The Dy. CIT, Central Circle-2, Surat V. M/s. Manan Corporation, Surat

ITA 3542/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1361 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 06-04-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 17-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Document seized; Additional evidence; Documents seized
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER THE DCIT, CENTRAL CIRCLE - 2, ROOM NO. 504, AAYKAR BHAVAN, MAJURA GATE, SURAT - 395002 (APPELLANT) VS M/S. MANAN CORPORATION, 606, LALBHAI CONTRACTOR COMPLEX, OPP. PARSI LIBRARY, NANPURA, SURAT PAN: AADFM9787H (RESPONDENT) REVENUE BY : S H RI R.K. GUPTA , SR. D . R. ASSESSEE BY: S H RI M.K. PATEL , A.R. DATE OF HEARING : 06 - 04 - 2 016 DATE OF PRONOUNCEMENT : 16 - 06 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2012 - 13 , AR IS ES FROM ORDER OF THE CIT(A) - 4, SURAT DATED 26 - 10 - 2015 IN APPEAL NO. CAS - 4/TFR/120/2014 - 15 , DELETING PENALTY OF RS. 11,50,000/ - IMPOSED BY THE ASSESSING OFFICER IN ORDE R DATED 29 - 09 - 2014, IN PROCEEDINGS I T A NO . 3542 / A HD/20 15 A SSESSMENT YEAR 2012 - 13 I.T.A NO. 3542/AHD/2015 A.Y. 2012 - 13 PAGE NO DCIT VS. M/S. MANAN CORPORATION 2 UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THIS ASSESSEE BUILDS/DEVELOPS HOUSING PROJECTS. THE DEPARTMENT SEARCHED/SURVEYED ITS PREMISES AS WELL AS THAT OF GROUP CONCERNS ON 18 - 10 - 2011. TH E ASSESSEE APPEARS TO HAVE DISCLOSED A SUM OF RS. 1,15,00 ,000/ - IN COURSE THEREOF. THEREAFTER IT FILED RETURN ON 11 - 04 - 2012 STATING INCOME OF RS. 3,53,63,600/ - . THE ASSESSING OFFICER COMPLETED A REGULAR ASSESSMENT ON 27 - 03 - 2014 MAKING SECTION 69C ADDITION OF RS. 7000/ - . HE ACCORDINGLY COMPUTED TAXABLE INCOME OF RS. 3,53,70,600/ - . HE FURTHER INITIATED THE IMPUGNED SECTION 271AAA PENALTY PROCEEDING S ALLEGING THAT ASSESSEE S DISCLOSURE OF RS. 1. 5 CRORES DID NOT JUSTIFY THE MANNER AND SUBSTANTIATE THE MEANS O F HAVING DERIVED THE ABOVE STATED UNDISCLOSED INCOME SO AS TO BE ENTITLED SECTION 271AAA(2) IMMUNITY. QUANTUM PROCEEDINGS APPEAR TO HAVE ATTAINED FINALITY AT THIS STAGE. 3. WE COME TO THE IMPUGNED SECTION 271AAA PROCEEDINGS. THE ASSESSEE PLEADED THAT I T HAD ALREADY SATISFIED ALL NECESSARY CONDITIONS IN ORDER TO AVAIL IMMUNITY STATED HEREINABOVE. IT EMPHASIZED THAT THE DEPARTMENTAL AUTHORITIES DID NOT PUT UP ANY SPECIFIC QUERY IN COURSE OF SEARCH AT THE TIME OF THE DISCLOSURE IN QUESTION. THE ASSESSING OFFICER CONCLUDED IN THE PENALTY ORDER THAT THE ASSESSEE HAD NOT SPECIFIED THE MANNER OF DERIVING OF THE IMPUGNED UNDISCLOSED INCOME ALONG WITH SUBSTANTIATION . HE ACCORDINGLY IMPOSED THE PENALTY IN QUESTION OF RS. 11.15 LACS. I.T.A NO. 3542/AHD/2015 A.Y. 2012 - 13 PAGE NO DCIT VS. M/S. MANAN CORPORATION 3 4. THE ASSES SEE PREFERRE D APPEAL. THE CIT(A ) ACCEPTS THE SAME AS FOLLOWS: - 8. I HAVE GONE THROUGH THE FACTS OF THE CASE, THE OBSERVATION OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. THERE IS NO DISPUTE THAT THE INCOME IN QUESTION WAS DECLARED DURING THE STATEMENT U/S. 13 2(4) AND WAS OFFERED TO TAX AND ASSESSEE PAID TAXES THERE ON. THE AO HAS ALSO ACCEPTED THE SAME. HOWEVER THE LD. A.O REFERRED TO THE PROVISIONS OF SECTION 271AAA AND HELD THAT THE FOLLOWING TWO CONDITIONS REQUIRED FOR IMMUNITY FROM PENALTY UNDER SUBSECTIO N 2 OF SECTION 271AAA HAVE NOT BEEN FULFILLED: - (I) IF THE ASSESSEE SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DISCLOSED U/S.132(4) OF THE IT ACT, 1961. (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. BEFORE PROCEEDING FURTHER, THE PRINCIPLES LAID DOWN BY VARIOUS ITAT BENCHES AND HIGH COURTS PARTICULARLY WITH REFERENCE TO DISCLOSURE MADE UNDER SECTION 132(4) IS REQUIRED TO BE DISCUSSED. IN THE CASE OF CIT VS. MAHENDRA C. SHAH (299 ITR 305) THE HON'BLE GUJARAT HIGH COURT CONSIDERED SIMILAR STATEMENT UNDER SECTION 132(4) TO GRANT IMMUNITY UNDER SECTION 271 (1 )(C). THE HON'BLE HIGH COURT HELD AS UNDER: - 'WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAI N THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT DI A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO FAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. 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 STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED. SECONDLY, I.T.A NO. 3542/AHD/2015 A.Y. 2012 - 13 PAGE NO DCIT VS. M/S. MANAN CORPORATION 4 CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED IN THE SECOND EXCEPTION WHILE MAKING STATEMENT U NDER SECTION 132(4). EVEN IF THE 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.' THE SCOPE AND M EANING HAS BEEN LUCIDLY EXPLAINED BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADHA KISHAN GOEL (2005) 278 ITR 454 (AIL), WHICH WAS FOLLOWED BY THE HON'BLE GUJARAT HIGH COURT IN THE ABOVE REFERRED CASE. 8.1 NOW, LOOKING TO THE FACTS OF THE CASE THE FOLLOWING PERTINENT OBSERVATIONS ARE MADE: I. THE DISCLOSURE WAS MADE IN THE STATEMENT OF MR. RAVJIBHAI P PATEL, PARTNER U/S. 132(4) ITSELF AND IS BASED ON THE DOCUMENT SEIZED DURING THE COURSE OF SEARCH. II. IN THE STATEMENT IN REPLY TO QUEST ION NO. 9 THERE WAS PROJECT WISE BREAK UP GIVEN FOR INCOME EARNED FROM THEM IN DIFFERENT FIRMS. HE HAD COOPERATED AND GIVEN THE DETAILS OF ABOVE WHOSE HANDWRITING - IS THERE ON DIFFERENT LOOSE DOCUMENTS. HE FURTHER STATED THAT THIS INCOME IS IN THE FORM OF R ECEIVABLE (CLEARLY MEA - NING THAT IT IS WITH THIRD PARTIES AND NOT AS CASH OR OTHER ASSETS). III. CLEARLY NO FURTHER RELATED QUESTION WAS ASKED DURING THE 132(4) STATEMENT. IV. IN THE POST SEARCH INQUIRIES, EVEN THE CAREFUL READING OF QUESTION NO. 9 AND ANSWER OF STATEMENT DT. 25.01.2012, DISCUSSED BY AO AT PAGE 4 OF THE PENALTY ORDER; MAKES IT VERY CLEAR THAT THE OFFICER WAS ALREADY REFERRING THE INCOME DISCLOSED TO BE RELATED TO THE SALE OF THE UNITS AND THE APPELLANT HAS \ CLEARLY STATED THAT IT IS OV ER AND ABOVE THE QUANTUM REFLECTED/INTENDED TO BE REFLECTED IN THE REGISTERED SALE DEEDS OF THE UNITS. HE FURTHER ELABORATED THAT THIS IS INCOME ABOVE THE REGULAR INCOME FROM THE SALE/BOOKING OF THE I.T.A NO. 3542/AHD/2015 A.Y. 2012 - 13 PAGE NO DCIT VS. M/S. MANAN CORPORATION 5 PROJECTS, WHICH WOULD NOT BE/HAS NOT BEEN REFLECTED IN TH E REGULAR BOOKS. CLEARLY IT HAS BEEN ACCEPTED AND DECLARED THAT THIS IS THE 'ON MONEY' ON SALE OF FLATS/UNITS AND 'IS NET INCOME ON WHICH NO EXPENSE IS FURTHER DEDUCTABLE OR TO BE DEBITED. V. THE APPELLANT WAS ASKED TO SHOW THE TREATMENT OF THIS INCOME I N THE SERVICE TAX RETURN (REFER PARA 7.2 OF THIS ORDER). THE APPELLANT HAS SHOWN IN RESPONSE THAT THE DECLARATION (NO. 2013106) HAS BEEN MADE BEFORE THE SERVICE TAX DEPARTMENT ON 23.10.2013 TO DECLARE SERVICE TAX ON THIS UNDISCLOSED INCOME BEING THE UNDISC LOSED REVENUE EARNED AND SUBSEQUENTLY TAXES HAVE BEEN PAID AND THE DECLARATION ACCEPTED UNDER THE VOLUNTARY DISCLOSURE SCHEME. WITHOUT ANY DOUBT THE NATURE OF INCOME HAS BEEN IN WORDS AND ACTION HAS BEEN SHOWN TO BE REVENUE INCOME EARNED AS 'ON MONEY' ON THE SALE/BOOKING OF FLATS, EARNED OUTSIDE THE BOOKS OF ACCOUNT AS ON MONEY ON WHICH NO EXPENSES REMAINED TO BE DEBITED. THE APPELLANT ADHERED TO THE STATEMENT AND DISCLOSED THE INCOME IN RETURN AND PAID TAXES THEREON. THE INCOME WAS ALSO SHOWN TO THE SER VICE TAX DEPARTMENT BEFORE THE INCOME TAX ASSESSMENT WAS COMPLETED. IN NUTSHELL, THE APPELLANT HAS IN HIS STATEMENT U/S. 132(4) ACCEPTED THE UNDISCLOSED INCOME, SUBMITTED THAT IT IS IN THE FORM OF RECEIVABLE (CLEARLY MEANING THAT IT IS WITH THIRD PARTIES A ND NOT AS CASH OR OTHER ASSETS), NO FURTHER QUESTION WAS ASKED IN 132(4) STATEMENT, IN POST SEARCH STATEMENTS THE NATURE OF INCOME WAS EXPLAINED AND INCOME DISCLOSED AND TAXES PAID. LOOKING TO THE ENTIRETY OF ABOVE FACTS AND FOLLOWING THE JUDGMENTS OF HON' BLE GUJARAT HIGH COURT IN THE CASE OF MAHENDRA C SHARV (J.YPRA) AND HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RADHA KISHAN GOEL (SUPRA); I HOLD THAT THE CONDITIONS FOR EXEM PTION OF PENALTY - AS STIPULATED IN SUB SECTI ON (2) TO SECTION 271AAA OF THE I .T. AC T HAVE BEEN MET AND NO CASE IS MADE OUT FOR IMPOSITION OF PENALTY. I HAVE ALSO TAKEN NOTE OF THE FOLLOWING DECISIONS OF AHMEDABAD BENCH OF THE ITAT, WHICH SUPPORT THE APPELLANT'S CASE: (A) DY. CIT VS. M/S. ASHIRWAD CORPORATION - ITA NO. 1615/AHD/2011 (B ) DY . CIT VS. DR. MUKESH S SHAH - ITA NO. 1942/AHD/2012 (C) DY. CIT VS. JAIPRAKASH ASWANI - ITA NO. 2090/AHD/2011 I.T.A NO. 3542/AHD/2015 A.Y. 2012 - 13 PAGE NO DCIT VS. M/S. MANAN CORPORATION 6 (D) DY. CIT VS. SURYA ENCLAVE - ITA NO. 2092/AHD/2011 8.2 I, THEREFORE, HOLD THAT THE PENALTY LEVIED BY THE A.O. TO THE TUNE OF RS. 11,5 0,000/ - IS UNJUSTIFIED AND IT IS DIRECTED TO BE DELETED. 5. THE REVENUE STRONGLY ARGUES THAT THE CIT(A) ADMITTED ADDITIONAL EVIDENCE IN COURSE OF THE LOWER APPELLATE PROCEEDINGS. NO SUCH CASE IS BEING MADE OUT AFTER PERUSING THE LOWER APPELLATE ORDER. THIS PLEA IS ACCORDINGLY REJECTED. THE REVENUE S NEXT ARGUMENT SEEKS TO REVIVE THE IMPUGNED SECTION 271AAA PENALTY BY DRAWING SUPPORT FROM PENALTY ORDER. IT HOWEVER FAILS TO PLACE ANY MATERIAL ON RECORD REBUTTING THE ABOVE EXTRACTED FINDING THAT ASSES SEE S PARTNER SHRI RAJEEVBHAI PATEL HAD MADE THE DISCLOSING IN QUESTION ON THE BASIS OF DOCUMENTS SEIZED, HE GAVE PROJECT WISE BREAK UP IN ORDER TO ACCOUNT FOR THE ABOVE UNDISCLOSED INCOME IN THE FORM OF RECEIVABLES FROM CUSTOMERS. THIS WAS FOLLOWED BY ASSESSMENT OF THE ABOVE STATED UNDISCLOSED INCOME AND PAYMENT OF TAX ES. IT HAS COME ON RECORD THAT THE REVENUE AUTHORITIES DID NOT EVEN MAKE A SUGGESTION DURING SEARCH DOUBTING VERACITY OF THE ASSESSEE S DISCLOSURE. WE ARE OF THE OPINION IN THESE FACTS A ND CIRCUMSTANCES THAT THE CIT(A) HAS RIGHTLY HELD THE ASSESSEE TO HAVE SATISFIED ALL THE THREE NECESSARY THREE CONDITIONS FOR CLAIMING SECTION 271AAA(2) IMMUNITY I.E. IT ADMITTED UNDISCLOSED INCOME OF RS. 1.15 CRORES, SPECIFIED MANNER OF HAVING DERIVED THE SAME FOLLOWED BY SUBSTANTIATION THEREOF AND PAID TAXES THEREUPON. WE REJECT THE REVENUE S ARGUMENTS ACCORDINGLY. I.T.A NO. 3542/AHD/2015 A.Y. 2012 - 13 PAGE NO DCIT VS. M/S. MANAN CORPORATION 7 6. THIS REVENUE S APPEAL IS DISMISSED . ORDER PR ONOUNCED IN THE OPEN C OURT ON 16 - 06 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 16 /06 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUA RD FILE. BY ORDER/ , / ,