Gulmohar High School, Jamshedpur V. ITO Exemption Wd, Jamshedpur

ITA 355/RAN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9648 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 10-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K MONDAL
• Assessee Lawyers: M K CHOUDHARYAR
• Keywords: Search and seizure; Document seized; Documents seized
• Section: 271(1)(c); 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.355 /RAN/201 6 ASSESSMENT YEAR : 2009 - 2010 DY/ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, RANCHI. VS. SRI RAJ KUMAR SHAH, EUROPEAN QUARTER, CHAIBASA, JHARKHAND PAN/GIR NO. ALKPS 7305 M (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY: SH RI M.K.CHOUDHARY,AR REVENUE BY : SHRI P.K.MONDAL, JCIT DATE OF HEARING : 28 /05 / 201 8 DATE OF PRONOUNCEMENT : 29 /05/ 2018 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE REVENUE A GAINST THE ORDER OF THE CIT(A) - 3, PATNA DATED 21.10.2016 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN DELETING THE AMOUNT OF RS.53,28,163/ - LEVIED U/S.271(1)(C) OF THE ACT BY THE ASSESSING OFFICER. 3 . AT THE OUTSET, LD A.R. OF THE ASSESSEE BY FILING COPY OF NOTICE ISSUED U/S.271(1)(C) OF THE ACT BY THE AS SESSING OFFICER DATED 26.12.2011 IN 2 ITA NO.355/RAN/2016 ASSESSMENT YEAR: 2009 - 2010 ASSESSMENT YEAR 2009 - 2010 SUBMITTED THAT THE ASSESSING OFFICER IN THE SAID NOTICE HAS STATED AS UNDER: HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 4 . THUS, IT IS NOT CLEAR FROM THE SAID NOTICE ISSUED U/S.271(1)(C) OF THE ACT BY THE ASSESSING OFFICER WHETHER THE SHOW CAUSE IS ISSUED TO THE ASSESSEE FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 5 . ON THE OTHER HAND, LD D.R RELIED ON THE ORDE R OF THE ASSESSING OFFICER. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE CIT(A) HAS DELETED THE PENALTY BY OBSERVING AS UNDER: AFTER CONSIDERING THE AOS FINDINGS A ND SUBMISSION OF THE APPELLANT, I FIND THAT FOLLOWING FACTS EMERGED. 1. AS A RESULT OF SEARCH AND SEIZURE ACTION, THE APPELLANT HAD DISCLOSED AN AMOUNT OF RS.20,00,000/ - IN THE RETURN OF INCOME FILED IN COMPLIANCE TO NOTICE ISSUED U/S.153A OF THE ACT. THE TOTAL INCOME SHOWN IN THE RETURN OF INCOME U/S.153A WAS ACCEPTED BY THE AO WHILE FINALISING THE ASSESSMENT U/S.153A OF THE ACT. PENALTY U/S.271(1)(C) WAS INITIATED ON THE INCOME DISCLOSED IN THE RETURN FILED U/S.153A OF THE ACT. IN THE ASSESSMENT ORDER, THE AO GIVEN FINDING PERTAINING TO INITIATION OF PENALTY U/S.271(1)(C) AS UNDER : ASSESSED U/S 153A R.W.S. 143(3) OF THE IT ACT, 1961 ON A TOTAL TAXABLE INCOME OF RS. 37,35,150/ - . PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT IS INITIATED. IN THE PENALTY ORDER AGAIN, THE AO HAS BASED HIS CONCLUSION BY REFERRING TO EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT TO CONCLUDE THAT THE APPELLANT IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF 3 ITA NO.355/RAN/2016 ASSESSMENT YEAR: 2009 - 2010 INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF INCOME OF RS. 20,00,000/ - . THE APPELLANT HAS COUNTERED THE ABOVE FINDING OF THE AO BY BRINGING OUT THE CONTENTION THAT EXPLANATION 5 TO SEC. 271(1)(C) WAS NOT APPLICABLE AS THE SEARCH IN THE CASE OF THE APPELLANT TOOK PLACE AFTER 01.06.2007. FURTHER, THE APPELLANT HAS ALSO CONTROVER TED THE AO'S CLAIM REGARDING THE CONCLUSIVE FINDING OF ANY CONCEALMENT OF INCOME ARRIVED AT IN THE ASSESSMENT ORDER PASSED U/S 153A OF THE ACT OR IN THE PENALTY ORDER U/S 271(1)(C) OF THE ACT. THE APPELLANT HAS ALSO REFERRED TO THE DEFICIENCY OF NOTICE ISS UED U/S 274 R.W.S. 271(1)(C) WHEREIN THE AO DID NOT TICK MARK THE RELEVANT APPLICABLE PART OF THE SAID NOTICE NEITHER STRIKED OUT INAPPLICABLE PORTION OF THE SAID NOTICE. THE APPELLANT REFERRED TO VARIOUS COURT DECISIONS ON THIS DEFICIENCY IN NOTICE WHEREI N PENALTY WAS CANCELLED BY THE COURTS. AFTER GOING THROUGH THE ASSESSMENT ORDER AS WELL AS PENALTY ORDER, I AM INCLINED TO ACCEPT THE APPELLANT'S CONTENTION THAT THERE IS DEFICIENCY IN PROPER NOTICE ISSUED AND SERVED BY THE AO AS PER SEC. 274 R.W.S. 271(1) (C) OF THE ACT. THE COPY OF NOTICE U/S 274 R.W.S. 271(1)(C) DATED 30.12.2010 ISSUED BY THE AO HAS BEEN FILED AS PART OF SUBMISSION AND THIS NOTICE CLEARLY REFLECT THAT THE AO HAS NOT TICK MARKED RELEVANT APPLICABLE PART OF THE NOTICE. FURTHER, THE MANNER I N WHICH THE ASSESSMENT ORDER MENTIONS THE INITIATION OF PENALTY PROCEEDING U/S 271(1)(C) INDICATE THAT THE AO HAD NOT GIVEN HIS CONCLUSIVE FINDING AS TO HOW THE INCOME DISCLOSED IN THE RETURN U/S 153A AMOUNTS TO CONCEALMENT OF INCOME OR FURNISHING OF INACC URATE PARTICULARS WITHIN THE MEANING OF SEC. 271(1)(C) READ WITH EXPLANATION 5A OF THE ACT. IT IS PERTINENT TO MENTION HERE THAT IN THE APPELLANT'S CASE THE RELEVANT EXPLANATION APPLICABLE IS EXPLANATION 5A TO SEC. 271(1)(C) AND NOT EXPLANATION '5' AS REFE RRED BY THE AO IN THE PENALTY ORDER. FOR LEVY OF CONCEALMENT PENALTY U/S 271(1)(C) OF THE ACT, THE EXPLANATION 5A TO SEC. 271(1)(C) PUTS A CONDITION THAT AS A RESULT OF SEARCH AND SEIZURE ACTION, THE APPELLANT IS EITHER FOUND TO BE OWNER OF (A) ANY MONEY, BULLION, JEWELRY OR OTHER VALUABLE ARTICLE OR THINS OR (B) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR TRANSACTIONS. THE AO HAS NOT GIVEN ANY FINDING EITHER IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER TO CONCLUDE THAT THE INCOME DISCLOSED U/S 153A WAS CONCEALED INCOME AS PER EXPLANATION 5A TO SEC. 271(1)(C) OF THE ACT. IN FACT, THE AO HAS REFERRED TO EXPLANATION '5' WHICH IS NOT RELEVANT TO THIS CASE. 4 ITA NO.355/RAN/2016 ASSESSMENT YEAR: 2009 - 2010 THE ISSUE WAS ALSO REMANDED TO THE AO DURING CURRENT APPELLATE PROC EEDINGS AND EVEN IN THE REMAND REPORT DATED 22.09.2014 OF ACIT, CENTRAL CIRCLE - 1, RANCHI DULY FORWARDED BY THE RANGE HEAD, NO FINDING HAS BEEN GIVEN TO RELATE THE DISCLOSURES MADE BY THE APPELLANT ARE FALLING WITHIN THE TWO CONDITION OF EXPLANATION 5A TO S EC. 271(1)(C) OF THE ACT. WITH REGARD TO THE DEFECTS IN THE NOTICE U/S 271(1)(C) OF THE ACT RAISED BY THE APPELLANT, THE PROVISION OF SEC. 292B OF THE ACT APPLICABLE W.E.F. 01.10.1975 IS REPRODUCED HEREUNDER: 292B. NO RETURN OF INCOME, ASSESSMENT, NOTICE , SUMMONS OR OTHER PROCEEDING, FURNISHED OR MADE OR ISSUED OR TAKEN OR PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSUED OR TAKEN IN PURSUANCE OF ANY OF THE PROVISIONS OF THIS ACT SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASON BY ANY M ISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURP OSE OF THIS ACT. THE ABOVE PROVISION COMES TO THE RESCUE OF THE AO IN THE CURRENT CASE AS HE HAS INITIATED PENALTY U/S 271(1)(C) ON THE BASIS OF ADDITION OF UNDISCLOSED INCOME SHOWN BY THE APPELLANT AND IN THE PENALTY ORDER, AO HAS CONCLUDED THAT THE PENA LTY WAS LEVIED FOR DEEMED CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AS PER EXPLANATION 5A TO SEC. 271(1)(C) OF THE ACT. THUS, DESPITE THE DEFECTS IN THE NOTICE WS 271(1)(C), THE SAME IS FOUND TO BE AS PER THE I NTENT AND PROVISIONS OF THE ACT. ACCORDINGLY, APPELLANT'S FIRST CONTENTION FOR QUASHING OF PENALTY ORDER ON THE GROUND OF DEFECTS IN NOTICE U/S 271(1)(C) IS HEREBY DISMISSED. 2. THE APPELLANT HAS REFERRED TO VARIOUS COURT DECISIONS INCLUDING THE DECISION OF SUPREME COURT IN THE CASE OF CIT VS AGARWAL ROLLING MILLS LTD (2014) 88 CCH 036 ISCC WHEREIN THE HON'BLE SUPREME COURT HELD THAT NO PENALTY CAN BE IMPOSED U/S 271(1)(C) OF THE ACT WHERE THE ADDITION WAS MADE ON THE AMOUNTS SURRENDERED BY THE ASSESSEE. I N THIS CASE, THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY TO THE TUNE OF RS. 1.49 CRORES DURING THE YEAR. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT SUBMIT THE DOCUMENTS RELATED TO THE AMOUNT OF RS. 61 LAKHS RECEIVED FROM 12 APPLICANTS. ACCORDINGLY, SHARE APPLICATION MONEY OF RS. 61 LAKHS WAS SURRENDERED BY THE ASSESSEE. THE AO TREATED RS. 61 LAKHS AS INCOME AND INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. COMMISSIONER OF INCOME - TAX (APPEALS) ('CIT(A)') AND ITAT HELD THE CASE IN FAVOUR OF THE ASSESSEE. 5 ITA NO.355/RAN/2016 ASSESSMENT YEAR: 2009 - 2010 ON APPEAL BY THE REVENUE, THE CHATTISGARH HIGH COURT (TCA NO. 15/2011) HELD THAT THERE WAS NEITHER ANY DETECTION NOR ANY INFORMATION IN POSSESSION OF THE REVENUE EXCEPT FOR THE AMOUNT SURRENDERED BY THE ASSESSEE. ACCORDINGLY, IT COULD NOT BE SAID THAT THERE WAS ANY 'CONCEALMENT'. THE SUPREME COURT DISMISSED THE PETITION FILED BY REVENUE THEREBY HOLDING THAT PENALTY CANNOT BE LEVIED UPON VOLUNTARY SURRENDER OF INCOME. THE FACTS OF THE CURRENT CASE IS SQUARELY COVERED BY THE FACTS O F THE DECISION IN THE CASE OF M/S AGARWAL ROLLING MILLS LTD. AS IN THE CURRENT CASE THE APPELLANT SURRENDERED CERTAIN INCOME WHICH HAS NOT BEEN CORRELATED WITH ANY SEIZED DOCUMENTS OR OTHER EVIDENCES TO FALL WITHIN EXPLANATION `5A' TO S. 271(1)(C) OF THE A CT. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT THE PENALTY LEVIED U/S 271(1)(C) IS NOT SUSTAINABLE AND THE SAME IS HEREBY DELETED . 7. BEFORE US, LD D.R. COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE CIT(A). HE ALSO COULD NOT BRING ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF THE CIT(A). EVEN OTHERWISE, WE FIND THAT HONBLE SUPREME COURT VIDE JUDGMENT IN CASE OF M/S. SSA'S EME RALD MEADOWS, (2016) 73 TAXMANN.COM 248(SC) DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE JUDGMENT RENDERED BY HON'BLE HIGH COURT OF KARNATAKA, WHEREIN, IT WAS HELD THAT HAS HELD THAT OMISSION BY THE AO TO EXPLICITLY SPECIFY IN THE PENALTY NOTICE AS TO WHETHER PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OR FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION. IN THE INSTANT CAS E ALSO, FROM THE COPY OF NOTICE FILED BY LD A.R. OF THE ASSESEE, IT IS OBSERVED THAT THE ASSESSING OFFICER HAS NOT EXPLICITLY SPECIFIED IN THE PENALTY NOTICE AS TO WHETHER PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. THEREFORE, PENALTY ORDER PASSED BY 6 ITA NO.355/RAN/2016 ASSESSMENT YEAR: 2009 - 2010 THE ASSESSING OFFICER IS LIABLE TO BE CANCELLED. THEREFORE, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISSED THE GROUND OF APPEAL OF THE REVENUE. 8 . IN THE RESULT , APPEALS FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 /05 /201 8 SD/ - SD/ - (PAVAN KUMAR GADALE) (N.S SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER RANCHI; DATED 29 /05 /201 8 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PS, ITAT, CAMP AT RANCHI 1. THE APPELLANT : DY/ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, RANCHI. 2. THE RESPONDENT: EUROPEAN QUARTER, CHAIBASA, JHARKHAND 3. THE CIT(A), 3, PATNA 4. PR. CIT , PATNA 5. DR, ITAT, RANCHI 6. GUARD FILE. //TRUE COPY//