ALLIANCE POLYSACK PVT. LTD., Jaipur V. ACIT, Jaipur

ITA 415/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4839 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 21-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CIT DHK
• Keywords: Income from undisclosed sources; Search and seizure; Corroborative evidences; Revised return
• Section: 143(3); 153A; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH DQY HKKJR ] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 415/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 M/S ALLIANCE POLYSACK PVT. LTD., 137-138, INDUSTRIAL AREA, JHOTWARA, JAIPUR. CUKE VS. A.C.I.T. CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAHCA 6054 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE. JKTLO DH VKSJ LS@ REVENUE BY : SHRI ANIL KUMAR (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01/12/2016 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 16/12/2016 VKNS'K@ ORDER PER: KUL BHARAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 10/02/2016 PASSED BY THE LD. CIT(A)-4, JAIPUR FOR T HE A.Y. 2012-13. THE GROUNDS TAKEN BY THE ASSESSEE IN APPEAL ARE AS UNDE R:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ORDER DATED 10/02/2016 PASSED BY LD. CIT(A), IS PERVERSE, ARBITRARY AND BAD IN LAW. ITA 415/JP/2016_ M/S ALLIANCE POLYSACK PVT. LTD. VS ACIT 2 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING T HE ACTION OF LD. A.O. OF LEVYING THE PENALTY OF RS. 10,90,000/- U/S 271AAA OF THE INCOME TAX ACT, 1961. 2. IN THIS CASE, THE ONLY EFFECTIVE GROUND IS AGAIN ST CONFIRMING THE PENALTY OF RS. 10.90 LACS U/S 271(1)(C) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). THE FACTS IN BRI EF ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING/TRADING OF HDPE/HDPP WO VEN SACKS/FABRICS. ON 30/01/2012, A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CARRIED OUT AGAINST MANGAL GROUP INCLUDI NG THE ASSESSEE AND INCRIMINATING DOCUMENTS ETC. FOUND FROM THE SEARCH PREMISES WERE INVENTORISED AND SEIZED AS PER PANCHNAMA. LATER ON, JURISDICTION OVER THIS CASE WAS ASSIGNED TO ACIT, CENTRAL CIRCLE-3, JAI PUR VIDE NOTIFICATION U/S 127 OF THE ACT. PURSUANT TO THIS, A.O. ISSUED A NOTICE U/S 153A OF THE ACT, IN COMPLIANCE OF WHICH, ASSESSEE FILED ITS E-RE TURN OF INCOME DECLARING TOTAL LOSS AT RS. 8,92,99,467 ON 30/09/20 12 FOR THE A.Y. 2012- 13. SUBSEQUENTLY DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, ASSESSEE FILED ITS REVISED RETURN OF INCOME DECLARING NET LO SS AT RS. 7,83,99,467/- ON 24/03/2014 FOR THE A.Y. 2012-13 WHEREIN ASSESSEE HAS SUO MOTU INCLUDED AN AMOUNT OF RS. 1,09,00,000/- UNDER THE H EAD INCOME FROM OTHER SOURCES. FINALLY, A.O. COMPLETED THE ASSESSE E U/S 153A RWS ITA 415/JP/2016_ M/S ALLIANCE POLYSACK PVT. LTD. VS ACIT 3 143(3) OF THE ACT BY ACCEPTING THE REVISED RETURN WH EREIN TOTAL INCOME DECLARED AS RS. 7,83,99,467/- AND SIMULTANEOUSLY AL SO INITIATED PENALTY PROCEEDINGS U/S 271AAA ON UNDISCLOSED INCOME OF RS. 1,09,00,000/-. FINALLY, THE AO LEVIED PENALTY OF RS. 10.90 LACS BE ING 10% OF THE UNDISCLOSED INCOME OF RS. 1,09,00,000/-. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), W HO AFTER CONSIDERING THE SUBMISSIONS, DISMISSED THE APPEAL ON THE GROUND THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE MANNER IN WHICH THE UNAC COUNTED INCOME WAS EARNED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. A R OF THE ASSESSEE HAS SUBMITTED THAT THE AUTHORITIES BELOW WER E NOT JUSTIFIED IN LEVYING THE PENALTY AND CONFIRMING THE SAME. HE ALS O SUBMITTED THAT THE UNACCOUNTED INCOME WAS DULY DISCLOSED IN THE RETURN OF INCOME AND IT IS NOT THE CASE THAT THE INCOME WAS NOT DISCLOSED AND D URING THE STATEMENT AS RECORDED U/S 143(4) OF THE ACT, THE MANNER IN WHI CH IT WAS EARNED WAS STATED AND SUBSTANTIATED. FURTHER HE SUBMITTED T HAT BEFORE THE LD. CIT(A), THE ASSESSEE HAS RELIED UPON VARIOUS CASE LA WS, WHICH WAS NOT CONSIDERED BY THE LD. CIT(A), THEREFORE, HE SUBMITTE D THAT THE PENALTY AS ITA 415/JP/2016_ M/S ALLIANCE POLYSACK PVT. LTD. VS ACIT 4 LEVIED AND CONFIRMED CANNOT BE SUSTAINED IN THE EYE S OF LAW AND MAY BE DELETED. 5. ON THE CONTRARY, THE LD. CIT DR HAS VEHEMENTLY SU PPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT T HE ASSESSEE HAS GROSSLY FAILED TO SUBSTANTIATE IN THE MANNER THE IN COME WAS EARNED AND ALSO IT WAS POINTED OUT THAT IN THE ORIGINAL RETURN, THE ASSESSEE HAD NOT DISCLOSED THE INCOME. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. CIT(A) HA S DECIDED THE ISSUE BY OBSERVING AS UNDER:- NOW IT NEEDS TO BE EXAMINED AS TO WHETHER THE ASSES SEE HAS BEEN ABLE TO FULFILL THE REQUIREMENT OF SECTION 271 AAA FOR CLAIMING EXEMPTION FROM LEVY OF THE PENALTY THE RE UNDER. HAVING GONE THROUGH THE PROVISIONS LAID DOWN U/S 271 AAA OF THE ACT, I FIND THAT IN RESPECT OF UNACC OUNTED INCOME IN THE CASES WHERE SEARCH IS INITIATED AFTER 1.6.2007 AND BEFORE 1.7.2012, THE ASSESSEE IS TO PAY A PENAL TY @ 10 % OF UNACCOUNTED INCOME. SUB SECTION (2) OF SECTION 271 AAA HOWEVER PROVIDES EXEMPTION FROM THIS PENALTY PROVISIONS IN A SITUATION IN WHICH (I) DURING THE COURSE OF SEARCH IN A STATEMENT UNDER SECTION 132(4) THE ASSE SSEE ITA 415/JP/2016_ M/S ALLIANCE POLYSACK PVT. LTD. VS ACIT 5 ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MAN NER IN WHICH SUCH INCOME HAS BEEN DERIVED (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED A ND (III) PAYS THE TAX TOGETHER WITH THE INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. THE AO IN THE IMPUGNED PENALTY ORDER HAS HELD THAT THE ASSESSEE H AS NOT FULFILLED CONDITIONS AS LAID DOWN IN CLAUSE (IV) TO SUB SECTION (2) OF SECTION 271 AAA OF THE ACT. ON PERUSAL OF THE ABOVE, IT IS SEEN THAT ASSESSEE H AS FAILED TO SUBSTANTIATE THE MANNER IN. THE DICTIONARY MEANIN G OF SUBSTANTIATE (AS A VERB) IS TO ESTABLISH BY PROOF OR COMPETENT EVIDENCE. FURTHER, THE WORD 'SUBSTANTIATE IS RELATED TO THE WORD SUBSTANTIAL, WHICH MEANS 'SOLID, SO AS TO SUBSTANTIATE A CLAIM IS TO MAKE IT SOLID OR BELI EVABLE. IF THE EVIDENCE GIVEN IN SUPPORT OF AN ARGUMENT IS WEAK AND UNCONVINCING, THAT EVIDENCE CAN BE DESCRIBED AS INSUBSTANTIAL. THE LEGAL MEANING OF TO SUBSTANTIATE' IS AS UNDER: (I) AS VERB ... TO ESTABLISH THE EXISTENCE OR TRUTH OF A PARTICULAR FACT THROUGH THE USE OF COMPETENT EVIDENCE; TO VERIFY (II)AS NOUN ... SUBSTANTIATION NOUN 'AUTHENTICATING EVIDENCE, CONFIRMATION, CONFIRMING EVIDENCE, CORROBORATING EVIDENCE ITA 415/JP/2016_ M/S ALLIANCE POLYSACK PVT. LTD. VS ACIT 6 THEREFORE, TO SUBSTANTIATE MEANS EVIDENCE, WHICH BEAR S OUT THE TRUTH, EVIDENCE WHICH PROVES A SUPPOSITION, EVIDENCE WHICH RATIFIES A POSITION, EVIDENCE WHICH VA LIDATES A SUPPOSITION, SUPPORTING EVIDENCE, VERIFICATION. ON CAREFUL PERUSAL OF SWORN STATEMENT RECORDED & NOT E FORMING THE PART OF STATEMENT OF TOTAL INCOME SUBMI TTED VIDE LETTER DATED 29/04/2011 IT IS SEEN THAT ASSESSEE HAS NOT MENTIONED THE UNDISCLOSED INCOME OF RS. 1,09,00 ,000/- IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT OF SH SANJAY JAIN AND THEREAFTER FAILED TO SUBSTANTIATE A LSO. IN VIEW OF THESE FACTS, ASSESSEE HAS NOT FULFILLED THE CONDITIONS LAID DOWN IN SEC 271 AAA(2)(II) OF THE ACT. ACCORDINGLY, CASES RELIED UPON BY THE ASSESSEE WILL BE OF NO HELP AS FACTS OF THE CASE ARE TOTALLY DIFFERENT. IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE, AOS ACTION IN LEVYING PENALTY OF RS. 10,90,000/- U/S 271 AAA O F THE ACT IS JUSTIFIED. ASSESSEES APPEAL FAILS. FROM THE ABOVE FINDINGS OF THE LD. CIT(A), IT APPEAR S THAT THE PENALTY IS CONFIRMED ON THE BASIS THAT THE ASSESSEE WAS UNABLE TO SUBSTANTIATE THE MANNER BY WHICH THE INCOME WAS EARNED. WE FIND FROM T HE STATEMENTS RECORDED BY THE ASSESSING OFFICER THAT THE ASSESSEE STATED THAT AT PAGE NOS. 116 TO 126 OF THE PAPER BOOK, DETAILS OF PLOT OF SALES ARE MENTIONED. IT WAS FURTHER STATED THAT WHILE DISPOSING OF THE LAN D, SOME OF THE ITA 415/JP/2016_ M/S ALLIANCE POLYSACK PVT. LTD. VS ACIT 7 AMOUNT WAS RECEIVED IN CASH. THEREFORE, IT CAN BE IN FERRED THAT THE UNDISCLOSED INCOME PERTAINS TO THE UNACCOUNTED RECE IPTS FROM THE SALE OF THE LAND. THEREFORE, IN OUR CONSIDERED VIEW, THE LD. CIT(A) HAS ERRED IN OBSERVING THAT THE ASSESSEE HAS NOT SUBSTANTIATED T HE MANNER. UNDER THESE FACTS AND CIRCUMSTANCES, WE HEREBY DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER, 2016. SD/- SD/- HKKXPAN DQY HKKJR (BHAGCHAND) (KUL BHARAT) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 16 TH DECEMBER, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S ALLIANCE POLYSACK PVT. LTD., JAIP UR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CENTRAL CIRCLE-3, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 415/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR