The ACIT, Sabarkantha Circle, Himatnagar V. M/s. Mehta Finance, Sabarkantha

ITA 3600/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6337 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 23-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Onus to prove; Revised return

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NOS.3600 AND 3601/AHD/2015 ( / ASSESSMENT YEARS : 2011-12 & 2012-13) THE ACIT SABARKANTHA CIRCLE HIMATNAGAR / VS. M/S.MEHTA FINANCE TOWER ROAD HIMATNAGAR DIST.SABARKANTHA 383 001 # ./ ./ PAN/GIR NO. : AACFM 5349 L ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI JAMES KURIAN, SR.DR '#& )( / RESPONDENT BY : SHRI S.N. DIVATIA, AR *+ ), / DATE OF HEARING 23/11/2017 -./0 ), / DATE OF PRONOUNCEMENT 05/ 01 /2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: BOTH THE CAPTIONED APPEALS FILED AT THE INSTANCE OF THE REVENUE ARE AGAINST THE COMMON APPELLATE ORDER OF THE COMMISSIO NER OF INCOME TAX(APPEALS)-4, AHMEDABAD [CIT(A) IN SHORT] DATED 12/10/2015 IN THE MATTER OF PENALTY IMPOSED UNDER S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') BY THE AO VIDE ITS ORDERS ITA NOS.3600 & 3601/AHD/2015 ACIT VS. M/S.MEHTA FINANCE ASST.YEARS 2011-12 & 2012-13 - 2 - IDENTICALLY DATED 28/03/2014 RELEVANT TO ASSESSMENT YEARS (AYS) 2010- 11 & 2012-13 RESPECTIVELY. 2. SINCE THE ISSUES ARE INVOLVED COMMON, BOTH THE APPEALS HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER. 3. IN BOTH APPEALS, THE REVENUE IS AGGRIEVED BY T HE ORDER OF CIT(A) IN DELETING PENALTY IMPOSED UNDER S.271(1)(C) OF TH E ACT QUANTIFIED AT RS.37,03,219/- AND RS.48,35,445/- FOR AYS 2011-12 & 2012-13 RESPECTIVELY. 4. BRIEFLY STATED, THE ASSESSEE, A PARTNERSHIP-FIR M, IS ENGAGED IN THE BUSINESS OF MONEY LENDING AND FINANCE. THE ASSESSE E FILED ITS ORIGINAL RETURN OF INCOME FOR AY 2011-12 ON 27/09/2011 DECLA RING TOTAL INCOME OF RS.26,60,000/-. SUBSEQUENT TO THE FILING OF R ETURN, A SURVEY WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE UNDER S.1 33A OF THE ACT ON 14/02/2013 WHERE CERTAIN INCRIMINATING DOCUMENTS WE RE FOUND AND CONSEQUENTLY THE ASSESSEE MADE A DISCLOSURE OF CER TAIN UNACCOUNTED INCOME FOR VARIOUS YEARS. SUBSEQUENT TO SURVEY, A REVISED RETURN WAS FILED RELEVANT TO AY 2011-12 AND AY 2012-13 WHERE T HE INCOME EARLIER DECLARED WERE REVISED TO INCLUDE UNACCOUNTED INCOME DETECTED IN SURVEY. THE ASSESSMENT WAS THEREAFTER COMPLETED UNDER S.143 (3) OF THE ACT AND THE REVISED INCOME SO DECLARED WAS ASSESSED AS SUCH AT THE SAME FIGURE. AS A SEQUEL TO THE ASSESSMENT, PENALTY ORDER UNDER S.271(1)(C) OF THE ACT ITA NOS.3600 & 3601/AHD/2015 ACIT VS. M/S.MEHTA FINANCE ASST.YEARS 2011-12 & 2012-13 - 3 - RELEVANT TO ASSESSMENT YEARS 2011-12 & 2012-13 WERE ALSO PASSED. IN THE RESPECTIVE PENALTY ORDERS, THE ASSESSING OFFICE R (AO) OBSERVED THAT IN THE COURSE OF SURVEY, CERTAIN INCRIMINATING DOCU MENTS IN THE FORM OF DIARY AND LOOSE-PAPERS WERE FOUND AND IMPOUNDED FR OM THE PREMISES OF THE ASSESSEE. IT WAS FURTHER NOTED THAT STATEMENT OF ASSESSEE WAS ALSO RECORDED IN WHICH THE ASSESSEE CONCEDED THE FACT OF UNACCOUNTED INCOME ARISING FROM MONEY LENDING BUSINESS. THE AO THEREA FTER NOTED THAT ON THE BASIS OF EVIDENCES FOUND DURING THE COURSE OF S URVEY BY THE INCOME- TAX DEPARTMENT, THE ASSESSEE INTER ALIA DISCLOSED ADDITIONAL INCOME FOR AY 2011-12 AT RS.1,19,84,531/- AND RS.1,56,48,690/- FOR AY 2012-13. THE AO ACCORDINGLY CONCLUDED THAT THE UNACCOUNTED I NCOME DETECTED AND CONCEDED IS SUSCEPTIBLE TO PENALTY AS THE SAME WAS NOT SHOWN BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME FOR THESE ASSESSMENT YEARS FILED PRIOR TO THE SURVEY. THE AO HELD THAT THE CONCEALE D INCOME WAS DECLARED WHEN DETECTED BY THE DEPARTMENT AS A RESULT OF SURV EY UNDER S.133A OF THE ACT. CONSEQUENTLY, A MINIMUM PENALTY @100% ON THE INCOME SOUGHT TO BE EVADED WAS QUANTIFIED AND IMPOSED AS PENALTY BY RESORTING TO SECTION 271(1)(C) OF THE ACT. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AGAINST THE AFORESAID ACTION OF THE AO AND CHALLENGED THE M ERITS OF IMPOSITION OF PENALTY. THE CIT(A) AFTER TAKING INTO ACCOUNT VARI OUS SUBMISSIONS MADE BY THE ASSESSEE, CAME TO THE CONCLUSION THAT PENALT Y IMPOSED BY THE AO ITA NOS.3600 & 3601/AHD/2015 ACIT VS. M/S.MEHTA FINANCE ASST.YEARS 2011-12 & 2012-13 - 4 - IS NOT JUSTIFIED FOR AYS 2011-12 & 2012-13 BROADLY ON GROUND THAT (I) THE INITIAL DISCLOSURE WAS MADE ON ESTIMATED BASIS, (II) REVISED RETURN WAS FILED WITH 15 DAYS OF SURVEY, (III) NO REASONS WERE MENTIONED FOR INITIATION OF PENALTY AND (IV) REVISED RETURN WERE FOUND TO BE CORRECT AND NO QUERY WAS RAISED ABOUT THE FINDINGS OF SURVEY. THE CIT(A) PLACED HEAVY RELIANCE ON THE PLEA OF THE ASSESSEE THAT THE DISCLOSURE WAS MADE TO BUY PEACE OF MIND AND TO SAVE THE GOOD-WILL OF THE FIRM. THE CIT(A) ACCORDINGLY REVERSED THE ACTION OF THE AO AND DELET ED THE PENALTY FOR BOTH THE ASSESSMENT YEARS. 6. AGGRIEVED, THE REVENUE PREFERRED THE APPEAL BEFO RE THE TRIBUNAL. 7. THE LD.DR FOR THE REVENUE, AT THE OUTSET, SUBMIT TED THAT THE CIT(A) HAS MISDIRECTED ITSELF IN LAW AND ON FACTS IN CANCELLING THE IMPOSITION OF PENALTY. THE LD.DR EXHORTED THAT THE ASSESSEE FILED A RETURN OF INCOME UNDER S.139(1) PRIOR TO SURVEY WHE REBY TOOK ITS POSITION ON THE INCOME EARNED. AFTER THE FILING OF THE RETU RN OF INCOME, SURVEY WAS CARRIED OUT AND CERTAIN LOOSE-PAPERS AND DOCUME NTS WERE FOUND WHICH WERE CONFRONTED TO THE ASSESSEE. THE ASSESSE E READILY ACCEPTED THE FACTUM OF UNDISCLOSED INCOME AND OFFERED ESTIMATED ADDITIONAL INCOME OF VARIED AMOUNTS FOR DIFFERENT ASSESSMENT YEARS. THE EXACT UNDISCLOSED ADDITIONAL INCOME WAS THEREAFTER INCLUDED IN THE RE VISED RETURN FILED PURSUANT TO SURVEY ACTION. THEREFORE, THE CONCEALE D INCOME DETECTED AS A ITA NOS.3600 & 3601/AHD/2015 ACIT VS. M/S.MEHTA FINANCE ASST.YEARS 2011-12 & 2012-13 - 5 - RESULT OF SURVEY AFTER THE FILING OF THE RETURN OF INCOME CANNOT ESCAPE THE CLUTCHES OF PENALTY PROVISIONS. 8. THE LD.AR, ON THE OTHER HAND, EXTENSIVELY RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE UNDISCLOSED INCOM E WAS DECLARED TO BUY PEACE OF MIND AND TO SAVE LOSS OF GOODWILL BASE D ON THE UNDERSTANDING THAT NO PENALTY AND PROSECUTION PROCE EDINGS WILL BE INITIATED AGAINST AFORESAID DECLARATIONS. THE LD.A R THEREAFTER SUBMITTED THAT CIT(A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE MORE SO BECAUSE THE ASSESSEE HAS FULLY CO-OPERATED IN TH E SURVEY PROCEEDINGS AND IS NOT GUILTY OF CONCEALMENT OF ANY INCOME PER SE . 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LIMITED ISS UE IN BOTH THE CAPTIONED APPEALS BEFORE US IS WHETHER UNACCOUNTED INCOME DE TECTED IN THE COURSE OF SURVEY RELEVANT TO AN ASSESSMENT YEAR AND INCLUD ED IN THE RETURN REVISED AFTER THE SURVEY PROCEEDINGS CONDUCTED UNDE R S.133A OF THE ACT IS SUSCEPTIBLE TO IMPOSITION OF PENALTY ON THE AMOU NT SO DETECTED IN THE COURSE OF SURVEY PROCEEDINGS OR NOT. RELEVANT TO T HE PRESENT APPEALS, THE ORIGINAL RETURN FOR BOTH THE ASSESSMENT YEARS 2011- 12 AND 2012-13 WERE FILED PRIOR TO SURVEY. AS A CONSEQUENCE OF SURVEY, CERTAIN ADDITIONAL INCOME (RS.1,19,84,531/- - 2011-12; RS.1,56,48,690 /- - 2012-13) WERE INCLUDED IN THE REVISED RETURN OF INCOME. ON FACTS , WE NOTICE REFERENCE TO ITA NOS.3600 & 3601/AHD/2015 ACIT VS. M/S.MEHTA FINANCE ASST.YEARS 2011-12 & 2012-13 - 6 - CERTAIN DIARY, LOOSE-PAPER AND CHITS STATED TO BE FOUND IN THE BUSINESS PREMISES OF THE ASSESSEE AFTER THE FILING OF THE RE TURN OF INCOME. ON BEING CONFRONTED, THE PARTNER OF THE ASSESSEE-FIRM CONCEDED THAT SOME OF THE ENTRIES AS FOUND IN THE LOOSE-PAPERS ETC. ARE N OT RECORDED IN THE BOOKS OF ACCOUNTS. AFTER CONSIDERING THESE LOOSE-PAPERS/ CHITS ETC. CERTAIN ADDITIONAL INCOME WERE READILY OFFERED FOR VARIOUS FINANCIAL YEARS IN THE COURSE OF SURVEY. THEREAFTER, EXACTING FIGURES WER E INCLUDED AS ADDITIONAL INCOME IN THE REVISED RETURN FOR AYS 201 1-12 & 2012-13. THE QUESTION THAT ARISES FOR OUR CONSIDERATION IN T HESE FACTS ARE WHETHER PENALTY UNDER S.271(1)(C) OF THE ACT CAN BE IMPOSED ON SUCH ADDITIONAL INCOME OR NOT. 9.1. IT IS WELL-SETTLED THAT CONCEALMENT TAKES P LACE ON THE DATE WHEN THE RETURN IS FILED WITHOUT DISCLOSING THE TRUE PAR TICULARS OF INCOME OF THAT YEAR AS HELD BY THE APEX COURT IN THE CASE OF BRIJ MOHAN VS. CIT 120 ITR 1 (SC). IT IS ALSO HELD BY THE HONBLE SUPREME COURT THAT THE LAW WHICH PREVAILS ON THE DATE OF FILING OF SUCH RETURN WOULD BE APPLICABLE FOR LEVY OF SUCH PENALTY. IT IMPLIES THAT OFFENCE OF C ONCEALMENT TAKES PLACE AS SOON AS THE RETURN IS FILED WITHOUT INCORPORATIN G TRUE INCOME AND NOT SHOWING ANY BONAFIDE REASONS FOR SUCH FAILURE. 9.2. IN THE INSTANT CASE, THE ORIGINAL RETURN OF INCOME WAS FILED DISCLOSING CERTAIN INCOME WHICH WAS ADMITTEDLY UNDE RSTATED. THEREAFTER ITA NOS.3600 & 3601/AHD/2015 ACIT VS. M/S.MEHTA FINANCE ASST.YEARS 2011-12 & 2012-13 - 7 - SURVEY WAS CONDUCTED AND INCRIMINATING MATERIAL WER E FOUND. IT IS EVIDENT FROM THE STATEMENT RECORDED IN THE COURSE O F SURVEY THAT THE DECLARATIONS MADE WERE BASED ON TANGIBLE INCRIMINA TING MATERIAL. THE RETURN WAS CONSEQUENTIALLY REVISED AND EXACT QUANTI FICATION OF ADDITIONAL INCOME OF VARIED AMOUNT WERE MADE FOR THE DIFFERENT ASSESSMENT YEARS AND THE REVISED RETURN WAS ACCORDINGLY FILED. IN THESE CIRCUMSTANCES, FACTS BELIE THE ASSERTIONS THAT THE NON-DISCLOSUR E OF THE ADDITIONAL INCOME IN THE ORIGINAL RETURN OF INCOME AND FOUND I N THE COURSE OF SURVEY WAS DUE TO ANY BONFIDE AND INADVERTENT MISTAKE. T HE DEPOSITION MADE IN THE STATEMENT IS CORROBORATED BY INCRIMINATING MATE RIAL AND SUBSEQUENT REVISED RETURN OF INCOME. AS A CONCOMITANT, WE DO NOT FIND ANY FORCE IN THE PLEA OF THE ASSESSEE THAT THE DECLARATION WAS M ADE MERELY TO BUY PEACE AND TO PROTECT GOOD-WILL OF THE FIRM ALONE. THE ASSESSEE WAS LEFT WITH NO CHOICE AS A CONSEQUENCE OF SURVEY BUT TO IN CLUDE THE AFORESAID INCOME IN THE REVISED RETURN. 9.3. THE BURDEN TO PROVE MITIGATING CIRCUMSTANCES FOR NOT INCLUDING THE CORRECT INCOME IN ORIGINAL RETURN OF INCOME IS ON A SSESSEE WHICH IS NOT FOUND TO BE DISCHARGED AT ALL. IT IS A CLEAR CUT-CA SE WHERE THE ASSESSEE HAD SOUGHT TO CONCEAL THE TRUE INCOME BY UNDERREPORTING THE TRUE INCOME IN THE ORIGINAL RETURN. IN THE ABSENCE OF A BONAFIDE AND A PLAUSIBLE EXPLANATION FOR NOT INCLUDING THE TRUE INCOME IN TH E ORIGINAL RETURN, THE ASSESSEE IS LIABLE TO PENALTY PROCEEDINGS WHICH IS PROVIDED AS A REMEDY ITA NOS.3600 & 3601/AHD/2015 ACIT VS. M/S.MEHTA FINANCE ASST.YEARS 2011-12 & 2012-13 - 8 - FOR THE LOSS OF POSSIBLE REVENUE.. NO EXPLANATION WORTH THE NAME WAS OFFERED BY THE ASSESSEE AND THE SURRENDER WAS MADE ONLY AFTER TANGIBLE CORROBORATING MATERIAL WERE FOUND DURING THE SURVEY OF THE BUSINESS PREMISES OF THE ASSESSEE. TO REITERATE, ONUS SQUAR ELY LIES UPON THE ASSESSEE TO PROVE ITS BONAFIDES. MERE AVERMENT TH AT THE DISCLOSURE WAS MADE TO BUY PEACE AND TO SAVE GOODWILL PER SE IS OF NO CONSEQUENCE. WE DO NOT, IN THE SAME VAIN, FIND ANY SORT OF COMMITM ENT ON THE PART REVENUE THAT PENALTY PROCEEDINGS WILL NOT BE INITIA TED AS REQUESTED BY THE ASSESSEE. UNILATERAL REQUEST OF ASSESSEE IN THIS R EGARD WITHOUT EXISTENCE OF ANY CORRESPONDING PROMISE IS OF NO BINDING CONSE QUENCE AND CANNOT COMPEL THE AO TO EXERCISE ITS DISCRETION IN FAVOUR OF ASSESSEE. 10. THEREFORE, WE DO NOT FIND ANY IOTA OF MERIT IN THE CONCLUSION DRAWN BY THE CIT(A) IN THESE FACTS WHILE CANCELLING THE P ENALTY IMPOSED BY THE AO. WE FIND THAT THE ACTION OF THE AO IN IMPOSING THE PENALTY UNDER S.271(1)(C) OF THE ACT IN BOTH THE CAPTIONED APPEAL S IS IN TUNE WITH LAW AND CANNOT BE FAULTED. THE CIT(A), ON THE OTHER HA ND, HAS FAILED TO APPLY ITS MIND TO THE FACTS JUDICIOUSLY AND HAS WRONGLY A PPRECIATED THE UNEQUIVOCAL FACTS. THE ORDER OF THE CIT(A) CANCELL ING THE PENALTY FOR BOTH THE ASSESSMENT YEARS ARE THUS SET ASIDE AND RE SPECTIVE PENALTY ORDERS OF THE AO ARE RESTORED. ITA NOS.3600 & 3601/AHD/2015 ACIT VS. M/S.MEHTA FINANCE ASST.YEARS 2011-12 & 2012-13 - 9 - 13. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 05 / 01 /201 8 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 05/ 01 /2018 4..*,.*../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-4, AHMEDABAD 5. 9:;,*67 , 67 0 , 5 / DR, ITAT, AHMEDABAD 6. ;<+ / GUARD FILE. / BY ORDER, '9,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 2.1.2018 (DICTATION-PAD 24- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3.1.2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.5.1.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 5.1.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER