DR. SHRIKRISHNA KESHAVRAO DESHPANDE, Nagpur V. THE ASSTT. C.I.T, CENTRAL CIR. 1(2), Nagpur

ITA 384/NAG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3123 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 12-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 153A; 132; 2; 139

Judgement Text

1 ITA NO. 384/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 384/NAG/2014 ASSESSMENT YEAR : 2008 - 09. DR. SHRIKRISHNA KESHAVRAO DESHPANDE, ASSTT. COMMISSIONER OF INCOME - TAX, NAGPUR. VS . CENTRAL CIRCLE - 1(2), NAGPUR. PAN AANDP7179A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.V. DESHPANDE. RESPONDENT : SMT. ANITA RUPAVATARAM. DATE OF HEARING : 02 - 12 - 2015. DATE OF PRONOUNCEMENT : 25 TH FEBRU ARY, 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF LEARNED CIT(APPEALS) - III, NAGPUR DATED 22 - 05 - 2014. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY OF RS.1,00,000/ - AND THIS HONOURABLE COURT BE PLEADED TO CANCEL THE PENALTY, AS ONE LEVIED, WITHOUT CONSIDERING THE FACTS IN THEIR PROPER PERSPECTIVE. 2. WITHOUT PREJUDICE TO THE FORGOING GROUND AND ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) WAS NOT JUSTIFIED IN NOT CONSIDERING THE FACT THAT THE APPELLANT HAD SUBSTANTIALLY COMPLIED TO THE PROVISIONS OF SEC. 271 AAA 2(II), WHILE LEVYING THE PENALTY UNDER THE SAID SECTI ON AND THIS HONOURABLE COURT BE PLEASED TO DELETE THE PENALTY SO INITIATED. 2 ITA NO. 384/NAG/2014 2. AS PER THE ASSESSMENT ORDER PASSED U/S 153A READ WITH SECTION 143(3) DATED 27 - 10 - 2010 THE ASSESSEE IS A DOCTOR AND WORKING AS AN ANESTHETIST. A SEARCH U/S 132 WAS CONDUCTED ON 1 0 - 04 - 2008. DURING THE COURSE OF SEARCH A CASH OF RS.10 LAKHS WAS SEIZED WHICH WAS OFFERED B Y THE ASSESSEE. FURTHER IT HAS ALSO BEEN MENTIONED BY THE AO THAT A REGULAR RETURN WAS FILED ON 29 - 09 - 2008 U/S 139 OF I.T. ACT DECLARING INCOME OF R S.26,36,120/ - . LA TER ON IN COMPLIANCE OF A NOTICE U/S 153A A RETURN WAS FILED ON 08 - 06 - 2010 DECLARING INCOME OF RS.27,86,720/ - . THE ASSESSMENT WAS FINALLY COMPLETED ON THE ASSESSED INCOME OF RS.28,86,994/ - . 2.1 WHILE LEVYING THE PENALTY U/S 271AAA VIDE ORDER DATED 18 TH AP RIL, 2011 THE AO HAD REFERRED THE SAID PROVISIONS ACCORDING TO WHICH IF A SEARCH IS CONDUCTED U/S 132 AND ADDITION IS MADE THEN THE ASSESSEE IS REQUIRED TO PAY BY WAY OF PENALTY, IN ADDITION TO TAX, A SUM AT THE RATE OF 10% OF THE UNDISCLOSED INCOME. AS A RESULT THE ASSESSEE WAS PENALIZED FOR A SUM OF RS.1 LAKH. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FI R ST APPELLATE AUTHORITY, LEARNED CIT(APPEALS) HAS CONFIRMED THE PENALTY AS UNDER : IN THE PRESENT CASE, THE AO HAS CLEARLY HELD IN PARA 7 OF THE IMPUG NED PENALTY ORDER THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE INCOME DECLARED OF RS.10,00,000/ - U/S 132(2) OF THE I.T. ACT WAS EARNED. THE AO HAS THUS CLEARLY OBSERVED THAT WHILE OTHER TWO CONDITIONS OF THE SECTION ARE SATISFIED B Y THE ASSESSEE, BUT THE CONDITION AS REGARDS THE SUBSTANTIATING THE MANNER OF EARNING OF UNDISCLOSED INCOME HAS NOT BEEN COMPLIED. IN THIS REGARD, THE AR OF THE APPELLANT HAS HEAVILY RELIED UPON THE AFFIDAVIT DATED 05.06.2008 WHICH WAS SUBMITTED BEFORE THE INVESTIGATION WING & A COPY WAS GIVEN TO THE AO. THE SAME HAS BEEN CAREFULLY PERUSED AND IT IS OBSERVED THAT THE ASSESSEE NOWHERE SPECIFICALLY HAS STATED THE SOURCE FROM WHICH HE HAS EARNED UNDISCLOSED INCOME OF RS.10,00,000/ - HE HAS NEITHER NARRATE D THE MANNER OF EARNING THE SAME, NOR THE BASIS OF WORKING OF RS.10,00,000/ - HAS BEEN PROVIDED IN THE SAID AFFIDAVIT. BESIDES, EVEN THEREAFTER, THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE OF SUBSTANTIATING THE MANNER OF EARNING OF THE SAID UNDISCLOSED INCO ME. NO SATISFACTORY PAPERS/EVIDENCES 3 ITA NO. 384/NAG/2014 WERE PRODUCED BY THE APPELLANT EVEN BEFORE ME DURING APPELLATE PROCEEDINGS. THUS, IN MY CONSIDERED VIEW, I HAVE NO HESITATION IN HOLDING THAT THE APPELLANT FAILED TO COMPLY THE CONDITION MENTIONED IN SECTION 271AAA(2)(II) AS REGARDS THE SUBSTANTIATING THE MANNER OF EARNING THE UNDISCLOSED INCOME. THUS NO INTERFERENCE IS REQUIRED TO BE CALLED FOR. ACCORDINGLY THE PENALTY OF RS.1,00,000/ - IS HEREBY CONFIRMED AND THE APPEAL OF THE ASSESSEE IS DISMISSED. 4. WIT H THIS FACTUAL BACKGROUND WE HAVE HEARD BOTH THE SIDES. FACTS OF THE CASE HAVE REVEALED THAT THROUGH AN AFFIDAVIT THE IMPUGNED AMOUNT OF RS.10 LAKHS WAS OFFERED BEFORE THE DY. DIRECTOR OF INVESTIGATION, NAGPUR. IT WAS MENTIONED THAT THE AMOUNT OFFERED SHOU LD BE CONSIDERED AS VOLUNTARY OFFER TO SAVE THE PENALTY U/S 271(1)(C) OF THE I.T. ACT. FACTS OF THE CASE FURTHER REVEALED THAT A PHOTO - STATE COPY OF THE SAID AFFIDAVIT WAS FILED BEFORE THE LEARNED CIT(APPEALS). IT HAS ALSO BEEN MENTIONED THAT THE SOURCE OF THE SAID AMOUNT AS PROFESSIONAL INCOME OF THE ASSESSEE. THEREFORE, THE ASSESSEE HAS SUBMITTED THE INFORMATION ABOUT THE MANNER IN WHICH THE SAID AMOUNT WAS EARNED. THE TAX OVER THE SAID AMOUNT HAS ALSO BEEN PAID BY FILING A RETURN OF INCOME. HENCE IT WA S PLEADED THAT EVEN IF A SURRENDER WAS MADE BUT THE SAME WAS AS PER THE STATEMENT U/S 132(4) OF THE I.T. ACT DISCLOSING THE MANNER IN WHICH THE AMOUNT IN QUESTION WAS EARNED AND LATER ON THE TAX HAS ALSO BEEN PAID ON THE SURRENDERED AMOUNT. IN THE LIGHT OF THE ABOVE FACTS WE HAVE EXAMINED THE PROVISIONS OF SECTION 271AAA WHICH READS AS FOLLOWS: 271AAA (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIAT ED UNDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007[BUT BEFORE THE 1 ST DAY OF JULY, 2012], THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. 4 ITA NO. 384/NAG/2014 (2) NOTWITHSTANDING CONTAINED IN SUB - SECTION (1) SHALL APPLY IF THE ASSESSEE, - (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB - SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. 4.1 ON CAREFUL READING OF THIS SECTION WE HAVE NOTICED THAT THE MAIN PROVISION HAS PRESCRIBED THAT AN ASSESSEE SHALL PAY BY WAY OF PENALTY A SUM COMPUTED AT THE RATE OF 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. THIS PENALTY IS TO BE PAID IN ADDITION TO THE TAX, IF ANY, PAYABLE BY HI M ON THE SAID UNDISCLOSED INCOME. HOWEVER, AN EXCEPTION IS PRESCRIBED UNDER SUB - SECTION (2) OF SECTION 271AAA WHICH SAYS THAT INSPITE OF ANY THING CONTAINED IN SUB - SECTION (1) IF THE ASSESSEE IN THE COURSE OF SEARCH ADMITS UNDISCLOSED INCOME AND MAKE A STA TEMENT U/S 132(4) AND THEREIN SPECIFY THE MANNER IN WHICH SUCH INCOME HAD BEEN EARNED AND THAT ALSO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND THEREAFTER ALSO PAY THE TAX TOGETHER WITH INTEREST IN RESPECT OF THE SAID UNDISCLOS ED INCOME THEN PENALTY IS NOT TO BE LEVIED. WE ARE OF THE CONSIDERED OPINION THAT CONSIDERING THE FACTS OF THE CASE THE QUESTION OF LEVY OF PENALTY DO NOT ARISE IN VIEW OF THE EXCEPTION PRESCRIBED UNDER SUB - SECTION (2) OF SECTION 271AAA. WE, THEREFORE, HOL D THAT THIS CASE DOES FALL UNDER 5 ITA NO. 384/NAG/2014 THE CATEGORY OF EXCEPTION DULY CARVED OUT IN THIS SECTION. AS A RESULT, WE HEREBY REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND DIRECT TO DELETE THE PENALTY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF FEBRUARY, 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 25 TH FEBRUARY, 2016. COPY FORWARDED TO : 1. DR. S.K. DESHPANDE, 218, RADHA NIWAS, NORTH AMBAZARI ROAD, GOKULPETH, NAGPUR - 440010. 2. A .C.I.T., CENTRAL CIRCLE - 1(2), NAGPUR. 3. COMMISSIONER OF INCOME - TAX - ,NAGPUR. 4. CIT(APPEALS) - II I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.