIBUNAL IN THE CASE OF PRAMOD KUMAR JAIN (SUPRA) IS ALSO WITH REFERENCE TO SECTION 271(1) ( C) OF I.T. ACT AND NOT WITH REFERENCE TO SECTION 271AAA. IN THE CASE OF SMT. RAJ RANI GUPTA FROM DELHI TRIBUNAL (SUPRA) IN THE ASSESSMENT U/S 132(4) THE ASSESSEE HAD STATED THAT THE SAID INCOME WAS DERIVED FROM FORWARD/SPECULATION AND PROPERTY TRANSACTION CARRIED OUT BY HIM. THUS THE ASSESSEE IN THAT CASE HAS GIVEN THE NECESSARY EXPLANATION. SO THIS CASE LAW IS ALSO NOT HELPING THE CASE OF THE ASSESSEE. IN THE CASE OF KANAKIA SPACES PVT. LTD. OF ITAT, MU MBAI (SUPRA) THE ASSESSEE WAS ENGAGED IN BUSINESS AND AMOUNT SURRENDERED WAS ON THE BASIS OF ENTRIES CONTAINED IN THE WORK IN PROGRESS SHEET SEIZED DURING THE COURSE OF SEARCH. SO ADMITTEDLY THE INCOME IN THIS CASE WAS RELATED TO THE BUSINESS WHILE IN THE PRESENT CASE THE ASSESSEE IS HAVING ONLY SALARY INCOME AND NO SOURCE 7 ITA NO. 305/NAG/2015 . WHATSOEVER HAS BEEN STATED LEAV E ALONE THE MANNER AND SUBSTANTIATING OF THE SAME. IN THE CASE OF NANDINI REALTORS PVT. LTD. OF NAGPUR ITAT (SUPRA), THE TRIBUNAL HAS NOTED THAT THE INCO ME OFFERED WAS DULY DISCLOSED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE MANNER IN WHICH THE INVESTMENT WAS MADE HAS ALSO BEEN DULY INCORPORATED. HENCE THIS CASE IS DIFFERENT FROM THAT OF THE PRESENT ASSESSEE. 1 1 . ACCORDINGLY IN MY CONSIDERED OPINION THE CASE LAW S REFERRED BY THE LEARNED COUNSEL OF THE ASSESSEE DO NOT SUPPORT THE CASE OF THE ASSESSEE. THE ASSESSEE DERIVED ONLY INCOME FROM SALARY AND HAS ADMITTED UNDISCLOSED INCOME WITHOUT SPECIFYING THE MANNER IN WHICH THE SAID INCOME HAS BEEN DERIVED AND HAS ALSO NOT SUBSTANTIATED THE MANNER. HENCE THE ASSESSEE CLEARLY FALLS UNDER THE AMBIT OF AFORESAID PROVISION OF THE ACT. IN FACT SECTION 273B DOES NOT INCLUDE SECTION 271AAA FROM CASES WHERE THE PENALTY CAN BE W AIVED ON ATTRIBUTION OF REASONABLE CAUSE. ACCORDINGLY I DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW AND CONFIRM THE LEVY OF PENALTY. 1 2 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF SEPT., 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 22 ND SEP T., 2016. 8 ITA NO. 305/NAG/2015 . COPY FORWARDED TO : 1. SHRI ANAND SANCHETI, C/O R.S. BHATTAD & CO., 33, CENTRAL BAZAR ROAD, RAMDASPETH, NAGPUR. 2. D.C.I.T., CENTRAL CIRCLE - 2(3), NAGPUR. 3. C.I.T. - I, NAGPUR. 4. CIT(APPEALS), - II I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.