Mothers Pride Education Personna Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 3372/DEL/2011

• Counselvise Citation: 337220114 RSA 2011
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 09-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 29-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GUNJAN P RASAD
• Assessee Lawyers: CHANDRASEKHAR
• Keywords: Search and seizure
• Section: 5(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: E NEW DELHI SHRI J.SUDHAKAR REDDY, A.M. AND SHRI RAJPAL YADAV, JM ITA NO: 3372/DEL/2011 ASSESSMENT YEAR : - 2008-09 MOTHERS PRIDE EDUCATION PERSONNA P.LTD. VS. DCIT, C C 5 11/77, WEST PUNJABI BAGH NEW DELHI NEW DELHI PAN/GIR: AADCM 9347 C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI CHANDRASEKHAR, C.A. RESPONDENT BY : SH.G UNJAN PRASAD, CIT (DR) O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT(A) DT. 26.5.2011 FOR THE ASSESSMENT YEAR 20 08-09 ON THE FOLLOWING GROUNDS. 1. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF H INDUSTAN STEEL VS STATE OF ORISSA 1972 83 ITR 26 STILL HOLD GOOD AND APPLICABLE TO THE APPELLANTS CASE. HENCE THE PENA LTY LEVIED IS UNJUSTIFIED. 2. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE PENALTY SHALL NOT BE LEVIED ORDINARILY WHE RE THE ASSESSEE IS NOT AT FAULT OR GUILTY OF MISCONDUCT. THE LD.AO AND COMMISSIONER OF INCOME TAX (APPEALS) ERRED BY LEVYI NG PENALTY ON THE APPELLANT WITHOUT ANY FINDING/PROVING ANYTHI NG ON RECORD IN RELATION TO THE ADDITIONAL INCOME. HENCE THE PE NALTY LEVIED IS UNCALLED AND WITHOUT ANY BASIS. 3. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) AND THE LD.AO ERRED BY CONSIDERING THAT T HE APPELLANT FAILS TO FULFILL THE CONDITIONS OF S.271 AAA OF THE INCOME TAX ACT, 2 1961. WHEREAS THE APPELLANT HAS TRULY DISCLOSED AL L THE FACTS IN THE COURSE OF SEARCH WHATEVER BEING ASKED BY THE OA TH ADMINISTRATOR. HENCE PENALTY LEVIED IS AGAINST THE PROVISIONS OF LAW AND SHALL BE DELETED. 2 FACTS IN BRIEF:- A SEARCH AND SEIZURE OPERATION U/S.132 OF THE ACT WAS CONDUCTED ON SMT. SUDHA GUPTA, DIRECTOR OF THE ASSESSEE COMPANY. DURING THE COURSE OF SEARCH SMT. SUDHA GUPTA STATED ON OATH THAT THE PAYMENT OF RS.2.5 CRORES WAS MADE OUTSIDE THE BOOKS FOR PROPERTY. THE AMOUNT WAS ADMITTED AS ADDITIONAL INCOME OF THE COM PANY. 3. AS THE ASSESSEE DID NOT SPECIFY THE MANNER IN WH ICH UNDISCLOSED INCOME WAS DERIVED AND AS IT DID NOT SUBSTANTIATE T HE SAME, PENALTY PROCEEDINGS UNDER SECTION 271(AAA) OF THE ACT WERE INITIATED WIDE NOTICE DATED 31.12.2009. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PENALTY OF RS.25 LAKHS WAS IMPOSED VIDE ORDER DATED 28.06.2010. 4. ON APPEAL, THE FIRST APPELLATE AUTHORITY CONFIR MED THE PENALTY. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. COUNCIL FOR THE ASSESSEE MR. CHANDRASEKH AR SUBMITTED THAT SIMILAR ISSUE HAS COME UP IN APPEAL BEFORE THE F BENCH OF THE DELHI TRIBUNAL IN THE CASE OF SMT. RAJ RANI GUPTA I N ITA NO.3371/DEL/2011 ORDER DATED 30.03.2012 AND THE TRI BUNAL DELETED THE PENALTY. THE LD. DR MR.GUNJAN PRASAD, THOUGH NOT L EAVING HIS GROUND 3 SUBMITTED THAT SIMILAR PENALTY ARISING OUT OF THE V ERY SAME SEARCH PROCEEDINGS IN THE GROUP AND ON SIMILAR FACTS WAS D ELETED BY THE TRIBUNAL. 6. AFTER HEARING RIVAL CONTENTIONS WE FIND THAT THE TRIBUNAL AFTER EXAMINING THE STATEMENTS RECORDED AT THE TIME OF SE ARCH U/S 132(4) CAME TO A CONCLUSION THAT THE ASSESSEE WAS NEVER ASKED A BOUT THE MANNER IN WHICH THE INCOME WAS EARNED, NOR THAT SHE WAS EVEN ASKED TO SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WAS ARRIVED. IN THE PROCEEDINGS UNDER SECTION 271(AAA), THE QUESTI ON ABOUT THE MANNER IN WHICH THE INCOME WAS DERIVED WAS PUT TO THE ASSE SSEE AND SHE HAD REPLIED TO THE SAME. THE TRIBUNAL HELD THAT, HAD T HE CONCERNED OFFICER POSED A SIMILAR QUESTION TO THE ASSESSEE DURING THE RECORDING OF THE STATEMENT U/S132(4), SHE MIGHT HAVE REPLIED AS TO T HE MANNER IN WHICH THE INCOME WAS EARNED AND SHE WOULD HAVE SUBSTANTIA TED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. RELIANCE WAS PLACED ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF RADHA KISHAN GOEL, 278 ITR 454 AND THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C.SHAH, 298 ITR 3 05 AND PENALTY WAS DELETED. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF RADHA KISHAN GEOL (SUPRA) HELD AS FOLLOWS:- UNDER SECTION 132(4) OF THE INCOME TAX ACT, 1961, I T IS THE AUTHORIZED OFFICER, WHO EXAMINES ON OATH ANY PERSON , WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS O F ACCOUNTS, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE OR 4 THING, THEREFORE, IT IS FOR THE AUTHORIZED OFFICER TO RECORD THE STATEMENT IN HIS OWN WAY. THEREFORE, IT IS NOT EXP ECTED FROM THE PERSON TO STATE THOSE THINGS, WHICH ARE NOT ASKED B Y THE AUTHORIZED OFFICER. IT IS A MATTER OF COMMON KNOWLEDGE, WHICH CANNOT BE IGNORED THAT THE SEARCH IS BEING CONDUCTED WITH THE COMPLET E TEAM OF THE OFFICERS CONSISTING OF SEVERAL OFFICERS WITH THE P OLICE FORCE. USUALLY TELEPHONE AND ALL OTHER CONNECTIONS ARE DIS CONNECTED AND ALL INGRESS AND EGRESS ARE BLOCKED. DURING THE COU RSE OF SEARCH PERSON IS SO TORTURED HARASSED AND PUT TO A MENTAL AGONY THAT HE LOSES HIS NORMAL MENTAL STATE OF MIND AND AT THAT S TAGE IT CANNOT BE EXPECTED FROM A PERSON TO PRE-EMPT THE STATEMENT REQUIRED TO BE GIVEN IN LAW AS A PART OF HIS DEFENCE. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT UND ER SECTION 132(4) OF THE INCOME TAX ACT, 1961 UNLESS THE AUTHO RIZED OFFICER PUTS A SPECIFIC QUESTION WITH REGARD TO THE MANNER IN WHICH INCOME HAS BEEN DERIVED, IT IS NOT EXPECTED FROM TH E PERSON TO MAKE A STATEMENT IN THIS REGARD AND IN CASE IN THE STATEMENT THE MANNER IN WHICH INCOME HAS BEEN DERIVED HAS NOT BEE N STATED BUT HAS BEEN STATED SUBSEQUENTLY, THAT AMOUNTS TO T HE COMPLIANCE WITH EXPLANATION 5(2) OF THE INCOME TAX ACT, 1961. WE ARE ALSO OF THE OPINION THAT IN CASE E THERE IS NOTHING TO THE CONTRARY IN THE STATEMENT RECORDED UNDER SECTION 13 2(4) OF THE INCOME TAX ACT, 1961, IN THE ABSENCE OF ANY SPECIFI C STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERI VED, IT CAN BE INFERRED THAT SUCH UNDISCLOSED INCOME WAS DERIVE D FROM THE BUSINESS WHICH HE WAS CARRYING ON OR FROM OTHER SOU RCES. THE OBJECT OF THE PROVISION IS ACHIEVED BY MAKING THE S TATEMENT ADMITTING THE NON DISCLOSURE OF MONEY, BULLION, JEW ELLERY ETC. 5 THUS, WE ARE OF THE OPINION THAT MUCH IMPORTANCE SH OULD NOT BE ATTACHED TO THE STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. IT CAN BE INFERRED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN THE ABSENCE OF ANYTHI NG TO THE CONTRARY. THEREFORE, MERE NON STATEMENT OF THE MAN NER IN WHICH SUCH INCOME WAS DERIVED WOULD NOT MAKE EXPLANATION 5(2) INAPPLICABLE. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF IN THE CASE O F CIT VS. MAHENDRA C SHAH 298 ITR 305(SUPRA) HELD AS UNDER:- IN SO FAR AS THE ALLEGED FAILURE ON THE PART OF TH E ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF TH E INCOME TAX ACT, 1961 REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT WHEN THE STATEMEN T IS BEING RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXP LANATION 5 IN ITS ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZ ED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PE RMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE ST ATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STAGE AND MAKE AV ERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSI DERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RAD HA KISHAN GOEL (2005) 278 ITR 454. SECONDLY, CONSIDERING THE ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIO NS STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMENT UNDER SECTIO N 132(4) OF THE INCOME TAX ACT, 1961. THE VIEW TAKEN BY THE TR IBUNAL AS WELL AS THE ALLAHABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE 6 STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO.2 IN EXPLA NATION 5 IS COMMENDABLE. 7. APPLYING THESE DECISIONS THE RATIO OF THESE JUDG MENTS TO THE FACTS OF THE CASE AND RESPECTFULLY FOLLOWING THE CO-ORDIN ATE BENCH ORDER IN THE CASE OF SMT. RAJ RANI GUPTA(SUPRA) WE DELETE THE PE NALTY LEVIED U/S 271(AAA) OF THE INCOME TAX ACT, 1961. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2012. SD/- SD/- (RAJPAL YADAV) (J .SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED: THE 12 TH OCTOBER, 2012 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 7 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON: