Setu Developers, Ahmedabad V. The Dy.CIT, Central Circle-2(1), Ahmedabad

ITA 380/AHD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89418 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-05-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 20-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA WITH G M THAKOR
• Keywords: Revised return
• Section: 143(3); 153A; 132; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE S/SHRI N. S. SAINI, A.M. & S. S. GODARA, J. M. ITA NO.380/AHD/2015 ASST. YEAR 2011-12 SETU DEVELOPERS, COPPER STONE NEXT TO SHRIDHAR BUNGLOWS, THALTEJ SHILAJ ROAD, THALTEJ, AHMEDABAD-380059 VS DY. CIT, CEN. CIRCLE 2(1), 3 RD FLOOR, AAYKAR BHAAVAN ASHRAM ROAD, AHMEDABAD-380015. (APPELLANT) (RESPONDENT) PA NO.ABSFS 1780Q APPELLANT BY SHRI P. M. MEHTA WITH G.M. THAKOR, AR RESPONDENT BY SHRI SUBHAS BAINS, CIT-DR DATE OF HEARING: 7.5.2015 DATE OF PRONOUNCEMENT: 11.5.2015 O R D E R PER SHRI N. S. SAINI, ACCOUNTANT MEMBER. THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF CIT(A) XII, AHMEDABAD, DATED 9.1.2015. THE SOLE GRO UND OF APPEAL TAKEN IS THAT THE CIT(A) ERRED IN UPHOLDING THE LEV Y OF PENALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT, OF RS.2,41,02,00 0/- MADE BY THE AO. ITA NO.380/AHD/2015 2 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AC TION WAS CARRIED OUT U/S 132 OF INCOME-TAX ACT, 1961 ON 6.1.2011 IN THE CASE OF SAVALIA GROUP, RESIDENTIAL PREMISE OF SHRI MAGANBHA I H. BHAKHAR SITUATED 86/1, H. COLONY, NEHRUNAGAR CHAR RASTA, AM BAWADI. IN THE STATEMENT RECORDED ON 6.1.2011 & 7.1.2011 UNDER SEC TION 132(4) OF THE ACT, SHRI MAGANBHAI H. BHAKHAR ADMITTED AN AMOU NT OF RS.7,80,00,000/- AS UNDISCLOSED INCOME. THE DISCLOS URE IN THE HANDS OF ASSESSEE FIRM WAS MADE IN RELATION TO ON MONEY RECEIVED FROM VARIOUS PARTIES FOR DEVELOPMENT OF PROJECTS OF CO PPER STONE NEAR SHRIDHAR BUNGLOW, THALTEJ. THE SCHEME CONTAINED 108 FLATS AND ASSESSEE HAD DISCLOSED RS.7.80 CRORES AS ON MONEY FROM 108 MEMBERS. THE SAME WAS DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME AND WAS ASSESSED TO TAX BY THE AO VIDE ORDER PASSED UNDER SECTION 143(3) ON 22.01.2013. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS REQUIRED TO PROVIDE THE DETAILS OF ON MONEY RECEIVED FROM EACH MEMBER FOR BOOKING 108 FLATS. THE ASSESSEE FAILED T O PROVIDE THIS INFORMATION AND, THEREFORE, PENALTY PROCEEDINGS WER E INITIATED UNDER SECTION 271(1)(C) OF THE ACT FOR SUBMITTING INACCUR ATE PARTICULARS OF ITA NO.380/AHD/2015 3 INCOME. IN THE PENALTY ORDER THE AO OBSERVED THAT T HE CORE ISSUE IN THE CASE OF THE ASSESSEE WAS WHAT CONSTITUTES CONCE ALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF SUCH INCOME. THE LEGAL ISSUE INVOLVED HERE IS WHETHER PA RTICULARS OF INCOME CAN BE SAID TO HAVE BEEN CONCEALED EVEN IF Q UANTUM OF RETURNED INCOME IS SAME AS ASSESSED INCOME. THE AO OBSERVED THAT THE ASSESSEE FIRM WAS FOUND TO HAVE CONCEALED THE P ARTICULARS OF INCOME DECLARED IN THE RETURN OF INCOME BY NOT PROV IDING TRUE AND CORRECT FACTS. HE OBSERVED THAT IT IS CLEAR FROM TH E FACTS OF THE ASSESSEES CASE THAT THE ASSESSEE HAS NEITHER FURNI SHED NOR EXPLAINED THE MANNER IN WHICH UNDISCLOSED INCOME IS EARNED AND DID NOT PROVIDE THE DEPARTMENT WITH TRUE AND CORRECT PA RTICULARS OF INCOME AND, THEREFORE, HE WAS SATISFIED THAT THE AS SESSEE HAS CONCEALED PARTICULARS OF ITS INCOME AND FURNISHED I NACCURATE PARTICULARS OF ITS INCOME AND WAS LIABLE FOR PENALT Y U/S 271(1)(C) OF THE ACT AND ACCORDINGLY HE LEVIED PENALTY OF RS.2,41,02 ,000/- BEING 100% OF THE TAX EVADED. 4. ON APPEAL THE CIT(A) CONFIRMED THE ACTION OF THE AO BY OBSERVING THAT IT WAS THE DUTY OF THE ASSESSEE TO R ECORD ALL HIS ITA NO.380/AHD/2015 4 TRANSACTION, INVESTMENT, EXPENDITURE AND INCOME IN THE BOOKS OF ACCOUNT ALONG WITH SOURCE OF PAYMENTS AND RECEIPT A ND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED IN EVERY YEAR. 5. THERE ARE AMPLE JUDICIAL PRONOUNCEMENTS WHEREIN IT HAS BEEN HELD THAT EVEN SURRENDERING OF INCOME OR FILING OF REVISED RETURN DOES NOT ABSOLVE THE ASSESSEE FROM THE APPLICABILITY OF PENALTY PROCEEDINGS U/S 271(1)(C). SINCE THE ASSESSEE DID N OT RECORD THE UNACCOUNTED ON MONEY RECEIVED IN THE BOOKS OF ACCOU NTS, THE ASSESSEE FAILED TO SHOW TRUE AND CORRECT INCOME IN THE BOOKS OF ACCOUNT MAINTAINED. THE CIT(A) ALSO OBSERVED THAT T HE AO LEVIED THE PENALTY UNDER SUB-CLAUSE (C) OF EXPLANATION 4 TO SE CTION 271(1)(C) OF THE ACT WHICH PROVIDES THAT EXPRESSION OF AMOUNT O F TAX SOUGHT TO BE EVADED MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABL E HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME I N RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED. HE, THEREFORE, HELD THAT THE AO WAS FULLY JUSTIFIED IN LEVYING PENALTY UNDER CLAUSE (C) OF EXPLANATION 4 O F SECTION 271(1)(C) OF THE ACT. ITA NO.380/AHD/2015 5 6. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT DURING THE COURSE OF SEARCH THE ASSESSEE MADE DISCLOSURE O F RS.7.80 CORES ON 6.1.2011 AND 7.1.2011 AND IN THE RETURN FILED FO R AY 2001-12 ON 30.09.2011 THE ASSESSEE DISCLOSED THE INCOME AND PA ID TAX THEREON. THE ASSESSMENT WAS MADE BY THE AO AT THE VERY SAME INCOME AT WHICH THE RETURN WAS FILED BY THE ASSESSEE I.E.7,81 ,17,510/- IT WAS, THEREFORE, THE SUBMISSION THAT THERE WAS NO CONCEAL MENT OF INCOME BY THE ASSESSEE WITH RESPECT TO THE RETURN OF INCOM E FILED BY THE ASSESSEE AND HENCE WAS NOT LIABLE TO PENALTY. IT WA S FURTHER SUBMITTED THAT CONFIRMATION OF THE IMPUGNED PENALTY BY THE CIT(A) UNDER EXPLANATION 4 TO SECTION 271(1)(C) OF THE ACT WAS TOTALLY ILLEGAL FOR THE SIMPLE REASON THAT THE AFORESAID EXPLANATIO N 4 IS ONLY A PROCEDURAL OR MACHINERY PROVISION THE SOLE OBJECT O F WHICH IS TO FACILITATE THE CALCULATION OF THE QUANTM OF PENALT Y TO BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT. EXPLANATION 4 IS NOT A DEEMING PROVISION AND LEVY OF PENALTY UNDER EXPLANATION 4 RENDERS THE APPELLATE ORDER PASSED BY THE CIT(A) AS BAD IN LAW. 7. HE FURTHER RELIED ON THE DECISION OF HONBLE DEL HI HIGH COURT IN THE CASE OF CIT VS.SAS PHARMACEUTICALS (2011) 3 35 ITR 259 (DEL) ITA NO.380/AHD/2015 6 WHEREIN IT HAS BEEN HELD THAT CLAUSE (C) OF SECTION 271(1) OF THE ACT AUTHORIZES IMPOSITION OF PENALTY WHEN THE ASSES SING OFFICER IS SATISFIED THAT THE ASSESSEE HAD EITHER CONCEALED PA RTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT WAS NOT A CASE OF FURNISHING INACCURATE PARTICULARS OF INCO ME, AS IN THE INCOME-TAX RETURN, PARTICULARS OF INCOME HAD BEEN D ULY FURNISHED AND THE SURRENDERED AMOUNT WAS DULY REFLECTED IN THE RE TURN. THE QUESTION WHETHER THE PARTICULARS OF INCOME WERE CON CEALED BY THE ASSESSEE OR NOT WOULD DEPEND UPON WHETHER THIS CONC EALMENT HAD REFERENCE TO THE RETURN FILED BY THE ASSESSEE. THE WORDS IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT WERE PRE FACED BY THE SATISFACTION OF THE ASSESSING OFFICER OR THE COMMIS SIONER (APPEALS). WHEN THE SURVEY WAS CONDUCTED THE QUESTION OF SATIS FACTION OF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER DID NOT ARISE. IT WAS THE ASSESSING OF FICER WHO INITIATED THE PENALTY PROCEEDINGS AND DIRECTED THE PAYMENT OF PENALTY. HE HAD NOT RECORDED ANY SATISFACTION DURING THE COURSE OF SURVEY. THE DECISION TO INITIATE PENALTY PROCEEDINGS WAS TAKEN WHILE MAKING THE ASSESSMENT ORDER. THUS, THE EXPRESSION IN THE COU RSE OF ANY PROCEEDINGS UNDER THIS ACT COULD NOT HAVE THE REF ERENCE TO SERVEY ITA NO.380/AHD/2015 7 PROCEEDINGS, IN THIS CASE. THE CONCEALMENT OF PARTI CULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME B Y THE ASSESSEE HAD TO BE IN THE RETURN FILED BY IT. NO PENALTY COULD B E IMPOSED UNLESS THE CONDITIONS STIPULATED IN THE PROVISIONS WERE DULY A ND UNAMBIGUOUSLY SATISFIED. SINCE THE ASSESSEE WAS EXPOSED DURING TH E SURVEY, MAY BE, IT WOULD HAVE NOT DISCLOSED THE INCOME BUT FOR THE SURVEY. HOWEVER, THERE COULD NOT BE ANY PENALTY ONLY ON SUR MISES, CONJECTURES AND POSSIBILITIES. SECTION 271(1)(C) OF THE ACT HAD TO BE CONSTRUED STRICTLY. UNLESS IT WAS FOUND THAT THERE WAS ACTUALLY CONCEALMENT OR NON-DISCLOSURE OF THE PARTICULARS OF INCOME, PENALTY COULD NOT BE IMPOSED. THERE WAS NO SUCH CONCEALMENT OR NON- DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISC LOSURE IN THE RETURN AND OFFERED THE SURRENDERED AMOUNT FOR THE P URPOSES OF TAX. 8. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE R OF LD. CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE THE ASSESSING OFFICER LEVIED PENALTY OF RS.2,4 1,02,000/- ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF I NCOME IN RESPECT OF ON MONEY OF RS.7.80 CRORES. THE RELEVANT FACTORS ARE THAT A SEARCH ITA NO.380/AHD/2015 8 AND SEIZURE OPERATION WAS CARRIED OUT IN THE CASE O F THE ASSESSEE ON 6.1.2011 IN THE COURSE OF WHICH THE ASSESSEE DISCLO SED EARNING OF ON MONEY OF RS.7.80 CRORES. 10. THEREAFTER THE ASSESSEE IN THE REGULAR RETURN F ILED BY IT DISCLOSED INTER ALIA INCOME OF RS.7.80 CRORES AS RE CEIVED AS ON MONEY. THE ASSESSEE DISCLOSED ITS TOTAL INCOME AT R S.7,81,17,501/- IN THE RETURN OF INCOME AND WAS ASSESSED UNDER SECT ION 143(3) VIDE ORDER DATED 22.01.2013 AT THE RETURNED INCOME OF RS .7,81,17,501/-. THUS THERE WAS NO DIFFERENCE IN THE RETURNED INCOME AND ASSESSED INCOME. 11. ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE COULD NOT FURNISH NAMES OF THE PERSONS FROM WHOM ON MONEY WAS RECEIVED AND THEREFORE HE CONSIDERED THE PARTICULARS OF INCO ME OF ON MONEY AS INACCURATE AND THEREFORE LEVIED PENALTY UNDER SE CTION 271(1)(C). 12. ON APPEAL COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMED THE ABOVE LEVY OF PENALTY. 13. WE FIND THAT IN THE INSTANT CASE PENALTY HAS NO T BEEN LEVIED UNDER SECTION 271 AAA OF THE ACT BUT UNDER SECTION 271(1)(C) OF THE ACT. ITA NO.380/AHD/2015 9 14. IN OUR CONSIDERED VIEW NO INACCURACY IN THE PAR TICULARS OF INCOME OF RS.7.80 CRORES BEING ON MONEY COULD B E ESTABLISHED BY THE ASSESSING OFFICER BY BRINGING ON RECORD ANY REL EVANT MATERIAL. 15. THE AMOUNT OF INCOME AND THE NATURE OF INCOME A S DISCLOSED BY THE ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFIC ER ON ASSESSMENT. THUS NO INACCURACY OR FALSITY IN THE PA RTICULARS FURNISHED BY THE ASSESSEE WAS FOUND BY THE ASSESSING OFFICER. THE CASE OF THE ASSESSING OFFICER IS THAT FURTHER MORE DETAILS IN R ESPECT OF THE INCOME WHICH WAS DESIRED BY THE ASSESSING OFFICER COULD NO T BE FURNISHED BY THE ASSESSEE AND THEREFORE FOR THIS FAILURE OF THE ASSESSEE HE LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN OUR CONSIDERED VIEW FOR SUCH A FAILURE PENALTY UNDER SECTION 271(1)(C) CANN OT BE LEVIED. PENALTY UNDER SECTION 271(1)(C) CAN BE LEVIED ONLY FOR EITHER CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, THE COMMISSIONER OF INCOME-TAX ( APPEALS) WAS NOT JUSTIFIED IN CONFIRMING ABOVE LEVY OF PENALTY. 16. FURTHER EXPLANATION 4 TO SECTION 271(1)(C) EXPL AINS THE PROCEDURE TO CALCULATE THE QUANTUM OF TAX SOUGHT TO BE EVADED AND THEREFORE, IN A CASE WHERE RETURNED INCOME AND ASSE SSED INCOME ARE ITA NO.380/AHD/2015 10 SAME, NO PENALTY UNDER SECTION 271(1)(C) CAN BE LEV IED WITH THE HELP OF PROVISIONS OF EXPLANATION 4 TO SECTION 271(1)(C) OF THE ACT. 17. WE FIND THAT THE HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO.1181 OF 2010 WITH TAX APPEAL NO.1182 OF 2010 TO TAXAPPEAL NO.1183 OF 2010 IN THE CASE OF KIRIT DAHYABHAI PATE L VS. ASSTT. COMMISSIONER OF INCOME-TAX, VIDE ORDER DATED 03/12/ 2014 HELD AS UNDER :- 13. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO CONSIDERING THE DECISIONS RELIEF UPON BY LEARNED SENIOR ADVOCAT E FOR THE APPELLANT, WE ARE OF THE CONSIDERED OPINION THAT THE VIEW TAKEN BY THE T RIBUNAL IS ERRONEOUS. THE CIT(A) RIGHTLY HELD THAT IT IS NOT RELEVANT WHETHER ANY RETURN OF INCOME WAS FILED BY THE ASSESSEE PRIOR TO THE DATE OF SEARCH AND WHE THER ANY INCOME WAS UNDISCLOSED IN THAT RETURN OF INCOME. IN VIEW OF SP ECIFIC PROVISION OF SECTION 153A OF THE I.T. ACT, THE RETURN OF INCOME FILED IN RESP ONSE TO NOTICE UNDER SECTION 153(A) OF THE I.T. ACT IS TO BE CONSIDERED AS RETUR N FILED UNDER SECTION 139 OF THE ACT, AS THE ASSESSING OFFICER HAS MADE ASSESSMENT O N THE SAID RETURN AND THEREFORE, THE RETURN IS TO BE CONSIDERED FOR THE P URPOSE OF PENALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT AND THE PENALTY IS TO BE LEVIED ON THE INCOME ASSESSED OVER AND ABOVE THE INCOME RETURNED UNDER SECTION 15 3A. IF ANY. WE THEREFORE, DELETE THE PENALTY OF RS.2,41,02,000/ - LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/5/2015 SD/ SD/- (S. S. GODARA) JUDICIAL MEMBER (N. S. SAINI) ACCOUNTANT MEMBER