SHRI PANKAJ CHOKHANI, Nagpur V. A.C.I.T. Central Cir. 1(3), Nagpur

ITA 312/NAG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1293 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 03-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Business income; Revised return
• Section: 143(3); 132

Judgement Text

1 ITA NO. 312/NAG/2015. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER.. I.T.A. NO. 312/NAG/2015 ASSESSMENT YEAR : 201 0 - 11 . SHRI PANKAJ CHOKHANI, ASSTT. COMMISSIONER OF INCOME - TAX, NAGPUR. VS. CENTRAL CIRCLE - 1(3), NAGPUR. PAN ABBPC6871H. APPELLANT. RESPONDE NT. APPELLANT BY : SHRI MUKESH AGRAWAL. RESPONDENT BY : SHRI NARENDRA KANE. DATE OF HEARING : 2 1 - 11 - 2016 DATE OF PRONOUNCEMENT : 28 TH DEC., 2016 O R D E R. PER SHAMIM YAHYA, A.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - III, NAGPUR DATED 30 - 10 - 2015 AND PERTAINS TO ASSESSMENT YEAR 2010 - 11. THE GROUNDS OF APPEAL READ AS UNDER : 1. THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY UNDER SECTION 271AAA OF THE INCOME - TAX ACT, 1961. 2. THE LEARNED CIT(APPEALS) ERRED IN CONCLUDING THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENTS OF SUB SECTION 2(I) & SUB SECTION 2(II) OF SECTION 271AAA OF THE INCOME TAX ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : A SEARCH U/S 132 WAS CARRIED OUT AT THE PREMISES OF M/S NANDINI REALLTORS PVT. LTD. AT THE RESIDENCE OF ITS DIRECTORS AND THE PREMISES OF ASSOCIATE CONCERNS ON 22 - 01 - 2010. THE RETURN WAS FILED ON 07 - 12 - 2011 DECLARING TOTAL INCOME OF RS.61,07,740/ - WHICH INCLUDES THE ADDITIONAL INCOME DISCLOSED ON ACCOUNT OF EXCESS JEWELLERY FOUND AT THE RESIDENCE OF THE ASSESSEE AMOUNTING TO 2 ITA NO. 312/NAG/2015. RS.5,95,000/ - . THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION IS COMPLETED ON 27 - 12 - 20 - 11 DETERMINI NG TOTAL INCOME AT RS. 61,07,740/ - WHICH INCLUDES THE VALUE OF JEWELLERY AMOUNTING TO RS.5,95,000/ - WHICH IS FOUND IN EXCESS. THE PENALTY PROCEEDINGS U/S 271AAA OF THE I.T. ACT WERE INITIATED IN RESPECT OF THE UNDISCLOSED INCOME CORRESPONDING TO THE EXCESS JEWELLERY FOUND DURING THE SEARCH & SEIZURE ACTION AMOUNTING TO RS.5,95,000/ - . 3. THE AO LEVIED PENALTY OF RS.59,500/ - U/S 271AAA BEING 10% OF THE UNDISCLOSED INCOME OF RS.5,95,000/ - WITH FOLLOWING OBSERVATIONS: FROM THE FACTS OF THE CASE AND ASSESSEES EXPLANATION, IT IS CRYSTAL CLEAR THAT ASSESSEE ADMITS THE UNDISCLOSED INCOME AND PAID THE TAXES THEREON. HOWEVER, ASSESSEE FAILS TO SPECIFY AND SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. HENCE PROVISIONS OF SECTION 271AAA OF THE ACT ARE CLEARLY APPLICABLE IN THIS CASE. THEREFORE, I AM SATISFIED THAT THIS IS A FIT CASE FOR LEVY OF PENALTY U/S 271AAA OF THE ACT. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) AFFIRMED THE AOS ACTION. 4. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IN IDENTICAL CASE THIS TRIBUNAL IN ITA NO. 310/NAG/2015 VIDE ORDER DATED 05 - 12 - 2016 IN THE CASE OF SHRI OMPRAKASH CHOKHANI HAS HELD AS UNDER : 8. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT THE LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT IN IDENTICAL SITUATION LEVY OF PENALTY U/S 271AAA IN CASE OF A GROUP CONCERN, NAMELY, M/S NANDINI REALITORS PVT. LTD. IN ITA NO. 415/NAG/2014 VIDE ORDER DAT ED 05 - 05 - 2016 WAS DELETED BY THE ITAT. THE DECISION OF THE ITAT IN THE SAID CASE READS AS UNDER : WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH THE FACTS NARRATED HEREIN ABOVE ARE NOT IN DISPUTE THAT A SEARCH U/S 132 WAS CONDUCTED AND THEREUPON IT WAS FOUN D THAT THE ASSESSEE HAS PURCHASED A LAND AS PER THE REGISTERED DEED WHEREIN THE CONSIDERATION MONEY WAS RS.2,75,65,000/ - . A STATEMENT U/S 132(4) WAS RECORDED AND AFTER CONFRONTING WITH THE EVIDENCES AN AMOUNT OF RS.2 CRORES WAS OFFERED BEING CASH CONSIDERA TION OVER AND ABOVE THE SALE CONSIDERATION MENTIONED IN THE REGISTERED DEED. AS A 3 ITA NO. 312/NAG/2015. CONSEQUENCE A REVISED RETURN WAS FILED. THE ASSESSMENT WAS COMPLETED U/S 143(3) AND THE INCOME WAS ASSESSED AT RS.2,15,60,620/ - . WE HAVE BEEN INFORMED THAT THE SURRENDERED AM OUNT U/S 132(4) WAS ACCEPTED AS SUCH BY THE AO. THERE IS NO DISPUTE THAT THE TAX ON THE AMOUNT OFFERED HAD ALSO BEEN PAID BY THE ASSESSEE. IN THE LIGHT OF THE ABOVE MENTIONED ADMITTED FACTS WE HAVE PERUSED THE PROVISIONS OF SECTION 271AAA WHICH HAS PROVIDE D THAT A PENALTY AT THE RATE OF 10% IS TO BE LEVIED ON THE AMOUNT OF UNDISCLOSED INCOME FOUND AS A CONSEQUENCE OF SEARCH U/S 132 OF I.T. ACT. HOWEVER, VIDE SUB - SECTION (2) AN EXCEPTION IS ALSO PROVIDED THAT IN A SITUATION WHEN THE OFFER IS MADE OF THE UND ISCLOSED INCOME U/S 132(4) OF I.T. ACT AND IT IS SPECIFIED THE MANNER IN WHICH THE INCOME WAS EARNED AND DULY SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND THAT THE TAX WITH INTEREST WAS PAID THEN OUT OF THE AMBITS OF PENALTY PR OVISIONS. FURTHER IT HAS ALSO BEEN BROUGHT ON RECORD THAT THE INCOME 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 IN THE ACCOUNTS, MOREOVER THE TAX WA S PAID HENCE WE HEREBY HOLD THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY HELD THAT THE QUESTION OF LEVY OF PENALTY U/S 271AAA WAS OUT OF THE SCOPE OF SUB - SECTION (1) BUT WITHIN THE AMBITS OF THE EXCEPTION PRESCRIBED UNDER SUB - SECTION (2) OF THE SAID SECTION . RESULTANTLY THE VIEW TAKEN BY THE LEARNED CIT(APPEALS) IS HEREBY CONFIRMED. 9. I FIND THAT IN THE PRESENT CASE THE CASE LAWS AS MENTIONED ABOVE COME TO THE RESCUE OF THE ASSESSEE. THE ASSESSEE IN THIS CASE IS ENGAGED IN EARNING INCOME FROM BUSINESS. LE ARNED CIT(APPEALS) HAS OBSERVED THAT INDIVIDUAL ENTITIES HAVING NO REGULAR BUSINESS ARE DISTINGUISHABLE FROM OTHER BUSINESS ENTITIES LIKE PROPRIETARY CONCERNS, FIRMS, CORPORATE ENTITIES ETC. HENCE LEARNED CIT(APPEALS) CHOSE TO DISTINGUISH THE ASSESSEES CA SE. I FIND THAT THE PLANK OF DISTINCTION BROUGHT BY THE LEARNED CIT(APPEALS) IS NOT COGENT ENOUGH. AS PER THE RETURN OF INCOME AND ASSESSMENT ORDER THE ASSESSEES SOURCE OF INCOME IS HOUSE PROPERTY, BUSINESS INCOME AND OTHER SOURCES. HENCE THE ASSESSEE IS HAVING BUSINESS INCOME. LEARNED CIT(APPEALS) DISTINCTION IS NOT SUSTAINABLE. ACCORDINGLY RESPECTFULLY FOLLOWING THE PRECEDENTS AS ABOVE, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSE SSEE. 6. FOLLOWING THE PRE CEDENT AS ABOVE, WE SET ASIDE THE ORDER OF LEARNED CIT(APPEALS) AND DELETE THE PENALTY. 4 ITA NO. 312/NAG/2015. 7. IN THE RESULT, TH IS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF DEC., 2016. SD/ - SD/ - (RAM LAL NEGI) ( SHAMIM YAHYA) JUDICIAL MEMBER. ACOUNTANT MEMBER. NAGPUR, DATED: 28 TH DEC. , 2016. COPY FORWARDED TO : 1. SHRI PANKAJ CHOKHANI, 544, OPP. D.N.C. COLLEGE, CONGRESS NAGAR, NAGPUR. 2. A .C.I.T., CENTRAL CIRCLE - 1(3), NAGPUR. 3. C.I.T. - (CENTRAL), NAGPUR. 4. CIT(APPEALS) - III , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.