Asst. Commissioner of Income Tax, Circle-1(1), Panaji V. M/s Shrithik Rolling Pvt. Ltd., Panaji

ITA 383/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93499 (ITAT-PANAJI)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEHBOOB ALI KHAN
• Keywords: Revised return
• Section: 153A; 148; 6; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN , HONBLE JUDICIAL MEMBER AND SHRI N.K. BILLAIYA , HONBLE ACCOUNTANT MEMBER ITA NO. 38 3 /PNJ/2014 (ASST. YEAR : 200 7 - 0 8 ) ACIT , CIRCLE - 1(1), PANAJI GOA VS. M/S. SHRITHIK ROLLING PVT. LTD., T6/T7, SANDEEP APARTMENTS, D.V. ROAD, PANAJI GOA. PAN NO. AAGCS 2502 J ITA NO S . 38 4 & 385 /PNJ/2014 (ASST. YEAR S : 2006 - 07 & 200 7 - 0 8 ) ACIT, CIRCLE - 1(1), PANAJI GOA VS. M/S. SHRITHIK ISPAT PVT. LTD., T6/T7, SANDEEP APARTMENTS, D.V. ROAD, PANAJI GOA. PAN NO. AAICS 1765 P ITA NO S . 386 & 387/PNJ/2014 (ASST. YEAR S : 200 5 - 0 6 & 2007 - 08 ) ACIT, CIRCLE - 1(1), PANAJI GOA VS. M/S. PRATEEK ALLOYS PVT. LTD., T6/T7, SANDEEP APARTMENTS, D.V. ROAD, PANAJI GOA. PAN NO. AA ACP 1598 D (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI MEHBOOB ALI KHAN - DR DATE OF HEARING : 1 7 / 0 6 /2015 . DATE OF PRONOUNCEMENT : 17 / 0 6 /201 5 . 2 ITA NO. 38 3 - 387 /PNJ/2014 O R D E R PER N.K. BILLAIYA TH E S E APPEAL S BY THE REVENUE AGAINST THE THREE ASSESSEES BELONGING TO THE SAME GROUP PREFERRED AGAINST THE SEPARATE ORDER S OF L D. CIT (A), PANAJI , DATED 2 8 /0 8 /201 4 PERTAINING TO A.Y S . 200 5 - 0 6 TO 2007 - 08 . AS ALL THESE APPEALS HAVE COMMON GROUND, THEY WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE COMMON GROUND IN ALL THESE APPEALS IS THAT LD. CIT(A) ERRED IN DELETING THE LEVY OF PENALTY BY THE ASSESSING OFFICER MADE U/ S.271(1)(C) OF THE ACT. 3 . THE COMMON FACTS IN ALL THESE APPEALS ARE THAT A S E A R C H WAS CONDUCTED U/S. 132 IN THE CASE OF SHIKHIR VIR AGARWAL AND HIS GROUP OF COMPANIES INCLUDING THE ASSESSEE UNDER CONSIDERATION ON 03/03/2008 . DURING THE COURSE OF S E A R C H OPERATIONS AND IN THE STATEMENT MADE U/S.132(4) OF THE ACT, ASSESSEE OFFERED TOTAL ADDITIONAL UNDISCLOSED INCOME OF RS. 9 C RORE S IN THE ENTIRE GROUP. OUT OF RS. 9 CRORES DECLARATION MADE ON 03/03/2008 , INCOME OF RS. 4,61,00,000/ - WAS OFFERED IN THE A.Y. 2008 - 09 IN GROUP CONCERNS AS DETAILED BELOW : - 3 ITA NO. 38 3 - 387 /PNJ/2014 SHRITIK ROLLING PVT. LTD. PRATEEK ALLOYS PVT. LTD. SHRITIK ISPAT PVT. LTD. TOTAL 1,55,00,000 2,31,00,000 75 , 00 , 00 0 4,61,00,000 BALANCE INCOME OF RS. 4,39,00,000/ - WAS OFFERED TO TAX IN RETURN OF INCOME FURNISHED UNDER SEC. 153A IN RESPECT OF THE PERSONS CONCERNED AND DETAI L S, ASSESSMENT YEAR WISE, IS AS UNDER: - A.Y SHRITIK ROLLING PVT. LTD. PRATEEK ALLOYS PVT. LTD. SHRITIK ISPAT PVT. LTD. GIRIJA AGARWAL TOTAL 07 - 08 61,00,000 1,71,00,000 75.00,000 0 3,07,00,000 06 - 07 0 5,00,000 55,00,000 0 60,00,000 05 - 06 0 62,00,000 2,00,000 5,50,000 69,50,000 04 - 05 0 0 0 2,50,000 2,50,000 6 1,00,000 2,38,00,000 1,32,00,000 8,00,000 4,39,00,000 DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSEE WAS CONFRONTED ON THE ADDITIONAL UNDISCLOSED INCOME OFFERED . THE ASSESSEE ADMITTED THAT THE UNDISCLOSED INCOME HAS BEEN OFFERED U/S.132(4) CONSEQUENT TO SEARCH. THE ASSESSING OFFICER WAS OF THE FIRM BELIEF THAT THE ASSESSEE HAS DISCLOSED ADDITIONAL INCOME ONLY AFTER THE SEARCH, WHICH MEANS THAT THE ASSESSEE KNOWINGLY AND DELIBERATELY CONCEALED THE INCOME. EVEN IF THE ASSESSEE HAS DECLARED SUCH INCOME IN THE RETURN FILED AFTER THE SEARCH, ASSESSEE IS DEEMED TO HAVE CONCEALED HIS INCOME/FURNISHED INACCURATE PARTICULARS. THUS, PENALTY PROCEEDINGS WERE INITIATED AND AFTER RELYING UPON VARIOUS DECISIONS WHICH ARE INCORPORATED IN THE PENALTY ORDER, THE ASSESSING OFFICER FINALLY CONCLUDED THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT AND ACCORDINGLY, PROCEEDED BY LEVYING THE PENALTY. 4 ITA NO. 38 3 - 387 /PNJ/2014 4 . AGGRIEVED BY THIS , THE ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A) . IT WAS STRONGLY CONTENDED THAT SATISFACTION OF THE ASSESSING OFFICER IN THE ORDER OF THE ASSESSMENT IS A PREREQUISITE CONDITION FOR INVOKING THE PENALTY PROCEEDINGS. THE ASSESSING OFFICER HAS NOT RECORDED HIS SATISFACTION. THEREFORE, IN THE ABSENCE OF ANY PROPER REASON BEING RECORDED BY THE ASSESSING OFFICER, ORDER OF PENALTY LACKS APPLICATION OF MIND . RELYING UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MS. MADHUSHREE GUPTA VS. UNION OF INDIA & ANR. (317 ITR 107) , I T WAS STRONGLY CONTENDED THAT FAILING TO RECORD SATISFACTION IN ITSELF WOULD MAKE THE LEVY OF PENALTY ILLEGAL. 4.1 IT WAS FURTHER BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT EVEN THE NOTICE FOR INITIATION OF PENALTY WAS NOT CLEAR WHETHER THE PENALTY PROCEEDING S HAVE BEEN INITIATED FOR CONCEALMENT OF INCOME OR F I L I N G INACCURATE PARTICULARS OF INCOME. 4.2 IT WAS STRONGLY CONTENDED THAT WITH THE INSERTION OF SECTION 271AAA, THE LEVY OF PENALTY IN THE CASE OF SEARCHES CONDUCTED ON OR AFTER 01/06/2007 HAVE TO BE CONSIDERED IN THE LIGHT OF THE PROVISIONS OF SEC. 271AAA . THE ASSESSING OFFICER HAS LEVIED THE PENALTY U/S.271(1)(C) OF THE ACT I S BY ITSELF BAD IN LAW. 5 ITA NO. 38 3 - 387 /PNJ/2014 4.3 AFTER CONSIDERING THE SUBMISSIONS AND THE FACTS OF THE CASE AND RELYING UPON THE JUDIC IAL DECISIONS DISCUSSED BY THE LD. CIT(A) IN HIS ORDER, LD. CIT(A) FINALLY CONCLUDED BY HOLDING AS UNDER: - I FIND THAT THE APPELLANT HAS FULFILLED ALL THE CONDITIONS, AS IT HAS GIVEN DETAILS OF ITS DISCLOSURE, INCLUDING THE MANNER IN WHICH IT HAS BEEN EAR NED, WHILE FILING THE R ETURN OF INCOME DECLARING UNDISCLOSED INCOME. AS ALREADY MENTIONED, IT PAID TAXES ON ITS UNDISCLOSED INCOME IN DUE COURSE. TO SUPPORT ITS CONTENTIONS, TH E APPELLANT HAS PLACED RELIANCE ON MANY JUDICIAL PRONOUNCEMENTS . OUT OF THE DECISIONS RELIED UPON BY THE APPELLANT, I WOULD LIKE TO QUOTE THE DECISION OF HON'BLE SUPREME COURT,, GIVEN IN THE CASE O CIT VS. SURESH CHANDRA MITTAL, REPORTED IN 251 ITR 9 (SC). IN THI S CASE, THE ASSESSEE HAD ORIGINALLY FILED RETURN SHOWING MEAGER INCOME. WHEN, AFTER ACTION U/S. 132 OF THE INCOME TAX ACT, 1961, NOTICE U/S. 148 WAS SERVED ON HIM, HE FILED REVISED RETURNS SHOWIN G HIGHER INCOME. EVENTUALLY ASSESSMENT ORDERS WERE PASSED. II PENALTY PROCEEDINGS UNDER SECTION 271, THE ASSESSEE CLA IMED THA T HE HAD OFFERED ADDITIONAL INCOME TO BUY PEACE OF MIND AND AVOI D LITIGATION. PENALTY ORDERS WERE PASSED AND THE COMMISSIONER (A ) CONFIRMED THE ORDERS. BUT THE APPELLATE TRIBUNAL HELD THAT TH E DEPARTMENT HAD NOT DISCHARGED ITS BURDEN OF PROVING O F CONCEALMENT AND HAD SIMPLY RESTED ITS CONCLUSION ON THE ACT O F VOLUNTARY SURRENDER DONE BY THE ASSESSEE IN GOOD FAITH, AND THAT PENALTY COULD NOT BE LEVIED. ON A REFERENCE, THE HIGH COURT HELD THAT NO PENALTY COULD BE LEVIED FOR CONCEALMENT. THE DEPARTMENT PREFERRED APPEAL TO THE SUPREME COURT. THE HON'BLE SUPREME COURT DISMISSED THE APPEAL HOLDING THAT NO INTERFERENCE WITH THE ORDER OF HIGH COURT WAS CALLED FOR. IN MY OPINION, THIS DECISION OF THE HON'BLE SUPREME COURT SQUARELY COVERS THE INSTANT CASE, AS THE FACTS ARE IDENTICAL. THUS, LOOKING AT THE FACTS OF THIS CASE, CONDUCT OF THE ASSESSEE, PROVISIONS OF S.271AAA AND THE DECISION OF THE HONOURABLE SUPREME COURT IN THE ABOVE DISCUSSED CASE, IN MY OPINION, PENALTY U/S.271(L)(C) IS NOT LEVIABLE IN THIS GROUP OF CASES . 6 ITA NO. 38 3 - 387 /PNJ/2014 5. AGGRIEVED BY THIS, REVENUE IS BEFORE US. 6. IN ITS GROUNDS OF APPEAL, REVENUE HAS REFERRED TO EXPLANATION 5A TO SEC. 271(1)(C) OF THE ACT AND HAS CLAIMED THAT IT IS APPLICABLE ON THE FACTS OF THE CASE. WE FAILED TO UNDERSTAND HOW CAN REVENUE TAKE SUCH A GROUND , WHEN THIS ISSUE IS NOT ARISING OUT OF THE PENALTY ORDER BECAUSE NOWHERE IN THE PENALTY, THE ASSESSING OFFICER HAS INVOKED EXPLANATION 5A TO SEC. 271(1 ) (C) OF THE ACT. THE ENTIRE PENALTY ORDER REFERS TO LEVY OF PENALTY FOR THE CONCEALMENT OF INCOME BECAUSE THE INCOME WAS OFFERED ONLY AFTER THE SEARCH AND SINCE INCOME WAS NOT OFFERED IN THE ORIGINAL RETURN OF INCOME, PENALTY WAS LEVIABLE. 6.1 IN THE ANXIETY OF LEVYING THE PENALTY U/S. 271(1)(C) OF THE ACT, THE OFFICER SIMPLY IGNORED THE PROVISIONS OF SEC. 271AAA OF THE ACT WHICH HAVE BEEN INTRODUCED FOR THE SEARCHES CONDUCTED ON OR A F T E R 01/06/2007 . THE OFFICER FAILED TO APPRECIATE THAT THE ASSESSEE HAS FU LFILLED ALL THE CONDITIONS MANDATORY TO GET IMMUNITY FROM THE LEVY OF PENALTY. FURTHER, THE OFFICER DID NOT CONSIDER THE FACT THAT IN HIS STATEMENT MADE U/S. 132(4) OF THE ACT, THE ASSESSEE HAS OFFERED ADDITIONAL INCOME FOR TAX. THE ASSESSEE HAS PAID TAXES ON THE SAID UNDISCLOSED INCOME OFFERED AND THE ASSESSEE HAS EXPLAINED THE SOURCE FROM WHICH THE SAID INCOME HAS BEEN EARNED. WE , THEREFORE, DO NOT 7 ITA NO. 38 3 - 387 /PNJ/2014 FIND ANY MERIT IN THE GRIEVANCE OF THE REVENUE. WE , THEREFORE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). 7. IN THE RESULT, ALL THE APPEAL S FILED BY THE REVENUE ARE, ACCORDINGLY, DISMISSED. ( ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 TH JUNE , 201 5 ). S D / - S D / - ( GEORGE MATHAN ) ( N.K. BILLA I YA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 1 8 T H JUNE , 201 5 . VR/ - COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT A) M/S. SHRITHIK ROLLING PVT. LTD. B) M/S. SHRITHIK ISPAT PVT. LTD. C) M/S. PRATEEK ALLOYS PVT. LTD. 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 8 ITA NO. 38 3 - 387 /PNJ/2014 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 1 7 .06.2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 1 7 .06.2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 1 7 /06/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 1 7 /06/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 1 7 /06/2015 SR.PS 6. DATE OF PRONOUNCEMENT 1 7 /06/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 1 8 /06/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER