Anil Kumar Jain, New Delhi V. ITO, New Delhi

ITA 4192/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5544 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-02-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 26-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Keywords: Income from undisclosed sources
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : A NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.4192/DEL./2009 (ASSESSMENT YEAR : 2002-03) SHRI ANIL KUMAR JAIN, VS. ITO, WARD 27(4), C-4F/172, JANAK PURI, NEW DELHI. NEW DELHI. (PAN/GIR NO.AAGPJ2675N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL KAPOOR/AMIT GUPTA/MS. SWAT I GUPTA, ADV. REVENUE BY : SHRI G.S. SAHOTA, SR.DR ORDER PER A.K. GARODIA, AM : THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF THE CIT(A)-XXIV, NEW DELHI DATED 24.08.2009 FOR AY 2002-03. THE ASSESSE E HAS RAISED AS MANY AS NINE GROUNDS OF APPEAL, BUT THE ONLY GRIEVANCE OF THE AS SESSEE IS REGARDING IMPOSITION OF PENALTY OF RS.234600/- U/S 271(1)(C) OF THE I.T. AC T. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED RETURN OF INCOME ALONG WITH AUDITED ACCOUNTS DECLARING TOTAL INCOME OF RS.21589 0/-. IT IS NOTED BY THE AO IN THE ASSESSMENT ORDER THAT THE ASSESSEE IS PROPRIETOR OF VARIOUS SALE PROPRIETORSHIP CONCERNS AND IN ALL OF THEM, THE ASSESSEE HAS RETURNED LOSS EXCEPT SHOWING PROFIT FROM CONSTRUCTION ACTIVITY. IT IS ALSO NOTED BY THE AO THAT A SURVEY WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 23.10.2001. IN THE SURVEY REPORT DATED 23.07.2002 FORWARDED BY THE DDIT(INV.) TO THE AO, IT WAS REPORTED THAT AS PER U NSIGNED KACHHA AGREEMENT TO SELL FOR PROPERTY AT GURGAON, IT WAS NOTED THAT TOTAL SALE C ONSIDERATION WAS SHOWN AT RS.35.70 LAKH AND THE ASSESSEE SHARE WAS RS.11.90 LAKH BEING 1/3 RD SHARE. IT WAS ALSO REPORTED THAT IN THE REGULAR AGREEMENT FOR SALE, THE ASSESSEE HAS SHOWN HIS PART OF THE SALE CONSIDERATION AT RS.4,23,333 AND HENCE, THERE WAS UNDER RECORDING OF SALE CONSIDERATION TO THE EXTENT OF RS.7,66,666/-. IT WAS ALSO ACCEPTED BY THE ASSESSE E THAT THIS DIFFERENCE WAS RECEIVED IN CASH AND HAD NOT BEEN DISCLOSED IN THE REGULAR BOOK S OF ACCOUNT. IT IS FURTHER NOTED BY THE ITA NO.4192/DEL./2009 (A.Y. : 2002-03) 2 AO THAT THE ASSESSEE HAD DECLARED THIS INCOME IN TH E RETURN FILED BY HIM AS MISCELLANEOUS INCOME OF RS.7,76,866/-. IT IS STATED BY THE AO IN THE ASSESSMENT ORDER THAT THIS AMOUNT CANNOT BE TREATED AS MISCELLANEOUS INCOME, BUT THE SAME HAS TO BE TREATED AS UNDISCLOSED INCOME BECAUSE AS PER THE AO, HAD THE SURVEY NOT BE EN CONDUCTED, THE UNACCOUNTED INCOME OF RS.7,66,666/- COULD NOT HAVE BEEN DETECTE D. ALTHOUGH THE AO HAD MADE THIS OBSERVATION IN THE ASSESSMENT ORDER, BUT THERE IS N O ADDITION IN THE ASSESSED INCOME BECAUSE THIS INCOME WAS ALREADY INCLUDED BY THE ASS ESSEE IN THE REGULAR RETURN FILED BY HIM, BUT STILL THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. APART FROM THIS, THE AO MADE ADDITION OF RS.575988/- ON ACCOUN T OF DISALLOWANCE OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. THE CIT(A) HAS A LLOWED RELIEF OF RS.5,28,870/- AS AGAINST ADDITION MADE BY THE AO OF RS.575,988/-, AN D IN THIS MANNER HE CONFIRMED THE ADDITION OF RS.47,118/-. NO PENALTY HAS BEEN IMPOS ED BY THE AO ON PART ADDITION CONFIRMED BY THE CIT(A) ON ACCOUNT OF DISALLOWANCE OF EXPENSES TO THE EXTENT OF RS.47,118/-. THE PENALTY HAS BEEN IMPOSED BY THE A O ON INCOME OF RS.7,66,666/- WHICH WAS ALTHOUGH INCLUDED BY THE ASSESSEE IN THE INCOME DECLARED IN THE RETURN OF INCOME, BUT IT WAS HELD BY THE AO THAT THE SAME HAS TO BE TREAT ED AS UNDISCLOSED INCOME. FOR THE PURPOSE OF IMPOSING PENALTY, THE AO HAS ADDED SUCH INCOME IN THE INCOME AS PER RETURN OF INCOME AND WORKED OUT THE PENALTY TO THE EXTENT OF RS.2,34,600/-. HE IMPOSED THE PENALTY OF RS.2,34,600/- U/S 271(1)(C). BEING AGGR IEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), BUT WITHOUT SUCCESS AN D NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. IT IS SUBMITTED BY THE LD.AR OF THE ASSESSEE THA T SINCE THIS INCOME OF RS.7,66,666/- HAS BEEN INCLUDED BY THE ASSESSEE IN THE RETURN OF INCOME FILED BY HIM, NO PENALTY CAN BE IMPOSED U/S 271(1)(C) OF THE ACT. A S AGAINST THIS, LD.DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. OUR ATTENTION WAS DRAWN TO PARA.4.4 OF CIT(A) WHEREIN IT IS OBSERVED BY HIM THAT THERE WAS SUPPRESSION OF SALES BY THE ASSESSEE TO THE EXTENT OF RS.7,66,666/- BECAUSE IT WAS FOUND IN THE SURVEY THAT SALES PROCEEDS WERE UNDER RECORDED BY THIS AMOUNT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT THERE IS NO DISPUTE REGARDING THIS FACT THAT ON ACCOUNT OF THIS AMOUNT OF RS.7,66,666/-, NO ADDITION WAS MADE BY THE AO IN THE ASSESSMENT ORDER. THE PENALTY HAS BEEN IMPOSED BY THE AUTHORITIES ITA NO.4192/DEL./2009 (A.Y. : 2002-03) 3 BELOW ON THE BASIS THAT IF THERE WOULD HAVE BEEN NO SURVEY, THIS INCOME COULD HAVE NEVER BEEN DECLARED BY THE ASSESSEE BECAUSE TO THIS EXTEN T, THE SALE CONSIDERATION WAS RECEIVED BY THE ASSESSEE IN CASH AND WAS NOT ACCOUNTED FOR B Y THE ASSESSEE IN HIS REGULAR BOOKS. NOW, WE FEEL THAT THE PROVISIONS OF SECTION 271(1)( C) ARE RELEVANT AND HENCE WE REPRODUCE THE SAME HERE-IN- BELOW ALONG WITH EXPLAN ATION 1 TO SECTION 271(1)(C): FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES, CO NCEALMENT OF INCOME, ETC. 271. (1) IF THE ASSESSING OFFICER OR THE COMMISSION ER (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) DELETED (B) NOT RELEVANT (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR (D) HAS CONCEALED THE PARTICULARS OF THE FRINGE BEN EFITS OR FURNISHED INACCURATE PARTICULARS OF SUCH FRINGE BENEFITS, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, (I) DELETED (II) NOT RELEVANT (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D) IN ADDITION TO TAX, IF ANY, PAYABLE] BY HIM, A SUM WHICH SHALL NOT BE LESS THAN , BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFITS OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS. EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATERIA L TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THA T ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL I NCOME HAVE BEEN DISCLOSED BY HIM, ITA NO.4192/DEL./2009 (A.Y. : 2002-03) 4 THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHI CH PARTICULARS HAVE BEEN CONCEALED. 5. FROM THE ABOVE, WE FIND THAT AS PER THE PROVISIO NS OF SECTION 271(1)(C), THE PENALTY IS IMPOSABLE FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME HAS TO BE EXAMINED WITH REGAR D TO THE AMOUNT OF INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED BY HI M. WE ARE OF THE CONSIDERED OPINION THAT IF ENTIRE INCOME HAS BEEN DECLARED AND SUBJECT ED TO CORRECT RATE OF TAX, THEN THERE IS NO CONCEALMENT OF INCOME AS PER THE PROVISIONS OF S ECTION 271(1)(C) ON WHICH ANY PENALTY CAN BE IMPOSED UNDER THIS SECTION. WE ALSO FIND THAT FOR THE PURPOSE OF DECIDING THE DISPUTE IN THE PRESENT CASE, EXPLANATION 5A TO SECTION 271(1)(C) IS ALSO RELEVANT AND HENCE, WE REPRODUCE THE SAME HERE-IN-BELOW: EXPLANATION 5A. WHERE, IN THE COURSE OF A SEARCH IN ITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FO UND 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 AS SESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR I N 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 B OOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WH OLLY 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 YE AR 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 FO R 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 TH IS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. ITA NO.4192/DEL./2009 (A.Y. : 2002-03) 5 6. AS PER THE CHANGED PROVISIONS, IN CASES OF SEARC H CARRIED OUT ON OR AFTER 1.6.2007, IN PLACE OF FILING BLOCK RETURN, THE ASSESSEE HAS T O FILE FRESH RETURN OF INCOME FOR SIX ASSESSMENT YEARS U/S 153A AND EVEN IF IN SUCH RETUR N, AN INCOME IS INCLUDED BY THE ASSESSEE WHICH WAS NOT INCLUDED IN THE EARLIER RETU RN OF INCOME, THE ASSESSEE IS CONSIDERED TO BE HAVING CONCEALED HIS PARTICULARS O F INCOME IN SPITE OF THE FACT THAT SUCH INCOME HAS BEEN INCLUDED BY THE ASSESSEE IN THE RET URN OF INCOME FILED BY HIM U/S 153A OF THE ACT. THIS EXPLANATION IS APPLICABLE IN CASE S OF SEARCH CONDUCTED ON OR AFTER 1.6.2007. AS PER THIS EXPLANATION, EVEN AFTER INCL USION OF INCOME IN THE RETURN FILED U/S 153A, CONCEALMENT PENALTY IS LEVIABLE U/S 271(1)(C) . THIS IS A DEEMING PROVISION FOR SEARCH CASES AFTER 1.6.2007 AND THIS CANNOT APPLY T O SURVEY CASES. THERE IS NO SUCH EXPLANATION IN SECTION 271(1)(C) TO COVER SURVEY CA SES WHERE IT WAS FOUND THAT SOME TRANSACTION OR INCOME WAS NOT ACCOUNTED FOR BY THE ASSESSEE IN REGULAR BOOKS, BUT AS A RESULT OF SURVEY, THE ASSESSEE HAS INCLUDED SUCH IN COME IN THE RETURN OF INCOME FILED BY HIM AND IN THE ABSENCE OF ANY SUCH EXPLANATION IN S ECTION 271(1)(C) COVERING SURVEY CASES, THE INCOME INCLUDED BY THE ASSESSEE IN THE R ETURN OF INCOME FILED BY HIM AFTER SURVEY ON THE BASIS OF ADVERSE MATERIAL FOUND IN SU RVEY CANNOT BE SUBJECTED TO PENALTY U/S 271(1)(C). WE, THEREFORE, DELETE THE PENALTY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 8. ORDER PRONOUNCED IN OPEN COURT ON 12.02.2010. SD/- SD/- (R.P. TOLANI) (A.K. GARODIA) JUDICIAL MEMBER. ACCOUNTANT MEMBER *SKB* DATED, FEBRUARY 12, 2010. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-XXIV, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT ITA NO.4192/DEL./2009 (A.Y. : 2002-03) 6