DCIT, Central Circle-VII, Kolkata, Kolkata V. Ashoke Kumar Jain, Kolkata

ITA 31/KOL/2009

• Counselvise Citation: 3123514 RSA 2009
• Duration Of Justice: 5 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-06-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 13-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 15; 139; 5(2); 153A

Judgement Text

I.T.A. NO. 31, 32/KO L./2009 & C.O. NOS. 06, 07/KOL/2009 (IN ITA NOS. 31 & 32/KOL/2009) ASSESSMENT YEARS: 2 003-2004 & 2004-2005 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI P.K. BANSAL (ACCOUNTANT MEMBER), AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NOS. 31 & 32/KOL./ 2009 ASSESSMENT YEARS : 2003-2004 & 2004-2005 DEPUTY COMMISSIONER OF INCOME TAX,................. ......................APPELLANT CENTRAL CIRCLE-VII, KOLKATA -VS.- ASHOKE KUMAR JAIN,................................. ...................................RESPONDENT 28/1, SHAKESPEARE SARANI, KOLKATA-700 017 [PAN : ACOPJ 2615 G] & C.O. NOS. 06 & 07/KOL/2009 (ARISING OUT OF I.T.A. NOS. 31 & 32/KOL/2009) ASSESSMENT YEARS : 2003-2004 & 2004-2005 ASHOKE KUMAR JAIN,................................. ..................................CROSS OBJECTOR 28/1, SHAKESPEARE SARANI, KOLKATA-700 017 [PAN : ACOPJ 2615 G] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. ........................RESPONDENT CENTRAL CIRCLE-VII, KOLKATA APPEARANCES BY: SHRI DAVID Z. CHAWNGTHU, ADDL.CIT, SR. D.R., FOR TH E DEPARTMENT N O N E, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JULY 22, 2014 DATE OF PRONOUNCING THE ORDER : JULY 22, 2014 O R D E R PER GEORGE MATHAN: ITA 31/KOL/2009 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL-I, KOLKATA IN APPEAL NO.33/CC-VII/CIT(A),C-1/08-09 DATED 11.09.20 08 FOR THE ASSESSMENT YEAR 2003-04. I.T.A. NO. 31, 32/KO L./2009 & C.O. NOS. 06, 07/KOL/2009 (IN ITA NOS. 31 & 32/KOL/2009) ASSESSMENT YEARS: 2 003-2004 & 2004-2005 PAGE 2 OF 7 ITA 32/KOL/2009 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL-I, KOLKATA IN APPEAL NO.33/CC-VII/CIT(A),C-1/08-09 DATED 11.09.20 08 FOR THE ASSESSMENT YEAR 2004-05 AGAINST THE CANCELLATION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. C.O. 6 OF 2009 IS A CROSS OBJECTION FILED BY THE AS SESSEE IN REVENUES APPEAL IN ITA NO. 31/KOL/2009 AND C.O. 7 OF 2009 IS A CROSS OBJECTION FILED BY THE ASSESSEE IN REVENUES APPEAL IN ITA 32/KOL/2009. 2. SHRI DAVID Z. CHAWNGTHU, LD. ADDL. CIT, SR. D.R., REPRESENTED ON BEHALF OF THE REVENUE AND NONE REPRESENTED ON BEHALF OF TH E ASSESSEE. 3. IN BOTH THE REVENUES APPEAL, THE REVENUE HAS RA ISED THE FOLLOWING GROUNDS:- (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(APPEALS) IS JUSTIFIED IN PERVERS ELY CANCELLING THE ORDER OF PENALTY LEVIED U/S 271(1)(C ) OF THE I.T. ACT. (2) WHETHER THE LD. CIT(APPEALS) ON THE FACTS AND I N THE CIRCUMSTANCES OF THE CASE WAS JUSTIFIED IN CONSIDER ING THE DISCLOSURE PETITION AS PER CLAUSE (2) IN PLACE OF C LAUSE(1) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE I.T. ACT, 1961. 4. IN BOTH THE CROSS OBJECTIONS THE ASSESSEE HAS SU PPORTED THE ORDER OF LD. CIT(APPEALS) ON THE GROUND THAT THE ASSESSME NTS ARE VOID AB INITIO. 5. AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD. D.R. THAT THERE WAS A SEARCH ON THE PREMISES OF THE ASSESSEE ON 30. 05.2005. THE ASSESSEE HAD VIDE LETTER DATED 28.07.2005 MADE A DISCLOSURE UNDER SECTION 132(4) OF RS.1,00,00,000/- FOR THE VARIOUS ASSESSMENT YEAR S AS HIS UNDISCLOSED INCOME. THE ASSESSMENT CAME INTO COMPLETED UNDER SE CTION 153A FOR THE ASSESSMENT YEAR 2003-04 ON 31.12.2007 ACCEPTING THE DISCLOSED INCOME. IN THE RETURN FILED BY THE ASSESSEE, THE ASSESSEE H AD DISCLOSURE I.T.A. NO. 31, 32/KO L./2009 & C.O. NOS. 06, 07/KOL/2009 (IN ITA NOS. 31 & 32/KOL/2009) ASSESSMENT YEARS: 2 003-2004 & 2004-2005 PAGE 3 OF 7 RS.20,00,000/- AS UNDISCLOSED INCOME FROM OTHER SOU RCES FOR THE RELEVANT ASSESSMENT YEAR. IT WAS THE FURTHER SUBMISSION THAT FOR THE ASSESSMENT YEAR 2004-05, THE ASSESSEE HAD DISCLOSED UNDISCLOSE D INCOME AT RS.25,00,000/-. IT WAS THE SUBMISSION THAT IN REPLY TO THE NOTICE UNDER SECTION 271(1)(C) THE ASSESSEE HAD RAISED A CONTENT ION THAT DISCLOSURE UNDER SECTION 132(4) GAVE THE ASSESSEE PROTECTION U NDER SUB-CLAUSE (2) TO EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. T HE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HAD L EVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IT WAS THE SUBM ISSION THAT THE LD. CIT(APPEALS) HAD CANCELLED THAT PENALTY LEVIED BY H OLDING THAT VOLUNTARY DISCLOSURE OF INCOME OF ASSESSEE, EVEN IF THEY ARE RELATED TO UNEXPLAINED ASSET FOUND IN THE COURSE OF ASSESSMENT WOULD BE IM MUNE FROM PENALTY PROCEEDINGS UNDER EXPLANATION 5(2) TO SECTION 271(1 )(C). IT WAS THE SUBMISSION THAT THIS WAS NOT CORRECT IN SO FAR AS T HE EXPLANATION 5(2) TO SECTION 271(1)(C) OF THE ACT REQUIRES MULTIPLE COND ITIONS BEING THE DISCLOSURE TO BE MADE IN THE RETURN BEFORE EXPIRY O F THE TIME SPECIFIED IN SUB-SECTION (1) OF SECTION 139 AND ALSO SPECIFIES I N THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PA YS TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. I T WAS THE SUBMISSION THAT IN ASSESSEES CASE, THE ASSESSEE HAS NOT SPECIFIED THE MANNER IN WHICH THE SAID INCOME WAS DERIVED NOR WAS THE TAX AND INTERES T PAID IN RESPECT OF THE INCOME. IT WAS THE FURTHER SUBMISSION THAT THE ORDER OF THE LD. CIT(APPEALS) WAS LIABLE TO BE REVERSED. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D. R. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT AFTER THE SEARCH THE AS SESSEE HAS FILED HIS RETURN IN RESPONSE TO THE NOTICE ISSUED UNDER SECTI ON 153A. IT IS NOTICED THAT IN THE ASSESSMENT THE ASSESSING OFFICER HAS AC CEPTED THE RETURNED INCOME AS RETURNED IN THE RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 153A. THERE IS NO DISCUSSION IN THE ASSESSMENT ORDE R AS TO WHAT IS THE INCRIMINATING MATERIAL, WHICH HAS BEEN USED BY THE ASSESSING OFFICER FOR I.T.A. NO. 31, 32/KO L./2009 & C.O. NOS. 06, 07/KOL/2009 (IN ITA NOS. 31 & 32/KOL/2009) ASSESSMENT YEARS: 2 003-2004 & 2004-2005 PAGE 4 OF 7 MAKING THE ASSESSMENT. THE ASSESSING OFFICER ONLY M ENTIONS THAT BOOKS WERE SEIZED AND DOCUMENTS WERE ALSO SEIZED AND UNAC COUNTED PURCHASES AND SALES WERE ALSO DETECTED. HOWEVER, NO ADDITION HAS BEEN MADE ON THE BASIS OF SUCH SEIZED MATERIALS OR DETECTION. THE RE TURN FILED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION 15 3A HAS BEEN COMPLETELY ACCEPTED. SECTION 271(1)(C) EXPLANATION 5(2) PROVIDES CERTAIN EXEMPTIONS FROM THE LEVY OF PENALTY UNDER SECTION 2 71(1)(C). SUCH EXCEPTIONS ARE CONTROLLED BY CERTAIN CONDITIONS BEI NG THAT THE ASSESSEE IN THE COURSE OF SEARCH MAKES A STATEMENT UNDER SECTIO N 132(4) IN RESPECT OF THE UNDISCLOSED INCOME THAT THE SAME HAS BEEN ACQUI RED BY HIM OUT OF SOURCE WHICH HAD NOT BEEN DISCLOSED BY HIM IN SO FA R AS HIS RETURN OF INCOME WAS FURNISHED BEFORE THE EXPIRY OF TIME SPEC IFIED IN SECTION 139(1). HE HAS ALSO TO SPECIFY IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME WAS DERIVED AND HE HAS TO PAY THE TAX AND IN TEREST, IF ANY, IN RESPECT OF SUCH INCOME. IN THE PRESENT CASE, A PERU SAL OF THE STATEMENT GIVEN BY THE ASSESSEE UNDER SECTION 132(4) ON 28.07 .2005 SHOWS THE FOLLOWING:- THIS IS IN THE FORM OF A LETTER ADDRESSED TO THE D DIT(INVESTIGATION), UNIT-IV(5). A PERUSAL OF THE PROVISION OF SECTION 1 32(4) REQUIRES THAT THE AUTHORIZED OFFICER MAY DURING THE COURSE OF THE SEA RCH OR SEIZURE, EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN PO SSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION MAY THEREAFTER BE USED ANY EVIDENC E IN ANY PROCEEDINGS UNDER THE INCOME TAX ACT, 1922 OR UNDER THIS ACT. T HE LETTER DATED 28.07.2005 CLEARLY IS NOT A STATEMENT RECORDED BY T HE AUTHORIZED OFFICER DURING THE COURSE OF THE SEARCH OR SEIZURE. IT IS N OT UNDER OATH EITHER. THE SEARCH IN THE PRESENT CASE AS PER THE PANCHNAMA WAS CONCLUDED ON 31.05.2005. CONSEQUENTLY THIS LETTER OF THE ASSESSE E DATED 28.07.2005 CANNOT BE TREATED AS A STATEMENT RECORDED UNDER SEC TION 132(4) OF THE ACT. I.T.A. NO. 31, 32/KO L./2009 & C.O. NOS. 06, 07/KOL/2009 (IN ITA NOS. 31 & 32/KOL/2009) ASSESSMENT YEARS: 2 003-2004 & 2004-2005 PAGE 5 OF 7 A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT IN PAR A 3, THE ASSESSING OFFICER HAS RECORDED THAT THE ASSESSEE VI DE HIS LETTER DATED 28.07.2005 HAS MADE A DISCLOSURE UNDER SECTION 132( 4) OF THE ACT. THOUGH WE HAVE EARLIER HELD THAT THIS LETTER OF THE ASSESSEE DATED 28.07.2005 CANNOT BE TREATED AS A STATEMENT UNDER S ECTION 132(4), ACCEPTING THE STAND OF THE ASSESSING OFFICER THAT T HIS IS A DISCLOSURE MADE UNDER SECTION 132(4), THOUGH THERE IS NO PROVISION FOR MAKING SUCH DISCLOSURE UNDER SECTION 132(4), WE WOULD EXAMINE T HE LETTER OF THE ASSESSEE AS TO WHETHER THE SAID LETTER FALLS WITHIN THE EXEMPTION PROVIDED UNDER SECTION 271(1)(C) EXPLANATION 5(2). IN THE SA ID LETTER, THE ASSESSEE CATEGORICALLY ADMITS THAT ALL THE RECORDS FOUND IN THE COURSE OF SEARCH BELONGED TO THE ASSESSEE AND NONE ELSE. THE ASSESSE E HAS IN PARA 11 OF THE SAID LETTER DECLARED AN AMOUNT OF RS.1,00,00,000/- AS HIS UNDISCLOSED INCOME FOR SIX YEARS STARTING FROM 01.04.1999. IN P ARA 12, HE AGREES THAT THE AMOUNT OF RS.1,00,00,000/- IS A TENTATIVE FIGUR E AND IS MADE AS A TOKEN OF HIS BONAFIDE INTENTION. NOWHERE IN THE SAI D LETTER HAS THE ASSESSEE SPECIFIED THE MANNER IN WHICH THE INCOME H AS BEEN DERIVED NOR HAS THE ASSESSEE PAID THE TAX TOGETHER WITH INTERES T IN RESPECT OF THE SAID INCOME. THE LETTER ALSO DOES NOT SPECIFY AS TO THE UNDISCLOSED INCOME YEAR-WISE. IN VIEW OF ALL THESE REASONS, THE ASSES SEES CLAIM FOR THE APPLICABILITY OF EXPLANATION 5(2) TO SECTION 271(1) (C) OF THE ACT CANNOT STAND. IN VIEW OF THIS MATTER, THE FINDING OF THE L D. CIT(APPEALS) IN CANCELLING THE PENALTY BY HOLDING THAT THE ASSESSEE WOULD BE IMMUNE FROM PENALTY PROCEEDINGS UNDER EXPLANATION 5(2) TO SECTION 271(1)(C) OF THE ACT STANDS REVERSED. HOWEVER, THE MATTER DOES N OT REST HERE. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS TH AT THE ASSESSING OFFICER HAS NOT MENTIONED ANYTHING ABOUT THE SEIZED MATERIAL OR AS TO HOW AND ON WHAT BASIS THE UNDISCLOSED INCOME HAS BE EN COMPUTED. THE INCOME ADMITTEDLY AS DISCLOSED BY THE ASSESSEE IN H IS RETURN HAS BEEN ACCEPTED. THIS DECLARATION ITSELF BEING AN ESTIMATE . A PERUSAL OF THE PENALTY ORDER SHOWS THAT THE ASSESSING OFFICER HAS NOT BEEN ABLE TO POINT I.T.A. NO. 31, 32/KO L./2009 & C.O. NOS. 06, 07/KOL/2009 (IN ITA NOS. 31 & 32/KOL/2009) ASSESSMENT YEARS: 2 003-2004 & 2004-2005 PAGE 6 OF 7 OUT AS TO WHAT IS THE BASIS ON WHICH OR THE DOCUMEN TS ON THE BASIS ON WHICH HE IS HOLDING THAT THE ASSESSEE HAS CONCEALED HIS INCOME. A PERUSAL OF THE LETTER OF THE ASSESSEE DATED 28.07 .2005 SHOWS THAT THE ASSESSEE HAS OFFERED THE AMOUNT OF RS.1,00,00,0 00/- FOR THE SIX YEARS STARTING FROM 01.04.1999 WAS CLEARLY TO BUY PEACE O F MIND AND TO AVOID PROTRACTED LITIGATION AND THE LETTER HAD BEEN FILED TO SHOW TOKEN OF THE ASSESSEES BONAFIDE INTENTION. THE ASSESSING OFFICE R HAS ACCEPTED THE LETTER DATED 28.07.2005. THIS LETTER HAVING BEEN AC CEPTED AND THE ASSESSEES RETURN HAVING BEEN ACCEPTED WITHOUT ANY MURMUR CLEARLY THE EXPLANATION PROVIDED BY THE ASSESSEE HAS BEEN ACCEP TED AND THE ASSESSEE WOULD BE ENTITLED TO CANCELLATION OF PENALTY IN SO FAR AS THE ASSESSING OFFICER HAS NOT BEEN ABLE TO IDENTIFY ANY SPECIFIC CONCEALMENT OF INCOME IN THE HANDS OF THE ASSESSEE. THE ASSESSEE HAS GIVE N A SIMPLE ESTIMATED DISCLOSURE OF ADDITIONAL INCOME, UNSUPPORTED BY ANY COMPUTATION, CALCULATION OR CORROBORATING EVIDENCES AND THE LD. ASSESSING OFFICER HAS ONLY ACCEPTED THE SAME WITHOUT ANY FURTHER VERIFICA TION OR RECORDING OF ANY ADVERSE FINDING. A PERUSAL OF THE ORDER OF THE LD. CIT(APPEALS) ALSO SHOWS THAT THE LD. CIT(APPEALS) HAS CATEGORICALLY GIVEN A FINDING THAT IN THE PRESENT CASE, EVEN THE NEXUS BETWEEN THE UNEXPLAINED ASSETS AND T HE DISCLOSED INCOME IS ABSENT AND WHAT IS ASSESSED IS ONLY THE ESTIMATE D INCOME WITHOUT ANY RELATION TO THE MATERIAL FOUND IN THE COURSE OF SEA RCH. THIS FACTUAL FINDING OF THE LD. CIT(APPEALS) HAS NOT BEEN DISLODGED. THE LD. CIT(APPEALS) HAS CANCELLED THE PENALTY LEVIED UNDER SECTION 271(1)(C ) OF THE ACT, EVEN ON THIS FACTUAL FINDING BY FOLLOWING THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF SUDARSHAN SILKS & SAREES REPOR TED IN 300 ITR 205. THIS FACTUAL FINDING OF THE LD. CIT(APPEALS) HAS NO T BEEN DISLODGED BY THE REVENUE. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW T HAT CANCELLATION OF PENALTY AS DONE BY THE LD. CIT(APPEALS) ON THE GROU ND THAT THE ESTIMATE WHAT IS ASSESSED IS ONLY THE ESTIMATED INCOME WITHO UT ANY RELATION TO THE I.T.A. NO. 31, 32/KO L./2009 & C.O. NOS. 06, 07/KOL/2009 (IN ITA NOS. 31 & 32/KOL/2009) ASSESSMENT YEARS: 2 003-2004 & 2004-2005 PAGE 7 OF 7 MATERIAL FOUND IN THE COURSE OF SEARCH IS ON THE RI GHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. 7. IN THESE CIRCUMSTANCES, GROUND NO. 1 OF THE REVE NUES APPEALS IS DISMISSED AND GROUND NO. 2 OF THE REVENUES APPEALS STANDS ALLOWED. HOWEVER, AS WE HAVE CONFIRMED THE CANCELLATION OF P ENALTY BY THE LD. CIT(APPEALS) ON MERITS, THE APPEALS OF THE REVENUE STAND DISMISSED. 8. AS WE HAVE DISMISSED THE REVENUES APPEAL, THE C ROSS OBJECTIONS FILED BY THE ASSESSEE BECOME INFRUCTUOUS AND, THERE FORE, THE SAME STANDS DISMISSED. 9. IN THE RESULT, THE APPEALS OF THE REVENUE AND CR OSS OBJECTIONS FILED BY THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JULY, 2014. SD/- SD/- P.K. BANSAL GEORGE MATHAN (ACCOUNTANT MEMBER) (JU DICIAL MEMBER) KOLKATA, THE 22 ND DAY OF JULY, 2014 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-VII, KOLKATA (2) ASHOKE KUMAR JAIN, 28/1, SHAKESPEARE SARANI, KOLKATA-700 017 (3) COMMISSIONER OF INCOME-TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.