Shri Sachin K. Meghani, RAJKOT-GUJARAT V. The Joint Comissioner of Income Tax (OSD), Central Circle-2, RAJKOT-GUJARAT

ITA 343/RJT/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9041 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 20-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 343/RJT/2013 (ASSESSMENT YEAR: 2010-11) SHRI SACHIN K. MEGHANI PROP. M/S. NEELAM ENTERPRISE, MEENAWALA CHAMBERS, RAJKOT V/S JOINT COMMISSIONER OF INCOME TAX (OSD), CENTRAL CIRCLE-2, RAJKOT (APPELLANT) (RESPONDENT) PAN: AFHPM 6301G APPELLANT BY : SHRI M.J. RANPURA, A.R. RESPONDENT BY : SHRI YOGESH PANDEY, SR. D.R. ( )/ ORDER DATE OF HEARING : 31 -05-201 7 DATE OF PRONOUNCEMENT : 05 -06-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)- IV, AHMEDABAD DATED 14.08.2013 PERTAINING TO A.Y. 2 010-11. ITA NO. 343/ RJT/2013 . A.Y. 2010-11 2 2. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS. 41.20 LACS LEVIED BY THE A.O. U/ S. 271AAA OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS ENGAGED IN THE BUSINESS OF WHOLESALE AND RETAIL TRADING OF GOLD, S ILVER AND BULLION IN THE NAME AND STYLE OF M/S. NEELAM ENTERPRISE. BESIDES T HE ASSESSEE ALSO DERIVES INCOME FROM OTHER SOURCES. A SEARCH AND SEI ZURE ACTION U/S. 132 OF THE ACT WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 25.03.2010. DURING THE COURSE OF WHICH THE ASSESSEE ADMITTED AN INCOME OF RS. 4.08 CRORES ON AD-HOC BASIS IN HIS STATEMENT RE CORDED U/S. 132(4) OF THE ACT. 4. THE ADMITTED INCOME WAS OFFERED FOR TAXATION IN THE RETURN FILED ON 28.09.2010 AND THE SAME WAS ACCEPTED BY THE A.O. IN THE ASSESSMENT FRAMED U/S. 143(3) OF THE ACT. 5. INVOKING THE PROVISIONS OF SECTION 271AAA OF THE AC T, THE A.O. INITIATED PENALTY PROCEEDINGS ON THE GROUND THAT ASSESSEE DID NOT SPECIFY THE MANNER IN WHICH THE INCOME HAS BEEN DERIVED AND HAS ALSO FAILED TO PAY TAX. THE ASSESSEE STRONGLY OBJECTED TO THE LEVY OF PENALTY STATING THAT NO SPECIFIC QUESTION WAS ASKED IN THE STATEMENT RECORD ED U/S. 132(4) OF THE ACT. THE ASSESSEE FURTHER BROUGHT TO THE NOTICE OF THE A.O. THAT HE HAS ALREADY MADE AN APPLICATION FOR THE ADJUSTMENT OF S EIZED CASH TOWARDS PAYMENT OF TAXES AND DUE TO SEVERE FINANCIAL CRUNCH , THE ASSESSEE COULD NOT PAY TAXES ON TIME. THE BALANCE OF THE TAX WAS P AID IN INSTALLMENTS. ITA NO. 343/ RJT/2013 . A.Y. 2010-11 3 6. THE CONTENTIONS OF THE ASSESSEE DID NOT FIND ANY FA VOUR WITH THE A.O. WHO WAS OF THE FIRM BELIEF THAT THE ASSESSEE DID NOT CO MPLY WITH THE PROVISIONS OF SECTION 271AAA OF THE ACT AND WAS, THEREFORE, LI ABLE TO PAY PENALTY OF RS. 41.20 LACS. 7. THE ASSESSEE UNSUCCESSFULLY CARRIED THE MATTER BEFO RE THE LD. CIT(A). 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OU R ATTENTION TO THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT O F GUJARAT IN THE CASE OF MAHENDRA C. SHAH 299 ITR 305 AND PLEADED THAT SINCE NO SPECIFIC QUESTION WAS ASKED INSOFAR AS THE MANNER IN WHICH THE INCOME WAS DERIVED BY THE ASSESSEE, NO ADVERSE VIEW CAN BE TAKEN ON THIS ACCO UNT. THE LD. COUNSEL DREW OUR ATTENTION TO THE APPLICATIONS FILED BEFORE THE A.O./COMMISSIONER FOR THE APPROPRIATION OF SEIZED CASH TOWARDS THE TA X LIABILITY OF THE ASSESSEE. IT IS THE SAY OF THE LD. COUNSEL THAT DUE TO SEVERE FINANCIAL CRUNCH AFTER THE SEARCH OPERATION, THE ASSESSEE COULD PAY THE TAXES ONLY IN INSTALLMENTS. THEREFORE, THE ASSESSEE WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSE IN NOT PAYING THE TAXES ON TIME. T HE LD. COUNSEL FURTHER STATED THAT THE ONLY REQUIREMENT OF SECTION 271AAA IS THAT THE TAX TOGETHER WITH INTEREST HAS TO BE PAID BUT THERE IS NO TIME L IMIT PRESCRIBED IN THE THIRD CONDITION FOR THE PAYMENT OF THE TAX AND INTEREST. THE FIRST TWO CONDITIONS HAVE BEEN FULLY DISCHARGED AND THE THIRD CONDITION WAS ALSO FULFILLED BY PAYING THE TAXES ALONG WITH INTEREST IN INSTALLMENT S. THEREFORE, THE PENALTY LEVIED SHOULD BE DELETED. ITA NO. 343/ RJT/2013 . A.Y. 2010-11 4 9. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE REVENUE AUTHORITIES. IT IS THE SAY OF THE LD. D.R. THAT THO UGH, IT IS TRUE THAT NO SPECIFIC QUESTION WAS ASKED DURING THE COURSE OF THE SEARCH PROCEEDINGS BUT IT IS EQUALLY TRUE THAT THE ASSESSEE DID NOT PAY TAXES ON OR BEFORE THE DATE OF FILING OF THE RETURN. THEREFORE, LEVY OF PENALTY IS JUSTIFIED. 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT THE ASSESSEE HON ORED THE DISCLOSURE MADE AT THE TIME OF SEARCH AND OFFERED RS. 4.01 CRO RES FOR TAXATION IN ITS RETURN OF INCOME. IT IS ALSO AN UNDISPUTED FACT THA T NO SPECIFIC QUESTION WAS ASKED SO FAR AS MANNER OF INCOME DERIVED IS CONCERN ED. THIS IS ALSO SUBSTANTIATED BY GOING THROUGH THE COPY OF THE STAT EMENT RECORDED U/S. 132(4) OF THE ACT EXHIBITED AT PAGES 9 TO 18 OF THE PAPER BOOK. THE FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF MAHENDRA C. SHAH (SUPRA) READS AS UNDER:- 15. INSOFAR AS THE 1 ALLEGED FAILURE ON THE PART OF THE ASSESSES TO SPE CIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT W HEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE AND THE CONCERNED AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPS E IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, T HE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPUL ATED* BY THE PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF RADHA KISHAN GOEL ( SUPRA). SECONDLY, CONSIDERING ITA NO. 343/ RJT/2013 . A.Y. 2010-11 5 THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE P OINT REGARDING THE CONDITIONS STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMEN T UNDER SECTION 132(4) OF THE ACT. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLA HABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MAN NER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER D ENIAL OF THE BENEFIT UNDER EXCEPTION NO. 2 IN EXPLANATION 5 IS COMMENDABLE. 11. RESPECTFULLY FOLLOWING THE AFORE-STATED DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, IN OUR CONSIDERED OPINIO N, THE ASSESSEE HAS FULFILLED CONDITION NO. 2 MENTIONED IN SECTION 271A AA OF THE ACT. SO FAR AS THIRD CONDITION IS CONCERNED, THERE IS NO DOUBT THA T VIDE LETTER DATED 30.03.2010 FILED BEFORE CIT-III, RAJKOT , THE ASSES SEE HAD REQUESTED FOR THE ADJUSTMENT OF CASH SEIZED OF RS. 45 LACS TOWARDS PA YMENT OF TAX LIABILITY. THE TOTAL TAX PAYMENT OF THE ASSESSEE CAN BE UNDERS TOOD FROM THE FOLLOWING CHART:- PARTICULARS DATE AMOUNT TOTAL TAX AS PER RETURN OF INCOME 1,32,21 ,705/ - INTEREST AS PER RETURN OF INCOME 9,34,824/ - TOTAL TAX & INTEREST 1,41,56,529/ - LESS: APPROPRIATION OF SEIZED CASH 30.03.2010 (09.05.2012) 45,00,000/ - TDS 22,908/ - ADVANCE TAX PAID 14.09.2009 5,00,000/ - ADVANCE TAX PAID 14.12.2009 5,00,000/ - ITA NO. 343/ RJT/2013 . A.Y. 2010-11 6 ADVANCE TAX PAID 12.03.2010 5,00,000/ - CHALLAN PAID 22.09.2010 10,00,000/ - CHALLAN PAID 28.09.2010 15,00,000/ - CHALLAN PAID 15.02.2011 15,00,000/ - CHALLAN PAID 16.01.2012 1,76,427/ - CHALLAN PAID 15.02.2012 1 0,28,733/ - CHALLAN PAID 24.08.2012 2,00,000/ - CHALLAN PAID 21.09.2012 8,00,0007 - CHALLAN PAID 21.11.2012 5,00,000/ - CHALLAN PAID 22.04.2013 7,00,000/ - CHALLAN PAID 15.05.2013 7,00,000/ - REFUND ADJUSTMENT 21.05.2013 1,61,340/ - TOTA L PAID 1,42,89,408/ - TOTAL REFUNDABLE 1,32,879 12. THE HONBLE SUPREME COURT IN THE CASE OF GEBILAL KA NHAIALAL HUF 348 ITR 561 HAS HELD AS UNDER:- 'EXPLANATION 5 TO S. 271(1)(C) IS A DEEMING PROVISIO N WHICH PROVIDES THAT IF, IN THE COURSE OF SEARCH U/S 132, THE ASSESSES IS FOUND TO BE THE OWNER OF UNACCOUNTED ASSETS AND HE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQ UIRED BY HIM BY UTILIZING, WHOLLY OR PARTLY, HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH OR WHICH IS TO END ON OR AFTER THE D ATE OF SEARCH, THEN, IN SUCH A SITUATION, NOTWITHSTANDING THAT SUCH INCOME IS DECL ARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME FOR THE PUR POSES OF IMPOSITION OF PENALTY U/S 271(1)(C). SUB-CLAUSE (2) CONFERS AN IMMUNITY FROM PENALTY IF THREE CONDITIONS ARE FULFILLED, NAMELY, (I) THE ASSESSEE MUST MAKE A STATEMENT U/S ITA NO. 343/ RJT/2013 . A.Y. 2010-11 7 132(4) IN THE COURSE OF SEARCH STATING THAT THE UNA CCOUNTED ASSETS AND INCRIMINATING DOCUMENTS FOUND FROM HIS POSSESSION D URING THE SEARCH HAVE BEEN ACQUIRED OUT OF HIS INCOME, WHICH HAS NOT BEEN DISC LOSED IN THE RETURN OF INCOME TO BE FURNISHED BEFORE EXPIRY OF TIME SPECIFIED IN S. 139(1), (II) THE ASSESSEE SHOULD SPECIFY IN THE S. 132(4) STATEMENT THE MANNER IN WH ICH SUCH INCOME STOOD DERIVED AND (HI) THE TAX TOGETHER WITH THE INTEREST HAS TO BE PAID. THERE IS NO TIME LIMIT PRESCRIBED IN THE THIRD CONDITION FOR THE PAYMENT O F THE TAX & INTEREST. AS THE ASSESSEE HAD FULFILLED THE FIRST TWO CONDITIONS AND PAID THE TAX & INTEREST (BEFORE THE COMPLETION OF THE ASSESSMENT), IT WAS E NTITLED TO IMMUNITY UNDER EXPLANATION 5 TO S. 271(1)(C)'. 13. THOUGH, THIS DECISION WAS DELIVERED IN THE CASE OF PENALTY LEVIED U/S. 271(1)(C) OF THE ACT BUT THE RATIO LAID DOWN BY THE HONBLE APEX COURT SQUARELY APPLY ON THE FACTS OF THE CASE IN HAND AS U/S. 271AAA OF THE ACT ALSO THERE IS NO TIME LIMIT PRESCRIBED FOR THE PAYM ENT OF THE INTEREST. CONSIDERING THE FACT THAT THE ASSESSEE HAS IN FACT PAID ALL THE TAX AS PER THE CHART EXHIBITED ELSEWHERE, IN OUR CONSIDERED OPINIO N, THE ASSESSEE HAS FULFILLED THE THIRD CONDITION ALSO. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE LEVY OF PENALTY. WE, ACCORDINGLY SET ASIDE THE FIND INGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE PENALTY OF RS. 41.20 LACS. 14. APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 05 - 06 - 201 7. SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED: 05 /06/2017