ACIT, CIRCLE-6, Nagpur V. M/S NANDINI REALTORS PVT. LTD, Nagpur

ITA 415/NAG/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2224 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 04-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Search and seizure; Revised return
• Section: 143(3); 153A; 32; 132

Judgement Text

1 ITA NO. 415/NAG/2014. 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. 415 /NAG/2014. ASSESSMENT YEAR : 2010 - 11. ASSTT. COMMISSIONER OF INCOME - TAX N/S NANDINI REALTORS PVT. LTD., CIRCLE - 6, NAGPUR. VS. NAGPUR. PAN A ACCN0532H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.P.G. MUDLIAR. RESPONDENT : SHRI MUKESH AGRAWAL. DATE OF HEARING : 1 3 - 04 - 2016 DATE OF PRONOUNCEMENT : 5 TH MAY , 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AR I SING FROM THE ORDER OF LEARNED CIT(APPEALS) - III, NAGPUR DATED 16 - 06 - 2014 CHALLENGING THE DELETION OF PENALTY LEVIED U/S 271AAA OF RS.24,28,610/ - . 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S 271AAA DATED 19 TH JUNE, 2012 WERE THAT A SEARCH U/S 132 WAS CONDUCTED ON 22 - 01 - 2010 AT THE PREMISES OF M/S NANDINI REALTOR S P. LTD. ON INVESTIGATION IT WAS FOUND THAT THE ASSESSEE HAD PURCHASED THE LAND AT NAGPUR VIDE A SALE DEED REGISTERED ON 18 - 01 - 2010. THE CONSIDERATION DISCLOSED WAS AT RS.2,75,65,000/ - . DURING THE COURSE OF SEARCH A STATEMENT WAS RECORDED U/S 132(4) OF I. T. ACT AND THEREIN IT WAS ADMITTED THAT OVER AND ABOVE THE SALE CONSIDERATION A CASH OF RS.2 CRORE WAS ALSO PAID. THE AO HAS RECORDED THAT BECAUSE OF THE SAID STATEMENT RECORDED U/S 132(4) THE ACTUAL SALE CONSIDERATION OF THE LAND WAS AT 2 ITA NO. 415/NAG/2014. RS.4,75,65,000/ - . THE OFFERED AMOUNT OF RS.2 CRORES WAS DISCLOSED AS PER THE INCOME - TAX RETURN FILED FOR ASSESSMENT YEAR 2009 - 10 AND 2010 - 11. WHILE LEVYING THE PENALTY THE OBSERVATION OF THE AO WAS THAT THE EVIDENCES WERE GATHERED DURING THE COURSE OF SEARCH AND WHEN THOSE EVIDENCES WERE CONFRONTED THE ACTUAL SALE CONSIDERATION WAS ADMITTED. THE AMOUNT IN QUESTION WAS THE DISCLOSED INCOME WHICH WAS DETECTED AT THE TIME OF SEARCH, THEREFORE, THE ASSESSEE IS SUBJECT TO PENALTY U/S 271AAA OF I.T. ACT. THE 10% OF THE INCOME DISC LOSED WAS LEVIED AS PENALTY AMOUNTING TO RS.24,28,610/ - . 3. BEING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED CIT(APPEALS) HAS DELETED THE PENALTY AFTER RECORDING THE REASONS AS UNDER : 7. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE COUNSEL OF THE APPELLANT AND PERUSED THE EVIDENCES ON RECORD. IN THIS CASE THE UNDISPUTED FACTS ARE THAT THERE WAS A SEARCH AND SEIZURE IN THE CASE OF SHRI PANKAJ CHOKHANI ON 22/1/2010 A ND AS PER HIS STATEMENT RECORDED U/S 132(4) OF THE I.T. ACT,M HE ADMITTED THAT THE SALE CONSIDERATION OF THE LAND SITUATED AT 32, CLARKE TOWN, NAGPUR PAID TO SHRI YOGRAJ SAHANI AND SMT . UMA SABLOK INCLUDED AN AMOUNT OF RS . 2 CRORES PAID IN CASH OVER AND ABOVE WHAT IS REFLECTED IN THE REGISTERED SALE DEED. IT IS OBSERVED THAT THE SALE CONSIDERATION MENTIONED IN THE SALE DEED IS RS.2,75,65,OOO/ - WHEREAS AS PER THE ASSESSEE'S STATEMENT, THE TOTAL SALE CONSIDERATION ACTUALLY PAID WAS RSA,75,65,OOO/ - ; WHICH T HUS INCLUDED RS.2 CRORES CASH. THIS CASH CONSIDERATION WAS NOT REFLECTED IN THE BOOKS OF ACCOUNTS IN THE CASE OF THE APPELLANT . THE APPELLANT HAD FILED THE RETURN OF INCOME ON 15/10/2010 WHICH WAS REVISED ON 07/12/2011 DECLARING THE TOTAL INCOME OF RS . 2,15 ,60,620/ - . THE ASSESSMENT ORDER U/S.143(3) WAS COMPLETED ON 27/12/2011 ACCEPTING THE RETURNED INCOME . HOWEVER, THE AO . HAD INITIATED THE PENALTY U/S . 271AAA OF THE I T ACT STATING THAT THE APPELLANT HAS FAILED TO SPECIFIC AND SUBSTANTIATE THE MANNER IN WHIC H THE UNDISCLOSED INCOME HAD BEEN DERIVED. THE AO . HAS STATED THAT THE APPELLANT REMAINED SILENT ON THE ISSUE AND ACCORDINGLY HE LEVIED THE PENALTY. THE AR . OF THE APPELLANT ON THE OTHER HAND HAS ARGUED VEHEMENTLY 3 ITA NO. 415/NAG/2014. THAT THE PENALTY LEVIED IS DULY UNJUSTIFI ED AS ALL THE CONDITIONS AS MENTIONED U/S . 271AAA HAVE BEEN COMPLIED IN THE CASE . SECTION 271 AAA(2) IS REPRODUCED AS UNDER : - . . . . 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 MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED ; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVE; AND (III) PAYS THE TAX , TOGETHER WITH INTEREST , IF ANY , IN RESPECT OF THE UNDISCLOSED INCOME .... 11 LET US ANALYSE WHETHER THE ABOVE STATED THREE CONDITIONS ARE SATISFIED IN THE CASE OF THE APPELLANT OR NOT! THE FIRST CONDITION IS OBVIOUSLY APPLICABLE TO THE ASSESSEE AS THE SAID DISCLOSURE OF RS.2 CRORES HAD BEEN MADE AS PER THE STATEMENT RECORDED U/S . 132(4) OF THE I T ACT, WHICH IS UNDISPUTED . THE THIRD CONDITION IS ALSO DULY SATISFIED BY THE APPELLANT AS THE DUE TAXES HAVE BEEN PAID IN RESPECT OF SAID DISCLOSED INCOME . THUS THER E IS NO D I SPUTE AS REGARDS THE FULFILMENT OF THE ABOVE STATED FIRST AND THIRD CONDITION , WHICH THE AO . HAS ALSO ACCEPTED . THE DISPUTE I S AS REGARDS THE SECOND CONDITION WHICH IS ABOUT SUBSTANTIATING THE MANNER OF DERIVING THE UNDISCLOSED INCOME. IN THIS R EGARD , THE A . R . OF THE APPELLANT SUBMITTED VEHEMENTLY THAT THE ASSESSEE HAD PAID THE SAID AMOUNT OF RS . 2 CRORES OUT OF ITS BUSINESS INCOME FOR THE YEAR UNDER CONSIDERATION WHICH HAD BEEN INCLUDED IN THE RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE SAME HAS BEEN ACCEPTED BY THE A.O. BY ACCEPTING THE BUSINESS INCOME . THE AR . OF THE APPELLANT HAS FURNISHED A COPY OF THE P&L A CCOUNT AND B ALANCE SHEET OF THE ASSESSEE IN THIS REGARD DURING THE APPELLATE PROCEEDING . ON GOING THROUGH THE P& L ACCOUNT OF THE ASSESSEE FOR F . Y. ENDING ON 31/3/2010 I T IS CLEARLY SEEN THA T THE APPELLANT HAS SHOWN RS . 2 CRORE AS OTHER INCOME CREDITED I N I TS P&L ACCOUNT . FROM THIS IT IS EVIDENT THAT THE APPELLANT HAS DECLARED RS.2 CRORE AS OTHERINCOME (BUSINESS INCOME) WHICH HAS BEEN DULY CREDITED IN THE P&L ACCOUNT . THUS , THERE IS AN IOTA OF DOUBT THAT THE APPELLANT HAD NOT DECLARED THE SAME AS BUSINESS INCOME . FURTHER , ONCE THE SAME HAS BEEN DECLARED AS BUS I NESS 4 ITA NO. 415/NAG/2014. INCOME AND HAS BEEN DULY REFLECTED IN IT P&L ACCOUNT AND RELEVANT TAXES HAVE BEEN PAID , I NMY CONSIDERED VIEW , I HAVE NO HESITATION IN HOLDING THAT THE SECOND CONDITIONAS STATED IN SECTION 271AAA IS ALSO SATISFIED IN THIS CASE . THE AR . O F THE APPELLANT HAS ALSO RELIED UPON THE FOLLOWING DECISIONS IN ITS SUPPORT : - COMMISSIONER OF INCOME TAX VS. S UBHIR J AIN (2013) 87 CCH 009 DELHI HIGH COURT ASHOK KUMAR 5HARMA VS. DEPUTY COMMISSIONER OF INCOME TAX (2012) 149 TT J (CTK)(UO)33 PRAMOD KUMAR JAIN VS DEPUTY COMMISSIONER OF INCOME TAX (2012) 149 TT J (CTK)(UO)36 DEPUTY COMMISSIONER OF INCOME TAX VS PIONEER MARBLES & INTERIORS (P) LTD (2012) 668/52/50T 94. THE GIST OF THE AFORESAID DECISIONS IS THAT NO DEFINIT I ON COULD BE GIVEN TO ' SPECIFIED MANNER ' INSOFAR AS VERY STATEMENT OF OATH U/S . 132 ( 4) SPECIFIES THE MANNER IN WHICH THE ASSESSEE IS PREPARED TO PAY THE TAXES INSCRIBING THE SAME I N THE BOOKS OF ACCOUNT AND WHEN HE FILED THE RETURNS IN PURSUANCE TO THE NOTICE U/S 153A OF THE I.T. ACT, PENALTY IS NOT JUSTIFIED. THE GIST OF THESE CASES IS QUITE SIMILAR TO THE FACTS OF THE PRESENT CASE. IN LIEU OF THE AFORESAID FACTUAL FINDINGS AS WELL AS THE LEGAL PREPOSITIONS, I HOLD THAT THE PENALTY OF RS.24,28,601/ - LEVIED UPON THE APPELLANT IS NOT JUSTIFIED AND IS ACCORDINGLY DIRECTED TO BE DELETED. THIS ISSUE IS ACCORDINGLY ALLOWED IN FAVOUR OF THE APPELLANT. 5. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH THE FACTS NARRATED HEREIN ABOVE ARE NOT IN DISPUTE THAT A SEARCH U/S 1 32 WAS CONDUCTED AND THEREUPON IT WAS FOUND THAT THE ASSESSEE HAS PURCHASED A LAND AS PER THE REGISTERED DEED WHEREIN THE CONSIDERATION MONEY WAS RS.2,75,65,000/ - . A STATEMENT U/S 132(4) WAS RECORDED AND AFTER CONFRONTING WITH THE EVIDENCES AN AMOUNT OF RS .2 CRORES WAS OFFERED BEING CASH CONSIDERATION OVER AND ABOVE THE SALE CONSIDERATION MENTIONED IN THE REGISTERED DEED. AS A CONSEQUENCE A REVISED RETURN WAS FILED. THE ASSESSMENT WAS COMPLETED U/S 143(3) AND THE INCOME WAS ASSESSED AT 5 ITA NO. 415/NAG/2014. RS.2,15,60,620/ - . WE HAVE BEEN INFORMED THAT THE SURRENDERED AMOUNT U/S 132(4) WAS ACCEPTED AS SUCH BY THE AO. THERE IS NO DISPUTE THAT THE TAX ON THE AMOUNT OFFERED HAD ALSO BEEN PAID BY THE ASSESSEE. IN THE LIGHT OF THE ABOVE MENTIONED ADMITTED FACTS WE HAVE PERUSED THE PROV ISIONS OF SECTION 271AAA WHICH HAS PROVIDED THAT A PENALTY AT THE RATE OF 10% IS TO BE LEVIED ON THE AMOUNT OF UNDISCLOSED INCOME FOUND AS A CONSEQUENCE OF SEARCH U/S 132 OF I.T. ACT. HOWEVER, VIDE SUB - SECTION (2) AN EXCEPTION IS ALSO PROVIDED THAT IN A SI TUATION WHEN THE OFFER IS MADE OF THE UNDISCLOSED INCOME U/S 132(4) OF I.T. ACT AND IT IS SPECIFIED THE MANNER IN WHICH THE INCOME WAS EARNED AND DULY SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND THAT THE TAX WITH INTEREST WAS PAID THEN OUT OF THE AMBITS OF PENALTY PROVISIONS. FURTHER IT HAS ALSO BEEN BROUGHT ON RECORD THAT T HE INCOME OFFERED WAS DULY DISCLOSED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE MANNER IN WHICH THE INVESTMENT WAS MADE HAS ALSO BEEN DULY INCORPOR ATED IN THE ACCOUNTS, MOREOVER THE TAX WAS PAID H ENCE WE HEREBY HOLD THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY HELD THAT THE QUESTION OF LEVY OF PENALTY U/S 271AAA WAS OUT OF THE SCOPE OF SUB - SECTION (1) BUT WITHIN THE AMBITS OF THE EXCEPTION PRESCRIBED UNDER SUB - SECTION (2) OF THE SAID SECTION. RESULTANTLY THE VIEW TAKEN BY THE LEARNED CIT(APPEALS) IS HEREBY CONFIRMED. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF MAY , 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NA GPUR, DATED: 5 TH MAY , 2016. 6 ITA NO. 415/NAG/2014. COPY FORWARDED TO : 1. M/S NANDINI REALTORS, RAMBAG ROAD, BAIDYANATH SQUARE, NAGPUR - 440 003. 2. A.C.I.T., CIRCLE - 6, NAGPUR. 3. COMMISSIONER OF INCOME - TAX - ,NAGPUR. 4. CIT(APPEALS) - III ,NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.