M/s Jain Road Carrier, Bargarh V. DCIT, Sambalpur

ITA 393/CTK/2012

• Counselvise Citation: 39322114 RSA 2012
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 15-06-2012
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: S N PADHEE
• Keywords: Assessment record
• Section: 132; 143(3); 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 393/CTK/2012 / ASSESSMENT YEAR 2007 - 08 M/S.JAIN ROAD, CARRIER, NEAR TOLL GATE, P.O./DIST. BARGARH 768 (ODISHA) PAN: AAFFJ 1541 E - - - VERSUS - DCIT, CIRCLE 2(1), SAMBALPU R. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI S.N.PADHEE, AR / FOR THE RESPONDENT: / SHRI A.BHATTACHARJEE, DR / DATE OF HEARING: 13.08.2012 / DAT E OF PRONOUNCEMENT: 31.08.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY ISSUE WITH RESPECT TO THE CONFIRMATION OF PENALTY LEVIED UNDER THE PROVISIONS OF SECTION 271AAA. 2. THE BR IEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT A S EARCH & SEIZURE OPERATION WAS CONDUCTED IN THE RESIDENTIAL AND BUSINESS PREMISES OF SHRI PRAMOD KUMAR JAIN & GROUP AT BARGARH & BHUBANESWAR ON 30.08.2007. DURING THE COURSE OF SEARCH & SEIZURE OPERATION PAPERS RELATING TO INVESTMENT AND OTHER TRANSACTIONS MADE BY THE ASSESSEE WERE FOUND. ACCORDINGLY, PROCEEDING U/S 153A OF THE L.T.ACT, 1961 WAS INITIATED AND NOTICE U/S 153A(A) OF THE L..ACT,1961 WAS ISSUED AND DULY SERVED ON THE ASSESSEE. THE ASSESSEE FIL ED ITS RETURN OF INCOME BEFORE THE D.C.I.T. CIRCLE 2 (1), SAMBALPUR ON DT. 20.11.2009 SHOWING TOTAL INCOME OF 1,45,99,570. THE I.T.A.NO. 393/CTK/2012 2 ASSESSEE DERIVED INCOME FROM TRANSPORTATION WORKS. SCRUTINY ASSESSMENT U/S 143(3) OF THE I. T. ACT., WAS COMPLETED ON DT.3 1.12 .2009 ON A TOTAL INCOME OF 1,68,29,560 BY MAKING THE FOLLOWING ADDITIONS: SL.NO. PARTICULARS AMOUNTS 01. SITE EXPENSES 51,544 02. TRAVELLING EXPENSES 47,446 03. INTEREST ON ADVANCES 21,31,000 04. DISCLOSURE U/S.132(4) 1,00,00,000 DURING THE COU RSE OF SEARCH & SEIZURE OPERATION SOME PAPERS RELATING TO INVESTMENT AND OTHER TRANSACTIONS WERE FOUND AND SEIZED. THE ASSESSEE HAS MADE DISCLOSURE U/S 132(4) FOR 1,60,00,000 DURING THE COURSE OF SEARCH OPERATION FOR A.Y. 2007 - 08. A TOTAL ADDITION OF 22 ,29,990 HAS BEEN MADE UNDER THE HEADS SITE EXPENSES AND INTEREST ON ADVAN C ES TO THE INCOME RETURNED BY THE ASSESSEE. THE DUE DATE FOR FILING THE RETURN OF INCOME U / S . 139(1) HAS NOT EXPIRED BEFORE THE DATE OF SEARCH. THE ASSESSEE HAD ALSO NOT FILED ITS RETURN OF INCOME WITHIN THE DUE DATE FOR FILING OF RETURN OF INCOME. THE INCOME SO DISCLOSED HAD NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOU S YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. ASSESSMENT U/S.143(3)/153A WAS COMPLETED TREATING THE AMOUNT OF 1,60,00,000 AS ASSESSEES UNDISCLOSED INCOME AND ADDED TO HIS TOTAL INCOME. IN THE PENALTY PROCEEDINGS U/S.271AAA THE ASSESSING OFFICER HELD THE ABOVE AMOUNT AS CONCEALED INCOME OF THE ASSESSEE AND THEREFORE, IMPOSED PENALTY OF 16,00,000. I.T.A.NO. 393/CTK/2012 3 3. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO CONSIDERED THE CASE OF THE ASSESSEE APPELLANT BY OBSERVING IN PARAGRAPH 7.2 OF HIS ORDER, WHICH READS AS UNDER: 7.2. LET ME ADVERT TO THE SCOPE OF SECTION 271AAA. THIS AMENDMENT IS A PART OF A SET OF AMENDMENTS RELATING TO THE EFFECT OF PRESUMPTION IN CASE OF SEARCH CASES U/S.1 32(4A) ALON G WITH OMISSION OF EXPLANATION 5 AND INSERTION OF EXPLANATION 5A TO SECTION 271(1)(C) AND SECTION 292C. THE APPLICATION OF SECTION IS LIMITED TO INCOME OF SPECIFIED PERIOD I.E. PERIOD FOR WHICH RETURN HAD NOT YET BECOME DUE AND THE BROKEN PERIOD STARTING FROM THE BEGINNING OF THE FINANCIAL YEAR TILL THE DATE OF SEARCH. SECTION PROVIDES FOR 10% PENALTY ON SUCH INCOME BY A STATUTORY INFERENCE THAT SUCH INCOME WAS NOT INTENDED TO BE DISCLOSED BECAUSE THEY WERE NOT RECORDED IN THE BOOKS SEEN AT THE T IME OF SEARCH. HE CONFIRMED THE PENALTY LEVIED U/S.271AAA OF THE I.T.ACT,1961. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE STANDS COVERED BY THE DECISIONS OF ITAT, CUTTACK BENCH IN THE CASE OF SRI PRAMOD KUMAR JAIN & M/S.JRC RESOURCES (P) LTD., V. DCIT IN ITA NOS.131,132 AND 133/CTK/2012 DT.20.07.2012 WHICH FACTS ARE SQUARELY APPLICABLE TO THE ASSESSEES CASE FOR THE LEVY OF PENALTY U/S.271AAA.THE LEARNED COUNSEL ALSO HAS RELIED ON THE DECISION OF THE ITAT, CUTTACK BENCH IN THE CASE OF ASHOK KUMAR SHARMA & OTHERS V. DCIT IN A CONSOLIDATED ORDER PRONOUNCED ON 22.12.2011 IN ITA N OS.476 TO 480/CTK/2011 WHEN PENALTY U/S.271AAA WAS CONSIDERED NOT LEVIABLE AS THE PROVISIONS OF SUB - SECTION (2) OF SECTION 271 AAA WERE APPLICABLE. WE HAVE PERUSED THE MATERIAL PLACED ON RECORD. IT IS NOT UNDISPUTED FACT THAT THE AO HAS HIMSELF NOTED THE B ASIS FOR LEVY OF PENALTY WHICH CLARIFIES ITS STAND INSOFAR AS THE I.T.A.NO. 393/CTK/2012 4 PROVISIONS OF SUB - SECTION (2) OF SECTION 271AAA ARE APPLICABLE TO THE FACTS OF THE ASSESSEES CASE . THEY READ AS UNDER : PENALTY WHERE SEARCH HAS BEEN INITIATED. 271AAA. (1) THE ASSESSING O FFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007 [BUT BEFORE THE 1ST 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. (2) NOTHING 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 MANNE R IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES 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. THE LEARNED CIT(A), AS WE OBSERVE, HAS IMPORT ED THE INTENTION OF THE LEGISLATION BY INTERPRETING THE OMISSION OF EXPLANATION 5 OF SECTION 271(1)(C) R.W.S. 292C. WE HAVE TO OBSERVE THAT THE FINDING TO RELATE LEVY OF PENALTY U/S.271AAA R.W.S. 292C WILL GIVE A CONTRA MEANING TO THE INTENTION OF THE LEGI SLATION WHICH HAS BEEN CONSIDERED BY THE LEARNED CIT(A) AS OMISSION OF EXPLANATION 5 OF SECTION 271(1)(C). CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS HAVE TO BE ESTABLISHED BY THE ASSESSING OFFICER FOR LEVY OF PENALTY U/S.271(1(C). THE P ROVISIONS OF SECTION 271AAA CLEARLY INDICATE THAT THE AMOUNT OF PENALTY BE AT 10% ON SUCH INCOME THE ASSESSEE HAS SUBSTITUTED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED I.T.A.NO. 393/CTK/2012 5 ALONG WITH HAVING PAID THE TAXES ON THE BASIS OF DECLARATION U/S.132(4) ADM ITTING THE UNDISCLOSED INCOME. THE ASSESSING OFFICER HIMSELF NOTED THAT THE EXPENSES WERE TO BE DISALLOWED AGAINST WHICH THE NET PROFIT MORE THAN THE EXPENSES HAD BEEN DECLARED WAS ALREADY IN THE BOOKS OF ACCOUNT ON THE DATE OF SEARCH CLARIFIES THE STAND T HAT THE LEARNED CIT(A) HAS NOT APPRECIATED THE FACTS OF THE ASSESSEE. SIMILARLY THE SUNDRY CREDITORS WHICH WERE NOT CASH CREDITORS WERE AGAINST THE PURCHASE BILLS WHICH LIABILITY THE ASSESSEE CHOSE NOT TO PAY BUT PAID TAX THEREON. THIS BECOMES CAPITAL INSO FAR AS THE MANNER HAS BEEN EXPLAINED BY THE ASSESSEE BEING PURCHASES WHICH HAS NOT BEEN FOUND OTHERWISE. SO, IN THIS VIEW OF THE MATTER, THE WHOLE OF THE AMOUNT OF 1,60 ,00,000 STANDS IN COMPLIANCE TO SUB - SECTION (2) OF SECTION 271AAA WHERE SUCH ASSESSEE F OR LEVY OF PENALTY IS INSCRIBED UNDER SUB - SECTION (1). THE LEARNED CIT(A), THEREFORE, ERRED IN CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER ON UNDISPUTED FACTS BROUGHT ON RECORD IN THE ASSESSMENT RECORD, WHICH THE LEARNED CIT(A) HAS NOT CORRELATE D HIS FINDING OF INACCURATE PARTICULARS OF CONCEALMENT OF INCOME TILL THE DATE OF SEARCH. THEREFORE, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND CANCEL THE PENALTY LEVIED U/S.271AAA IN CASE OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 31.08.2012 ( ), (H.K.PADHEE), SENIOR.PRIV ATE SECRETARY. I.T.A.NO. 393/CTK/2012 6 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S.JAIN ROAD, CARRIER, NEAR TOLL GATE, P.O./DIST. BARGARH 768 (ODISHA) 2 / THE RESPONDENT: DCIT, CIRCLE 2(1), SAMBALPUR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 13.08.2012 . 2. DATE ON WHI CH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14.08.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 31.08.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31.08.2012 ` 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8 . THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..