Rajni Aggarwal, Ludhiana V. DCIT, CC-1, Ludhiana

ITA 32/CHANDI/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9489 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 09-01-2019
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH B, CHANDIGARH .., ! '# #$ %, & '( BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO. 32/CHD/2019 ASSESSMENT YEAR : 2014-15 SMT. RAJNI AGGARWAL, 3301/2 GURDEV NAGAR, LUDHIANA THE DCIT, CC-1, LUDHIANA PAN NO: ABBPA4929N APPELLANT RESPONDENT !' ASSESSEE BY : SHRI SANJAY SOOD, CA #!' REVENUE BY : SHRI AMIT SHUKLA, SR. DR $ %! & DATE OF HEARING : 19/09/2019 '()*! & DATE OF PRONOUNCEMENT : 19/09/2019 ')/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT. 12/11/2018 OF THE LD. CIT(A), JALANDHAR. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED AO (ACIT CENTRAL CIRCLE -1 LUDHIANA) AND COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LEVYING PENALTY U/S 271 AAB(1 )(C) OF THE INCOME TA X ACT OF RS 3,00,000 /- WITHOUT APPRECIATING THE FACT THE ESTIMATED LUMP SUM CONDIT IONAL SURRENDER OF RS. 10,00,000/- WAS MADE SUBJECT TO NO PENAL ACTION AND PROSECUTION. (A S EVIDENT FROM SURRENDER LETTER ENCLOSED) 2. THE FINDING OF THE LD. ASSESSING OFFICER IS BASED U PON MERE CONJECTURES AND SURMISES AND IS FACTUALLY WRONG AND LEGALLY INVALID. HENCE, THE ENTIRE PENALTY DESERVES TO BE DELETED. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DELETE ANY GROUND(S) OF APPEAL BEFORE IT IS FINALLY HEARD FOR DISPOSAL. 3. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED VIDE ORDE R DT. 31/07/2019 IN ITA NO. 27 TO 2 30/CHD/2019 IN THE CASES OF M/S GENEX INDUSTRIES LTD. & OTHERS VS. DCIT, CENTRAL CIRCLE-1 FOR THE A.Y.2013-14 & 2014-15. IT WAS FURTHER SUBMITT ED THAT THE PRESENT ASSESSEE ALSO BELONGS TO THE SAME GROUP TO WHICH THE AFORESAID ASSES SEES BELONGED AND THAT THE MATTER WAS RESTORED TO THE FILE OF THE A.O. VIDE AFOR ESAID REFERRED TO ORDER DT. 31/07/2019 IN THE CASE OF M/S GENEX INDUSTRIES LTD. & OTHERS VS. DCIT, CENTRAL CIRCLE- 1(SUPRA). 4. IN HIS RIVAL SUBMISSIONS THE LD. SR. DR ALTHOUGH SU PPORTED THE ORDERS OF THE AUTHORITIES BELOW BUT COULD NOT CONTROVERT THE AFORESAI D CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS BEEN ADJUDICATED VIDE AFORESAID REFERRED TO ORDER DT. 31/07/2019 IN THE CASE OF M/S GENEX INDUSTRIES LTD. & OTHERS VS. DCIT, CENTRAL CIRCLE -1(SUPRA) AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 7 TO 8 OF THE AFORESAID ORDER WHI CH READ AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A PERUSAL OF THE RECORD IT IS EVIDENT THAT IN THE F ACTS OF THE PRESENT CASE IT IS EVIDENT THAT THE ASSESSEE HAS BEEN HEARD, HOWEVER, THE ASSESSEE, IT IS SEEN HAS MISTAKENLY RELIED UPON THE STATEMENTS ALLEGEDLY GIVEN AT THE TIME OF SURRE NDER THAT THE SURRENDER IS MADE ON THE UNDERSTANDING THAT NO PENALTY WOULD BE VISITED UPON HIM ON ACCOUNT OF THE SURRENDER MADE. IT GOES WITHOUT SAYING THAT NO SUCH DISCRETIO N OR POWERS HAVE BEEN VESTED UPON THE TAX AUTHORITIES BY THE INCOME TAX ACT. ANY SUCH BELIEF ENTERTAINED BY THE ASSESSEE HAS NO LEGAL SANCTION. ACCORDINGLY, IT IS SEEN THAT SUC H EXPLANATION OFFERED AT THE APPELLATE STAGE AND RE-ITERATED BEFORE US HAS TO BE DISCARDED . THE FACT WHICH EMANATES IS THAT ADMITTEDLY AN EFFECTIVE OPPORTUNITY OF BEING HEARD HAS NOT BEEN EXERCISED BY THE ASSESSEE ON ACCOUNT OF THE MIS-CONCEPTIONS ENTERTAI NED AND MISTAKEN BELIEF. SECTION 271AAB OF THE ACT IN SUB-SECTION (1) OF THE SAME UN AMBIGUOUSLY LAYS DOWN THAT, WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR A F TER THE 1S T DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION T O TAX, IF ANY, PAYABLE BY HIM PENALTY AT THE RATE OF 10%, 20% OR 30% ON THE UNDISCLOSED INC OME IN CASE THE CIRCUMSTANCES AS SET OUT IN CLAUSES (A) (B) AND (C) OF SUB-SECTION (1) O F SECTION 271AAB ARE APPLICABLE. 7.1 WHAT WOULD CONSTITUTE UNDISCLOSED INCOME HAS BEEN DEFINED IN THE EXPLANATION TO SECTION 271AAB AS UNDER : EXPLANATION.- FOR THE PURPOSES OF THIS SECTION- (A) SPECIFIED DATE X X X (B) SPECIFIED PREVIOUS YEAR X X (C) UNDISCLOSED INCOME MEANS- (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLIONS, JEWELLERY OR OTHER VALUABLE ARTICL E OR THING OR ANY ENTRY IN THE BOOKS OF 3 ACCOUNTS , 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 SEAR CH 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 PRINCIPAL C HIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIO NER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REP RESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOK S OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPE CIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED.] 7.2 ON A PERUSAL OF THE ABOVE, IT IS EVIDENT THAT T HE SECTION IS SELF-CONTAINED WHEN THESE ARE CONSIDERED ALONGWITH THE STATUTORY MANDATE AS S ET OUT IN CLAUSES (A); (B) AND (C) OF SUB-SECTION (1) OF SECTION 271AAB THERE CAN BE NO D OUBT THAT THERE IS NO DISCRETION WITH THE AO AS THE PARAMETERS BY WHICH THE AO OR THE TAX AUTHORITIES ARE BOUND IN REGARD TO THE RATE OF PENALTY AND THE CIRCUMSTANCES ON THE BA SIS OF WHICH THE PENAL PROVISION CAN BE SAID TO BE ATTRACTED IS SELF EXPLANATORY. THE ST ATUTE FURTHER IN TERMS OF SUB-SECTION (4) OF SECTION 271AAB MANDATES THAT SO FAR AS MAY BE PROVI SIONS OF SECTION 274 AND 275 SHALL APPLY. IN THE FACTS OF THE PRESENT CASE, THE STATUT ORY MANDATE OF SUB-SECTION (1) OF SECTION 274 IS TRIGGERED. THE REQUIREMENT SET OUT THEREIN I S THAT NO ORDER IMPOSING PENALTY UNDER THIS CHAPTER SHALL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD OR HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. IN THE FACTS OF THE PRESENT CASE, NO DOUBT THE ASSESSEE HAS BEEN HEARD BUT THERE CAN ALSO BE NO TW O OPINIONS ON THE FACT THAT THE ASSESSEE INSTEAD OF ARGUING ON PERMISSIBLE FACTS HA S MISTAKENLY RELIED UPON HIS SURRENDER LETTER BELIEVING THAT THE TAX AUTHORITIES WERE ALSO BOUND BY THE UNILATERAL TERMS OF THE SURRENDER MADE I.E. THAT ON ACCOUNT OF THE SURRENDE R BEING MADE ALLEGEDLY VOLUNTARILY ON THE CONDITION THAT NO PENAL CONSEQUENCES WOULD BE V ISITED UPON THE ASSESSEE, THE SURRENDER HAVING BEEN MADE CONSEQUENTLY BOUND THE T AX AUTHORITIES ALSO TO HONOUR THE UNILATERAL BELIEF. AS NOTED, THIS BELIEF HAS NO LEG AL SANCTION AND HAS TO BE DISCARDED. HOWEVER, THE FACT REMAINS THAT THE OPPORTUNITY SO P ROVIDED HAS BEEN MISUTILIZED BY THE ASSESSEE BY MAKING IRRELEVANT ARGUMENTS. ACCORDINGL Y, IN ALL FAIRNESS, IT CANNOT BE SAID THAT AN EFFECTIVE AND REASONABLE OPPORTUNITY OF BEING HE ARD HAS NOT BEEN AVAILED OF BY THE ASSESSEE. 8. ACCORDINGLY, IN VIEW OF THE FACTS AS SET OUT HER EINABOVE, WE SET ASIDE THE IMPUGNED ORDERS. THE PARTIES WERE, ACCORDINGLY, REQUIRED TO ADDRESS AS TO WHICH AUTHORITY THE REMAND BE MADE AS NECESSARILY THE STATEMENT RECORDE D AT THE TIME OF THE SEARCH AND THE DOCUMENTS CONFRONTED AND ANY OTHER RELEVANT FACT WO ULD BE REQUIRED TO BE ADDRESSED WHICH LED TO THE SURRENDER BEING MADE SO AS TO ADDR ESS UNDISCLOSED INCOME. THE LD.-DRS MADE A REQUEST THAT THE MATTER MAY BE REMANDED TO T HE AO AS HE SHALL BE IN A BETTER POSITION TO CONFRONT THE MATERIAL TO THE ASSESSEE. THE LD. AR AGREED THAT HE SHALL ADDRESS HIS ARGUMENTS WITHIN THE PARAMETERS OF THE POWERS V ESTED WITH THE TAX AUTHORITIES. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE BACK T O THE FILE OF THE AO WITH THE DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFT ER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. THE ASSESSEE IN ITS OWN INTERESTS IS ADVISED TO PARTICIPATE FULLY AND FAIRLY IN THE PROCEEDINGS BEFORE THE TAX AUTHOR ITIES. IT IS MADE CLEAR THAT IN THE EVENTUALITY OF ABUSE OF THE TRUST REPOSED THE AO WO ULD BE AT LIBERTY TO PASS AN ORDER ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. SO RESPECTFULLY FOLLOWING THE ABOVE SAID ORDER DT. 3 1/07/2019 IN THE CASE OF M/S GENEX INDUSTRIES LTD. & OTHERS VS. DCIT, CENTRAL CIRCL E-1(SUPRA) THE PRESENT CASE IS REMANDED BACK TO THE FILE OF THE A.O. TO BE DECIDED AS PER THE DIRECTIONS GIVEN IN THE 4 AFORESAID REFERRED TO ORDER DT. 31/07/2019 IN THE CAS E OF M/S GENEX INDUSTRIES LTD. & OTHERS VS. DCIT, CENTRAL CIRCLE-1(SUPRA). 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ( ORDER PRONOUNCED IN THE OPEN COURT ON 19/09/2019 ) SD/- SD/- #$ % .., (SANJAY GARG ) ( N.K. SAI NI) & '(/ JUDICIAL MEMBER ! / VICE PRESIDENT AG DATE: 19/09/2019 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR