Shri Vitthalbhai Gordhanbhai Prajapati, Ahmedabad V. DCIT, Central Circle-1(2), Ahmedabad

ITA 4/AHD/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6795 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-07-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 01-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P F JAIN A R SHRI SHIV SEVAK
• Section: 271(1)(c); 143(3); 153A; 132; 2; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS . MADHUMITA ROY, JUDICIAL MEMBER SL. NO(S ) ITA NO(S) ASSE T. YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1 . 04/AHD /201 8 2008 - 0 9 VITHALBHAI GORDHANBHAI PRAJAPATI, 9, ABBHIKARAM COMPLEX, NEAR BHAIKAKA NAGAR, THALTEJ, AHMEDABAD PAN: AFZPP0251L D.C.I.T CENTRAL CIRCLE - 1(2) AHMEDABAD 2. 05/AHD/2018 2010 - 11 RAVJIBHAI GORDHANBHAI PRAJAPATI, 308/43, PRAJAPATI VAS, S.G. HIGHWAY, THALTEJ, AHMEDABAD PAN: APRPP0713R - DO - 3 . 06/AHD /201 8 2010 - 11 SURESHBHAI GORDHANBHAI PRAJAPATI, PAN : APRPP0781K - DO - ASSESEE BY : SHRI P.F. JAIN, A.R REVENUE BY : SHRI SHIV SEVAK, SR.D.R / DA TE OF HEARING : 02 . 07 .201 9 / DATE OF PRONOUNCEMENT : 19 .0 7 .201 9 / O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER : THE CAPTIONED APPEALS HAVE BEEN FILED AT THE INSTANCE OF THE DIFFERENT A SSESSEE AGAINST THE SEPARATE ORDERS OF COMMISSIONER OF I NCOME TAX (APPEALS) - II , [LD.CIT(A) IN SHORT] OF EVEN DATED 08/09/2017 ARISING IN THE 2 ITA NO S. 04 - 06/AHD/2018 AY S : 2008 - 09 &2010 - 11 MATTER OF ASSESSM ENT ORDERS PA SSED UNDER S. 271(1)(C) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') RELEVANT TO THE ABOVE ASSESSME NT YEARS (AYS). SINCE C OMMON I SSUE S ARE INVOLVED IN ALL THE APPEALS FILED BY THE DIFFERENT ASSESSEE, T HEREFORE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. FIRST, WE TAKE UP THE ASSESSEE S APPEAL IN ITA NO. 04/AHD/2018 FOR AY 2008 - 09 AS THE L EAD CASE . THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GROUND OF APPEAL : 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING PENALTY OF RS.1,54,070/ - LEVIED U/S271(1)(C) WITHOUT PROPERLY APPRECIATING THE FACTS OF THE ASSESSEE. 2. THE LEVY OF PENALTY IS SUBMITTED IN BAD IN LA W AS THE PENALTY NOTICE DATED 25/02/2015 ISSUED IS DEFECTIVE WITHOUT SPECIFYING THE NATURE OF DEFAULT FOR INITIATING PENALTY BY SIMPLY MENTIONING HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. 3. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN NOT CONSIDERING THE SUBSIMMION DATED 18/08/2015 AND THE DECISION OF ITAT DELHI RELIED UPON BY THE ASSESSEE IN THE CASE OF PREM ARORA AND PAWERKUMAR GUPTA AND IGNORING THE FACT THAT RETURN INCOME IN RESPONSE TO NOTICE U/S.153A IS THE ASSESSED INCOME U/S.153A(1)(B). 4. ON THE FACTS NO SUCH PENALTY U/S.271(1)(C) OUGHT TO HAVE BEEN LEVIED. THE APPELLANT CRAVES LEAVE TO ADD TO ALTER AND/OR TO MODIFY ANY GROUND OF APPEAL. THE FIRST ISSUE RAISED BY THE ASSESSEE IS THAT THE LD. CIT (A) ERRED IN CONFIRMING THE PENALTY IMPOSED BY THE AO ON ACCOUNT OF THE DIFFERENCE IN THE INCOME DECLARED IN RETURN FILE D U/S 139 OF THE ACT, AND INCOME DISCLOSED IN RETURN FILED U/S 153A OF THE ACT. 3 ITA NO S. 04 - 06/AHD/2018 AY S : 2008 - 09 &2010 - 11 2. BRIEFLY STATED FACTS ARE THAT A SEA RCH WAS CARRIED OUT U/S 132 OF THE ACT IN THE KALOL - PRAJAPATI GROUP OF CASES INCLUDING THE ASSESSEE DATED 06 - 11 - 201 2 . THE ASSESSEE DECLARED THE INCOME IN THE RETURN FILED UNDER SECTION 139(1) OF THE ACT AT RS. 1,21,070.00 WHEREAS THE ASSESSEE IN RESPONSE T O THE NOTICE UNDER SECTION 153A OF THE ACT FILED RETURN OF INCOME AT RS 6,77 , 1 82/ - WHICH WAS ACCEPTED IN THE ASSESSMENT PROCEEDINGS FRAMED UNDER SECTION 143(3) R.W.S. 153A(1)(B) OF THE ACT VIDE ORDER DATED 25 - 2 - 201 5. 2.1 SUBSEQUENTLY, THE AO INITIATED TH E PENALTY PROCEEDING S ON THE DIFFERENCE OF THE INCOME OF RS. 5,56,110.00 DISCLOSED IN THE INCOME TAX RETURN FILED UNDER SECTION 139(1) AND DECLARED IN RETURN FILED UNDER SECTION 153A OF THE ACT BY ISSUING A NOTICE UNDER SECTION 274/271(1)(C) OF THE ACT TO THE ASSESSEE ON ACCOUNT OF CONCEALMENT OF INCOME VIDE DATED 25 - 02 - 2015 . THE ASSESSEE IN RESPONSE TO THE NOTICE SUBMITTED AS UNDER: 1) HE HAS DISCLOSED THE INCOME IN RETURN FILED U/S 153A OF THE ACT VOLUNTARILY. 2) AS PER PROVISION OF SECTION 271(1)(C) R.W.S . 153A OF THE ACT FOR IMPOSIN G OF PENALTY , THE RETURN FILE D U/S 139 OF THE ACT, HAS NOT TO BE CONSIDERED . AS SUCH THE RETURN FILE D U/S 153A OF THE ACT NEEDS TO BE CONSIDERED . 3) TO IMPOSE THE PENALTY , THERE SHOULD BE ADDITIONAL INCOME OVER AND ABOVE THE INCOME DECLARE D IN RETURN FILED U/S 153A OF THE ACT WHICH SHOULD BE CONSIDERED AS CONCEALMENT OF INCOME. 4) THE PROVISIONS OF S ECTION 153A OF THE ACT EXCLUDE THE ASSESSMENT PROCEDURE COVERED UNDER SECTION 139 ,147,148,149,151 AND 153 OF THE 4 ITA NO S. 04 - 06/AHD/2018 AY S : 2008 - 09 &2010 - 11 ACT. THUS FOR PENALTY PROCEEDINGS , THE RETURN FILED U/S 153A OF THE ACT SHOULD BE CONSIDERED AND NOT THE RETURN FILE D U/S 139 OF THE ACT. 2.3 HOWEVER , THE AO REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT HAD THE SEARCH NOT TAKEN PLACE, THE INCOME DISCLOSED BY THE AS SESSEE WOULD HAVE REMAINED UNTOUCHED. 2.4 ACCORDINGLY , THE AO LEVIED PENALTY ON ACCOUNT OF THE CONCEALMENT OF INCOME U/S 271(1) (C) OF THE ACT AMOUNTING TO RS. 1 , 54 , 070 / - ONLY BEING 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED . 3. THE A GGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A) WHO CONFIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER: 6. THE FACTS OF THE CASE, FINDINGS OF THE AO AND SUBMISSION OF THE AR OF THE APPELLANT HAVE BEEN GONE THROUGH. IT WAS AN ESTABLISHED FACT THAT THE APPELLANT DID NOT FULLY DISCLOSE THE INCOME EARNED AND CONCEALED THE PARTICULARS OF INCOME OF RS.5,56,110/ - DURING THE YEAR UNDER CONSIDERATION IN THE REGULAR RETURN OF INCOME. THIS INCOME WAS DISCLOSED IN THE RETURN FILED U/S.153A AFTER CONDUCTING SEARCH IN THE CASE OF THE APPELLANT. IT WAS A CLEAR CASE OF CONCEALMENT OF INCOME BY FURNISHING PARTLY INACCURATE PARTICULARS OF INCOME AND ALSO BY NOT FURNISHING PARTICULARS OF INCOME. THEREFORE, AFTER HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IN MY CONSIDERED OPINION, THE ACTION OF THE AO DOES NOT WARRANT ANY INTERFERENCE. ACCORDINGLY, THE GROUND OF APPEAL IS DISMISSED. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. 4 . THE LD. AR BEFORE US SUBMITTED THAT THERE WAS NO DOCUMENTARY EVIDENCE FOUND DURING THE SEARCH QUA THE UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE UNDER SECTION 5 ITA NO S. 04 - 06/AHD/2018 AY S : 2008 - 09 &2010 - 11 153A OF THE ACT. THEREFORE THERE CANNOT BE ANY PENALTY UNDER SECTION 271(1)( C) READ WITH EXPLANATION 5AOF THE ACT. THE LEARNED AR IN SUPPORT OF HIS CLAIM RELIED ON THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAHYABHAI PATEL VS. ACIT REPORTED IN 80 TAXMANN.COM 162. 5 . ON THE OTHER HAND, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 6 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE ARISES WHETHER THERE WILL BE ANY PENALTY UNDER SECTION 271(1 )(C) OF T HE ACT ON THE INCOME DECLARED BY THE ASSESSEE IN RETURN FILED UNDER SECTION 153A OF THE ACT. 6 .1 FROM THE PRECEDING DISCUSSION AND ON PERUSAL OF THE ORDER OF THE AUTHORITIES BELOW , WE NOTE THAT THERE WAS NO REFERENCE MADE TO ANY INCRIMINATING DOCUMENT FO UND DURING THE S EARCH . THEREFORE, WE ARE OF THE VIEW THAT THE ADDITION OF UNDISCLOSED INCOME WAS BASED ON THE STATEMENT FURNISHED UNDER SECTION 132 ( 4 ) OF THE ACT. 6 .2 AT THE TIME OF THE HEARING, A QUERY WAS RAISED TO THE LD. DR WHETHER THE ASSESSEE DISCLOSED THE INCOM E IN PURSUANCE TO THE SEARCH BASED ON THE INCRIMINATING DOCUMENT, BUT HE FAILED TO BRING ANY MATERIAL ON RECORD. THEREFORE, IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, WE INFER THAT THE ASSESSEE DISCLOSED THE INCOM E BASED ON THE STATEMEN T FURNISHED UNDER SECTION 132 ( 4 ) OF THE ACT. 6 ITA NO S. 04 - 06/AHD/2018 AY S : 2008 - 09 &2010 - 11 6 .3 IN THE CASE ON HAND, THE PENALTY PROVISIONS ARE GOVERNED UNDER THE EXPLANATION 5A OF SECTION 271 ( 1 )(C) THE OF THE ACT WHICH READS AS UNDER: [ EXPLANATION 5A. WHERE, IN THE CO URSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OT HER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB - SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CO NCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.] T HE ABOVE PROVISION REVEALS THAT THE PENALTY UNDER E XPLANATION 5A TO SECTION 271 ( 1 )(C) OF THE ACT CAN BE ATTRACTED IF THE ASSESSEE WAS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS. 7 ITA NO S. 04 - 06/AHD/2018 AY S : 2008 - 09 &2010 - 11 6 .4 BUT, IN THE CASE ON HAND , THERE WAS NO SUCH ALLEGATION AGAINST THE ASSESSEE EITHER IN THE ASSESSMENT OR PENALTY OR THE CIT (A) ORDER REFERRING TO THE INCRIMINATING DOCUMENTS . TH US TH E ISSUE ARISES WHETHER THE PENALTY CAN BE LEVIED UNDER SECTION 271 (1) (C) R.W. EXPLANATION 5A OF THE ACT MERELY BASED ON THE STATEMENT FURNISHED UNDER SECTION 132(4) OF THE ACT AND WITHOUT HAVING FOUND OF ANY INCRIMINATING MATERIALS FOUND IN SEARCH . IN THIS REGARD , WE ARE INCLINED TO REFER TO THE ORDER OF ITAT IN THE CASE OF AJAY TRADERS VS. DCIT REPORTED IN 81 TAXMANN.COM 463 WHEREIN IT WAS HELD AS UNDER: THE ASSESSEE DISCLOSED AN ADDITIONAL INCOME ON ACCOUNT OF UNACCOUNTED SALES. BASED ON SAID DISCLOSURES, THE ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271(1)( C ) BY INVOKING EXPLANATION 5A TO SAID SECTION. HELD THAT IT WAS UNDISPUTED FACT THAT DURING THE COURSE OF SEARCH, NO INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. THE ASSESSEE SURRENDERED THE ADDITION AL INCOME UNDER SECTION 132(4) AT RS.15 LACS AND REQUESTED NOT TO IMPOSE PENALTY UNDER SECTION 271(1)( C ). THE ASSESSING OFFICER IMPOSED THE PENALTY BY INVOKING THE EXPLANATION 5A TO SECTION 271(1)( C ). FOR IMPOSING THE PENALTY UNDER EXPLANATION 5A ON THE BA SIS OF STATEMENT RECORDED DURING THE COURSE OF SEARCH, IT IS NECESSARY TO BE FOUND INCRIMINATING DOCUMENTS AND IS TO BE CONSIDERED AT THE TIME OF ASSESSMENT FRAMED UNDER SECTION 153A. AS NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH, TH EREFORE, EXPLANATION 5A TO SECTION 271(1)( C ) IS NOT APPLICABLE. ACCORDINGLY, THE PENALTY WAS TO BE DELETED. F ROM THE ABOVE ORDER, IT IS CLEAR THAT THERE CANNOT BE ANY PENALTY UNDER EXPLANATION 5A TO SECTION 271 ( 1 ) OF THE ACT UNTIL AND UNLESS THE QUANTUM ADDITION IS BASED ON SOME INCRIMINATING DOCUMENT. ACCORDINGLY , WE HOLD THAT THERE CANNOT BE ANY PENALTY UNDER SECTION 271 (1) OF THE ACT IN THE GIVEN FACTS AND CIRCUMSTANCES. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. I N THE RESULT , THE APP EAL OF THE ASSESSEE IS ALLOWED. 8 ITA NO S. 04 - 06/AHD/2018 AY S : 2008 - 09 &2010 - 11 COMING TO THE OTHER APPEALS FILED BY THE ASSESSEE BEARING ITA 5/AHD/2018 AND 6/AHD/2018 : 7 . IN T HE IDENTICAL FACTS AND CIRCUMSTANCES, WE HAVE DELETED THE PENALTY IMPOSED UNDER SECTION 271 ( 1 )(C) OF THE ACT VIDE PARAGRAPH NO. 6 OF THIS ORDER. RESPECTFULLY FOLLOWING THE SAME , WE DELETE THE PENALTY IMPOSED BY THE AO WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LD. CIT (A) . HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. IN THE RESULT, TH E APPEALS OF THE ASSESSEE ARE ALLOWED 8 . I N THE COMBINED RESULT, ALL THE 3 APPEALS FILED BY THE DIFFERENT ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19 /07 / 201 9 AT AHMEDABAD. / - - - SD - - SD - ( MADHUMITA ROY ) JUDICIAL MEMBER ( WASEEM AHMED ) ACCOUNTANT MEMBER (TRUE COPY) AHMEDABAD ; DATED 19 / 07 /20 1 9 MANISH